I hope that the Minister, who I am glad to see in his place, will agree that although the debate is unambiguously broad in scope, few subjects are more important to our constituents. The state of the economy in Wales has considerable impact on the livelihoods, prosperity, and life chances of the people whom we represent. Indeed, the strength of the economy conditions the amount of money that is available for public spending. I am pleased that the Government have invested substantial extra resources in long-term prosperity and vital public services; that would not have been possible without the Government's sound management of the economy.
I shall make some general comments on the bigger picture before dealing with specific issues. I hope that the Minister will respond to some of my points in his winding-up speech. I am particularly interested in pursuing the increasingly serious position of the rail infrastructure and the effect that the rail crisis--that is what it is--is likely to have on the economy, and on the Welsh economy in particular. I am sure that other hon. Members share those concerns. I would also like the Minister to respond to the issue of the high levels of economic inactivity that, unfortunately, still plague the Welsh economy. I shall also make a few remarks on the rural economy and the need to ensure a choice of energy supply, particularly gas, to those who live in rural communities.
There is no doubt that the Government have a good story to tell on the economy. Inflation and interest rates in the United Kingdom as a whole are at their lowest for 30 years. Unemployment is down to historically low levels and 1 million new jobs have been created in the UK. The Government should be proud of that worthy record. Exports, manufacturing and business investment are growing and the UK economy is continuing in a cycle of growth. The Chancellor can be congratulated on creating the conditions of economic stability that will enable us to provide long-term and sustainable prosperity for all the people of the UK--and of Wales. That is in stark contrast to the official Opposition's apparent platform, involving a severe programme of no less than £16 billion-worth of cuts--which they will have to explain to the people of Wales in due course.
In a moment; I want to develop my point.
My right hon. Friend the Chancellor is right to emphasise that we must turn our backs on the years of boom and bust. He is also right to emphasise the need to make tough choices to create economic stability in stark contrast to the years of boom and bust.
In Wales, unemployment has fallen to record lows: 40,000 more people are in work than at the time of the general election in 1997. There have been historically high increases in the Welsh block, which will shortly be running at £10 billion per annum. That will make a major difference to the amount of money available for public services. Together with many colleagues who are present, I was pleased to hear my right hon. Friend the Chancellor announce that £420 million would be available for objective 1 funding over the next three years. That will make a big difference to the Welsh economy.
The minimum wage, introduced by this Government, is helping 100,000 people in Wales. It boosts the average income of those in receipt of it by about one third.
The hon. Gentleman made a passing reference to £16 billion--an example of the fantasy figures that the Labour party has dreamed up. He will have to wait until we present our Budget, not present his own fiddled figures.
The hon. Gentleman also mentioned objective 1 status, and we are delighted that that money is being made available. However, he will accept that there is widespread concern and confusion in Wales about how objective 1 funding is distributed. We are 11 months into the budget of a five-year programme, yet a number of local authorities simply do not know how to go about applying for some of the funds. Does the hon. Gentleman share my concern that the Welsh Assembly and local authorities should be made more aware of how objective 1 funding will be made available, especially in areas of west, north and mid-Wales?
I am not sure how that point arises from what I said. I am entirely confident that the National Assembly for Wales, working in partnership with the Labour Government at Westminster, will be able to deliver and exploit the full potential of objective 1 funding. After all, the Labour Government secured that funding for Wales.
On the subject of grants to Wales, is my hon. Friend aware that the previous Conservative Government took away assisted area status from vast parts of his constituency and mine? That contrasts greatly with the Labour Administration, who, at the 11th hour, allowed our constituencies to be included in the objective 1 map of Wales.
It will not come as a surprise to my hon. Friend that, not for the first time, I am in complete agreement with him.
I mentioned the minimum wage. In addition, the working families tax credit is helping about 80,000 families in Wales and making a significant impact on many people's quality of life. Pensions are a big political issue throughout the United Kingdom. I am pleased that the Government have introduced increases in the basic state pension, which will mean that pensioners will be on average about £11 a week better off than in 1997.
Although the conditions of stability and economic prosperity applying to England can be seen in Wales, there is no mistaking the challenges still facing the Welsh economy. Historically, there has been a prosperity gap. Members from south Wales are present today. I am a north Wales Member, but I am well aware of the serious deprivation in places such as Blaenau Gwent and Merthyr Tydfil. Again, there is a historical challenge to be overcome. Anyone interested in finding out more about the context should refer to the excellent book recently written by my hon. Friend Mr. Rowlands.
Unfortunately, Wales has lagged behind. It was recently announced that Welsh gross domestic product had dropped slightly as a percentage of United Kingdom GDP, which is worrying. The holy grail of a new economy in Wales with high-value jobs--a knowledge-based, information technology-literate economy--still seems some distance away. The National Assembly for Wales and, indeed, the Government in London have much to do to achieve that end.
One crucial problem in Wales is the continuing high level of economic inactivity--a legacy of our industrial past. Many people still suffer from long-term illness; many more have dropped out of the job market. The level of economic activity in Wales is currently about 55 per cent., compared with 62 per cent. in the UK. That statistic speaks for itself.
Does my hon. Friend share my pleasure at the fact that of the 1 million extra jobs created by the Labour Government, half have gone to people aged over 50--an age bracket that often has high levels of economic inactivity?
I agree entirely, which brings me to the Government's proposals for increasing the participation of over-50s in the labour market. I make no apology for dwelling on that subject because I represent a constituency with the highest number of pensioners in Wales and one of the highest in the United Kingdom. No less than 35.5 per cent. of my electorate are of pensionable age. Over the past 20 years, the proportion of people aged between 50 and state pension age who are not working has doubled. Currently, about 2.8 million men and women over the age of 50 in the UK are not working. Most do not take redundancy voluntarily. More people wish to retire early nowadays, but of that 2.8 million, the majority would prefer to continue working.
On the question of people not retiring voluntarily, would my hon. Friend care to comment on the steel manufacturers, Corus? When it took over the steel industry a while ago, it gave a commitment to the work force that the plants and their jobs were secure. It is now treating the community with contempt, throwing people on the scrap heap. The workers are not going voluntarily; they are forced to go. What does that say about the steel industry in this country and, in particular, Corus?
