General Powers of the Board

Orders of the Day — Development of Rural Wales Bill [Lords] – in the House of Commons at 12:00 am on 1st November 1976.

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11.30 p.m.

Photo of Mr Nicholas Edwards Mr Nicholas Edwards , Pembroke

I beg to move Amendment No. 8, in page 4, line 44, at end insert: 'which is essential for the economic and social development of the area and which the Board is satisfied after consultation with the Council cannot be provided in any other way'. Perhaps the House is in less of a hurry to get on with the Bill and we can elaborate our arguments in view of the vote on the previous amendment. I am sure the Minister will not feel that he has to hurry to reply to the important arguments we shall put forward.

We seek to return to the scene of old battles. On numerous occasions during proceedings on the Bill and other Bills we have voiced anxieties about the powers taken by the Government to acquire and carry on businesses. Government bodies that do not have to commit their own money are not usually good judges of what constitutes a viable business. The recent report of a Select Committee dealing with the activities of the former Secretary of State for Industry in certain organisations bears out that judgment. About £10 million was spent on organisations that promptly went bankrupt.

We are particularly concerned about the possible danger to other business in rural Wales if the Board or the Development Agency—we have to speak of the two organisations jointly because their functions and boundaries frequently averlap—seeks to establish businesses in competition with other organisations or to establish businesses that could threaten the existence of the small businesses that are the foundation of the economic life of rural Wales.

It has become clear from our discussions that the health of rural Wales depends essentially on the health of small businesses. Because small businesses have been crushed by the burden of taxation and administration placed on them by the Government, high interest rates and inflation, we have record unemployment levels throughout much of rural Wales. Unemployment levels are frequently 14 per cent., 15 per cent. or more. In my constituency they are even higher.

We believe that potentially successful enterprises can usually raise finance. I do not share the view expressed by the hon. Member for Cardigan (Mr. Howells) in Committee that there are many small businesses that can do well only if they are given a temporary helping hand. I fear that the temporary helping hand would turn into a permanent helping hand and too many businesses would become permanent loss-makers.

We are told that it may be necessary for the Board to operate certain essential services. Specific reference was made in Committee and in another place to the new town powers. It was argued, not unreasonably, that it would not be sensible in this measure to take away powers that already existed in the new town in Mid-Wales. In Committee we tried to qualify the power to manage businesses and take part in business enterprises by reference to a clause that specified that these pursuits should be carried on in new towns. I recognise that that might have been unduly restrictive and that, within the framework of the Board's activities, to draw the boundaries so tightly might have been difficult in practice.

We were also strongly critical in Committee of the extension imposed by the Government of the Board's powers which enabled it to acquire businesses. At the end of the proceedings our anxieties remained, and those anxieties are shared by others. The Welsh office of the CBI wrote that its committee was still extremely concerned that the present wording of the clause gives open-ended powers to the Board and it believes that they should be closely and clearly defined. The CBI does not wish to prevent the Board from carrying out essential services but firmly believes that the Board should not be given general powers which might enable it to establish businesses which could compete unfairly with the existing private sector thus affecting employment prospects of employees of established companies. This evening we are having another go at the same exercise. The Under-Secretary will concede that the amendment is moderate in tone. It is permissive. It will not place restrictions on necessary activities, but it clearly places the onus on the Board to establish that those activities are necessary and cannot be provided by other means. That is reasonable.

I have in mind particularly that the Board should consider the situation of other private businesses in the area which might be able to provide the services and the effect of its decisions on businesses within the area for which it is responsible. The amendment that we tabled envisaged consultation with the Council, but the Council has, sadly, just been swept away by a vote of the House, against the combined representations of the Opposition parties. For that reason, clearly I cannot now press this amendment to a vote as I otherwise would have done. All I can hope is that, if it is felt to be reasonable, in another place the Government will have a further look at this proposal, because I genuinely believe that it has merit.

I urge the Government, when they are considering proposals to establish a development agency or a rural board or any other organisation, not just to be concerned with the actual impact that they believe their proposals will have on business and other activity in an area, but also to take full account of the psychology involved. At present industry is operating under great strains. The small business sector is faced with desperate conditions. Many small businesses find it difficult to survive. Many have had to go under. Many more have laid off one, two or three employees.

It is important that the Government accept or introduce wordings that at least instil confidence that it is not their intention to weaken small businesses. There is a real fear—it was expressed in the CBI letter—that, whatever the Government's intentions, this will be the effect.

In considering amendments of this nature and in drafting Bills, if they do not intend to use powers in a dangerous or harmful way the Government should make it clear in the legislation. It is no good giving undertakings in Committee. Most business men do not—perhaps mercifully—read our proceedings in Committee. Indeed, it would be a harsh penalty to ask them to do so. Many of them have to read Bills, however, and they see powers being given that cause them alarm. There is an obligation on the Government to write their Bills in such a way that proper safeguards are introduced and alarm is reduced to the minimum.

Photo of Sir Raymond Gower Sir Raymond Gower , Barry

I hope that the Government will look at this carefully. My hon. Friend the Member for Pembroke (Mr. Edwards) has explained why we are opposed to the wording of the Bill. It is too wide and will allow any undertaking or business to be carried on. That power would be great in any part of the country but it is particularly extreme and excessive in the context of the rural area of Mid-Wales.

For various reasons many businesses and industries in rural Wales are experiencing a difficult time. I apportion no blame, but some are finding it difficult to remain solvent. Businesses in rural Wales have several disadvantages, one of which is the population, which is small and scattered. These are scattered catchment areas which are particularly difficult for distribution. Communications are poor, and excessive transport costs cause grave difficulties. Existing businesses, industries and trades in the rural counties of Mid-Wales have long lines of communication for the acquisition of stocks and should they seek to sell outside their immediate neighbourhood.

In addition to the general disadvantages under which industry in the whole of the United Kingdom is at present operating, those in rural counties have extra disadvantages. Probably some of the businesses will go into liquidation in the months ahead. Let us hope they will be few. Whatever their performance in the past, such firms have every right to be anxious about the future. They face difficult conditions and would be gravely affected if the Agency were allowed to carry on any undertaking or business under the Bill. That is too wide a power to confer on any body in this context.

