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House of Commons
Session 1999-2000
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Standing Committee Debates
Welsh Grand Committee Debates

Welsh Economy

Welsh Grand Committee

Tuesday 16 May 2000


[Mr. Barry Jones in the Chair]

Welsh Economy

Motion made, and Question proposed [this day],

    That the Committee has considered the matter of the Welsh economy.—[Mr. Paul Murphy.]

4 pm

Question again proposed.

Mr. Richard Livsey (Brecon and Radnorshire): I intend to make a short speech because I believe that many other hon. Members wish to speak before my hon. Friend the Member for Montgomeryshire (Mr. Öpik) sums up. The standard of debate this morning was high. I especially noted the intellectual rigour of the points that the right hon. Member for Llanelli (Mr. Davies) put to the right hon. Member for Caernarfon (Mr. Wigley), whose speech was well researched. At one stage, I was tempted to ask whether exchange rates should be determined in Cardiff or in Europe, but I guessed that that would have led to some protest, so I desisted.

Manufacturing is of great concern, and we have discussed the importance of the steel and car industries. However, I should like to draw the Committee's attention to what has been happening in the textile industry in Wales, especially in relation to women employed in that industry. I advise hon. Members to read the G2 section of The Guardian today. The article says:

    It might make less spectacular headlines than Longbridge or Dagenham, but the fact that textile workers are scattered does not lessen the impact of redundancy. While a quarter of the industry is based in the east Midlands, there are significant centres in Yorkshire, Lancashire, Scotland and south Wales.

The article goes on to describe what has happened to women working in the textile industry in the valleys, at the Baird factory, Cohen's and other firms that have folded. At Dewhurst in my constituency, all the work has gone to Morocco, where it will be carried out for rock-bottom wages. We should be very concerned about that. As the article says, those women supported the miners during the miners' strike, but they have been forgotten now that they are losing their jobs at places like Maesteg and Ystradgynlais in my constituency, as well as in many other places. Those women were the breadwinners of their families. Something must be done urgently.

Mr. Elfyn Llwyd (Meirionnydd Nant Conwy): I agree entirely with the hon. Gentleman. Does he agree that the action of Marks and Spencer leaves a lot to be desired? It insists on sourcing from the third world, at great cost to jobs in the United Kingdom.

Mr. Livsey: I agree entirely. The actions of Marks and Spencer are absolutely despicable and have polished off some very poor communities.

We have mentioned many other problems in manufacturing. In farming, especially dairy farming, tenant farmers are in an almost impossible situation. One Powys county council tenant has been farming 65 acres for the past 30 years. He raised a family of three children. One child became a doctor, another became a manager and another became an adviser. That farm is no longer viable and will never again rear such a family because the milk price has gone down from 25p to 16p. That farmer is giving up and his farm will be amalgamated with another farm. Those women and those tenant farmers are the sort of people in whom we should take an interest. We should ensure that they have a future. Indeed, I was pleased to hear the Secretary of State say that an interest must be taken in the whole of Wales and all its industries.

I thank the Government for yesterday's announcement of an increase in the agricultural sector for over-30-month cattle. That will make a big difference to the overall income of beef and dairy farmers. It will be a great help; it is especially good to mention it now because it happened only yesterday.

Indigenous business will obviously be extremely important in Wales for the small business sector, particularly for start-ups, because it will help to ensure that young people remain in our communities. I believe that big opportunities will arise in communications. The idea of having a development bank, which has been the policy of the Liberal Democrat party policy and of Plaid Cymru, the party of the right hon. Member for Caernarfon, has been adopted by the First Secretary and the National Assembly. I believe that it should have a fair wind, because it is a vital part of risk capital to ensure that small businesses thrive, particularly for our young people.

In passing, I believe that the abolition of the Development Board for Rural Wales was a complete and utter disaster. It should have been extended to all rural areas of Wales. It has been asset-stripped of its best staff and business advisers. The remaining staff are working their socks off and I congratulate them, but we have seen a diminution in the effectiveness of rural advice for small business. I am sad to report that, but it was an inevitable result of the development board's abolition.

Mr. John Smith (Vale of Glamorgan): I appreciate the hon. Gentleman's concern about the abolition of the board and its integration into the Welsh Development Agency. Does he not recognise that it was necessary so that the development agency could compete effectively with the regional developments agencies in the rest of the United Kingdom, which have wider remits? Not making that move might have placed us at a great disadvantage.

Mr. Livsey: I thank the hon. Gentleman for that intervention, but I do not agree with him. The board focused on rural matters and rural development. We need to focus on those aspects still, even if it means having a further reorganisation in the Welsh Development Agency to allow it to use its expertise to deal with rural problems as it now does to deal with urban industrialisation problems. There is a synergy, but the rural part has unfortunately been diluted.

