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Volume 487: debated on Wednesday 28 January 2009

The Secretary of State was asked—

Rural Economy

1. What assessment he has made of the contribution of the rural economy to economic performance in Wales; and if he will make a statement. (250633)

A strong rural economy is vital for Wales as a whole, particularly during the present challenging economic conditions. We and the Welsh Assembly Government are committed to supporting rural businesses with the range of packages that were announced recently, which are designed to help all businesses.

As the Minister knows, Montgomeryshire has seen shops such as Woolworths closing and businesses such as Stadco preparing to lay off scores of staff. Indeed, the number of job losses has risen by more than 60 per cent. in the last year. While the new assistance package is welcome, is the Minister aware that banks are putting such a tight squeeze on local firms that their viability is threatened? Will he meet local business representatives in Montgomeryshire to hear about the effect of reduced bank lending? Such a dialogue would undoubtedly help firms, and also the Government.

We are, of course, aware of the situation in mid-Wales, and in the hon. Gentleman’s constituency in particular. We are especially concerned about what has been happening to Stadco, where the loss of 100 jobs was announced recently. The important point is that we are essentially on the side of people who are suffering in this way, and totally understand their predicament. As Members will know, the proposals announced recently by the Government are designed to promote cash flow and to help small and medium-sized enterprises. In Wales in particular, high street banks have been turning down applications for loans, and Finance Wales has stepped in successfully to help. We are certainly aware of the problems, and we want to see the position improve.

I should be delighted to visit the hon. Gentleman’s constituency. Perhaps we can discuss an appropriate time later.

The rural and valley areas in Wales need better opportunities to embrace the knowledge economy and, to that end, the Welsh Affairs Committee is about to start an inquiry into digital inclusion in the country. Does the Minister agree that Governments at all levels should encourage the public, private and voluntary sectors to work together to overcome the current difficulties in such communities and reduce the isolation that they experience both socially and economically?

I entirely agree. It is vital that we maintain and reinforce our commitment to the development of a knowledge economy in Wales: that is the future.

Speaking as the deputy Minister for digital inclusion, I also consider it important for us to recognise that our investment in new technology and full participation must continue apace. We must not use the present economic downturn as an excuse not to proceed with that agenda; on the contrary, the downturn must be used to reinforce our commitment to its development. We must also ensure that at all times we are strongly committed to the public and private sectors working together. That, too, is the future. I commend what my hon. Friend has said, and the work of his Committee.

Does the Minister agree that enacting legislation that will require all companies, or at least private companies, to use the Welsh language in all forms of business could prove very detrimental not just to the rural economy but to the rest of the economy in Wales, at a time when, tragically, we are seeing hundreds of jobs lost?

The hon. Gentleman should choose his words carefully. I am sure that the last thing any Member would want to do is be seen to be against the Welsh language. It has developed over the past few years, and we want to ensure that it continues to develop with the consent of all the people of Wales.

As the hon. Gentleman will know, the draft Welsh language legislative competence order is due to be published next week. I hope that, as a result, there will be full discussion among all the people of Wales about what is the best way forward.

Does my hon. Friend agree that the rural economy in Wales needs to recognise the vital opportunity provided by the economic downturn, and the fact that people are holidaying in the United Kingdom, to promote our wonderful natural environment, particularly the environmental protection areas? My constituency contains the national nature reserve at Kenfig, and there are local nature reserves all along the coast. In the constituency of my hon. Friend the Member for Ogmore (Huw Irranca-Davies) is the wonderful Garw valley, one of the most beautiful spots in Wales. Does the Minister agree that environmental tourism is a real saviour?

That is a very difficult one to answer.

I entirely agree with my hon. Friend. My constituency contains the magnificent Caerphilly castle, the largest castle not just in Wales or Britain but in the whole of Europe. There are plenty of opportunities for Welsh tourism, and we need to recognise that indigenous tourism is particularly important at this time. I am delighted to say that the Welsh Assembly Government have invested some £2.2 million in the United Kingdom campaign to extol the virtues of Welsh tourism.