That is a very worrying feature and I well understand my hon. Friend's concerns.
More than half of people aged over 50 who are now economically inactive receive most of their income from state benefits. The economic cost of that is great, and has a dampening effect on Welsh GDP, which lags quite considerably behind the rest of the UK. The performance and innovation unit recently published a policy document on the issue entitled "Winning the Generation Game". It states:
The drop in work rates among the over 50s since 1979 costs the economy about £16 billion a year in lost GDP. That is for the UK as a whole, but I imagine that the figures for Wales are significantly higher.
What are the causes of those relatively high figures? There has been restructuring, but there is also a culture of writing people off once they reach their early 50s. Reference has already been made to the shedding of labour at Corus. There is a prejudice against older people and a feeling that they cannot contribute, although many of them continue to want to do so. There must be a change of culture and fairer access to lifelong learning for everyone. We must provide greater help for displaced workers to re-enter the work market. We must enable older people to make better use of their skills.
I welcome the Government's new deal programme for the over-50s. Can the Minister give us an assessment of its success to date? It is basically dependent on individualised programmes of support for unemployed people. There is an employment credit, which is a wages top-up. That is a valuable incentive to work. Can the Minister give us any statistics relative to Wales? It is early days, as the programme was introduced only in April 2000, although there were earlier pilot schemes in north-east Wales. What does he think will be the success of that measure?
Many pronouncements and directives come out of the European Union. I speak as one who is becoming increasingly sceptical about certain aspects of the European project, not least the single European currency. It is fair to say that several European institutions lack the characteristics of open and democratic ones. It is an increasing worry, and I am reflecting the concerns of my constituents.
Would my hon. Friend bear in mind the concerns of my constituents who have recently lost their jobs at Panasonic? I suggest that one reason for the loss of jobs at Corus is the low value of the euro in comparison with the pound. The owners of such as Panasonic and Sony are most concerned that we join the euro in the foreseeable future, as it is the basis of most of the market for such products.
Unfortunately, that is not just an economic question, but a political issue. British manufacturing as a whole, although under considerable competitive pressure due to the high value of the pound relative to the euro, is still succeeding. We have a relatively large manufacturing sector in Wales, which, admittedly, has had problems and difficulties recently, but is making a good fist of it. There is a debate to be had about the single currency and its possible effect on not just the UK economy as a whole, but the Welsh economy in particular.
What approach will the Government take regarding the proposed European Union directive on age discrimination, which is designed to outlaw such discrimination? It has yet to reach the Commission and the Council of Ministers, but its introduction is proposed for 2005.
Is the Wales Office represented on bodies that deal with the implementation of the new deal for over 50-year-olds? Does it have an input into the issue of increasing participation in the labour market for those aged over 50?
Some hon. Members may have read an article in The Guardian last week that described the increasing concerns of the business community about the effects of the rail crisis on business. Does my hon. Friend the Minister agree with the north-east business person, who says that the most serious impact of the rail crisis is that it exposes the isolation of regions like this? He was referring to the north-east, but his comments could equally be made of Wales. He continues, saying that the isolation poses problems for overseas investment...but it also raises questions about the expansion plans of British businesses to the regions.
Does my hon. Friend the Minister agree with a comment made to me by a senior member of the Welsh Development Agency that the rail system, especially in north Wales, is so bad that we tend to be a road-based economy, so Railtrack's problems do not make too much difference? That is an indictment of the lack of an integrated transport system for north Wales.
I should also like to mention gas supplies to rural communities--a subject in which I am increasingly interested. Several local communities in my constituency-- chiefly Betws-yn-Rhos and Gellrifor--are campaigning to ensure that their areas, which are relatively close to larger suburban or urban communities, can access mains gas. The Tory Government liberalised the gas market and introduced the split between transporters and suppliers of gas. Hon. Members may recall that, before the measures were introduced, British Gas could subsidise the capital costs of piping gas to rural communities through a cross-subsidy from its supply operation. That is no longer possible. Gas transporters such as Transco are in the invidious position of having to charge individual consumers large sums--as much as £2,000--before they will even begin to think of piping gas to the communities.
We hear much about the need to create a more inclusive society, and about combating social and economic exclusion in rural communities. Many problems that beset Welsh agriculture, and British agriculture as a whole, are global and reflect tremendous global competition. However, the Government could surely take action on the matter. I recently tabled a parliamentary question about it, and was told by a Department of Trade and Industry Minister that a working group had been set up to explore ways in which to relax the regulatory framework policed by the Office of Gas and Electricity Markets, which would facilitate greater choice in energy supplies for rural dwellers.
What are the views of my hon. Friend the Minister about how the Wales Office and other United Kingdom Depts can facilitate the admirable project to create a sustainable economy to which the National Assembly for Wales has committed itself? Does he have any observations on how to create a market in sustainable energy supplies, particularly in rural communities?
The subject of the debate is broad, and I know that other hon. Members are anxious to speak. In recent months, however, there has hardly been a plethora of Welsh-based subjects for Adjournment debates in Westminster Hall. I hope that this will be one of many future debates.
I congratulate Mr. Thomas on securing this debate. As he said, it is an important subject about which many stories can be told. However, my story about the Welsh economy is not as rosy as that told by the hon. Gentleman. Indeed, Mr. Deputy Speaker, he used so many United Kingdom figures that I began to wonder whether he was still in order, although he must have been in order as you allowed him to continue.
I start by picking up on the hon. Gentleman's slight criticism of the Government, which is that the Welsh gross domestic product has fallen by 3 per cent. during the past three years. The latest regional estimates, published on
I thank the hon. Gentleman for giving way. He admitted that he had difficulty with the Office for National Statistics, but the latest statistic that he cited was for 1998. How does that relate to the present Government's performance? They did not come to office until just before then.
Perhaps the hon. Gentleman should take the matter up with the ONS. That statistic is the latest available.
The European target for Wales is 84 per cent. per head by 2002, but I doubt whether we shall reach that figure by then. Perhaps the Minister thinks that we shall. The fact is that we are lagging behind the rest of the UK, and the hon. Gentleman cannot deny it.
I shall not give way now; I want to develop my arguments.
