Previous Section Back to Table of Contents Lords Hansard Home Page

Edinburgh Assay Office Order Confirmation Bill

Brought from the Commons, read a first time, and (pursuant to the Private Legislation Procedure (Scotland) Act 1936), deemed to have been read a second time and reported from the Committee.

The Welsh Economy

6.27 p.m.

Viscount St. Davids rose to call attention to the economy in Wales; and to move for Papers.

The noble Viscount said: My Lords, the last opportunity we had to debate the economy in Wales was 29th January 1992, at col. 1311 of Hansard. It is unfortunate that tonight's debate is without knowledge of the contents of the rural White Paper which will be published early in February.

During the past four years your Lordships have passed three Acts specific to Wales and two education Acts containing special provisions for Welsh education. All these Acts have an economic impact on Wales. The situation is not unlike a nest of Russian dolls, the Welsh economy being the smallest, contained inside the UK economy which itself lies within the European economy, which in turn lies within the world economy. In the past, when our economy was overwhelmed by the colliery face and steel plants, the world sneezed and Wales caught pneumonia.

Wales entered the recession ahead of the United Kingdom and came out earlier. The index of industrial production for Wales now stands at a higher figure than that for the UK, having passed that point during 1994. Manufacturing as a percentage of GDP, at more than 27 per cent., is significantly higher than the 21.6 per cent. for the United Kingdom as a whole and compares very favourably with the best regions of England. Unemployment, historically higher in percentage terms than in the UK as a whole, started the recession at a higher level but now, at 8.2 per cent., is within 0.2 per cent. of the UK figure.

Surveys published this month by the CBI and Dun & Bradstreet show Wales to be the most optimistic region of Great Britain. Nearly 80 per cent. of Welsh firms expect to increase sales, 70 per cent. to increase their exports, and 66 per cent. to increase employment. Welsh manufacturers continue to plan high levels of investment in training and innovation and a moderate increase in investment in plant and machinery. Wales is the only part of the United Kingdom in which manufacturing employment has increased in the past decade. There has been a slow narrowing of the gap in average earnings, which in Wales now stand at 90 per cent. of the UK figure.

There has been a second industrial revolution in Wales. That can be attributed to successive governments. The statistics do not reveal the true picture for the whole of Wales. It would be a golden age if they did. The second revolution relates not only to assets but also locality. It is mainly confined to the area known as

31 Jan 1996 : Column 1502

the M.4 corridor. The statistics would look even better if they were not diluted by lack of economic progress elsewhere in the Principality.

Unemployment in Newtown in December 1995 was below 3 per cent., in south Pembrokeshire over 13 per cent. An article in the Western Mail last week mentioned unemployment rates of over 20 per cent. in some areas. We know that Wales has an exceptional inward investment record. We have consistently attracted up to 20 per cent. of all inward investment recorded for the United Kingdom despite having only about 5 per cent. of the population. Overseas-owned manufacturing companies employ over 70,000 people--31 per cent. of the total number of manufacturing jobs in Wales. Why do they come to Wales? How do we ensure that they continue to come--not only overseas companies but also companies from elsewhere in the United Kingdom--and enable skilled Welshmen to stay at home?

The main attractions of Wales lie in its quality of life, its telecommunications infrastructure, its inward investment promotion policy and the availability of suitable sites, premises and housing. To that we must add the fact that manufacturing productivity in Wales is the third highest of all UK regions and, on the latest figures, 3.2 per cent. above the UK average. Let us not forget the high quality of Welsh education, a subject to which I shall return.

The Welsh Office and the Welsh Development Agency are not the only agents at work securing inward investment. We must also recognise the important part played by local authorities, many of which have built up a considerable expertise. We must ensure that this expertise is safeguarded during the process of local government reorganisation. It is far too early to know what will be the effect on the Welsh economy of the proposed changes.

This year is the 20th anniversary of the Welsh Development Agency, created when the right honourable gentleman Mr. John Morris was Secretary of State. Many functions were brought into being by the noble Lord, Lord Cledwyn of Penrhos, and subsequent Secretaries of State. The invaluable contribution that the Welsh Development agency has made to the economic prosperity of Wales is well known. The agency will have removed all major industrial blight and dereliction by the year 2000, a very remarkable achievement. The noble Lord, Lord Cledwyn, who has done so much for the cultural and economic prosperity of our country, can be proud of his brainchild. It has taken the Welsh economy from the 19th century, through the 20th and prepared it for the 21st century.

The agency has decided to adjust its programmes to take account of both slower than expected progress in some schemes and lower than anticipated receipts this financial year. However, contractual commitments will be honoured and no projects lost. The agency is expecting to exceed its target for inward investment at 10,000 created, or safeguarded, jobs of which about 8,000 have been secured. That is 60 per cent. up on a year ago. The 1996-97 budget will allow the agency to increase grant-in-aid by 58 per cent. to reflect its

31 Jan 1996 : Column 1503

priorities and the work that it has to do. That will enable the agency to fund gross programmes of a size similar to those of this year at around £130 million.

The Cardiff Bay Development Corporation, another important engine of economic growth, is still expected to meet its key lifetime target of providing of over 25,000 jobs, 6,000 homes and the attraction of about £1.5 billion of private sector investment, of which £350 million has already been achieved.

Tourism is not an area in which I lay claim to any particular knowledge other than that I live in an area of Wales which could not exist without it. The tourist industry contributes about £1.3 billion to the Welsh economy, being about 5.5 per cent. of the Welsh GDP. It employs 9 per cent. of the labour force and provides about 95,000 jobs. But its contribution to the economy is out of all proportion to these numbers as it brings prosperity to areas far from the M.4 corridor.

I pray that I am not being over-harsh when I suggest that if tourism in Wales is to play a more prominent part in the growth of the Welsh economy it must trade up. There are too few quality hotels and many of our resorts give the appearance of living in the immediate post-war period when the competition was a holiday camp. With its short summer season and uncertain weather, it is to the growing wealth of the older generation that Welsh tourism must look. There may be a market to capture as medical opinion raises concern over excess exposure to the sun--not a Welsh problem! But that will also require a fresh look at the accommodation and other amenities being offered. The sunny southern regions of Europe will not part with their tourist trade willingly.

The short-term cottage rental sector maintains a high standard, policed by standards set by the letting agents, the Welsh Tourist Board and competition from other cottages in the neighbourhood. The tourist board does a first-class job, but in many areas of Wales further gains will depend upon a reappraisal of what is being offered and major investment in upgrading.

Education is all-important to economic success. The Welsh have always known that the route to the classless society is through the classroom. They have always known that the ladder that extends from poverty to personal fulfilment is the ladder of educational achievement. That is why the culture that pertains to education in Wales differs so widely from the culture that pertains in England. I believe that this cultural difference is little understood in Whitehall.

I do not intend to set up an educational polemic to tilt at. Tall I may be, but Don Quixote I am not! I believe that local authorities have sufficient resources available to ensure that their schools are adequately funded. The number of young people entering higher education, at 30 per cent., has more than doubled enrolment at higher education institutions other than the University of Wales. Enrolment at the University of Wales has increased by 70 per cent. since 1980 despite the fact that many Welsh students seek their education elsewhere in the United Kingdom.

31 Jan 1996 : Column 1504

I express considerable concern that Welsh language education is little understood outside Wales. I have heard of cases of entrepreneurial talent being deterred in Wales by misunderstanding. If education is a cornerstone of economic success, then so is social cohesion. A people divided against themselves will not succeed. Most of Wales is a long way from London and even further from Brussels. National identity is a protection against a feeling of isolation by the individual. Language is a part of national identity. The Welsh Language Act--its birthplace was your Lordships' House--has a key role to play in Welsh culture. But it must be used sensibly, as an agent of cohesion, not of division.

Each locality will have a local innovative job creation scheme of note. This evening I draw attention to just such a scheme. Mr. Danny Fellows, district secretary for Wales of the TGWU, has started a lottery, licensed by the local authority, which can raise up to £10,000 a week. It offers prizes of £2,000 a week. The profit is devoted to the financing of small businesses.

Small business projects are selected by a committee drawn from the local business community. The scheme is promoted by local banks which may well contribute capital, adding gearing to the number of jobs created. The lottery is creating jobs at the rate of 200 per year, a number expected to rise to 400 as it becomes better known. Mr. Fellows's scheme shows that "good causes" are not necessarily the "best causes". If such a scheme was copied by all local authorities in Wales, the resulting job creation would be enormous.

I had high hopes of the West Wales task force when it was announced by my right honourable friend Mr. David Hunt. Unfortunately, its inception caught the downturn in government spending and it is unfunded.

The geography of Wales does not allow for easy north-south communication. Road projects must remain a high priority if the whole of Wales is to take part in growth similar to that achieved in the M.4 corridor. Local innovation cannot overcome bad communications.

In the time allowed, I can raise only a few of what appear to me to be important issues. The economic success of the south must now be matched by equal success in rural and coastal areas. Let us hope that the rural White Paper will sow the seeds of that success. I beg to move for Papers.

6.42 p.m.

Baroness White: My Lords, we should all appreciate the speech made by the noble Viscount, Lord St. Davids, although he used the word "economy" in a wider sense than I had supposed that he would. Earlier this afternoon I listened to a number of the speeches in the previous debate on inward investment into the UK, including the excellent speech of the noble Lord, Lord Borrie. I could not help wondering whether it was better for us to have our own separate debate on a complex subject in Wales or whether it would have been more desirable to have joined with Scotland and England in the previous debate. Having listened to the noble Viscount, I think that we are probably better off as we are with our own opportunity and our own subjects. Those of us who have

31 Jan 1996 : Column 1505

at heart the welfare and well being of our native land must express our gratitude to the noble Viscount for giving us this opportunity to consider aspects of the current and prospective economic position of the Principality.

