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Mr. Simon Thomas: Will the hon. Gentleman accept from me that the outline of the jobs available in the jobcentre in his area also applies to rural areas of Wales? Will he also accept that Ireland spent more than 38 per cent. of objective 1 money not on infrastructure but on skills training?

Mr. Rowlands: I am glad that the hon. Gentleman has confirmed my impression. In that case, how do we ensure that we do the same in Wales?

Mr. Paterson: Will the hon. Gentleman give way?

Mr. Rowlands: No, I want to deal with this point, and many other hon. Members want to speak.

We cannot afford to let the objective 1 money be dissipated and chopped up into little pieces to filter into the economy. We have to have a national programme. The Employment Service provides a national instrument for delivering that service. The Employment Service in Wales has been transformed since 1997 by the Government's new deal proposals. It has been transformed in spirit, character and personnel. It is extremely proactive--it may not be in Ceredigion, but it is in my area. It has changed from the old dole and benefit mentality to a proactive, exciting service. We should build on that experience and use objective 1 money for the Employment Service.

I am sorry that the right hon. Member for Caernarfon (Mr. Wigley) is not here, because I can even tell him where we can get the match funding from. It does not involve the comprehensive spending review, help from the Treasury or raising taxes. The money already exists in the windfall tax fund, a curious and separate fund which we occasionally ignore. The fund, which falls outside the comprehensive spending review, contains more than £1 billion, £570 million of which is unallocated. If the Employment Service and my right hon. Friend the Secretary of State for Wales, backed by the National Assembly, produced a first-class national training and skills programme, match funding could be found from the windfall tax fund. We need not raise the money, merely allocate it.

I have watched with fascination as my right hon. Friend the Secretary of State for Education and Employment has raided the fund for interesting uses. I would like to raid it for Wales, and I want the Secretary of State to propose that we do so. The European Union could not possibly deny that that would be matched funding, and neither could it deny our objective because training lies at the heart of most EU programmes.

Why are we arguing when the money is available? We share an objective, and we should go out and achieve it instead of spending our time in debate. I hope that

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during his stewardship my right hon. Friend will raise his sights and his horizons to help to ensure that under objective 1 we can over the next five years transform the Welsh economy into a modern, efficient 21st century economy capable of and willing to meet the needs of all our people.

6.11 pm

Mr. Owen Paterson (North Shropshire): Having had the honour over the past year to serve on the Select Committee on Welsh Affairs and on the Welsh Grand Committee, it is a pleasure to be called to speak in the debate. I pay tribute to my neighbour, the hon. Member for Clwyd, South (Mr. Jones), who chairs the Welsh Affairs Committee fairly, although he may find my views on devolution poisonous. I pay tribute, too, to the Secretary of State, who kindly allowed me to visit him with the hon. Member for Montgomeryshire (Mr. Öpik) to discuss the anomalous problem of the A483, a Welsh trunk road that passes through my constituency. I should be grateful if the Secretary of State would pay that problem some attention during the coming months, because it has not gone away, and careful liaison is required with his other British colleagues in the Cabinet when he discusses it with them as the representative of Wales.

It is a great shame that we did not hear from the right hon. Member for Llanelli (Mr. Davies) on the relationship between the Welsh Assembly and Westminster.

Mr. Öpik: I apologise to the hon. Gentleman for interrupting his speech so early. Does he agree that, unless the serious trunk road problem is addressed, Wales will remain without a proper north-south road connection?

Mr. Paterson: The hon. Gentleman--my neighbour--is absolutely right.

I should like to make one point about the speech of the hon. Member for Merthyr Tydfil and Rhymney (Mr. Rowlands). I went last year to Ireland with the Welsh Affairs Committee. It is most important that hon. Members--particularly those from Plaid Cymru--should understand that the head of the Irish Development Agency said emphatically that the key to reviving Ireland's economy was not grants. Grants were welcome, he said, and they represented 5 per cent. of Irish gross domestic product.

Mr. Llwyd: Corporation tax made the difference. The hon. Gentleman need not tell me that; I know it already.

Mr. Paterson: Exactly so. Corporation tax was at 10 per cent., and it has been fixed at 12 per cent. until 2026. The idea that Ireland was turned round by grants is a fundamental misunderstanding. The improvement came from highly favourable corporation tax.

As a devo-sceptic--one who did not want devolution--I know that the part of Wales that I know best, the north-east, did not support devolution during the campaign. It is worth remembering that devolution went through on a majority of 168 votes per constituency. Real scepticism remains about it. It is not good enough to say that we have had the result and should forget about it. Whenever I speak to people who come from Wales to Oswestry market or wherever, I hear real doubt about the merits of the exercise.

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The ICM poll has confirmed that. Some 40 per cent. said that the Assembly had achieved only a little, and 48 per cent. that it had achieved nothing at all. The Government tempt hubris in both Cardiff and London by discussing the spending of large sums of public money on new buildings. The project is not proven yet. We were told, as my hon. Friend the Member for Ribble Valley (Mr. Evans) said, that the new building would cost £17 million. As recently as 19 January, the then First Secretary--the right hon. Friend the Member for Cardiff, South and Penarth (Mr. Michael)--told us that it would cost £22.8 million. We are now told that the cost could creep up to between £26 million and £30 million. It is tempting hubris to spend such an amount, when money is needed for public services.

