Below is the text of the statement made by Nicholas Edwards, the then Secretary of State for Wales, in the House of Commons on 3 March 1986.
I intend to concentrate on a few subjects of special importance. Before turning to the central economic and industrial theme, I shall say something about agriculture, rates and the Health Service. At this delicate moment in the negotiations, I do not intend to speak about education, save to say that I hope that all the unions will now join in bringing this damaging disruption to an end by sitting down to talk about pay and conditions of service in the knowledge that the Government are prepared to make very substantial additional resources available to get a better paid teaching profession with extra pay for those with skill, responsibility and experience.
In agriculture, this has been another difficult year for Welsh farmers and the supporting industries. Fortunately, many in Wales were able to recover some of the harvest during the few fine weeks in September. Farming incomes have declined but not so severely as in other parts of the country. The Government made available £1 million weather aid to help the worst hit. Hill livestock compensatory allowances have been increased and part of the sheep premium for farmers in less favoured areas has been paid early.
Most milk producers have adjusted to the quota regime better than was expected a year ago. As a result of the outgoers’ scheme, all small milk producers of up to 200,000 litres — that is, more than half the milk producers in Wales—were restored to their 1983 levels of production. We can now issue more quota producers whose development awards represented a high proportion of their total quota. These will now have at least 90 per cent. of the total quota that they would have had if there had been no cut. We shall end completely the 35 per cent. cut in development awards for all producers with quotas of up to 200,000 litres.
At recent meetings, the farmers’ unions have emphasised the importance that they attach to maintaining support for beef in the price-fixing negotiations and opposing proposals by the European Commission that discriminate against British farmers. The Government share those objectives.
Over the years ahead we face fundamental changes in the pattern for agriculture. We shall need to make full use of a range of measures to achieve those changes and to give farmers the time that they need to adjust. Among the instruments are price restraint, quotas, quality control, income support, assistance with countryside and conservation measures and the encouragement of new crops.
I am surprised that, at a time when the National Farmers Union in Wales is pressing for much wider use of quotas, Liberal spokesmen have announced their total opposition to quota systems. I look forward to hearing their alternative policies.
Mr. Geraint Howells (Ceredigion and Pembroke, North) rose—
Are they coming?
I am grateful to the right hon. Gentleman, but first of all he said that the Government had plans to introduce quotas; I am just wondering for what commodities.
As I thought, we are not to hear the alternative policies. All I am saying is that quotas are one of the instruments that will continue to be needed. We shall clearly continue to need them for milk. The National Farmers Union in Wales, as the hon. Gentleman knows, is suggesting that they should be used for a wide range of commodities. I do not entirely share the views of the NFU on that issue, but the Liberal party has said that quotas should not be used as an instrument at all, and I find that surprising.
The rate support grant settlement for local government that I announced before Christmas was a good one for Wales. It provided for a 5 per cent. increase in current spending, which is more than the likely rate of inflation.
Local authorities have complained of a reduction in grant, but this year we were proposing an increase to 67 per cent. Local authorities understood very well that the system was designed to discourage high spending and that authorities spending above the settlement figure would lose grant. I had undertaken that any grant unclaimed would come back to local authorities, but that the method of recycling would be decided only when we had a clearer indication of spending plans.
While the system undoubtedly had the effect of discouraging authorities from proposing even larger increases in spending—I am glad to say that on average they have been substantially less than in England—some have chosen to impose very high precept demands on ratepayers.
I make no apology for seeking to discourage high spending, or for trying to protect ratepayers from what the chairman of the Welsh Counties Committee at the meeting with me described as “horrendous rate increases”. I agree with Mr. Arthur Harris of Dyfed that:
“vast endeavours must be made to reduce the burden on ratepayers”.
Local councillors talk about the pressures on their services caused by high unemployment and the need to fund high pay settlements in the local authority sector, but private sector firms cannot pass on high wage settlements, or their rate bills, without losing business, and high rate burdens add to unemployment.
When representatives of the Welsh counties came to see me, asking for immediate recycling of grant, I believe that I was right to suggest that if I did so they should trim their expenditure as well. What shocked me was not that they refused to reduce by 2 per cent., or by 1 per cent. but that they said that it was impossible to make any economies or to reduce by a single penny. I was even more shocked when Dyfed’s “vast endeavours” to help ratepayers led to a further increase in spending and precept, despite its receiving extra police grant.