I must confess to being slightly irritated to find that when I had gone to some considerable trouble 10 days ago to check at source the current Welsh position in the two areas about which I wish to speak, I found that one was dealt with at some length last Friday in the Financial Times and the other today in our major Welsh newspaper, the Western Mail.

The first subject in my area of concern relates to aspects of the Welsh Regional Technology Plan which was not touched upon by the noble Viscount. I have the consultative text of the Welsh Regional Technology Plan which I will happily give him at the end of the debate.

The other subject with which I am concerned is tourism, which the noble Viscount discussed but upon which I should like to give further detail in a moment. The RTP--everyone now calls everything by its initials--is an interesting way of discussing the problem of our culture and our financial position. It took about 18 months' discussion with 600 companies and organisations to bring about a consultative report, which was issued on 24th January, on a regional technology plan aimed at developing a much needed culture of innovation in Wales.

The interesting point about it is that Wales is one of only eight European regions, and the first in the UK, to have been invited to devise an RTP by the European Commission which provided 200,000 ecu (£157,000) in each case to fund a pilot scheme. The prime motivation for the RTP is that investment in research and development and innovation has been shown to be a key factor behind the disparities in the prosperity of European regions. The richer regions spend six times more on that than the poorer regions such as Wales. The noble Viscount was confident about the Welsh situation, although it seemed to me that the RTP was a little less so.

Wales appears to have the lowest level of industrial R&D investment of any mainland UK region. Compiling a report was a team effort with the WDA which matched the European funding and led the project with support from the Cardiff Business School. This is, of course, attached to the University of Wales, with which I had a good deal to do years ago when I was a university officer in Wales.

The Welsh Office chaired a steering group drawn from industry and the public sector, including local authorities. In charge of the group, and the author of the consultative report, was Mr. Meirion Thomas, who is attached to the Business School, although he wrote the report independently. When the report was being issued last week, he said:

    "In Wales we have trouble with implementing new ideas".

He emphasised in particular:

    "Established banks expect to have a quick return. They do not really understand innovation. They are not prepared to wait for the 10 or 15 years it takes for the return to emerge".

31 Jan 1996 : Column 1506

I am not well enough informed about these matters to be able to judge the validity of what he said but it sounds convincing to me. The objective of the RTP exercise is to develop a consensus among academia, the public sector and industry, on a strategy to help to improve the performance of the Welsh economy. That is an interesting way to go about such matters. The consultative report was issued last week at a seminar in Cardiff attended by nearly 300 people. It had the blessing of the Secretary of State for Wales, who was present on the video only. However, I understand that that was reasonably effective.

The final report on the RTP is expected to be published late in March. Mr. Meirion Thomas states:

    "The exercise over the past 18 months has put Wales at the forefront of European thinking on regional development and innovation strategy".

He suggests that companies learn best from each other. Supply chains and networks are crucial to innovation. That is easy to say, but not so easy to carry out. That is so as regards the smaller firms, which may have good ideas but lack confidence or resources, and as regards the larger, established firms which fail to realise the need for change.

We are fortunate, therefore, that the Welsh economy has caught the attention of the resources of the European Commission as well as the Welsh Development Agency and we must wish it well. In the meantime, we can expect to face highly relevant increased competition from South-West England, following the second Severn crossing and the new West of England Development Agency. On the positive side, I believe that we have some promising developments ourselves. I am told that the new steel production facility at Llanwern may become the most advanced plant in Europe. I very much hope that that is true.

Perhaps I may refer briefly to the other subject on which the noble Viscount, Lord St. Davids, touched; that is, tourist enterprise in Wales. It is undoubtedly one of the most important subjects. Again, I have brought with me the necessary document. I am not sure whether the noble Viscount has seen the Wales Tourist Board's magazine for 1996. It was made available last week and I should be delighted to give him another present if he does not have a copy. When we spoke about tourism in Wales a few days ago he seemed to me to be rather scathing about some aspects of it; I believe mistakenly so, because during the past 10 years the tourist industry in Wales has improved remarkably. The Wales Tourist Board's holiday magazine for 1996 is a very impressive publication. No other tourist organisation in Great Britain has or could have anything superior.

Some of your Lordships may know that for the past 10 years or so the Wales Tourist Board has been actively run by Mr. Paul Loveluck, who has recently resigned to take over the post of Chief Executive of the Countryside Council for Wales. I know that he was most active during the 10 years that he was in charge of the Wales Tourist Board. In his farewell message to colleagues two weeks ago he wrote:

    "It has been a privilege to play a part in the development of one of Wales' most important industries and to see it done in ways which will sustain our natural environment and our cultural heritage.

31 Jan 1996 : Column 1507

    Through the partnership which has been forged between the private and public sector a great deal has been accomplished. The standard and range of facilities for our visitors has improved beyond recognition. Our professional and customer care skills have also improved. Our universities and colleges are now turning out well qualified and motivated young people anxious to join the industry".

Mr. Loveluck then refers to the development of image building and direct marketing in the United Kingdom and to the achievement of overseas marketing powers for the Wales Tourist Board. Most noble Lords will know that the board had great difficulty in obtaining adequate arrangements for its overseas direct marketing. A national tourist information centre network of 85 centres has been set up with 55 of them now open throughout the year, compared with only two centres 10 years ago. The tourist industry in Wales has great resilience and has a capacity to play an even greater part in the programme of balanced economic growth in Wales.

I apologise to your Lordships for speaking for too long; I did not follow the numbers on the clock. However, we have plenty of time to discuss Welsh issues and I am glad that the noble Viscount has given us this opportunity tonight.

6.56 p.m.

Lord Hooson: My Lords, it is always a pleasure to follow the noble Baroness, Lady White, who in a variety of guises has made such a great contribution to the life of Wales, not least to the economy of Wales. I wish to congratulate the noble Viscount, Lord St. Davids, on introducing the debate, which is so timely. I appreciate fully the thrust of his remarks, which went beyond the M.4 corridor.

I wish to say at the outset that I completely support the remarks that will be made later by my noble friend Lord Davies on the importance of the opera house at Cardiff as an integral part of the development of the attractions of the capital city of Wales. I do not wish to duplicate his remarks, but I have been privy to correspondence and comments made by the noble Lord, Lord Crickhowell, as chairman of the Opera House Trust. My noble friend Lord Davies is co-chairman of Welsh National Opera. I completely share their exasperation at the lack of consistent approach and inadequate reasoning that so far has emerged on that subject.

I wish to concentrate my remarks on three topics and for my sins I must make a declaration of interest in respect of each one. The first is the importance of the M.4 corridor. The prosperity of the M.4 corridor depends to a degree, and assists to an even larger degree, on the Severn crossing. I happen to be chairman of the company which is building the second river crossing and which runs the present bridge across the Severn. That development is of supreme importance to Wales. I agree that the development that has taken place along the so-called M.4 corridor is natural and inevitable.

Years ago when I was practising at the Bar I undertook a case for the late Sir Brandon Rhys Williams. He was a far-seeing chap and perhaps a little eccentric at times. The case engendered an enormous

31 Jan 1996 : Column 1508

amount of opposition and it concerned the land which is now the home of the Bosch factory at Miskin. A great deal of the inward investment--Bosch was only one investor--came to that corridor. It is clear that such development will flourish on each intersection that is available along the M.4 and on tributaries to and from it. That part of South Wales is going to develop apace, as is its counterpart on the other side of the Severn estuary.

Perhaps I may give some figures about the growth in the volume of heavy goods vehicles travelling on the present Severn Bridge. Perhaps contrary to the impression which the Cardiff Business School created a little time ago the figures show--I have checked them today--that the increase between 1993 and 1994 in heavy goods vehicles using the bridge was 2.6 per cent. and that between 1994 and 1995 that figure increased by 6.3 per cent. We do not yet have the figure for 1995-96, but all the indications are that the increase will be at the same rate. That increase has gone on month by month. There has been a steady increase in the number of heavy goods vehicles using that bridge for 17 or 18 months now.

In passing, perhaps I should mention that the bridge is a marvellous example of European co-operation and of investment on the part of the European Investment Bank, without which it could not have been built. It might be worth pointing out for the benefit of all the Euro-sceptics that the bridge is a marvellous example of British-French co-operation. If it were not for the existence of the common market and other markets in Europe, there would have been no need for a bridge. We in South Wales would have slumbered into decline at a rate that is unimaginable today. That is why I am clear about the future prosperity of that area.

I turn secondly to the greater problem of the rural areas, which was mentioned by the noble Viscount. I should like to concentrate on Mid Wales as it is the largest of the vast rural areas in Wales. I have an interest to declare here because I happen to be chairman of Laura Ashley plc, which is a supreme example of the success of such a venture in a rural area. Although I had known that it was the largest private employer in Mid Wales, I was amazed to learn last week that Laura Ashley plc is the third largest private employer in the whole of Wales.

