Welsh Development Agency Bill

Business of the House – in the House of Commons at 9:50 pm on 28th January 1988.

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Question again proposed, That the Bill be now read a Second time.

Mr. Jones:

Finally, I want to respond to the hon. Member for Gower, because he should not be selective in the evidence that he adduces in condemning selective assistance. He asked what evidence there is for the move towards selective assistance — [Interruption.] In his dwelling, in the hallowed chamber of Room 18 on the Upper Committee corridor, he referred to various pieces of evidence that have been brought before the Select Committee on Welsh Affairs. I do not have the page number before me from which to quote, but I recall that the whole thrust of the argument that we were given by the Wales Trades Union Congress was exactly the move towards selective assistance that has now come about. Indeed, I seem to recollect that David Jenkins, the general secretary of the Wales TUC, was very dismissive of alternative arguments for maintaining or expanding automatic assistance. Even in the quotation that the hon. Member for Gower used from the chief executive of the Welsh Development Agency—it was a fishing analogy in which he likened automatic assistance to ground bait —it was described as only ground bait. The relationship between the suitors was finally consummated only by the use of selective assistance.

Mr. Alan Williams:

We should understand that my hon. Friend the Member for Gower (Mr. Wardell) made no such attack on regional selective assistance. He argued for the combination of selective assistance and grants. However, as the hon. Gentleman is so committed to regional selective assistance, will he explain why, if we consider the national figures, regional selective assistance —so loved by the Conservative party—has fallen by 37 per cent, since that party came to office?

Mr. Jones:

I thought that I was responding to the hon. Member for Gower. I was trying to use the evidence that he put forward today, in relation to the quotation from the chief executive of the Welsh Development Agency and the omission of the evidence that was brought forward by the Welsh TUC.

In conclusion, the Bill will be important for south Cardiff, Cardiff and all of Wales. I see it as continuing the economic regeneration of Wales that has been so well begun and that will now continue further apace.

Photo of Mr Ted Rowlands Mr Ted Rowlands , Merthyr Tydfil and Rhymney 10:03 pm, 28th January 1988

We welcome the Bill because we welcome the activities of our agency, our Welsh Development Agency. It helps the regeneration and redevelopment of our communities, which we have a right to serve. Although I am sure that over the years my hon. Friends and I have had relationships with the WDA which could sometimes be characterised as creative tension, nevertheless in all my experience the chief executive, Mr. Waterstone, and his team have been utterly committed and dedicated to helping in the development of Wales as best they can, to meet the challenges of regeneration in the communities that we serve. Therefore, we welcome and support the Bill.

Although the Welsh Development Agency is a major instrument for regeneration in our communities, it is in partnership, not only with the Secretary of State for Wales, but with our local authorities. That is a vital additional element in the trinity needed for progress and development. I am glad that it appears so far that at least this Secretary of State has not brought to Welsh affairs the rather bilious prejudice that English Ministers seem to have towards English local authorities. It is the combination of all three that is helping in the regeneration of our community.

I shall touch briefly on the three major functions of the agency and on the impact of its work on communities such as mine. Sadly, the Secretary of State touched only briefly on the first function; perhaps the Minister will expand upon his right hon. Friend's remarks. I refer to the role of the agency as a major venture capital agency for our community. That is desperately important, especially when one considers that the agency and Investment In Industry together account for 80 per cent, of all the venture capital that comes into our community.

Will the Minister tell us what will be the agency's venture capital budget in the coming year? I have tried to go through the figures and have a look at the accounts and I have concluded that that sum will be about £10 million. Admittedly, that £10 million may generate twice as much investment or more from other sources, but we must remember that we are fundamentally dependent on the agency for the promotion and development of venture capital in our society. One of the greatest inhibitions to regional development — not only in Wales but in the north, the north-east, Scotland and elsewhere — is the centralised accumulation of capital in the City. It is dramatically over-centralised: 73 per cent, of all venture capital companies are in the City of London. Some fascinating research done with the support of the agency shows that 80 per cent, of all decisions relating to the investment of venture capital were made by people living within two hours of their office. That means that they are made by people based in the City of London. The concentration and accumulation of our capital—we are talking about our pension funds; it is our savings that go into the Legal and General, the Prudential and the building societies—means that we do not get anything like the share that we need to regenerate and support our communities. Therefore, we are desperately dependent on the WDA as a venture capital agency. Will the Minister give us a categorical assurance that that fundamental role will not be curbed, whittled or clipped by Government Departments and, in particular, by the Treasury? I hope that the Minister will reaffirm that it is an integral part of the agency's role to develop and expand its venture capital function because of the over-centralisation of capital in the City. If I am right that the venture capital budget will be about £10 million, I hope that the Minister will tell us how it will be expanded in 1988–89 and beyond.

My second point concerns the industrial and commercial role of the agency in my community. No one denies that the announcement of the advance factory building programme for my community is welcome. We worked, fought and begged for that. However, we want to go further. I am interested in the future of commercial development. What will be the role of the urban renewal unit created by the WDA? What is the relationship of that unit to urban development grants which, I gather, are still vested in the Welsh Office? Will the urban renewal grant be a lending or a grant-giving body? That is unclear. That unit will have an important function in the broader industrial and commercial development and diversification of our local economies.

Thirdly, I am interested in the programme of development announced today. With reference to my own community, I am particularly interested in this statement: The regional office identifies the following opportunities locally for possible private sector development: Goal Mill road Merthyr—small factories. I live within yards of the Goat Mill road site. Its dereliction is not that of 150 years ago; it is that of factories that have been closed over the past decade as a result of the decline in manufacturing industry in the community. It is a new form of dereliction. I should like to know how the private sector development will take place. What will be the nature of the vehicle by which this development will be made? The area desperately needs redevelopment. The dereliction is a result of the decline in manufacturing jobs in the community over the past decade.

I should like to consider briefly the land reclamation aspect of the WDA. The Secretary of State visited the community that I represent last week and saw some of the largest areas of historic land reclamation to be seen in any community. He drove up the slip road from Pentrebach up to the top of the Heads of the Valleys and saw the land dereliction on either side of the road. It is an amazing story, because we could widen that road, clear the tips, get some of the coal from those tips washed in the nearby washery and broaden and develop the infrastructure surrounding it to make it infinitely more attractive. It is one of the most vital lifelines in communications between the south of the Heads of the Valleys, the midlands, Worcestershire and beyond. That should be of the highest priority. If British Coal gets its way and we have another decade of open-casting along that road, all our hopes and visions of investing in and around the Heads of the Valleys will be dashed. The Secretary of State will have to take those issues into account when he receives the representations that will follow the local inquiry.

Land reclamation is one of the most vital functions of the agency. My right hon. Friend the Member for Swansea, West (Mr. Williams) spoke not only about our historic success in trying to clear as much dereliction as we can but the growing pace of new dereliction. A most interesting survey that was carried out by the Welsh Coalfields Communities showed that, despite the tremendous efforts that have been made by everyone to clear dereliction, we are about where we were five or 10 years ago with regard to the amount of dereliction that we have. A budget of £16 million to £20 million, which is what I assume the agency will receive, is not sufficient. A figure of £25 million a year would make inroads into the rate of dereliction in our communities.