I hope that the Government will accept our proposal as reasonable. We recognise the need for emergency action in some circumstances, and that would not be removed by our suggested amendment. But we find it objectionable to give the Agency a totally unfettered power. It could be injurious to those who have to work under the present difficulties in rural Wales. People working in rural Wales are apprehensive about this part of the Bill. I hope that the Minister will say something to lessen their fears.

11.45 p.m.

Photo of Mr Ian Grist Mr Ian Grist , Cardiff North

The clause is objectionable primarily because subsection (1)(g) is a catch-all phrase: to carry on or acquire and carry on any undertaking or business". That is a lazy piece of drafting. The draftsmen are saying We couldn't think of anything more to put in the subsection. We threw this in at the end so that the Board can do anything it wants." It has been done before. It is something that Governments and draftsmen go in for, but I see no reason why Parliament should continue to tolerate it. Ministers will be able to produce a number of precedents from previous Bills, but I take no responsibility for those Bills, and, therefore, feel no shame about those precedents.

The Board's functions are restricted to a certain geographical area, and we have been told several times by Ministers that it is restrained in its intent and approach. It is non-party-political and non-doctrinaire. Therefore, there should be no need for this catch-all wording.

The wording is particularly objectionable in the hands of a Socialist Government. We on the Conservative Benches cannot avoid being suspicious about a party which believes in State bodies carrying on, acquiring or starting any business, through the Development Agency, the NEB or whatever it may be. The Government are creating a growing host of bodies. If only they could manage the economy that little bit better they would have the money, and through this legislation the means to carry on a real Socialist State. The one thing which saves us all at present is that they cannot provide the finance to operate these clauses.

I can see no reason why we should accept this shoddy draftsmanship, especially when we think of the present Government and those who wish to make a reality of the wording.

Photo of Sir Anthony Meyer Sir Anthony Meyer , Flint West

I support the amendment, which would tighten the definition of the role to be played by the Board. This is perhaps the last amendment on which it is practicable to consider the Board's role, the philosophy behind it and what it is likely to achieve.

I have made it clear in previous debates on the Bill and on the Welsh Development Agency that I am not by temperament opposed to the idea of Government intervention. It is ludicrous to claim in modern society that the State can opt out of economic development. Like it or not, the mixed economy is here to stay, and the State will have a large role to play in the direction of the economy.

The problem then becomes one of balance. Associated with it there is a psychological problem, one of expectations—what people can reasonably expect the State to do. The accumulating evidence. which is now overwhelming, is that the balance has now tilted too far. It is now horribly clear that, for reasons which have nothing to do with political doctrine, the limitations on the effectiveness of Government intervention in the economy are far stricter than any of us had ever imagined.

It is, alas, now clear that unemployment is going out of control in the sense that it no longer responds to stimuli which a decade or so ago would infallibly have influenced its direction one way or the other. This is the justification for the expenditure cuts which have been so strongly urged on the Opposition Benches, because it is now clear—and I am as sorry to say this as anybody else —that it is Government expenditure that is now causing unemployment.

As for the reality of unemployment, there is, I fear, no possibility of disguising it. My own county of Clwyd hither- to has been one of the stablest in terms of unemployment. I know that the Rhyl area, as most seaside resorts, has a highly fluctuating unemployment rate, but in the area represented by the Under-Secretary of State for Wales on the littoral of Deeside unemployment remained steady and low for a long period. We are now witnessing for the first time a high level of unemployment in that area also. This must give great cause for anxiety to those such as the Under-Secretary of State who believed that there was scope for effective Government intervention to create employment.

The Bill comes at the wrong time. The quarrel with the clause as drafted is that it gives the impression that the Board, by a wave of its wand, can create jobs in that part of Mid-Wales to which the Bill applies. I am sorry to say that it will not be able to create these jobs. For any job that the Board creates by this operation the risk is that one-and-a-half jobs will be lost in areas outside the operation of the Board.

Many people outside the House see these matters more clearly than we do in this House. I refer to the self-employed and the small business men, who are only too aware of the weight of bureaucracy and taxation—a situation brought into being by the existence and activities of well-meaning bodies, such as those that we are discussing tonight. Once expectations are aroused, as they are by the provisions which we are now considering, they are hard to damp down. People who have lost their jobs because of the burdens imposed by the Government on firms, causing those concerns to contract, understandably demand that the Government should take further action to save their jobs and bring in new ones.

It is our responsibility by adopting some such amendment as that which is now before the House to bring home to people the tight limits on the ability of the Government to do anything to save jobs. The best thing the Government can do, if they wish to create more jobs, is not to create more bodies such as in the Bill, but to pack up and go home

Photo of Mr Barry Jones Mr Barry Jones Parliamentary Under-Secretary (Welsh Office)

I reject the alarmist employment theories advanced by the hon. Member for Flint, West (Sir A. Meyer). The problem in North-East Wales, put bluntly, is that for too long the area has relied on too few basic industries that are now vulnerable to technological change.

The hon. Member for Cardiff, North (Mr. Grist) placed strictures on our wording, which he said was lazy. I would say that the wording in the amendment is slap-happy. The aim of the Bill is to stop the depopulation of rural Wales, to generate employment, and to make a better life possible for the people of that part of Wales.

I also want to nail the misapprehension under which some hon. Members labour, that this Government might be against small businesses. That is not so. The Department of Industry has its small businesses section, and the Welsh Office is as friendly towards small businesses as any other political philosophers.

Photo of Mr Ian Grist Mr Ian Grist , Cardiff North

Since the Minister mentioned the position in North-East Wales, would he not agree that the problem there really lies with the lack of profitability in firms, and that if he wants to bring employment to his part of the world and the rest of Wales, his Government should bring about conditions in which firms can operate profitably?

Photo of Mr Barry Jones Mr Barry Jones Parliamentary Under-Secretary (Welsh Office)

That has nothing to do with the Bill or with Cardiff.

