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Baroness Farrington of Ribbleton: My Lords, perhaps I may remind your Lordships that there is insufficient time to allow noble Lords to overrun the eight-minute limit allocated to each speaker. I have carefully checked the position with the Clerk. However, while speaking, perhaps I may declare an interest as someone who would use one of the railway lines to which the noble Lord just referred.

5.5 p.m.

Lord Griffiths of Fforestfach: My Lords, it is a great pleasure to take part in today's debate on Wales. It is indeed a timely debate and, like others who have spoken, I should like to express my gratitude to my noble friend Lord Crickhowell for introducing the Motion. It is also a pleasure to follow the noble Lord, Lord Geraint, whose wisdom and knowledge of Wales I greatly admire. I know very little about farming. However, after listening to noble Lords this afternoon who do know something about it, the recent behaviour of farmers became readily understandable to me. One does not think of farmers behaving in that way.

As the Motion is so far ranging, I should like to confine my remarks to the good governance of Wales and, in particular, to some issues raised by the referendum vote on devolution and the proposed national assembly for Wales. The reason I said that it is such a pleasure to take part in the debate is that I strongly support the proposal to establish a national assembly for Wales. I must be frank and say that, in the past, I have had reservations on devolution: that is partly because it would be the creation of another tier of

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government; partly because it could easily become a body dominated by old Labour; and partly because I thought that it could put in jeopardy the ultimate sovereignty of the Parliament of the United Kingdom.

However, I have changed my view, although I recognise that there are still issues which need to be addressed. In my judgment, the critical question which must be answered is: are the people of Wales better governed with an assembly than without one? I believe that they are for a number of reasons. First, the assembly will provide a better and more informed debate on Welsh issues because there will be more people involved in that debate with first-hand knowledge of Wales and there will also be more time than there is at present to discuss such issues. In addition, the assembly will also mean that all those unelected bodies in Wales will be required to be more transparent and accountable than they are at present. I cannot help but think that that was one prospect which spurred on the movement for devolution. Most important of all, I believe that the very existence of an assembly at the heart of Welsh political life must strengthen the identity of Wales and its language which, in my judgment, are important, if not critical, for the preservation of Welsh culture.

Like my noble friend Lord Crickhowell, I believe that we on this side of the House, despite the small size of the majority in favour of a Welsh assembly, should accept the result and not seek to re-open the debate over devolution. Naturally I would have been happier if the turnout had been higher and the majority greater. But in view of our poor showing in Wales at the previous general election, even if we thought it right to do so, we frankly have a rather weak basis on which to mount an opposition platform. I believe therefore that Wales has for too long been a kind of sidecar to England and has gone in a direction and at a speed which was not entirely reflective of the wishes of Welsh people. This, I believe, is an historic opportunity to put that right.

However, while I strongly support the Government in their proposals to create a national assembly for Wales, that does not mean that I do not have real concerns. One is that in the current euphoria over devolution it is important to recognise the limits of what the assembly can achieve according to what I have read in various documents and heard in debate. Take, for example, the issue of job creation. Jobs are most effectively created in free markets in which investors and business people are prepared to take risks and are allowed to make commercial decisions with minimum regulation, restriction, bureaucracy and so on. The evidence we have from the United States--the most successful economy in the world in terms of creating jobs--is a good example of that. Of course the Government--in this case Westminster--have an important role to play in maintaining low inflation, low interest rates and low taxes; but it is business left to itself which creates jobs.

However, as I read the White Paper, and the role it envisages for an enlarged WDA--what it calls "the new economic powerhouse"--and the role of the assembly in laying out the new economic agenda for Wales, I could not help feeling that it was government not private enterprise which was to be the engine to create jobs and prosperity in Wales. Frankly, I have to say that

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I am sceptical of that. It seems to me that the one thing which the Welsh Assembly can do is to raise standards in schools and to put something in place--which we have never succeeded in doing in these islands of ours--to replace the old apprenticeship system. There it could really help in job creation and wealth creation, but I feel that the role of the assembly is limited.