The GDP figures are important. Wales has objective 1 status because our GDP lags behind the European and UK averages. In the recent three-year comprehensive spending review, Wales received a settlement of about £200 million in addition to the Barnett formula. That must be seen against the £628 million needed during the same period for the objective 1 project, which is made up of a European allocation of £421 million and matched funding of £207 million.
I acknowledge that there has been a break in the Barnett formula, but the inadequate allowance of those figures in the comprehensive spending review means that Wales ends up with an increase in the normal block grant of 7.3 per cent. compared to 8 per cent. for the UK as a whole. Perhaps that is the reason for the figures that the Institute of Welsh Affairs will publish tomorrow, which show that education spending in Wales is lower than in the rest of the United Kingdom. It begs the question why the Government are so keen on the Barnett formula if they cannot deliver the full funding package for objective 1 status in Wales.
Earlier this year, the Government said that they might review the Barnett formula, but the Secretary of State for Wales recently told the Select Committee on Welsh Affairs that he was no longer in favour of such a review. Will the Minister give us his thoughts on whether a review of the Barnett formula would be appropriate? The figures for the Welsh GDP, as part of the overall UK figures, show that the regions are lagging behind.
Not for the moment--I want to pursue this particular argument. I will give way to the hon. Gentleman later.
I shall quote from a recent statement:
Since 1990 the share of GDP within the UK has declined significantly in the North East, the North West, the West Midlands, Wales and Scotland. It has increased significantly in the Eastern Region, London and the South East. Those are the symptoms of something fundamental. We don't have to look far for some of the causes. In 1998 manufacturing businesses invested over ten times as much in research and development in the South East than in the North East...Lack of investment, poor skills and education qualifications, these are some of the underlying causes we need to tackle. In the modern economy we cannot build a strong economy, a strong nation, if we have a tail of under performing regions. We need all our regions firing on all cylinders. Apart from the fact that I would describe Wales as a nation, not a region, I agree completely with that quote from the Secretary of State for Trade and Industry. We should be debating the need to deal with the problems that he outlines, not glossing over what has been done in the Welsh economy.
The hon. Gentleman is annoyed with the Office for National Statistics, which is in my constituency, for not giving the figures that Plaid Cymru wants. The ONS is devoted to giving objective truth. Farming's contribution to the Welsh gross domestic product reflects our overdependence on that industry and shows why Welsh GDP is lower. Farming's contribution was calculated as zero, but those arriving at that figure forgot to take into account things such as tir mynydd payments. In fact, we have a dependent industry from which the contribution to GDP is a minus quantity--less than zero. To take one comparison, the steel industry contributes 6 per cent. and the rest of manufacturing industry contributes 28 per cent. That is our problem in Wales.
I am still dealing with the previous intervention. The decline in GDP that I outlined is continuing, and has nothing to do with farming. I would imagine that the recent decline of farming exacerbated the decline in GDP.
I shall continue for now, and will give way to Mr. Ruane later. I want to outline what has happened in manufacturing in Wales over the past three years. Since 1997--these are incontrovertible, up-to-date figures, if Mr. Flynn is concerned by them--8,000 manufacturing jobs have been lost in Wales. Some 2,000 jobs have been lost in agriculture in Wales, and approximately 2,000 jobs were lost in manufacturing during this summer alone. Other hon. Members have raised their constituency interests in some of the Japanese companies in Wales. The job losses have been put down partly to uncertainty over entry into the euro, and Japanese companies and other inward investors in Wales would feel more confident if we had a clearer line from the Government on that. They are also partly due to the lack of regional incentives and operating aids in Wales.
The Minister's own figures are that 30,000 jobs have been created in Wales during the past three years. I do not know how many jobs have been created in manufacturing, and I doubt that he will tell us when he winds up. In any case, 30,000 jobs were created in Wales during that period, not 80,000, which was the figure that the Minister supplied to the House on another occasion. In that period, the Government have increasingly relied on what I would call muck jobs--temporary and part-time jobs in the service sector with firms such as Kentucky Fried Chicken or McDonald's. Those jobs do not have the skills that we want to be developed in Wales, and the Confederation of British Industry report published on Tuesday underlined the importance of manufacturing in supporting the service economy. In that respect, long-term problems are being stored up in Wales.
The hon. Gentleman must have known what I was going to talk about next. His claims are incorrect. On the Government's International Labour Organisation figures for my constituency, unemployment in Ceredigion is 5.5 per cent, a reduction on the figure under the Conservatives that I welcome. However, the employment is not in the long-term, sustainable, well-paid and high-skilled jobs that I want to be created in Wales.
There is a huge income gap between Wales and the rest of the United Kingdom. Figures for April 2000 show that average income in Wales is £19,134 a year, making the average Welsh worker nearly £50 a week worse off than those in the rest of the United Kingdom. In Wales, 21 per cent. of children live in workless households; the figure for the rest of the United Kingdom is 18 per cent. The proportion of the working age population living in households where no one works is 16 per cent. in Wales, but 13 per cent. in the rest of the United Kingdom. The proportion of working-age people in households with incomes below half the mean income is 22 per cent. in Wales, 2 percentage points higher than the United Kingdom figure of 20 per cent.
On the matter of the income differential between England and Wales, can the hon. Gentleman explain how his party's policy of independence for Wales--getting rid of the Barnett formula--would help the Welsh economy? Would Wales not lose about £1.5 billion of extra income from Barnett at a stroke if it went for independence?
I have never heard such a wonderful argument for the Barnett formula. My party's policy is not independence for Wales, so the hon. Gentleman should address his comments to another forum. He obviously feels that the Barnett formula is defensible; we, too, look forward to defending it in a general election campaign.
The proportion of the working-age population in Wales with a qualification is 79 per cent., which is also lower than that in the United Kingdom.
I shall speak about what is needed to improve the economy in Wales. One of the worst aspects of the Welsh economy at present is that we are at the bottom of the United Kingdom regional competitive index. A recent report from Cardiff university--it was published by the House of Commons Library, in case hon. Members doubt its statistics--shows that Wales lags behind the rest of the United Kingdom in competitiveness and in information technology job creation, a subject mentioned by the hon. Member for Clwyd, West. The mid-term prospect for Wales in that regard is poor; Wales lacks competitiveness, and UK taxation levels do not favour areas of Wales that need operating aid. The UK economy is run to benefit the south-east of England; it does not benefit Wales to the same extent.
