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3.40 pm

Mr. Stephen Crabb (Preseli Pembrokeshire) (Con): It is a pleasure to participate once again in the annual, not-quite-St. David’s day debate on Welsh affairs, and it is a privilege to follow the former Secretary of State for Wales, the right hon. Member for Neath (Mr. Hain), who was economical with the time allocated, and made an extremely important point about the importance of home-grown, Welsh-produced television for an English language audience in Wales.

The backdrop to the debate is, as right hon. and hon. Members have already said, the deteriorating economic picture facing Wales, the UK and the entire world. I was still a member of the Select Committee on Welsh Affairs when it began scoping out its inquiry into the globalisation report, which is one of the background documents to the debate. The economic scenario that we were considering two years ago seems very different to the one we are facing now. Looking back, it is interesting to note that what many of us regarded then as underlying strengths of the economy now look illusory, built as they were on piles of unsafe, risky debt.

The report also highlights the fact that what hon. Members from all parties recognise as underlying continuing weaknesses in the Welsh economy now look even more troubling and disturbing. I am thinking of the growing pool of people not in education, employment or training, the persistent problem of worklessness and a rate of people claiming incapacity benefit in Wales that is higher than the national average. Some deep-seated economic issues have to be tackled, and the current economic downturn makes that more difficult.

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It was interesting and useful to hear the Secretary of State outline all the measures that the Government and the Welsh Assembly Government are taking to assist Welsh businesses, but I reiterate the point that I made earlier. The data that we are seeing from Wales so far do not suggest that the Welsh economy is any more resilient to the downturn than other parts of the UK. I am thinking, for example, of the recent RBS purchasing managers index report, which is a monthly monitor of the state of business activity in Wales. The most recent report shows the eighth consecutive month of a significant contraction of private sector business activity in Wales, which is very concerning.

At the end of January, the First Minister of Wales, Rhodri Morgan, said that he had “no idea” when the recession would end. That is probably a more realistic assessment than the one underpinning the pre-Budget report in December, which forecast the UK effectively bouncing out of recession six months from now. No one would regard that as a realistic economic forecast now. The truth is that we do not know when the recession will end, and it could be a long haul indeed for the Welsh economy and Welsh businesses. We all hope that better times lie ahead, however, and fundamental to that, and to reorienting and rebalancing the Welsh and UK economy, is focusing as never before on world-class skills and education. That issue has been flagged up already, and it was good to see that skills featured strongly in the Welsh Affairs Committee’s report on globalisation.

In the time that I have, I would like to make a few brief points, the first of which concerns further education. That was already highlighted by the powerful speech of the hon. Member for Ceredigion (Mark Williams), who spoke about some of the pressures facing the further education sector in Wales. The umbrella body for further education colleges in Wales, fforwm, predicts that about 450 jobs will have to be lost from further education colleges in Wales in the next 12 months as a result of the cut of about £3 million that is being made to further education this year. At a time when we need to focus even harder on the skills agenda to help the Welsh work force adjust to the challenges of the recession, the further education budget is actually being cut. My local college, Pembrokeshire college, is consistently the most successful beacon award winner in the UK, having notched up seven beacon awards in the past six years as recognition of its innovative and effective approaches to further education. In the next 12 months, there will be a 1 per cent. reduction in its budget at a time when it should be expanding the courses that it offers and the skills training that it delivers to the people of west Wales. That picture in my constituency is replicated right across Wales, with further education colleges having to make cuts at a time when they should be thinking about how they can expand services to help their local areas.

Another issue flagged up in the report on globalisation was the importance of Welsh exports. There has been something of a success story in recent years. In his evidence to the Committee, a Trade Minister said that the Welsh economy had been a particular beneficiary of globalisation, with the value of Welsh exports growing by half between 1998 and 2005, almost twice the rate of the UK as a whole. He cited specialised electronics,
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technology, aerospace and the service sector as areas in which Wales had a comparative advantage relative to other parts of the UK.

