On a point of order, Madam Speaker. On Monday afternoon, you were gracious enough to allow the Home Secretary to make a statement to the House on the leak of the Stephen Lawrence report. At the end of the statement, the Home Secretary said:

"The whole report will be published in full to Parliament on Wednesday, as planned; but it was and remains plainly contrary to the public interest for there to be selective and premature disclosure of a judicial inquiry."—[Official Report, 22 February 1999; Vol. 326, c. 23.]

I entirely endorse those sentiments—as I believe that you do, too.

The Home Secretary published the report yesterday. Again, you were gracious enough to allow him to make a statement to the House. The report and the appendices were then made available to Members of Parliament and to the press. A copy of the appendices currently resides in the Library.

About an hour ago, I went to the Vote Office to request a further copy of the report and the appendices. I was astonished to discover that, early this morning, the Home Office had given instructions that the appendices should be withdrawn.

I went to the Library to inquire whether any reasons for the withdrawal had been given. The Library, with its usual efficiency, established for me that, apparently, the appendices had been withdrawn, on the Home Secretary's instructions, because they contained confidential information that should not have been published.

It would appear that the Home Secretary may have permitted to be published, and to be placed in the public domain, material that could prejudice a re-trial of those believed to be guilty. If that is so, it is a very serious matter indeed and calls into question the Home Secretary's position.

Has the Home Secretary indicated to you that he wishes to come to the House to make a statement, to say why he withdrew that document this morning, without notice to the House?

Further to that point of order, Madam Speaker. I have only just heard about the issue—which is a very important one, as the appendices and the information in them have been heavily reported in the media. To put the matter at its mildest, if the document has been withdrawn for a reason, the House and also the media will need some indication of why that has been done and which parts of the appendices have been withdrawn.

Much of the information is already in the public domain, and much of it is germane to the debate itself. Many hon. Members will speak in the continuing debate on the Lawrence report on the basis of the information given. We need urgent guidance from the Home Office on exactly what is happening, and on why the document has been withdrawn.

I understand that volume II of the Lawrence report, which contains the appendices, has been withdrawn from the Vote Office. My understanding—I have not made direct inquiries because, as I am sure the House will appreciate, I have not had the opportunity to do so—is that the volume was withdrawn because it contained some inaccuracies, but is to be replaced very soon.

As the right hon. Member for Sutton Coldfield (Sir N. Fowler) and the hon. Member for North Thanet (Mr. Gale) will be aware, the report is the responsibility of the Department. I trust that the Department will ensure that the replacement is made available as soon as possible. The House can be certain that, as soon as I leave the Chair, I shall use my best endeavours to ensure that that is done.

On a point of order, Madam Speaker. The brutal gunning down and murder of the Ayatollah Muhammad al-Sadr in Najaf last week is roughly the middle eastern equivalent of the murder of Thomas à Becket, and is creating great difficulties in not only Iraq but the whole Shi'ite world. It has been widely said in the Arab press that that act was not the responsibility of the Iraqi regime, whose interests would hardly be served by such a public murder, but has to do with opposition groups financed by the west. That is what is being said, rightly or wrongly. Have you had any request from the Foreign Office to make a statement in response to what is so widely thought and believed, rightly or wrongly, in the Arab world?

I am not aware that the Foreign and Commonwealth Office is seeking to make a statement today.

On a point of order, Madam Speaker. I had hoped to bring to the notice of the Leader of the House a serious breach of clause 79 of the ministerial code of conduct, which relates to the long-standing tradition of the House that Ministers should inform Back Benchers whose constituency they are going to visit. The right hon. Lady visited my constituency last Tuesday, but the first notice that I had was an article in the Malmesbury Standard. By coincidence, on the same day the right hon. Lady answered a parliamentary question from me listing the constituencies that she had recently visited and failing to list mine. Would it be appropriate for you to remind Ministers about that important clause?

I had hoped that we were sufficiently far into this Parliament for all hon. Members to be able to resolve such matters between themselves and not raise the issue in the House. I expect all Members of Parliament, including Ministers, to have the courtesy to inform others when they visit their constituencies.

Just over two months from now, the first elections to the National Assembly for Wales will mark the biggest ever change in Welsh government. That delivers one key promise made by Labour in 1997, but in looking forward to the exciting time ahead, it is important to take stock of what else the Government have achieved in the short time since May 1997. We can celebrate St. David's day on Monday safe in the knowledge that a Labour Government are delivering on the key pledges that we made to the electorate when we asked for their trust in the general election. The six pledges that we made to the electorate in Wales struck a chord because they represented the real priorities of ordinary people: proper jobs for young people and the long-term unemployed, smaller class sizes, shorter waiting lists for the national health service, swift action on youth offending, creating a sound economy and greater democratic control of Welsh institutions.

Those remain the people's priorities. Since taking office as Secretary of State for Wales, I have undertaken a programme of open and inclusive public meetings around Wales. At a meeting in Aberystwyth last Thursday, questions rained in from Plaid Cymru, Liberal Democrats, Labour party members, Cymdeithias yr laith Cymraeg, students of politics, trade unionists, councillors and ordinary members of the public. Those meetings have given me an opportunity to hear at first hand about the issues that concern people at national and local level. The issues that our key pledges addressed remain at the top of the agenda: jobs, education, health, economic stability, law and order, and, underlying them all, the need to combat poverty and social exclusion.

On 6 May—two years and five days after the general election—we will elect the National Assembly for Wales, which will face real challenges and real opportunities.

I congratulate my right hon. Friend on the outcome of last Saturday's ballot and wish him well in the important work that he has to do for the people of Wales. When will we know the outcome of the review of the assisted areas in Wales? Will he take on board my constituency's urgent need to be assured that it will not lose its status? The aerospace industry in particular is looking to him for a positive outcome.

I am well aware of the needs of my hon. Friend's constituency and his passionate advocacy of the needs of its industries, some of which I have had an opportunity to visit with him. I understand that he has had a constructive meeting with the Under-Secretary of State for Wales, my hon. Friend the Member for Neath (Mr. Hain), on those important issues. He will be aware that we want an outcome to the assisted area status review as quickly as possible. Work is going on, but there is more to be done before the Government will be able to announce the way forward.

Devolution presents the chance not just to set up a new political institution, but to establish new and better ways of working. I am determined to ensure that the National Assembly for Wales will not mimic the traditions of Westminster and Whitehall, which have often seemed alien, aloof and distant to us, never mind to ordinary people. The Assembly must lead a partnership in Wales that draws in and mobilises all the positive forces in Welsh society—from local government, from the voluntary sector, and from the two sides of industry.

I firmly believe that the National Assembly will reinvigorate government in Wales, which atrophied under the Tory viceroys of the 1980s and 1990s. That is not only my view. When we advertised externally for new middle managers, we received more than 1,000 applicants for little more than a dozen jobs. Many of the successful applicants said that they would have been less likely to consider working for the Welsh Office had it not been for the prospect of the National Assembly.

It is crucial that everyone in Wales, wherever they live and whatever their political opinion, should be able to make their voice heard in the Assembly. I am confident that we will achieve that. In the Assembly, we will create a modern democratic institution for the people of Wales; one of which we will all be proud.

That institution, like the Welsh Office, will be judged by what it delivers. I am bending all my efforts to preparing the ground for the Assembly to succeed. It is a major challenge, given the state of Wales when the Tories were swept out in 1997. Let me focus first on our pride and joy—and our biggest challenge—the NHS in Wales.

We promised to bring down NHS waiting lists and to tackle underfunding. We have made a start, and we will fulfil our pledge, although I would be the first to admit that we underestimated the horrendous scale of the problems bequeathed to us by our predecessors.

We have already invested £20 million in bringing down waiting lists, which have fallen by almost 4,700 since August 1998, and by allocating more than £1 billion in additional funding to the NHS over the next three years—an increase of more than 6.4 per cent. per year—we have shown that we are serious about moving towards our goal. However, the problems of the NHS are not just about underfunding; they also involve structure and philosophy.

The Government have transformed the malign and destructive approach to health and the provision of health services that we inherited. Since May 1997, we have moved to replace the divisions of the internal market with a new collaborative approach to service planning and provision and devolved decisions to local communities. The Health Bill will abolish GP fundholding with its inherent discrimination, drive up the quality of health services and promote the development of integrated services by breaking down the barriers to effective partnership. We have produced proposals for improving the health of the people of Wales and the measures that we and our partners should take to deliver our plans. In December I announced my plans to create a single health service in each part of Wales and to reduce the number of trusts in Wales by nearly half. That will improve standards of clinical care and release £7 million from bureaucracy to be reinvested in patient care. We have made the recruitment and retention of nurses a priority and improved their pay and conditions.

Those changes have replaced the division and confrontation of the Tory years with policies that promote co-operation and integration. It is only a start, however, and I am determined to move quickly into the next crucial phase of our reforms of the NHS. Having grasped the difficult nettle of reorganising NHS trusts across Wales and creating a single health service, I will be making an announcement on the future for Cardiff and the Vale of Glamorgan in a few days time to put in place the final piece of that particular jigsaw. I am also about to announce the future role and composition of community health councils in Wales.

Let me again stress the clarity of our vision: a single model of integrated health services across Wales, with acute mental health and community services working together, service planning devolved to local communities through local health groups and the national health service working in partnership with local government and others. Our distinctive vision to improve care and raise standards of health has been widely welcomed and the progress being made in establishing local health groups is really good news.

Much remains to be done, however. It is still only a start and there are other nettles to be grasped. Let me be clear. The Tories left the NHS in a parlous state. We have to put right their neglect. One of my predecessors, the right hon. Member for Wokingham (Mr. Redwood) believed that the hidden hand of the internal market could be left to run the health service in Wales. His legacy was an NHS and a Welsh Office shorn of the expertise and experience necessary to run a £2.4 billion service. It also left health authorities in Wales with funding and service problems which have to be resolved. I am determined to tackle those problems. I am deeply unhappy with a situation in which the Welsh Office is making loans to Welsh health authorities to cover operational deficits that must be repaid from future years' resources. That situation is intolerable and it must be sorted. I promise the House that it will, indeed, be sorted.

The same Secretary of State, pursuing his bizarre policies of devolution of blame, stripped out management expertise and NHS experience from the Welsh Office. No wonder there is a mess. We are now acting on an expert report by Sir Graham Hart. Through open competition, we are recruiting staff to strengthen the professional team in NHS Wales at director level.

In parallel with that internal strengthening of capacity, I can announce today that I am commissioning a major stocktake of the NHS in Wales, which I want to be available for the Assembly when it assumes its powers on 1 July. The first dimension of the stocktake is a review of the financial health of the NHS in Wales and the quality of service delivery. Following a recent meeting with the chairman and senior officers of the Audit Commission, I will explore in detail, in the next few days, ways in which the commission can assist with the review. The commission has already expressed its enthusiasm for this approach.

The second dimension is a review of the present arrangements for long-term planning in Wales, which includes the contributions that can be made to this process by all the key stakeholders—professional, managerial and public. In the next fortnight, I shall meet the Welsh Office team and then the top team from every NHS trust and health authority in Wales to discuss the project, respond to questions and ensure that its importance is fully understood.

I am sure that hon. Members will accept that it is right to go beyond our election promises and seek to tackle the most deep-seated problems of our public service. That is what I intend to do. The same applies to education.

In our general election campaign, we promised to cut class sizes for five to seven-year-olds. We have done so, as part of a new crusade for higher educational standards throughout Wales. We are well on our way to meeting our pledge that no five, six or seven-year-old will be in a class of over 30 pupils by the end of this Parliament. This year, we have provided earmarked funds to allow an extra 270 teachers to be employed, releasing 23,500 infants from classes of over 30. We will invest a further £34 million over the next three years in order to fulfil our pledge.

More generally, we have set about reforming our whole education system. We inherited a system buffeted by too many policies ill-suited to the needs of Wales. We have moved quickly to establish a clear strategy for the future. That includes the first ever education White Paper for Wales, "Building Excellent Schools Together", which sets out the Government's proposals for raising standards in Welsh schools.

We are investing so that our young people can receive the education that they deserve. Next year, there will be an additional £70 million for local authority education budgets, with even larger increases over the following two years. The scale of the investment will make a real difference and the fact that it is over three years will allow schools and authorities to plan for the future and to use the resources to best effect.