Does the Minister agree that one significant boost to the rural economy of west Wales at this time would come from the construction of the new gas-fired power station at Pembroke, in the constituency of the hon. Member for Carmarthen, West and South Pembrokeshire (Nick Ainger)? The project has taken four years to reach this point. It has passed its environmental consents, and merely awaits a decision from the Minister’s colleague the Energy Minister. Will he speak to the Energy Minister and unlock this important project? The United Kingdom needs the generating capacity, and my constituents need the jobs.

The hon. Gentleman is entirely right: this is an important project. We are mindful of that; discussions have taken place with my hon. Friend the Member for Carmarthen, West and South Pembrokeshire (Nick Ainger), who represents the constituency where the new installation will be based, and I am sure that, across all Departments, we are absolutely committed to ensuring matters are expedited as quickly as possible, but also in a proper manner.

Market towns are a key component of the local rural economy across Wales, and they have maintained a range of quality independent retailers, which make them attractive not only to the people who live there, but to tourists and visitors. Town centres with closed shops and pubs are very unattractive, however. As our thoughts turn towards the spring and Easter holidays, will the Minister intervene with his colleagues in the Assembly—and, indeed, in Westminster—to find ways of reducing the burden on these businesses, particularly in respect of business rates? The Government come forward with new initiatives day by day, but will the Minister now stand up for the retailers and shopkeepers of rural Wales?

Indeed, we stand full square behind small enterprises generally, and in particular retail businesses. The business rates issue has been looked at, and the Government nationally and in Wales are doing everything possible to help. We can be absolutely certain of one thing: we will do everything possible to help people get through this difficult period. I must say, however, that I am impressed in all sectors of the Welsh economy, including the one the hon. Gentleman refers to, by the determination and commitment of the people of Wales. It is very important that we reinforce the determination to get out of this economic downturn as quickly as possible, and I hope the hon. Gentleman will work closely with us to achieve that.

Does the Minister recognise that small and medium-sized enterprises in Wales are vital for employment throughout Wales, and in particular in rural areas? Will he join me in congratulating the Welsh Assembly Government on their £290 million flexible support package for business, the £7 million rates relief package for smaller businesses and the £115 million investment fund? Does he not agree that the Assembly Government have been very proactive at a time when such action is required?

Yes, I agree. I am pleased that the hon. Gentleman has listed some of the initiatives that have been introduced, and it is important to recognise that, in the critical area of the development of our economy, we are seeing good practical examples of the Government here in Westminster and the Welsh Assembly Government working together and pulling together in the interests of the people of Wales. There are other initiatives as well as those that the hon. Gentleman has mentioned. I also believe we have led the way in the United Kingdom in holding economic summits. There have been three very successful economic summits, and another one in north Wales is planned shortly. That reinforces the partnership that has been established not just between Cardiff and London, but between all the main players in Wales.

Small Businesses

2. When he next expects to meet representatives of small business organisations in Wales to discuss the regulatory burden on them. (250634)

My right hon. Friend the Secretary of State and I met the Wales CBI only last week, and I recently held a meeting with the Federation of Small Businesses to listen to its specific concerns. In March I shall be participating in the FSB’s national conference.

I thank the Minister for that reply. Ministers keep telling the House how much they are doing to support small firms, but why did Ministers not do more to resist the job-destroying EU agency workers directive, which was vehemently opposed by every single small business organisation?

The Government are certainly doing everything they can to help small businesses—there is no doubt about that. However, it is important to recognise that we are talking specifically about Wales, and we can point to initiatives that have been taken by the Welsh Assembly Government, such as the ProAct and ReAct programmes. We can also allude to the fact that significant sums of European money have gone into these initiatives. They are helping small businesses and the people who are directly affected by the economic downturn, so I think it is very important that, unlike Opposition Members, we take a balanced view of the European Union. I believe that, on balance, our membership of the EU is positive and helpful, and many thousands of people in Wales would testify to that fact.