Another concern I have relates to other forms of devolution: grant-maintained schools, hospital trusts and housing action trusts, all of which I was intimately involved with when I was head of the Prime Minster's policy unit. With all their shortcomings, I nevertheless believe that they have great strengths at least partly because they were an exercise in devolving power and responsibility to local communities and those more closely involved in schools, hospitals and housing. However, I recognise also that striking the right balance between the powers of the assembly, the powers of local government and the powers of these other bodies is not easy. In the White Paper there is an absence of discussion of that; there is much too much emphasis on the power of the assembly in partnership with local government.

My final concern has to do with the impact of the assembly and the Scottish parliament on England. We dare not underestimate the historic significance of the effects of Scottish and Welsh devolution on the United Kingdom. These proposals mark a decisive step forward but it is into uncharted territory. The dangers of an English backlash need to be thought about seriously. I am not sure that I fully understand the Government's proposals to establish regional development agencies and regional chambers. To the extent that I do, I doubt whether they fully answer the problem I raise. The transparency in calculating the block grant is welcome; but answering the problem may well involve more radical proposals regarding England in which for the first time we may have to face up to the issue of federalism.

I conclude by saying that despite these reservations, I still see great value in the national assembly. I believe that Welsh people are naturally rather conservative. I fully expect that through the elections to the assembly we on this side of the House may be able to capture that sentiment not only in the interests of our own party but also in the interests of Wales.

5.15 p.m.

Lord Elis-Thomas: My Lords, I, too, endorse the thanks that have already been conveyed to the noble Lord, Lord Crickhowell, for initiating this debate. We have had a wide-ranging discussion of social, economic and governance aspects. I shall throw in a few comments about sustainability and the environment because I think that relates to them all. Before I do so, I thank the noble Lord, Lord Griffiths of Fforestfach, as it was a great pleasure to be present at the public confirmation of his conversion. I mean that seriously because to have the head of the policy unit at No. 10 extol the virtues of the national assembly while also warning us of the practical problems that we face in relation to the role of Welsh business is an important contribution to the debate. I thank him for it.

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It will be no surprise to your Lordships that I want to support what has been said on behalf of my older and newer neighbours in the farming industry in my previous constituency, Merionnydd Nant Conwy. I wish to support what has been said already in relation to agriculture. We are now of course back where we were 23 and 24 years ago with the crisis at Holyhead. Those of us who have been concerned at the development of commercial relationships between Ireland and mainland Europe across Wales are deeply saddened by these events. But we must understand that we must support our farming community which is suffering a reduction of 37 per cent. in farm incomes according to official figures last week. Indeed the reduction is 47 per cent. if we include the family labour within the industry. The Government must address this issue urgently.

We know what the problem is. It concerns the strength of the pound, the green pound mechanism and the UK rebate. The noble Baroness, Lady Thatcher, when Prime Minister, negotiated rebate. What we now see is a direct consequence of those rebate arrangements. The UK Government cannot say, on the one hand, that they are proud of the rebate understanding achieved with other Community countries while at the same time denying British farmers the opportunity of competing on the same basis in terms of the level of income.

Currently the Irish Government are paying £25 million to their beef, dairy and cereal farmers, with a further £68 million coming through the European Union. Where is this Government's responsibility for one of our most important of managed industries? Agriculture, after all, is a managed market. The role of the public sector both at member state level and European Union level in managing this market is absolutely crucial. The member state of which we are a part--the United Kingdom Government--cannot deny its responsibility. Those Ministers, including the Prime Minister, who lecture Welsh farmers about their moral responsibility should look to their responsibility. There is no need for that kind of lecture. The people who work in agriculture in rural Wales are people of the highest moral calibre whose contribution to maintaining the integrity of our rural life should not be gainsaid by any government. The Government should realise the depth of this crisis.

I pay tribute to the Secretary of State for Wales because he has tried to negotiate in Cabinet and certainly in discussion with farmers. Mr. Ron Davies, as Secretary of State, laid the foundation stone of the magnificent National Botanic Garden of Wales at Middleton Hall in Llanarthne in Carmarthenshire on Friday. While standing in the middle of that magnificent Carmarthenshire countryside, where I hail from, the Secretary of State said that the landscape was a symbol of the important contribution that Welsh agriculture has made to the environment. He indicated his commitment to the environmental contribution of the farming industry. I hope that his colleagues in Cabinet will respond in a similar way. I mention the National Botanic Gardens and the environment because they link with my other theme; namely, the need to look for sustainable development in the context of the Welsh economy and

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society. That is unfortunately missing from the Government of Wales Bill which has had its Second Reading in another place.