Following that meeting with the Welsh Counties Committee I decided that I would give the maximum possible immediate relief to ratepayers through a recycling of RSG, on the clear understanding that it would be passed on, while maintaining pressure on the remaining counties to reconsider their expenditure plans. The decision of the Clwyd county council, both to reduce its precept by 10 per cent. and to make a £1·5 million reduction in expenditure, proved that this was the right approach, and it made nonsense of the argument that expenditure reductions were impossible.
Dr. John Marek (Wrexham)
How much extra unemployment will result if the £1·5 million cut takes place, as opposed to appearing on paper?
I have just said that, because industrial firms and businesses cannot pass on the demands to customers, with high-spending decisions fewer people will be employed in commerce and industry. So far from increasing unemployment, the cut will protect jobs which would otherwise have been lost.
Mr. Donald Anderson (Swansea, East)
Will the right hon. Gentleman give way on that point?
No, I have just given way and I want to get on. I know what will happen. The last time that I spoke from the Dispatch Box I was criticised for giving way too often and for making too long a speech. On this occasion, the proper thing is for me to allow everyone to speak, and I shall try not to take too many interventions.
I am glad that other counties have reduced their precept as well, and there are good reasons for thinking that the pressure of the system will lead to further reductions in expenditure during the year. Last year, Welsh local authorities undertook to exercise restraint if we removed the system of targets and penalties. Regrettably some of them have failed to do so; but I am quite clear about three things: first, that our system has and will continue to put pressure on local authorities to restrain expenditure, secondly, that I have been able to obtain direct reductions in the rate burden for the benefit of the ratepayers of Wales, and thirdly, that the case for our package of reform of the local government finance system has been further reinforced by these events.
Sir Raymond Gower (Vale of Glamorgan)
South Glamorgan’s proposed rate increase is the highest in Wales, and I should like to know whether my right hon. Friend has made a special appeal to it. There seems to be little difference between the circumstances of the Welsh counties, and certainly not one which would merit such an enormous increase.
I agree with my hon. Friend. The leaders of the councils made it clear at our meeting that they were proposing increases in their spending programmes.
As my hon. Friend the Member for Delyn (Mr. Raffan) observed at Question Time, the system is such that, if the authorities continue to spend in this way, they will lost grant and low-spending authorities will benefit when we come to the further redistribution of grant withheld.
I have now given way three times, twice to Opposition Members and once to my hon. Friend the Member for Vale of Glamorgan (Sir R. Gower). I should like now to get on with my speech.
We are at the time of the year when health authorities are having to face the difficult decisions that they have to take about priorities. That will always be the situation because funds cannot be infinite, while demand is virtually unlimited. What the House and the public must understand is that health authorities are dealing with the problems and the priorities of an expanding service and changing needs, and that the allegations of widespread cuts are false.
The Government are providing record levels of financial resources for the National Health Service in Wales. We are carrying out one of the largest programmes of hospital building ever. Taking account of inflation, recurring revenue allocations to district health authorities have been increased by over 23 per cent. between 1978–79 and the financial year which is just ending. We have recently announced that, in total, a further £44 million in revenue provision will be made available to health authorities in Wales for the coming financial year, which represents a cash increase of more than 7 per cent. over the provision in 1985–86. Between 1979 and 1985, the number of staff concerned directly with patient care has increased by more than 12 per cent. allowing for the reduction in the standard working hours of nurses.
Among new services announced in 1985 was an eight-bed bone marrow transplant unit in Cardiff. In August I announced that high-resolution CT scanners would be provided at Morriston and Ysbyty Glan Clwyd, supported by five or six small to medium scanners at other locations. The third Welsh renal dialysis unit became fully operational at Morriston in 1985, while the two new subsidiary renal units at Bangor and Carmarthen both opened in the summer and are working well.
There is, of course, considerable concern about waiting lists, which have risen under this Government just as they did under the previous one. There is one difference between the situation then and now, and that is that already by 1984 we were treating 63,000, or 18 per cent., more in-patients than in 1979 and 51,000, or 12 per cent. more out-patients. These figures have continued to rise since. The acceleration in the number of patients treated and in the range of services has been far greater than under our predecessors: it is a remarkable achievement. Health authorities have been checking on their waiting lists and report that in many cases the numbers include double counting; but that is no consolation to the patients who are having to wait and we are undertaking a major exercise with health authorities to try to get on top of this longstanding problem.
The right hon. Gentleman has boasted about an increase in the number of in-patients. How much of that increase is accounted for simply by demographic factors—the aging population—and how much is a real increase?
Of course there is an aging population, but we have provided not only additional resources to deal with it but a wider range of new and improved services. It is a considerable achievement to have been able to extend the service in the way we have and to treat this large number of additional patients.
Dr. Roger Thomas (Carmarthen)
Will the right hon. Gentleman give way?
