I am sure that the election of any person is a matter for congratulation. I am glad that the hon. Gentleman can find a small crumb of comfort in that.
I should like to welcome back to health and to his place in our discussions on Welsh affairs the hon. Member for Rhondda (Mr. Jones). We do not always agree with the Under-Secretary, but we respect him and we are grateful for his courtesy and for the agreeable way in which he and his fellow Under-Secretary always seek to respond to discussions in Committee. The Secretary of State is fortunate to have two such colleagues to sort out the difficulties that he so often creates for himself.
I take this opportunity of paying tribute to those who have given great public service in Wales. Lord Brecon made an immense contribution to Welsh public life and was untiring to the end in the most difficult of jobs, in spite of the grave ill-health which beset him. We mourn his passing. Fortunately, the other Welshman I wish to praise is still with us, and I would first say this of Mervyn Jones. If his successors do half as much with half the enthusiasm, good humour and success as he has achieved for tourism in Wales we shall be very fortunate.
I turn now from people to procedure, to protest, as we are entitled to do, at the shabby way in which Welsh Members, and therefore Wales itself, have been treated for the second year running. The suggestion that our debates might again be divided was intolerable. The uncertainty about the starting time caused hon. Members inconvenience, and to have the debate on a Friday has added to that inconvenience as is clearly evidenced by the fact that fewer than half the Welsh Members are in their places today.
When I first came into the House our Welsh day debate was usually held on about 1st March. I cannot understand why it is now always slipped in at the tail end of the Session in this shabby way, so that we are very lucky if it gets slipped in at all.
Listening to the Secretary of State describing the task he inherited, the difficulties that he faces and the immense problems which lie ahead, it is hard to remember that his Government have been in power and he has been in office for two years and eight months. Yet I suppose that it would be unfair to blame him too much for the tragic condition of the Welsh people. One does not blame the cabin boy when the ship goes on the rocks. The responsibility rightly lies primarily with those who matter—the captain and the mate. We blame the Prime Minister—I was going to say first and foremost, but I suppose that we blame his predecessor even more. We blame the Chancellor. We blame first those who carry weight and influence in drawing up Labour Party policy.
The Secretary of State cannot escape unscathed, however. He is pleased enough to accept the glory of his office and he must accept the responsibilites that go with it. Let us make no mistake, the responsibility for the present disastrous state of the Welsh economy is that of the Government. It was they who put party before country in 1974, and it was they who abandoned the public expenditure cuts introduced by Mr. Barber, as he then was, in the wake of the oil crisis. It was they who let public expenditure rip in the wake of the election and it was they, not while in Opposition but with the knowledge of eight months in government, who talked of inflation at 8·4 per cent, after they had served eight months in office. It was they who, in their Welsh manifesto in October 1974, boasted of "strong action to strengthen the Welsh economy" and said that "the Labour Government would continue to build on the firm foundations which it has already laid". "Firm foundations, not a bleak inheritance was what they offered the electorate. They told us that they had" pressed ahead vigorously in attracting new manufacturing industry to Wales". They talked of giving "further impetus to the task of developing the valleys and improving the quality of life for those living in them. This would mean providing even more jobs and a wider range of jobs", they said. That was the promise and the expectation in October 1974.
The reality, two years later, is that male unemployment in the valleys is almost 10 per cent. Is that what the people of Wales were led to expect? Did Mr. Gordon Parry, as he was then, tell the electorate in Pembrokeshire in October 1974 that two years later, under a Labour Government, 4,213 people would be thrown out of work—more than double the figure in any previous October between the outbreak of war and the October election? Not even I imagined that a Labour Government would put 20 per cent, of the population of Milford out of work, or leave nearly 17 per cent, of those in Pembroke Dock unemployed. It is the same sad story elsewhere in Wales. The facts and the figures are a shocking condemnation of the Government. They said that we would do it, but it is they who have done it.
The tragedy is that the sacrifice has has been entirely wasted. The immediate impact of the measures needed to solve our economic crisis may well be to increase unemployment for a time. But once it is realised that a Government mean business, the firm expectation that inflation will be beaten is likely to restore investment and modify wage demands, so that instead of the nightmare we now face we would have—sooner than many people realise—rising production, increasing job opportunities and expanding pay packets.