It is important that we recollect that in 1962 when I became the Member of Parliament for Montgomeryshire the whole area was suffering from acute depopulation. The noble Baroness, Lady White, will well remember that. I shall not go over all the steps that were taken, or all the campaigning that was necessary, to change that trend, but I would say this--and every government should remember it--that without government investment and leadership, the rehabilitation of Mid Wales could not have taken place. Mid Wales needed pump-priming, intelligent investment, the development of its roads, and leadership from within Mid Wales, which mercifully, was present. It also needed the backing of government through the Welsh Office and the development board in its various guises. That body is now known as the Development Board for Rural Wales. That point is important.

31 Jan 1996 : Column 1509

The present requirements are as follows: it is important to safeguard the industries that are there. There are disadvantages to being in Mid Wales. The transport difficulties are obvious. In addition, air communication is not easy, although it is so important for larger companies which have to get their products to ports or to airfields that can take large planes. All those factors are important, as is the availability of grants for equipment. In the 1960s when such companies were developing in Mid Wales those grants were extremely important. Small business loans have also been successful there.

However, there is also a case--I have no doubt that the Government will look at this--for allowing organisations such as the rural development board and the Land Authority for Wales to take equity in a company and to share the risk and take the benefits. There needs to be a partnership between private industry and public investment.

The third matter that I should like to discuss is agriculture. My noble friend Lord Geraint will deal with this in more detail, but I particularly wanted to mention the research facility at Aberystwyth. I refer to the famous plant breeding station. Again, I must declare an interest because I am a farmer and was for some years a member of the governing body of the Institution for Grassland and Environmental Research. I mention that because everybody involved in agriculture knows how important that facility in Aberystwyth has been for the past 75 years, not only for Wales but for the United Kingdom and for developing countries overseas. If only one institution can claim the greatest credit for the green revolution, it is that institution under Sir George Stapleton, one of the most distinguished Englishmen ever to become a naturalised Welshman. He made a tremendous contribution.

This year the future of that facility, like the future of IGER, will be carefully considered under the "public options" scheme. All that I ask the Government to do is to give an indication of what they think is the right road ahead and to keep that very important research capability and all the research expertise at that plant breeding station in Aberystwyth. Is it to be differently formed under IGER? Is it to be attached to the university? Whatever happens, it is vital that that capability and expertise are preserved.

7.6 p.m.

Lord Elis-Thomas: My Lords, as always it is a pleasure to follow the noble Lord, Lord Hooson, and to endorse what he said about European investment and rural policy. The noble Baroness, Lady White, did the House a courtesy by referring in great detail to the importance of research and development in the recent regional technology plan (RTP) of the European Union. It is perhaps the most important recent innovation in the Welsh economy and I congratulate the noble Baroness on drawing the attention of the House to that important subject. We look forward to the final stage and to the report produced by Mr. Meirion Thomas.

The whole House is grateful to the noble Viscount, Lord St. Davids, for helping us to celebrate the 20th anniversary of the Welsh Development Agency; an

31 Jan 1996 : Column 1510

agency which I recollect the Conservative Party opposing at the time of its establishment, but we shall not go over that ground now. Nevertheless, it is important to celebrate such occasions and to mark the work of the agency, which has not had an altogether positive press in recent years. I deprecate the tendency of some Members of another place to talk down Wales and through some of their statements to undermine the effectiveness of our institutions when they are abroad working for the development of regional policy in Wales.

In its 20 years of operation, the agency has spent over £1,750 million in the Welsh economy. Of that, a total investment of nearly £280 million went directly into business between 1977 and 1990. I should like to refer not only to investment in business, but to the equally important environmental investment of the agency. That is the theme that I want to pursue. I declare an interest as vice-chairman of Cynefin Environmental Limited, a small to medium-sized environmental consultancy. Between 1976 and 1995 the agency improved over 9,000 hectares of land by reclamation at an investment of nearly £300 million. That investment means that the agency is committed to greening Wales in all senses. After 20 years, it is appropriate that the agency itself should be taking stock of its contribution to the greening of Wales and realising that greening is not just about clearing dereliction, but about developing sustainable development in the broadest sense and ensuring that the quality of life in Wales is enhanced in all ways.

I believe that in the next 20 years the environmental policy of the agency--indeed, the environmental goals of government and public sector investment--should be at the front end. Surely Wales can take the lead in that. We still have a magnificent environment. We have areas which are designated for their outstanding landscape and scientific quality. We already have a good image in terms of the quality of life in Wales.

What we need to do is to enhance that in all possible ways. That requires a vision for the Welsh environment which I know the agency is developing in partnership with the other agencies, such as the Countryside Council for Wales and the equally important agency referred to by the noble Lord, Lord Hooson, the Development Board for Rural Wales. I very much applaud the recent decision of the board to restructure itself to meet the new requirements and "Go West" by separating its western and eastern sections. I am sure that that will bring benefit to the people in my old constituency of Meirionnydd and also to the area of Ceredigion.

The emphasis on rural development is not the only essential emphasis in terms of environmental policy. The South Wales Valleys are a major area of environmental improvement. The agency, the countryside council, the tourist boards and the local authorities have a new vision for the valleys which is to restore its traditional landscape and to reverse the dramatic developments of the 19th century, while maintaining the very special sense of community which was created at that time.

That enhancement is important because it would create the opportunity for people to take part in restoring their own community. Here I declare an interest as one

31 Jan 1996 : Column 1511

of my voluntary activities is chair of the co-ordinating committee of the "Keep Wales Tidy" campaign. We have been involved in a number of initiatives; for example, in cleaning rivers and cleaning up valley communities and, indeed, with providing people with the opportunity and skills to care for their own areas. That initiative itself is an indication of the importance of the greening of our towns and cities.

High quality landscapes are important, but equally important, too, are the objectives of environmental policy as they apply to technological development. Here I should like to commend what the noble Baroness, Lady White, said about the importance of developing a culture of innovation through the regional technology plan. I should like to mark up one particular area where I hope that that plan and the new investment of the agency will lead; namely, in the so-called direction of ETS--to add another acronym to our debates--which stands for environmental technologies and services. Surely they are the scientific investment areas of the future.

The current world market in the area is already worth some 250 billion dollars according to OECD estimates, and it is calculated to rise. We can set that in perspective if we look at the aerospace industry, which has an estimated value of some 180 billion dollars. Therefore, it is already a major area. The market is currently dominated by Germany, the USA and Japan. One of the important aspects of that market is the fact that not only is it an example of how investment meets environmental criteria (which is usually set by legislation of Parliaments, of the European Union and, indeed, by international regulations), but also many of the costs of environmental improvements and of achieving new standards and promoting efficiency are seen as savings when they are turned into investment in new job opportunities.

I should like to see Wales lead as a region which has had environmental problems to deal with but which still has a fragile and very striking environment of great variation, which is still attractive to tourism, with an emphasis increasingly on green tourism. Indeed, I endorse all that the noble Baroness, Lady White, said about the sterling work of Paul Loveluck with the tourist board. We wish him well, as she did, with his new role in the countryside council. Within that context, it is possible for Wales to develop and become a market leader among European regions in the whole area of ETS. I have in mind the technologies of water and effluent treatment in which we already have a strong lead from Welsh Water (our regional water company), the areas of waste management recycling and air pollution control and, indeed, the areas of energy and urban amenities, including the restoration and development of public transport.

We heard earlier an emphasis on the importance of road transport and road communications. I am proud of the fact that I travel between North and South Wales regularly by train and try not to drive. It is important, I believe, that I should save myself for my work of ensuring that the Welsh language becomes developed in the life of Wales and it is easier to do so using even that

31 Jan 1996 : Column 1512

convoluted train ride from Bangor, through the lovely Welsh borders and down to Cardiff. However, we need to improve that service. We need to improve the quality of the rolling stock and, indeed, of the timetable. But we also need to look at our inter-valley urban transport and our bus services in rural areas. We need an integrated strategy for public transport throughout Wales.

In terms of the development of our environmental industries, we can also look at the development of environmental biotechnologies and other environmental services. If we consider that as a key area we can see that it is possible to envisage Wales as a lead area in environmental technologies and in sustainable development. But that can only be done in partnership. Moreover, it would have to be a partnership between the major agencies and the private sector; and it would also have to be a partnership with communities in Wales and in particular with our new local authorities.

I hope that our new local authorities will be taking up the challenge of local Agenda 21 and that they will be look at sustainable development as a key activity for them within their own communities. Each community can look at what it should be doing to ensure that it is a community which is greening itself and that it becomes an attractive place for its residents and a place in which they can be proud to live, about which visitors will say, "Here is a country which is both local in its commitment to its language, culture and heritage, but which also has a global vision".

7.16 p.m.

Lord Aberdare: My Lords, I, too, should like to thank my noble friend Lord St. Davids for giving us the opportunity to discuss Welsh affairs. We do not have many such opportunities and this one is certainly most welcome. My particular interest lies in what were the mining valleys of South Wales, and especially in the Cynon Valley where my family had its home until recently. I listened with great interest to what the noble Lord, Lord Elis-Thomas, said about the mining valleys.

The whole valley depended on the coal industry, and the disappearance of the collieries has caused massive unemployment. The key issue in improving conditions in the valleys, therefore, is the creation of more jobs. I listened with great interest to the end of the last debate and I certainly agree that we need much more inward investment. After all, we are not that far from the M.4 corridor.