I think that this must be the last time I shall give way, or I shall be accused of speaking for too long.
How much has the fact that people are leaving Wales and seeking specialist treatment elsewhere contributed to reduced waiting lists in Wales?
I fear that it has not contributed as much as perhaps it should have. Although we have greatly improved and extended the service, there will always be opportunities for some patients to go elsewhere. Indeed, in some specialist cases, it is right that they should do so. We must use all the available resources for health care in a particular district both within Wales and within the United Kingdom as a whole. I hope that authorities will look at that as one way of reducing health pressures in the short term.
I turn now to the economy. In the last year, the coal industry in south Wales has undergone a major change, hastened and made more severe by the miners’ strike. Eleven of the heaviest loss-making pits have closed or merged. The number on colliery books is down to about 13,500 and the total work force to just under 16,000. The coal board has fulfilled its commitment of finding alternative jobs for all those who wanted to remain in the industry, while those who chose to leave have received generous redundancy terms.
While these closures have been taking place, the work force has responded very positively to good management and the result has been a dramatic increase in performance. Productivity has increased by 46 per cent. in eight months; and the coalfield, which had been losing £100 million or more a year, expects to break even in the March quarter. It is a remarkable achievement. It has enabled the board to announce since the beginning of the financial year investment of £80 million—the largest capital development programme in so short a time in the history of the coalfield. Much of this new investment has been directed into new coalface equipment. I am particularly pleased that the board has approved the investment of £30 million in a new anthracite project at Carway Fawr, thereby safeguarding 800 jobs. There are good grounds for thinking that we have now reached the end of a period of decline that has lasted for many decades in south Wales, and caused much hardship.
The 6,000 job losses in the coal industry, along with losses in a number of other industries including the closure of Courtaulds in north Wales and the loss of jobs at BP Llandarcy, have contributed to the distressingly high unemployment in Wales, now at a record level. I very much regret these closures and loss of jobs, and the impact that they have on local communities, but the process of industrial change is continuous. Whatever general economic policies are adopted, particular companies will cut back or go out of business.
Fortunately, there have been many positive developments. Two major steel projects have been completed on schedule—the £171 million hot strip mill project at Port Talbot and the £30 million Galvalume project at Shotton. Work is well advanced to provide Llanwern with the Concast facility which will further improve its performance.
We continue to see a high level of industrial investment in Wales. During 1985, offers of regional selective assistance and new-style regional development grants totalled nearly £60 million, with the aim of creating 12,500 new jobs and safeguarding over 4,800 existing jobs.
During 1985, Wales continued its record of attracting around one fifth of all the inward investment to the United Kingdom with 25 new overseas projects and 23 expansion projects by existing overseas companies involving a combined capital investment of £143 million. In addition, United Kingdom firms from outside Wales decided to locate 20 new projects and one expansion project in Wales with a promise of nearly 2,750 jobs and over £14·5 million in capital investment. I am glad to say that only today it was announced that Nimbus records, the sole manufacturer of compact discs in the United Kingdom, has decided on a major expansion in Cwmbran which will lead to the creation of 275 jobs.
In 1985 the small firms centre dealt with over 17,000 applications, over 9,000 from individuals seeking to start up in business. The business improvement services scheme received over 900 applications in steel closure areas and made offers to over 550 small firms with a value of £2·8 million. The number of self-employed in Wales is rising fast. An example of what projects of this kind can lead to is the firm in the Rhondda, Valdons Ltd., which just three or four years ago was launched by two redundant workers and which now employs over 70 people, about 60 of whom are making plastic mouldings to the very high standards demanded by National Panasonic.
I am encouraged by the very wide range of projects started during the year. The list covers almost every industrial sector, including electronics, biotechnology, pharmaceuticals and aircraft, as well as high-volume consumer products such as video recorders and microwave ovens. I was particularly pleased by the decision of an outstandingly successful British high technology company, Renishaw, to establish a manufacturing plant in Cwmbran backed by high quality research and development, providing over 500 jobs; and by Warner Lambert’s decision to consolidate its United Kingdom manufacturing operation at Pontypool which will provide 250. Similarly, Pirelli has announced a major new investment at its Aberdare factory, which will provide over 150 jobs. The further expansion of Amersham International at Cardiff will provide over 200, and a notable success was the safeguarding of over 500 jobs at Borg Warner after a long period of uncertainty.