We welcome the Bill because we believe that a partnership between the agency, the local authority and the Welsh Office is the way in which communities such as mine can be regenerated and redeveloped. We shall support the Secretary of State, whenever he deserves it, to achieve that purpose. I hope that he in turn will recognise that when Labour Members speak we do so with authentic voices of the needs and wishes of the people whom we serve.

Photo of Sir Anthony Meyer Sir Anthony Meyer , Clwyd North West 10:12 pm, 28th January 1988

I want to respond briefly to the extremely constructive and thoughtful speech of the hon. Member for Merthyr Tydfil and Rhymney (Mr. Rowlands), which, like the speech of the hon. Member for Ceredigion and Pembroke, North (Mr. Howells), was in startling contrast to what we heard from the right hon. Member for Swansea, West (Mr. Williams).

There is a good case to be made by the Labour party with regard to these changes, but it is not helped by distorting the facts. The facts are that we have had an enormous increase for Wales and an enormously expanded programme for the Welsh Development Agency. It spoils the case altogether to try to gloss over that.

None the less, I must express a concern, for two reasons. First, the constant changing of the system of regional aid has gone on under successive Governments. It is not that it changes as each Government is elected. Each Government seems to try two or three different approaches to this matter, and the introduction of uncertainty is damaging to inward investment.

There is a strong case to be made for certainty, and it was made powerfully in the debate on Monday by my right hon. and learned Friend the Member for Richmond, Yorks (Mr. Brittan) and my hon. Friend the Member for Pudsey (Sir G. Shaw). The abolition of regional development grant removes an element of certainty that is of value in attracting investment, but I am quite prepared in the short term to trade that against the tremendous success of my right hon. Friend in attracting so much more help to Wales.

I remember that once when my noble Friend Lord Carrington was being interviewed about the Prime Minister he was asked the usual question about what would happen if a No. 11 bus were to run over her, to which he retorted that it would not dare. My concern is that if that No. 11 bus, swerving to avoid the Prime Minister, were to run over my right hon. Friend the Secretary of State for Wales there would be precious little, now that we are doing away with regional development grant, to ensure that the same battles would be fought so heroically in the Cabinet and that under a less automatic system we in Wales would get our fair share.

What was a little worrying at the end of Monday night's debate was the failure of my right hon. and learned Friend the Member for Richmond, Yorks to get the assurance that he sought from the Minister that the total of aid under regional selective assistance would be maintained and that what is undoubtedly happening for the coming year would happen for the years ahead. Therefore, I have this faint, nagging worry, but as long as my right hon. Friend is there I know how hard he will fight for Wales, and I take this opportunity of congratulating him on what he has managed to achieve.

Photo of Mr Michael Foot Mr Michael Foot , Blaenau Gwent 10:16 pm, 28th January 1988

Like all my hon. Friends, I certainly welcome without any qualification and with open arms all of the propositions in this Bill for increasing the amount that we are to get under the arrangements of the Welsh Development Agency. Every time since 1979 that I have visited the Welsh Office or the Welsh Minister has come to my constituency I have asked for more money for the WD A because of the kind of work that it is doing and because I think that it is asinine that all the time it should have to choose between, for example, a new, advance factory that is desperately needed and a new development of land reclamation which is equally desperately needed. So of course we want more money and welcome it. It would be ridiculous for us not to do so. And we need more.

We are suffering from an accumulation of what has happened in the past, and people do not take into account the economic burden that rests on the shoulders of the people who work in the valley towns, for example. With perisistent mass unemployment, 22 per cent, female and 24 per cent, male, for six, seven or eight years on end, which is what we have had since 1979, soon after which it doubled, the economic burden is enormously increased. If there are cuts in social security such as we are having in the valley towns—and the worst ones are coming into operation in the next few months — that imposes a burden on our people because they have not got as much money to spend as people in other parts of the country.

All these accumulated burdens of the persistent slump that we have had to bear while other parts of the country have talked about fabulous improvements we are still carrying to a large extent. Therefore, we need every penny we can get in the Welsh Development Agency and we need even more than the Government are providing under these new provisions.

My right hon. Friend the Member for Swansea, West (Mr. Williams) is quite justified and correct in recalling what happened in 1978 and 1979, when we faced the run down. The people in my constituency wanted the support through the WDA to be sustained on the scale that we were getting then. If we had had that, we should have been able to cut our unemployment during that period and achieve very much greater expansion.

I am not trying to qualify the compliment I have paid to the right hon. Gentleman and his hon. Friends. We have not had any nonsense today about not being able to solve problems by throwing money at them. We have not had any of that kind of drivel from the right hon. Gentleman. He is able to say that he is going to throw a bit more money in and that is why we should cheer him so much. And we do so. The point stressed by my hon. Friend the Member for Gower (Mr. Wardell) regarding the alteration in the regional grant process is a serious matter.

I congratulate the Secretary of State on having visited so many places in the last few weeks and listened to what local authorities have to say on these matters. If the Government had listened in such a way, I cannot believe that the measure changing the provision of regional grant would have been introduced. It is a brainwave from Lord Young and we all know how dangerous that can be. Nobody knows that better than the Secretary of State. I cannot believe that he was ever in favour of this proposition. The questions put by my hon. Friend the Member for Gower are unanswerable. He has all the evidence from people working on the job and the evidence from the Welsh Development Agency. I guarantee that he has evidence from every local authority to which he has put the question. Certainly, he got such evidence when he visited my local authority. It was one of the main subjects that we wanted to discuss with him.

I do not ask the Secretary of State to reply to the question now; indeed, it might be dangerous for him to do so. If he replies and emphasises what was said by Ministers in the debate a few days ago, we would be landed with it. I would like the Minister to work out for Wales a new formula under which we could give industrialists coming to this area special advance assurance so that there would be no question of selective argument about whether they were entitled to the grant. We would be able to say to them, "We are going to give you a better chance over a long period of the kind of assistance and advantage that we have had over some areas in the past."

It makes me furious that, in my area, the provision of such assistance was foreseen in 1978 and 1979. It was foreseen that areas in which there was such a fierce rundown in the steel industry and other industries must have special provision over and above the normal development assistance. My right hon. Friend the Member for Swansea, West worked out exactly what such special assistance should be.

I do not expect the Secretary of State to deal with this matter at the end of the debate, but it would be advantageous if he could consider the matter before the present provisions expire. It is comical to be told that we shall have a great advantage over the next few months before the system is changed. Many firms will rush in because the future is more assured. There will be a combination of improved grant and a guarantee for the future. I ask the Secretary of State to consider that and to realise that such an advantage for areas which are most seriously hit must be restored.

I represent an area which continues to be hit. It is not just a question of what has happened in the past seven or eight years. That is why it is absurd for the Secretary of State to talk about the fabulous restoration of the economy. In my area, we still have redundancies and closures in the mining industry on a huge scale. Those closures do not affect just a few hundred people here and there. We have had major closures in the past year and we face more in the future. There are areas in Wales and other parts of the country which need special assistance We shall make every possible use of everything that we can get from the Welsh Development Agency, but we need something in addition to that.

