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18 Nov 2002 : Column 442—continued

Mr. Hendrick: My hon. Friend said that changes to the stability and growth pact were needed. If those changes were not made, would he still be in favour of entry, notwithstanding what he said about manufacturing industry?

Mr. Beard: I would still be in favour of joining European monetary union, because if we are to influence the stability and growth pact and what comes after it, we will do better within than without.

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For the reasons that I have given—the exchange rate and the risk of deflation—the only way to protect and advance the welfare of this country is to take concerted action with allied nations. There is no economic future for Britain in the false superiority of sullen isolation.

8.2 pm

Mr. Simon Thomas (Ceredigion): I am pleased to respond to the Government's legislative programme on behalf of Plaid Cymru. I was interested in the Chancellor's ebullient opening remarks. He was confident and positive, and much of what he said was correct. I want to concentrate on some of the regional disparities that have grown up in the past four or five years and the effect that that has had on Wales. Many Members from other parts of the United Kingdom, including the English regions, will find something to agree with in what I am about to say.

Some of the economic indicators of what has been happening in Wales in the past five years do not show such a rosy picture. In 1998, there were 204,000 manufacturing jobs in Wales, whereas the figure is now 187,000. When the Government came to office, gross weekly earnings in Wales were 89.1 per cent. of the UK average, which is more than 10 per cent. behind, and the figure is now 86 per cent., so the position has worsened. The number of VAT-registered businesses in Wales was 94.5 per cent. of the number of UK businesses, and now the figure is down to 90 per cent., so we are losing our businesses as well. When the Government came to power, the index of production and construction in Wales was 95.6 per cent. of that for the UK, and it is now 91.4 per cent.

However the economic fortunes of 1997–98 were created—I accept that there is a ping-pong battle about who was responsible—there is no doubt that in the past four or five years the position of Wales has declined in relation to the rest of the United Kingdom. It is that position that we want to see reversed, and that we want this legislative programme and next week's pre-Budget statement to address.

One tool that is specific to Wales is objective 1, which is a six-year programme of regional structural funds from the European Union. I welcome the objective 1 programme and the way in which it is working. It is a sign of weakness, but nevertheless it is a tool to improve the Welsh economy. It is regrettable that, in the first two years of objective 1, we have been able to commit only 77 per cent. of the resources available. The most under-committed part of objective 1 is that dealing with infrastructure, and I shall concentrate most of my remarks on that.

The subtext of the Chancellor's remarks was that unemployment was no longer a problem. We need to consider the unemployment figures very carefully. In Wales, the percentage of people living in households with at least one person unemployed has gone up in the past four years from 15.6 to 16.7. The number of people in employment, which is a bit different from the unemployment figures, has declined. In Wales, the figure is now less than 70 per cent., whereas the UK average is about 75 per cent. Neath-Port Talbot, which covers the constituency of the Secretary of State for Wales, is languishing at 56 per cent. of the working-age population in employment.

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As well as the sickness statistics, the problem of people who do not choose to register for employment and the difficulty of getting women into the employment market because of the lack of child care are infrastructure problems in the Welsh economy. That is reflected in the average earnings figure for Wales, which is #380 a week compared with #440 a week for the UK. The infrastructure difficulties in the Welsh economy should be addressed.

It is fortuitous that this aspect of the Government's legislative programme is being discussed tonight, because today Plaid Cymru launched its economic strategy for Wales. I am sure that hon. Members will be interested to know what it contained, so I thought that I would take this opportunity to tell them what we propose. There is a UK economy and a set of UK fiscal measures to deal with that economy, but the presence of the public sector has a specific bearing with regard to Wales, because 60 per cent. of the Welsh economy is based on the public sector as opposed to 40 per cent. in the rest of the UK.

Certain aspects, such as the public finance initiative, public procurement and the Barnett formula, impinge on the economy of Wales in a way that they do not in most of the UK, although they have resonances in some parts of England. We would like a statement on the Barnett formula. It was not in the legislative programme, but it may be appropriate for the issue to be included in the pre-Budget statement next week. We do not think that Wales has anything to lose from a review of the Barnett formula or from the establishment of a more needs-based formula. Indeed, many areas in England would also benefit from such a review. I think that many Labour Members would be interested in a review to see what it would bring to their regions, particularly with regional government now being introduced in England. The United Kingdom overall would benefit from a lack of regional disparities.

Mr. Andrew Love (Edmonton): Has the hon. Gentleman checked with the Scottish National party?

Mr. Thomas: The hon. Gentleman will be present tomorrow night when the hon. Member for Banff and Buchan (Mr. Salmond) will hopefully catch the Speaker's eye to make his views clear about where he stands on this matter. I am speaking for Wales and for Plaid Cymru.