Our success in attracting Japanese companies continues with the announcement during the year of projects by Brother Industries, the 10th Japanese company to come to Wales, and Sharp, which will lead to the creation of over 350 jobs at Wrexham, I was also particularly struck on a recent tour by the scale of the modernisation and expansion of the major factories of Hitachi, Sony and National Panasonic in south Wales, involving the creation of nearly 450 jobs. United Paper Mills, a Finnish company, began production two months ahead of schedule at its mill at Shotton in which it has invested well over £100 million to create over 250 jobs on the site as well as providing a major boost to the forestry industry.
The Welsh Development Agency, with its offshoots WINvest and WINtech, continues to play an important role in encouraging investment and preparing industrial sites. During 1985 the agency contributed 1·5 million sq ft to the total of more than 2 million sq ft of Government factory space that was allocated. The agency expects to spend about £11 million on land reclamation and environmental improvement in the current year and is, at this time, drawing up a further programme.
The Welsh Office, the agency and Mid Wales Development are working up further programmes to help job-creating business activity in the rural areas, and I hope to announce details within the next few weeks. I believe all Welsh Members will welcome the Government’s decision to maintain the present system of tourist boards, and in particular to retain the Wales tourist board, which is doing much good work.
Despite all those encouraging developments—with continued growth in the economy and high investment—we have not been able to make any impact yet on total unemployment levels at a time when large numbers are joining the labour force and job losses continue to arise from changes in the industrial structure. Against that depressing background, the Government have reinforced their employment and training programmes.
The growth of the number of long-term unemployed is a particularly disturbing aspect of the situation. During the year, we have more than doubled the number of available places on the community programme, and I am pleased to say that the Manpower Services Commission is well on its way to meeting the June target of 20,500 filled places. Pilot schemes in Neath and Port Talbot aimed at getting the long-term unemployed into jobs or training are already showing encouraging signs. Fourteen thousand places are planned for the adult training programme in Wales in the coming year, representing a threefold increase since 1984–85. The revised training arrangements announced last year are developing well.
I have been particularly encouraged by the success over the last year of the enterprise allowance scheme, which provides a weekly allowance of £40 to unemployed people wishing to set up their own business. We shall have 5,192 places available in Wales this year, an increase of more than 1,000.
The two-year youth training scheme is being introduced from 1 April, and that major training programme will provide school leavers with high quality training and work experience. I am pleased that the problems in Mid Glamorgan have been overcome and the area manpower board has unanimously approved the plans.
Mr. Michael Foot (Blaenau Gwent)
On the subject of the second year of the youth training scheme, the right hon. Gentleman talks of problems being overcome, but the Government are imposing a considerable increase in the amount that the local authorities have to pay. Will he not look at that afresh, particularly in the light of the meeting we had at the weekend, representing all the heads of the valley areas, which are all facing the same problems? The Government boast about what they are doing about training, when a considerable part of the burden is being put on the local authorities. Will the right hon. Gentleman look at the financing of that matter again?
I take note of what the right hon. Gentleman says. As I said, we have allocated massive additional funds to start this training programme, which, regrettably, was not started when the right hon. Member for Blaenau Gwent (Mr. Foot) had responsibility for such matters. We had to catch up with other countries and I am pleased with the progress that is being made to introduce better training for young people. [Interruption.] The Opposition do not like being reminded of their neglect of these matters in the past.
Mr. Foot rose—
I will not give way again. I have just given way to the right hon. Gentleman.
I turn now to another package of measures which we have developed in our drive to tackle the problems of unemployment, urban dereliction and social hardship which are the consequences of industrial change. In addition to a major road programme—last week we went out to tender for the Conwy crossing, one of the largest road and bridge contracts ever undertaken in this country—during my time in the Welsh Office we have set in motion a dramatic and far-reaching transformation and reclamation of the urban areas of Wales that have been symbols of industrial decay for so large a part of this century.
One instrument has been the urban programme. We have increased resources from £7·1 million in 1979–80 to £29 million in 1986–87. I am pleased that it has proved possible to approve 200 new schemes at a total cost of £14·4 million for 1986–87, which represents a 53 per cent. increase in the value of new schemes approved over 1985–86.
In addition to the urban programme allocations, nearly £10 million has been earmarked for urban development grant projects throughout Wales. Since we introduced the urban development grant scheme in 1982, it has proved to be a highly effective tool in bringing forward private sector projects which together have a total investment value of about £115 million. As well as many other benefits, those projects are expected to create nearly 4,000 permanent jobs as well as some 1,800 temporary jobs during the construction stages. By far the most significant project so far approved is the £42 million redevelopment of the Bute east dock area in Cardiff by Tarmac, which is now well under way.