We celebrate the growth in exports from Wales, but if we dig a bit deeper into the figures and drill down into what is driving that growth, the picture does not look quite so rosy. According to the most recently released statistics, in the previous 12 months the value of Welsh exports had grown by £1.3 billion on the year before, up from £9 billion to almost £10.5 billion. That looks great on the surface, but when we drill down into those figures we see that that growth in value was driven to a significant extent by inflation of the oil price, as Wales is a significant exporter of refined petroleum products from the two major refineries in west Wales. When we strip out the effect of $150 barrels of oil and the increase in the price of refined products, we see that there are challenges to be addressed in increasing export volumes from various industrial sectors in Wales. Perhaps the picture is not quite as positive as we are led to believe.

The Committee noted in its report that it was disappointed by the achievements so far of International Business Wales, the arm of the Welsh Assembly Government that is seeking to boost trade, particularly with China, secure inward investment and expand exports. Much more work needs to be done at UK and Welsh level on considering how to encourage Welsh businesses to take advantage of parts of the world that are still experiencing economic growth, such as India, China and south-east Asia. That is a major challenge.

A point that was not highlighted in the Committee’s report, but that is relevant to the discussion of the economy and globalisation, is foreign language skills. There has been a disastrous decline in the number of Welsh young people coming out of school with any meaningful qualification in a modern foreign language. Back in 2002, the Assembly Education Minister, Jane Davidson, said at the launch of the Assembly Government’s national modern foreign languages strategy:

That is great rhetoric, with Assembly Members talking up the importance of modern foreign languages, but what has been the effect of the policies of the past five years? There has been a decline every year in the number of young people of 15 starting GCSE courses in French, Italian or Spanish, and an even sharper decline in the number of those gaining grade C or above in their GCSE two years later. There has been a UK-wide decline as well, but the figures for Welsh young people show that as a proportion significantly fewer pupils are coming out of Welsh schools with qualifications in those languages.

Does that matter? I believe that it does. There was a view kicking around some years ago that given globalisation, and with English being the language of Microsoft, perhaps it was not so important any more for people to be multilingual, and that the English language would suffice for doing business. That view has been proved
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false. Companies value people with language dexterity, and it is important for trading and business relationships to have people who can go into other cultural and national contexts and speak other languages. Welsh young people who do not have such qualifications and are presented with opportunities such as the ERASMUS programme—the EU-funded exchange programme that enables students to spend a year or a term of their university course in a European university—will find that such options are not open to them because they do not have A-levels or good GCSEs in modern foreign languages.

Those are the points that I believe are relevant to today’s discussion.

3.50 pm

John Smith (Vale of Glamorgan) (Lab): I am grateful for the opportunity to speak in the annual Welsh affairs debate. We do not have many opportunities in the House nowadays to discuss Welsh issues exclusively, so the debate is welcome.

As previous speakers have said, our debate today takes place against the backdrop of a serious global economic crisis—possibly the worst international financial crisis in the past 100 years. I would therefore like, in the short time available to me, to refer to three projects in my constituency, but not parochially, because they all have valuable strategic Welsh importance. I want to use today’s opportunity to draw the House’s attention to several issues surrounding the projects.

The Conservative spokesperson has already mentioned the first project. It will come as no surprise to hon. Members when I refer to the defence technical academy in St. Athan in my constituency. It is progressing well. It was recently announced that Sodexho is to be the equity partner, replacing Land Securities Trillium, which had to withdraw because—let us make no bones about it—of the financial crisis. However, in many respects, Sodexho is a better fit. Unlike its predecessors, its core activity is facilities management, and it has been involved in the scheme from day one. It was always involved, but it has just become a 50:50 equity partner.

The Minister for the Armed Forces made a statement in the House, saying that the negotiations were progressing well and were on track. A clear timetable is developing. A detailed planning application for the scheme will be submitted in May this year and construction will commence around August next year. That timetable is important, because we have lost time in the past two years, mainly because the project is so large and complex. It is the biggest single Ministry of Defence investment and its importance for Wales cannot be overestimated.