A further £140 million will support the professional development of teachers. I have announced a major initiative to support and restore schools and youth music—the orchestras, bands and choirs that are the doorway to opportunity for so many of our young people. The overriding purpose to all of the investment is to raise standards, which is absolutely central to our agenda for Wales. The evidence from examinations and assessment is that we are making encouraging progress, but we have a long way to go to reach the demanding targets that we have set.

We will achieve those targets only if pupils develop the key skills of literacy and numeracy. Good language skills are fundamental to all learning and to a child's success in later education and throughout life. We have already targeted work on literacy in primary schools—early results are encouraging and that work will continue—but I now want an equally sharp focus on numeracy, and we recently announced a £2 million programme aimed at ensuring that all schools reach the numeracy standards of the best.

Education is not only about schools or about building a sound basis for a modern economy, although it is true that without a dramatic improvement in our skills in Wales we will not be able to compete in the knowledge-based economy of the new millennium. Education is also about enhancing the life chances of the most dispossessed in our society. That truth was brought home to me on the individual level as a youth worker in Cardiff 20 years ago and was reinforced as I saw young people's chances of a job and a decent life destroyed by the Thatcher Government. That is what made me angry enough to stand for Parliament. I am absolutely determined to make sure that neither the Welsh Office nor the Welsh Assembly let down those young people and that is why I was proud to be part of the Labour team which put the new deal in place.

My right hon. Friend will recall that under the previous Government certain schools in Wales, often the most prosperous and in the most favoured areas, received extra financial help and other schools, which were sorely in need, were neglected. Will he ensure in his allocations to schools that that shortfall is made up in favour of the schools in deprived areas?

I am happy to confirm that it is our policy to combat unfairness and neglect and to be fair to all schools, especially by recognising the problems with which they seek to cope. Some schools have tackled problems with great fortitude and courage, but they have not been able to match the finances available to other schools. I mentioned the money that I have put into schools music and it is noticeable that some schools in better-off areas have been able to maintain their involvement in schools music, but schools in worse-off areas, which face the pressures that my hon. Friend mentioned, had to let it slip. It is very important that opportunities should be fully available to every child in every school and that the inequalities are tackled.

I was especially delighted to be able to announce earlier this month that—as part of the record increase of £844 million for education and training in Wales over the next three years—there will be a major boost for further education. More than £120 million of extra funding will be available for further education, bringing Welsh spending on FE to more than £200 million each year. That will allow the number of students at further education institutions to rise by at least 28,000 by the academic year 2001–02. Together with an increase of 8,000 students in higher education, that will more than meet Wales's share of the target of 500,000 extra students announced by my right hon. Friend the Prime Minister. I was pleased to announce those figures at Coleg Glan Hafren in my constituency, where changes in the way that further education opportunities and sixth-form education are offered have increased the proportion of youngsters staying in post-16 education and training from one third to almost a half in the catchment area. Those figures have been maintained in recent years.

I mentioned new opportunities for young people. Our promise was to take 250,000 young people off the dole and put them into work. On that pledge, too, we are well on the way to success. The new deal is one of the great success stories of this Government—in Wales as throughout the country. Less than eight months after the election, my hon. Friend the Member for Neath (started the new deal for 18 to 24-year-olds in the Swansea and west Wales pathfinder district. In April 1998, that was extended to the whole of Wales. By November 1998, nearly 3,700 young people in Wales had already been placed in real jobs through the new deal and more than 13,000 Welsh youngsters had started the new deal.

The new deal for young people is the cornerstone of our efforts to combat the hopelessness of life on the dole, but it is only one part of the Government's commitment to welfare to work. Since the end of June 1998, the new deal for those over 25 has offered support through subsidised employment or full-time study to those who have been unemployed for two years or more. That complements the existing provision available through the Employment Service, training and enterprise councils and FE colleges. In less than six months, more than 4,300 people in Wales had joined the schemes, while the new deal for lone parents had attracted 2,500 parents, with nearly 900 of them either obtaining jobs or increasing their working hours.

I recently announced the location of a second tranche of employment zones in Wales, which will start operating in April 2000. Those zones will target help at communities with some of the highest rates of long-term unemployment in Wales. The new zones will enable us to build on the work of the prototype zone in north-west Wales, which by December 1998 had provided help for more than 500 people, 65 of whom had found work.

I should like to underline the fact that, as ever, the numbers and figures that I mention refer to individual people, their families and communities. So it is important to bring these points home to the House.

Are not the employment zones an acknowledgement by the Government that there is a difficulty with the new deal? It is not that the new deal is not accomplishing a lot of good in many constituencies, but that people are not taking up the subsidised jobs. If the Secretary of State is admitting that there is a difficulty, I welcome the fact that the Government are learning from their mistakes.

The hon. Gentleman is entirely wrong, which is not unusual. The employment zone approach is entirely separate. The first such zone that I referred to was started in north Wales, and paralleled the launch by my hon. Friend the Under-Secretary of the prototype for the new deal in south Wales. We have looked at what works and are building on that. We are serious about this matter and, unlike the hon. Gentleman, are not interested in trying to score cheap political points.

The new zones, selected on the basis of unitary authorities with a high share of unemployed people aged 25 and over, will provide support for up to 3,000 people over a two-year period.

It was a serious question.

I get a bit sharp when members of the Conservative party start talking about unemployment. Given the unemployment that the previous Government caused in Wales and the hopelessness that they created in our young people, I think that we are entitled to be angry. We are doing something about those problems, and I hope that the hon. Gentleman will start to take a constructive interest.

The next of our key pledges was to cut by half the time from arrest to sentencing for persistent young offenders—another area in which the previous Government failed. We have kept that pledge through the Crime and Disorder Act 1998. I am proud to have been associated with that key piece of legislation in my previous role at the Home Office. It is a key piece of legislation for every community in Wales.

The 1998 Act has introduced far-reaching changes to the youth justice system and goes far beyond the knee-jerk reactions to offending that characterised the last Administration. It will help build safer communities, reform youth justice to nip things in the bud, and reduce offending by young people. It will speed up the criminal justice system and lead to a long-term improvement in the performance of the criminal justice system and public confidence in it.

The 1998 Act states explicitly that the principal aim of the youth justice system is to prevent youth offending. One of its key provisions is the setting up of crime and disorder reduction partnerships in every local authority area, which will bring together local authorities, the police, the probation service, health authorities and others. The partnerships will develop local crime reduction strategies, to be in place by April 1999.

I am pleased that two Welsh partnerships, at Swansea and Gwynedd, have been selected as pathfinder sites to be visited by the Home Office task force.

The Secretary of State is talking about law and order, a matter that is important in Wales and throughout the United Kingdom. Will he say whether, since the general election, there are more bobbies on the beat in Wales now, or less?

Fewer.

Fewer: the hon. Gentleman should get his grammar right. I know that we have moved on from education, but I wish that Opposition Members would improve the standard of their contributions.

The Government are backing the legislation with a crime reduction programme for England and Wales costing £250 million. The programme will give grant aid to evidence-based research projects capable of being replicated elsewhere. I assure the House that I will be tireless in my efforts to make sure Welsh communities lead the way in developing such new approaches.

Moreover, I am determined that partnerships will develop across Wales. Schools such as Dwr y Felin in Neath and Holyhead comprehensive in Ynys Môn have shown how young people can be part of the solution, not just part of the problem. In Merthyr Tydfil, the Safe Merthyr project has had stunning results. In Wrexham, neighbourhood watch has teamed up with young people in an award-winning partnership. And at the accident and emergency unit in Cardiff, Professor Jon Sheppherd and the whole medical team are helping to cut violence by working with the police, with the organisation Victim Support, and with the City council. I have asked every health authority and health trust in Wales to pick up on those lessons and put them into practice. Under the Assembly, I believe that these innovative approaches will become the norm.

The right hon. Gentleman and I have had many debates on home affairs over the years, and we have often been on the same side. What application does he envisage of the weird and dangerous principle being propounded by his right hon. Friend the Home Secretary of interning people who may at some future point be dangerous?

The hon. Gentleman raises an interesting point that cuts across issues affecting the health service as well as community safety. The Home Secretary will take the lead on the issue, but the dilemma we face is quite simple. Some individuals are identified as having severe personality disorders. I have seen the prognosis on some of those individuals, and the documents state that they cannot be treated under mental health legislation, but are very dangerous. That occurs with some of the most serious sex offenders as well as people who commit violent offences.

The difficulty is that the prognosis that people cannot be treated ends one part of the story for the health service, but the other part is that the criminal justice system cannot lock up someone to protect the public from him or her until that person has committed an offence. There is a gap between the two systems, into which falls the identification of a serious risk to both the public and the individual concerned.

That is the problem that my right hon. Friend the Home Secretary is seeking to tackle. It is difficult to balance the protection of the public with the liberty of the individual, and the problem has been left untackled for many years. My right hon. Friend, our colleagues at the Department of Health, and I, when it comes to health matters in Wales, will seek to tackle the problem, and the House will have to grapple with the balance between the principles of public protection and individual freedom. The problem will not go away, and I am grateful to the hon. Member for Meirionnydd Nant Conwy (Mr. Llwyd) for raising it. I look forward to debating it with him further in future. I am sure that he will agree that it is a serious problem and that we need to tackle it.

The Government are determined to break once and for all the vicious cycle of drugs and crime, which wrecks lives and threatens communities. Police forces estimate that around half of recorded crime has some drug element to it, and there are serious issues to be tackled in Wales. The Welsh drug and alcohol misuse strategy "Forward Together" has been reviewed in the light of the new UK strategy, and a report on the implications for Wales has been provided to Keith Hellawell, the UK anti-drugs co-ordinator, whom I met recently to discuss the Welsh dimension.

Following the review, I can announce my intention to relaunch the Welsh drug and alcohol strategy to reflect many key elements of the UK strategy, in particular its emphasis on tackling the social causes of substance misuse. It will promote the adoption of the partnership approach and build on the good work already done.

In our key pledges, we promised to provide sound economic management for our country, and that we would not, in doing so, raise income tax rates. As a Government, we have fulfilled that pledge. Inflation is low. Government borrowing has been cut by £20 billion. Long-term interest rates are at their lowest for 40 years. Yet, for the next three years, we will be able to provide massive new resources for health and education in Wales, as in England, Scotland and Northern Ireland.

Before my right hon. Friend moves on from management of the economy, will he join me in welcoming the Prime Minister's statement earlier this week on preparations for a single currency? That statement went down extremely well with Welsh business and commerce. The devastation caused to our primary industries by the Conservative party over two decades has made Wales the region of the United Kingdom most dependent on trade with the European Union. The people of Wales will view the Opposition's policy of ruling out the single currency for 10 years with absolute disbelief in the run-up to the Welsh Assembly elections.

I agree with my hon. Friend. Despite the Opposition's attempts to spread confusion, the Prime Minister's statement was widely welcomed, particularly in Wales, by both business and farmers, on whom the policy will have a considerable impact.

The Secretary of State mentions the substantial additional resources that the Treasury has put at the Welsh Office's disposal as a result of the economic management of the past two years. Will he give an assurance that the Treasury will be forthcoming with the matching funds that are needed to ensure that Wales can get the full benefit of objective 1 money, if we succeed in obtaining objective 1 status when the decision is taken next month? Is he prepared to put his own neck on the block in delivering that, given that, during the recent election campaign, he said that he could have such an influence on Government Departments in London?

I am delighted that the right hon. Gentleman is at last willing to lead with his chin in the House, as he does in the newspapers. Such an election ploy is obvious when it comes from his quarter, and it appears to be the only ploy that Plaid Cymru currently has, other than generally rubbishing the achievements of the Labour Government.

Answer the question.

The right hon. Gentleman knows the answer—it is straightforward. When we have a decision from Europe, there will be discussions involving Treasury colleagues, in which we shall consider the way in which the UK Government will fulfil their obligations and enable Wales to draw down the finances available under objective 1 status, which we are satisfied that we shall be able to achieve.

Will the right hon. Gentleman give way?

The right hon. Gentleman must be patient. He is not usually patient, as was shown when he rubbished the Government's attempts to get objective 1 status for Wales. He said that a Labour Government would not succeed in obtaining objective 1 status, but we did succeed. The right hon. Gentleman has not yet apologised for his misrepresentation but, in the fullness of time, he will have to do so.

rose—

Does the right hon. Gentleman want me to give way again?

