Legislative Programme and Pre-Budget Statement

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Mr. Simon Thomas: Will the hon. Gentleman confirm that he is against the present subsidy being paid to farmers to convert to organic farming? What about his earlier comments that he wanted more subsidies in his area to tackle unemployment black spots?

Mr. Flynn: I am not against such subsidies. I suggest that the hon. Gentleman read a chapter of ``Baglu Mlaen'' which sets out the painful history of the steel industry. When I worked in that industry, it was up to its armpits in subsidies, but it was going from failure to greater failure. The best thing that happened to the industry was the announcement that there would be no more subsidies. The same is true of farming in Canada and New Zealand. Fifteen years after all subsidies ended, New Zealand is now producing food that it can sell in Wales. That food, which is transported around the world, is cheaper than that produced by Welsh farmers.

I want to make a point that is not made very often about what has happened to British farming. Over the past 50 years when farmers have had a problem, instead of looking to the marketplace, varying their production to include more useful products and considering alternatives, such as non-food farming uses for the land—all of which would employ more people and make the industry more prosperous—their instinct has been to campaign and lobby Members of Parliament, Members of the Assembly and Europe. That highlights their dependency culture. The best shot in the arm to farmers is to say, ``There will be no more subsidies after five years, except for the environment.'' That would give them an impetus.

Last week, I received a call saying that 220 jobs in the aluminium foil industry were to disappear in my constituency because of the strength of the pound and market forces and because the industry could not compete with firms overseas.

Mr. Huw Edwards (Monmouth): I assure my hon. Friend that the farmers who campaign and lobby me do not go on about subsidies; they go on about there being a fair marketplace in Europe and say that regulations applied in Europe should apply in this country.

Mr. Flynn: Let me make a comparison between the steel industry and the farming industry. The steel industry is now among the most efficient in the world. It has a large amount of investment, but it has faced real perils. Few of us have fallen into the trap of demanding extra subsidies for it. It has a rosy future.

The farming industry is wholly dependent. In fact, the Welsh Assembly produced figures showing that the contribution of farming to gross domestic product in Wales, once the subsidies were removed, was nil. In fact, the position is far worse than that, because many of the hidden subsidies, such as the tir mynydd scheme, have not been taken away. We cannot look to a future where people in industry carry the farmers around on their backs. All industries must be self-sufficient. The many present diversifications in farming are encouraging, but the only way to ensure a prosperous rural area is to ensure that farmers go into alternative forms of production that have a future. We cannot have one policy for dealing with market forces in one area and say, ``You must be victims of market forces,'' and say to another part of industry, ``You are to be recipients of handouts for all time.'' There must be some realisation that that takes place.

The Queen's Speech is a good news story for the people of Wales. We have a strong economy. In the 1950s and 1960s, Wales enjoyed several years of full employment; now there are many pockets of Wales where the situation is even better than that. Unemployment in those regions is at a level below what we once regarded as full employment. That is a great achievement, but we tend to talk about the issues of our time rather than the genuine strength of our economy. We have a good new story to tell in Wales.

I made a point in an intervention about the problems of the distortions in the Welsh economy. The objective 1 project is a great achievement for the Government and the Labour party in the National Assembly which will benefit many areas of the country. However, I appeal to my right hon. Friend the Secretary of State to consider the map in his conversations with the Assembly and when he is taking decisions. Although it was created for good reasons, it represents a crude distortion of deprivation in Wales. The right hon. Member for Caernarfon said that it was drafted prematurely; I thought that he would make the point that it was drafted before the Assembly produced the index of deprived wards in Wales.

The index of deprivation tells a different story. Ceredigion and Conwy are included in objective 1 areas—and good luck to them. However, not a single one of the 100 wards in Wales with the worst indications of deprivation is in Conwy or Ceredigion. There are wards in those two areas that need support and help, but we should compare their situation with urban areas of Wales such as Wrexham, Cardiff and Newport. Four wards in my constituency are in the first 100 and some are in the first 20 of the most deprived wards in Wales, but those and many other wards in urban areas will not get a single penny of objective 1 money. That will create a further distortion, as will the distribution of money for the police in Wales.

When we take such decisions, we must ensure that we are not influenced by the clamorous voices of those who write to us almost daily, who campaign and make a great deal of fuss and have the press and media on their side. In my book about things that a Member of Parliament should do, I laid down 10 commandments; one of those was that we should listen to the silent voices. We should listen to the silent voices in care homes and of children mistreated by their parents or grandparents—that is what the Care Standards Act 2000 aims to achieve. Other voices in Wales are much too silent; we should hear more from people in industrial areas and the valleys whose voices are, if not silent, at least muted.

12.47 pm

Mr. Lembit Öpik (Montgomeryshire): I start by blaming the current and former Governments for my lateness. I had things to do last night in my constituency and thought that I would be early enough if I got up at 4 am this morning—but evidently not, as everyone else has decided to abandon public transport and drive. However, I suspect that there is a plot here somewhere. Not satisfied with blocking the M40, the Government regard the Liberal Democrats as such a threat that they detained everyone on the M4 simply to prevent my hon. Friend the Member for Brecon and Radnorshire (Mr. Livsey) from arriving. However, we have not been deterred—we have made it anyway. I thank the Committee for its indulgence, and all hon. Members for showing their unbridled happiness at the fact that we have made it.

