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Mr. Thomas: The hon. Gentleman recently visited my constituency and informed me of his plans to do so. Unfortunately, he has not realised that the job losses at Dewhirst to which he referred took place in my constituency--165 jobs were lost. There is also a threat of job losses in Fishguard, to which many of my constituents travel to work. That is the reality of job losses in rural areas; in a small town such as Lampeter, the loss of 165 jobs--mainly held by women--is a tremendous blow.
Mr. Evans: On top of all that, an enormous number of jobs has been lost at Associated Dairies during the past two to three years. Furthermore, it is extremely hard to put jobs back into the dairy sector.
I know that a meeting on job losses is being held today. Many people will be affected; not just those who work directly for Corus, but those working in other industries that rely on the company. Service jobs and those in other manufacturing sectors depend on the health of Corus. Those people will be looking to the Government to set up a package of support and regeneration in the area. I hope that the Under-Secretary of State for Wales will be able to offer us some guidance on that matter as quickly as possible; those people must be extremely worried about the job losses. I do not know whether the meeting has finished--[Interruption.] The hon. Gentleman indicates that it will finish shortly.
The Library has produced figures on social exclusion in Wales; in each category, the document gives figures for the United Kingdom as a whole, followed by the figures for Wales. The number of children in workless households is higher than in the United Kingdom generally. The number of children in households with relatively low income is higher in Wales. The number of working-age people in employment is obviously lower in Wales. The number of working-age people in workless households is higher in Wales. The number of working-age adults on income support for two years or more is higher in Wales. That makes fairly bleak reading.
The report entitled "Social Exclusion in Wales"--to which the hon. Member for Clwyd, South (Mr. Jones) will, no doubt, shortly refer--contains some chilling statistics, especially those on teenage pregnancies, to which he refers specifically.
Mr. Martin Caton (Gower): If the Conservative party is so concerned about social exclusion in Wales, why has it boycotted the entire social exclusion inquiry by the Select Committee on Welsh Affairs?
Mr. Evans: The hon. Gentleman is referring to the fact that the Select Committee's Conservative Members were unable to be present during the deliberations.
Mr. Evans: I will not give way. The hon. Gentleman will be able to discuss that matter with the individuals concerned.
The incoming Labour Government told us that things could only get better in Wales; they were trusted by people in Wales, but things have got decidedly worse in the past four years. Things will get better; they will get better in a few weeks' time when we have a general election. We are fed up to the back teeth with hearing statistic after statistic from Ministers. They tell us how good things are, but we know from visiting villages, towns and cities in Wales that there is real poverty. There are areas of growth, too, but the pockets of poverty hurt deeply. Things will only get better when this rotten Government are chucked out a few weeks from now.
5.1 pm
Mr. Denzil Davies (Llanelli): The hon. Member for Meirionnydd Nant Conwy (Mr. Llwyd) requests that there should be a further look at the Barnett formula. He calls for a Barnett formula mark 2, which would be more needs based and perhaps more sophisticated than the current one. The Select Committee on Welsh Affairs also issued that call. I certainly would not resile from that, but if we have a needs-based Barnett formula mark 2, more money will presumably come to Wales from the British Exchequer. I do not object to that; it is the purpose of having a better formula, but neither the hon. Gentleman nor his hon. Friends have told us how their policies could bridge the gap between the even greater public expenditure derived from a Barnett formula mark 2 and the amount of tax, sadly, that is raised in Wales.
Total public expenditure in Wales is about a third higher than the total sum raised in tax. If we had a better Barnett formula--let us have one--that gap would be even greater. Plaid Cymru Members want to leave the British Union and join the European Union. That is their policy, and they are perfectly entitled to it, but they must tell the people of Wales how they would bridge that gap in expenditure.
Plaid Cymru Members may say that they could somehow borrow the difference, but that would be practically impossible because a borrowing requirement of 15 per cent. of GDP would be involved, but the Maastricht criteria allow for 3 per cent. at most. If they borrowed at that 15 per cent. rate, they would not be allowed to join the euro, and they would have given up the British pound. Perhaps they will therefore tell us in what currency would the Welsh steel industry trade. Clearly, that policy would be a total disaster not only for the Welsh steel industry, but for the Welsh economy.
I agree with the hon. Member for Meirionnydd Nant Conwy and the terms of the motion tabled by his party that the Corus cuts and closures will worsen the problems of social exclusion in Wales. Of course, they will certainly make them worse in the short term, but I hope that the position can be retrieved in the medium term. I speak as the Member of Parliament for a constituency that does not produce basic steel, but it does produce tinplate. It has produced tinplate from before the first world war and it was producing it when President McKinley and the United States imposed the McKinley tariff on Llanelli tinplate.