Yes, I do want the Secretary of State to give way. Does he accept that, months after Cornwall had made its application for NUTS 2 area designation and after the application was in from South Yorkshire, the Welsh Office were miles behind and nearly missed the boat? Had it not been that in March last year, at the last minute, the Welsh Office woke up to that fact, Wales would have totally missed objective 1 status. The danger now is that we shall miss the ability to make use of that status unless the Secretary of State wakes up and gets the Treasury on side. We in Wales are looking for an absolute commitment, not "ifs" and "buts" or "we shall see in two months time when the election is over". We want a categoric assurance and we want it now.

Listening to that artificial rant, I thought that Rod Richards had rejoined the House of Commons, for the right hon. Gentleman is singing a Tory tune. He knows that the content of his remarks is as artificial as the tone in which he made them.

rose—

The right hon. Gentleman should listen for a moment. He knows that questions about how the money will be delivered and how the UK Government will deliver on their responsibilities cannot be asked until the details have been received from Brussels.

Of course they can.

Perhaps the right hon. Gentleman should read the comments of Professor Kevin Morgan. In contradiction of the press release that was wandering around yesterday suggesting that there was a problem—no doubt it was inspired by someone close to the right hon. Gentleman—Professor Morgan confirms that the Welsh Office is playing the process absolutely right. The Welsh Office played the provision of evidence for objective 1 status absolutely right, which is why we are on the verge of winning it. While we are on the subject, what happened to the case of champagne that the right hon. Gentleman promised Welsh Office Ministers? It does not appear to have arrived yet—although, in the interests of objectivity, perhaps it should be delivered to you, Madam Speaker, rather than to Welsh Office Ministers.

I say in all seriousness to the right hon. Gentleman that he must not talk Wales down or try to undermine the position of the Welsh Office in negotiations with Ministers in other Departments and with Europe. We shall do the job for Wales, I promise, and no rant of his will improve our position. I ask him to think seriously about the comments he makes and to contribute to debates a little more responsibly than he contributed to this morning's Western Mail.

Will the right hon. Gentleman give way?

Of course I will give way.

I am grateful. Of course, I keep my promises—and I will provide a crate of champagne that the right hon. Gentleman and his predecessor can share when Wales gets objective 1 money. I ask only for an equal promise and commitment that the Treasury will provide matching funds.

As I said at the outset, I recognise the right hon. Gentleman's election ploy of asking a question that he knows will be answered in the fullness of time as a result of the discussions that we will have with our colleagues in Government. I promise the right hon. Gentleman that we will fight Wales's corner as strongly within the United Kingdom Government as we will fight it in Europe. I give that pledge to the right hon. Gentleman and the House in all seriousness. I accepted this job and chose to stand for the position of First Secretary to the Assembly in order to fight Wales's corner, and I promise the right hon. Gentleman that I will deliver.

I congratulate my right hon. Friend and his predecessor on winning objective 1 status for Wales. He has presented a patient, long-term argument, and I admire my right hon. Friend for now pressing for matching funds. Having listened to the ranting and raving of the right hon. Member for Caernarfon (Mr. Wigley), it comes as no surprise to learn that Caernarfon has the highest unemployment in Wales. That is what ranting and raving does: it destroys jobs. We want the quiet, tactful diplomacy and the hard work that my right hon. Friend will bring to his task.

I am grateful to my hon. Friend for his comments. I do not wish to get involved in a personal debate with the right hon. Member for Caernarfon (Mr. Wigley), but he is correct in saying that serious work must be done in Government. I pay tribute to my predecessor, my right hon. Friend the Member for Caerphilly (Mr. Davies), and to the junior Ministers, for playing their role in completing the day-to-day work so that we may now hope to receive objective 1 status shortly. We then face the serious task of transforming the Welsh economy. We have created a national strategy for Wales in which we are engaging every sector of the economy. That is a serious job, and I look to Opposition Members, as well as to my right hon. and hon. Friends, to show unity in fighting the cause for Wales rather than creating divisions within Wales.

We have heard some rather ranting rhetoric in the past 10 minutes. Does the Secretary of State agree that it is most important to work now on projects for objectives 1 and 2 status? Communities in Wales must work very hard to ensure that they attract objective 1 funding and so create more employment in Wales.

I agree with the hon. Member for Brecon and Radnorshire (Mr. Livsey), who makes a positive contribution to the discussion. Much work is being done at present to develop the strategy, which will be open for consultation as soon as it is completed. It has been an open and participative process. I agree entirely with the hon. Gentleman that organisations and bodies throughout Wales should consider submitting applications, not just for objective 1 status, but in all areas where we are offering support—whether it is sustainable development through the strand of funding that I launched when I visited the hon. Gentleman's constituency, or through the strand of social inclusion.

On that point, I refer the House to two themes that are drawn from all that I have put before it today: partnership and social inclusion. They underpin a great deal of what the Government are seeking to achieve in Wales. We are working in partnership with local government, the voluntary sector, business and trade unions. The Welsh Office is no longer a fortress ruled by an out-of-touch and alien Tory high command, but a team that looks outward for inspiration, ideas and assistance in creating a new and more prosperous Wales. The National Assembly will be in a strong position to build on those achievements.

Promoting social inclusion is at the heart of my policies for Wales and informs all of the specific strategies that we have developed for Wales. Our economic strategy, "Pathway to Prosperity", is about tackling low incomes and spreading prosperity to the valleys and west Wales. The "Building Excellent Schools Together" and the "Learning is for Everyone" strategies for education are about tackling the skills and qualifications deficits that keep people out of mainstream opportunities. The "Better Health, Better Wales" strategy is about finding radical new ways of tackling the appalling health problems that afflict those who live in our poorest communities.

As well as that crucial mainstream work, we are investing in targeted strategies for the most vulnerable groups and the most excluded communities. I particularly want to highlight the social inclusion fund to which I have allocated £48 million over the next three years. We shall use that money to stimulate new approaches to fill gaps in service provision and make more effective use of mainstream resources to push forward our onslaught on social exclusion.

Soon, I shall consult the Welsh Local Government Association about how best to use those resources to tackle the most pressing issues, with a specific commitment and priority to reduce the risks of social exclusion among young people in Wales.

Our aim is to make a difference to the prospects of everyone in Wales, including those at the bottom of the heap, and I have absolutely no doubt that it will be at the top of the Assembly's agenda. Success means finding new approaches and doing what we are doing, but in better and smarter ways, so that we can invest in what works, in partnership with agencies. That will be central to the work of all public agencies in Wales.

I am grateful for this opportunity to report on some of the Government's major achievements in Wales and the work ahead. There have been achievements and progress on many fronts. In future, we must build on the work towards winning European Union objective 1 funding for a major part of Wales. Our policies also include support for enterprise and small businesses; assistance to farmers at a time of crisis and efforts to add value to our agriculture; and measures for the environment, sustainable development and equal opportunities.

There is also a range of wider issues on which we are delivering more than we ever dared hope, such as incorporation of the European convention on human rights into UK law, the minimum wage, reform of the House of Lords and much more. Such matters affect the quality of life and future hope for people in Wales.

I should also mention transport, which we debated at length in the Welsh Grand Committee at Aberaeron this week. Returning from that meeting, I had to stand on a Sprinter train for the 50 miles between Neath and Newport because of the cancellation of the InterCity service. I suspect that if that had occurred before the debate, the points made by hon. Members of all parties about rail services would have been a great deal stronger and more heated. That was a salutary reminder of how much work is still needed to make good the damage done to our transport system by 18 years of Tory Government.

At least I was in good company with the Under-Secretary of State, my hon. Friend the Member for Neath and officials as well as members of the public, who made it clear that their patience and good humour should not be taken for granted—they want the problems sorted out. That is why I am delighted that the Deputy Prime Minister, backed by the Prime Minister, is leading the transport summit, to demonstrate how important it is to drive forward change and improve transport services.

We have made great progress but we have much to do. I am pleased to say that the National Assembly for Wales will inherit a live and active agenda with many challenges, but also with the foundations, the flexibility and great opportunities to deal with the issues of greatest concern to the people of Wales.

Any hon. Members who had entered the Chamber halfway through the Secretary of State's speech might have thought that they were entering a domestic dispute, given the language used by the right hon. Gentleman and the right hon. Member for Caernarfon (Mr. Wigley). However, I have some sympathy with the Secretary of State when he is accused of being almost late in making an application. In English, we have a phrase for "almost late"—it is "on time". Some parties with no experience of government would do well to take on board the fact that Ministers tend to work closely to set timetables.

I congratulate the Secretary of State on his spectacular and commanding win at the weekend, which I am sure will boost his authority in his own party no end. Interestingly, he began by saying that he hoped that the new, all-inclusive, cuddly and winceyette politics of devolved government in Wales would not mimic the traditions of Westminster. He is, of course, in a unique position: I doubt whether other Members could appear on television saying that they believed that they had less support than their opponent in an election but that none the less they would win, and subsequently be proved right. That is certainly a departure from the democratic traditions of this place.

I hope that the Secretary of State will depart from tradition and give some straight answers. I was disappointed that when he was asked a perfectly straightforward question by my hon. Friend the Member for Ribble Valley (Mr. Evans), he chose to concentrate on a grammatical point rather than answering. However, I am not sure whether "fewer" was his answer or his correction, since he would have been correct in either case. Perhaps he would clarify that later.

I hope that this will not be the last debate of its kind in the House, and that, as we move towards the establishment of the Welsh Assembly, we will remember in this place that our responsibilities extend well beyond the borders of England, to the whole of the United Kingdom. All hon. Members will continue to take an active interest in issues in Scotland and in Wales, even in issues that relate to devolved powers, because as a Union Parliament we have a duty and a responsibility to all our countrymen, irrespective of where they live and under what form of government.

We have a second duty, which is to Parliament. All of us in the House will be asked to raise the taxes that will be spent through the Welsh Assembly and the Scottish Parliament. Surely we have a right to scrutinise how that money is spent. In debates such as this in future, as those who are responsible for raising revenue, it will be our duty to ask the questions that should be asked about how that revenue is spent. We must remember that that is an absolute democratic principle.

The Secretary of State made great play of the economy and the wonderful transformation brought about not only in Wales, but in the rest of the United Kingdom by the Labour Government. He seems to have a rather short memory. Only a week ago, the Governor of the Bank of England predicted that growth would be downgraded yet again to between 0 and 0.5 per cent. in the next quarter. That has serious implications for the future of prosperity and jobs, especially in Wales.

The latest CBI survey confirmed that Wales had been hurt more than other parts of the UK in recent times. It stated:

"General business optimism has declined more rapidly in Wales than anywhere else in the UK, although export optimism has fallen much less sharply. Output has fallen markedly, with similar falls expected in the next four months, in addition to 1,000 further job cuts forecast between the final quarter of last year and the first quarter of 1999."

Do not talk us down.

We must consider what is actually happening in the economy, not fantasy economics or how we wish the economy was functioning.

As the survey by British Chambers of Commerce reported:

"Welsh manufacturers have suffered their worse declines in sales and orders compared to all other regions. Service sector firms are not that far behind their manufacturing counterparts, particularly in export market sales. Confidence in the manufacturing sector is, not surprisingly, lower than elsewhere."

Why should that be? Why should confidence be falling more quickly in Wales than elsewhere? Those are questions that Ministers should tackle seriously. Cheap sedentary interventions such as that from the hon. Member for Vale of Glamorgan (Mr. Smith) will not help to provide jobs and prosperity.

Does the hon. Gentleman consider it appropriate for a non-Welsh Member of Parliament to open for the Opposition in the debate by talking our country down? I ask him to think carefully about what he is doing, before he does any more damage.

I come to the House as a Member of a Union Parliament and as a spokesman for the official Opposition in a constitutional arrangement that is accepted by both sides of the House. I will not be lectured by a Government Back Bencher about my right to speak on any issue affecting any part of the United Kingdom. That is the constitutional settlement that we have. If the hon. Gentleman does not believe in it, he should go and sit beside the nationalists, because that is their view, not the view of his own party.

The figures for Welsh manufacturers in the last part of 1998 were the lowest in the UK. One third of firms said that UK sales were down; two thirds of firms said that UK orders were down; one half of firms said that exports were down; and two thirds of firms said that export orders were down.

We cannot deal with problems unless we accept that they exist. Again I ask why Wales should be in that position, compared with other parts of the UK. The problems in Wales also exist in other parts of the country, but they seem to be exacerbated in Wales for some reason about which Ministers do not yet seem clear.