Much has been done--and, indeed, is still being done--to achieve that end. I should especially like to commend the Cynon Valley Business Partnership which was stimulated and is run by Mr. Alun Davies. The partnership involves local businessmen with statutory bodies in the task of bringing new jobs to the area--just, I believe, what the noble Lord, Lord Hooson, advocated for his area. They have had some success thanks to the excellent co-operation from council officers, the backing of elected members, the money and efforts of the Welsh Development Agency (which has been frequently mentioned this evening), the support of the Welsh Office and the selective financial assistance

31 Jan 1996 : Column 1513

scheme. It has indeed been a thoroughly co-operative effort and there are signs that things are improving both economically and socially, though slowly. At least the unemployment figures have begun to fall.

In the past year, unemployment in the Cynon Valley fell by 10 per cent. compared with 7.8 per cent. in the UK as a whole. So that was slightly satisfactory. But unemployment is still far too high and there is plenty more to do not only to bring industry to the valley, but also to improve communications in order to encourage people to travel to areas such as the greater Cardiff area where work is more readily available.

However, there are worries and two in particular. The first is the fact that the Rhondda Cynon Taff Unitary Authority which comes into being in April has a total population of 232,000; Cynon Valley has 69,0000. As a result, out of 72 councillors in the new authority, only 12 come from the Cynon Valley and they hold no important committee chairs. They are, therefore, heavily outnumbered. Despite that fact, I hope that the new unitary authority will continue the work of regeneration in the Cynon Valley that has been a feature of recent years.

The second worry is that the new unitary authority starts life, as I understand it, with a required cut in spending of £24 million, entailing a likely increase of 45 per cent. in council tax. If that is true, it is indeed a serious problem for a poor area. If the Minister is able to give us any comfort on those predominant worries when he replies to the debate, I should be most grateful.

I now turn to a real success story in Caerphilly. There is a company called National Britannia which provides a package of environmental, hygiene and safety services and has many prestigious clients throughout the country, including Asda, Marks & Spencer, Littlewoods and British Gas just to mention a few. National Britannia was formed in November 1992 by Mr. Anthony Record. In 1993 it employed some 200 people and had a turnover of some £6 million. Last year it employed over 300 people and had a turnover of £9 million. Its latest objective is to spread its activities into mainland Europe. Apart from being a commercial success, it has fostered a feeling of mutual involvement among its staff, who feel themselves very much part of the company and responsible for its future. I am sure that there are many other small companies of this kind which are doing an admirable job, but this is just one that I happen to know well. I must declare a paternal interest because my son is employed in it.

Finally, I wish to say a few words about the rural areas, which have been mentioned by other speakers. My personal interest lies in the neighbourhood of Llandovery. I wish to draw attention to the fact that, as in other rural areas, there are enormous difficulties for young people. It is hard for them to find employment and many of them go to the bigger towns or even leave Wales altogether and go to England. Those who stay behind still face many problems. In Llandovery there are 15 pubs but until recently there was no other meeting place for young people. This inevitably leads to problems of alcohol, of drugs and of vandalism. Now, thanks to the initiative of a young lady, Jill Tatman,

31 Jan 1996 : Column 1514

there is a new YMCA. Perhaps I should declare an interest as I am the president of the National Council of YMCAs in Wales. This new YMCA was started on a shoestring. The club was held in a school hall on one evening a week but it has proved to be meeting a real need--even though it was held on only one evening a week--by the fact that there was soon a membership of 95 boys and girls.

I am happy to say that thanks to the generosity of some charitable trusts the YMCA has acquired a dilapidated church hall and, furthermore, has recently received a handsome grant from the National Lottery of £70,000 to renovate the hall and to buy a minibus. At present it is still staggering on in grim surroundings but it is managing to keep open three nights a week. The YMCA hopes that once the renovation is complete the club will be run for five or six nights a week. This is an astonishingly good performance and an example of the work the YMCA is doing for young people throughout Wales.

I am afraid that this speech has been somewhat disparate, but one single theme runs through it--the success that can be achieved by individual initiative and enterprise. I have a few minutes left in which to speak and I wish to declare my support for those who advocate a general purpose theatre in the docklands area capable of providing a home for the Welsh National Opera company as well as providing a stage for ballet and other stage performances. I have great sympathy with that ideal. Many years ago I was chairman of the St. David's Theatre Trust. My fellow trustees were Sir Kenneth Trehearne, Sir Lincoln Hallinan, Clifford Evans and the great Saunders Lewis. We struggled along. We had an excellent architect in Elydr Davies and we received initial financial support from Richard Burton. We were trying to provide an all-purpose theatre for Cardiff. In those days the Welsh National Opera company had an amateur chorus and only a three-month season. There was no National Lottery to help us and I therefore sympathise very much with the difficulties with which the present trustees are faced. I very much hope that the Millennium Commission will see its way to reconsidering its decision. I believe that the docklands development needs a landmark building to crown its achievements.

7.25 p.m.

Lord Prys-Davies: My Lords, I wish to apologise to the noble Viscount, Lord St. Davids, for not being in the Chamber for the opening part of his speech. I had been to a meeting which was not unrelated to Welsh affairs. I also wish to thank the noble Viscount for giving us the opportunity to discuss the Welsh economy. Of course we gladly recognise that many parts of Wales have benefited greatly from the large-scale inward investment policies of the past decade or so. However, the benefits which flow from the new industries along the M.4 and, to a lesser extent, the A.55 have not reached the remoter rural communities and the industrial communities high up in the valleys of South Wales. In those communities there is high long-term unemployment and under-employment and income levels are low.

31 Jan 1996 : Column 1515

Of course the trickle-down process cannot be completed all at once and overnight. However, we are right to draw attention to the future of the poorer communities. I believe that their case is central to the whole question of the future of the Welsh nation. In preparation for this discussion--I say "discussion" because this is more of a discussion than a heated debate--I spoke to a number of people whose judgment I value and who live in the poorer communities both in the rural north and west and in the industrial valleys of South Wales, not far from where I live. I have to place it on record that some have expressed considerable disillusionment, even of anobaith; that is to say, hopelessness. I place that on record because it gives some sort of feeling of mood. However, I gladly acknowledge that there are other voices. Many of those who are working within the voluntary sector and with the local anturau--the local enterprise agencies--to regenerate local economies are more hopeful.

I am not an economist or anything of the kind but it seems to me that the first purpose of economic policy is to enable all people to earn a decent living for themselves and their families, to provide an opportunity for our young people and to provide a reasonably civilised background for all our people. That is high principle but it leads me to ask a few questions of practical significance to the Welsh communities of which I have spoken. However, the Minister should not feel under any obligation to answer them all tonight, although obviously I should welcome a reply at a later stage if he is not able to do so this evening.

My main questions relate to the policies of the Welsh Office and the need for more financial assistance from both the Welsh Office and the European Union. I have been encouraged by the degree of co-operation which is being achieved by the area partnership networks which seek to co-ordinate the activities of the local authorities and the agencies of central government, with their different objectives for different services. However, there is a grave shortage of matching strategic development funds. Can the Welsh Office enhance the funding available for the strategic development schemes?

Like the noble Lord, Lord Aberdare, I have been told that the new unitary authorities will be very short of money. That is worrying, because in the past 20 years or so the total funding required at local level to embark on a community enterprise has included an important contribution from the local authorities. There is now widespread anxiety right across Wales that the new authorities, with their budgets under heavy pressure, will not be able to provide the funding which the county councils currently provide for economic regeneration. Is the Welsh Office seriously addressing that problem? I look forward with great interest to how the Minister will respond to the anxieties expressed by the noble Lord, Lord Aberdare, on that point.

That brings me to the European Union funds, and in particular the European Regional Development Fund, the Social Fund and, in the context of rural areas, the Agricultural Guidance and Guarantee Fund. Can the Minister give an indication as to how European-minded

31 Jan 1996 : Column 1516

the Welsh Office is these days? Is its relationship with Brussels what it ought to be? There are anxieties about that relationship. I shall mention briefly the most recent cause for concern which has come to my notice.

A few weeks ago the Scottish Secretary of State exercised his power to make the Rural Diversification Programme (Scotland) Regulations to implement for the benefit of Scotland's Objective 5(b) areas the European Council's decision to provide financial assistance for economic diversification of such areas. Under the terms of that order the Scottish Office can grant up to £25,000 (and in some cases £30,000) for approved diversification measures in respect of an agricultural holding. Why has the Welsh Office not made a comparable order? Is that not a symbol that its relationship with Brussels is not what it ought to be; or is it simply the case that the Welsh Office does not have the resources to enable it to proceed to make a comparable order independently of the Ministry of Agriculture? In any event, the delay in issuing a Welsh order comparable to the Scottish order needs to be fully explained.

The last Secretary of State went through a difficult stewardship of the Welsh Office. However, I am glad that the present Secretary of State has not been afraid to change direction on occasion. Thus he has decided to publish a White Paper on rural Wales. Can the Minister give an indication when that document is likely to see the light of day?

Under the last two Secretaries of State the Welsh Office committed huge resources and time to local government reorganisation. Can it now find some time to consider the future role of the Development Board for Rural Wales? As the noble Lord, Lord Hooson, explained, the board is a creature of statute, set up almost 20 years ago. There have been changes since then. Surely the board's area of operation should now include all the Objective 5(b) areas in Wales. Can the Minister please say a word about that?

The partnership networks are conscious of the importance of information technology being made available for the economic development of the more remote areas. However, I shall not dwell on the importance of that technology as it is my understanding that the present Welsh Secretary has already grasped its significance. That is another issue upon which we should like to have assurance.