It is important for us to be clear on the issues of inward investment. We are concerned about the recent discussion in the media on the concordat between the industry department and the Welsh Office in relation to inward investment. There must be a strengthening of the existing COP procedures in terms of overseas promotion--we understand that--but there must also be a clear balance of regional interests in the whole field of inward investment. The role of the WDA in this area must not be reduced in any way as the new assembly progresses. That role of inward investment relates also to the whole question of sustainable development and the effective balance of such investment both geographically and in terms of sectors of industry. I emphasise the importance of the environment technology industries. We have recently seen the important growth at Bridgend of one of the industries related to solar cellular technology. Its importance to the future of the Welsh economy cannot be overemphasised.

Sustainability also includes the need to emphasise a general environmental duty on the assembly. When the assembly is established it must have a remit not only for the social, economic and cultural well-being of the Principality but also for those environmental overviews which relate clearly to the European Union and its increasing environmental obligation for the whole of Europe as we move towards enlargement.

That brings me neatly to the issue of governance. I was not a little pleased to see the form of words by which the assembly is now being christened. Noble Lords will remember our debate on the Third Reading of the referendum Bill on 29th July when we discussed the nomenclature of a national assembly. I received wide support from all sides of the House. I am grateful to noble Lords for their support. We now have such a description.

I move from the nomenclature to the reality. After long and careful consideration, I have decided to come down in favour of Swansea. That should not surprise many of your Lordships who know that I was born in Carmarthen. I believe that a national assembly has to be a national institution. I think of a national assembly in that magnificent Guildhall building, with the wonderful surrounding scenery of Swansea Bay, but with the important links of technology throughout Wales and other public centres. I am impressed by the case for Aberystwyth to be the on-line equivalent of the Library of Congress for the national assembly. I am impressed by the suggestion of the Secretary of State in the consultative document that there should be centres in Aberystwyth, Bangor and even Cardiff and Mold, to provide links with the assembly. All this is at a capital cost of £10 million and a running cost of £2 million to £2.5 million.

More than that, I am impressed by the commitment of Swansea. I walked through Swansea the other Friday, by accident or design, and there was Vivienne Sugar, the chief executive of the City of Swansea, signing people up for a petition to have the assembly in

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Swansea. Although I have great respect for both the chief executive and the leader of Cardiff, I cannot imagine them standing in shop doorways requesting signatures for petitions.

That indicates to me the enthusiasm of Swansea. Swansea is only 45 minutes by high speed train from Cardiff. It has all the necessary links and the building. It will be a sign that we are not about creating a 19th century nationalist state in the City Hall in Cardiff, with its magnificent statues of Llywellyn, Owain Glyndwr and the rest of them. I have no interest in creating a Wales of the 19th century. I want a Wales of the 21st century. Swansea seems to me to be its capital.

5.23 p.m.

Viscount St. Davids: My Lords, I thank my noble friend Lord Crickhowell for giving us this opportunity to debate Welsh matters this afternoon. I ask for your Lordships' indulgence if much of what I have to say lies outside the intended interpretation of the Motion, but I would not make this speech if I did not believe it to be of importance to Wales, and to one of its institutions in particular. I have to declare an interest as I am both a member of the Council of the University of Wales, Lampeter, and a governor of the Welsh College of Music and Drama.

The Prime Minister has put at the centre of government policy "education, education and education". The former Prime Minister, my right honourable friend Mr Major, wished to create a "classless society". In Wales we have long known that the classless society is born in the classroom; that the pathway to personal advancement and fulfilment is through education. Thus in Wales we have an education system in our primary and secondary schools and in our universities of which we are justifiably proud. Wales is, of course, also the land of song, of music. These two themes, education and music, take me into the heart of what I want to say today.

In the wake of the recent Oxford and Cambridge debate in your Lordships' House, no Member need be embarrassed by special pleading; and my plea this afternoon concerns one of our national institutions-- a plea from poverty and not from wealth. I know that you will all share my dismay when I tell your Lordships that I have to call into question the financial viability of the Welsh College of Music and Drama. Unless the Higher Education Funding Council for Wales has a radical change in its funding policy, the Welsh college will not survive beyond the period for which students have already been enrolled. As our national assembly opens its doors, so will the Welsh college close its doors and thus Wales will enter the new millennium with a new system for its government but without the ability to teach that for which it is most famed.