Does my hon. Friend agree that Wales is particularly susceptible to problems with exports to Europe because last year the Government had interest rates too high, which made Welsh exports uncompetitive? Now, the Government seem content that the euro has been undergoing a competitive devaluation, with interest rates foolishly kept too low—we are talking about 1 per cent. a week since the euro was introduced. Surely the Secretary of State should be making vigorous representations to his colleagues in the rest of Europe to ensure that they do not devalue the euro and stop Welsh exports from going into their markets.

I do not think that any political party in the House would be particularly well served if we involved ourselves in a debate about the worth or otherwise of competitive devaluations of currencies. Let me, however, make the point that I do not intend to be competitive in comparing one part of the United Kingdom with another, or one specific region with another. If things are worse in Wales than elsewhere, perhaps we should ask why that is. Is it—this is a genuine question—because the Welsh economy depends more on the manufacturing sector than on the service sector, and, if so, what measures can be taken to alleviate the burden? A declining economy in any part of the United Kingdom is bad for the United Kingdom as a whole; and, if a sector is performing badly in one part of the UK, sooner or later that sector will be affected in another part of the UK.

Prosperity and long-term jobs can be created only if a country's share of world trade—gross domestic product—is increasing; and that can happen if products are of desirable quality, and are sold at a price that people are willing to pay. That means that we must not involve ourselves in excessive regulation. Part of the problem that is affecting manufacturing industry in this country is caused by excessive regulation—the red tape and restriction that are being created partly by the Government's agenda, and partly by European initiatives.

In signing up to the social chapter, the Government are importing back-door European interventionism. They have made major supply-side reforms, and I welcome their conversion to that idea, because their action has made our economy far more competitive. Britain has increased its share of world GDP since 1990, and is one of only two European countries to have done so. We must not throw those reforms out of the window.

We are all trying to cope with the hon. Gentleman's dazzlingly original ideas. He says that he wants fewer regulations. After the Tory pension mis-selling scandal, which resulted from a relaxation of regulations, how will he cope with the new style of mortgage mis-selling by a new breed of mortgage brokers and other operators who have created serious problems, and will create more serious problems in the future, by introducing disreputable ways of selling, in particular, personal equity plan mortgages and mortgages based on investment trusts and endowments?

A discussion of that issue seems about as attractive as a debate on the competitive devaluation of currencies, and it would take us some distance away from the issues that we are debating. The hon. Gentleman has, however, made the general point that all regulation is bad and total deregulation is good. Some regulations are worth while and sensible; what is bad is over-regulation and restriction, and that is what we want to avoid in the economy.

The Secretary of State was careful to mention only income tax, but increasing the tax burden on individuals reduces demand, and increasing the tax burden on businesses is a disincentive to investment. In the long term, such action will reduce the economic prospects of Wales. Wales has already experienced a number of tax increases since the Government came to office. One example, which those in many parts of Wales will appreciate, is the introduction of the £90 tax on corner shops to pay for the new Food Standards Agency. Dangerously, a wide range of taxes are now reducing output. Manufacturing is flat in some sectors, and agriculture is in recession. The Government do not seem to want to accept the reality of what they have done.

I would welcome further clarification of the points that the Secretary of State made in response to the right hon. Member for Caernarfon (Mr. Wigley) on objective 1 status. The letter from the Economic Secretary to the Treasury, which has been quoted this week, states:

"For Scotland, Wales and Northern Ireland, cover from Structural Fund spending must be found within the respective blocks, determined on the basis of the Barnett formula."

I accept that that position has long been accepted by both main parties, but it would be helpful if the Secretary of State—rather than maintaining an entirely neutral position, which he seemed to do in his speech—said that the Government would look favourably on such extra spending.

I am happy to comment on that letter, which was written some considerable time ago and describes the situation as it exists. The situation has never arisen where a proportion of a unit—in this case, of Wales—has received objective 1 status. For example, the highlands and islands form a minuscule part of the overall population, GDP and income covered by the Scottish Office. Therefore the issues that we have to discuss have never arisen before. That is all that the letter said. Indeed, I was able to confirm that point with my hon. Friend the Economic Secretary, who is the author of the letter. She entirely agrees with me that it has been quoted out of context, unhelpfully and, incidentally, without checking its relevance to today's discussions.

I am grateful for the Secretary of State's intervention on that point. To paraphrase him, the letter merely restates the position that has existed for some time, and in no way suggests that the Government would not look favourably, at a suitable point, on matching funding. I hope that that is a reasonable interpretation. Under the Conservative Government, that was always the position of the Treasury in relation to Welsh spending, and I am grateful to the right hon. Gentleman for clarifying that. It is extremely useful in dismissing the fear and smear tactics from nationalists, who are trying to drive a wedge between the Welsh Assembly and the Treasury at Westminster.

I note with considerable interest the closeness of the two Front Benchers on that issue, and no doubt the people of Wales will note it as well. Will the hon. Gentleman therefore give a categoric assurance that his party's policy is that—if Wales gets objective 1 status, as we all hope, following the announcement that is expected shortly—the money coming to Wales should include an element over and above what is generated by the Barnett formula? The proportion of the population in Wales that would receive the increase for the United Kingdom through objective 1 funds would be greater than the one seventeenth used in the Barnett formula. Indeed, the Barnett formula is irrelevant to this matter, because additionality has to be shown in respect of these projects.

The right hon. Gentleman will not be surprised that, at this point in the Parliament, I am not willing to commit my party to detailed spending plans, but I will say that we stand on our record and we were willing to match funding. It is unhelpful for businesses and for individuals planning economic activity in Wales if scare stories are begun for party political reasons, which may increase economic instability. It is not in anyone's interests to get a few extra votes at the price of reducing prosperity or increasing unemployment in any part of the United Kingdom. I am on record as saying how much I dislike the tactics of nationalists, in Scotland and in Wales. At least I am never disappointed at their consistency.

The Secretary of State spent some time talking about the Government's plans for health. He was extremely clever and selective with the figures that he chose and started with the end of 1998 rather than May 1997, when the Government came to office. Since the election, another 5,000 people have been added to waiting lists in Wales—an increase from about 68,000 to more than 73,000. Furthermore, the Government themselves have admitted that the number of people waiting to get on the waiting list has risen even more quickly.

Instead of tackling the real issues, the Government have fiddled the figures. Patients are being transferred from the main waiting list to subsidiary waiting lists, which do not appear on official returns to the Welsh Office and are therefore missed off the waiting list statistics. Patients are now made to wait longer before they get on the waiting list, thereby cutting the figures, but not cutting the problem. It makes life easier for the bureaucrats, but no less difficult for the patients. That is where the real debate lies.

Some hospitals have even been forced to introduce waiting lists for the waiting lists, which is nonsense. We cannot deal with the problem unless we are willing to admit that the problem exists. Changing the basis on which the figures are calculated does not help those who are waiting for treatment in our hospitals. It is a dishonest way of doing business, and we should put an end to it.

The Government talked about changing the culture in the NHS. My working life as a general practitioner was spent in the national health service. There has long been a need for a change in culture in the NHS across the whole of the United Kingdom. The present culture is biased too heavily towards hospital consultants and not enough towards primary care.

Our ability to fund increases in health provision is linear at whatever gradient we can manage, whereas medical science's ability to provide treatments increases exponentially, so the gap between the two will increase. We must deal with that problem honestly, and the best way to do that is to ensure that resources are directed at the closest level to general practitioners. As we change the health culture back from fundholding to a new model, we will move towards a culture in which power will be exercised by hospital consultants and decisions will be taken away from GPs, who are closer to the patient.

I have listened carefully to the hon. Gentleman—or is he right honourable? [HON. MEMBERS: "Right honourable."] He is just an hon. Gentleman at the moment, but he is no doubt looking forward to advancement. What he said is completely untrue. Purchasing in Wales will be done by local health groups, which will be made up of GPs, local authority social services, voluntary groups and other medical practitioners. The hospital trusts will be the servants of the local health groups. That is the model for the future.

I am perfectly aware of the collective model that is being established, but it none the less moves influence away from individual general practitioners. The hon. Gentleman put the issue in a wider context. It moves power from GPs, and therefore from the patients. We shall see over time how well the model works, but I fear that the culture being established will not allow us to use any finance available in the health service to best advantage.

This will be the last debate on Welsh affairs before devolution. It is useful to work out where we are in that process. We must consider the position of concordats, the structure of government to be established and the political culture in which it is developing.

Concordats raise important questions. Throughout the devolutionary process we were told about dispute resolution mechanisms. We were told that concordats will be the way in which we do business and that it will be a new, inclusive way of going about the process of government. I should like to ask the Secretary of State a hypothetical but extremely important question. If a Minister establishes a concordat, would it be legally possible on the ground of reasonableness for someone to seek a judicial review of that concordat?

That issue was discussed yesterday in the Standing Committee considering the transfer of powers. The problem is whether we deal with matters as possibilities or as likelihoods and realities. The nature of concordats is such that neither we, the Scottish Office nor others in government believe that they would be open to judicial review. It is possible that something outrageous could admit the possibility of judicial review, but I mean that only in the sense that one cannot rule anything out totally. This is not a fruitful avenue for the hon. Gentleman to pursue, as it is not a real likelihood or option.

I was not asking the Secretary of State whether he thought that there could be a successful judicial review of any concordat—I was asking if it was possible to seek judicial review of a concordat. I take what the Secretary of State has said to mean that that is possible, so we may see constitutional positions adopted not by this House, but by judge-made law. It is important to take that into account in terms of devolution.

The Secretary of State for Scotland has said that he does not think that judicial review is legally possible, but we have long maintained that it is. Were we to have nationalists who wanted to seek division, it would be entirely possible for them to try to get a judicial review of concordats, and to try to get judge-made positions that they could not get through a democratically elected House in Westminster.

The hon. Gentleman must accept that this is an academic point, in the worst sense of the word. It would be difficult to rule anything out in terms of seeking judicial review; one can seek judicial review of almost anything. The issue, surely, is succeeding in obtaining judicial review. If the likelihood was that judicial review would be sought successfully, that would be a significant point in debate. However, if the likelihood is so remote that it is merely an academic possibility, the matter should not take up too much of our time. It is in that sense that I have answered the question. In practice, the matter is not open to judicial review—although it is a theoretical possibility. However, it is not one on which it is worth spending much time.

As part of our constitutional debate, we have uncovered the fact that we are not sure how a new instrument will operate, and what checks it will be subject to. We will find out in due course. The Secretary of State is basing his grounds for reasonableness on the fact that he believes that the Welsh Assembly and the Government in Westminster will be of the same political colour. That may not always be the case, in which case the concordat would become an entirely different instrument. A question mark has been put down about the operation of this new part of our constitutional architecture. We will see whether it proves to be a benefit or a hazard to constitutional stability.

We must consider also whether the structure of devolution will always guarantee a properly devolved system. The relationship between any devolved body and local government—and how we ring-fence the powers of local government to make sure that those powers are not taken upwards from local government to the Assembly—has been mentioned. The proposal that the Assembly should take control of sixth-form education suggests that there is every possibility of the Assembly seeking to increase its role at the expense of local government—an anti-devolutionary mechanism. That seems to be entirely the opposite of what the Government have said, and it is entirely the opposite of what I would like. The Secretary of State must consider the matter in terms of his order-making powers. We must consider how we protect the power of local government and ensure that these are not taken upwards to the Assembly, thereby moving local government further away from the people.

The Secretary of State omitted to mention a vital part of the debate to which we hope the Minister will refer when he winds up. How do the Government see the role of the Secretary of State for Wales? How do they see the job being delineated in future? How do they see the relationship between the Assembly or the First Secretary and the Secretary of State for Wales? What do they believe the relative balance of powers should be?

Those are important issues for the Union Parliament to discuss. As the Government of Wales Bill has been passed, it would be interesting to know what the Government's wider thinking is on those issues. We need to look at the political culture within which devolution is developing. That was best illustrated by the Secretary of State's election last week. Having told us that we have to have a new inclusive, non-Westminster, more democratic culture, the Labour party opted for an electoral college with union block votes—unions that were not obliged to consult their members. That was in sharp distinction to the Prime Minister's election to the leadership of his party.

