Orders of the Day — WELSH DEVELOPMENT AGENCY (NO. 2) BILL [Lords]

Part of the debate – in the House of Commons at 12:00 am on 26th June 1975.

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Photo of Mr Nicholas Edwards Mr Nicholas Edwards , Pembroke 12:00 am, 26th June 1975

I hope that the Secretary of State will act on two points. I hope that he accepts the amendments we propose for the early notification of these powers when exercised. I hope that he will accept our proposal that we should have a Welsh Select Committee so that we can examine his performance and the performance of the agency.

As originally drafted, the Bill even restricted the power of the agency to appoint committees. While dealing with that point, Baroness White, a former Minister at the Welsh Office, and a supporter of the Government, was moved to tell the Government that she would not feel inclined to serve on such a body if she were invited to do so. Like Baroness White, I thought it intolerable that the members of the agency should be so much under the thumb of the Secretary of State. A concession has now been made, but I agree with the Baroness that there are too many manifestations of "nanny knows best" in the Bill. Those were the views expressed in another place. The Government can dismiss them if they feel like doing so.

Sadly, it is the intention of the Governernment that the agency is to be nothing more than the creature of the Secretary of State. I think that that will be a dispiriting experience.

In Committee we shall have a great deal more to say about the powers given to the Secretary of State and the lack of public accountability. We shall seek to move amendments that will at least ensure that Parliament is informed at an early stage when the Secretary of State exercises his power of direction or overrides the agency. But the most serious aspect is the lack of accountability for public money. The Secretary of State for Energy—the architect of the Industry Bill—has frequently argued the case for public knowledge about finance for the taxpayer when it is provided for individual companies.

Accountability can be achieved only when clear-cut criteria are laid down as to the use of public funds. That concept of accountability is entirely destroyed when the Secretary of State can give specific directions to the agency and, in effect, make up the rules as he goes along. Accountability can be restored only if on each occasion the Secretary of State does that the fact is reported very soon to Parliament.

The very first act of public accountability should occur during the Second Reading of a Bill, when the Minister should explain and justify to the House the Commons the expenditure of public money, but that has been a duty on this occasion most casually performed.

We are told that £100 million—or £150 million by order—is to be made available to the agency, but we are entitled to know a great deal more than that. We know practically nothing. How quickly is the money to be spent? How far will the Government control that expenditure? In discussions on the consultative domument there was talk of the money being spread over five years, but, in the present financial crisis, is the agency to be told that there is an annual limit beyond which it cannot go or, taking its cue from this profligate administration, can it blue it all in 18 months, as suggested from the benches behind me, and come back for more? The Secretary of State said that there was no time span and no time limit. Will he say exactly the same after the economic measures have been announced by his right hon. Friend the Chancellor of the Exchequer within the next three weeks?

During the debate in the Welsh Grand Committee on 31st May, the Secretary of State confirmed that in the current financial year the expenditure of the agency over and above the money already being spent on selective assistance, regional development grants and the regional development premium was planned to be £8 million or £9 million. He went on to say that the agency would be operational for only part of the year—for three or four months perhaps—and made clear that we should do a multiplication sum to arrive at an annual rate of expenditure——in other words, between £24 million and £36 million. Are we to assume that the Government will allow the agency to spend that sort of sum in a full year? Is that the intention? We are entitled to be told how much the Government expect to be spent on the various functions. What, for example, is the agency's range of expenditure likely to be on development land clearance, and how does it compare with current expenditure?

We are sometimes given the impression that extra funds of £100 million are being injected. That is not really the position. The Secretary of State referred today to expenditure of £11 million by the Industrial Estates Corporation, and £3 million is being spent by the local authorities on derelict land clearance. That represents £15 million a year which is being expended at present and which will be absorbed by the powers of the Bill.

In another place, the Lord Chancellor said that the agency would be able, with the additional resources made available to it, to do more in existing spheres—for example, derelict land clearance—and to make an impact in new activities. He went on to say that the Bill did not specify any period for which the funds should last and that the Government thought that was right. He said that it was hard to predict how rapidly the agency would need to draw on financial resources. The Secretary of State said today that he was not in a position to indicate how rapidly the agency would draw on the funds. Is that all that can be said? Is it right in the present economic crisis for the Treasury to leave entirely uncontrolled the rate at which £100 million of public money is spent? I just do not believe it.