Photo of Mr Geraint Howells Mr Geraint Howells , Cardigan

The Minister said that the Government were looking after the interests of small businesses. is he aware that the Government promised an interim report five years after the Bolton Report was published in 1971 on the problems of small businesses and that the present Government have refused such an interim report?

Photo of Mr Barry Jones Mr Barry Jones Parliamentary Under-Secretary (Welsh Office)

Five years ago we did not hold office.

The amendment is incompatible with the Bill as amended. Who will specify the person or the body to decide what is an "essential" business or undertaking? To develop the point that I made to the hon. Member for Cardiff, North, the language of the amendment is unsatisfactory. For instance, one does not "provide" a business. One carries it on or undertakes it in terms of drafting legislation. But I do not say that that is our major objection to the amendment.

The word "essential" is too stringent. Something may be beneficial or desirable without being essential. During the Bill's passage, repeated assurances have been given, here and in another place, that the power of the Board to acquire and carry on a business will be exercised only where it is unable to interest private bodies or persons in a business that it considers is in the interests of an area.

Photo of Sir Raymond Gower Sir Raymond Gower , Barry

I am grateful for that assurance, but where in the Bill does that appear? I have been unable to find it so far.

Photo of Mr Barry Jones Mr Barry Jones Parliamentary Under-Secretary (Welsh Office)

Under the powers relating to business. I hope that the hon. Gentleman will allow me to develop the assurance that I am trying to give him.

The whole purpose is to assist and complement the development of an area. But we cannot allow a project which the Board thinks is in the interests of an area to be balked by unreasonable objections by private bodies which are not themselves willing to undertake the venture.

Clause 4(5)(c) specifically provides that the consent of the Secretary of State must be obtained by the Board to exercise this power. That consent will be given only when the proposed enterprise would benefit the local community and when the Board cannot interest private bodies or persons in the project. What is more, the Secretary of State would need, among other matters, to consider the viability of the project under consideration before giving his approval.

For these reasons, I urge the House to reject the amendment.

Photo of Sir Anthony Meyer Sir Anthony Meyer , Flint West

Before the hon. Gentleman sits down——

Photo of Sir Anthony Meyer Sir Anthony Meyer , Flint West

Will the hon. Gentleman reconsider his remarks——

Mr. Deputy Speaker:

Order. I think that the Minister has sat down.

12 midnight

Photo of Mr Nicholas Edwards Mr Nicholas Edwards , Pembroke

When one listens to the Under-Secretary charmingly giving that sort of reply, one knows that he has not a very good case. It was the kind of case that we have heard him advance so often before when he has turned to his advisers and said "We have not a very good argument, but produce some drafting points which will shoot the whole thing down in flames." I have already conceded that, as a result of the passing of an earlier amendment, this one is faulty and that perhaps it can be looked at again where the Bill started its proceedings—in another place.

Then the Under-Secretary said that it was the Government's intention and object to do all that was contained in my amendment. He proceeded to define the scope of the Board's activities as providing those functions of economic and social development which it felt were desirable and important, which would not he obtained in any other way and which private bodies refused or felt unable to provide.

Once again we have the Government giving declarations in Committee which they are not prepared to write into the Bill. If they are able to give these declarations and assurances, I cannot understand why they are so slap-happy and shoddy about their drafting. Why cannot they draft a Bill properly so that they do not have to give these repeated assurances about their intentions? We would like legislation to be drafted so that the Government's intentions are clearly spelled out.

It is because the Government repeatedly fail to do this that we criticise them. We would like the safeguards and Assurances on this point written into the Bill, just as we wanted them on agriculture, and we shall go on chasing the Government until we get some sensibly drafted Bills instead of the shambles usually presented to us.

Amendment negatived.

Photo of Mr Dafydd Elis Thomas Mr Dafydd Elis Thomas , Merioneth

I beg to move Amendment No. 10, in page 5, line 4, at end insert: '(i) to provide financial assistance by way of grant or loan or partly by grant or partly by loan or by taking of equity in a company, to assist any person or persons proposing to carry out any activity in a manufacturing, extractive, agricultural, fisheries, forestry, land-use, recreation, tourist, or service industry which will contribute to the economic and social development of the area for which it is responsible.' The purpose of the amendment is to lift into the Bill a major section of the Highlands and Islands Development Board Act which was omitted by the draftsman. In our view, the amendment is crucial to make the Bill into a measure setting up a Development Board for Rural Wales in the full sense of the word. We cannot talk about development in a rural area heavily dependant for its employment on primary industry if development does not include the development and stimulus of primary industry as well as secondary manufacturing activities.

My major criticism of the Board is that it falls far short of a development board for rural Wales as envisaged by experts whom I shall not quote at this hour and as envisaged in practice by the Highlands and Islands Development Board in Scotland.

I know that the Minister will say, as he did in Committee, that the intention of the Board is to concentrate on manufacturing industry, to provide COSIRA loan powers and to do some work on social development as such.

In Scotland, the Highlands and Islands Development Board is to continue to function as an effective agency of regional intervention alongside the Scottish Development Agency, but retaining its financial assistance powers over a whole range of activities in primary as well as manufacturing industry.

The whole thinking behind the creation of the Board is that regional intervention on a technical level is necessary because of special problems. We need a Board for a given, defined area, because there are special problems. By limiting the powers of the Board to manufacturing industry, the Government seem to be arguing that it is only in that sphere that we ought to intervene, whereas I am arguing that many of the problems of Mid-Wales are concerned with its primary industries. If we are looking to job creation it must be job creation in land use, in recreation, in tourism, in extractive industry and in the other areas of industry which I have mentioned, not merely in manufacturing.

Indeed, at this time, by concentrating on looking for foot-loose manufacturing industry from outside the area, the Board may be following a dead end from the start in that we already have a substantial problem in Mid-Wales with the existing resources. The WDA has the same problem and has so far been unable to help us here.

In a situation of overall economic growth in the area we could manage the migrants from the Midlands overspill if they came into Mid-Wales, but in a situation of contraction the spin-off and the spill-over are no longer there. Therefore, by looking to manufacturing industry to provide the immediate growth in jobs, the Government and the Board may be making a fatal mistake in their economic plan. In the amendment we say that the Board must have powers over a full range of activities within its area and not be merely limited to manufacturing industry.