The Welsh Development Agency has done a magnificent job. I would rather that it made mistakes and spent money than not get on with the job. It has shown how public enterprise can co-operate with private enterprise and with local authorities in the best possible way, but it can do much more. It needs more money and a fresh look and this provision, which was so essential in the past, will still be necessary.

Photo of Mr Dafydd Elis Thomas Mr Dafydd Elis Thomas , Meirionnydd Nant Conwy 10:25 pm, 28th January 1988

I echo what the right hon. Member for Blaenau Gwent (Mr. Foot) said about the overall level of regional spending in Wales and the need for an effective regional policy. I take as read what was said from the Opposition Benches in the debate on Monday.

In a debate of this kind it is difficult to do justice to the broad activity of the WDA. What is clear—apparently this view is shared by hon. Members on both sides of the House—is the importance of a public sector agency that ensures partnership between commercial and public finance to ensure development within Wales. That partnership covers the broad basis of existing industry, commercial activity, agriculture and tourism, as well as the more traditional forms of manufacturing investment.

Of course we all echo the welcome that has been given to the external overseas inward investment in Wales. In real terms, that investment represents a small part of the agency's total work, albeit extremely important in terms of new investment. Most of the work of the WDA is involved in stimulating, maintaining and developing growing and existing industries. In Wales, small enterprises represent a success story. The survival rate of such enterprises in Wales is substantially higher than in other parts of Britain.

When considering the activities of the agency we need to look in particular at the essential role of small businesses in building up the economy. We have plenty of evidence from other advanced capitalist countries that the small business sector is a major growth area in a mature economy. Certainly, in the past five years it has been evident that, in Wales, there is opportunity for substantial growth in the medium and small business sectors. The WDA must direct its attention to that growth in addition to the support that will be available from the Government under the new enterprise package.

One thing that is important to destroy is the myth that Welsh people are somehow not enterprising per se. That myth still seems to hang around. My experience is that there is tremendous enterprise. Most people who live and work in my part of the country have at least three jobs —and that does not mean that they are moonlighting. They are actively engaged as contractors, as well as being self-employed in other capacities, or they may take in tourists. It is a diverse economy, and most of us have more than one job.

However, because of the traditional education system and the reliance on employment patterns in some of the heavy industries, there has been a failure in the take-up of the enterprise idea and the possibility of moving on from an idea to actual investment. Much of the responsibility for that failure must lie with the financial system. I endorse what has been said by hon. Members on both sides of the House about the need for venture capital to be a priority in the role of the WDA.

There is an important link between the agency and other agencies of development in Wales. The right hon. Member for Ceredigion and Pembroke, North (Mr. Howells) stressed the role of the Mid-Wales Development Board. I referred to that on Monday night, and I do not wish to repeat what I said. However, it is important that anything that happens within the WDA is parallel, albeit on a smaller scale, to regional schemes through the Mid-Wales Development Board. Similarly, some of the social development programmes that the Mid-Wales Development Board has pioneered should also be made available in rural Wales through the work of the WDA. It is regrettable that social packages are available in mid-Wales but not in other parts of rural Wales.

It is important that there should be a link between WDA work, as the senior enterprising agency and the major source of capital, and the work of the Wales tourist board. The tourist board is aware that the WDA has large sums of capital available to it, yet the tourist board, the promotional body for tourism — a major growth industry — does not have access to the same kind of capital. It must be made clear that, with the development of tourism, the WDA should undertake the role of providing capital and the development of that service sector in close partnership with the tourist board.

The Wales tourist board knows the needs within the industry and the capacity for promoting development. I emphasise the need for collaboration between the various public agencies and also, on a smaller scale, between the WDA and other agencies in rural Wales, in particular, the National Parks Authority and its development of small craft centres and so on in the countryside.

The main issue to which I want to refer is the need for the agency to give even higher priority to ensuring the provision of venture capital. Part of the problem of Wales is its need to be a finance centre and therefore self-generating in capital accumulation and economic growth. The agency should be giving the highest possible priority to the provision of risk capital and other business services and the development of a genuine Wales-based entrepreneurship.

Photo of Mr Keith Raffan Mr Keith Raffan , Delyn

That is a very important point, and the hon. Gentleman is making it as constructively as the hon. Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) did in an important contribution to the debate. On the whole question of venture capital, we must get across the fact that we need to build up in Cardiff a financial centre, which does not exist there now. Edinburgh has one, and that is the advantage that Scotland has over Wales — a point that the hon. Member for Merthyr Tydfil and Rhymney did not quite make. It is a very important matter in the controversy over getting more venture capital into the Principality. We must build up a financial centre in Cardiff.

Photo of Mr Dafydd Elis Thomas Mr Dafydd Elis Thomas , Meirionnydd Nant Conwy

I very much agree with the hon. Gentleman. I have always looked at the Welsh economy in terms of a partnership between the commercial sector and the public sector. The absence of commercial-sector centres of finance capital is the key gap in the regeneration of the Welsh economy.

If we take the WDA venture capital out of the equation of venture capital available to Wales, we find that there is a substantial gap. The figures made available in the recent study of venture capital show that, if the role of the WDA and its associated Welsh venture capital is ignored, Wales received less than 2 per cent, of investments of venture capital in the years covered by the study 1983 to 1986. That illustrates the size of the problem. With the role of the WDA included, Wales receives more than its share each year by numbers, but less by value. There is a problem not only of the number of investment projects taking off in Wales, but of the value of the investments. We can see from the study a preponderance of small investments by the WDA; 60 per cent, of Welsh investments were under £100,000, while the figure for England is a quarter. That indicates the scale of investment in different projects.

I am not complaining about that. We may well need to have more smaller projects for investment in Wales. It is significant that the role of start-ups and early-stage financing in Wales is substantially greater than it is in England or Scotland. There are various growth tendencies in the Welsh economy. The important thing is to be able to service them, and to see that the WDA has the means to do that.

It is also interesting to look at the sectoral composition of venture capital: nearly 17 per cent, in electronics; a substantial proportion, 15 per cent., still in energy and mining; and up to 11 per cent, in consumer-related investment.

As outside commercial investment has increased, so the value of WDA investments has been reduced, but the WDA's role as the major lead agency in the formation of venture capital in Wales, which is recognised by the agency, must also be recognised more fully by other commercial sources of finance in Wales.

Perhaps the one matter on which I found myself in complete agreement with the Secretary of State's predecessor was his famous lecture to the City of London. He got into trouble for doing it, but it was one of his better speeches, and it is important that such speeches should still be made with regard to the effect, or lack of effect, of capital markets on development in Wales.

I wish to stress particularly that the agency cannot overemphasise its role with regard to venture capital, and the effect that that can have on the necessary growth and diversification of the Welsh economy.