My hon. Friend will be aware that one of the problems that small businesses face is getting large-scale procurement contracts from local government and, in my constituency, from the Ministry of Defence. This problem has come up at a number of meetings hosted by the Wales Office. Can he assure me that in these difficult times, and through the economic summits that we have had in Wales, we will be able to relax the rules or even explain them better to local businesses, so that they can have the opportunity to get the contracts and get the work locally?

I entirely agree with the point that my hon. Friend makes, because this issue has to be addressed. I am pleased to say that there will be a meeting on Monday to discuss precisely that point of procurement and how government at all levels can do whatever they can to help. We are also pressing strongly for the next economic summit in Wales, to which I referred, to address the issue specifically. As far as Anglesey is concerned, we will do everything possible to help sustain jobs; I am aware of the excellent work that he is doing on Anglesey Aluminium, and we stand full square behind him on that issue as well.

I am sure that empty property business rates have been a significant feature of the Minister’s discussions with the Federation of Small Businesses and others. Although we welcome the increase to £15,000 for relief, that is not enough for many of our constituents. One of my constituents faces a bill on empty properties of £30,000 a year, and that is very much compounded by the unhelpful attitude of the banks. Will the Minister continue to advance the case for raising that threshold further in his discussions with the Welsh Assembly Government and, consequently, the UK Treasury?

I am glad that the hon. Gentleman recognises that we have already taken action on business rates—I think it has been warmly welcomed by those people directly affected. We will take the necessary action and we will keep the situation under review. We have given an explicit commitment to doing whatever is necessary to ensure that we all move forward together as quickly as possible through this economic downturn. All those issues that he has raised will be carefully examined—this is a moving brief.

Major job losses in Wales, such as those at Corus, understandably make the headlines, but the Minister must know that the consequential impact on small businesses can be just as catastrophic, if not more so, for families and individuals. Can he explain why, despite all his summits, he and the Welsh Assembly Government are not helping businesses more directly by bringing in our proposals, such as those for a six-month VAT holiday, a cut in corporation tax and a cut in payroll taxes for companies with fewer than five employees?

Forgive me for smiling, but it is important for Labour Members, at least, to recognise that a tremendous effort has been made. The Wales Office recently published a document that itemises all the efforts that have been made and all the initiatives that have been taken by the central Government, in co-operation with the Wales Office, and by the Welsh Assembly Government. I would be more than delighted to ensure that the hon. Lady has a copy, so that she is able to avail herself of all the information that it contains. It clearly sets out the umpteen initiatives that have been taken, which have been well appreciated and, most importantly, are having a direct positive effect to help businesses in these difficult times.

I am not smiling, and I happen to have had a copy of that list, for which I am very grateful. Forgive me if I am sceptical about the Minister’s warm words, his summits and his lists. How can businesses rely on a Labour-Plaid Welsh Assembly Government who during this dreadful recession have taken decisions to cut further education budgets that would retrain workers; to hand back to Europe, because of their own bad planning, £77 million of aid for the poorest regions; and to inflict an above-inflation rise of almost 5 per cent. on business rates from April this year? The Minister may be smiling but business in Wales is not. How will such moves help small businesses or, indeed, any business in Wales?

The hon. Lady’s jokes are in bad taste and her mock humour is inappropriate. Over the past few months we have seen a strong partnership between the Welsh Assembly Government and central Government. European funds have been effectively accessed as far as the ProAct and ReAct schemes are concerned. Those programmes are in place and they have had a direct effect.

The hon. Lady might not like it, but the Welsh Assembly Government have led the way in helping small and medium-sized enterprises. Europe is playing a critical role and the best action that the Welsh Assembly Government could do is to reinforce that partnership with the European Union to ensure that money comes through the structural funds and through the European Investment Bank. The single most important thing that the hon. Lady could do is listen to her shadow Business Secretary on VAT, for example. He recognises the importance of the VAT reduction and the importance of Europe. It is a pity that the rest of his colleagues do not do the same.