The hon. Gentleman has given a beautiful, descriptive but well-known analysis of the problems that we face in Wales and which the Government are tackling head-on. Will the hon. Gentleman give us some idea of what his party proposes to do about the problems?
My intention was to conclude with an analysis of what needs to be done. If the hon. Gentleman will contain his enthusiasm for a little longer, he will hear some of my party's ideas.
In Wales, a greater balance is needed between the new high-tech jobs and the more traditional industries like manufacturing, which should be seen as a traditional industry and protected and enhanced within Wales. Although the knowledge economy is thriving in the south-east of England and London, it is failing in Wales. At present, Wales has 21,000 jobs in IT, and although that sounds like a lot, it is only 2 per cent. of United Kingdom IT employment, although we have 5 per cent. of the UK work force. It is the lowest percentage for any of Great Britain's regions or nations. That is disastrous for Wales's prospects of taking advantage of the revolution in information technology.
The situation is just as bad for agriculture. We have the worst crisis for 50 years. Although the price of milk has stabilised recently--owing to the fact that so many farmers have withdrawn from milk production that there is a shortage for the winter--the price of lamb and beef has dropped.
Before the hon. Gentleman leaves the subject of information technology jobs, will he explain where, if there is such a shortage, they should come from?
I have already told the Chamber that I shall conclude by mentioning that, so perhaps I may be allowed to continue.
The influx of beef from the continent, and in particular French beef, given the way things stand in France, will have a huge impact on agriculture in Wales. Not only is rail infrastructure lacking in Wales, as the hon. Member for Clwyd, West mentioned, but freight is not carried by rail in rural Wales.
I shall conclude my remarks--as promised several times now--with some ideas for the future. An idea from my constituency is being developed at Aberporth, at the Defence Evaluation and Research Agency facility, which is to be privatised, having been within the Ministry of Defence. An exciting project exists there to produce just the sort of information technology facility that hon. Members have been asking for in Wales. I understand that the Treasury is currently considering an application from the Ministry of Defence for a £6 million training application for Aberporth. That shows the way ahead. The plan does not involve objective 1 funding. It is the capital modernisation fund for the United Kingdom that is relevant. That shows what could be done in rural areas and throughout Wales to enhance information technology skills and development. I hope that that idea will receive a warm reception in Government, because it will go some way towards changing the low-wage economy of west Wales.
I referred to a report by Robert Higgins of Cardiff university, which made clear how Wales lags behind in the competitive league. He says:
At a global level, London and the South East are performing as well as the top-ten most competitive nations. However, he adds that at the lower end of the scale, Wales, among others, is "ranked alongside...Hungary, Chile" and similar nations. I do not think that that is what the Government want for Wales. It does not accord with their rhetoric for Wales. We need policies that will make a greater impact on the more deprived and uncompetitive regions or nations of the United Kingdom, such as Wales. That means that we need stronger regional economic policies. The stability of the British economy in general at the moment means that there is enough surplus and strength to allow the Chancellor to offer the regions, and Wales in particular, the sort of aid that will lift productivity and improve their economies.
As a start, in the Budget next year cuts could be made in corporation tax as an operating aid for companies starting business in Wales, Scotland and the north of England, particularly, perhaps, in the objective 1 area. That would be perfectly acceptable and allowable, to provide a greater incentive to foreign investors. It has been done in Ireland, so it hardly seems right that we could not do it here. Local investors would be able to expand their work force. If each of the small businesses, employing fewer than four people, that account for 60 per cent. of jobs in Wales, could be encouraged by cuts in corporation tax and an improvement in national insurance arrangements to take on new staff, a great deal could be done to create and enhance jobs in Wales.
I am concluding, so I think that the hon. Gentleman will have to catch your eye, Mr. Deputy Speaker.
It is clear that Wales needs stronger regional economic policies. The failure of the Government to provide them makes clear the need for a full legislative Parliament in Wales, so that the operating aids that I have called for could be the subject of argument at the right level in Europe and the United Kingdom. The main factor that holds Wales back is the fact that its economy is not sufficiently looked after or linked to the economy of London and the south-east. That is a barrier to our further expansion and improvement in the European Union. Present Government policies can at best only alleviate, but not heal, the deep divisions, wounds and deprivation in Wales.
Order. The hon. Member for Ceredigion has been accommodating in allowing numerous interventions. Five Back Benchers will be seeking to catch my eye in the debate. By convention in this Chamber we allow the principal Front-Bench spokespeople to speak 30 minutes before the end of the debate, so there are only 16 minutes left in which the five Members may speak. I am simply alerting hon. Members to that fact. What happens is entirely up to hon. Members and their self-discipline.
On a point of order, Mr. Deputy Speaker. I should like to apologise on behalf of my colleagues and myself; we are attending an important meeting relating to miners' compensation for bronchitis and emphysema. It is not intended as a discourtesy to the Chair that we have to leave.
I congratulate my hon. Friend Mr. Thomas on provoking this debate. He represents the area in which I was brought up and has been assiduous in promoting the economic interests of areas such as Colwyn Bay--a subject on which he and I attended a meeting when he was elected. He is right to say that the Government, in a short time, have begun to change the Welsh economy, but that we must ensure that we do not return to the failed policies of the past. Those of us who have seen the devastation caused by those policies--young people who wanted to work but were denied the opportunity; the undermining of public services such as health and education; the economics of boom and bust--can never want to return to them. Mr. Thomas grudgingly acknowledged that things had improved, but his memory seems to be a little short. A little less whinge, and more encouragement for the progress of the Welsh economy, would be appropriate.
The recent differences made to our economy are massive. There has been an end to boom and bust, which is crucial because a stable economy allows businesses and families to plan. There has been an end, too, to the draining of cash into the payment of debt--both nationally and to pay off the debt built up during the Conservative years in, for example, the health service in Wales. Most important, we have got young people into work.