The hon. Member for Ceredigion and Pembroke, North referred to agriculture and the position of Dyfed and Gwynedd with a declining agriculture. The agency has shown enterprise here, with the rural initiative, which has taken off in Dyfed. I have been very impressed by what it has done in marketing the incredibly varied cheeses produced in the hon. Gentleman's constituency. Here the agency has tackled a sector of development that has been neglected, in terms of refinancing, and set up advice and marketing services to improve the products.

What we see is a diverse agency touching all aspects of enterprise within the life of Wales. We pay tribute to the work that the agency has done. We welcome very much the additional funding that is being made available to it. But we are also well aware that the work of such an agency can be effective only if it is seen as a partnership. The capitalist sector has not served Wales well in the past. It is high time we got a response from that sector to the public sector finance that is being put in now.

Photo of Martyn Jones Martyn Jones , Clwyd South West 10:35 pm, 28th January 1988

May I preface my remarks by telling the hon. Member for Cardiff, North (Mr. Jones) that there are still many empty advance factories in certain areas. Conservative Members can start crowing when they exceed the all-time record of jobs in Wales that we had in 1979.

We see in today's report on the Welsh Development Agency and its boost for the development of property that there is a record demand for industrial and commercial property. Is this why only a few further units of rural workshops are planned for the Denbigh area? I wonder. Presumably there is no demand for industrial property in the vale of Clywd or the southern areas of my constituency.

Of course, the Secretary of State may not be aware of the problems of that area. This would seem likely from the reply I received to a question that I put to him last November. Of the five WDA factories which it was claimed would help replace the jobs lost in the vale of Clywd if the North Wales hospital closed, four were in Corwen, which is not in the vale of Clywd. I suspect that they are still empty, along with the other one that became empty after my question was put.

Why is the record demand not apparent in south-west Clywd, or indeed in the constituency of the hon. Member for Delyn (Mr. Raffan)?

Photo of Mr Keith Raffan Mr Keith Raffan , Delyn

I find the hon. Gentleman's contribution extraordinary, in view of the statement by the chief executive of the Welsh Development Agency today, when he made it clear that the vacancy rate on a total property portfolio of more than 18 million sq ft is currently 86 per cent. He said that anything under 10 per cent, inhibits the ability of the agency to attract companies from other parts of the United Kingdom or from abroad into Wales The hon. Gentleman is inadvertently making the point that some of his predecessors made. Unfortunately, they have left the House and their wisdom is no longer on those Benches. I am thinking of Roger Thomas, the former Member for Carmarthen. He made the point that advance factories were not as good as bespoke units. What the hon. Gentleman is saying is nonsense.

Photo of Martyn Jones Martyn Jones , Clwyd South West

It can hardly be nonsense, as there are empty factories in my constituency.

For the edification of the hon. Member for Delyn, I was told in answer to another question that assisted areas have an 8·5 per cent, vacancy rate, but unassisted areas have a 15 per cent, vacancy rate; that is, nearly double. I suspect that we have problems in south-west Clywd because 90 per cent, of the area does not have assisted area status, and now no regional development grants.

The demand will fall further in regions such as mine without assisted status. As I have said, the vacancy rate in unassisted areas is roughly double the rate in assisted areas. In the north of Wales as a whole we have only one property development initiative, at Deeside. Why not have them where jobs are obviously going to be lost, such as in the vale of Clwyd? When will the WDA launch its dedicated programme of advance factory building in areas requiring urban renewal — for instance in parts of my constituency such as south Clwyd, Rhos, Cefn and Ruabon, which desperately need such investment? There is no indication of when it will happen.

The aims of the WDA's programme, financed by a switch of resources, are, as my right hon. Friend the Member for Swansea, West (Mr. Williams) pointed out, first, to increase the supply of traditional property in regions where demand is now outstripping available stock; and, secondly, to undertake a range of new and innovatory projects. An innovatory project in the vale of Clywd, at Denbigh, is being ignored. The Pilkington special glass project has no access to grants and is struggling in a very high-tech area. The third aim of the new programme is to help regenerate the more disadvantaged urban and rural areas. I submit that this cannot be achieved in my area or any other area in a vacuum without RDG or assisted area status.

Photo of Mr Rhodri Morgan Mr Rhodri Morgan , Cardiff West 10:39 pm, 28th January 1988

I was wondering when we started the debate two hours ago why the Secretary of State was performing this all-singing, all-dancing, barnstorming routine, saying that everything in Wales was wonderful; and why he was putting so much hyperbole into his performance.

The explanation came to me in the unexpected presence of the hon. Member for Wokingham (Mr. Redwood). He made three visits here. I think that the explanation is that Rothschilds is to make a bid for the WDA next week. It is the Secretary of State's job to talk up the Welsh economy. It may even make a bid for Wales. He wants to raise the price-earnings ratio of Wales and the WDA as much as he can before next week.

Photo of Mr Peter Walker Mr Peter Walker , Worcester

The hon. Gentleman is always talking Wales down.

Photo of Mr Rhodri Morgan Mr Rhodri Morgan , Cardiff West

I do not talk anything down.

What the Secretary of State was engaged in, and may engage in again when he replies—I hope he does not—is the phenomenon familiar to psychiatrists of overcompensation. Since he comes from Gloucester and represents Worcester, but is now the Secretary of State for Wales, he has to try to prove to all of us and to the Welsh population that he is a better Welshman than the rest of us, although he does not come from Wales. Do we really have to go so far as back to his home town of Gloucester and his constituency of Worcester and spray green paint all over the roadsides and write in the old Romano-British names of Caerloyw and Caerwrangm at the entry to those towns? I think that would be going a bit far. He is now known as "Caerloyw boyo" in the coal mines of Wales. Unfortunately, there are not too many coal mines left in which that soubriquet can gain currency.

If we analyse the figures, without the hype, for which the Secretary of State is becoming well known in Wales, and see what he has announced on behalf of the WDA, and what the building programme that the WDA itself has announced in Cardiff today, and compare that with what has been done in the past 10 years, we get some idea of whether it is a big programme, an about average programme or a small programme. That is what we really want to know.

Let us look at the average for the last 10 years of the WDA's advance factory building programme. I calculate that to be a shade under the convenient round figure of 750,000 sq ft per year. I hope that the team of officials will now be able to provide that now familiar phenomenon of the slick fingertip-passing from apparatchik to Parliamentary Private Secretary to Chief Whip, sometimes on the mis-move to the Secretary of State, sometimes to the Minister of State for him to run in the tries. I hope that the Welsh three-quarters manage to perform with the same facility a week Saturday. The Secretary of State can show what a good private sector optician he benefits from when he gives us the answer. If the Secretary of State does not like the figure that I have given, I am sure that his officials will correct it.

What figure has the Secretary of State announced today relative to that average? Is that average a reasonable figure to take? I am sure that when the right hon. Gentleman replies he will say that that average is false because it includes the special steel closure programme which ran from 1978 to 1982. Is it fair to exclude the steel closure area? He obviously wants to exclude it, because that will bring the average down for the past 10 years and make today's announcement and the future programme for which he is now responsible more impressive. But is it really reasonable to exclude the steel closure area special building programme of the years 1978 to 1982?