To start my story at its beginning requires a brief history of the college, for in that history lie the seeds of today's tragedy. Founded in 1949, the college was at first situated in Cardiff Castle and moved to its present purpose-built premises in 1974 when its administration passed from the City of Cardiff Education Authority to the County of South Glamorgan. During 1991-92 it was

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controlled directly by the Welsh Office, and since 1992 the college has been funded by the Higher Education Funding Council for Wales. It is from this period that our problems arise; they have their origin in the comparison that the funding council made when deciding upon the level of funding per student.

The cynical, or perhaps the realist, would say that the council chose the cheapest option when it decided upon Rose Bruford, drama, and Trinity College, music. The most direct comparison would have been with the Royal Scottish Academy of Music and Drama. In the current year the Welsh college receives £4,600 per funded student; the Royal Scottish Academy, £5,989; the Royal College of Music, £8,230; and the Royal Academy of Music £10,327. The two London colleges have around 400 students each and the Welsh college 494. To be fair, the two London colleges do not also teach drama. Your Lordships will note that the Welsh college receives £1,389 per student less than the Royal Scottish Academy, equal to 30.2 per cent. of its present grant from the funding council.

The history of the college shows that at no time could any surplus fat have been built up. Over the past four years the college has achieved efficiencies against the RPI of 18 per cent., a period in which the income per student has fallen by 2.4 per cent. The total budget for the current year is £3,695,000 of which the funding council provides £2,268,000. If the funding council were to add £250,000 to its current grant and maintain the total in real terms, the Welsh College of Music and Drama would survive and flourish. Without that commitment, I would have to advise my fellow governors that the college should have no commitment to a student beyond the year 2000.

The first call by the accountants in the funding council to merge has been heard. Little do they understand the nature of an institution that teaches the playing of music or the teaching of the dramatic art. No merger of a conservatoire into a university has ever worked. If the funding council doubts this assertion, it should study the recent Australian experience and also talk to those who teach the performance of music and to those who teach the theory and history of music as an academic subject. No, I do not suffer from the Mandy Rice-Davies syndrome. If I thought that the college would survive within the framework of one of our Welsh universities, I would most certainly say so.

The loss of identity and the loss of mission will ensure a rapid decline in enrolment. Let us not forget that students are intelligent young people who will now have to make a substantial contribution to their study. Why should they choose to attend a college which is funded at a lower level than one in England or Scotland and one that a merger would define as a hybrid?

I pray that the noble Lord, Lord Williams of Mostyn, does not think for one moment that I blame the Government, for this is a problem which they have inherited. I know that what I have said about the college will cause him personal grief, and I wish to place on record the great service that the noble Lord has given to both the Welsh College of Music and Drama and the University of Wales. The service that I ask of him today is to bring these matters to the personal attention of his

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right honourable friend the Secretary of State. Your Lordships are among the foremost opinion formers in Wales. I ask you, too, for your aid.

I thank your Lordships for your indulgence and again apologise to my noble friend if I have used today's debate for a purpose other than that for which it was intended.

5.30 p.m.

Lord Harlech: My Lords, I am grateful to my noble friend Lord Crickhowell for initiating this most important of debates. The subject is one about which I care deeply. Before I continue, I should be most interested to know from the Minister whether the Welsh Office has intentions in progress of making cross-party appointments to the committee on the Welsh assembly; and if so, how advanced those plans might be. Perhaps he will write to me.

In principle, I shall restrict my contribution to the rural economy of Wales, my interest being declared as a farmer and landowner in the Principality. I was born there; I live there; and I shall probably die there.

The rural economy of Wales is, by definition, an inter-connected socio-economic structure consisting of farms, markets, towns, transport, goods and services, education and health. Enormous numbers of citizens are affected.

A sustainable economy--social progression--relies on an inherent sense of security that all businesses and the people affected thereby are reasonably assured of profitability as a result of a policy which initiates their long-term trust in the investment they make. Assured security and profitability, my Lords. Tentative support is not the right way.