My final comment concerns the role of the co-operative movement, which was part of the tradition of 19th century Wales. It still has relevance. That has been strikingly demonstrated by the solid achievements of the Welsh Co-operative Centre set up a decade or so ago and by the recent history of the Tower Colliery in Hirwaun. In a debate in your Lordships' House a fortnight ago my noble friend Lord Carter argued that there was a need for a new co-operative Act to take account of modern co-operative requirements and to provide modern legislative machinery. I urge the Welsh Office to take an interest in the proposal for new legislation which has been submitted by the UK Co-operative Council to the Treasury and the DTI.

I shall be grateful if the Minister can answer some of the questions that I have addressed to him.

31 Jan 1996 : Column 1517

7.35 p.m.

Lord Kenyon: My Lords, I too should like to thank my noble friend Lord St. Davids for the debate. Four years ago, when the previous debate took place, I had not inherited from my father, so for me this is a first. I feel sure that it will not be the last.

To the English it must seem curious that in the union of this United Kingdom we should set out to debate the economic condition of any particular region. We do not have debates on the economy in the south-west or the midlands region, but it is the historic nature of Wales that continues to set it apart from the rest of the Kingdom. While we welcome our union with the remainder of the country, we continue to cling fiercely to our identity as a principality, differentiated not least by our language and culture and largely unsullied by the Roman occupation. In a word, we are Welshmen first but we want the same terms and conditions as the rest of the country.

Perhaps one of the greatest perceived disadvantages in Wales in terms of economic activity is its isolation from the rest of the country--"peripherality" in the words of Brussels. It is true that great advances have been made in the improvement of access to Wales, as has already been mentioned, but the concentration of economic activity in the south-east, where two major international airports (or four major international airports if one includes Luton and Stansted) make access so much easier. It means that there is always an uphill struggle when trying to attract new business to Wales.

I should first of all declare my interest. Last May I was elected to the new Wrexham County shadow authority, so I am shortly to become a councillor in that authority. Two years ago I made my maiden speech on the Welsh local government Bill; it is no accident that many of those who spoke then are also speaking today, because Wales is paramount in their minds.

The creations of that Bill, the 22 new unitary authorities, are now about to come into being. In just a few short weeks the unification of Welsh local government will come about. The transition has not been without its problems. The timescale was very short, as we pointed out at the time. Money, needless to say, is scarce and the cutting of the various bits of the cake has, from time-to-time, been acrimonious and will doubtless continue to be so for some time to come. Nevertheless, on 1st April the new authorities will open shop and the economic prosperity and progress of Wales will be an objective that they will pursue relentlessly.

The new authorities realise that their goals cannot be achieved overnight and that there is a need for a concerted plan of action over a long period of time. More importantly, there must also be a partnership between all the players if success is to be assured. One of the problems of the past was the frequent lack of co-operation between county and district councils. That has now disappeared and the new authorities should be able to produce a single economic development plan specifically for their region.

Of course, I am not forgetting the contribution of the government agencies. Those have already been mentioned. The Welsh Development Agency, the

31 Jan 1996 : Column 1518

Development Board for Rural Wales, the Welsh Tourist Board as well as the Department of Trade and Industry all play a major part in the development of a healthy Welsh economic environment. It goes without saying that the continuing partnership between those public sector bodies and the local authorities is fundamental to the success of any economic policy.

On a national scale, economic development programmes are, quite rightly, the province of central government. But central government can only influence, as has already been said on at least two occasions earlier today. It does not create the economy or the jobs.

Local government, too, is only a facilitator, or an enabler. However, it plays a central role in translating the national strategy into local action. The new authorities, even in their embryonic state, are acutely aware of the importance of keeping the momentum and of preparing now to form their own individual and collective views on how they wish to go forward in the coming months and years. Although it is a time of massive reorganisation and staff upheaval, they are conscious that they must not allow any strategic gap in the formulation and execution of the economic development plan. To allow such a gap would undo much of the good work that has been done to date.

I believe that it is particularly important that a meaningful dialogue continues between my right honourable friend the Secretary State for Wales and the new authorities. I feel sure that he will acknowledge that the local authorities are in an ideal position to influence his policies and the other Welsh Office agencies' economic development policies rather than merely being directed by them, and that the local authorities should play an active role in the execution of the programmes.

I am often reminded that Wales has benefited substantially due to the efforts of central and local government initiatives, and especially from European Union initiatives. I acknowledge that those have indeed been fundamental in encouraging the development of the economy. But it is all too easy to forget how Wales suffered after the war in the losses of jobs from the mining and heavy manufacturing industries as well as from agriculture.

Wales continues to attract investment in new manufacturing industries and particularly electronics industries. Despite a general decline in manufacturing jobs in Europe, productivity in manufacturing, measured in terms of GDP per person, has increased in Wales to the extent that we are now among the highest in the European Union.

However, in highlighting those strengths, we must not be fooled into thinking that all in the garden is rosy. Wales is still a long way behind the rest of Europe, and the position, if anything, is getting worse. Between 1981 and 1991 GDP per person dropped from 85 per cent. of the EU average to 83 per cent. and that even after the addition of Portugal, Spain and eastern Germany to the Union. For rural Wales the GDP in 1991 was even worse at little more than three-quarters of the EU average. Between 1983 and 1993 the average pay of those in employment in Wales compared with the rest of the United Kingdom

31 Jan 1996 : Column 1519

fell from 94 per cent. to 89 per cent. Therefore while it is true to say that jobs are being created in Wales, they are all too often low paid jobs.

The goal for the future of the Welsh economy must be that set out by the Institute of Welsh Affairs; namely, to ensure that Wales enjoys a quality of life as good as the best in the European Union. In the light of the present starting point, which already shows evidence of deterioration, as well as tight spending plans and fierce competition from other regions of the UK and the remainder of Europe and of the world, this may sound like a tall order. But the evidence of success and the will to succeed are already there, and with the advantages of the higher public investment levels and the dedication of the development agencies in particular we are well placed to achieve that given a clear vision and leadership, and a willingness of all partners to engage in the closest possible collaboration.

I wish briefly to touch on agriculture, and in doing so to declare my interest as a farmer and landowner; I know that my noble kinsman Lord Harlech will speak at length on that. The continuing structural changes are having a devastating effect on the rural communities. I know that this problem is by no means exclusive to Wales, but in many of the more remote rural areas there is no alternative to agriculture. Agriculture will always be the predominant factor in the economies of those areas. Many marginal hill farms in Wales produce incomes totalling less than £8,000 a year, and that probably for a 12 hour day, 365 days a year, no holiday, and precious little social life other than a weekly trip to the livestock market. It was a cruel blow to this disadvantaged sector of the farming community when the hillside livestock compensatory allowances (HLCAs) were cut. Such a small saving to the public purse has a magnification factor of indescribable proportions in the Welsh hills and valleys, and I hope that the position will be redressed very soon to stem the ongoing depopulation of rural Wales.

I look forward to the White Paper on rural Wales which was promised by my right honourable friend the Secretary of State for Wales. I am sure that it will contain a cast-iron commitment to ensure the long term viability not just of agriculture but of the overall management of the rural environment in Wales. Anything less will spell disaster.

The Welsh team are playing strongly, but they must keep their eyes firmly fixed on the ball if they are to win the game.

7.45 p.m.

Lord Davies: My Lords, first, perhaps I may thank the noble Viscount, Lord St. Davids, for initiating the debate on the economy in Wales today. I declare an interest in that I am the chairman of Welsh National Opera and trustee of the Cardiff Bay Opera House Trust. I wish to speak briefly on the effect on the Welsh economy of those two organisations--the first actual and the second potential.

31 Jan 1996 : Column 1520

Welsh National Opera, now celebrating its 50th anniversary season, has built an international reputation for excellence on the secure foundations of a company growing from an amateur band of musicians and singers, many from down the mines--truly the voice of the people. Fully professional for the past 20 years, the company employs at its headquarters in Cardiff some 250 full-time staff, including chorus and orchestra, and 50 or so part time. Of the turnover of £10 million, £7 million to £8 million goes directly back into the local Welsh economy. On the income side, some £2.1 million comes from ticket sales in England, and £0.5 million is earned by the set-making arm of the company, making sets for other companies in the UK and abroad. In the past year £170,000 was earned from a Japanese company for sets and costumes for "Madame Butterfly" for performances in Tokyo--a most successful collaboration. During the past three years the company has averaged £0.5 million in overseas earnings from production hires, foreign touring and set construction.

But Welsh National Opera is probably more important to the Welsh economy in indirect ways. For many years the company has established a reputation for such quality in its work and care with its preparation that it has been able to attract artists of the highest order and as a result has created some productions that have aroused international interest. Thus the company has been invited abroad, including visits to Paris, Milan, New York and Tokyo. The last two visits were made in co-operation with the Welsh Development Agency and enabled it to reach a very large number of the captains of industry in both countries. The huge success of both visits was enhanced by the presence at a performance of our patron, the Princess of Wales, with, in Japan, the Prince of Wales, resulting in enormous media exposure for Wales associated with the excellence of the company. That, together with the improvement the company thus gives to the perception of the quality of life for staff living in Wales, will have played its part in the success of Wales in attracting overseas investment.