There were 30,000 jobs lost in the Welsh steel industry in that period. In the last two years, since the end of the miners' strike, between 11,000 and 12,000 jobs have been lost in the mining industry. Therefore, 30,000 over four years compared to 11,000 over two years is not that different. It is not unreasonable for us to include the average of the whole of the last 10 years when the average figure for advance factory building programmes was 750,000.

Today's announcement is not on an entirely comparable basis, but in so far as it can be deciphered —I am sure that I will be corrected if I am wrong, as I could easily be — it looks as though next year's completion programme will be 550,000 sq ft. The following year's figure depends on when the 900,000 sq ft that was announced today in Cardiff for the advance factory building programme will be completed. I want to take a charitable view. I do not talk anything down; the Secretary of State is wrong about that. Someone who has been an industrial development officer for six and a half years does not do that.

If we assume, charitably, that all the factories announced today in Cardiff will be completed by the year after next — I do not think it will happen, but let us assume that that will be the case — we would have a completion rate in the next financial year of 550,000 sq ft and, in the year after, of 900,000 sq ft. If we divide those two, we come out somewhere near the average of the past 10 years of just below the average — 700,000 sq ft. instead of 750,000 sq ft.

I see the Secretary of State shaking his head, but I am not sure what he is shaking his head about, because the laws of mathematics are the same on both sides of the Chamber.

Let us look too at the actual performance of the Welsh Development Agency this year. One of the problems—it is in the public expenditure White Paper—is that it was supposed to complete 650,000 sq ft this year but it looks as though it will actually complete less than 500,000 sq ft. So it is 150,000 sq ft down, a 22 per cent, shortfall in the great year of opportunity mentioned by the hon. Member for Delyn (Mr. Raffan) earlier.

That is why I am inclined to think that this year will go down in the annals of the Welsh Development Agency as the year of the great missed opportunity. It appears to have been the only body, governed as it was by the very strict Treasury rules of two or three years ago, that failed to foresee that in election year there would be an election year boom and that there was likely to be a sharp increase. It did not foresee it or, more likely, was not allowed to foresee it and so to have a balance in hand sufficient for the election year upturn which was visible to almost everyone else.

Photo of Mr Peter Walker Mr Peter Walker , Worcester

Why is it that, when my predecessor announced a 12 per cent, increase in spending for election year, he was accused of electioneering by hon. Members on the Opposition Benches?

Photo of Mr Rhodri Morgan Mr Rhodri Morgan , Cardiff West

I know that the Secretary of State's experience of Welsh affairs is relatively short, but one should not necessarily answer on the basis of one year's change. Over a three-year period of change, we go from about 200,000 sq ft of construction in 1984–85 to 300,000 sq ft in 1985–86, and an attempt is being made to crank the machine back up to 600,000 or 700,000 sq ft.

It cannot be done. Planned this year is 650,000 sq ft and the actual outturn is 498,000 sq ft, as we saw in the public expenditure White Paper last week. That is 22 per cent, behind planned output, because one cannot crank up a machine just like that. In the old days, five years ago, 2 million and 1 million sq ft of advance factory space was being produced per year; that was dropped right down to 200,000 sq ft, one tenth of the original—and it is being boasted about.

On page 15 of the Welsh Development Agency's annual report and accounts for 1984–85 — I will read the passage to hon. Members just in case the Secretary of State thinks that I am talking down the efforts of the Welsh Development Agency — it boasted about the fact that advance factories were no longer needed. In fact, it has been a very expensive lesson for the Secretary of State and his predecessor. The report says: The amount of new space created in advance factories was just 7 per cent, of the amount built in the peak year of 1981–82. Advance factories providing low-cost factory space at short notice still fulfil an important function but they are now built to fill identified gaps in the market". The problem was that the machinery available to the Welsh Office, the Treasury, the Secretary of State and the Welsh Development Agency, did not spot the market coming; it did not see that in an election year there would be a rise in demand. The machinery was run down in 1985 and it was impossible to build it back up again. The result is that they have all been caught with their pants down. It is very sad. We shall miss a large number of opportunities.

We hope that, once and for all, those responsible will learn the lesson, that the right thing is to provide the WDA with a steady amount of money for factory building every year, rather than suddenly producing big building programmes, such as that announced in Cardiff today, of advance factory construction of about 1·4 million sq ft over the next couple of years—we do not know when the completion will be at the moment. That will probably catch the next downturn in the market.

It sounds good to announce it today, but there is no way that it will be on stream for a long time, because the WDA has run down. It no longer has the army of surveyors, architects and so on, and the construction companies no longer have the expertise that they had in 1981 and 1982. Otherwise, we would find that they would have produced the 650,000 sq ft that they were supposed to produce this year. Instead, they have produced 22 per cent, less than that, on the figures given in the Government's White paper section on the WDA, published two weeks ago. That is a sad state of affairs. It is an expensive educational lesson, and I hope that the Secretary of State and his team will learn from it.

Photo of Alun Michael Alun Michael , Cardiff South and Penarth 10:50 pm, 28th January 1988

I shall briefly refer to the relevance of the Bill and today's announcement to the needs of Cardiff, and, more specifically, to those of my constituency.

I ask the Secretary of State to ponder three things. First, I ask him to have regard for the tradition of local initiatives. The WDA has been at its best when working in local partnerships. There have been local successes, and I appeal to the Secretary of State, when considering ways of putting in money in the future, not to put all the eggs in one basket, which could become too large and bureaucratic. I ask him to consider that small is beautiful and successful, provided that it is adequately resourced at local level.

Secondly, I refer to the tradition of partnership that we have developed over recent years in the Cardiff area. The Secretary of State will be aware of the sort of work that has been done in partnership between the city council and private developers in redeveloping the city centre, and of the work done by the city and county jointly on helping local and incoming firms. He will also know of the work done jointly by the city, the county and the Welsh Office on a number of economic projects, and by the city, the county and local firms on the establishment of the Cardiff and Vale Enterprise.

As one of the people involved in founding that partnership I was pleased to hear the Secretary of State's praise for what we have achieved when he opened our new premises last Monday. If I may make one party political point in passing, the establishment of the organisation was opposed by the local Conservatives, although since then we have welcomed their conversion and support. So this is no longer a matter of controversy between the parties locally.

Hearing the hon. Member for Vale of Glamorgan (Sir R. Gower) describing the Conservative party's reluctance to embrace imaginative initiatives, it is tempting to remind hon. Members that, wherever the Department of enterprise may be, the party of enterprise is on the Opposition side of the House.

Thirdly, I refer to the challenge of the future of Cardiff bay, and here again I emphasise the need for partnership. Indeed, I have emphasised that on a number of occasions, as has the Secretary of State. So far, so good, for the rhetoric used and the way in which things have started off; but vigilance will be needed because it is human nature to prefer to run things in one's own way. It is a human failing to try to dominate; it is a human error to assume that single domination, as long as it is one's own, is more effective — an error committed by every dictator throughout the ages. However, it is a simple fact that cooperation is the approach that produces effective and lasting results.