The Welsh Office has spent £5.2 million since May 1997 on publicity alone. The Government must be careful about spending such large amounts when in health--a public service that is much in the public eye--9,422 more people are on waiting lists than in 1997; the number of patients waiting more than 12 months for treatment has increased by 3,776; and 3,743 people have been waiting more than 18 months. That is where the majority of the Welsh population would like that money to be spent.

Several Members have mentioned post offices. I shall not go into detail, but post offices are critical in rural areas. There are 1,500 post offices in Wales but the National Federation of Sub-Postmasters predicts that, if the ACT reforms go through, the number could drop to 750. That would have a dramatic impact in rural areas.

Another element of Government activity has caused real damage. We hear much talk of competitiveness, but in the teeth of that there is an extraordinary increase in transport costs. We have the most expensive diesel and petrol in western Europe; 85 per cent. of the cost of fuel goes to the Government in tax. We are heading well north of a £3.50 gallon to a £4 gallon. That was never predicted when the Government came to power.

In rural areas of Wales, 98 to 99 per cent. of goods are carried by diesel-powered lorry. Between 70 and 80 per cent. of people in rural areas drive to work. As was pointed out, the car is the last thing that a working family can afford to lose. Those people are faced with substantial increases. The AA reckons that the cost of running an average car is £900 a year. That does not make rural Wales more competitive; it damages businesses.

Mr. Ruane: Will the hon. Gentleman remind the House who introduced the fuel escalator?

Mr. Paterson: The Pavlovs would have been delighted if their dogs had reacted so predictably. That is what Labour Members always say. The fuel escalator began at 3 per cent. The previous Conservative Government increased it to 5 per cent., but this Labour Government have increased it to more than 6 per cent. If the hon. Gentleman reads table B9 on page 154 of the "Pre-Budget Report", he will see that the fuel duty take is to increase over the next three years.

The Secretary of State must tell his colleague, the Chancellor, that increases in fuel duties do real damage to the rural economy.

Dr. Julian Lewis: I apologise for intervening so early in my hon. Friend's speech. Is not the argument that was

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made to him rather like saying that, just because someone invented income tax, that person is to blame when other people increase it by vast amounts?

Mr. Paterson: That is right.

Several hon. Members rose--

Mr. Paterson: Other Members want to speak, so I shall push on.

Recently, the Agriculture and Rural Development Secretary of the Welsh Assembly visited a farm not far from Oswestry, while I was visiting Oswestry market. The farm had 180 cows and 600 sheep, but the farmer was on income support. That is terrible.

The Secretary of State is a fair man, but I did not think that the cursory attention in his speech to the problems of agriculture was good enough. He touched on the matter, but he did not cover the depth of the crisis. An article in this week's Farmers Guardian referred to another visit by the Welsh Agriculture Secretary to a farm--a family farm that had been going for 400 years, but may close by the end of the year. It is a good mixed farm--dairy and sheep.

There is a dramatic crisis. Farm incomes have been slashed. The National Farmers Union in Wales reckons that some hill farmers are earning as little as £15 a week. Between 1997-98 and 1998-99, dairy farm incomes fell by 37.5 per cent. Incomes from cattle and sheep fell by 75 per cent. Those figures are dreadful. Unemployment is rising. About 2,000 jobs were lost in Welsh farming between 1998 and 1999.

It is not usual to mention suicides without paying due care to the circumstances. However, in 1997 there were eight recorded suicides of Welsh farmers; there were nine in 1998. The problem is growing worse. A study carried out by PhD students at Swansea university showed that a combination of social and economic factors was driving many Welsh farmers to feel suicidal. The position is desperate, but the problems are resolvable. Farming should not be seen as a problem, because many of its difficulties come from government agencies. I admit that they did not all happen at once, but this Government have placed extra costs on farming.

I was involved in the consideration of the Food Standards Act 1999, so someone from an abattoir in north Wales wrote to me. Before 1999, its total Meat Hygiene Service costs were £596.73 a week, but from April this year they will be £2,602. Another abattoir in mid-Wales wrote to me: its costs have risen from £300 to £17,000 a year in inspection charges, and are £180 a tonne compared to £1 a tonne in a large commercial plant. Small abattoirs are vital if we are to maintain the quality of Welsh meat and use its production as the basis for future prosperity. We shall not be able to market meat without working with such small businesses.

The Government have been extraordinarily slow to react to many of the recommendations in the Pooley report, which they themselves commissioned. The Secretary of State should push his colleagues in the Ministry of Agriculture, Fisheries and Food to put reforms into action.

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The Government could lift other costs that are imposed only in this country. Why are we the only country that insists on taking the spine out of sheep aged over 12 months? Why do we have a crisis in the calves scheme? It is traumatic for Welsh farmers to bring into the world male dairy calves only for them to have to shoot them on the spot and send the meat to hunt kennels. That is going on. The market in France sells calves for £150 each and it would make a large difference to dairy farming in Wales if that market could be opened up.

The dairy industry needs efficient production. Our dairy products cost twice as much as those on the continent. The break-up of Milk Marque has not helped, and I ask Ministers to consider what has happened to Eden Vale and Dairy Crest in the past week. It is not good enough to victimise Milk Marque and to put it in a difficult position where it cannot get production, and not to pay attention to what other producers do.

In summary, let me say there is a large contrast between what the Government spend on their agencies, publicity and services, which are not being delivered, and the devastating crisis in rural Wales.

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