I appeal to Conservative Members to stop undermining the new deal. I have seen young people in my constituency begin to stand tall with confidence because the new deal has given them the opportunity to work and train. I recently met some young people at a site developed by Cardiff community housing association, one of whom had been not only unemployed but on the streets. He had been trained, motivated and shown a future by that housing association, as well as accommodated. This Government have addressed the vital social and economic issue of employment for the first time in a couple of decades. However, a big job remains to be done, so it is crucial that the Government continue to build a strong economy.
Much work must be done on the economy to bring prosperity to all parts of Wales. Labour in local government created much of the success in transforming the economy of the centre of Cardiff and Cardiff docks, but we should recognise that there is still high unemployment in constituencies such as Cardiff, South and Penarth. The October figures show that it has the highest number--the percentage is lower--of unemployed men of any constituency in Wales. The neighbouring constituencies of Cardiff, West and Cardiff, Central are also in the top 10, so we must not assume that the job has been finished. A nation is judged through its capital city and the regeneration of Cardiff and the valleys of south Wales is as important as the regeneration of rural communities. Every part of Wales shares the need for progress.
The steel industry and exporters should also be helped. The stability of the economy is good for all. The weakness of the euro is causing enormous problems in the steel industry, not only to Corus but to organisations such as Allied Steel and Wire--the headquarters of which are in my constituency--as well as firms connected to the industry. I hope that those difficulties--some of them the products of success--will be recognised and addressed.
Finally, as the next stage in the new deal, we need to bring those who have been excluded into the world of work. Young people in our highly populated urban areas, those with learning difficulties, and offenders must share--as every part of Wales must share--in the developing prosperity of this country.
I wish to draw attention to the good news; I am sure that other hon. Members will want to mention the developments that have been announced in their constituencies. On Friday, for example, 300 jobs in auto components in Llanelli were announced; 400 jobs were announced at Unilever information technology headquarters in north Wales; 800 high-quality jobs were announced at Lloyds Trustee Savings Bank in Bridgend; and 1,400 jobs have been created by Conduit plc in the constituency of Cardiff, Central. During the past three weeks, 3,000 new jobs have been announced in Wales. Mr Thomas mentioned the losses, but it is important to bear in mind the number of high-quality jobs that have been created.
Absolutely. The good news to which I have referred follows the 1,700 jobs that have been created in British Aerospace in north Wales. I acknowledge that the good news was preceded by job losses that affected my constituency and that of my hon. Friend Mr. Jones--for example at Panasonic, Sony and Hitachi, where many of our constituents lost jobs--although that was linked to the crisis in the traditional television manufacturing industry and the change from analogue to digital.
There have been a series of job losses for people who have worked in traditional industries for many years in my constituency as a result of the closure of production at Alloyed Wheels, Aeroquip and Viscosuisse. On Monday, I visited Federal Mogul, on the Llanishen trading estate in Cardiff, which is reducing its work force. However, it is maintaining a commitment to Wales by concentrating on its PTFE seal product and retaining 85 of 200 jobs. It hopes to develop a centre of excellence, working closely with the university.
Last week, I attended a meeting at the House of Commons in celebration of the achievements of companies that have been awarded millennium product status. One of those companies was VA from Cardiff, North, which had developed the award-winning, non-spill baby's cup that has swept the world markets. It was invented by Mandy Harberman, who had the good sense to realise the need for such a cup. The firm is going from strength to strength with new inventions, which is all good news. Despite the losses in manufacturing, 300 jobs in the manufacture of gear sticks and car components were announced on Friday in the constituency of my right hon. Friend Mr. Davies. We thought that no such jobs would be created again in Wales, so such news is very encouraging.
The new starts show that Wales is moving up the value chain. We must accept that there has been a structural shift of certain types of work to eastern Europe, where the wages are one sixth of those in Wales, and to Africa, where the wages are one tenth of those in Wales. That work includes garment making such as Baird wear and work in analogue television, which has been transferred to eastern Europe.
The key matter is what has to be done in Wales. We must have much better high-technology than elsewhere. We must encourage research and development. We must not have the branch factory mentality, but embrace information and technology, and financial issues. It is important to work with universities on new products, as Federal Mogul in Cardiff, North is doing, and to increase training in this new era.
The National Council for Education and Training for Wales will come into being next year, and it must help workers move up the skills chain. We need to change the nature of the Welsh work force and increase the number of skilled people in Wales. As I said to the hon. Member for Ceredigion, the Assembly is in the process of increasing modern apprenticeships by 60 per cent. I am concerned about modern apprenticeships, as they are still subject to much gender stereotyping, although that will take many years to change. Nevertheless, we welcome the apprenticeships, which fit well with the Government's new deal. They are important to getting women back into work. Call centres offer workers the opportunity to return to the labour market and develop their skills.
The shape of the economy in Wales is changing. It is an optimistic picture--there is great sadness at the loss of many traditional jobs, but the challenge is to develop skills to fit new demands. All the Government's efforts, here and in Wales, are helping in that task.
Every month, I look up the published figures on unemployment by constituency. I have a table of unemployment figures for the past five years. When the Labour party was elected to govern, there were 1,536 people on the claimant count in my constituency. The latest entry for my constituency is 964. That is 600 fewer on the claimant count, which is falling at the rate of about 200 a year. Therefore, in four or five years, given the election of a Labour Government and continuation of our excellent economic policies, there will be full employment. Youth unemployment has dropped by 80 per cent., and long-term unemployment by 40 per cent., despite the problems in the rural economy. Clearly, agriculture has experienced difficulties, but the buoyant economy and large number of infrastructure projects are creating jobs at an enormous rate.
The Government have negotiated objective 1 status, which will give a terrific boost to west Wales and the valleys. Clearly, we are impatient to see the results, which is the responsibility of the Assembly. This year, £60 million has been allocated to Welsh Development Agency, tourist board and agrifood partnership projects, which are under way. We want local government and private industry to become heavily involved as soon as possible.
I share the vision of my hon. Friend Ms Morgan about the need to up-skill the work force. I hope that most of the objective 1 resources are allocated to education and training, so that we attract high-skill, high-tech jobs. The challenge for the Assembly is to achieve not just a 2.5 per cent. economic growth rate, which is expected for the rest of the United Kingdom, but 3 per cent., 4 per cent. or even 5 per cent. growth every year for the next seven or eight years, so that the differential between Wales--and west Wales and the valleys--and the rest of the terrain is rapidly closed.