With regard to manufacturing industry, I do not want to repeat the arguments already made about the powers of the WDA and the relationship between the Board and the WDA. But, having read carefully the speeches of the Under-Secretary of State in Committee, I still fail to see the logic in giving the Board COSIRA loan powers and no other powers at all.

If I were a budding entrepreneur or the chairman of a co-operative and looking for an opportunity to develop, or for investment, I might consider COSIRA loan powers or assistance, but the rate is as high as the bank rate. It would not be a type of COSIRA loan that I would feel to be necessary but a form of equity participation by a Board such as this over a short period, which would give me an opportunity later of buying back the equity. But if I wanted that kind of assistance I should have to make, for example, one application to Aberystwyth, then another to Treforest, and, if I were in a difficult situation, I should be making a parallel application to the Industry Division of the Welsh Office in Cardiff.

We now have this plethora of bodies. The Secretary of State made a great peroration about it when we started off on Second Reading. That was the whole argument for creating an effective Board which would replace the many tiers of industrial assistance in the area. In place of the Development Commission and its range of assistance, we are now to have the Industry Division of the Welsh Office, the Welsh Development Agency, and this Board with its very limited COSIRA loan powers. I do not see the logic of transferring only these powers from the WDA to the Development Board for Rural Wales. Again I am concerned that the WDA will of necessity not only be looking for its development opportunities in industrial South-East Wales and industrial North-East Wales but will also be tending to concentrate on the big fish, or on trying to develop or farm the big fish, whereas the people most in need of assistance in Mid-Wales are the smaller fish. It is the small man who needs a capital injection to help him expand from six to 10 or from 10 to 16 jobs. It is not the big projects which are looking for capital, but small projects which do not automatically turn to the merchant banks.

This is the whole success of Inverness as the centre of the Highlands and Islands Development Board. Decisions are made there in 24 hours on small-scale projects. That Board has been able to assist a whole range of small projects, not only in manufacturing but in other areas proposed in our amendment.

I mention specifically the extractive industry, not because I expect RTZ or some other international mining company to go to the Board and ask for help for starting copper mines, but because there are smaller slate quarries in my constituency which could do with a capital injection to develop new machinery and improve—particularly now that their regional development grants are being withdrawn from 1st April 1977. A number of these small enterprises have diversified into producing craft goods for the tourist industry, and that, too, would be more successful if actual capital injection was available for that purpose. As with the extractive industry, the Board will not be able to provide any financial assistance.

The position is similar with agriculture. We have specific agricultural needs in Mid-Wales. I know that the Minister will say that they are helped by ADAS and various other schemes, including the hill area special compensatory payments from EEC, and so on. In the case of Scotland, the Highlands and Islands Development Board gives assistance to expanding a herd of cows from 15 to 20, for example, and much finance has gone into small schemes of this kind. We have, in Merioneth, designated a hill project area, but this kind of development work on hill land is virtually useless unless there is capital to match it. If hill farming is to develop effectively in Mid. Wales, it will need capital injection like that provided by the Highlands and Islands Development Board, and not provided here.

Agriculture is a primary source of employment in rural areas of Wales, as is forestry. Once again, the Board has no powers in this area. Our amendment would provide aid for afforestation in the areas I have been talking about—on small farms with hill land on which forests could be developed on a small scale. I am not talking here about pop-singers like Cliff Richard who have trees growing in my constituency. If we are talking about regional intervention in manufacturing industry, it is logical also to talk about the same thing in relation to afforestation.

As for fisheries, fish-farming could be a major industry in areas of Mid-Wales. Much of the work of the Highlands and Islands Development Board has been in providing aid for fisheries. Our Board could do much to innovate work which would not otherwise be done.

12.15 a.m.

Finally, I come to tourism and recreation. This, of course, is the major growth industry in Mid and rural Wales and it is a growth industry which has to be very carefully planned and developed. I think what applies to the Welsh Development Agency in the case of manufacturing industry and its relationship with the area and with potential developers also applies to the Welsh Tourist Board and its links with the area.

The Board's financial assistance is administered centrally from Cardiff and is not available on a local basis. I have discussed this with the Tourist Board and I can certainly say that there are many people within the Board who feel that the Board might be more effective if it were able to provide grant aid at regional offices rather than all the projects having to be dealt with through Cardiff. There might be a limitation on the amount available locally, but, as things stand, all grant aid for tourist projects has to go through Cardiff.

I am not complaining, because I have campaigned to get some of these projects off the ground and they are doing so with Welsh Office and Welsh Tourist Board money. But I am worried that the small hotelier who wants more bedrooms or who would like to carry out a small tourist development is not getting any backing.

It is the smaller-scale development which would provide jobs in Wales but it is the larger development which will have more attention when the application is made to Cardiff. The tourist industry is the major job creator now, not manufacturing industry, and it is essential that there should be powers for the Board in this instance.

The logic of the amendment is to extend the powers of the Board. It would make it into a Development Board for Rural Wales in the full sense of the word, not merely one which concentrates on the manufacturing sector but one able to assist the whole economic activity in its area. The Government have accepted the logic of my amendment by giving some social powers to the Board but they are not prepared to go the full way and give the Board the whole range of economic development powers which I believe it must have.

Photo of Mr Nicholas Edwards Mr Nicholas Edwards , Pembroke

The hon. Member for Merioneth (Mr. Thomas) will know that I have sympathy for some of the things he says, though not all. I do not believe that we need a body with these very extensive economic powers that he believes would transform the situation, because, regrettably, I do not think that they would. I think that the central economic responsibility must remain with the Government. We have seen in so many instances how such organisations are powerless against disastrous decisions taken centrally by the Government.

For example, at the present time there are 53 Government factories and 44 advance factories standing empty in Wales. Needs are not met by the setting up of boards to build advance factories if the central economic management of the economy is wrong.

