After the fiery polemics of the right hon. Member for Rhondda (Mr. Jones) I shall turn to a more peaceful scene. No doubt because of the multiplicity of the subjects with which he had to deal, my right hon. Friend the Secretary of State did not find time to say anything about the important subject of agriculture. I hope that the right hon. Member for Rhondda will not accuse me of being a sycophantic Back Bencher if I do not criticise my right hon. Friend for not speaking for longer than he did.
It is hardly necessary for me to remind the House of the important part that agriculture plays in the Welsh economy. Indeed, Welsh agriculture plays an important part in many aspects of British agriculture out of all proportion to our population and area. Welsh agriculture is dominated by livestock production. The sheep breedng flock represents some 25 per cent. of the United Kingdom total. Welsh farms carry nearly 13 per cent. of the United Kingdom beef herd and we produce more than 10 per cent. of United Kingdom milk. The total value of Welsh agricultural output is about £450 million per annum.
It has been the fate of Welsh farmers, as of farmers in the United Kingdom generally, to have suffered a fall in real and nominal income for some years. It is now estimated to be only one-half in real terms of what it was in 1976. Hill and upland cattle and sheep farms have been especially hard hit. It seems likely that the value of farm output this year will show a rise in nominal but not real terms. The concomitant of the sharp fall in real incomes has been a disastrous fall in the value of investment, which is now at its lowest level for more than 20 years. Between 1980 and 1981 there was a fall of 18 per cent. in investment in plant, machinery and vehicles and of no less than 23 per cent. in building.
In those depressing circumstances, it becomes especially vital that the green pound should not be adjusted to the disadvantage of Welsh and other United Kingdom farmers. That is a real peril, in that that has been recommended by the EEC Commission. If that recommendation were implemented, the benefit of the 9 per cent. increase in farm prices, which has also been recommended by the Commission, will be more that halved for United Kingdom farmers.
I know that I am preaching to the converted when tell my right hon. and hon. Friends on the Front Bench that these proposals- must be strongly resisted, because my right hon. Friend the Minister of Agriculture, Fisheries and Food has said that he intends to do so. I have every confidence that he will resist those proposals as vigorously as he has championed British agricultural interests within the EEC.
Before I leave the subject of agriculture, I make a plea to my right hon. and learned Friend the Chancellor of the Exchequer. I should like to think that I do so with as much confidence as I did to the Minister of Agriculture, Fisheries and Food on the other matter. My plea is for the reduction of the incidence of capital gains tax and capital transfer tax on agricultural holdings. I hope that the Budget will contain proposals not merely for a general reduction but for a general reappraisal of both these taxes, especially capital gains tax.
Capital gains tax has borne especially heavily on agriculture because of the phenomenal inflation of land prices since the oil crisis of 1973. The latest available figures for the three months ending 30 September 1981 show an average price per hectare—I suppose that we must now get used to hectares—in Wales of just over £2,500. That was indeed a slight reduction on the previous three months, when the average price was in excess of £2,500. In broad terms that represents an inflation rate of more than 1,000 per cent. over the past 20 years. That would not be so great a problem if there were an equitable basis for the extraction of capital gains tax, but there is not.
When he became Chancellor of the Exchequer in 1853, Mr. Gladstone was moved to describe income tax as an immoral tax tempting Governments to extravagance and taxpayers to fraudulent evasion. If Mr. Gladstone were with us now, I cannot conceive how forceful an adjective he might use to describe capital gains tax, which is uniquely unjust in that it is based on the quite fraudulent fiction that the pound has the same value today as it hid in April 1965, when, as we all know, its true value is now less than one-fifth of what it then was.
It would be churlish of me not to reflect the appreciation of farmers generally, and especially those in my constituency to whom I have spoken, for such measures of relief as the Government have introduced in this sphere since 1979, particularly in the form of roll-over provisions and exemptions, but all this has essentially been tinkering with the problem. The time has now surely come when the Government can no longer avoid addressing themselves to the core of the matter—the basis on which the tax is to be exacted, if indeed it must be retained at all.