All Wales Convention

3. What recent discussions he has had with the chair of the All Wales Convention on the work of the convention. (250635)

I have been following the convention’s work with great interest and I have met Sir Emyr Jones Parry on a number of occasions.

When families across Wales are concerned about their future does my right hon. Friend think that anybody gives a fig about the All Wales Convention? It is wasting £1 million of taxpayers’ money, calling shambolic meetings, showing videos that give a distorted picture of Wales and pandering to those who think that the big issue of the day is independence. Would it not be better spending its time talking to the Corus workers?

I am grateful to my right hon. Friend for his robust comments on the work of the convention. I think that the convention is doing a proper job in trying to find out what the people of Wales would think about extra powers for the Assembly. I agree with him that it is more important to concentrate these days on the effects of the economic downturn on the people of Wales than on constitutional issues, but I do not undervalue the work of the convention.

On constitutional issues, does my right hon. Friend have any plans to slash the number of Welsh MPs before any further devolution settlement and to gag them when it comes to speaking on UK parliamentary issues? If he does not have such plans, does he know anybody who does?

I think I do. The Government have no plans to reduce the number of Welsh Members of Parliament or the effectiveness of the Welsh representatives in the House of Commons. The Government have no plans to gag us in any way whatsoever. However, I was surprised at the Conservative Front Benchers when they decided some weeks ago to suggest that we might reduce the number of Welsh Members of Parliament. They then changed their minds, for which I am very grateful.

Will my right hon. Friend ensure that the chairman of the convention is aware of the success of the legislative competence order process in ensuring that, where it is appropriate, additional responsibilities and powers are provided to the National Assembly for Wales? Given the amount of disinformation that we see from the press and media in Wales and from some who seem to want to pretend that the process is not successful, is it not important that the convention should ensure that people understand that the process is successful?

Yes, it is. It would be useful for my right hon. Friend to meet Sir Emyr to put those points to him. The process has improved over the past months and will improve even more.

Employment (South Wales)

The levels of employment show the continued effect that the global economic slow-down is having on the Welsh labour market. Although that problem requires a global solution, we are doing everything we can, in partnership with the Welsh Assembly Government, to help minimise the effects on Welsh families and on our economy.

I thank my right hon. Friend for his reply. Is he aware that 330 jobs are likely to be lost from Cardiff Gate and from my constituency if the International Baccalaureate continues with its plan to move to a mainland European city such as Amsterdam? Is he aware that one of the reasons given for that is that Cardiff and south Wales do not have an international mindset? Is that not extraordinary when we consider that the first full IB school was Atlantic college at St. Donats in south Wales?

Yes, I very much agree with my hon. Friend, who rightly points out that the International Baccalaureate was started in Atlantic college, and that, far from being a parochial place, Cardiff is very much an international centre. I fully support her early-day motion. I have written to the director-general in Geneva about keeping the 300 jobs in Cardiff and I hope that her campaign is successful.

The hon. Member for Vale of Glamorgan (John Smith) has claimed many times that hundreds of jobs will come to Wales as a result of the defence training review programme, but the programme has rising costs and increasing delays. Indeed, in his desperation, the hon. Gentleman visited the Prime Minister this week, even though the latter has given no assurance that the defence training review will go ahead in Wales. Do we not need an early statement from the Secretary of State giving us the truth about the project and its rising costs?

I have had no indication at all that there will be any change of plan concerning that huge investment in Wales. The Government are committed to it and I am sure that, when the time comes, there will be a proper statement to this House of Commons.

Does my right hon. Friend agree that employment levels in south Wales will be greatly improved by the 5,000 jobs brought to the area by the defence technical academy? Does he also agree that it is about time that Opposition Members stopped knocking the project and began pulling together to ensure that it is brought in on time and within budget?