The Transport and General Workers Union and the Amalgamated Engineering and Electrical Union backed the Secretary of State without a ballot, and Unison, using one member, one vote, backed his opponent. It is legitimate to ask why one member, one vote was not used. Although that is an internal matter for the Labour party, it is interesting for what it tells us about the political culture of the new Labour Government. The answer is rather simple: the Prime Minister does not love the trade unions, but he would rather have them than trust his members to come up with the solution that he wants.

Lord Hattersley has said that Nicolae Ceauçescu did not live in vain because his legacy is being carried on by a Prime Minister who decides what he wants the outcome of an election to be, and then decides what the structure should be that can deliver him that result. That says much about the culture of new Labour.

Does not my hon. Friend find it ironic that a party that has claimed that it is in favour of proportional representation seems to believe in first past the post when it comes to the trade union block decision?

Nothing that the Labour party does would surprise me when it comes to rigging any form of electoral system. It seems that it has abandoned OMOV—one member, one vote—for OLOV: one leader, one veto. That seems to be the deciding system in the party.

That is a sad development because I am sure that many of the small proportion in Wales who voted for devolution believed that they would get a more democratic system and, as the Secretary of State said, a break from the old political taboos. The Labour party quickly returned to them when it thought that it was in its short-term interest to do so.

We leave the debate with a Secretary of State leading a party whose members did not want him. He leads his party into Welsh elections that his London headquarters are trying to manipulate. They are condescending, manipulative and cynical. They fail to understand the consequences of either their political or their constitutional actions. Economically, medically, educationally and in so many other ways, they have failed Wales.

I have to notify the House, in accordance with the Royal Assent Act 1967, that the Queen has signified her Royal Assent to the following Act:

Social Security Contributions (Transfer of Functions, etc.) Act 1999.

The hon. Member for Woodspring (Dr. Fox) began his speech by referring to the hope and aspiration that the Welsh day debate would continue. I also hope that that will happen. Let us briefly remember the origins of the Welsh day debate. It was a substitution for a Welsh Office and Secretary of State for Wales in the 1944 to 1948 period. It was offered as an alternative to the appointment of a Secretary of State and a Welsh Office.

If my memory serves me rightly, the first debate was replied to for the Government by the then President of the Board of Trade, Mr. Hugh Dalton. I was looking forward to the Secretary of State for Trade and Industry replying to the debate. I was particularly looking forward to the previous Secretary of State for Trade and Industry, my right hon. Friend the Member for Hartlepool (Mr. Mandelson), answering a Welsh day debate. Nevertheless, I hope that we will continue to have one. I hope that the business managers realise that it is wanted. It is only in the past 30-odd years that the Secretary of State for Wales has been present for such debates. Before that, they took place without one.

As we look forward to the future of the National Assembly and to a United Kingdom devolved, we should do so without carrying too many myths about the past, particularly the past performance of the British state. In many Welsh circles these days—not only in nationalist circles, but in wider ones—the British state is talked of pejoratively. I should like to make a case in defence of the British state's past performance, at various times, in serving the Welsh nation and the Welsh economy.

I am sorry that the hon. Member for Ceredigion (Mr. Dafis) is not in the Chamber. In the most recent Welsh local government finance debate, he made the case against the British state. He said that the parlous condition of the Welsh economy

"has something to do with the construction of the British state … The problem can be traced back to Wales's ridiculous over-dependence on heavy industry, the failure to introduce a more varied industrial base".

If it had not been for that ridiculous over-dependence on heavy industry, the communities whom I represent—and whom my predecessors for the past 100 years or so represented—would barely have existed. They certainly would not have been able to develop their rich character, or to make the rich contribution that they have made to the whole idea of a Welsh identity. More important, however, was the hon. Gentleman's reference to

"the failure to introduce a more varied industrial base".—[Official Report, 11 February 1999; Vol. 325, c. 502.]

As we embark on the new and exciting constitutional changes that the House has approved, let us remind ourselves that it was a British state and a British central Government who, in legislation from this place, created something that did not exist previously in Wales: a Welsh manufacturing and industrial society.

There was no Welsh manufacturing or Welsh industrial society until the late 1930s. Such a society barely existed until after the second world war. We were not a factory or manufacturing society. A complete absence of the skills necessary for that type of society was one of our major problems and one of the major causes of the depression and the problems of the inter-war years.

Welsh manufacturing society was initially created by a British state and a British Government, legislating from this place. Their redistribution of industry to Wales—not from other parts of the world, but from Birmingham, Coventry, Oxford and the Greater London area—created the Welsh manufacturing base. If nothing else, let us dispel some of the silly myths about the failure of the British state.

Of course, at various moments in history individual Governments have failed Wales. However, the British state created in Wales a fundamentally varied industrial base—as the hon. Member for Ceredigion used the term—that did not exist previously. Moreover, it achieved it by using the centralised powers of central Government, of the British state and of the House.

Surely the hon. Gentleman is being incredibly complacent in his attitude. As a result of the cumulative policy of successive Governments since the post-war period, Wales has the lowest income per head of any country or region in Britain. An immense amount needs to be done. Surely that is not something of which we can boast.

The right hon. Gentleman takes a selective view of Welsh history. He should recall the state of the Welsh economy after the collapse of our basic industries—coal and iron—in the 1920s and 1930s, and how the economy was reconstructed. I am saying only that the British state made a major contribution to that reconstruction.

I accept that at various times the British state has not been able to match that achievement, and I shall deal with the current situation later in my speech. At times, Governments have of course failed us and failed Wales. However, if the right hon. Gentleman asks where Welsh manufacturing industrial society began, the answer is that it began in a deliberate policy established by British Governments and passed in legislation by the House.

There would not have been a Welsh manufacturing base were it not for central Government exercising power in redistributing industry and in using the other redistributive instrument available to them—public expenditure. Those two elements have played an important role. They were the core of the practical, centralised socialism that was an example of the joined-up government that it is now popular to talk about. As a signed-up member of the process for the past 40 years, I am not prepared to hear it rubbished, as it now is, from a variety of quarters.

Does the hon. Gentleman also think it worth pointing out to those who seek to break up the United Kingdom that it is because that Welsh heavy industrial base was allied to other manufacturing and defence capabilities in the United Kingdom, not least an allied defence force, that all parts of the United Kingdom are free today?

We have made a fantastic contribution to rearmament programmes at various times through the steel and iron industry. I hope that the hon. Gentleman will read my book when it comes out. He will find, however, that Whitehall had an enormously bilious view of the capacity of Wales to assist in the wartime effort. War, not the Government of the day, revalued our greatest resource—our people and their skills.

I have common ground with the right hon. Member for Caernarfon (Mr. Wigley) in that considerable damage has been done to the rebuilt Welsh economy in the past 20 years by deindustrialisation and the erosion and collapse not of our coal and steel industries—although that happened as well—but of the manufacturing base that had been created by post-war Governments. The charge against the Conservative party relates to the decade or more when the number of people in employment fell in Wales while it was growing elsewhere. That led to the serious problems that we now face, with the remorseless increase in the number of workless households and the serious social consequences that have flowed from that. Those consequences are reflected in the recent survey that revealed the deprivation in communities.

My worry and horror is that deindustrialisation is not yet complete and we may be in for another bout of it. The Minister, my hon. Friend the Member for Neath (Mr. Hain), has a particular concern about Ystradgynlais. Anyone who represents communities such as mine will be desperately worried about the impact of the closures that such places are facing. Anyone who knows about the problems of the European or global steel industry will be deeply concerned about the potential impact on our society.

Many interesting things are going on in our economy. In the past two years we have created more than 15,400 new manufacturing jobs, but we have lost about 17,600. The number of people in employment has stalled. That is a challenge to current policies and it will certainly be a challenge to our new National Assembly and economic powerhouse.

The challenge to our existing policies comes because we depend so heavily on the new supply side of the economy that we have devised—training and education. My hon. Friend the Minister knows how much I support our efforts, locally and beyond, on the new deal, training and education to create a better educated, more talented and more highly skilled society, because we believe that that will make people more employable. If we depend heavily on that, we must get our policies right. I am worried that we are likely to produce a large number of educated but unemployable people. I hope that my hon. Friend will take another hard look at the education and training advisory group report, which got the priorities and the balance of the training and education programme wrong. We must ensure that our training and education programmes meet the needs and demands of the Welsh economy in the near future.

My second point relates to the broader macro-economic scene. Historically, the communities that I represent have been far less worried about inflation than about deflation. Deflation has been their curse as it creates unemployment. Banks and bankers have been major contributors to deflationary policy. That is why during the past 18 months to two years I have not shared the Government's enthusiasm for creating an independent Bank of England. I was even less enthusiastic about the creation of an independent European bank that might hold our destiny in its hands.

Welsh economic history shows that Wales is not saved from our British bank, nor does its salvation—despite the usefulness and importance of objective 1 status—rest in Europe. Wales requires a macro-economic policy based on growth and expansion. Jobs and employment need to be at the centre, not at the periphery of economic policy. That is one of the lessons of Welsh history.

At present, the great danger and threat to our economy and to jobs in Wales is not inflation or price stability. Price stability means that small manufacturers and enterprises in my community are not making surplus profits and capital to refinance and invest. We already have price stability and so has Japan, but it has been demonstrated that price stability does not create growth or jobs. The last thing that we need is deflation or deflationary policies of any kind or character. That is the bitter understanding and memory of the communities that we represent.

We welcome the new National Assembly and its economic powerhouse. We have had the slogan "education, education, education". I offer the new Assembly the slogan, "jobs, jobs, jobs".

This is the closest date to St. David's day—the last St. David's day this century is on Monday. It is a time to reflect and to look forward. In the words of an old song: "What a difference a day makes". In this context, what a difference a century makes.

Our predecessors in the House of Commons would be astonished that it has taken so long to achieve their cherished dream of a measure of home rule for Wales. The 20th century has not been dominated by radical politics in the United Kingdom, and to testify that, it has taken the entire 20th century for Wales to achieve a measure of devolution. Even now we are only just putting our toes in the water. What Gladstone, Lloyd George, Tom Ellis, Keir Hardie, Mabon and many others would have made of such slow progress I shudder to think, but a Welsh Assembly—not a parliament—is at least in sight.

As the hon. Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) said, the milestones of the century in Wales have contributed to the delay. They include the emigration of our young people around the world and the loss of tens of thousands in the first world war, among them the flower of our youth—on the fields of Flanders and northern France they fell. That was followed by the 1926 general strike and unemployment; lock-outs and poverty; the second world war; the hopes born in 1906 and 1945; the creation of a more comprehensive Welsh Office and, in the 1960s, a Secretary of State for Wales; the fiasco of the 1979 referendum and the dark years of the 1980s and 1990s when for 18 years a Welsh Assembly seemed all but impossible; the triumph of the 1997 referendum and the yes vote; a Wales Bill on the statute book; and next May, our very own Welsh Assembly. All that has occurred in the space of 100 St. David's days.

The hon. Gentleman said that Wales was putting its toe in the waters of devolution. Is it still his party's policy to give the Assembly tax-raising powers, and would he like that to happen without a fresh mandate from the Welsh people via a referendum?

I know that the hon. Gentleman will not like the word, but we are federalists and believe in tax-varying powers for the regions and countries of the United Kingdom, as well as primary legislative powers. That applies to Wales as much as anywhere else. That has been our policy for a long time.

What about a referendum?

In what sense?

Would it be Liberal Democrat policy to seek tax-raising powers for the Welsh Assembly without consulting the Welsh people via a separate referendum?

We will put these matters in our manifesto, and if we are elected to power they will be part of our reform programme for the Welsh Assembly. It is up to the electorate of Wales to decide whether they approve.

Those catastrophes and lost hopes of the past 100 years are still, in a sense, there. Sadly, Lucas-SEI decided only last month to close its manufacturing operation in Ystradgynlais in my constituency, which will cause 750 employees to be laid off. They received only four hours' notice, which is really more like something from the first quarter of the 20th century than the verge of the 21st. The work is being transferred to Poland, and the work force in Ystradgynlais trained the Polish workers. That is more or less the equivalent of digging one's own grave and falling backwards into it.

The takeover by TRW of the Lucas Varity corporation, of which the managing director, Victor Rice, will get a cool £17 million—a sum, incidentally, that could keep the Ystradgynlais plant running for another two years—is a disgrace and a scandal. I hope that the Minister will ask the Secretary of State if he will take the opportunity, when he visits the United States soon, to go to the TRW headquarters in Cleveland and ask whether some work can be transferred to Ystradgynlais.