I welcome the references in today's announcement to the Cardiff bay development, and agree with the point made about the worries of local people by the hon. Member for Cardiff, North (Mr. Jones) whose interest in my constituency I welcome. Perhaps I shall be able to return the compliment some time. What he said was helpful because it underlined the fact that this is not a party political point giving rise to criticism. It concerns, rather, the best way of going about making the most of the developments in south Cardiff.

The hon. Gentleman referred to a real fear in the area —that the standstill in development of land for industry and factories has led to the loss of jobs. That may be an inevitable penalty while the planning process is under way, but it is no less a cause for concern because of that. The problem is that the only readily available sites for industrial development in the Cardiff area are those in the bay development area that are in the process—if it is not already complete — of being passed over from the WDA to the bay development corporation.

I have reservations about the withdrawal of the WDA from the Cardiff bay area. There is much concern at the combination of the lack of land for industrial development in Cardiff and the removal of the WDA's specific involvement in the south Cardiff area. I must add that the land that is available is in the bay area.

The WDA's publication today refers to the Treforest area which covers some extremely important areas represented by my right hon. and hon. Friends. It includes areas with tremendous job creation problems — for example, the Rhonnda valley, the Rhymney valley, the eastern side of the Taff Ely—Treforest and Pontypridd —and, as an afterthought, Cardiff has been added.

That is no accident. It reflects the withdrawal of the WDA from Cardiff. If that is the case, it is a matter for serious concern. I do not want to detract from the importance of the areas within what is described as the Treforest region. However, I suggest to the Secretary of State that there is a need to re-examine the WDA's role in respect of Cardiff.

That need is emphasised by the WDA's 1989 programme. I can find only one entry for the proposals for Cardiff. It refers to a size range of 5,000 to 10,000 sq ft with no reference to numbers. One sentence in the text refers to Cardiff: There is no shortage of industrial land within the Cardiff Area and the Agency will be actively pursuing this issue. I hope that it will be encouraged to pursue that issue in partnership with the bay development corporation and the local authorities. I hope that the Secretary of State will encourage those organisations to work in partnership rather than to pursue their own individual paths.

The lack of land is important. On numerous occasions I have referred to the high unemployment level in Cardiff. Despite our success locally in creating new jobs, there is a gap primarily in the skilled and semi-skilled sectors, and it is precisely that type of job that will be subject to possible relocation as the bay development progresses. At the same time, we are getting the inquiries and the home-grown results. The spaces provided previously by local authorities in partnership with others, including the WDA, have been filled.

In conclusion, I want the Secretary of State to note these points. First, many of the activities referred to in the WDA's proposals published today have been pioneered by local authorities and in partnership with others. I hope that they will be encouraged to continue. Secondly, I hope that he will note the opportunities and the needs in Cardiff. I want him to support the request for partnership and involvement with the WDA in Cardiff, and specifically I want him to note the need for land, factories and workshops.

I have many details that I would be happy to follow up with the Secretary of State outside the Chamber. However, we must remember that the city of Cardiff has many communities with horrendous levels of unemployment. Despite the success of some of the initiatives, they are suffering extreme levels of unemployment, especially among the young. Those problems are of the same order as those experienced in inner cities. I ask the Secretary of State not to be hypnotised by his public relations or by our public relations locally. We do not want to undersell Cardiff in any way—we have a great deal to be proud of—but we must recognise the employment difficulties and the specific areas that require positive action.

Photo of Mr Roy Hughes Mr Roy Hughes , Newport East 10:58 pm, 28th January 1988

This debate has been about the proposed increased borrowing powers of the WDA and the Secretary of State's announcement of the WDA's development programme. My right hon. Friend the Member for Swansea, West (Mr. Williams) welcomed the proposals, and that welcome was echoed by every Opposition Member who has spoken. The purpose of the WDA is to regenerate the economy and improve the environment of Wales. Those objectives are as relevant as ever.

My right hon. Friend the Member for Swansea, West also reminded the Secretary of State that the WDA, when it was created, was opposed by the Conservative party. It was opposed even by the wets and the soft-soapers, right down to the mavericks—and even they have occasional twinges of enlightenment. Our criticism of this short Bill is based on the inadequacy of the measures contained in it; and, indeed, of the amounts involved, which in any case form only a guideline of the figures that could be spent, because the veto is still with the Secretary of State.

The problem of unemployment in Wales is massive. We have an Everest to climb. However, we hear from the Government a fanfare of trumpets to herald the most minimal measures. Reading the Welsh press, and in particular yesterday's leading article in the Western Mail, one would have thought that a millennium had been reached. Yet the Government have reached only the foothills: the mountain has yet to be climbed.

Let us examine the figures. In December 1987, the average unemployment rate in Wales is given as 11·7 per cent., or 40,300. But even that hefty figure is reached after a degree of massaging that would make a physiotherapist green with envy. The Library informs me that the figures are calculated with the use of a wider denominator, expressing the unemployed as a percentage of employees: that is, the unemployed, Her Majesty's forces and the self-employed. All I can say is, "Amen to all that."

We can compare those figures with the figures in 1979, when the rate was 5·9 per cent., or 73,100. That is half the present doctored figure. Let us look at the league table. I quote the figures for many Welsh districts: Pwllheli, 24·7 per cent.; Cardigan, 24 per cent.; South Pembrokeshire, 23·9 per cent.; Holyhead, 20·8 per cent.; Aberdare, 19·7 per cent.; Lampeter and Abereeron, 18 per cent.; Haverfordwest, 16·8 per cent.; Merthyr and Rhymney, 16·8 per cent.; Machynlleth, 16·2 per cent. I could continue, right down to Newport, where the figure is 12·6 per cent. Newport was once the gravitational point in industrial development for a vast area of south-east Wales.

What is the reality behind those figures? The facts are even more revealing. The hon. Member for Vale of Glamorgan (Sir R. Gower) said that we were recovering. I can only say, "Good heavens, we need to." Nearly 30,000 men in Wales have been out of work for more than five years or have never worked at all. Nearly 80,000 men and women have been jobless for longer than two years. Some 5,000 people have even given up looking for work. The 160,000 men and women who are out of work face a life of poverty and hardship. The brief facts that I have given are not figments of my imagination; they come from the Welsh Office document of September 1987 entitled, "Health, Wealth and Living Conditions in Wales".

When the Secretary of State visits the Rhondda, Cynon Valley, Merthyr, and Newport, which I have already pointed out has 12·6 per cent, of its people out of work, perhaps he could take with him Mr. Ian Kelsall, of the Confederation of British Industry, and the new editor of the Western Mail. They could tell the people there, at first hand, how buoyant the Welsh economy is at present. All I can say is that the response to that would not be very charitable.

Photo of Mr Peter Walker Mr Peter Walker , Worcester

Does the hon. Gentleman share Newport council's current optimism about how successful it is at attracting new industries and new firms? Does he join that council in its impression that Newport is a real growth area at the moment, or does he think that it is a decadent area in decline?