The future of Hyder, the largest company in Wales stands at an important, perhaps disastrous, crossroads. I read today—I have mentioned it before—that the United Kingdom will suffer a 30 per cent. shortfall in its water supply. All accurate forecasters agree that there will be a shortage of water. Heaven knows, we have plenty of water in Wales. It is one of our major assets. The right outcome to the ownership battle for Hyder is vital, but I very much regret that it is going from Welsh ownership. It is alarming to know that 30 per cent. of the shareholders reside in the United States.

Perhaps I should not be talking about this now; I hope that I am still covered by parliamentary privilege. A competitive bid is being made by Western Power, an American company which could easily do a deal with that 30 per cent. of American shareholders in Hyder. We must be extremely careful about that.

Mr. Donald Anderson (Swansea, East): One of the sadder facts of the change of ownership of Hyder is that we in Wales will be deprived of a group that has been extremely generous in its involvement with community work. It is most unlikely that a foreign-owned group would have that same involvement, leaving aside the matter of employment and the other benefits that we have gained from the present company.

Mr. Livsey: I agree entirely with the hon. Gentleman. It is vital that the headquarters of Hyder remain in Wales and that employment in Hyder is secured. It is also crucial that there should be no hiving off or asset stripping of water supplies to north-west England. Those three important principles must be adhered to.

I think that the Western Power bid is subject to examination by the Office of Fair Trading. It has been noted because of the company's other interests and operations. All hon. Members, from whatever party we come and whatever area of Wales we represent, must take a strong interest in the future of Hyder and in securing the continuation of its operations in Wales. I assure the Committee that, in 50 years' time, water will be one of the most valuable commodities in the whole of western Europe we do not need much imagination to realise that, and we must take cognisance of it.

4.10 pm

Mr. Win Griffiths (Bridgend): I am pleased to have the opportunity to make what I hope will be a brief contribution. It will remain short if Opposition Members do not lead me down any false highways.

The contribution made by the hon. Member for Ribble Valley (Mr. Evans) was breathtaking in its cheek. All that I heard from him was that Wales was crippled and strangled, that manufacturing was in terminal decline, that the farmers of Wales were just about to disappear over the horizon and so on. I asked myself whether this was Rip van Evans speaking. I desperately tried to think, but I could not recall hearing the hon. Gentleman making a speech on the loss of jobs in manufacturing during the 18 years when his party was in government. I could not recall him making any speeches when he was a Member of Parliament during that time, and no news releases came out of that Swansea paper shop when the steel industry in Wales lost about 15 per cent. of jobs in the early 1980s, when the hon. Gentleman was still rampant or, rather, crawling—on the political scene in south Wales. We heard nothing from the hon Gentleman in that time.

Everywhere in the developed world, manufacturing jobs are on the decline. That applies even the most prosperous and strong economies, simply because technology is making many jobs obsolescent, and, unfortunately, workers become redundant as a result. It is the duty of Governments to try to provide different opportunities or training, so that people who lose their jobs and are coming on to the job market can find opportunities in new sectors.

The truth is that employment has risen under this Government. As was pointed out this morning, wages have made a real-terms increase. On top of that, the minimum wage in Wales has helped 100,000-plus people. The working families tax credit has helped about 60,000 families and, on average, has provided an improvement of about £1,000 in their take-home income. Almost 2,000 families in my constituency have been helped. When we look at the big picture, there is no doubt that the Government have been and are being successful. There are more jobs and people are becoming more prosperous. Inflation is under control; despite the slight jump in today's figure, which relates to the abolition of MIRAS, the underlying rate remains well within the Government's targets. The ratio of debt to GDP is coming down at a time of increased public spending. The big picture is good.

We look forward to the implementation of the objective I programme to help the areas of Wales with special problems—the valley communities, or those that were not necessarily in the valleys but were part of the traditional coal and steel-making industries of Wales, as well as rural communities where, because of the decline in agricultural job opportunities, special action is needed. No fair-minded person would attribute those problems to the past two or three years. In fact, some things have begun to improve in that time. However, there has been a steady decline. This morning, the Barnett formula was mentioned and it was pointed out that, since it was devised, GDP in Wales has been reduced by 10 per cent. or more. That process continued through the 1980s and most of the 1990s. We now have an opportunity in Wales to turn that around.

Despite the big picture being good, however, we cannot turn our eyes away from the problems. We are all aware of the long-term problems. We must remember that, although the high interest rates are helping to keep inflation stable, they put pressure on manufacturing and steel making. Recent figures show marginal improvements in production in both sectors, but we cannot ignore the warnings that the balance is very fine. The Bank of England's Monetary Policy Committee has a difficult job to do in getting that balance right So far, taking the economy—and the economy of Wales—as a whole, a good job is being done.

The idea that we can manage exchange rates down is hoping for the impossible—the gold crock at the end of the rainbow. My right hon. Friend the Member for Llanelli (Mr. Davies) pointed out in his brilliant contribution this morning that he is still waiting for a reply 25 years after asking Treasury officials how to go about that. We do not know how to do it, because we cannot control the market. We know that some big players can spend billions if they think that the currency will go up or down.


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Prepared 16 May 2000