The task force, in which Ministers, local councillors and I have been involved, is there to produce a solution to this terrible problem. Every avenue must be explored.

I was in touch with TRW in America yesterday, to discuss the future of the Ystradgynlais site. I pay tribute to the work that the hon. Gentleman has done on behalf of the work force there, and look forward to working in partnership with him to solve the problems that have been created.

I thank the Minister very much indeed for those remarks. I am sure that the people of Ystradgynlais will also be grateful. We are all working extremely hard to ensure that the problem is solved. The plea by the hon. Member for Merthyr Tydfil and Rhymney for jobs, jobs and more jobs is absolutely correct. We can train as many people as we like, but if the right kind of employment is not there, we will not produce jobs for people in our communities. Whole families have been sadly affected by the proposed closure and we need to find solutions that involve real employment.

There is a huge slump in farming in Wales. The farm management survey shows that the net income of the disadvantaged area farms in 1998–99 is forecast to be a mere £48 for the whole year. In the severely disadvantaged areas and the lowland beef and sheep areas, farmers are at present earning the equivalent of £2.20 an hour. That looks pretty stupid in comparison with the proposals for the national minimum wage, which I support. Those figures are calculated on the basis of a 40-hour week. That problem has to be solved, and quickly.

Our family farms are in terminal decline and unless much more attention is paid to that, I am afraid that there will be an exodus from the land. Help could be given immediately by ensuring that payments such as hill livestock compensatory allowances are made immediately. That would assist the cashflow of farmers in a desperate situation. The Office of Fair Trading report, which will be published shortly, about the pricing policies of supermarkets is important, but there is no accountant on the body considering the issue and it appears to concentrate on groceries rather than the problems in the meat chain that directly affect the farming community.

We also face the problems of Agenda 2000 and CAP reform. Changes are now being made to the original proposals for Agenda 2000. The national envelope and co-financing are problems that I am sure that the Under-Secretary, the hon. Member for Cardiff, Central (Mr. Jones), has been studying in the past week in the Council of Ministers meeting in Brussels on CAP reform. I am alarmed to note from yesterday's Western Mail suggestions of changes to the original Agenda 2000 proposals from a maximum of direct support to farms of £70,000 to a maximum of £3,700. If that goes through, it spells disaster. What impact would it have on the Welsh Office's agriculture department budget, which has reached £300 million of support for farming in Wales? I have noted references in Welsh Office documents to sums of more than £200 million. That could mean a substantial reduction in support for the farming industry from the Welsh Office, much of it European money.

We have discussed the objective 1 situation and the question of matched funding at length, and I shall not go back over that ground, except to remind the Secretary of State that the Lucas factory is only 200 yards from an objective 1 area. That is a problem in its own right, because the people of Ystradgynlais cannot benefit directly from objective 1 money. I know that the Minister is trying to do something about that and I am sure that he will work hard to obtain additional funding for the upper Swansea valley.

Powys and parts of east Wales are in dire need of objective 2 funding and I have been promised before that those areas will get it. However, the question of matched funding arises again. I was in Brussels last week and I discussed the issue of European structural funds with some of the Eurocrats. It was stressed to me that grass roots projects were an important method of obtaining objective 1 and 2 funding. It is not top-down action that is required, but local communities coming forward with proposals. That is an important way to tackle the problem.

How will Wales look on St. David's day in 2000? St. David's day is a special day in the calendar, when the daffodils emerge from the bud on every hillside and in every garden, and in every lapel. However, St. David's day is also a genuine sign of the gathering spring. It is a time of hope, singing and poetry, as every schoolchild in Wales knows. One has only to visit a primary school in Wales on that day to be greeted by the spirit of St. David.

By this time next year, Wales will have had its National Assembly for almost a whole year, including the first elections, a new First Minister, the first ever Cabinet for Wales and a Committee structure that I hope will be founded on true democratic principles, perhaps including one member, one vote.

I do not believe that the Government of Wales model will be as radical as some people think. There will be welcome change, but not a revolution. Will it be the personalities or the parties that will reign supreme? There is no lack of characters in Wales and I am certain that many will emerge in the new Assembly. Many are likely to be women, and that will be a change for the better. In fact, the personalities are likely to prove more influential than the political parties.

Time will put the Members of the Assembly on a steep learning curve. It will not be long before they come to realise what they cannot do, as much as what they can do. Let us hope that in a year's time they will not be too frustrated. Secondary legislative powers may sound superficially attractive, but in 12 months' time they may be seen as no big deal! Balancing the books will also be a frustrating experience and priorities will demand hard choices. I can envisage cries next March for primary legislative powers and tax-varying powers, just like Scotland.

Building up new traditions in our Assembly will be a challenge. I make a firm prediction that the deep sense of fairness in Welsh society will mean that the twin values of liberty and social conscience will be much to the fore. I hope that tolerance and inclusiveness will underwrite those values. That does not mean that the traditional fiery Welsh radicalism will not have its place, but it will be fashioned into a more egalitarian democracy suited to the 21st century.

The proportional system of top-up seats should give us political representation that is a truer reflection of people's views in Wales. Wales is nothing if not a community of communities, so the proportional system of top-up seats should therefore be welcomed. Let us hope that we see the end of machine politics. There is a danger that if the power of the Executive is misused, people will feel excluded from the Assembly process. The Assembly's Committees, both subject and regional, will be vital. I am hopeful that with an enlightened leadership the disparate views that characterise Wales will begin to be welded into a more cohesive force for good. Wales is too small a country for us to fall out among ourselves.

In particular, we desperately need vision and leadership. Every Committee in the Assembly must have its strategies worked out in 12 months' time. The Education Committee must have set its targets and the Health Committee's recipe for tackling the many problems in Wales must be in place. The Economic Development Committee must have developed its strategies for better job opportunities and wealth creation. The Rural Affairs and Agriculture Committee must have its plan to revitalise our family farms and the rural economy. We may even be considering an integrated transport policy that may provide a solution to join up north and south Wales.

We should know by next year where we want to go as a nation and how we are going to get there. The next years will be spent in engaging the participation of the people of Wales to build a new Wales, with a more caring and entrepreneurial society in which young people can gain skill and jobs in a quality environment, the old know that they will be cared for properly, and where music, sport, the arts and all kinds of recreation are an everyday experience. We will not reach that state in one year, but by next March the signposts will be there to a Wales where it is not always necessary to leave to gain recognition, because it can be achieved at home in our own country. Is that idealism? Yes. Is it possible? Yes. On St. David's day 2000, there will be new stars on the horizon and more than a few poets celebrating the rebirth of our nation.

I first spoke in this Chamber in the annual St. David's day debate on 2 March four years ago, and I speak now in the final such debate before the historic Welsh Assembly elections. However, I hope that there will be many more St. David's day debates in the years to come because, as we move forward to a historic change in the way in which our country is governed, we must not lose sight of the fact that, in Britain and Northern Ireland, there are four nations but one country. The Parliament of all the nations of Britain and Northern Ireland is, by the consent and desire of the people, here in Westminster.

This Government have delivered on their pledges to the peoples of Wales, Scotland and Northern Ireland to bring about devolution. I welcome that. We have done it in the face of stiff resistance from the Tory Opposition, but we recognise that, if we are to release the potential of all our people and give them a new vision for a new century, we must put in place a modern system of Government to demonstrate a renewed confidence in being Welsh, and in being British.

In my darkest moments, I sometimes think that the one thing that unites all of us who are Welsh is a lack of self-confidence. We lack self-belief, and feel that we cannot achieve things. Some say that that is due to the melancholy in our natures, to the dark, brooding and often romanticised element of what it is to be Welsh. That element may make for wonderful poetry and help to define us, but we must not let it blind us to the future.

Wales is a small country on the edge of a great continent. We may be at the margins of Europe geographically, but there is no reason why we should not be at the heart of Europe economically, socially and culturally. Moreover, I believe that the Welsh people recognise that all our interests can be best served by truly being part of the larger political unit that is the United Kingdom. Not for us the narrow argument of the nationalists, who want a separate and isolated Wales. The people of Wales will not be looking to the nationalism of the 19th century to find the answers to the problems of the 21st century.

I support devolution, and am certain that the Assembly will provide the basis for greater accountability and transparency in decision making. Devolution gives us a chance to put an end to the quango culture, which allows decisions affecting the lives of people throughout Wales to be made by people meeting in secret behind closed doors, who spend millions of pounds of taxpayer's money and yet remain unaccountable for what they do.

Devolution is an opportunity to put a stop to the over-centralisation of decision making which was the hallmark of 18 Tory years. It will help breathe new life into local government, with the Assembly forging a new partnership with councils and with Parliament in Westminster. Many of my councillor friends who were sceptical about devolution are now excited and enthusiastic about the prospect. As the main service providers, they can see many potential benefits of an effective partnership between local authorities, the Assembly and the Government in London.

Partnership right across Britain is one reason why the creation of the Assembly does not mean the break-up of the Union. The purpose of devolution is to create a better system of government for the Welsh people, not to cut us off from the rest of Britain. Indeed, the overwhelming majority of people in Wales do not regard the creation of an Assembly as an opportunity to go down the separatist path.

The referendum gave one clear message: the people of Wales are not yet convinced of the benefits of devolution, and it is no good hiding the fact that the jury is still out. The big challenge for us all is to make devolution work and to show the Welsh people that it has considerable benefits for them.

One key area in which we must make devolution work is in meeting the economic challenge. The Assembly must help provide the motivation, and be the powerhouse to transform the Welsh economy. It must, as my hon. Friend the Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) said, create jobs to bring about lasting prosperity. It is as a result of the policies pursued by this Labour Government—the Government of all Britain—that the Welsh people will gain.

Labour's vision is of a Wales where social justice is put before separatism, where investment in education and the reskilling of our labour force is at the top of our priorities. We are not going to compete in the world economy of the next century if we have low wages and a low-skilled work force, with an industry desperately lacking investment and less productive than our competitors. We need a Wales where we tackle poverty and social exclusion by creating opportunities and providing work, so that people are not left to depend on benefits; a Wales in which we recognise that decent, affordable housing is as much an investment in our people's health as money spent on hospitals.

This year of 1999 is truly a year in which Labour will deliver on its pledges—to extend democracy by means of the Assembly, and to tackle poverty root and branch. We want to begin by helping people on benefit who can and want to get work to be given that chance. However, we must recognise that it is no use moving people from poverty on benefit to poverty in work. That is why we need a national minimum wage.

When it is introduced in April, the national minimum wage will benefit tens of thousands of people across Wales, many of them women. The minimum wage, linked with the working families tax credit to be introduced in October, will guarantee low-paid families with a full-time worker at least £190 a week, with no tax to pay on earnings below £220. That, together with the reduction in employees' national insurance contributions due in April, will be of considerable benefit to families on low or middle incomes.

All those measures to help the poor in Wales have been opposed by the Tory Opposition. Is it any wonder that no Conservative Members of Parliament represent Welsh constituencies?

There is much more that we must do to tackle the culture of poverty in Wales. Children and old people are the most vulnerable, and are often locked in a cycle of poverty from which it is almost impossible to escape. That is why, from April, child benefit is to be raised by a record amount of £2.95 for the eldest child. There will be equivalent increases for poorer families with rises in family premium, income support and jobseeker's allowance.

Building on the package of measures already announced for pensioners, from April eye test charges will be abolished, and all pensioners will have a minimum income guarantee of £75 a week for a single pensioner, and £116 for pensioner couples.

As my right hon. Friend the Secretary of State said when he opened the debate, the new deal has been a great success in Wales. Thousands of young people are now in work and being given opportunities, where before they had no hope and no chance. Supporters of the Welsh nationalist party in my constituency have labelled the new deal slavery, but we are creating opportunities. From April, those opportunities will be extended to people over 25.

On top of that, the Government have cut business taxes to an all-time low to encourage investment. At the same time, they have put a massive £1 billion extra into health in Wales and £850 million into education.

If the other parties had been told before the general election that, in two years, we would do half as much as I have described, they would have called us fantasists and claimed that we would be unable to achieve anything at all. So let me remind the House what the Government have achieved in those two years.