The last time that I heard Mr. Thomas speak I said that he was suffering from repetitive whinge syndrome. Clearly, his condition has become even more chronic. Throughout his speech this morning he accentuated the negative.
Objective 1 status is welcome in Wales, and a great success for the Labour Government and the Welsh Assembly. However, the map is a crude distortion. It is not a precise representation of deprivation in Wales. Since the achievement of objective 1 status in Wales, the Welsh Assembly has provided a list of the 100 most deprived wards. Although Ceredigion is covered by objective 1, it does not have a single ward in the top 100. My constituency is outside the objective 1 area, yet it includes four of the most deprived wards in Wales, including the most deprived ward in all of Gwent. [Interruption.] I am pointing out that, in proceeding with objective 1, we must bear it in mind that many other areas in Wales need help.
The steel industry has a magnificent record as a modern, efficient world-beater, and it has made a huge contribution to the Welsh economy. For the sake of every steel worker in Wales, it now needs assistance from the Government.
I shall try to condense a 10-minute speech into two minutes.
I do not recognise the Wales that was described by Mr Thomas. It is a different tale in my constituency. National and international companies such as Phoenix Glass, H and H Electronics, AVVA Engineering, MITA, Pinnacle, Pilkington Space Technology and Hotpoint are creating jobs in my community--every single one of which is a manufacturing job. TRB, a Japanese company, decided--as its first ever foreign investment in Europe--to locate in St. Asaph business park in the Vale of Clwyd.
The success in my constituency is due to co-operation--not the confrontation that we saw in the Conservative years. Central Government, the National Assembly for Wales, Business Connect, the Welsh Development Agency, the employment services, CELTEC and Denbighshire county council are working together in my constituency to attract and create jobs. Having said that, I should like my hon. Friend the Minister to address a number of potential problems in the Welsh economy.
No, constructive criticism--not talking Wales down, as Plaid Cymru Members do day after day, week after week, month after month, under their leader, Ieuan Whinge Jones.
We need to source more goods internally. Wherever possible, contracts must be given to Welsh companies such as Hyder and British Aerospace. Wales must be internationalised. The new National Assembly gives us a great opportunity to do that through branding Wales. We need to increase our exports and to create added value in our communities, especially in raw, agricultural and timber products. We need to expand information technology in Wales. I hope that the Welsh Affairs Committee will examine the problem of broadband availability and take-up.
We need targeted growth sectors, not a scattergun approach. For example, central parts of north Wales should focus on opto-electronics. The Welsh opto-electronics forum wants to increase the number of jobs in that sector from 2,500 to 7,500 over seven years. That private sector initiative should have the full support of the agencies and government bodies that I have mentioned.
The biggest problem facing Wales is a skills shortage. If we do not build a skilled work force, the jobs that are created will be for people who live outside Wales.
My sincere apologies, Mr. Deputy Speaker. I shall not make that mistake again.
The history of Wales is littered with stories of success and of decline. Our main problem is that we have not experienced sustained growth over long periods of time. The creation of the National Assembly has given us the opportunity to focus on long-term planning.
The history of my family is in Cyfartha Ironworks in Merthyr Tydfil, which hit the buffers in the 1920s. The ironworks was mentioned in the book by Mr. Rowlands entitled "Something Must be Done"--the phrase with which the then Prince of Wales responded to the devastation in Dowlais. Fortunately, there was investment and regeneration in the 1940s, which the hon. Gentleman described in his book. Rural Wales thrived during and after the war, but now that prosperity has plummeted. There are serious infrastructure problems in the Welsh economy that must be addressed.
The scourge of Euro-scepticism has affected almost all British political parties, but it is essential that we enter the eurozone at the right exchange rate as soon as possible. Whereas the Welsh manufacturing industry constitutes 28 per cent. of the economy, London's, for example, constitutes only 10 per cent. We are affected badly by the disparity in the exchange rate, and for that reason, agriculture has been hit by a 40 per cent. drop in commodity prices. The Welsh economy must be directed towards job creation, which is the most important issue. The challenge is to change and develop our traditional skills, and get rid of obsolescence. The economy is still out of balance: there are too many traditional industries and not enough new, cutting edge ones.
We must improve our infrastructure; our roads and railways are appalling. Efforts are being made to improve matters, but that process needs a massive injection of capital. One problem is that we have little banking or insurance in Wales and minimal access to risk capital. There is a lack of innovation, entrepreneurship and skills, and we need to diversify. The National Assembly for Wales is addressing all those points, but, as has been said, the problem is the continuing decline in gross domestic product. We must make up the difference between Wales and the remainder of the United Kingdom, which is why Wales qualifies for objective 1 and objective 2 funding. Welsh people have many innate skills at their elbow, but we must have more small business growth, technological change, increased skills, investment and marketing.
Population exchange is a big problem. Young people are leaving Wales and older people are moving in, so there are fewer economically active people. As a result, there is a productivity gap, especially in manufacturing.
Yes, I very much agree with that. My hon. Friend has been in the Select Committee on Agriculture all morning and must return there now, but I am pleased that he was able to join us here, albeit briefly.
We have lower growth because we do not have enough economically active people. We must close the productivity gap. That is being addressed, but we need more investment in the Welsh Development Agency--as set out in the partnership agreement between the Liberal Democrats and the Labour Government in the National Assembly for Wales--and the Wales tourist board. We must increase the availability of risk capital through Finance Wales, and improve marketing of agricultural produce through the agrifood partnership. The stability in the macro-economy is good, but we must put the micro-economy right and invest in our infrastructure. That long-term project will challenge Governments in the new century, and we need to get down to it. We must create the wage levels and jobs to sustain the Welsh economy in the future, so that we can increase the amount of money in the Welsh economy and match levels in the rest of the UK.
In the vein of the contribution from Mr. Ruane, my speech will be full of constructive criticism. Before I say anything else, I congratulate publicly Mr. Anderson on becoming a member of the Privy Council, which recognises his contribution to the House over many years.