The delay meant that I had plenty of time to consider the word ``radical'' on the way down. The extent to which the public see that radical solutions are being found is a crucial element in the evaluation of how radical a Government are. It is clear from the Queen's Speech and pre-Budget statement, as other hon. Members have said, that the general election is likely to come on 3 May. Will the Secretary of State confirm that date? It would then be easier to plan the months ahead. I believe that I may not, however, receive an answer to that question.

I regard the Queen's Speech as aspirational because even the limited agenda that it contains is unlikely to be carried through. I imagine that the Minister has already referred to the fact that five Bills are proposed for this year's programme, which will confer functions to a greater or lesser extent on the Assembly. Those include Bills on the Children's Commissioner, health and social care, housing, regulatory reform and special education needs and disabilities.

Mr. Simon Thomas: Can the hon. Gentleman confirm that his colleagues in the National Assembly have been consulted on those aspects of the Queen's Speech, in relation to the Labour coalition in the Assembly?

Mr. Öpik: That is an odd question. In the spirit of trying to give a meaningful answer, I do not think that the Liberal Democrats or Mike German wrote the Queen's Speech or any significant part of it; nor were they consulted before the statement was made. There is no doubt that, within the partnership, regular dialogue takes place about the consequences of the Queen's Speech, and Liberal Democrat Members at Westminster have discussions with the Assembly group. The main goal of the partnership is to make the provisions in the Queen's Speech work, to the best of our ability, in Wales.

Without going into too much detail, the overriding strategic requirement is that to which the right hon. Member for Caernarfon referred—the need for the Assembly to have maximum flexibility to interpret and implement the consequences of Bills in the best interests of Wales. It should not be too hard for the Minister to provide confirmation in that regard, not least because the UK Government have followed the Assembly's lead, for example, on homelessness. The Queen's Speech included proposed legislation to place a duty on local authorities to house vulnerable people who have recently left institutions such as care homes, prisons and the armed forces. That comes five months after the National Assembly endorsed a Liberal Democrat proposal to designate the same categories of people as being in priority need. That is an example of the reverse flow of legislation—the Assembly guiding the Queen's Speech. To some extent, therefore, I could say to the hon. Member for Ceredigion that, at an embryonic level, the Welsh Assembly can guide best practice at Westminster.

The point made by the right hon. Member for Caernarfon, which is even more important in terms of the pre-Budget statement, should be emphasised. The Chancellor said that he was investigating the possibility of fiscal variations for the poorest areas of Britain, which sounds like code for looking into operating aid for objective 1 areas. Corporation tax and national insurance contributions are the most important ways in which that can be done. It is worth remembering that that was very successful in Ireland in 1994-95. In fact, academics regard tax variations as far more significant in regenerating the economy than European Union cash.

Objective 1 status allows regions and member states to attain, through EU competition rules, a degree of fiscal variation. However, I acknowledge that there are hurdles to cross. Europe needs to say yes, and, ultimately, the Chancellor of the Exchequer must underwrite the cost of doing that. Will the Minister confirm that he will do all that he can to assist the Assembly Minister with responsibility for economics in that regard? Incidentally, the Conservatives seem to have a schizophrenic attitude to this matter. In the Welsh Assembly, they said that it was too late to incorporate fiscal variations into objective 1 implementation, apparently because the programme document had already been submitted to Brussels. However, that reveals a fantastically flawed understanding of the process. I hope that the Conservative members of this Committee will counsel their Assembly colleagues to think again. It is not helpful to have conflicting messages coming out of the Assembly when it is in everyone's interests to do a good job with regard to tax breaks under objective 1.

We are not so happy with other aspects of the pre-Budget statement. First, in contradiction of what the hon. Member for Newport, West (Mr. Flynn) said, we believe that rural areas have once again received the bum's rush. [HON. MEMBERS: ``Oh!''] Thank you, Mr. Jones, for not bringing me to order on that point.

The hon. Member for Newport, West takes a cynical attitude to farming. It sounds almost as though he is blaming the farmers for capitalising on their financial environment. Hon. Members should remember that the subsidy system was set up to prevent starvation and maintain agricultural stability after the war. It has become overbearing and complicated, but it has fulfilled its original objective. I agree that it needs reforming, but the hon. Gentleman is being a little harsh in blaming farmers merely for responding to market circumstances.

There are direct consequences of removing the subsidy: the zero subsidy environments, such as New Zealand, cited by the hon. Member for Newport, West, can result in depopulation of the countryside. It is all very well to take a political approach, but my hon. Friend the Member for Brecon and Radnorshire and I do not agree with it; a wholesale change would mean that we were willing to accept the depopulation of the countryside because small farms would merge with big ones and a proportion of land might go to seed. Those are not consequences that the Liberal Democrats want and I suspect that the same is true of the members of Plaid Cymru.

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Prepared 11 December 2000