Class sizes have been cut. Hospital waiting lists are down. Handguns have been banned. There are new rights for people at work. The national debt has been reduced from £28 billion to £8 billion. Interest rates have been cut to their lowest long-term rate for 35 years. Value added tax on fuel has been cut to 5 per cent. Extra money has been devoted to breast cancer screening. Councils have been allowed money from the sale of council houses to build new homes and improve existing ones. The largest hospital building programme in our history has been launched. The biggest-ever child care programme is under way. There has been legislation to raise standards in schools. The Bank of England has been given independence to set interest rates. There has been a massive shake-up in the criminal justice system—I could go on.

In a couple of days, we shall be celebrating St. David's day, our saint's day. After two years of this Labour Government, there is much to celebrate, for Wales and for Labour in Wales. Working in partnership with the Assembly that will be elected on 6 May, the Government will take forward the policies that I have talked about this afternoon, for the benefit of all the people in Wales. The policies that concern them are investment in health and in education and training. They want job opportunities, safer streets, better public services—those are the priorities of the people whom I represent. They are the policies of the Labour Government in Westminster, and they will be the policies of the Labour party that will run the Assembly.

The people of Wales will respond to Labour's vision for the 21st century—partnership within the United Kingdom—rather than the narrow nationalism of the 19th century. They do not want to operate at the margins of politics, like the increasingly desperate Tory party. They do not want the publicity without responsibility of the Liberal Democrats. The people of Wales consistently rejected the separatist agenda of the nationalists. They reject policies that benefit the few, not the many, as advocated by the Tories. They have certainly rejected the Mickey Mouse tactics of the Liberal Democrats.

We are approaching the biggest shake-up in the government of Wales. We can make that change with confidence and without fear. The people of Wales will look to Labour—the real party of Wales—to make an historic process work.

I wonder why the hon. Member for Islwyn (Mr. Touhig) left the Green party free of his venom.

It is often said that, when political parties unite, they do so for a serious cause. There is no doubt that all the political parties in Wales—notwithstanding the long spat between my right hon. Friend the Member for Caernarfon (Mr. Wigley) and the Secretary of State—have worked together to try to obtain objective 1 status for west Wales and the valleys. I have rarely seen such a concerted effort, and I have worked closely with members of the ruling party in north Wales to secure that all-important designation, which would be a tremendous social and cultural boost for Wales.

The underlying principle that should guide us in considering objective 1 status is the impact that it could have on economic and social cohesion. We must consider additionality: significant improvements have been made in demonstrating additionality at national, regional and local level. However, there is a need to ensure that mechanisms are in place that fully demonstrate the transparency and improved measurements of the concept.

Complementarity—the relationship between structural and domestic funds—has never been adequately addressed. A grey area remains over, for example, the differences between the European regional development fund, the European social fund and the European agricultural guarantee and guidance fund. Matters still require to be ironed out in that complicated area, and we should all consider them more often than we do, standing, as we are, on the threshold—possibly—of obtaining objective 1 status.

The Secretary of State referred to partnership—a buzz word in politics, but an important feature of structural fund policy in Wales—which will be a prerequisite of policies related to objective 1 status. I have the privilege of representing a constituency that falls into two unitary authority areas—Gwynedd and Conwy. Both would benefit substantially if objective 1 status came to Wales. Mindful of the time constraints, I shall today talk only about Conwy county borough council, which covers what was previously Aberconwy borough council and part of Colwyn Bay borough council.

The area has suffered greatly over the past 12 or 13 years. Aberconwy qualified fully for objective 2 designation 10 or 12 years ago, but lost out. I visited Brussels, and a number of members of the Commission confirmed that there was no shadow of a doubt that the area qualified on all basic criteria. Alas, however, it did not happen. Over the past 10 or 12 years, the area has undoubtedly suffered. I do not doubt that the luck of Merseyside—good luck to that area—in obtaining objective 1 status was an active disincentive to inward investment into Conwy.

Conwy has the lowest gross domestic product in Wales, the lowest-wage economy in Britain and a low rate of inward investment. It is incredible but true that only 18 new jobs were created between 1994 and 1997. Yet the area gains no assistance from designated status.

The economy in Conwy depends on jobs in the tourism, public and agricultural sectors. Changes in tourism and agriculture are putting significant pressure on the viability of businesses in both sectors. The economy of Conwy desperately needs to diversify to strengthen its base if it is to be socially and economically sustainable. Recognition of the county's problems, and its inclusion in the west Wales and valleys sub-region which has the prospect of obtaining objective 1 status, is a tribute to all who have striven in partnership to have Conwy and Denbighshire included in that designation.

Led by the county borough council, partners are developing a county-based development strategy based on the themes of competitive business, countering social exclusion and balanced development. That strategy will be integrated into the broader west Wales objective 1 strategy, providing a clear framework from 2000 to 2006. I hope that that will help the area to overcome its structural problems.

The strategy will seek to create a balance of indigenous and inward investment, a matter that has, of late, much concerned the Select Committee on Welsh Affairs. A report has been prepared, and the Committee, of which I am a member, took evidence from many areas on inward investment and indigenous expansion in parts of the UK and beyond.

A full range of support services will be developed for existing and potential small and medium enterprises. Perhaps simplistically, I believe that we do not pay enough attention to SMEs, which, if my figures are correct, account for 90 per cent. of employment in Wales. The stark fact is that, if every SME created one more job, there would be hardly any unemployment in Wales. We must concentrate on that sector, and—although I hope that I am wrong, and that LG will come on line—there are lessons to be learned from putting too many eggs in one basket. It takes creative thinking to expand SMEs and to create an atmosphere of expansion. However, we would do well to target that area as the benefits would be considerable.

The hon. Member for Brecon and Radnorshire (Mr. Livsey) said that the difficulties of the agricultural sector, and the knock-on effects that they have on the whole community, have extremely serious ramifications for his rural community. The same is true of Conwy. It is essential that the quality and value of agricultural produce from Conwy—and from all of rural Wales—should be maximised locally. Objective 1 status can assist us in that area.

The Welsh Office has recently confirmed that the new development authority will have a far more extended agricultural brief, and that is welcome. I hope that we may see such things as a substantial chilling plant for meat in mid-Wales, which could serve Wales and beyond. We lack that at present, and it is an area on which we could concentrate. We should add value locally to meat—the new prepared foods such as lasagna and other meals that are very popular nowadays. By producing such food locally, we would add value to the product. We have a good product, and we should add value as locally as we can to the point of production.

There has been an historic lack of both investment and investment opportunity in Conwy. Several barriers need to be brought down. I am very pleased that Conwy has been included in the European objective 1 designated areas; it is critical that people now concentrate fully on the way ahead and on drawing up plans in good time. If the county of Conwy is to succeed, it is important that projects are proposed as soon as possible, partners found and all potential European and other funding effectively sought.

I could repeat that message on behalf of Gwynedd, but I am mindful of the time constraints and aware that several other hon. Members want to speak. Last year, as part of a delegation from the Select Committee on Welsh Affairs, I visited Inverness and the highlands and islands of Scotland. The problems of those areas were not dissimilar to Gwynedd's problems—the feeling of remoteness and declining economic activity in a rural setting. The visit was most instructive, because it brought home starkly to me the potential benefits of objective 1 status, if properly used—opportunities for small businesses to expand, and for a hard-pressed agricultural sector to expand and diversify to meet the challenges that will inevitably flow from Agenda 2000.

I also learned of the utmost importance of matched funding. I was told that, because of the effective drying up of matched funding, little use had been made of objective 1 structural funds in the preceding 18 months. In other words, because of the absence of matched funding, the European funds could not be drawn down; the process was at a standstill. Members of Parliament from the north of Ireland have told me of their similar experience of stop-go—when matched money is not available, everything is put on hold. Because any scheme under objective 1 lasts for only a given period of time—six years—if we fail to do our level best to get as much as possible out of objective 1 status, money is wasted. We have all seen the prosperity that has been created in Ireland, largely because of objective 1 funding. Many of us trumpet Ireland's economic success: now, at long last, there is net immigration of Irish people to Ireland, as highly qualified youngsters come back to the good jobs on offer in an economy that appears to be booming.

I do not care greatly that, by raising this important subject, I risk incurring the venom of Ministers—not that venom rests comfortably in the Under-Secretary of State for Wales, the hon. Member for Neath (Mr. Hain), who is sitting on the Treasury Bench. There are, and will be, serious difficulties if matched funding is scarce: we need a greater commitment from the public sector and, more important, from central Government, especially for the long term. Consideration for matched funding should be agreed at programme level, not by project; and there should be further exploration of the global grants system and far greater co-ordination of domestic funds, with better clarification of the rules governing private sector involvement.

I mentioned the general concordat—to use a word of the moment—between the political parties during the campaign to secure objective 1 status. When the Government submitted the plans to Brussels, opposition parties were asked not to rock the boat, lest that should in some way damage the chances of obtaining objective 1 status. I found it offensive when the Secretary of State said that my party, of all parties, was creating difficulties. Far from it—we did everything that we could to assist and we shall continue to do so. In that vein, I shall ask the Minister one or two questions; I trust that, in that vein and in this context, he will find my questions helpful. I shall find it helpful if the answers are forthcoming.

I have campaigned for objective 1 designation for a long time, as have other right hon. and hon. Members. On each and every occasion when the Secretary of State for Wales, the Prime Minister and the Chancellor of the Exchequer have been asked to give an assurance on the subject of matched funding, they have fallen silent, despite their having, rightly, trumpeted the fact that the Government have done everything that they can to secure objective 1 status. There is now grave concern because, without adherence to the principle of additionality and, of course, securing matched funding from additional Treasury money, the whole campaign could come to nothing, like a handful of sand seeping through one's fingers. I am not encouraged by the Government's predisposition to hide behind the Fontainebleau accord—for example, to deny the farmers of Wales proper agri-monetary compensation. The whole question of matched funding has a similar flavour and I am greatly concerned, as is my right hon. Friend the Member for Caernarfon.

In his opening speech, the Secretary of State referred to a recent press release. Professor Kevin Morgan and other members of the Institute of Welsh Affairs have expressed their concern sensibly, not in a headline-grabbing manner. They say that at stake is as much as £1.8 billion between 1999 and 2006, and they quote a letter that they received from the Economic Secretary to the Treasury. The hon. Lady was asked how much matched funding would be available, to which she replied:

"If Western Wales and the Valleys were to qualify for Objective 1 status after 1999 I can give no assurance that all the additional receipts (assuming that the total allocation to Wales did, in fact, increase) would be reflected in an increased public expenditure allocation".

She added:

"For Scotland, Wales and Northern Ireland, cover for Structural Fund spending must be found within their respective blocks, determined on the basis of the Barnett formula."

That is an extremely worrying response.

The Secretary of State was probably right to say that we do not yet know what decision will be made; however, if we do not yet know but such a negative response has already been forthcoming, questions must be asked. It behoves all of us across the political spectrum to ask the appropriate questions and not to leave them until some future date. Why cannot the questions be asked now? More important, why can they not be answered now?

Professor Morgan says:

"The realignment of the Wales funding map that has now been approved in Brussels is only the first stage in this crucial battle. Two more battles need to be won, the first in Brussels and the second in Whitehall … Brussels has since been convinced that the GDP of the new west Wales and the Valleys region is below 75 per cent. of the EU average. So there is a strong case for the Treasury in London to approve Public Expenditure Survey cover for new funds. Assurances need to be sought by our political representatives that this will be the case. Failure to secure PES cover from the Treasury will mean that up to £1 billion will come from the existing £7 billion Welsh Office block grant. The economic and political implications of this could be disastrous. The Objective 1 victory would be a cuckoo's egg."

I call on the Minister to give a full, frank and straight answer to that vital question. Failure to do so will mean that, once again, the Government can be summarised best as a Government who are always ready to raise hopes and expectations, but who are unable to deliver.

I strongly urge Welsh Office Ministers to contact the Treasury and obtain a full, clear and unequivocal answer to the question. All the hard work that has been done throughout Wales and across all the political parties might yet come to nothing unless that assurance is available. I would go so far as to say that, if the additional moneys are not available, the Welsh Office will have let down the people of Wales, because the Treasury will have denied the Welsh Office. The current devolution proposals, good as they are, will not affect that betrayal.

I also wish to return to the subject that caused such a conflagration in the House two hours ago. I hope that my remarks about objective 1 funding and its effects on Wales do not re-ignite that tinderbox.

