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Mr. Rowlands: They have been abolished.

Mr. Davies: I do not know whether they have been abolished--I think the Spaniards would have something to say about that--but I am talking about the past five years. Perhaps they will be abolished. If we had qualified for cohesion funds in the past five years, we would have received £150 million--this time I have rounded the figure up. However, we would have lost the £5 billion. We do not receive the cohesion funds because we are a member of the British Union, whose GDP is too high. Leaving that aside, let us add the £150 million of cohesion funds.

We have been told that the next six years will be bonanza years, because there will be objective 1 money. I hope so. I have heard the figure of £2 billion, but I do not know whether that will survive the meetings in Berlin this weekend--let us hope that it does. If my mathematics are not too bad, that comes to £330 million a year over the next six years. What would happen to objective 2 and 5b assistance if we received objective 1 money? I have no idea, but presumably it would be slightly less. If it were halved, and we received £2 billion-worth of objective 1 assistance plus a little objective 2 money, we would get £500 million over the next six years. [Interruption.] The hon. Member for Brecon and

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Radnorshire (Mr. Livsey) seems to be nodding. He understands these matters, because he goes to Brussels and talks to people.

Mr. Livsey: Occasionally.

Mr. Davies: Not too often, I hope.

Plaid Cymru wants to trade in the British Union and get the European Union--

Mr. Llwyd: Will the right hon. Gentleman give way?

Mr. Davies: I have at last managed to provoke the hon. Gentleman to intervene.

Mr. Llwyd: I have not intervened before, because quite frankly this is fag packet economics. I can think of several amounts that the right hon. Gentleman could take into account. For example, every large company operating in Wales pays tax outside Wales. That is a huge figure, and there are many such others. I should be delighted to argue these points with him at another time, but at the moment he is, with respect, talking fag packet, unrealistic rubbish.

Mr. Davies: I am glad that I managed to provoke the hon. Gentleman. I was hoping that the right hon. Member for Caernarfon (Mr. Wigley) would be here, because he would have got on his feet much sooner. Over the years, the nationalists have tried to knock these figures down--there have been various articles in the Western Mail and other worthy publications--but they have never managed to do so. It is quite simple: if Wales has the lowest income per head in the United Kingdom, obviously expenditure must be greater than the tax raised. The nationalists used to talk about defence expenditure, but they have gone off that now.

Mr. Llwyd: That is a good point.

Mr. Davies: Indeed. I am surprised that the hon. Gentleman did not mention defence expenditure.

That is the position we are in, and £500 million against £5 billion is a small sum.

I have always thought that Welsh day debates, the Welsh Office, which was established in 1964, and now the Welsh Assembly, were introduced to preserve Welsh identity. There is also the democratic element, and the notion that the Welsh Office can runs things better than the Department of Trade and Industry or the Home Office. However, underlying all that is the need for institutions in Wales to preserve national identity--I think that is the vogue word. They are required even more now because we live in a world of global capitalism and global economics, in which the driving force of economics breaks down loyalties in communities, between individuals and between nation states.

The Welsh Assembly will exist partly to preserve Wales's national identity. I hope that it does not become a national whingeing Assembly where we are always attacking the Treasury, the London Government and the British state, and where we whinge about what more we should get, such as increased powers of taxation when there is no tax base. I hope that it does not become a place where we talk about devolution being a process and not an event, and about wanting more powers.

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If we go down that road, we shall not be able fully to utilise the Assembly as a bulwark of the Welsh national identity and to improve Welsh democracy and the Welsh economy. We will be able to do that only if we recognise the realities of Wales's parlous economic condition.

3.47 pm

Mr. Desmond Swayne (New Forest, West): I apologised to Madam Speaker earlier, and I now apologise to the House, for not having been present at the opening of the debate. My plans were made before we adopted the extraordinary arrangements for Thursdays in this part-time Parliament. The Speaker is well aware of my views on that, and I have been ruled out of order more than once for having drawn attention to them, so I shall not go down that road again today.

Several Labour Members have referred to the parlous state of the Welsh economy--or at least to the relatively less-well-off state of its economy. I want to draw attention to the regional trends survey published by the Confederation of British Industry on 9 February, which states:

Mr. Win Griffiths: I appreciate that the hon. Gentleman's previous arrangements prevented him from being present for the opening speeches, but surely, at the very least, communications within his party should have enabled him to check with the shadow Minister with responsibility for constitutional affairs, because that report was mentioned at length in the opening speech from your side of the House. It is old news, and we have heard it before. It would have been much better for you to address your constituents elsewhere.

Mr. Deputy Speaker (Mr. Michael Lord): Order. They are not my constituents and it is not my side of the House.

Mr. Swayne: The hon. Member for Bridgend (Mr. Griffiths)--from the party of spin--will know that these messages bear repetition. Indeed, the more they are repeated, the more likely it is that the message will be received and recorded.

There has been a significant rise in the rate of home repossessions because of unpaid mortgage repayments--an increase of 1,000 last year. In addition to the problems in the Welsh economy, there are problems for the agricultural sector. The problems of Welsh agriculture are not new. In recent years, as a result of those problems, my family withdrew from farming at Whitland on the border between Carmarthenshire and Pembrokeshire to farm in New South Wales. Although the problems have been compounding for years, it is now true that farmers in Wales have never been poorer, and they face new problems. We know that the arrangements under discussion for reform of the common agricultural policy will pose new challenges and problems to Welsh agriculture.

I wonder whether Ministers and hon. Members recognise the potential problems facing agriculture as a consequence of the increase in charges to be levied by the

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meat hygiene service, and the potential devastation that that may do to many livestock markets. There are huge challenges for agriculture and industry in Wales.

The right hon. Member for Llanelli (Mr. Davies) referred to the fiscal deficit; the huge challenge facing the Welsh economy in the coming years will compound that fiscal deficit. The single European currency was mentioned by the right hon. Gentleman. The problem that the Welsh economy will face is that it runs counter-cyclical to the average European economy. Its peaks and troughs are at a different time from the average European cycle.

The European central bank is insulated from any lobbying by the regions of Europe that will be adversely affected by its interest rate policy. Indeed, Governments that make representations will stand to be fined under the existing treaty structure. Counter-cyclical economies, such as that of Wales, will find that their fiscal deficits will be exaggerated. In times of inflation, the rate of inflation in Wales will be exaggerated, and at times of unemployment, its unemployment rate will be exaggerated by the interest rate policy pursued on behalf of the European norm.

It was instructive that the right hon. Member for Llanelli drew attention to fiscal deficits, which are seen as a way around the differential effects on regions which suffer disadvantages, as Wales would. There would be an expectation that the fiscal deficit would grow, and be required to grow, so that Wales could be compensated for the adverse interest rate policy by receiving a much larger fiscal inflow from the rest of the EU.

The problem is that the arrangements to do that are not in place in Europe, as they are in the United States. A state in the United States suffering adversely as a consequence of the policies of the Federal Reserve--for example, running a recession when the rest of the economy was in boom--would expect to receive a considerable increase in federal funding to ameliorate the effects. That is not in place in terms of any single currency that we might enter. Therefore, the full brunt of the adverse consequences of the interest rate policy will be felt in terms of unemployment in Wales.

That is a challenge with which the leadership in Wales and Welsh Members of Parliament must come to terms, and about which they must make representations to the Government. Given the Government's ability to take representations from this House, I suspect that the best way of getting through to Alastair Campbell might be to ring The Sun poll on the issue. They can do so by dialling 0660 100 721.

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