We are now looking at what development opportunities might be created in the wider south Cardiff area if we were to construct a barrage across the harbour mouth, and we are awaiting the results of the feasibility studies. Already the proposal has stimulated widespread professional and business interest in the considerable development potential of south Cardiff.
What is being achieved in south Cardiff also points the way to what can be done elsewhere. It is with that in view that I am today launching a new initiative to improve the environment of the south Wales valleys.
The special problems of the valleys cannot be tackled in isolation. Just as business in the communities of the coastal plain and the valleys grew and prospered together, so the future of the valleys must be related clearly to the tremendous progress which is being made in modernising and diversifying the economy of the rest of south Wales. A key to achieving that lies in the improvement of communications. The new road between Cardiff and Merthyr and into the Cynon valley is complete. We are continuing to support major improvements to the A467 beyond the Rogerstone to Risca section and have supported the construction of the important new access roads into the Rhondda valley.
We have approved capital expenditure allocations to the major development programme that British Rail is undertaking, in partnership with the county councils, for the Cardiff valleys network. It involves the replacement of the existing rolling stock, together with new stations, and other major improvements to services and facilities. With other important road schemes planned to improve access to the valleys still further, this is the moment to launch a fresh initiative to help ensure that the valleys share in the regeneration of the rest of south Wales.
A great deal can be done to improve the valley environment. That is especially true of the town centres and the areas lending to them, where poorly maintained buildings and a damaged environment sell short the enormous attractions which the valleys have to offer. What we shall seek to do is to trigger a series of co-ordinated initiatives by the local authorities and private and voluntary organisations to improve those areas. I am not proposing Welsh Office solutions. Where communities have sound ideas and the willingness to back them, the Welsh Office will focus the many existing mechanisms of assistance and will also make available additional resources to reinforce them, and to promote the contribution that is necessary from the private sector.
I am making available initially in 1986–87, for that specific valley initiative, on top of the other Government funding, £2 million of special capital allocations for housing-related initiatives and £1 million from urban programme resources, quite apart from special capital allocation of £3 million for housing priority estates projects, much of which will go to the valleys, and which I shall refer to later. Inevitably the bulk of developments under that initiative will fall in later years and those planning those projects can work on the assumption that we shall want to reinforce successful schemes in the years ahead.
Mr. Allan Rogers (Rhondda)
I am not sure whether I heard the Secretary of State correctly. Did he say that £3 million is available for each of the 12 or so districts in south Wales, or is there £3 million for the whole of the south Wales valleys?
I am saying that there is a substantial allocation of resources to local authorities under the housing schemes, to urban programme schemes, and to the work of the Welsh Development Agency and other agencies, all of which will be directed and concentrated. In addition, we are making available £3 million in the coming financial year for the initiative, and a large part of the £3 million of special capital allocation for housing priority estates projects will support the initiative.
I have set out my proposals in a statement, which I have already circulated to hon. Members and to organisations that we expect to be involved. We have shown in south Cardiff and in Swansea what can be achieved. The opportunity is there for the valleys as well. It will not surprise the House if I say that I do not always agree with the Bishop of Durham, but I felt that for once perhaps we shared a common approach when he spoke recently about the need for financial pump priming for community self-help. That is exactly what I am seeking to achieve.
Our drive to tackle housing dereliction has the same objectives. I have been able to increase local authority housing capital allocations for 1986–87. Within the total of over £141 million, special allocations of some £40 million have been made to encourage local authorities to concentrate on the renovation of both public and private housing stock. Taking into account the available spending from housing receipts, local authorities will be able to spend well over £140 million on the renovation of unsatisfactory housing in the coming year. In addition, I have increased net provision for the Housing Corporation by almost 15 per cent., to £44·7 million. A good deal of those resources will go into the valleys, and particularly into the programme of priority estates projects.
What can be done is already being demonstrated at Penrhys in the Rhondda and by the Afon project in Wrexham. The number of long-term unoccupied properties has already been greatly reduced, rent arrears have started to come down and vandalism is being brought under control. There is now a sense of commitment to make the estates places where people can live decent lives.
A new project in Bute Town, Cardiff got under way last October and is already making encouraging progress. We are now launching a further phase with new projects in Merthyr Tydfil, Pontypool and the Rhymney valley as well as in Barry. In total, special capital allocations of £3 million will be made for projects in 1986–87 and we are providing extra revenue support. Most important of all, we are making possible a much more sensitive style of management, which recognises the essential contribution which the people who live in the estates can make to improving them.
No doubt there will be a great deal to divide us in the debate this afternoon, but I hope that at least we can unite to make possible a real success of those important initiatives, and I seek the support of the House for them.