That is why I do not go the whole way with the hon. Gentleman and cannot urge my hon. Friends to support him on this occasion. In Committee, we voted with him on the basis that we liked the case he was advancing for trying to centralise functions in one organisation. I said then that the amendment he was moving on that occasion might not be satisfactory to be finally written into the Bill, but that perhaps it could be looked at again on Report stage.

The point on which we agree with the hon. Member is that the Government have produced total nonsense in the relationship between the Development Agency and the Board. I intend to say more about that if we have a Third Reading debate. I content myself by saying that we think the relationship between the two organisations will be a shambles and that there will be total uncertainty.

All the extra explanations given by the Under-Secretary during our debates have added nothing to clarity. His repeated incantation that it was all a matter of COSIRA powers, a statement that he made every hour or so in Committee, did not resolve the problem. We think that more fundamental changes will be needed to sort this matter out. That is why we shall not support the amendment. It attempts to place powers which already exist with the Government largely in the Development Agency so that industrialists can look to one body rather than two or three. Nevertheless, we do not think that it gets down to the fundamentals of sorting out relationships between these two bodies. Therefore, we shall have to come back to the matter at some time to try to do the job, but we do not think that the amendment solves the problem.

Photo of Mr Barry Jones Mr Barry Jones Parliamentary Under-Secretary (Welsh Office)

Everyone who served on the Committee will agree that we debated this matter at length and that we gave it a good airing. I shall therefore be brief.

The function of investment in industry, which is what the amendment is about, is a central function of the Welsh Development Agency. The Government do not intend that the Board should duplicate the Agency by having the power in its own right to assist companies or individuals by the direct provision of finance or by taking equity in a company. Investment in industry is a specialist function that in general is best left to the Agency. We think that specialist skills are required, and these will be available to the Agency. That makes that body the best channel of this type of direct assistance to industry. I therefore advise the House to reject the amendment.

Photo of Mr Dafydd Wigley Mr Dafydd Wigley , Caernarvon

The Minister's reply this evening has been almost as inadequate as was his reply in Committee. It was almost identical. I strongly support my hon. Friend the Member for Merioneth (Mr. Thomas), and I am disappointed that the Conservatives cannot vote for the amendment in the way that they did in Committee. Presumably that is because of the late hour.

This is a fundamental amendment which makes the difference between the Board being a success and being a rather dismal failure. We have seen many reports about rural Wales. There was the Beacham report, the Roy Thomas Study, and the Welsh Council's report, among others. Now we have the opportunity to do something, and that opportunity is about to be lost. That is nothing short of tragic.

We have to see the economy of rural Wales as a sort of integrated whole. Policies which depend upon transferring entities from outside to solve these economic problems are doomed to fail. They will be subject to the rejection which is sometimes experienced in other walks of life when a totally alien development is introduced into a certain area.

The Board falls between several stools. It is not a rural board for Wales. There are other rural areas with similar problems to the area defined for the Board, but they are excluded. The fundamental weakness is that it is neither a co-ordinating board nor an all-embracing board. It could be one or the other, but it is neither. A few moments ago the Minister told us that there were too many nominated boards, but here we have another. It is to be responsible for economic development, but it is given none of the necessary powers for that function. It exists because there is a difference in the structure of rural areas compared with industrial areas, but it does not have the necessary powers to deal with those different circumstances. It is to do with rural Wales, but it has no powers to deal with the fundamental industry in rural Wales. It deals with an area where the major industry is tourism, but has no responsibilities in this direction. It deals with an area with a major extracting industry, but has no powers in this direction either.

The Minister said that the Board has powers to deal with manufacturing; yet the real powers to deal with manufacturing are enshrined in the Welsh Development Agency Act and cannot be used by the Board.

The Minister also referred to this being a matter for experts. But who are the experts? Are they those used by the Welsh Development Agency? They are merchant bankers from London who could be equally accessible to the Board if it were thought that these were the people to be dealing with the small acorns of Mid-Wales.

We want people to deal with industries rooted in an area, not those who are good with discounted cash flows and present value ratios, but are lost in a pile of statistics. The Minister spoke about the power of the COSIRA loans, but experience is not very encouraging in terms of the lack of information and reasons given to those who do not get loans. I hate to see these great weaknesses enshrined in the Bill.

Is the Board or the Agency to pioneer the industrial assault, on a small scale, with industries suited to the problems of rural areas? I suspect that the Agency cannot and will not give priority to this work, because it is an area which is being covered by the Board. Yet the Board will not have the power to do this for itself.

In Committee the Minister said that the Board had no powers to assist industry directly because of the expertise of the WDA. I suspect that this expertise will be hived off in a totally different direction. The Agency may know about the circumstances of Rhondda, Merthyr, Wrexham, Caernarvon or Cardiff, but what does it know of the situation in Llanuwchllyn, Abergynolwyn, Ciliau Aeron or Llanbrynmair?

I remember talking to someone from Llanbrynmair when the late Jim Griffiths' new town was going to solve all the area's economic problems. It was pointed out that a factory of British Leyland might move in to solve the problems, and

the man said "But then it will not be Llanbrynmair." That is the reality of the situation. An answer to the problems of Cardiff and Wrexham will not be suitable for the rural areas. The Government seem to have missed this point.

We are dealing with small units, small acorns, family companies. It is much more important to know the background of the community in which people live, the interrelationship between them and other aspects of the community than to have analysts at arm's length who know everything about figures but are ignorant of these circumstances.

The 1973 report of the Welsh Council stated in strong terms that it had been impressed by what had been learned from the work of the Highlands and Islands Development Board. It hesitated to advocate such an approach in Wales only because of the impending local government re-organisation. No one could say that the re-organisation has provided an answer for rural Wales, and the case made by the Welsh Council for the granting of powers similar to those of the Highlands and Islands Development Board remains strong.

I thought about moving amendments to bring areas of my constituency within the ambit of the Board, but I decided not to because the Board is neither one thing nor the other. It will not add a jot to solving the problems of my area. With this amendment enshrined in the Act, there would at least be some possibility of help. At present the Bill represents an opportunity lost.