Many hon. Members have spoken about the problems in Wales, with the loss of manufacturing jobs, particularly in the south Wales corridor in the past few months, and the crisis in farming. No one can doubt that there are problems in some sectors in Wales. I was in Cardiff yesterday with representatives of the Federation of Small Businesses, the Confederation of British Industry and the Cardiff chamber of commerce, and five points were made to me.
I am interested in the fact that the hon. Gentleman had a meeting with the Federation of Small Businesses in Wales because he has a part-time small business. What is his explanation for the fact that when he and his party were in power, the number of small businesses in Wales--according to VAT registrations--fell by one fifth? Is not the news about Tory proposals to cut the Department for Trade and Industry budget for small businesses part of the story of their failure to help small businesses?
The hon. Gentleman needs to appreciate that, when Margaret Thatcher came to power in 1979, she had to transform the entire economy. We all remember the winter of discontent and the changes that had to be made in Wales. Without the changes that she and my right hon. Friend Mr. Major made, Wales would be in a much poorer state.
The Federation of Small Businesses made five non-party political points. The first concerned the supplementary business levy, which could be introduced at 1 per cent. a year on businesses over five years. That money will come from profits, but some smaller businesses do not make profits. They see the levy as an extra stealth tax on businesses and they are very worried about it. Will the Minister please examine that?
Many industries in Wales traditionally use a lot of energy. Will the Minister make representations about the climate change levy, because businesses in Wales could be hit disproportionately due to the high number of manufacturing jobs?
At-work car parking charges are a threat in Wales and are seen as another stealth tax on businesses.
The Government say a lot about deregulation and cutting red tape, but during the past three and a half years, £5 billion-worth of extra red tape has been imposed on businesses. I shall give one example from my own business, to which Mr. Griffiths referred. I had perfectly adequate weighing scales, but a man from Swansea council said that they must be metric. After years--more than a century--of selling products in pounds and ounces, we were told that we must replace our weighing scales. My business can withstand the extra £400 cost, although I greatly resent it, but many small businesses in rural areas do not have the money to do so. Many seem to operate as social services and do not make profits, but they have had to replace perfectly good weighing scales. Will the Minister consider how the extra bureaucracy can be cut?
I was delighted with Brynlie Williams' comments on the second protest about fuel costs. If the first protest had continued for one extra day, it would have had a disproportionate impact on Welsh industry. Some industries were laying off people, so we know that it had an enormous impact. The Chancellor of the Exchequer says that he is listening, but, unfortunately, he has done very little. I do not know of any garages in Wales that sell low-sulphur fuel. The Chancellor has merely frozen the tax on fuel at the high level it was at when the protest started.
The euro and Europe have been mentioned, and businesses have been told to prepare for the euro. The Labour-dominated Trade and Industry Committee has said that businesses must spend around £30 billion on getting ready for the euro. That is an enormous cost on businesses and I ask the Government to examine it.
I am sorry, I do not have time to give way.
The Federation of Small Businesses yesterday launched a report on barriers to growth and survival. Will the Minister consider that report carefully, because it is critical not just of his Government but of successive Governments and their lack of support for businesses over the years? Table 18 refers to dissatisfaction with Government-funded business support services and states that 51 per cent. of businesses are dissatisfied with the business advice that they are receiving. Dissatisfaction with locally provided services among businesses in Wales is even starker: 74 per cent. are dissatisfied with the level of local support, 71 per cent. are dissatisfied with council business charges, and 76 per cent. are dissatisfied with the level of business rates.
Ms Morgan mentioned education. Some 50 per cent. of businesses in Wales are dissatisfied with the availability of suitable labour, 43 per cent. are dissatisfied with literacy in the labour force, and 40 per cent. are dissatisfied with numeracy. On government in general, 81 per cent. are dissatisfied with the volume of legislation produced in this House, 83 per cent. are dissatisfied with the complexity of legislation, 79 per cent. are dissatisfied with the rate of legislative change, 79 per cent. are dissatisfied with the way in which legislation is interpreted, and 66 per cent. are dissatisfied with the way in which EU regulations are implemented.
Some 927 businesses in Wales contributed to the report. Small businesses in Wales, in particular, are crying out for this Government to help them locally and nationally, so I ask the Minister to look carefully at this report. We need to help our fledgling small businesses in Wales to flourish. At the moment, they are not getting that help.
We have had an interesting debate this morning, in which a wide range of Members participated. I, too, shall begin by congratulating my right hon. Friend Mr. Anderson on his appointment to the Privy Council. I also want to congratulate my hon. Friend Mr. Thomas--whom I am sure will one day become a right hon. Friend--on securing today's debate in Westminster Hall. It has given us the opportunity to discuss the Welsh economy and the many other issues raised this morning.
It is clear that unemployment in the constituencies of the right hon. and hon. Members who have spoken today is lower than when the Labour Government took office in May 1997. Indeed, the same can be said of the constituencies of those hon. Members who have been unable to contribute to today's debate, and we need to recognise that fact. I accept that there are still pockets of deprivation and difficult areas. There will always be shifts in the balance of the manufacturing industry, and there will be some gains and losses at different points in the economic cycle. However, we should remember that, in terms of people of working age, 40,000 new jobs have been created throughout Wales since the general election, at a rate of approximately 1,000 a month. In other words, an extra 1,000 people a month have been given the opportunity to earn a decent wage, and are no longer reliant on benefits.
The hon. Gentleman says that 40,000 new jobs have been created since Labour took office. Why, therefore, did he say a fortnight ago that 80,000 new jobs had been created?
As I just said, the figure of 40,000 relates to people of working age. If one includes people beyond working age who have taken up employment, the increase is 80,000.
Does my hon. Friend agree that the current situation in Wales is unprecedented? Indeed, it is so new that we do not have a word for it. There are substantial areas of Wales in which unemployment is lower than in the 1950s and 1960s, when we used to talk about full employment. Should we not start talking about areas of nano-unemployment, rather than listen to the Jeremiahs among the Opposition who have overlooked this new phenomenon?
The figures that I have used relate to the number of people who currently claim unemployment benefit. Unemployment in Wales is at its lowest level for a considerable time, and that is thanks to the work that the Labour Government have done and the key economic indicators that we have generated and supported.