The project will provide 5,000 direct jobs and train annually 25,000 service personnel from all three services. It will provide a defence training strategy in some of the most sought-after skills in the world—technical, engineering and information technology skills. I have always argued that the real value to Wales as a whole—not only to my constituency—is not the 5,000 jobs or the £12 billion private finance initiative investment over 25 to 30 years, or even the revenue, which runs to tens of millions of pounds, that will go directly to the local economy, but the transformation of Wales’s reputation to that of a country that is a centre of technical and skills excellence. Our reputation for being dominated—still—by metal
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manufacture and mineral extraction can be transformed into a reputation for high value-added technology. That is the benefit: a change of reputation and an ability to attract inward investment.

I am delighted that a Command Paper was put before the House on Tuesday, offering a contingent liability of £40 million to prepare the plans for this year and the design to get on with the construction next year.

Mr. David Jones (Clwyd, West) (Con): As the hon. Gentleman will know, we on the Conservative Benches also strongly support the St. Athan project. Does he agree that one of the key benefits of St. Athan will be to improve the perception of the military as a career for young people, with the high-quality jobs that if offers, and in particular as a career for Welsh young people? Does he agree that, today more than ever, going into the military is a good, attractive career for young Welsh people?

John Smith: I agree with every word that the hon. Gentleman just said. Indeed, he should forgive me if I have not referred to that point, because the overriding benefit of the project will be to improve training in the military. Perhaps I should remind the House that, unlike now, every technical qualification that will be achieved at the new academy will be a civilian-recognised qualification. We will be producing engineers for the future, including civilian engineers, so I accept the hon. Gentleman’s remarks. We also had all-party support, which in my view is one of the reasons why we won the bid in the first place.

Lembit Öpik: I applaud the cross-party work that the hon. Gentleman has done to secure those jobs. Does he agree that one of the opportunities for Wales will be not to repeat the errors at Deepcut Army barracks—I understand that they are being shut down, with some of the work perhaps coming to Wales—where Cheryl James, the daughter of one my constituents, was, I believe, murdered?

John Smith: Of course I agree with that.

St. Athan has been a huge success story for Wales and for Welsh politics. We won the bid because we were united across the parties and because—let us be clear about this—ours was the best bid. However, I must sound a rather disconcerting note this afternoon. The Command Paper was presented to the House on Tuesday, but—I have given notice of this to the hon. Gentleman involved—it was blocked. An obscure procedural motion was used on Tuesday on a point of order to block the contingent liability of £40 million. The process cannot be stopped, but the effect of what was done on Tuesday could be to delay a recession-busting project that is vital for our country.

I am sure that every Welsh Member of this House will condemn the hon. Member for The Wrekin (Mark Pritchard). I understand why he objects to the scheme: because he lost the bid. I understand his protesting, but what is reckless and unacceptable is his bid to block the progress of the scheme. It is important that we move ahead with the planning in May. I call on all hon. Members to condemn his action. I am afraid that I must say to Conservative Members in particular: for goodness’ sake, bring some influence to bear on him, because he is delaying a vital project.

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Mr. Crabb: I understand the hon. Gentleman’s passion and commitment to the St. Athan project. We would all recognise and applaud that. However, it is deeply unfair of him to talk in such terms about my hon. Friend the Member for The Wrekin (Mark Pritchard), who is not here and who does not have an opportunity to defend himself.

John Smith: I gave notice—I have been in the House long enough to realise that I should do that. What I am doing today I do with a heavy heart. I have never done it before, but the project is too vital to play silly political games with it. The future of Wales is at risk.

Daniel Kawczynski: As the neighbour of my hon. Friend the Member for The Wrekin (Mark Pritchard), may I say that he is an assiduous constituency MP and works extremely hard? As Opposition MPs, it is the responsibility of us all to scrutinise Government decisions.

John Smith: We have an overriding responsibility to behave responsibly. I will leave it at that, because I gain no personal benefit from making such comments, but it is important that I should make them today.