Photo of Mr Roy Hughes Mr Roy Hughes , Newport East

I have always had great faith in Newport's ability to attract jobs, because of its favourable geographical location and its transport facilities. However, that does not alter the fact that, even with all those facilities, Newport still has 12·6 per cent, of its people out of work. I hope that more new factories will open, but at present the position is dismal.

The Secretary of State has a duty to the people of Wales to include social reasons in the development of the WDA, not just market and commercial values which, as I see it, are still uppermost in the new property programme that was announced today. We argue that insufficient financial aid has been given to meet the dire economic and social consequences of the past nine years on the industrial and manufacturing base in Wales.

The Government tend to say, "Leave it to private enterprise and market forces," but surely that is what has caused so many of the present difficulties, such as the drift to the south-east of England, with its great disparity of wealth and employment opportunities, thus creating massive problems of congestion in that region. Regional policy is certainly good for the south-east of England, and the WDA is very much an arm of regional policy, which is why my hon. Friends and I so firmly support it.

Let us consider the thousands of jobs that have been lost in Wales in steel, coal and many other industries. Wales was in danger of being turned into an industrial wasteland, but fortunately — directly as a result of regional aid—some new industry has been brought in, although it is not nearly enough. That is why we deplore the decision to end regional development grants. As my hon. Friend the Member for Gower (Mr. Wardell) so lucidly pointed out, we know the background, as do the officials of the WDA, and, indeed, the civil servants in the Welsh Office.

The WDA needs to be assisted financially far more substantially than is provided for in the Bill or in the Secretary of State's announcement. Of course we welcome the boost to the property programme. However, let us consider what has happened to Wales and look at the outflow of population. Some 169,000 people have left Wales in the past five years. Some of our youngest and brightest have left, and that cannot be good for Wales.

Photo of Mr Peter Walker Mr Peter Walker , Worcester

I am interested to hear that 169,000 people have left Wales. Will the hon. Gentleman now give us the figures for those who have come into Wales?

Photo of Mr Roy Hughes Mr Roy Hughes , Newport East

I do not have the figure to hand. [HON. MEMBERS: "Ah!"] What I am trying to say is that among the 169,000 who left were many who we needed to hold on to for the future good of the Welsh economy. Many of those who have come to Wales have tended to be pensioners—not that they are unwelcome.

The funding base of the WDA is still not sufficient to enable it to meet its statutory duties, let alone fulfil popular expectations of what could and should be done to meet the vicious regional cut-throat competition that Wales has to face in trying to attract new jobs. The agency should be allowed to invest far more than is planned. There is so much to be done. My right hon. Friend the Member for Blaenau Gwent (Mr. Foot) rightly pointed out how much needs to be done in his area alone. The investment function is the element most in need of support and change. The WDA requires more funds over a longer period to counteract the fact that Wales has lost 113,000 of its manufacturing jobs — 36 per cent. — since 1979 when the Government came to power.

Finally, the debate must be seen in the context of the massive unemployment that Wales has to face. Opposition Members support the Bill, but it is only a minimal measure. It tends to confirm our belief that the Government are incapable of expanding the activities of the WDA to meet the real and pressing needs of the Welsh economy.

Photo of Mr Wyn Roberts Mr Wyn Roberts , Conwy 11:11 pm, 28th January 1988

Wales has had some superbly good news today. While many Opposition Members have acknowledged that, others have found it a bitter pill to swallow. Much has been made of the point that we owe the existence of the Welsh Development Agency to the Act passed by the Labour Government in 1975. However, I remind Opposition Members that today's WDA is a very different animal from the one that they envisaged and we opposed. We changed its functions in the Industry Act 1980. We repealed the provision dealing with the promotion of industrial democracy and substituted the promotion of private ownership of interests in industrial undertakings. As a result, the agency is a much healthier animal than it was when it came into our care.

As my hon. Friend the Member for Vale of Glamorgan (Sir R. Gower) said, there is widespread approval for the WDA's work in recent years, and agreement that it should be given the resources to build on its successes. The agency has undoubtedly played a full and vigorous part in transforming the outlook for the Welsh economy. Confidence among CBI members has been high throughout 1987, and nearly 910 of them believe that 1988 will be as good, if not better. Export orders have grown at a faster rate in the four months to January than in the previous six, and this upturn is expected to continue despite the strength of sterling. Dudley Fisher, the chairman of the CBI in Wales, is reported to have said that the latest survey reveals the best figures in the organisation's 10-year history.

However, perhaps the most encouraging feature is that his members' investment intentions are 40 per cent, up on what they were, with the general outlook for Wales being better than that for the United Kingdom as a whole. That exceptionally good news comes on top of the forecast of the Institute of Directors that its members are likely to take on 10 per cent, more staff this year.

Those two surveys reflect the general upbeat mood now clear to all in Wales — except for some Opposition Members—and provide firm evidence of our new-found ability to face the future with confidence. Even the Western Mail, which has never been renowned for its optimism, makes very pleasant reading these days. Among yesterday's headlines in the Business Mail were: Industry Shakes Off Blues. I hope that the hon. Member for Newport, East (Mr. Hughes) will shake off his blues.

It continued: Confident Welsh Firms Plan Investment Spree. The leading article, to which the hon. Member for Newport, East referred, was equally sanguine. It was headlined: Yes, Wales is a Going Concern. Its very first sentence read: The signs look better and better for a buoyant Welsh Economy. The last paragraph was almost ecstatic: It is for industrialists and businessmen in Wales to build confidence on confidence; Wales is a going concern. It is an uncommonly good investment. I think that the Western Mail is right. It has got the picture about right. It is against that background of buoyancy that the right hon. Member for Swansea, West (Mr. Williams) should consider the Government's current proposals.

The budget that has been agreed for next year for the WDA will be the biggest and best that it has ever had in cash or real terms for mainstream spending. At £113 million—over £108 million at 1987–88 prices—it beats by a wide margin the best that was ever achieved under a Labour Government—in real terms by a staggering £33 million or 45 per cent.

That is the true measure of what has been secured for next year by my right hon. Friend and of the Government's commitment to maintaining the momentum of development in Wales.

Gross spending, compared with the agency's budget for the current financial year, will rise by over 30 per cent, in 1988–89 alone and by 36 per cent, in 1990–91. The direct taxpayer contribution will increase by over 40 per cent, next year.

Across virtually the full range of its activities, the WDA has achieved record levels this year. The 30 per cent, increase in planned spending for next year will mean that further improvement will not be held back for lack of resources.

Photo of Mr Wyn Roberts Mr Wyn Roberts , Conwy

I shall not give way, because I want to answer as many points as I can.

My hon. Friend the Member for Cardiff, North (Mr. Jones) spoke of the misconceptions about the WDA's role in relation to small businesses. We have already heard that the WDA's business development unit small firms service is responding to a surge of inquiries for business advice and assistance.

I say to my hon. Friend the Member for Cardiff, North that the vast majority of the WDA's venture capital activity has been focused on helping small businesses to start up and expand–220 Welsh companies in 1987–88 alone. The average investment was about £40,000.