Let us take, for example, the slow and tortuous decline of the British fishing industry, or of mining, and the effects on communities. I do not say that this would happen, but it could be argued that the removal of subsidies and support might give rise to an economic-driven effect of, for example, much larger agricultural units, cheaper land and property prices, and efficiency without support. Or it could be argued that a drip-fed system of support would not sustain, but would deplete, an economic system. If, for example, it had been judged prudent last century to invest in support of, for instance, the wheelwrights industry, then making tens of thousands of wooden wheels--the point is obvious; the metaphor is clear--it would now be an embittered and depleted profession, and therefore extinct.

I therefore urge that the jeopardy to profits and income, indeed to social cohesion, means that today we must, and will, make clear, workable policies which encourage human endeavour rather than defeat it by marginalisation, and which allow the investments of today to reap benefits tomorrow for a proud people and a beautiful country.

5.33 p.m.

Lord Thomas of Gresford: My Lords, I thank the noble Lord, Lord Crickhowell, for introducing this vital debate. I welcome his commitment to making the assembly work and to accepting the result of the

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referendum. I join with him in hoping that the assembly will be a strong assembly and that there will be clarity of responsibility and members of quality to serve in that assembly.

The noble Lord, Lord Elis-Thomas, made a pre-emptive strike for Swansea. The people of Cardiff should realise that if you do not live in, or come from, Cardiff, there is no particular emotive drive for the assembly to be situated there. They should bear that in mind. No doubt the noble Lord, Lord Crickhowell, will put in a plea for Crickhowell House in the bay there, which I understand is one of the proposed sites.

I have to disagree with the noble Lord, Lord Thomas of Gwydir. It causes me some pain to do so since I have the same warm regard for the noble Lord as I am sure all noble Lords have, and I recognise his great contribution to Wales. He spoke about the value of the assembly. It occurred to me that had there been an assembly where the problems of Welsh farmers could have been openly discussed and openly aired months ago, where the crisis could have been foreseen, we should not all have been taken by surprise when farmers found that the only way in which they could draw their plight to the attention of the media in this country was to throw hamburgers into the harbour at Holyhead. I know that those farmers, led by a friend of mine, Peter Rogers, would not wish to behave in that way. It was a course to which they were driven. As the noble Lord, Lord Griffiths of Fforestfach, said, now it is readily understandable. Had there been an assembly the situation would have been understandable months ago and the problems faced by those farmers would have been aired to the public as a whole. They were discussed by the two hill farmers who surround me, the noble Lords, Lord Hooson and Lord Geraint. I must congratulate the noble Lord, Lord Hooson, on obtaining a first position at the Royal Welsh Agricultural Show winter fair last week. I should tell your Lordships that a beast reared on the pastures of the noble Lord, Lord Geraint, also obtained a first. It will not surprise the House to know that the beast in the case of the noble Lord, Lord Hooson, was in the lightweight division while that of the noble Lord, Lord Geraint, was in the heavyweight division.

I do not share the picture presented by the noble Lord, Lord Crickhowell, of the current situation in Wales. It is rather like reading in the English press an account of a Wales-England game: you wonder whether the writers were actually watching the same game! Unemployment is consistently higher in Wales than the UK average. As was stated earlier, the GDP per capita is 83 per cent. of the UK average, a decline of some 5 per cent. since the Barnett formula was fixed. There are areas of prosperity, but they are patchy. They are to be found along the M.4 and A.55 corridors. Job creation and the safeguarding of jobs is urgently needed outside those areas.

Inward investment has played a vital role. One must congratulate successive Secretaries of State, the Welsh Office and the Welsh Development Agency on the enormous work that they have done in projecting Wales and obtaining that inward investment. However, the focus must not always be on inward investment.

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Certainly, that is important, but it is unlikely to continue for the foreseeable future, and for two major reasons. The first is the collapse of the tiger economies in the Far East and the need for those economies to rebuild themselves at home. The knock-on effect of bank collapses in Japan and the demise of large corporations in Korea is certain to engender a more cautious approach in most countries to investment abroad in places such as Wales. Even in Hong Kong--I am travelling there tomorrow--small cake-shops and large multi-stores owned by the Japanese have recently closed. So let us not expect that the Far East will come to our rescue for ever and a day.

The second reason is the weak-kneed approach of this Government to the decision on European monetary union. Toyota denies that that is the reason it has chosen to move to northern France rather than to expand in Derby. But is that truly correct? We have got rid of trade barriers within the European Union; but are we not erecting currency barriers, with all the uncertainties that they create? The strong pound is a disincentive to industry just as much as it is to agriculture.