The second, related issue that I wish to raise is about an important piece of transport infrastructure: the M4 link road to Cardiff international airport—that is, to Wales’s international airport. That has a bearing on the technical academy, because although we will not lose the academy if we do not get the timing for that road right, we might lose some of the benefits that could come to Wales. The onus is on us to maximise all the benefits from the investment, to ensure that Welsh people and Welsh businesses benefit first from the huge opportunity that is coming our way. We must get the transport links. Businesses in Pembrokeshire and west Wales will benefit, as will businesses in Monmouth and mid-Wales. We must get the transport infrastructure right and the M4 airport link road is a crucial factor in it, because it will serve the defence technical academy, and it will serve Barry—the second largest town in Wales—as well as providing a link to the airport.

A decision is imminent. We have had the public consultation and the Welsh Assembly Government’s Deputy First Minister will take a decision shortly. The biggest decision to date has been about which route to choose. It is controversial—it will affect local people, so there is a lot of local concern about the impact on people’s quality of life—but the decision on the route of the direct link to the airport is crucial. I call on the Minister to use all his influence with the Welsh Assembly Government to ensure that the decision is taken, and taken quickly.

I am deeply concerned that there may be prevarication and second thoughts about the strategic importance of this road; we should be in no doubt that this link road is crucial. We will never have a country seriously recognised throughout the world unless we have a serious international airport that provides comprehensive scheduled flights across the world. Air travel is still the cutting edge of business communication, even in comparison with broadband—I accept everything said about it earlier—and Wales must have a proper international airport. What we have now is a holiday charter airport; it is growing and doing well, but as the aviation White Paper said, it has a long way to go. This road is an absolutely necessary
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condition for the growth and expansion of Cardiff international airport. It may not be a sufficient factor, but as I say, it is absolutely necessary.

I flag up that issue because I hope that we will not make the mistakes of the past by thinking that some funding for a few extra routes or a few extra slots to European cities will provide us with the strategic advances that we need for the airport’s future. The entire business community supports the road: the CBI in Wales, the Federation of Small Businesses, the Cardiff business club. Indeed, there is not a business in Wales that fails to recognise the importance of strategic access to the airport. It is supported by the planning authorities and it has been supported by every management of every company that has owned the airport over the past three decades.

It is a crucial issue—one of the most important road transport issues in Wales. We are really at the cusp, right on the edge, of making a decision on a matter that will drive the Wales international airport forward. The decision must be taken quickly and the right decision must be taken—that is, identifying what route to take, not having second thoughts about whether we need such access to the airport.

Finally, a third project based in my constituency is also of international importance. It has already been mentioned in earlier debates. I refer to the Severn tidal barrage. I am delighted that the Government have gone out to public consultation on the four shortlisted possibilities. I favour, as I have for the past 20 or 30 years, a large barrage from Lavernock Point to Brean Down. The scheme will provide 5 per cent. of the UK’s energy needs for the next 100 years, and it could provide the entire—I repeat, entire—energy needs for Wales for the next 120 years. The source is clean and renewable, and once the structure is there, it is cheap. We have a natural asset on our coast—at 42 ft, the highest rise and fall of tide in the world—so we can use our human ingenuity to harness the power of that tide. That will not only provide us with a cheap and environmentally friendly source of energy for our country, but contribute to the overriding threat to the world of climate change. Of course we have to consider carefully the environmental implications of such a project, and we have to carry out the feasibility study, but our overriding concern must surely be ensuring a source of energy for Wales for the future.

4.5 pm

Adam Price (Carmarthen, East and Dinefwr) (PC): It is a pleasure to follow the hon. Member for Vale of Glamorgan (John Smith), who is clearly proving an effective advocate for his part of Wales. I would like to focus on the economic crisis, which was at the heart of many of the speeches that we have heard. I particularly want to consider the role of banking and the effect of the crisis on Wales. In some ways, because we do not have an indigenous banking sector to speak of, we have been shielded from the direct effects, but of course we are dealing with the indirect repercussions of the banking crisis.

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