Photo of Mr Caerwyn Roderick Mr Caerwyn Roderick , Brecon and Radnor

Will the hon. Gentleman vote against it?

Photo of Mr Dafydd Wigley Mr Dafydd Wigley , Caernarvon

It is not a question of voting against it. There is an opportunity, which the Government side, as much as any other, has always wanted, now going through the window. It is tragic.

Question put, That the amendment be made:—

The House divided: Ayes 6, Noes 78.

Division No. 361.]AYES[12.30 a.m.
Beith, A. J.Howells, Geralnt (Cardigan)TELLERS FOR THE AYES:
Evans, Gwynfor (Carmarthen)Penhaligon, DavidMr. D. E. Thomas and
Hooson, EmlynRoss, Stephen (Isle of Wight)Mr. Dafydd Wigley.
Allaun, FrankHamilton, James (Bothwell)Owen, Rt Hon Dr David
Anderson, DonaldHarper, JosephPalmer, Arthur
Archer, PeterHarrison, Walter (Wakefield)Richardson, Miss Jo
Armstrong, ErnestHooley, FrankRoderick, Caerwyn
Ashton, JoeHuckfield, LesRooker, J. W.
Atkins, Ronald (Preston N)Hughes, Rt Hon C. (Anglesey)Rowlands, Ted
Barnett, Guy (Greenwich)Hughes, Roy (Newport)Ryman, John
Bray, Dr JeremyHunter, AdamSkinner, Dennis
Brown, Hugh D. (Provan)Jackson, Miss Margaret (Lincoln)Small, William
Callaghan, Jim (Middleton & P)John, BrynmorSmith, John (N Lanarkshire)
Campbell, IanJones, Alec (Rhondda)Spearing, Nigel
Canavan, DennisJones, Barry (East Flint)Stallard, A. W.
Cocks, Fit Hon MichaelJudd, FrankStoddart, David
Conlan, BernardKerr, RussellThomas, Jeffrey (Abertillery)
Cox, Thomas (Tooting)Lamond, JamesThomas, Ron (Bristol NW)
Cryer, BobLestor, Miss Joan (Eton & Slough)Walker, Terry (Kingswood)
Dalyell, TamLyons, Edward (Bradford W)White, Frank R. (Bury)
Davies, Ifor (Gower)McCartney, HughWhite, James (Pollock)
Deakins, EricMcDonald, Dr OonaghWilson, Alexander (Hamilton)
Dean, Joseph (Leeds West)McElhone, FrankWilson, Rt Hon Sir Harold (Huyton)
Dormand, J. D.Madden, MaxWise, Mrs Audrey
Ellis, John (Brigg & Scun)Mallalieu, J. P. W.Woodall, Alec
Ellis, Tom (Wrexham)Mendelson, JohnWoof, Robert
Evans, Ioan (Aberdare)Mikardo, Ian
Evans, John (Newton)Miller, Dr M. S. (E Kilbride)TELLERS FOR THE NOES:
Fraser, John (Lambeth, N'w'd)Morris, Rt Hon J. (Aberavon)Mr. Donald Coleman and
Golding, JohnOgden, EricMr. Alf Bates.
Graham, Ted

Question accordingly negatived.

Photo of Mr Nicholas Edwards Mr Nicholas Edwards , Pembroke

I beg to move Amendment No. 11, in page 5, line 5, after 'include', insert: 'in so far only as they are incidental to the Board's other functions'.

Photo of Sir Arthur Irvine Sir Arthur Irvine , Liverpool Edge Hill

With this we may take the following amendments:

No. 12, in page 5, line 6, at end insert: but this shall not empower the Board to acquire by agreement, hold and dispose of land in their area for the purpose of affecting amalgamation of agricultural land or the reshaping of agricultural units'.

No. 16, in page 5, line 30, at end insert: '(8A) For the avoidance of doubt, the powers of the Board under this section shall not be construed as allowing the acquisition by agreement or compulsion, the holding or disposal of land in their area for the purpose of affecting amalgamation of agricultural land or the reshaping of agricultural units.'.

Photo of Mr Nicholas Edwards Mr Nicholas Edwards , Pembroke

In Committee, and in another place, repeated attempts were made to write into the Bill safeguards for the agricultural industry. In Committee the Government steadfastly refused to accept amendments which would have further limited the powers of the proposed Board to acquire agricultural land and to carry out agricultural or forestry operations on such land. Instead, the Government introduced amendments of their own which are now embodied in Clauses 1(4) and 4(2). The Government also accepted an Opposition amendment which is now Clause 4(8). While the latter amendment, though general in nature, is an improvement, the Government amendments are far from reassuring to the agricultural industry.

Declarations have been made by the Under-Secretary of State that the Government do not intend the Board to use its powers to restructure agricultural holdings, as was the intention of the rural development board proposed in 1969 under the provisions of the Agriculture Act 1967, but that reassurance has not been written into the Bill. The Government amendments still leave a loophole in the Board's ability to engage in agricultural and forestry operations, which can be seen as a disguised means of reintroducing the earlier proposals for a rural development board. No doubt the Under-Secretary of State will repeat the assurance that he, the Lord Chancellor and others have given on this matter.

The trouble is that we are dealing not just with the present Government's intention. We are passing a Bill which when enacted will stand on the statute book for a long time and which future Governments may decide to interpret differently. In Committee the right hon. Member for Anglesey (Mr. Hughes) argued in almost violent terms that the Government were wrong to give this assurance and that he would like the power to be used in that way. We fear that there are Government supporters who, given the opportunity in future, might decide that it was not worth getting another Bill through the House and who would wish to use this Bill for the purpose.

I return to what I said in an earlier debate about psychology and confidence. As the Government are slowly and painfully beginning to realise, our economy is suffering from lack of confidence in the Government's administrative apparatus Here the Government are destroying confidence in the farming industry, which is vital to our economic survival and which should be encouraged to increase production so that we have to place less reliance on imports.

12.45 a.m.

