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1.18 pm

Dr. Liam Fox (Woodspring): Any hon. Members who had entered the Chamber halfway through the Secretary of State's speech might have thought that they were entering a domestic dispute, given the language used by the right hon. Gentleman and the right hon. Member for Caernarfon (Mr. Wigley). However, I have some sympathy with the Secretary of State when he is accused of being almost late in making an application. In English, we have a phrase for "almost late"--it is "on time". Some parties with no experience of government would do well to take on board the fact that Ministers tend to work closely to set timetables.

I congratulate the Secretary of State on his spectacular and commanding win at the weekend, which I am sure will boost his authority in his own party no end. Interestingly, he began by saying that he hoped that the new, all-inclusive, cuddly and winceyette politics of devolved government in Wales would not mimic the traditions of Westminster. He is, of course, in a unique position: I doubt whether other Members could appear on television saying that they believed that they had less support than their opponent in an election but that none the less they would win, and subsequently be proved right. That is certainly a departure from the democratic traditions of this place.

I hope that the Secretary of State will depart from tradition and give some straight answers. I was disappointed that when he was asked a perfectly straightforward question by my hon. Friend the Member for Ribble Valley (Mr. Evans), he chose to concentrate on a grammatical point rather than answering. However, I am not sure whether "fewer" was his answer or his correction, since he would have been correct in either case. Perhaps he would clarify that later.

I hope that this will not be the last debate of its kind in the House, and that, as we move towards the establishment of the Welsh Assembly, we will remember in this place that our responsibilities extend well beyond the borders of England, to the whole of the United Kingdom. All hon. Members will continue to take an active interest in issues in Scotland and in Wales, even in issues that relate to devolved powers, because as a Union Parliament we have a duty and a responsibility to all our countrymen, irrespective of where they live and under what form of government.

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We have a second duty, which is to Parliament. All of us in the House will be asked to raise the taxes that will be spent through the Welsh Assembly and the Scottish Parliament. Surely we have a right to scrutinise how that money is spent. In debates such as this in future, as those who are responsible for raising revenue, it will be our duty to ask the questions that should be asked about how that revenue is spent. We must remember that that is an absolute democratic principle.

The Secretary of State made great play of the economy and the wonderful transformation brought about not only in Wales, but in the rest of the United Kingdom by the Labour Government. He seems to have a rather short memory. Only a week ago, the Governor of the Bank of England predicted that growth would be downgraded yet again to between 0 and 0.5 per cent. in the next quarter. That has serious implications for the future of prosperity and jobs, especially in Wales.

The latest CBI survey confirmed that Wales had been hurt more than other parts of the UK in recent times. It stated:

Mr. John Smith: Do not talk us down.

Dr. Fox: We must consider what is actually happening in the economy, not fantasy economics or how we wish the economy was functioning.

As the survey by British Chambers of Commerce reported:

Why should that be? Why should confidence be falling more quickly in Wales than elsewhere? Those are questions that Ministers should tackle seriously. Cheap sedentary interventions such as that from the hon. Member for Vale of Glamorgan (Mr. Smith) will not help to provide jobs and prosperity.

Mr. Smith: Does the hon. Gentleman consider it appropriate for a non-Welsh Member of Parliament to open for the Opposition in the debate by talking our country down? I ask him to think carefully about what he is doing, before he does any more damage.

Dr. Fox: I come to the House as a Member of a Union Parliament and as a spokesman for the official Opposition in a constitutional arrangement that is accepted by both sides of the House. I will not be lectured by a Government Back Bencher about my right to speak on any issue affecting any part of the United Kingdom. That is the constitutional settlement that we have. If the hon. Gentleman does not believe in it, he should go and sit beside the nationalists, because that is their view, not the view of his own party.

The figures for Welsh manufacturers in the last part of 1998 were the lowest in the UK. One third of firms said that UK sales were down; two thirds of firms said that

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UK orders were down; one half of firms said that exports were down; and two thirds of firms said that export orders were down.