Hence the vital need for the future economic powerhouse is to take decisions which will improve indigenous industry and put the necessary investment into that field. Investment is essential for creating the framework for development of indigenous industry; for reclaiming derelict sites and dealing with hazards thereon; for preparing the physical and industrial infrastructure; for co-ordinating local organisations and assisting in the setting up of businesses; and for communicating with training organisations to ensure that there is a skilled and adaptable workforce. No doubt that work will be carried through with the merger of the Welsh Development Agency, the DBRW and the Land Authority for Wales. The exciting aspect is that there will be a national assembly for Wales which will be able to give further focus, direction and leadership to that work.

The major priority of the national assembly will be to improve the economic prosperity of Wales. GDP per capita will be the touchstone by which the success of the assembly in this field will be judged. The noble Lord, Lord Griffiths of Fforestfach, need not fear. I believe that there will be a new self-confidence in Wales which will of itself encourage enterprising young people to come forward with ideas for the 21st century. But, as always with the entrepreneur, there must be support and guidance. They will need access to capital; they will need the help of the new economic powerhouse through its services, such as Business Connect, Source Wales, and so on. It is the creation of a new spirit of adventure in business in the economy which will enhance the identity of Wales and ensure a prosperous future for the Welsh people.

5.41 p.m.

Lord Roberts of Conwy: My Lords, there is no doubt that the entire House is grateful to my noble friend Lord Crickhowell for initiating this wide-ranging debate. I am personally very grateful to Members who welcomed me to the Front Bench and who participated in the debate.

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Not surprisingly in view of recent events, and particularly today's news from Brussels, agriculture has loomed large in the debate, almost every speaker having raised the subject. As the Minister acknowledged earlier, the farming community is very important to the people of Wales. Over 90 per cent. of our farms are livestock, and our farmers face hard times, with falling incomes as a result of the strong pound and the continuation of the BSE crisis. I hope that the Minister, who is shortly to reply to the debate, in his own eximious fashion, will be able to enlighten the House as to why the Government do not draw on the substantial Community funds which are available to help those farmers in greatest need, among whom, surely, the farmers of the Welsh uplands must figure prominently.

The contribution of my noble friend Lord Crickhowell to the development of the economy of Wales and the life of its people during his tenure of office as Secretary of State was truly immense, as I know well, having had the honour to serve under him throughout that time. I doubt whether that honour would have been given to me had I not served my apprenticeship as a PPS to my noble friend Lord Thomas of Gwydir when he was Secretary of State.

The initiatives which my noble friend Lord Crickhowell took and drove to fruition were astonishingly varied--social and cultural, as well as economic. But if I had to single out one achievement from the many to which he could properly lay claim, it would be the progress made during his time as Secretary of State in laying the foundations of the new Welsh economy and giving it the modern manufacturing base we are familiar with today. It was a difficult task, undertaken in difficult times, and Wales is greatly indebted to him for his indomitable zeal and spirited persistence in pursuit of his goal. Wales was the only region of the UK where the proportion of male employees in manufacturing rose and was higher in 1995 than it was in 1981.

No man can be paid a higher tribute than that his successors should follow in his footsteps, and that is what happened when my noble friend left office in 1987. My noble friend Lord Walker of Worcester, who brought his own inimitable talents, energy and flair to bear on the problems of Wales, was succeeded by my noble friend Lord Hunt of the Wirral, whom I am glad to see in his place. Both of them strongly promoted inward investment and sought to strengthen Welsh small and medium-sized businesses by encouraging their efforts to secure orders in export markets worldwide. Much the same policies were pursued by their successors, culminating in the huge Korean investment by LG in Newport. I very much hope that that projected investment is safe, in spite of the financial problems in Korea.

It is clear from the thumbnail sketch that I have given and from what others have said during the course of the debate that the main thrust of the Conservative government's policy in Wales over the past 18 years was to promote economic development on a sound and profitable basis. That was complemented by very substantial investment in infrastructure of all kinds.

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We had some solid success in those endeavours. Wales no longer depended for its prosperity, as it did in 1979, on heavily subsidised, nationalised industries which, as the last Labour government realised only too well, were becoming unbearably uneconomic and more anachronistic by the day.