I have never been impressed by Treasury objections to tapering or indexation, but if my right hon. and learned Friend the Chancellor remains immovable with regard to those two solutions, I hope that he will not reject other, albeit to my mind less satisfactory, solutions such as introducing as a base the level of land prices and asset values which obtained in, say, 1975.
It was particularly appropriate that my right hon. Friend the Secretary of State should refer to the Welsh language, as the last parliamentary Session saw a painstaking investigation into Welsh language broadcasting by the Select Committee on Welsh Affairs. In addition, the first detailed results of the 1981 census seem to show that the speaking of the language continues to decline in most areas, although there has been a small but encouraging increase in the number of Welsh speakers in the two counties where one might least expect it, where the language has traditionally been weakest for the better part of a century—South Glamorgan and Gwent. Overall, however, in the past decade there has been a 2 per cent. decrease, which the language could ill afford.
If one looks back to the beginning of the century, or even just three decades to 1951, the seriousness of the decline becomes even clearer. The figures are stark. In 1911 Welsh speakers numbered not far short of 1 million. By 1951 the number had fallen to fewer than three-quarters of a million. By 1971 it was just over half a million, and the present number is almost certainly less than that figure. In short, the number of Welsh speakers is now about half what it was at the beginning of the century.
Whatever may be said in criticism of the Westminster Parliament's attitude to the Welsh language in years gone by—and much could probably be said in that context—no one can deny that Governments of both parties have made substantial contributions to its well-being in the past two decades.
I need not recite all the achievements on behalf of the language during that period. I will mention just two examples. The 1967 Act granted official status to the Welsh language. Then, about six years later, at considerable cost—some £4 million—there was the provision of Welsh road signs.
The determination to continue to give the language all possible support is evidenced by the generous grants made by the Government in the current financial year to the various organisations concerned with its survival and wellbeing. Those grants are not just far higher than any made under any previous Government, but show a marked increase over those for the previous financial year—well over £1-5 million, compared with just under £1 million in the preceding year—and this at a time of acute financial stringency.
The great "make or break" effort on behalf of the Welsh language will, of course, be the introduction of the Welsh fourth channel. I hope and believe that the Government will give this historic venture every chance and will adopt a generous and sympathetic attitude when they review its performance after three years. There will certainly be teething troubles, and it may take some time to get established, but there is no reason why it should not eventually be just as successful as Radio Cymru, despite the prophesies of doom of the Jeremiahs who always seem to flourish on these occasions. Of one thing I am sure—if it does not succeed, in all probability all our efforts and expenditure on behalf of our ancient language will have been in vain. So let us do everything humanly possible to ensure that it does not fail.
I wish to deal briefly with the Government's road building programme in Wales. A memorandum from the British Road Federation, which I think all hon. Members have received, emphasises, if emphasis were needed, the important economic benefits which flow to an area as a result of major road investment, in terms of increased industrial development potential, improved access to markets and suppliers, increased tourism potential, and so on. One statistic produced by the federation epitomises the beneficial effect since 1966 of the extension of the M4 and the building of the Severn bridge. A survey of 97 new firms in Gwent showed that almost four-fifths of them had been influenced by the motorway in their choice of location and that just over half of them regarded its availability as a major consideration.
Unhappily, North Wales has been the poor relation for many years in this respect. We have not one centimetre, let alone a good British inch, of motorway. Our principal and modest plea has been for the dual-carriagewaying of the A55. At long last, however, it is a matter of some comfort to us that, of the total Welsh road expenditure budget for the current financial year, by far the greatest allocation has been made for improvement of the A55. In time, this will make North Wales far more attractive to incoming industry generally. It will also be of particular value to tourism, which is assuming an ever-greater importance in our economy.
I congratulate my right hon. Friend the Secretary of State on his present concentration on improving the A55, but I beg him not to rest on his laurels when the work is completed but to direct his attention to other important routes in North Wales and especially to the A5, to which virtually no improvements—certainly none of any magnitude—have been effected in the past 20 years.