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Mr. Watts: Does my hon. Friend agree that state aid is as important as European structural funds to the future economic development of his area and mine?
 
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Does he share my view that the Government must ensure, in the Council of Ministers negotiations, that we continue to have state aid in areas like ours?

Chris Ruane: Yes. We have raised the question of state aid in relation to Denbigh high street and I have asked Glenys Kinnock to look into the matter with a view to getting the state aid rules revised and clarified.

There is more to this than putting up large sheds for Japanese, Austrian or even native companies. We must be able to provide the skills that those companies need. Objective 1 status in my area has helped Llandrillo college, which is situated some 20 miles away, to establish colleges in some of the poorest communities in Wales. For example, the west ward in Rhyl is the poorest of all the 865 wards in Wales. A college has been set up there for the first time in the town's history, only 100 yd away from that ward's boundary. The philosophy of the college is to reach into those poor communities and raise the skills of their people so that they can access the high quality jobs that are being created at the St. Asaph business park and in other places in north Wales.

I give credit to the principal of Llandrillo college, Huw Evans, for having the foresight to establish Rhyl college, headed by Irene Norman, and Denbigh college, headed by Julia Hughes. They are doing fantastic work in those towns and are also establishing links with smaller communities such as Bodelwyddan and Meliden, through their philosophy of taking learning into the community. Building on such work we will be able to raise the skills level so that people can get higher-paid and better jobs in the future.

The hon. Member for St. Ives tried to make the point that there was initiative overload by referring to between 20 and 30 Labour initiatives, but those initiatives are targeted and specific. They are not in competition with objective 1; they can co-operate with it. The Labour Government changed the rules on town heritage initiative grants. Under the previous Conservative Government, the fund for the Churchill diaries was awarded £12 million to prevent the diaries being sent to America, and £5 million was given for the playing fields of Eton. We said, "No more of that." Under a Labour Government, THI money goes where there is poverty and where there is architecture.

We changed the rules. The initiatives can be complementary—in towns such as Denbigh and Rhyl in objective 1 areas, THI money is coupled with objective 1 money to revitalise town centres that were neglected for so long under the Conservative Government. Those initiatives can result in additional funding for poorer communities.

We need to put the matter in perspective. In Wales, objective 1 funding, with UK, EU and private money, amounts to £3.2 billion. The Welsh block grant was £6.5 billion in 1997, but it is now about £12.5 billion a year, so we need to keep things in proportion. We have been giving credit to ourselves and to others, but we should also give credit for the macro-economic management of this country since 1997.

Lembit Öpik: Before we hear the eulogy to the Chancellor that will tell us the hon. Gentleman's side of the camp, I suggest that, given his reference to an additional payment above the Barnett formula, the
 
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Barnett formula needs to be revised. Would not it make sense to throw out a formula that even its inventor thinks outdated and replace it with something that better fits the needs of Wales and the funding requirements for objective 1?

Chris Ruane: I do not share the hon. Gentleman's view that we need to revise Barnett; it could be revised upwards as well as downwards and our English colleagues in London and the north-east may have their own perspective on that.

David Taylor (North-West Leicestershire) (Lab/Co-op): Wales has a population of 2.9 million, almost the same as that of the three east midlands English counties of Nottinghamshire, Derbyshire and Leicestershire, which have a similar socio-economic profile. Can my hon. Friend tell east midlands MPs, such as me, how we could share in the largesse that the Barnett formula gives Wales and, a fortiori, Scotland?

Mr. David: Become part of Wales.

Chris Ruane: Indeed. That is one avenue that might be explored.

The macro-economic position has helped West Wales, the Valleys and my constituency, as well as the constituencies of many Members. Objective 1 would not deliver on jobs if we did not have the lowest interest rates for 30 years or our current employment levels. People are employed—they have money in their pockets and can buy the goods and services that we are creating in Wales. The macro-economic policies have been fantastic since 1997. They have not just dropped from the sky and are not, as the Opposition say, the golden legacy of the Conservative era. They are the result of deliberately targeted policies such as the new deals for lone parents and for young people, child care provision and Sure Start, which allows young mothers and families to get back to work in the knowledge that their children are being looked after properly. Also helpful was the decision, opposed by the Conservatives—I do not know about the Liberal Democrats—to give control of interest rates back to the Bank of England.

Andrew George: I am grateful to the hon. Gentleman for raising the issue of where the Liberal Democrats stood. In fact, giving control of interest rates to the Bank of England was Liberal Democrat policy before the 1997 election, although it was not Labour policy then. It was one of the first policies that they unceremoniously nicked.

Chris Ruane: I would disagree.

Other colleagues wish to contribute, so I shall conclude. I sing the praises of West Wales and the Valleys and of Andrew Davies, the Minister for Economic Development and Transport in the Welsh Assembly, as he is an unsung hero who does not receive enough credit. I have given credit to the Chancellor and the Prime Minister for their initiatives, but I pay credit to Andrew Davies who has overseen objective 1 implementation in Wales and done a fantastic job. I pay tribute to the work of Chris Farrow, the head of the Welsh Development Agency in north Wales. We have
 
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the best record of economic development in Wales, and a great deal of that is down to Chris Farrow. All in all, Labour has done a good job.

6.37 pm

Mr. George Howarth (Knowsley, North and Sefton, East) (Lab): I apologise to the hon. Member for St. Ives (Andrew George), as I was not in the Chamber when he opened this Adjournment debate. Unfortunately, I had responsibilities elsewhere in the House, but I did manage to catch most of his speech. I congratulate him on raising this subject, as it provides a timely opportunity for many of us to contribute.