That is what we all like to hear. My hon. Friend has been a great champion of the project. When those jobs come to Wales, it will be as a result of the biggest single Government investment in Wales ever.

Since January 2008, 11,000 jobs have been lost in Welsh retail and services. That is more than in any other sector, and thousands more jobs are at risk because of the unreasonable conditions being imposed on small businesses by banks. For example, a business in my constituency is being charged 10 per cent. interest above the base rate on a loan of only £4,000, plus significant amounts in fees. Does the Secretary of State share my concern that, if that continues, more Welsh businesses will be driven into the ground, with significant numbers of redundancies? What extra help can he offer to businesses in those circumstances?

Thank you, Mr. Speaker. The hon. Lady is absolutely right. Banks should be lending, particularly to small businesses, and the initiatives taken by the Government are designed to help them do so. She will be aware that Wales is especially fortunate, as we have the Welsh Assembly Government’s initiatives and the schemes of the UK Government that help businesses in a very special way. However, I will make sure that the points that she has properly raised here in the House of Commons are raised at next week’s economic summit in north Wales.

My right hon. Friend will be aware that Corus has announced the closure of Coated Metals in Pontarddulais in my constituency—a blow to the community and to the workers. However, all the workers have also worked at some time in Port Talbot, so will he urge Corus management to show flexibility and use a combination of voluntary redundancies and inter-plant redeployment to minimise the damage?

Yes, I will. I had a conversation recently with the chief executive of Corus and the general secretary of Community, the steel industry’s main trade union. The points that my hon. Friend has made are very valid, and I shall raise them again with them.

Given the increasing numbers of job losses in south Wales, which of course include the 1,000 jobs lost at Corus this week, does the Secretary of State acknowledge the fundamental importance of maintaining flexibility in the labour market? Can he therefore confirm that the Government will continue to fight to maintain the British opt-out from the working time directive, notwithstanding the decision of Labour MEPs to support its abolition last months?

Yes, I think that there should be as much flexibility as possible. That has helped us in the past, and I hope that it will do so in the future as well.

Manufacturing Industry

5. What recent discussions he has had with the First Minister on prospects for manufacturing industry in Wales. My right hon. Friend has regular meetings with the First Minister, and hardly a day passes when the economic situation and manufacturing is not discussed. (250637)

Does the Minister agree that manufacturing industry is the only source of non-inflationary, sustainable economic growth? Bearing in mind that the Secretary of State for Wales said that manufacturing

“will play an important role in bringing us out of recession”—[Official Report, 26 November 2008; Vol. 483, c. 710.]

what are the current Government and the First Minister in Wales doing to help manufacturing industry at this time?

The short answer is a heck of a lot. The hon. Gentleman is correct in saying that manufacturing is still important in Wales—it is—and the last available figures show that some 13 per cent. of the work force were employed in that sector. That is why we have seen central Government and the Welsh Assembly Government being so proactive to ensure that policies are in place not only to help manufacturing but, importantly, to plan for the future. It is absolutely vital to give the greatest possible assistance and investment regarding skills and training, so that when the upturn comes, we are well placed to ensure that we take the maximum benefit of it.

My hon. Friend will be well aware of the £1 billion investment being made and, I hope, announced very shortly in my constituency to build a gas-fired power station. During its construction phase, it will employ 2,000 people. Will he agree to meet me and Alstom—the main contractor—to ensure that we maximise the number of local Welsh people who are employed during the construction phase?

My hon. Friend is correct in stressing the importance of that utility initiative in his constituency, and I give a commitment that we in central Government will do everything possible, in partnership with the Welsh Assembly Government, to ensure that the processes to bring that about are fulfilled as quickly as possible. Specifically, I very much hope that I will be able to come down to his constituency in the very near future, and that is one of the facilities that we can visit and discuss.