Welsh National Opera is part of the way through its 50th anniversary season--wonderfully successful so far--with three new productions still to come, a celebration concert at St. David's Hall, a newly commissioned opera to open in Llandudno in July and a further season sponsored by Amoco at the Royal Opera House in March. The company's balance sheet remains in the black and we expect this year to end with another small surplus. But serious threats to the future viability of the company can be seen ahead. The government policy of cutting funds for the arts is already having a serious effect and, if continued, will mean the end of the company as we know it within a very few years. After all, most of the benefits to Wales that I outlined earlier will be lost if the company is not able to continue to work at the highest level. A great asset can be quickly lost.

The other threats to its future are the compulsory purchase order on its headquarters for development due to be enforced in four years' time and the setback to the plans for a new home posed by the refusal of the Millennium Commission to support present plans for the Cardiff Bay Opera House. Ideas for this scheme started

31 Jan 1996 : Column 1521

to form in the mid-1980s when it was realised that a centre for the performing arts, as it was then known, could form an important and constructive element in the planned regeneration of what was then a derelict docklands area. It was the vision of the Secretary of State for Wales, Nicholas Edwards as he then was, to link the city of Cardiff with its waterfront, a new waterfront that would rival the great waterfront developments of Baltimore and even Sydney.

By 1991 a steering group had been formed under the auspices of the Cardiff Bay Development Corporation. Major feasibility studies into the viability, economy and fund raising were put in hand for the new opera house, as the project was called, at the instigation of the then Secretary of State for Wales, Peter Walker. Perhaps he had that most famous waterfront opera house in Sydney in mind, which is also used for far more than opera for much of the time.

Re-reading some of the most comprehensive reports in preparation for this debate, I have been struck by how well they have stood the test of time and how accurate their figures for all but inflation have remained. The conclusion of the economic report by KPMG contained the following:

    "In both appraisals the quantifiable benefits are small compared with the capital and operating costs. Consequently, the economic case depends upon the weighting attached to other factors, notably the extent to which the opera house would enhance Wales as a location for inward investment and benefit the local community.

    As regards inward investment, it is estimated that the net present value of the options involving the construction of the new opera house would equal zero if investment projects from overseas worth £5 million-£6 million per annum at July 1991 prices were attracted by the presence of the opera house. The likelihood of this occurring should be assessed in the context of the fact that, in 1988 and 1989, the total number of such projects attracted to Wales was 104, with an average value of £14.5 million. The net present value of the base case in which no new facility is created is minus £5.5 million ...

    Taking into account both the quantifiable and other benefits, the appraisal shows that a prestige building with a single auditorium is a better option than a low impact building with a single auditorium, and that the case for the second auditorium rests largely on benefits to the community".

All the studies concluded in favour of the project and the Welsh Office was urged to combine with private funding to bring forward the necessary funds. (At that time there was no lottery.) Without commitment to the eventual outcome, further substantial funds were provided by the Welsh Office through the Cardiff Bay Development Corporation for the development of a design brief and for a major international architectural competition to be completed. Although, perhaps inevitably, not everyone approved of the outcome, the competition itself was generally regarded as a model of its kind.

By this time, of course, the lottery was in being and a detailed application was made to the Millennium Fund. The fund was chosen as the appropriate body because the Arts Council fund which would normally be the source for such funding is split between England and Wales. So the Welsh element is not of a size to be able to cope with large projects of that sort. The Millennium Fund is not so split, but it funds only 50 per cent. of a project, whereas the Arts Council fund will go to

31 Jan 1996 : Column 1522

75 per cent. That has a most serious effect on a project like this in Wales, which is an area less financially favoured than many in England.

The application was duly considered by the commissioners at Christmas and turned down in its present form, to the great dismay of our many supporters, both in Wales and in England. I do not think it helpful to dwell on the reasons for that decision. Suffice it to say that we found some of them surprising.

However, we have been listening carefully to what has been said and seeing whether the commissioners' concerns can be met. We have entered into conversations with other bodies and organisations to see whether both the capital and the running costs can be spread and the value of the building to Wales increased still further. Those conversations are continuing and are opening up some most exciting possibilities.

This is the most crucial project for the regeneration of Cardiff and the economy of Wales. As reported by the Millennium arts assessor for the project, it represents by far the most significant landmark project yet to have emerged from the cultural sector in England and Wales. Yet it will also provide jobs in the area of highest unemployment in Wales. It will provide a home and a future for Welsh National Opera, but it will be used for musicals and dance even more than for opera, which, in any event, is not an elitist art form as practised by Welsh National Opera. Anyone who attended the performances of "Madame Butterfly" or "Nabucco" in the packed 2,500-seat Liverpool Empire before Christmas would testify to that. The trust has already evolved a programme for the involvement of young people and the community in the design and development of the project. Access and participation for all are central to the design of the building and the thinking of the trust.

Whether or not one likes the design, there is no doubt that it has the potential to make the impact into the next century that the Sydney Opera House has made in this and also to be a much better theatre. What is more, it is the only one on the table which could be built for the Millennium and thus attract Millennium funds. The door is still open at least a chink and it is essential that all in Wales--local authorities, industry and commerce, the Cardiff Bay Development Corporation, the Welsh Office, the Arts Council and all interested bodies and people--get behind this project and push it through.

Do we really want to be remembered in the next century as the generation that celebrated the Millennium with cliff paths and bicycle tracks--worthy though such projects are--rather than a project that will make an impact on how the world views not just Cardiff and Wales but the UK as a whole?

7.55 p.m.

Lord Griffiths of Fforestfach: My Lords, it is a great pleasure to follow the noble Lord, Lord Davies, in his eloquent statement of the case for the opera house, which I believe most, if not all, of us wish to support. It is also a great pleasure to take part in the debate this evening on Welsh affairs. Like everyone who has spoken so far, I wish to thank my noble friend Lord

31 Jan 1996 : Column 1523

St. Davids for giving us this opportunity. Having trained as an economist, I interpret the Welsh economy rather narrowly and I wish to take it from that perspective.

As one looks at Wales over recent years, if there is one word which I wish to use to describe the country as we stand back to look at it, it is "success". I use it advisedly and the reason I do so is that Wales has gone through the most extraordinary restructuring in recent years. It has gone from being dependent on coal and steel to being today a totally different economy. As my noble friend Lord Aberdare reminded us, it is a success based on individual enterprise and effort.

Perhaps I may remind noble Lords that before the Second World War there were about a quarter of a million people in Wales employed in the coal and steel industries. They accounted for 25 per cent. of the Welsh labour force. Today the figure is less than 20,000, under 2 per cent. In the past decade nearly 100,000 jobs have been lost in those two industries in Wales. In 1980 there were 35 working pits; today there are two. Yet today employment is greater in Wales than in 1975 and unemployment is near the average for Great Britain as a whole. That has not been the case since the mid-1920s.

What is even more remarkable is that the resurgence in Wales has been driven by manufacturing. As we were reminded by my noble friend Lord St. Davids, manufacturing in Wales has had one of the highest productivity levels in these islands. Not only that, the manufacturing resurgence is broadly based. Companies which have invested and grown in Wales are in the consumer electronics, car components and multimedia sectors. They are also in aircraft maintenance, frozen foods and a whole variety of other areas. We have left behind dependence on just two major industries. For example, in areas of electronics like opto-electronics we are world leaders, with 10 per cent. of the world market for optical fibres, employing about 40,000 people. Self-employment in the Principality has increased over 20 years by about 70 per cent. Cardiff, we are reliably told, is predicted to be the most rapidly growing conurbation in the United Kingdom for the rest of the decade.

Although Wales started from a low base, earnings have grown more rapidly than in the UK as a whole; and Welsh GDP per capita has grown more rapidly. As a result of the extraordinary restructuring that has taken place, with a tremendous loss of jobs in coal and steel and the revival of broad-based manufacturing, the Welsh economy today is stronger, more robust and more vigorous than it has been for a very long time. That is something with which the Government should be satisfied. However, it is not the whole story, and I shall come to that later.

What factors have given rise to this? It is very easy for someone of my background and inclinations to say that it is entirely a result of the market economy and of enterprise. Government policy is very important. One cannot emphasise enough that low inflation, low taxation, low interest rates and a rejection of the social chapter from Brussels are an ideal background against which enterprise can grow and inward investment can be attracted. Looking at Wales over the past 20 years,

31 Jan 1996 : Column 1524

when unemployment has risen in the United Kingdom, possibly because of mismanagement of the economy, unemployment has risen in Wales. When unemployment has fallen in the United Kingdom, it has fallen in Wales. In the early 1980s unemployment was rising both in the UK and in Wales. In the late 1980s it fell in both cases. In the early 1990s, it went up again in Wales and in the United Kingdom, and since 1993 it has fallen.

Secondly, it would be foolish to suggest that the public sector has not played a critical role in the resurgence in Wales. We have heard much in this debate about public spending on infrastructure, about roads, the Severn crossing and the cleaning up of dereliction, particularly in the Valleys. All those strike me as terribly important and necessary factors in getting enterprise going. In some cases it could have been done by the private sector. However, it would have taken a lot longer and would not have been nearly so effective.

A number of noble Lords referred to the quite extraordinary success of Wales in attracting inward foreign investment: £4 billion over the past five years. With only 5 per cent. of the population of the UK, Wales has nevertheless attracted between 10 and 15 per cent. of inward investment. Before this debate I looked up the names of the companies that have come to Wales with inward investment. Going through the list of companies--Aiwa, Bosch, Calsonic, Sony, Ford etc.--we find a thousand jobs here and a thousand jobs there. We see broadly based inward investment coming to Wales.