I shall make some general observations about objective 1 and its future, followed by some specific observations about Merseyside. I am grateful, as are other Merseyside MPs, for the dialogue that we have been able to develop with our right hon. Friend the Paymaster General about the future of objective 1. We had a meeting in her office, and the door is still open. She paid us a visit a couple of months ago, and productive discussions about our approach in future are under way between Members of Parliament and Ministers, and between officials from local government on Merseyside and officials in the Treasury and the Department of Trade and Industry. The hon. Member for St. Ives painted a gloomy picture, but there is hope that the process of changing to a new system will be managed in a beneficial and helpful way.

I take issue, however, with people who argue that the Commission's proposals are the answer to the problem. The issue needs to be reviewed, as the hon. Member for Montgomeryshire (Lembit Öpik) suggested, because the membership of the new accession states means that there will be a statistical shift in the average GDP, thus affecting the 75 per cent. cut-off. Areas such as Merseyside, although we are not yet prosperous by any means, will find it more difficult to qualify for objective 1 funding. The same may be true of Cornwall, but I am not in a position to say. Cornwall will still qualify, and it could be under that formula. That is more doubtful in Merseyside's case, partly because of the dramatic improvement that has taken place in our economy since the advent of a Labour Government.

If we were to go along with the Commission's proposals as they now stand, I understand that—my right hon. Friend the Minister will correct me if I am wrong—for every £14 the Government put into the fund, objective 1 areas will get the benefit of £1. I know that the Liberal Democrats are generally pretty profligate with taxpayers' money—in theory, at least—but it is a really poor deal to raise £14 to get £1 back in return. If the hon. Member for St. Ives will forgive me, I do not think that the Commission's proposals are the most sensible way of conducting these matters.

I would like to make one more general point. I do not wish to appear ungrateful, but we now have a number of different funding streams for areas, such as mine and that of my hon. Friend the Member for Liverpool, Walton (Mr. Kilfoyle), that still have economic and social problems. The neighbourhood renewal fund, the new deal for communities, which touches on part of my constituency, and the single regeneration budget all
 
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provide additional resources and are very welcome, but there is a difficulty in that too many funding streams come into areas such as ours. There is some duplication, and certainly confusion. It would be sensible from the Government's point of view—and this is probably the intention—for them to bring all the funds together, package them so that the same imaginative range of measures as are being carried out already can continue, but focus them more sharply on the areas that really need the most attention. I hope that out of the productive discussions that are going on, we can achieve that.

I now wish to make some Merseyside-specific points. I will be brief, because I think that my hon. Friend the Member for Liverpool, Walton will add to them. My constituency and Merseyside have benefited enormously from objective 1 funding. The local college, Knowsley community college, has sites in Knowsley, South and in Kirkby, in my constituency, and it has received enormous assistance from objective 1 for courses and other developments. We have transport improvements, and investments in industry and in the North Mersey business park, which my right hon. Friend the Paymaster General visited recently. That has enabled many small businesses to take off in a sheltered and helpful atmosphere. An awful lot is being achieved already, particularly in Knowsley and in parts of Sefton. I pay tribute to the contribution that local government has made towards that, because it has been enormously helpful in those areas in particular.

The hon. Member for St. Ives referred earlier to Liberal Democrat Merseyside, but I have to tell him that only part of Merseyside is Liberal Democrat, and in terms of objective 1, it is the worst performing part. My hon. Friend the Member for Liverpool, Walton will probably bring more examples to bear if he is fortunate enough to catch your eye, Mr. Speaker, but I shall name three projects that have received support from objective 1. As a result of the actions of the Liberal Democrats in Liverpool, two of them will never see the light of day.

The first is the prestigious Kings Dock waterfront development, which might have brought a football club to the area. It would certainly have provided a stadium for concerts, a facility sadly lacking on Merseyside. There was a great deal of attention in the media, and a great deal of spinning on the part of the Liberal Democrats in Liverpool, but where is that project now? There will be a development on the Kings Dock, but it is much scaled down. The Liberal Democrats squandered the opportunity.

The fourth grace was supposed to be a prestigious piece of architecture to go alongside the Three Graces on the waterfront on Merseyside, which have a worldwide reputation. Much money was spent and there was a great deal of objective 1 involvement. A design competition was held and an imaginative futuristic design was selected. It might not have been to everyone's taste, but it was an important venture. Where is it now? Scrapped. No fourth grace. A lot of money was spent and there was a great deal of European commitment to it—but Liverpool city council, Lib Dem-controlled, failed to deliver.

The project that affects me the most is the tram scheme. Labour-controlled Merseytravel has a proposal, which will still be implemented, to link
 
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Liverpool city centre with Kirkby in my constituency—a hugely important development, not only in terms of transport but in terms of economic development. Every area that it goes through is a Pathways area, which under objective 1 is designated as the areas under most stress. The scheme is brilliantly designed. Who nearly wrecked it? The Liberal Democrats on Liverpool city council, by arguing, among other things, about whether the stanchions to the tramline in William Brown street should be black or grey.

The scheme, which had objective 1 money from Europe, was nearly wrecked. I believe the Liberal Democrats in Liverpool wanted to wreck it because they wanted it to go along a different route. They did not want it to go through the poorest areas, but through the leafiest suburbs, where they are gathering votes. Although we are grateful for the work that the Government are doing and for all the assistance that we have had through objective 1, I hope that the Minister will keep a careful eye on the capacity of the Liberal Democrats in Liverpool to squander those benefits and make the whole region a laughing stock.

6.47 pm

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