In the 1970s, three factories in Wales produced tinplate. They were at Trostre in my constituency; Velindre in the constituency of my hon. Friend the Member for Gower (Mr. Caton); and Ebbw Vale in the constituency of my hon. Friend the Member for Blaenau Gwent (Mr. Smith). If the Corus proposals go through, only one plant will remain. In the 1970s, those three factories had 90 per cent. of the domestic tinplate market in the United Kingdom. More than 20 years later, that figure is now down to 50 per cent. and British Steel has never explained to me how it managed to lose almost 40 per cent. of the market. Perhaps it was too much to expect it to hold on to 90 per cent. of the domestic market--that figure may have been artificial--but the considerable decline has left us with the prospect that only the plant at Trostre will remain.
It gives no pleasure to those who work in Trostre and those who live in my constituency--they have lived with the problem for years--that our plant will be the last one remaining. Under the plans, the plant at Ebbw Vale is expected to close. We hope that the proposals put forward by the trade unions mean that at least two plants will produce tinplate in Wales. We need two plants to maintain a 50 per cent. market share, and, if that share is eroded any further, it will affect the plant in my constituency and the plant at Port Talbot that produces steel for the tinplate industry.
My hon. Friend the Member for Monmouth (Mr. Edwards) and others mentioned the meeting that some of us had with the chairman and chief executive of Corus. We heard what was said and have considered it carefully. Indeed, I have studied the press release that Corus issued. It seems fair to say that Corus gave three reasons for embarking on this venture. First, the euro-sterling exchange rate is a problem; secondly, it sees a decline in the UK's manufacturing base; and, thirdly, problems are associated with the overproduction and price of steel. I shall return to those three reasons shortly, but they are all external to the company.
I accept that the company was losing money but, as I understand it, the reconfigurated debt will be higher than the one it had before the reconstruction and all the cuts and closures took place. Although the company was losing money, no one has ever suggested that there were internal reasons for that. As we have heard, productivity is excellent and the steel industry in Britain is probably as efficient as almost any steel industry in Europe and it is close to being as efficient as the industry in Japan. The problems are not internal, but Corus is using internal measures--a blood sacrifice or slaughter of the innocents among the workers in the industry--to try to solve or react to external problems. It is not sitting down with the Government and the trade unions to consider how to deal with those external factors.
No one is suggesting that a solution is easy--some forces are outside all our control--but the company should do what Ford did. It should sit down with Government to try come to terms with the problems. The company's problems are not the result of a lack of productivity, but of external factors. Although we accept that the chairman and chief executive of Corus is under considerable pressure, it is totally indefensible for him not to come to Government to describe the external problems that the industry faces and to ask for help in alleviating them as best we can. The company failed to do that and engaged in an old-fashioned blood sacrifice that will not resolve the problem. Such an approach is totally out of date.
I should like to deal with the three reasons to which I referred, for which I have a ladder of escalation. The third reason on that ladder is the relative values of the pound and the euro. There is no doubt of the importance of that factor, as the exchange rate clearly worked against the steel industry. It has now improved a little, but the weakness of the euro was bound to affect British companies--including those in the steel industry--that were trying to export to the continent at a time when the pound was strong.
However, we should not imagine that the problems would not have arisen or that jobs would not have been lost if we had joined the euro. Indeed, we are not hearing that suggestion as much as we did previously and I certainly do not believe that Corus takes that view. When I ask people who favour joining the euro at what rate they would do so, I do not get an answer. Joining it at the present exchange rates or even the higher rates of six months ago would crucify not only the steel industry, but most of Welsh and British manufacturing.
On the other hand, it is sometimes suggested that devaluation is a great panacea. I have never thought that that is the case; devaluation is merely something that occasionally has to happen. I shall not betray any confidences, but I think that the Corus chief executive said in our meeting that, if devaluation was to help the company, it would have to occur at a rate of some 20 per cent. on present levels. Indeed, some European Commissioners have suggested a devaluation of 20 to 25 per cent. I find surprising the idea that the Germans and French would allow us to devalue at such a rate. If they did so, there would be other consequences: higher interest rates, higher taxes, cuts in public expenditure or a combination of the three. We would be in a completely different situation. Devaluation is not a panacea, and neither is joining the euro.
The second factor on my escalator of reasons is the decline in manufacturing industry. We must agree with Corus to some extent on that point. Yes, there has been a decline.
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