We cannot deal with problems unless we accept that they exist. Again I ask why Wales should be in that position, compared with other parts of the UK. The problems in Wales also exist in other parts of the country, but they seem to be exacerbated in Wales for some reason about which Ministers do not yet seem clear.

Mr. Ian Bruce: Does my hon. Friend agree that Wales is particularly susceptible to problems with exports to Europe because last year the Government had interest rates too high, which made Welsh exports uncompetitive? Now, the Government seem content that the euro has been undergoing a competitive devaluation, with interest rates foolishly kept too low--we are talking about 1 per cent. a week since the euro was introduced. Surely the Secretary of State should be making vigorous representations to his colleagues in the rest of Europe to ensure that they do not devalue the euro and stop Welsh exports from going into their markets.

Dr. Fox: I do not think that any political party in the House would be particularly well served if we involved ourselves in a debate about the worth or otherwise of competitive devaluations of currencies. Let me, however, make the point that I do not intend to be competitive in comparing one part of the United Kingdom with another, or one specific region with another. If things are worse in Wales than elsewhere, perhaps we should ask why that is. Is it--this is a genuine question--because the Welsh economy depends more on the manufacturing sector than on the service sector, and, if so, what measures can be taken to alleviate the burden? A declining economy in any part of the United Kingdom is bad for the United Kingdom as a whole; and, if a sector is performing badly in one part of the UK, sooner or later that sector will be affected in another part of the UK.

Prosperity and long-term jobs can be created only if a country's share of world trade--gross domestic product--is increasing; and that can happen if products are of desirable quality, and are sold at a price that people are willing to pay. That means that we must not involve ourselves in excessive regulation. Part of the problem that is affecting manufacturing industry in this country is caused by excessive regulation--the red tape and restriction that are being created partly by the Government's agenda, and partly by European initiatives.

In signing up to the social chapter, the Government are importing back-door European interventionism. They have made major supply-side reforms, and I welcome their conversion to that idea, because their action has made our economy far more competitive. Britain has increased its share of world GDP since 1990, and is one of only two European countries to have done so. We must not throw those reforms out of the window.

Mr. Flynn: We are all trying to cope with the hon. Gentleman's dazzlingly original ideas. He says that he wants fewer regulations. After the Tory pension mis-selling scandal, which resulted from a relaxation of regulations, how will he cope with the new style of mortgage mis-selling by a new breed of mortgage brokers

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and other operators who have created serious problems, and will create more serious problems in the future, by introducing disreputable ways of selling, in particular, personal equity plan mortgages and mortgages based on investment trusts and endowments?

Dr. Fox: A discussion of that issue seems about as attractive as a debate on the competitive devaluation of currencies, and it would take us some distance away from the issues that we are debating. The hon. Gentleman has, however, made the general point that all regulation is bad and total deregulation is good. Some regulations are worth while and sensible; what is bad is over-regulation and restriction, and that is what we want to avoid in the economy.

The Secretary of State was careful to mention only income tax, but increasing the tax burden on individuals reduces demand, and increasing the tax burden on businesses is a disincentive to investment. In the long term, such action will reduce the economic prospects of Wales. Wales has already experienced a number of tax increases since the Government came to office. One example, which those in many parts of Wales will appreciate, is the introduction of the £90 tax on corner shops to pay for the new Food Standards Agency. Dangerously, a wide range of taxes are now reducing output. Manufacturing is flat in some sectors, and agriculture is in recession. The Government do not seem to want to accept the reality of what they have done.

I would welcome further clarification of the points that the Secretary of State made in response to the right hon. Member for Caernarfon (Mr. Wigley) on objective 1 status. The letter from the Economic Secretary to the Treasury, which has been quoted this week, states:

I accept that that position has long been accepted by both main parties, but it would be helpful if the Secretary of State--rather than maintaining an entirely neutral position, which he seemed to do in his speech--said that the Government would look favourably on such extra spending.

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