I should like to move on to the bulk of my speech, but I shall give way to the hon. Gentleman in a moment.
My hon. Friend the Member for Clwyd, West hit the nail on the head when he said that unemployment in Wales was at its lowest level for some considerable time. More people are in full-time employment, and fewer people are in temporary work, than in May 1997.
We have the security of objective 1 funding, which the Government brought forward--against anxieties expressed by Plaid Cymru Members. In addition, we have provided the basic input of improving wage levels through the minimum wage, which now benefits 100,000 people in Wales; the working families tax credit, which benefits more than 80,000 people in Wales; and, as my right hon. Friend Mr. Michael mentioned, the new deal, which has had a massive impact on reducing youth and long-term unemployment and, as my hon. Friend the Member for Clwyd, West said, on tackling age discrimination and long-term unemployment for older people.
I agree that the new deal has been a success, and I congratulate the Government on that. However, does the Minister agree that in large parts of rural Wales young people are having to leave and the elderly population is increasing? Job creation is still a massive priority in rural Wales, with the fallout from agriculture and other declining rural industries.
I accept that. The Government are committed to helping tackle rural poverty and rural unemployment. The figure for Montgomeryshire is 1.8 per cent., and in the hon. Gentleman's constituency, the figure is slightly more than 3 per cent. We shall tackle unemployment and create a strong economy wherever possible. Yesterday the Government produced a rural White Paper relating to England, and some aspects of it will affect the economy of Wales. A great deal is being done for rural areas, one of which I represent. I accept that we need to consider how to tackle those issues.
Will my hon. Friend note that the leader of the Liberal Democrat party in Wales has just commended the new deal, despite the fact that the Liberal Democrats opposed the funding mechanism of the windfall tax on utilities, which provided the money to operate the new deal?
I welcome my hon. Friend's contribution, which shows how the Liberal Democrat party faces in different directions in different constituencies. To be fair, at least Mr. Evans and his party are honest, because they have said that they will scrap the new deal and the working families tax credit and abolish many of the mechanisms that have helped create the levels of employment that we have in Wales today.
My right hon. Friend the Member for Cardiff, South and Penarth made a strong case for some of the key reasons why the Government have been successful in helping to create a strong economy. We now have stability in Wales in terms of the Government's economic policy. We have low interest rates that are helping businesses. We are attacking long-term unemployment through the new deal. We are raising income levels through the minimum wage and the working families tax credit. We have a commitment to objective 1, which is working not only in objective 1 areas but throughout Wales as a whole.
My hon. Friend Ms Morgan mentioned several manufacturing industries that are now success stories not only in Wales or Britain but worldwide. British Aerospace, in my own area of north-east Wales, is now a world-beater, and many thousands of manufacturing jobs will be created there because of the actions of this Government and the National Assembly for Wales.
My hon. Friend Mr. Ruane mentioned a number of firms in his constituency. When I met and addressed the information and communication technologies forum in north Wales, which he organised and which Ministers were invited to address, I found that there was great understanding and commitment to the Government's progress on developing information technology, supporting the development of new technologies and making sure that, with the support of the Assembly, Wales is ready for the challenges of the next generation of businesses as well as those of the previous one.
Officials and colleagues from the Wales Office and from the National Assembly have contacted businesses in Wales that have announced job losses recently. There is concern about what is happening and we must look at the problem. I know that colleagues from the National Assembly are looking at ways in which we can tackle some of the issues, arrange meetings and discuss job losses, and how we can develop and strengthen that sector to prevent further losses. I know that my hon. Friends the Members for Cardiff, Central (Mr. Jones) and for Cardiff, North are concerned about the impact of those job losses in Cardiff. They have raised the matter with me and my right hon. Friend the Secretary of State, and they are fighting to ensure that we can secure those businesses in south-east Wales and Cardiff. It is important that we look at the problem. Action will be taken. We will meet them and discuss those matters.
Overall, jobs come and go, but the economy in Wales is strong. It is developing and it is secure. All hon. Members who have spoken in this debate have raised important issues, some of which were specific, but it is difficult to cover all areas in the short time available.
My hon. Friend the Member for Clwyd, West mentioned rail infrastructure. The Government and Railtrack must put safety first, but I recognise that the current difficulty is short term. It is causing problems for transport in north Wales in particular. In the long term, the Government are committed to improving the rail system, because it is important to the infrastructure and strong economy of north Wales. I hope that Government investment in the rail system in England and Wales will, in due course, benefit the economy of Wales as a whole.
I am grateful for my hon. Friend's comments about the rail system. Does he think that it would be cheaper to invest in a better long-distance bus network in Wales? Does he share my astonishment that, every morning, I can get a bus from Monmouth to Aberdeen, but not to Bristol, Cardiff or London?
The Government are certainly committed to investing in bus services in rural and other areas. The National Assembly has received a great deal of additional support and resources because of the comprehensive spending review settlement, which has allowed it to choose how to invest in an integrated bus service and in supporting rail services in Wales.
My hon. Friend the Member for Clwyd, West mentioned the age discrimination directive, which is an important issue in his constituency. The directive is currently going through the stages of consultation in the European Commission, and the Government will consider his representations in due course. We need to consider its implications at the finalisation stage--once it has been passed--but at present we have neither agreed the directive nor looked at its implementation.
I am conscious that time is pressing. We have had an interesting debate. A number of key issues have been raised by hon. Members. I will read their speeches and write to hon. Members whose concerns were not addressed today. The key message of the debate is that, fundamentally, the Welsh economy is strong and growing stronger because of investment by Government via objective 1 in west Wales and the valleys, because of the economic stability that the Government have been able to bring about, and because of Government support for the new deal. It is also growing stronger because of Government investment through the comprehensive spending review. In all sectors of the Welsh economy--the rural economy, tourism, manufacturing and the public sector--the Government are investing in real public services and real manufacturing jobs, promoting tourism and supporting infrastructural developments to help Welsh industry.
The hon. Member for Ribble Valley raised various concerns, which I shall investigate further. However, neither he nor the wider Welsh community should forget the 18 years of Conservative government, which destroyed the economy--