I said that the sacrifices had been entirely wasted and I referred to a nightmare. The nightmare is that we have rising unemployment and no prospect of inflation being defeated. The nightmare is that action will have to be taken when unemployment in Wales is almost 80,000. It could have been taken a year ago, when the figure was 9,000 fewer. It could have been taken in October 1974, when it was 39,000 fewer. A less irresponsible Opposition than Labour then was would have supported and maintained the corrective measures taken in October 1973, when unemployment was only 32,000. Now the operation has to be performed with the patient already gravely weakened. Let the cancer go unchecked and avoid what needs to be done and the job is made much more difficult, with much less chance of success.
Certainly the recent fall in total unemployment gives no grounds for complacency for the future. It has come about largely as last year, because school leavers have found jobs, but the underlying trend is still rising. Industry in Wales deserves our congratulations and thanks for the way in which it has taken on the school leavers, but the fact that it has done so cannot disguise the gloomy prospects we still face.
During Question Time on Monday I referred to coming redundancies in West Wales. There is the certainty of Courtauld's closures. There is the sad fact, described by the Welsh Industrial Development Advisory Board, that the initial impetus to secure new projects for the areas hit by steel closures has not been maintained. There is the fact that the impact of the pay-roll tax, which was imposed in July, and which will cost Welsh business about £60 million, has not yet been felt. Now there are the devastating consequences of the penal unprecedented interest rates imposed by the Government. All this takes place against a background that the present upturn in the world economy may well reach its conclusion by the end of next year and that before then we shall face an increase of at least 10 per cent, in the price of oil.
To have thrown so many out of work is a shocking failure of government. To have done so without achieving the necessary restructuring of the economy makes the failure doubly reprehensible and doubly tragic. The Government argue that to cut Government expenditure will endanger the social fabric. Surely nothing is more likely to endanger the social fabric than a double failure of this kind, coupled with a growing realisation that the situation will get worse. The Government used to argue that the sacrifice was worth it because the inflation rate had been halved. The Secretary of State fell back on that argument this morning.
The reality is that the inflation rate is still much higher than it was when the Government came into power. It is still 50 per cent, higher than the 8·4 per cent, boasted of by the Chancellor. The rate is still double that of our main competitors and is now likely to go on running at 15 per cent, or more throughout the next year. The Government have recently taken some comfort—the Secretary of State was able to see a glimmer of light at the end of a long tunnel—from the fact that industrial production in Wales has shown an upturn from the dismal figures of 1975, but the index is still substantially below its lowest point during the previous three years and prospects are varied.
The Secretary of State gave us the highlights. Building and construction is in a dreadful state with nothing on the horizon. Transport is doing very badly and sub-contracting engineering very poorly. Although firms concentrating on exports have done significantly better, there is no sign of any upturn in the home market generally. For every good bit of news listed by the Secretary of State it would be equally possible to list bad news. Most worrying, the steel industry, after a slight recovery, seems to be on the downturn again. Certainly the order book for the first part of 1977 is disappointing.
The steel industry is operating in a world market that is in surplus but there is reason to think that the home market is being affected more directly as a result of destocking due to the high interest rates imposed by the Government. Against this background it is no surprise to discover that investment is at an unprecedentedly low level. The number of expansion projects in Wales in the year ending 31st March 1976 was lower than in the previous year by 40 per cent. The Welsh Industrial Development Advisory Board reports a low level of applications in respect of expansion projects and states that the number of applications received during the period January to March 1976 was below that of any earlier three-month period. It was significant that the Secretary of State had to fall back rather desperately on inquiries from firms inside Wales. The number of inquiries from firms outside Wales seeking industrial locations there is 221 so far this year. Compare that with 855 in 1973, 635 in 1974 and 315 in 1975 and the story is all too clear.
The same pattern is to be seen in the number of official visits—again sharply down over previous years. The Secretary of State spent little time telling us today what he was doing about that. He talked of meetings with industrialists to encourage exports, but the right lion, and learned Gentleman told us remarkably little about what the Government are doing. He fell back on talking about the development agency and the Rural Development Board and advance factories. All these things are totally irrelevant while the economic ship is being steered with such irresponsibility.