None of us who participated in government during that time would claim that the transformation which we had promoted was complete. There was and still is a great deal to be done to improve the condition of the Welsh people. What we now fear is that the priority which we attached to that task has somehow been displaced by constitutional reform.

We had a foretaste of the constitutional debate in some notable speeches--by my noble friends Lord Crickhowell, Lord Thomas of Gwydir, Lord Thomas of Fforestfach and others. All I shall say on that issue is that we surely have to accept the referendum result. Even though the majority in favour was small, there was a majority in favour. A majority of one is enough. If I may put the opposite point of view, one thing is certain: the decision arrived at by the Welsh people in that referendum cannot be overturned.

It is obvious that the Government of Wales Bill, which the other place has been discussing for the past two days, will be the subject of considerable discussion in this House. I am also impressed by the fact that it will fully preoccupy the Secretary of State for many months to come, and possibly for years. Even assuming the successful passage of the Bill through Parliament that a large Commons majority and a manifesto commitment usually ensure, the implementation of the Bill and getting the assembly bedded down in proactive, worthwhile work will take a great deal of time. I am not sure that that is time which the Welsh economy can afford if it is to be improved as we all wish.

Many issues arose during the course of the debate and I hope that the Minister will be able to enlighten us as to the nature of the competition for inward investment between the regions in future and the concordat under central control by the Department of Trade and Industry. The position is unclear, to say the least, as the noble Lord, Lord Elis-Thomas, indicated.

We would also look for some comment on the future of the Barnett formula. Even the noble Lord, Lord Barnett, suggests that it may be time for Barnett formula mark II. I do not believe that he is totally inspired by an aspiration for political immortality when he calls for that formula. After 20 years the circumstances of the different regions have changed and the changes should be taken into account in any re-examination of the formula.

There is a great deal of talk about promoting the growth of indigenous business. I am all for that if it is done on a sound basis. We heard today at Question Time what the Government proposed to do about the comparatively low GDP in Wales. If this debate achieves nothing more than to instil a sense of urgency into the need to raise standards of living in Wales and the levels of prosperity among Welsh people, it will have been well worth while.

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However, with a lower rate of economic growth anticipated in the United Kingdom as a whole over the next three years, the prospect of declining support from European structural funds following enlargement of the Community and reduced inward investment from the Far East, to which the noble Lord, Lord Thomas of Gresford, referred, I am not sanguine about our prospects. As ever, I remain hopeful that things will turn out better than I feared. But one thing is certain. Wales will be clearly dependent on its own endeavours, on its own efforts.

5.52 p.m.

Lord Williams of Mostyn: My Lords, the noble Lord, Lord Crickhowell, made a remarkable introductory speech. As always, it was disciplined, focused and rigorous. I say it was remarkable because I found much in the content with which I could agree, and these are not the usual cosmetic thanks I offer to the noble Lord. It occurred to me that if the Welsh assembly had one-tenth of the ability and quality reflected in the speeches this evening, it would be doing rather well in its first year or two.

I entirely agree with what has been said. This is an extraordinary opportunity for a country. I take the noble Lord's words: confident and optimistic. It is an opportunity for which many people in this House and outside have worked for far longer than I. Ultimately everything depends on the quality of the membership. Whatever regime is adopted, after whatever degree of scrutiny in both Houses, it is the nature of the members which will matter.

I must hark back to what was said on behalf of the Government in a constitutional debate two years ago; that is, that we deliberately set our minds not to produce a consequence which would have been monolithic Labour. We know perfectly well the disadvantages of what had virtually become in many parts of Wales a single party regime. As the noble Lord indicated, the Conservative Party, despite having 20 per cent. of the Welsh vote in the last election, has no Welsh MPs. Under the present scheme, on any sensible construction of the model, if the Conservative Party obtains 20 per cent. of the votes for the new assembly, it will have 12 seats; in other words, a perfect accommodation between the number of votes and the number of seats.

I do not want to dwell on this, but there was a time when the Conservative Opposition were rather niggardly in their acceptance of what was undoubtedly to happen. It is not only for this evening that I welcome what was said by the noble Lord, Lord Roberts of Conwy. As long ago as early October he and I were interviewed on the same programme on Welsh radio. He said in early October--not a late convert--"I want to see an effective assembly properly run, efficient and really responsive." It is a great benefit to the constitutional arrangements of new Wales that we have the official constitutional spokesman for the Conservative Opposition from the Front Bench making his support as unambiguously clear as he did.