The Government have been equally imprecise about the £200 million allocated to the Scottish Development Agency, not to speak of the £700 million granted to the National Enterprise Board. We are talking about a collective expenditure of £1,000 million of public funds—taxpayers' money—without reference to Parliament at a time when the Government have a borrowing requirement of at least £9,000 million and problably more.

It will be of no benefit to the Principality if we provide financial aid to individual companies only to have them bankrupted by inflation unleashed largely as a result of excessive public expenditure. If that policy is pursued, for every job created in an agency project 100 jobs will be lost in small companies throughout Wales.

It is imperative that the House of Commons should not permit the expenditure of a pound that it has the power to control without being fully satisfied that that expenditure is essential and unavoidable. Before the House authorises spending on this scale, it should at least insist on knowing much more about the details of the expenditure than it has been told so far. It should do something else as well. It should ask for a statement of the Government's strategy. It should insist on an answer to the question whether expenditure of the kind provided for in the Bill is likely to produce the best results and the best value for money.

If there is to be stringency—that is what is belatedly promised by the Chancellor of the Exchequer—if every pound is to count, it must be spent in the right way. It may be more sensible to spend available resources on the infrastructure, on building roads and on providing sewerage and water facilities than on grants and loans to individual companies, let alone on the acquisition by the State of private companies or the establishment by the State of industrial enterprises.

The question we have to ask is what will be achieved by the expenditure of the extra money in terms of lasting employment opportunities and prosperity for Wales. Could it not perhaps be better spent? The taxpayer has a right to know that he is getting full value for his money.

For 10 years regional policy under both political parties has been concentrated on the payment of expensive subsidies to manufacturing industry. That policy has met with some success, and such aids have a vital part to play, particularly at a time when there is a heavy rundown of the old labour-intensive industries. In the Welsh Grand Committee debate on the economy I pointed to some of the results of the Conservative's Industry Act 1972 which had been given in recent Government answers. I referred to the 600 applications for projects in Wales and 23,000 jobs. None the less, we also have to acknowledge that there has been too little sign of widespread self-generating economic development in any part of Wales—and that is what we all need.

In April 1964 the unemployed in Wales as a percentage of the unemployed in the United Kingdom was 5·7 per cent.; in April 1974 it was 6·5 per cent.; in June 1975 it is just under 6 per cent. In June 1964 41·4 per cent. of the population was at work; in June 1973 41·5 per cent. of the population was at work—and that at the height of the boom. In 1960 there were 669,000 male workers in employment; in 1973 636,000 and in June 1974 621,000.

Unemployment is relatively high in Wales, partly because of the decline of the old industries, but partly because investment is less profitable in Wales than it is elsewhere. The most common reason for this lack of profitability is poor communications. The motorway map of Great Britain reads like a map of the development areas in reverse. After 16 years of motorway building, there are still only 27 miles of motorway in use in Wales. Time after time lack of communications has proved vital to investment decisions.

As a temporary expedient, subsidies are invaluable. I do not argue that they have not a part to play, but I fear that the creation of the agency may tip the balance so that we get the strategy wrong or, perhaps worse, that there is no strategy at all.

In general terms, it is a mistake for the Government to dictate these matters. They make mistakes. The job of the Government is to provide the conditions in which industry can flourish—infrastructure, labour training, education, housing to promote mobility, low taxation—and let industry get on with the job.

When presenting the Bill the Secretary of State had absolutely nothing to say to the House about his strategy. We are supposed to take on trust the policies of an administration whose every act so far has caused production to decline, the pound to lose its value and people to lose their jobs.

The Secretary of State puts the Bill forward as a kind of magic potion although he has done nothing to cure the fundamental sickness. He seeks to interfere where he should leave alone. He seeks to dictate where he should give freedom. He seeks to keep from this House the information that it should rightly have. Given the chance of an agreed measure, he rejects it. He persists with policies that destroy confidence. For all these reasons I ask the House to reject the Bill.