At the very time when the farming industry has to cope with all the embarrassments caused by the gross distortion of the green pound, by heavy taxation, and by rising costs, it has the added embarrassment of not knowing the future intentions of the Government. It must be suspicious if the Government refuse to write into the Bill reasonable amendments which would allow them to do the things they say that they want to do and prevent them from doing the things that they say they do not want to do. We cannot understand why the Government do not draft the Bill in such a way that we do not have to spend hours debating issues of this nature.

We have accepted that it is perfectly reasonable for certain activities to be carried on. I do not argue with the fact that if someone buys land to establish a factory, it must be sensible to go on farming that land for a time before building the factory. There is land in my constituency which is bought by oil companies and used by them for other purposes before they subsequently build oil refineries.

The fears I have referred to about a loophole exist especially because Clause 4(2), in conjunction with Clause 4(1)(h). allows the carrying out of agricultural operations in a wide number of circumstances where it would facilitate the discharge of the Board's functions or be incidental or conducive to their discharge". Read in conjunction with Clause 4(1)(g), it could provide the Board with wider powers than the Government suggest or the farming community would wish.

Indeed, the powers are further extended by Clause 4(3), which will enable them to be exercised in relation to the carrying out of agricultural operations outside the Board's area—that is, in the whole of rural Wales. Perhaps it is the one area where the Board is able to operate in the whole of rural Wales.

We seek in Amendment No. 11 to stress the incidental nature of any agricultural operations or any forestry operations which the Board might undertake. We do not object to its undertaking operations of the kind I described briefly in relation to the oil company or in relation to the acquisition of land. If it found itself for some reason having to carry on operations of that kind, that would not seem to be unreasonable, and we think that it could be perfectly easily written into the Bill.

The other two amendments would close the loophole I have identified and allay the fears of the farming community. I propose that we should make use of the wording in Section 48 of the Agriculture Act 1967, dealing with the powers of a rural development board to promote amalgamations or boundary adjustments, in order to exclude from the Board's remit the powers which would have been available to the Wales rural development board.

Amendment No. 12 seeks to insert the words: but this shall not empower the Board to acquire by agreement, hold and dispose of land in their area for the purpose of affecting amalgamation of agricultural land or the reshaping of agricultural units. There is an express disclaimer of what the Government have disclaimed verbally in Committee. The intention of both Amendment No. 12 and Amendment No. 16 is to narrow the scope of the power granted to the Board. Under the amendments, the Board would still be able to carry out agricultural operations but it would not be able to set itself up as an old-style development board.

The Government cannot challenge the wording in principle because it is taken from Section 48 of the Agriculture Act 1947, which laid down detailed provisions for amalgamation schemes. The main introductory wording comes from that section.

I see no reason why one or other of our amendments should not be accepted. They do not challenge the Board's functions but merely insert into the Bill that which the Minister said in Standing Committee. That is all that we ask. He said: I hope I can convince Opposition Members by giving them these details, and that we were in earnest in what we have per previously said".—[Offical Report, Standing Committee K, 22nd July 1976; c. 59] He will convince us by belatedly accepting our amendments.

Photo of Mr Geraint Howells Mr Geraint Howells , Cardigan

I support the amendment. We need a written assurance in the Bill. Safeguards are needed by the agricultural industry and especially by the small farmers. Unless the safeguards are written into the Bill, small farmers in rural Wales will be worried. When the last rural development board Bill was introduced they were worried about its being an incursion into the liberty of the individual. We therefore want to ensure that the agriculture sector will work in harmony with the rural development board in Wales.

Perhaps in five or 10 years' time members of the Board will take a different view from that now taken by Ministers. Perhaps they will want to take over non-viable units, although it is difficult to define a non-viable unit. Whether a small acreage is viable often depends upon the farmer. Farmers have an important role in the economic and social life of rural Wales, and we need an assurance written into the Bill so that their minds can rest easy in the years ahead.

Photo of Mr Wyn Roberts Mr Wyn Roberts , Conway

I support my hon. Friend the Member for Pembroke (Mr. Edwards). In Committee I argued strongly against the inclusion of subsection (2), which was introduced there as Amendment No. 38. The number is clearly engrained in my mind. It seemed to me then that the insertion of the subsection, which allowed the carrying out of agricultural operations and the carrying on of forestry and afforestation", was in contradiction of the assurances given by the Lord Chancellor. The Minister claimed in Committee that the subsection was a fulfilment of the assurances given in the other place, but I have read it again and again and I cannot see that that is so. Rather, it contradicts the Government's assurances.

Therefore, I fully support in particular Amendments Nos. 11 and 12, which are amendments to the subsection. They are clearly necessary to give any substance to the assurances given by the Minister and the Lord Chancellor.

Photo of Mr Barry Jones Mr Barry Jones Parliamentary Under-Secretary (Welsh Office)

I hope that I can show the Opposition that their fears are unjustified. I certainly advise the House to reject the amendments.

The Bill will not be used to restructure agriculture. Clause 1(6) states categorically that the Board shall not engage in farming any land held by it or in forestry or afforestation on such land", except, under Clause 4(1)(h), when this is likely to facilitate the discharge of the Board's functions or is incidental or conducive to their discharge. To this end the Board will have to buy and manage agricultural land pending its development—as, say, an industrial estate, or for housing and related urban purposes. The Board is, however, otherwise precluded by the provisions of the Bill from acquiring land for farming or for forestry.

Subsection (8) requires the Board to have regard to the need to conserve agricultural land and to the requirements of agriculture and efficient land management. The Government accepted an Opposition amendment to that effect in Committee, yet the Opposition are still not content. In principle, therefore, this group of amendments is objectionable.

Photo of Mr Wyn Roberts Mr Wyn Roberts , Conway

Does not the Minister agree that Clause 1(6) is in itself a contradiction of Clause 4(2)?

Photo of Mr Barry Jones Mr Barry Jones Parliamentary Under-Secretary (Welsh Office)

I disagree with the hon. Gentleman's interpretation.

I advise the House to reject Amendment No. 11 on the ground that any agricultural operations which the Board undertakes in the short term on land which it ultimately intends to develop cannot be incidental to such functions but must facilitate or be conducive to the discharge of its functions. We feel that the wording must be retained in the Bill as it stands and that the amendment should be rejected.