For the benefit of the hon. Member for Merthyr Tydfil and Rhymney (Mr. Rowlands), I can confirm that the venture capital figure is £10 million. The agency's investment generates £4, not £2, as the hon. Gentleman suggested, for every £1 put in.

The business development unit will be providing access to the business development consultancy services provided through Enterprise Wales, which my right hon. Friend announced on 13 January.

I advise my hon. Friend the Member for Cardiff, North and the hon. Member for Cardiff, South and Penarth (Mr. Michael), to take up specific Cardiff problems with the WDA. Similarly, that advice applies to the constituency problems of other hon. Members.

The hon. Member for Ceredigion and Pembroke, North (Mr. Howells) referred to the Felinfach creamery closure and the position at Llangefni in Ynys Môn. We obviously recognise the hon. Gentleman's concern, and I am sure that the WDA will do what can be done to alleviate the effects of the closures. The agency's latest factory programme will be of great assistance, with new workshop units being built in key towns in the whole of west Wales and particularly in Narberth, Tenby, Kilgetty, Cillefwr and Pembroke dock, and Mid Wales Development will shortly be coming forward with plans for the area within its responsibility.

With regard to mid Wales I must tell the hon. Gentleman and others who referred to Mid Wales Development that WDA expenditure does provide some help, but, in addition, my right hon. Friend has added £1·5 million to Mid Wales Development's own budget for 1988–89. That is an increase of 20 per cent.

Of course, we are very much involved through the WDA in rural initiatives and spending on rural-related schemes. The DRIVE scheme, started in 1986, for example, rose by more than 70 per cent, in the current year.

Higher resources for 1988–89 will also benefit rural Wales directly and the WDA's budget for its rural affairs unit will be pitched at about £2 million, four times its size in the current financial year. This will obviously supplement the benefits that the area will enjoy from general increases for the agency's full range of programmes, factories, venture capital and advice.

My hon. Friend the Member for Vale of Glamorgan and the hon. Member for Gower (Mr. Wardell) said that there was need for more emphasis on high tech. I fully agree with this, and of course the new WDA factory programme includes a wide range of new high-tech units. Specific examples include projects at Llanelli, Gilwern, Newport and Bangor. And of course, WINtech, the agency's new technology arm, is stimulating innovation and having a major impact. Its resources are being increased substantially.

Photo of Mr Rhodri Morgan Mr Rhodri Morgan , Cardiff West

I wonder whether the hon. Gentleman has noticed that under the WDA's own building programme it is now constructing only one third as many high-tech units as it was three years ago — 150,000 sq ft three years ago and 50,000 sq ft this year. Is that an indication of faith in the high-tech side of WDA?

Photo of Mr Wyn Roberts Mr Wyn Roberts , Conwy

Of course, WDA's building plans are based on its experience, its appreciation of the market and the likely level of demand. But there is no doubt as to the importance of high-tech development.

The right hon. Member for Swansea, West talked about the need for more land reclamation resources. We fully accept this, and that is why the WDA's resources over the next three years for this purpose will include about £75 million for land reclamation, environmental improvement and urban renewal –40 per cent, more than originally planned. A good proportion of this will go to the valleys, about which my right hon. Friend will say more in due course.

The hon. Member for Gower and my hon. Friend the Member for Clwyd, North-West (Sir A. Meyer) referred to the loss of predictability, the switch to selective assistance. I agree that predictability is very important for economic development, but there is also the predictability that arises from having confidence in a sound and growing economy; the predictability associated with the knowledge that modern industrial floor space is available at competitive rates; the predictability of knowing that a good project will secure financial backing; predictability, too, arising from the better and more professional flow of business advice now available to most companies in Wales.

The hon. Member for Cardiff, West (Mr. Morgan) got his factory completions completely wrong and he has misunderstood the situation. Factory completions, advance and bespoke, in 1987–88 will be 859,000 sq ft, and in 1988–89 the agency has been set the target of completing 1·5 million sq ft.

Photo of Mr Wyn Roberts Mr Wyn Roberts , Conwy

I do not wish to pursue this matter. The hon. Member for Cardiff, West spent a great deal of time boring the House with the wrong facts.

WDA's total spend since 1979–80 has totalled £850 million at today's prices — £700 million of this was mainstream spending—that is, excluding that earmarked specifically for the steel closure areas. Private sector investment triggered by this spending is likely to have been about three times higher, providing a massive and substantial boost to the Welsh economy.

Mr. Alan Williams:

Will the Minister give way on that point?

Photo of Mr Wyn Roberts Mr Wyn Roberts , Conwy

Let me complete it first.

The average mainstream budget since 1979–80 has been £78 million at today's prices–13 per cent, higher than that provided by Labour in the previous three years. This is an excellent record that is only bettered by the plans for the next three years. The agency budget for 1988–89—at £113 million—will never have been higher in either cash or real terms for mainstream activities — 45 per cent, higher in real terms than the best mainstream budget under Labour. Those are the facts, and there is no running away from them.

Mr. Williams:

The Minister has just given the figure of £850 million over eight years, which gives an average of £106 million. The figure he has quoted for next year is £108 million. Therefore the improvement for next year is, on average, only £2 million. What an achievement!

Photo of Mr Wyn Roberts Mr Wyn Roberts , Conwy

The amount of money that we are spending through the WDA in gross terms next year, at 1987–88 prices, is greater than the normal mainstream and special spending on account of steel closures in 1978–79. I have given the facts.

The agency is, of course, alert to the need to look for and take advantage of any new opportunities. Increasingly the new emphasis is on it becoming a catalyst, a facilitator, rather than a direct supplier. The new property and business development grants are prime examples of the new approach. In their own ways, both represent radical changes, and could well be models for other initiatives.

Notwithstanding the clear path on which the agency has embarked, the Government fully recognise that there is a need for immediate action to ensure that the economic recovery in Wales is not hampered by capacity restraints, or under-exploited technology. We recognise, too, that the drive to remove the legacy of dereliction associated with the old traditional industries, and to regenerate our older urban communities, must be fuelled by well-targeted resources.

Photo of Mr Ted Rowlands Mr Ted Rowlands , Merthyr Tydfil and Rhymney

I hope that I am not spoiling the Minister's peroration, but I asked for a simple assurance, and I would like it to be placed on the record. Will he assure the House that there will be no attempt to pare or clip the role of the WDA as a venture capital provider? If the budget for the venture capital side of the WDA was £ 10 million last year, what will its budget be for the next financial year?

Photo of Mr Wyn Roberts Mr Wyn Roberts , Conwy

I confirm the figure of £10 million. We lay considerable emphasis on the WDA's role in that area. The huge increase in the agency's budget for 1988–89 is proof positive that our commitment to the agency has been translated into action and cash. The new financial limit will provide the WDA with the headroom it needs to pursue the tasks during the lifetime of this Parliament. I urge the House to support the Bill.

Question put and agreed to.

Bill accordingly read a Second time.

Bill committed to a Committee of the whole House. —[Mr. Durant.]

Committee tomorrow.