The response of the Liberal Democrat and Labour coalition Government in Wales to these challenges has been pretty abysmal. The economic strategy of the National Assembly was published after the objective 1 programme started, so the unique fiscal tool that we have in Wales, which is separate from what happens at a UK level, was in place before any strategy was established. The strategy fails to address the real needs. It has wonderful targets: we would all like the GDP of Wales raised to 90 per cent. in the next six years, but it will not happen, certainly not as the strategy sets out. We would like 135,000 jobs to be created in Wales in the next six years, but I doubt that that will happen, not without a strategy to increase the number of businesses in Wales, especially small and medium-sized businesses, which is what Wales specialises in. It will not happen without helping existing businesses to grow, and without a way of sharing economic success throughout Wales.

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Under the National Assembly for Wales and the objective 1 programme, the majority of jobs in agriculture are based in Cardiff, which is not the most agricultural part of Wales and nor is it in the objective 1 area. Surely at the very least we should roll out public sector jobs in Wales: agriculture to the west and objective 1 jobs to the north.

We have set out the key tasks for Wales in the economic development strategy, and we would like to see the Government's legislative programme help them. They include regional development within Wales and a plan for jobs within Wales; for example, we do not have control over the Office for National Statistics, so we do not know what the labour market assessment in Wales is at the moment. We must wait two years until it filters down to us. That is vital to Wales, as is selecting the most promising sectors for development in the Welsh economy.

In my constituency, we have just lost Dewhirst, a clothing manufacturer from the town of Cardigan. The company was lost because it is cheaper to make jeans in Morocco and Turkey than in Cardigan. It has nothing to do with the work force, who were effective and efficient. It was often said that they were the best in the group and they were the last to go, which says something about them. However, 400 jobs lost in a small market town of 2,000 people is a big blow to take. Some 80 people have found jobs with local businesses. The small and medium-sized enterprise sector has picked them up, although some have to drive for more than an hour and a half to get to work. However, that leaves 300 people without jobs and another 150 jobs are to go at the old Ministry of Defence range at Aberporth. Those constituents who are affected will ask what is in this legislative programme for them. What can they take from it? There is nothing that we could usefully use in Wales—Xneutral" would be the most generous description—to support the sectors that we can grow in my constituency and throughout Wales.

There are sectors at which we can look, such as renewable energy. It is important that the energy review will come from the Government very soon and I agree with the hon. Member for Ilford, North (Linda Perham) that we need to invest in renewables and not nuclear. That is pertinent to Wales.

Mr. Love : The history of choosing winners in Wales is not a good one. Is the hon. Gentleman suggesting that politicians can choose those sectors of the economy in which we ought to invest?

Mr. Thomas: The hon. Gentleman makes a reasonable point. It is not for politicians to choose as such, but it is for politicians to note which sectors are likely to be goers in Wales. For example, we have the Welsh Development Agency—it is independent, and many parts of England would like something similar—to do the groundwork. However, without the labour market assessment, it is difficult to see the way forward. We are not talking about picking winners and then expecting inward investors; we are trying to pick some sectors that are growing with indigenous Welsh businesses, and support them to create more employment opportunities. That has been shown to be more successful in the longer term than getting interim

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investment. I do not have to talk about the LG plant in Newport; the hon. Gentleman may remember that example.

Another important factor is IT and, in this context, the communications Bill will be vital. Out of the 11 indicators of IT take-up promoted at an EU level, Wales lags at the bottom of seven in the UK and is in the bottom three in all 11. Only 30 per cent. of SMEs in Wales have a website. Here in London, the figure is 65 per cent. That digital gap in Wales, parts of England and Scotland will grow unless Ofcom and the Bill provide a statutory duty to ensure the roll-out of broadband and IT communications to all parts of the UK.

We can imagine what would have happened had we left electricity connections in rural areas to the free market. There are still businesses in my constituency that do not have mains electricity. That would have been worse had we not faced the challenges in the 1950s and 1960s of getting mains electricity to all parts of the United Kingdom. We must get IT and broadband to all parts as well.

My final point concerns agriculture. Reference has been made to common agricultural policy reform, and I agree. If there is genuine CAP reform, which looks at sustainability, the countryside and the unique role that agriculture plays in Wales in sustaining rural tourism, the language and social cohesion, I do not think that Welsh farmers will have much to fear. However, we do fear a fudged reform in which France, Germany and perhaps the United Kingdom fudge around the issues, try to protect some interests and do not address the over-production issues in agriculture. With farm incomes in Wales at #4,200 in upland areas, farmers have everything to play for within CAP reform. However, there are also huge dangers in the way in which the present bigger political game is being played out.

Plaid Cymru views the present legislative programme as a continuation of present policies. Regional disparity has widened in the past four or five years; it is likely to do so again under this programme. In Wales, we want a proper Parliament with tax-varying powers to look at things such as corporation tax, and to employ an economic strategy that builds sustainable development in Wales, to help indigenous businesses, to address the increasing number of economically inactive people in Wales and to raise the wealth of the people of Wales.

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