1.0 a.m.

Amendment No. 12 is defective because subsection (2) does not authorise the acquisition, holding or disposal of land, and the assumption on what the amendment is based is therefore incorrect. Again, I advise the House to reject it.

We believe that Amendment No. 16 is badly drafted. In the context of subsection (8) insertion of the words for the avoidance of doubt is inappropriate. There is no doubt that the Board could not purchase agricultural land if the only purpose was to amalgamate or reshape. Therefore, apart from drafting deficiencies, the amendment is objectionable in principle.

It is inevitable that at times the Board in properly discharging its functions will in a sense—although not in the sense intended by the Opposition—be required to increase or reduce the area of an agricultural unit. For instance, if the Board is not allowed to effect the amalgamation of agricultural land—and it is assumed that this may be construed as amalgamating fields or holdings—pending development of the land, the power of the Board to manage effectively the land it has acquired for legitimate reasons will be undermined.

Again, if the Board could not amalgamate land, it could not acquire agricultural land from separate owners for playing fields. To quote yet another example, the Board would not always want to acquire an entire agricultural unit. Yet this amendment would require it to do so, as otherwise in acquiring part of a unit it could be said to be reshaping an agricultural unit.

Photo of Sir Raymond Gower Sir Raymond Gower , Barry

How does the Minister explain his assertion that the Board cannot acquire the land? Clause 4(1)(a) reads to acquire, hold, manage, develop and dispose of land or other property". That is not a narrow purpose but represents a general power.

Photo of Mr Barry Jones Mr Barry Jones Parliamentary Under-Secretary (Welsh Office)

The hon. Member is a distinguished lawyer but I must stand by my argument. Obviously the Opposition by their amendment do not wish to prejudice the proper discharge of the Board's function. Their concern, which I appreciate, is that the wide powers given to the Board should not be used for the primary purpose of restructuring agriculture. I repeat the assurance that they will not be so used. I repeat that the Board will not restructure agriculture, and the Bill gives the Secretary of State the powers of direction and consent for the disposal of land which will ensure that the Board will not exercise its powers in such a manner as to restructure agriculture in its area. I hope that the House will reject the amendments.

Photo of Sir Raymond Gower Sir Raymond Gower , Barry

I believe the Minister speaks in good faith when he says that the Board will not do these things, but as the Bill stands it gives power to the Board to acquire land. He will know that Clause 4(2) gives powers relating to the carrying on of forestry and afforestation". Those powers are not limited in the manner he seeks to suggest. Indeed, his assurances will not be worth the paper they are printed on in tomorrow's Hansard.

The Minister's reply was disappointing and indaquate. Some years ago farmers throughout the rural areas were apprehensive about the operations of the Forestry Commission, even though those fears may well have been groundless. Similarly, for good reasons or bad, they are now apprehensive about the powers given to the Board, which go beyond any protection given by the Bill. It does not include the Minister's assurances, and that is why I hope that we shall vote for the amendment.

Photo of Mr Nicholas Edwards Mr Nicholas Edwards , Pembroke

My views have hardened during the debate. I had thought that, having fought this battle for a long time, we should, regretfully, admit defeat in the face of the Govern-men's peculiar obstinacy. But it is just that obstinacy which makes me suspect their intentions.

It is not good enough for the Government to raise a series of pedantic drafting objections. They have known throughout what our fears were, and if they felt that our amendments were technically deficient, they could have remedied that themselves. It is pretty ridiculous to say that the amendment might prevent the Board from acquiring land for playing fields. I am not convinced by the argument that the development of rural Wales could not carry on without the Board acquiring playing fields.

Although what my hon. Friend the Member for Barry (Sir R. Gower) and the hon. Member for Cardigan (Mr. Howells) said carried considerable weight, the final crunch came for me when the Minister, in his quiet and friendly way, referred again to the possibility of direction. It is precisely this power of direction which gives rise to our fears. I am worried not about the members of the Board who will carry out these functions but about members of the Government and future Governments. The Minister apparently regards direction as a protection for people: we see it as a danger in an increasingly extreme Left-wing Government— —

Photo of Mr Nicholas Edwards Mr Nicholas Edwards , Pembroke

Yes—an increasingly extreme Left-wing Government. Neither the Minister's smiling dissent nor the opinions of the Welsh National Party will persuade me that that threat does not exist. It is because of this power of direction and because the Minister has again totally failed to reply to the debate that I urge my hon. Friends to support

Question accordingly negatived.

Amendment proposed: No. 13, in page 5, line 12, at end insert— '(4A) The conditions which may be attached to the provision of finance under this section include conditions for repayment of the whole

at least one of the amendments. Because of its parentage, in an Act drafted by a previous Labour Government, I believe that the one to support is Amendment No. 12. Therefore, I shall not seek to press Amendment No. 11, but ask my hon. Friends to support No. 12.

Photo of Mr Oscar Murton Mr Oscar Murton , Poole

Does the hon. Gentleman seek the leave of the House to withdraw Amendment No. 11?

Photo of Mr Nicholas Edwards Mr Nicholas Edwards , Pembroke

Yes. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Amendment proposed: No. 12, in page 5, line 6, at end insert 'but this shall not empower the Board to acquire by agreement, hold and dispose of land in their area for the purpose of affecting amalgamation of agricultural land or the reshaping of agricultural units'.—[Mr. Nicholas Edwards.]

Question put, That the amendment be made:—

The House divided: Ayes 10, Noes 72. or any part of a grant in any circumstances'.—[Mr. Barry Jones.]

Photo of Mr Barry Jones Mr Barry Jones Parliamentary Under-Secretary (Welsh Office)

This amendment gives power to the Board when giving financial assistance to impose conditions, including conditions that may provide for the repayment in certain specified circumstances of all or part of any grants made.

Amendment agreed to.

Amendments made: No. 14, in page 5, line 13, leave out 'Subject to subsection (6) below,'.

No. 15, in page 5, line 20, leave out subsection (6).—[Mr. Barry Jones.]