All these things may be good in themselves but they are completely worthless while the economy is being mismanaged. This is the first speech that I can recall the Secretary of State making in which he has not boasted about advance factory building. The reason may become clear in a moment. Advance factory building has been proceeding rapidly. But it is easy to understand why members of the development agency speak rather bitterly about the obligations they have inherited to build even more of these factories regardless of whether they are of the right kind, in the right place or whether there is the slightest prospect of their occupation in the foreseeable future.
The Secretary of State boasts that he has authorised 960,000 sq. ft. of new advance factory space since February 1974. The significant fact is that only 185,00 sq. ft, have been formally allocated. Even more staggering is the fact that out of the total number of 132 advance factories completed since 1965, 44 are currently vacant. That represents one-third of all those advance factories built. That is not the whole story. A total of 53 Government factories are now vacant in Wales—14 of them having been empty for a year or more.
Perhaps it was a little unkind of me last week against a background of 27,000 redundancies in Wales this year, to ask the Secretary of State how many jobs had been provided in Wales by firms occupying Government premises for the first time during the year. If it was unkind it was nothing like as unkind as the right hon. and learned Gentleman's answer was for the unemployed in Wales. The Secretary of State said that 701 jobs have so far been produced in 1976. Worse, only 1,150 new jobs have been provided by manufacturing firms opening in Wales since March 1974. It is a story of financial irresponsibility, declining investment and economic decay.
Before I turn from economic affairs and the gross mismanagement of the Welsh economy by this disastrous Government, I shall deal with a suggestion made in the Western Mail Economic Review that Wales should be spared the cuts in public expenditure which I believe are necessary for the economic recovery of the nation. 1 am sure that it is wrong to base the argument simply on the fact that the percentage of people employed in the public sector in Wales is higher than in Great Britain as a whole. That is to a considerable extent due to the importance in Wales of the steel and mining industries. When we talk about cutting public expenditure we should be thinking primarily of cutting the unproductive sector. The CBI is absolutely right to emphasise in "The Road to Recovery" that cuts on commercially justifiable capital expenditure in national industries must be avoided. The theory that Wales cannot switch its public sector employment into an expanding private sector is particularly dangerous because such a large part of Wales is economically dependent on small businesses.
It is the small businesses that are being so gravely damaged by the irresponsible spending policies of the Government. It is this sector that is being forced to lay off so many people. This is clearly borne out by the unemployment figures for Wales outside the industrial valleys which run at levels of 15 per cent., 16 per cent. and 17 per cent, in constituencies like that of the hon. Member for Cardigan (Mr. Howells). The small business sector has a vital interest in seeing the burden of Government expenditure and administration eased. Wales has at least as important an interest as Britain as a whole in seeing that the country lives within its means.
We must not elude people into thinking that we can be spared the impact of necessary measures. These measures are necessary to avoid the prospect of 3 million unemployed and the collapse of social institutions proffered to us by the Chancellor. What is true is that Wales has certain needs and problems that in any allocation of priorities must be taken into account. Welsh industry would regard the maintenance, and indeed the improvement, of an adequate transport system as a hight priority to be kept even in a period of austerity.
Equally, we cannot ignore the changing structure of industry and the need to cushion the impact of all these changes. We share the Secretary of State's views on this point and it is utterly misleading for him to pretend otherwise, as he did earlier today. It was we who established the task forces in Blaenau Gwent and set on the road the work that is now going on. If our object is to reduce the numbers employed in the public sector—something that can be achieved substantially through natural wastage—we must actively be seeking to stimulate the conditions in which industry can take on people as it grows, in confidence that inflation will be halted and that it can look forward to a period when profits can be made and maintained.
My argument about capital expenditure for the nationalised industries has particular relevance to the investment strategy of the British Steel Corporation. A year ago in this debate the hon. Member for Gower (Mr. Davies), whom I am glad to see in his place today, pointed out that
Indecision and delay in revitalising the British steel industry has already given our overseas competitors a huge lead in the international race."—[Official Report, 12th November, 1976, Vol. 899, c. 1565–6.]
He urged the Government to give Port Talbot the tools to get on with the job by implementing the BSC strategy. He pointed out that failure to do so could be disastrous to the South-West generally and to the tin-plate industry in particular. On Monday when pressed by me on this matter the Secretary of State was characteristically less than frank, as he was again today. He knows perfectly well that the go-ahead has not been given for extra steel-making capacity, and that without that extra steel-making capacity the expenditure of £250 million for a new strip mill makes very little sense.