There is a fourth factor, not much mentioned this evening, that is critical; namely, the people of Wales. It is the resourcefulness of the people and their willingness to be adaptable in the workplace, to be flexible in their working practices, that has led to the high productivity in manufacturing that was referred to. The Welsh economy is a success story.

That said, there are some serious problems. There are unemployment blackspots; there is very high youth unemployment; and there is low pay, as referred to by the noble Lord, Lord Kenyon, especially in the field of services. I have to say that low pay is better than no pay, and being in a job is the best way of improving one's job. However, low pay results in low skills.

There is one matter to which I draw the attention of the House. Last year, Panasonic led inward investors to Wales in making a statement claiming that there had been a drastic failure in the education system of Wales. It advertised six apprenticeships for 16 year-olds with five or more GCSEs. Of over 200 applicants, only three had basic level education. Sony said its experience was very similar. People dropped out before their apprenticeship was complete. Other inward investors have reported a lack of well-qualified people, which is now becoming a constraint in Wales.

I see this as a very serious problem. The noble Baroness was right to say that innovation would be wonderful. We should also like to see the expansion of inward investment. Clearly it will not come about simply by more firms coming to greenfield sites; it will have to come about where it is. But people are telling us that there is inadequate basic education and that there

31 Jan 1996 : Column 1525

is an attitude problem. Post-16 education is too academic, and too many of the people in TEC training are being trained outside of engineering and outside of business.

That is a problem that the Government must face and tackle. I wish I could be as enthusiastic about education authorities as the noble Viscount who proposed the Motion. While I am totally committed to the measures the Government are taking, I should love to see more partnership involving private sector firms and government spending in order to solve this problem.

8.6 p.m.

Lord Harlech: My Lords, I join noble Lords in thanking my noble friend Lord St. Davids for initiating this most important debate.

The Government's achievements in attracting investors from around the world to revitalise, as we have heard, the worn-out and run-down coal and steel communities of North and South Wales demonstrate how much can be done through a combination of private enterprise, central and local government working together in co-operation, and indeed the same return of funding from Brussels as we invest as partners in the EU.

Although the most rabid advocates of the free market economy might find this success--involving, as it has done, active government support and intervention, an embarrassment in some ways, I certainly do not see it as that. Without skilful stage management, at which, to its great credit, the Welsh Office has become adept, Wales--one of the most successful regions in Europe, as we heard, attracting inward investment--would not still be getting that investment.

My noble kinsman Lord Kenyon was kind enough to say that I should go into careful detail about agriculture. In fact, I shall identify mostly with the rural economy, of which that is, of course, a very important part. I also agree with my noble kinsman that I must declare an interest as a farmer and landowner.

The rural communities of Mid and North Wales that I know best have different problems, for which the solutions are much less obvious. The problems facing those communities are by no means peculiar to Wales. Indeed, they are to be found in the remote areas of Scotland and throughout upland England.

Perhaps the first thing to be said about these areas is that the people who live and work in them do not wish to be patronised by politicians who have no understanding of the issues that matter most to them. Together with other remote parts of rural Europe, with which I have some familiarity and which I know make up a tiny minority, they are not peopled by some form of flotsam, left marooned when their fellow countrymen left for life in the cities. The people of whom I speak choose to live and work where they do. They certainly do not see themselves or their communities as a sort of political problem.

They do not wish to rely for their livelihood entirely on hand-outs from government, while needing some support of course for schools, health, housing and, as we have heard, to encourage commerce. The 1990s are

31 Jan 1996 : Column 1526

clearly turning into a decade of cost-cutting, in government, in industry, in the professions, and in services--and not only in Britain. Who can feel happy or secure at being dependent wholly on the Government or on European Union grants and subsidies at a time like this?

Tourism and agriculture are always likely to be the mainstay of a rural economy. That is very true in North and Mid Wales. But throughout North and Mid Wales there are large numbers of decaying and, for modern farming practices, impractical buildings of traditional construction that could, with some encouragement from the planners--I say that carefully--provide accommodation for a wide range of light industrial and office uses. Although the conversion of such buildings into holiday accommodation--we have heard a little about that this evening--to an extent benefits the local economy, it does not make a major contribution to local employment on a constant basis. Unfortunately, it is also transitory. Its impact lasts only a short while. Therefore, small manufacturing service industries would be greatly encouraged to stay where they are by the assistance of government, of whatever political complexion.

In the age of the computer and the Internet it would presumably be possible for differing skills and interests to work in quite remote areas of the countryside and communicate with cities via data lines. At any rate, I believe that to be the theory, though I am not an expert. Perhaps the Government should be looking into ways to make that a reality.

Another form of communication which is of constant concern in those parts of Wales with which I am familiar is public transport. While during daylight hours, as the noble Lord, Lord Elis-Thomas, said, the journey is pleasant, it can be arduous even over a small distance when one has to make a lot of changes.

All political persuasions may think that they can cure the public transportation problem in remote areas, but so far they have not done so. For one reason or another I rely heavily on public transport, as some noble Lords may be aware. It has totally failed the rural communities.

Finally, I draw your Lordships' attention to what I see as a potential danger in the future affecting areas such as Wales. The rules, regulations, memoranda, protocols, and bureaucracy of Brussels, Strasbourg, London, Paris and Rome may, in some instances, be wholly impossible or, at any rate, impractical to put into effect in rural communities--for instance, in Penrhyndeudraeth, Llanfihangel-y-traethau, Blaenau Ffestiniog, Llanfairpwllgwyngyll, Goch Dre or Llantysilio Goch Goch Goch. It would be all too surprising to me if the best policy for dealing with, for example, waste disposal or homelessness, hospitalisation or communications, were the same in a city of 3 million people as that for a rural area not one hour away with an average population of three persons to the square mile. The solutions cannot be the same.

It sometimes seems to me that a strand runs through the European institutions, a thought which cannot cope with diversity in any form. But diversity in any form is extremely difficult to measure unless one is raising it

31 Jan 1996 : Column 1527

from a city format. That cannot be translated into a rural area. But whether or not politicians and civil servants like it, I am delighted to say that we live in a world of startling diversity and in which my native Welsh people will always play a major role.

8.15 p.m.

Lord Geraint: My Lords, it has been an interesting debate initiated by the noble Viscount, Lord St. Davids, and I thank him for his contribution this evening. We had excellent contributions from noble Lords on both sides of the Chamber and all those who spoke, in my view, care for Wales, its people and its economy.

I was fortunate to be elected on to Cardiganshire County Council 44 years ago--that is a long time. On the agenda in those days was the economy of Wales. Those of us who had been brought up in the rural parts of Wales and in Mid Wales in particular, were talking then only about the problem of depopulation and what could be done to stop it taking place. Over a period of 50 years between 50,000 and 60,000 people had left Mid Wales. There was no work for them. That was due to the closures of the old lead mines at the turn of the century.

I remember at the first or second meeting of the Cardiganshire County Council in 1952 we decided to form the Mid Wales Development Agency with representatives from Breconshire, Radnorshire, Montgomeryshire, Merionethshire and Cardiganshire. From there it developed and excellent work was done for a period of years. Then, in the 1970s, we established the Development Board for Rural Wales and the Welsh Development Agency. As a nation we are fortunate to have those two boards. People will say perhaps that they are quangos; but in my view they are not.

Those two boards have saved Wales and especially Mid Wales. They have helped to stem the depopulation. The Development Board for Rural Wales covers 40 per cent. of the land area with a population of 213,500 inhabitants, but only 7.5 per cent. of the total Welsh population. It has among the lowest population density in Europe, yet it is the centre of Welsh language and culture. Twenty-five years ago the population was approximately 185,000. It was therefore a wonderful achievement on the part of the development board to turn the economy around. I agree entirely with my noble friend Lord Hooson that we will never survive in the rural areas without government involvement. The Development Board for Rural Wales and the Welsh Development Agency have proved that point.

Mention has been made of the unemployment rates which, in rural Wales, were 50 per cent. above the Great Britain average. But today, the DBRW has helped to reduce that to only 20 per cent. below the GB average; that is a wonderful achievement. I hope that it goes from strength to strength.

We are talking of inward investment. I was delighted to read a few weeks ago of the first ever direct Japanese investment attracted to rural Wales--a £5 million project. We are fortunate. Then we have the European headquarters of the Canadian company, Fisher Gauge Limited, being built at Welshpool, and it goes on and on. We are proud of that record.

31 Jan 1996 : Column 1528

I became a Member 44 years ago and have been in public life ever since. I have had the privilege of declaring an interest in agriculture and farming, but today I have to add that I am now a retired farmer. It sounds even better, does it not? I have received many letters recently. There are many problems that face the agricultural industry. I have received a letter from the well known National Sheep Association whose affairs are run by Mr. John Thorley, who is a very good chief executive. That body is very perturbed about the Irish distortion in relation to sheep. The recent special deal negotiated by Irish farmers has made the United Kingdom sheep industry highly critical of the British Government for allowing Irish sheep farmers once again to benefit at the expense of United Kingdom and Welsh producers. The deal which allows farmers in the lowland areas of Ireland an extra £8.46 per ewe in European Union payments in 1995 compared with 1994 is seen as grossly unfair. It distorts the market in both the immediate and long term and helps the Irish to undercut Welsh lamb prices. In addition, it will sustain an uncompetitive Irish lamb producer and contribute to a small and destabilised European Union sheep market. Just under 10,000 flock owners will have benefited from this special deal, with a total of about 1.2 million ewes which provides an increase of £10 million, or an average of £1,000 per producer. I advise the Minister to keep in touch with the National Sheep Association, which is a wonderful organisation, to ensure that the interests of sheep farmers are well looked after in the years to come.