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We have an opportunity to run our affairs differently. We can use modern technology in the ways described generally by the noble Lord, Lord Elis-Thomas. There is no reason to be static; to have a system to which we are all accustomed on the Westminster pattern. Some would say--whisper it low--that the Westminster pattern does not always produce perfect solutions.

The major aspect of this evening's debate focused on farming. I reiterate what I said in answer to the noble Lord, Lord Roberts of Conwy, earlier at Question Time when time was short. We regard the interests of the farming community in Wales as extremely important. It is not the simplistic comment that jobs are involved; it is infinitely more important and subtle than that.

The farming community in Wales is a significant cultural underpinning; and the linguistic heartland of Wales in many areas depends on the farming community. They are decent and good people and one sympathises with what has driven them to their present unlawfulness. There is no one in government who does not sympathise. Your Lordships will rightly say that sympathy pays no bills.

I am obliged for the comment about the Secretary of State. He is taking forward discussions as vigorously as he can. The Secretary of State issued his statement deprecating unlawfulness. He met the farmers' unions and individual farmers. The discussions in relation to monetary compensation are still continuing. I am not in a position to give any conclusions. In any event, the Secretary of State for Wales, powerful though he is, has no open cheque book on every occasion. However, it is the fact, which I readily reiterate, that the Welsh farming community has an informed and engaged champion in Ron Davies. He is doing his utmost to see that a proper outcome is brought about.

Specific questions were asked in regard to transport links. The noble Lord, Lord Crickhowell, raised one. Proposals have been made for improving rail links between the south and the north. I take his cautionary point about road developments being destructive in environmental terms and being extremely expensive. But we welcome the suggestions that there will be improved rail links between north and south Wales.

It is the fact that the BSE crisis has been long running and that that has not been the responsibility of the present Government. However, we must deal with matters as they stand. It has been mismanaged in the past. The situation has been compounded by the strength of sterling and the consequences on the green pound compensation payments to farmers have been adverse. None of those matters can be overlooked and I do not overlook them for a moment. Nor do I pretend that as of this evening--10th December--when negotiations between various government departments are still continuing, I can offer any solutions. All I can promise, yet again, is that we take it extremely seriously. It is not just pounds, shillings and pence. It is much more important than that.

The noble Lord, Lord Aberdare, raised the specific question of the YMCA schemes, particularly in mid-Wales, south Wales and Glamorgan, of which I have more knowledge. He will be encouraged by two

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things. First, that type of voluntary scheme is one which we entirely endorse. The success rate--to put it in crude terms--is 98 per cent. plus in the sense that those who are assisted to receive the accommodation of which he spoke do not revert to crime and do not breach their probation orders.

I can give the noble Lord some comfort. We specifically took his point on board before he made it. In Clause 111 of the Bill the duty is laid upon the assembly to work with the relevant voluntary organisations and produce plans of the sort that he described. I hope that that is of relevance and of assistance to him.

The noble Lord, Lord Prys-Davies, raised specific questions about employment prospects in west Wales. I am able to say that an offer has been accepted today from Omega Air in respect of the base at Trecynon which will probably result in 400 to 500 new jobs in aircraft maintenance. That is another piece of good news. The noble Lord also referred to skill shortages. That is extremely important. We want to work in partnership with courier service companies, employers locally, education authorities and local authorities. We have to work co-operatively to attack this problem.

The noble Lord, Lord Hooson, raised the question earlier, when my time was more limited, of indigenous small companies. That is dealt with in paragraph 4.6 of the consultative document, An Economic Strategy for Wales, published in October of this year, I think to general welcome. It states:

    "Greater emphasis will ... be put on developing indigenous small and medium sized enterprises".

That point was touched on also by the noble Lord, Lord Thomas of Gresford. The document goes on:

    "This will be important in strengthening economic development throughout Wales, including in the more peripheral and rural areas where it is inevitably harder to attract inward investment".

As I understood the point made by the noble Lord, Lord Hooson, one cannot simply rely on the headline inward investment successes, many of which there have undoubtedly been. I paid tribute earlier, so I do not need to repeat it, to the work done by the noble Lord, Lord Crickhowell--

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