I have spoken to agriculturalists in Wales, many of whom have referred to the future of the common agricultural policy. The major problem that faces the milk and sheep industries is the quota system. They would like to have a lead from the government of the day as to whether or not quotas will be around up to the turn of the century or afterwards. I am sure that the Minister is aware that very often quota is worth more than the stock. If it came to a sudden end the industry would face a major financial problem.

Another major problem in Wales relates to county council smallholdings. We are fortunate that we have so many of them both in Wales and England. Perhaps the Minister can tell me--or write to me if he cannot answer tonight--the latest developments in regard to the bid by a merchant bank to buy the 5,728 county council smallholdings in England and Wales. In his wind-up, can the Minister give an assurance to the tenants of those smallholdings that the county councils will remain their landlords in the years to come? Another major problem is rural crime.

I deal next with the White Paper for rural Wales. I agree entirely with the sentiments expressed by the president of the Farmers' Union of Wales. That body believes that a departmental structure of the Welsh Office will lend itself to the establishment of a rural affairs department responsible to the Secretary of State for Wales. I hold that view. It is very important to the rural economy. I am sure that that department can be set up in the Welsh Office, and a similar department in Brussels, to look after the interests of farmers.

31 Jan 1996 : Column 1529

So far as communications are concerned, can the Minister give an assurance that the road from Montgomeryshire to Cardiganshire will be improved in the years to come?

Finally, I believe that the Minister will agree with me that the economy of Wales will never be the same if Wales beat England on Saturday at Twickenham.

8.25 p.m.

Lord Williams of Elvel: My Lords, the House will be grateful to the noble Viscount, Lord St. Davids, for introducing this debate and making it possible. Many interesting contributions have been made. The picture that comes across to me is somewhat patchy. Many noble Lords claim, quite rightly, success in many parts of the Welsh economy; others, like my noble friend Lord Prys-Davies and the noble Lord, Lord Aberdare, point to certain difficulties. In particular, the noble Lord, Lord Geraint, has pointed to difficulties in agriculture.

It may be appropriate if I say a little about the industrial sector, go on to agriculture and finish with some thoughts on rural Wales. As the noble Viscount, Lord St. Davids, said, manufacturing has been the success story of South Wales and possibly the A.55 corridor as well, though on a lesser scale. I detected in the speech of the noble Lord, Lord Kenyon, a degree of sentimental regret, which I share, that the mining industry had collapsed so quickly. In my view, it was not quite so necessary. I believe that had the economics been slightly different, as Tower colliery has shown, Wales might still have had a mining industry of considerable proportions. To leave that aside, the transformation described so graphically by the noble Lord, Lord Griffiths, has been a success story. I agree with those noble Lords who say that all shades of government, but particularly those that have been interested in and formed the agencies about which noble Lords have spoken, are quite rightly credited with a large part of the responsibility for that restructuring. I do not believe that to be a party matter. Governments of both colours have pursued roughly the same policies.

Inward investment has been in part the key to this. There are now 360 overseas-owned plants in Wales--about 100 more than in 1985. Employment in those plants has risen by 50 per cent. In 1993-94 inward investment projects promised to create or safeguard nearly 14,000 jobs. We must be grateful for that. But the 1994-95 report of the Invest in Britain Bureau indicates that Wales is slipping a bit in the league table. We are getting only 11.5 per cent. of United Kingdom inward investment, whereas in the 1980s we were scoring 20 per cent. I believe that the changes in assisted areas put in place in 1993 have contributed to the decline in the percentage of inward investment that comes to Wales.

Another problem in relation to inward investment was graphically described by the noble Lord, Lord Griffiths. There is a clear skills shortage in Wales. I believe that that is part of the price of inward investment. Much of it has come from assembly and other operations which result in low-skilled, low-paid employment. Wales has failed to develop a suitably balanced overall industrial

31 Jan 1996 : Column 1530

structure. Added to the problems in the educational system, as pointed out by the noble Lord, Lord Griffiths, Wales is in danger of having a clear skills shortage. It was pointed out in Cardiff in March 1995 by the then Director-General of the CBI:

    "More successful regions of the European Union appear to have a better-educated, better-trained workforce. We know that training remains the Achilles heel of the economy, and that is particularly true in Wales. Inward investors like Panasonic and Sony have been telling us of their disappointment at the quality of applicants coming forward. That is a worrying sign at this stage of the recovery".

Ignoring these concerns, the Government cut the budget of Welsh training and enterprise councils by 17 per cent. in 1995-96.

As a result of that policy we are in danger of becoming a low-skill low-wage economy. Pay levels, which were relatively high in Wales in relation to other parts of Britain under the last Labour Government, have fallen dramatically while the Conservatives have been in power. That is the only party point I shall make. Average weekly earnings for full-time employees in Wales were £291 in 1994, the lowest level of average earnings of all the 10 regions of Britain. Forty thousand people in Wales earn less than £2.50 an hour. That is a dangerous situation for any country to find itself in. We have to consider carefully what plan of action is needed.

We need to encourage the expansion of existing indigenous and foreign industry in Wales. We need to capitalise on the multiplier effect of major manufacturers in Wales, to some of which the noble Lord, Lord Griffiths, referred. We need to attract investment with high value added employment. We need to assist the expansion of small and medium sized enterprises which are the main generators of employment, particularly those that can cluster around major companies--such as Panasonic and Sony, which are coming in with their big plants--to provide components. We have to concentrate on that area.

I shall move on to agriculture. I was most interested in the comments of the noble Lord, Lord Harlech, on the matter. It is perfectly true--this is my personal experience as well--that large areas of Wales, particularly of Mid Wales and North Wales, will, for as far as we can see, depend on agriculture as a main industry. That lands us with all kinds of problems. As the noble Lord, Lord Geraint, mentioned, there is an Irish problem which is suddenly produced out of the blue. We all agree, and have agreed for a long time, that we should reform the CAP. But if we reform the CAP, what will happen to the Welsh hill farmer? If, as we have heard before, the HLCA is suddenly removed and the CAP is suddenly restructured, plenty of my neighbours in Radnorshire will go straight out of business and into bankruptcy. I should like to be cautious about this because agriculture will keep those people, ourselves and our countryside alive. After all, there are four times as many sheep in Wales as there are human beings. We have to look after the human beings as well.

It is not just a question of small hill farmers. Rural market towns like Builth Wells and Llandrindod Wells depend on the farming community for their prosperity. There is a knock-on effect. Shopkeepers, transport and

31 Jan 1996 : Column 1531

so on depend on a healthy agriculture. There are things we can do which I hope the rural Wales White Paper will recommend. The noble Lord, Lord Harlech, mentioned the possibility of converting out-of-date agricultural buildings into possible small factories. They are what are called the new cottage industries; electronics networks, people working out of their own homes with computers which are linked up to central organisations in towns. The activities of the DBRW, which the noble Lord, Lord Geraint, rightly praised, should be devoted to that end. But there is no point in pretending that that will more than scratch the surface of the problem of the general poverty of Mid Wales and the Mid Wales farming community. We have to address that point.

Finally, I wish to say a few words about tourism. I agree with all that has been said about improving the transport system. It is well known that it is easy to get into Wales but very difficult to get up and down Wales. Anyone who has driven on the A.483 will know what I am talking about. Tourism is fine but it is seasonal. We are not like Switzerland. We do not have a winter tourist season. The Swiss have a winter tourist season and a summer tourist season. One can see it in my part of the country and in the part of the country of the noble Lord, Lord Aberdare. In July and August we are flooded with tourists. However, they all go away again in September and we do not see them back until the summer. However many hotels or theme parks one builds, it will always be a seasonal operation which will be run down when the season is finished.

Unemployment is too high. The Government have pursued good policies in many respects. We look forward to the rural Wales White Paper but it must address all the problems in rural Wales as an entity rather than try to disperse them as I think the rural England White Paper did.

8.35 p.m.

Lord Lucas: My Lords, I thank my noble friend Lord St. Davids for initiating the debate, though I find myself greatly awed in rising to answer. All noble Lords who have spoken share knowledge, experience and wisdom to which I cannot lay claim. They also share a great and evident love of Wales. That I can understand because my mother's family lived in Wales for 250 years. Even 150 years after they left one can see in their journals the regret at their departure. Not that that regret was shared by the Welsh. There is still a plaque in Ruthin church recording the day the de Greys left. It was a great relief to the Welsh that they did.

Wales has some extraordinary economic advantages--its people, its countryside, the Welsh language, culture and heritage. It has made excellent use of those advantages. As my noble friend Lord Griffiths said in a powerful speech, the theme of the Welsh economy over the past 50 years is success. Wales has recovered from the decline of its primary industries, celebrated in detail by my noble friends Lord St. Davids and Lord Griffiths of Fforestfach. In all the speeches

31 Jan 1996 : Column 1532

today credit has been given where credit is due--first and foremost to the Welsh people and in due measure to governments of all colours.

It was a pleasure to hear the noble Lord, Lord Williams of Elvel, saying nice things about the Government. I hope that it will not be the last time. The noble Lord, Lord Hooson, was also lavish in his praise. And from the noble Lord, Lord Elis-Thomas, I thought I even caught a longing for the day when the Welsh railways are finally privatised.

Next Section Back to Table of Contents Lords Hansard Home Page