We all accept that it is crucial to secure objective 1 and matched funding. However, no one should be cheering about the prospect of achieving objective 1 funding because one does not get it for nothing. It is like compensation for mine workers. Someone might think, "Isn't it wonderful: I'm getting 50 per cent. compensation from the National Coal Board for having pneumoconiosis", but it is terrible because that person has pneumoconiosis. The same deduction applies to objective 1 funding: we will receive it because Wales has economic pneumoconiosis. Our gross domestic product levels are so low that we require the maximum rate of European grants to help us put the economy back on a sound footing.

I understand why objective 1 funding causes such excitement. There are two reasons: first, because the timing is so critical relative to the commencement of the Assembly; and, secondly, because objective 1 funding is the jam on the bread for the Assembly's public spending capabilities. We have the Barnett formula and the three-year comprehensive spending review programme—which will begin in a few short weeks on 1 April—and objective 1 funding is a way of going beyond the limit.

If we ultimately secure objective 1 funding and there is no real problem with the provision of matched funding, there could be lots of jam on the bread for the Welsh Assembly. Therefore, the prospect stirs a certain amount of interest. If the figures that we have heard bandied around are correct, in theory, it might mean up to £500 million a year extra in public expenditure for different kinds of infrastructure in Wales for each of the seven years from 1 January 2000. Bearing in mind the fact that the Welsh Office's comprehensive spending review budget is £7 billion, an extra £500 million—if it is as much as that—amounts to an 8 per cent. increase. That is a pretty substantial increase to have running for the next seven years.

That £500 million is the top whack figure—it might be £450 million or £400 million if things go reasonably well but not perfectly. I understand that £300 million a year in European money would be provided for seven years, which we would expect to be matched—perhaps not pound for pound—by British Treasury sources. If that European funding were matched two thirds of a pound for a pound, it would mean that the additional £300 million would be matched by perhaps £150 million to £200 million in Treasury money, which would total £450 million or £500 million. If my calculations are not correct, the Minister will no doubt set me straight at the close of the debate. It is natural for people to want to examine the subject in considerable depth.

I mentioned that the timing of receipt of objective 1 funding is crucial. We all know why that is so. The three-year public expenditure programmes of the Welsh Office, which begin on 1 April this year—and will be inherited by the Welsh Assembly a month later—will continue for three years until 2002. Objective 1 funding should have been determined by then—perhaps at the European Union Council of Ministers meeting in March—and, if we are to receive it, will begin on 1 January. That will be some seven or eight months after the Assembly has taken charge of the bulk of Welsh Office powers. That funding will certainly stir the pot and be an integral and dominant part of the early activities of the Welsh Assembly.

The hon. Member for Meirionnydd Nant Conwy (Mr. Llwyd) referred to the interesting reply given by the Economic Secretary to the Treasury. We could debate for at least all of today—and probably on several other occasions—whether that response was a bit of a downer or left the door open for the Treasury to agree to matched funding. Let us try to view the matter positively. It is a chicken and egg situation. There is no way that the Treasury will say, "Here's an extra £200 million a year for the next seven years, provided Europe gives you objective 1 funding at the March Council of Ministers meeting". Unfortunately, it also works the other way. There is no way that the European Commission will agree to confer for fun the objective 1 funding designation—as though it were referring to a map—in the March Council of Ministers meeting.

The EC will confer objective 1 status only if it receives some sort of serious signal from the British Government that matched funding is being negotiated and is on the way. The Government must demonstrate that they are agreeing the details and taking a serious approach to securing the whole package. If there is no matched funding, there will be no objective 1 status. If there is no objective 1 status, there is no point in having matched funding.

We must somehow address that chicken and egg situation. The resolution of that problem should not be left until the early weeks of the new Assembly when Assembly Members will be finding their feet. We must sort it out before 7 May and the elections to the Welsh Assembly. The more clarity that we can lend to that chicken and egg situation, the better.

I think that the Secretary of State said earlier—I repeat the point now—that the Welsh situation is unique as regards objective 1 funding. It is not a problem in Northern Ireland, Scotland or England: it is only a problem in Wales. Scotland and Northern Ireland have received objective 1 funding before, so it is programmed into their three-year public expenditure programmes that start on 1 April. Wales has never had objective 1 funding. Although it is true that Cornwall and south Yorkshire have never received objective 1 funding, it is possible within the big block of public expenditure in England—comprising the Department of the Environment, Transport and the Regions, the Department of Trade and Industry and several other blocks—to rob Peter to pay Paul. However, it is not possible to rob Eddie to pay George—as we now say—within the Welsh block because almost all areas of Wales that are not objective 1 designates are objective 2 or objective 5b areas and will continue to receive European assistance.

The European Commission will not allow the British Government to take funds away from areas with objective 2 entitlements—which is the next level down in European grant—and give them to objective 1 areas by switching around expenditure within the Welsh block. That will not be allowed because it will infringe the additionality rule. Europe will not allow the British Government to tell the Welsh Office now—or the Welsh Assembly in the future—"Take it from Cardiff, Newport, Powys, Wrexham, Deeside, and so on, and give it to the objective 1 areas", when the Government are also claiming that the eastern strip of Wales along the English border remains sufficiently lacking in prosperity to require a lower level of European assistance.

Wales does not have the flexibility of the English block to take money from wealthy areas—such as the home counties—in order to provide matching funding in Cornwall and south Yorkshire, for example. That is not possible in Wales because of our double poverty gap problem. In other words, the whole of Wales is 18 per cent. behind England and, within Wales, the areas that we hope will receive objective 1 funding are another 10 per cent. behind the Welsh average. Therefore, they are 28 per cent. behind the British average or standard of living evaluation in England.

We must somehow solve that problem during a critical period of constitutional change. The House of Commons was devised to debate and resolve that sort of difficulty. There will not necessarily be any answers today because we have a few months to go, but we need maximum clarification of that issue.

The Welsh economy is undergoing a serious period of change, so objective 1 funding is critical. There is nothing we can do using objective 1 funding that we cannot do under the programmes of assistance provided by the present designations of 2, 5b and 3. However, the objective 1 category offers more money and a higher maximum rate of grant and encourages long-term planning and projections because the funding is available for seven years. The maximum rate of grant is higher. However, the essence is the same as that of the programmes that have been running for the past 10 years.

We must get away from the classic methods of regional development that we have used since the days of the big pit closures in the 1960s and 1970s. The aim of objective 1 funding is not to provide additional sheds and roads or to give the building industry grants to construct large highways or extrude vast quantities of 25,000 sq ft advance factories all over Wales. We have too many factories lying empty. We must find a way to fill the factories that we have with activities, rather than build more. We live in a world of surplus in such facilities, and we must modernise our products, processes, management and skills, improve training and upgrade apprenticeships. We must increase research and development and seed capital and widen access to venture capital.

Objective 1 funding is oriented towards those aims rather than providing static factors such as bricks and mortar and highways. It is concerned with how to make the economy more dynamic by improving access and the part of the infrastructure that will lead to faster economic growth.

We shall need that growth, because recent closures have revealed that this winter has been a difficult period for the Welsh economy. The closure of Lucas-SEI in Ystradgynlais in the constituency of the hon. Member for Brecon and Radnorshire (Mr. Livsey) is a symptom of a widespread malaise in the Welsh economy of dependence on the middle level of technology in electronic assembly or automotive components which is coming under huge pressure from the shift towards eastern Europe. Factory facilities such as the Lucas-SEI plant in Ystradgynlais can be shipped to Poland where the workers are paid wages that are, perhaps, one sixth of the prevailing rates in Wales.

American factories have faced similar problems since the signing of the North American Free Trade Agreement, because wage rates in Mexico and north America have roughly the same relationship as wages in eastern Europe do to those in western European areas such as Wales. Low to intermediate technology assembly line skills are gained with tremendous speed, and for the past 20 to 30 years, through no fault of our own, Wales has specialised in those skills and in automotive and electronic components, without housing the headquarters of the firms that are using design skills to upgrade and plan the next generation of products.

We have been developing the assembly line skills that are now at risk because the pound is relatively high and the next wave of European Union expansion points eastward to low labour cost countries. That sector will be under huge pressure unless, for any reason, the pound comes down sharply.

New and exciting economic prospects are opening up in sectors in which it is very difficult for us to compete, such as software and the globalised market for what are known as traded services. Those arise from huge mergers between, for example, merchant banks, which suddenly want 150,000 sq ft office blocks so that they can house their whole human resources department, finance office or back-office operation in one city. At the moment, for various reasons, Welsh cities are not seen to be as exciting as Dublin, Edinburgh or Barcelona, and we cannot therefore compete in the globalised traded services office market.

We are losing out in manufacturing and we are not at present in a position to gain in other sectors because we do not have the necessary software skills. The Republic of Ireland targeted software 10 years ago. It trained people in those skills and then succeeded in attracting inward investment. I am not saying that Wales should target software—we could target something else—but Ireland demonstrated what could be done with objective 1 funding, and that is one reason why its gross domestic product has overtaken that of Wales and, on some measures, that of Great Britain. I hope that, with the Assembly, Wales will be able to do the same.

I am looking forward to finding out how we can creatively use objective 1 funding to provide a more secure future for everyone in Ystradgynlais and other communities throughout Wales where there are job losses in intermediate technology.

I want to put it on record that in the election of the Secretary of State for Wales last Saturday, the Labour party conducted itself fairly, and both candidates should be congratulated on their conduct during the whole campaign. It was an historic election because the winner will be the principal person in Wales with great responsibilities.

I worked with my right hon. Friend the Secretary of State when we were in the Whips Office and when he was a shadow Welsh Minister. I know from personal experience that he has great talent and ability and that he is definitely a workaholic. When he came into the Whips Office he always had a bundle of papers under his arm. I have seen many hon. Members with such bundles and I always wondered whether they were for show or whether they actually read the documents, so I brought a bundle of papers to the Chamber today to try to impress people that I, too, read.

This week, hon. Members from all parties who represent Wales have had the gigantic task of reading documents and attending Committee sittings to consider statutory instruments dealing with the disqualification of Members. That needs to be carefully considered because Lords will be allowed to stand for election in Wales, even though they cannot stand for election to this place. Members leave this place to go to the other place and now we are affording Lords the opportunity to stand for election to the Welsh Assembly.

I find the hon. Gentleman's point inconsistent, and it is the second time that he has argued it this week. Why should Members of the House of Commons be able to stand for election to the Welsh Assembly and retain their seats here, while he would deny that chance to Members of the House of Lords?

To be frank, I entirely agree with the hon. Gentleman because of the responsibilities that will be involved. Only yesterday, when we were discussing in Committee the functions that we shall hand over to the Assembly, it was pointed out that Members of Parliament will have enough work to do here without going to the Assembly.

One of the main criticisms of the other place is that it is undemocratic because its Members do not stand for election. Surely it is welcome that they will now be able to put their head above the parapet and stand for election somewhere else.

Yes, but they will be standing for election to a Welsh Assembly, and the number of Lords left without a seat when we disqualify them within the next couple of months will mean that hundreds of Lords might go to Wales, looking for seats in the 60-seat Assembly. That is my great objection.

I have another objection. Roaming around Wales, we hear whispers from many members of all parties, and I have been given to understand that a prominent Welsh nationalist who is a Member of the House of Lords has already been promised a place as the president of the Assembly—the Presiding Officer. I do not know by whom because no one has been elected in Wales yet. If that is true, a Lord will not only be elected to the Assembly, but will be the Presiding Officer of an Assembly controlled, in all probability, by the Labour party. There would be something wrong if we allowed that to happen. I hope that people are listening to the party in Wales and to the debate today and have realised that we should not tolerate such a situation in Wales.

I am grateful to the hon. Gentleman for generously giving way a second time. He may correct me if I am wrong, but I understood from the Standing Orders for the Welsh Assembly that the Speaker or the Presiding Officer—whatever that person is called—must come from the majority opposition party. If that is the case, what is the hon. Gentleman's worry?

Let us wait and see what happens. I would not want the Welsh Assembly to have a Presiding Officer who did not enjoy the support of all Members. I would not want that for the Welsh Assembly or for Parliament.

I am speaking of my concerns on Welsh day, and I suppose that you would share some of them, Mr. Deputy Speaker, if we were speaking of Scotland. When we debated the Government of Wales Bill and also the Scotland Bill, I noticed that one hon. Member sat in the Chamber on his cushion through all the debates, taking note of every word that was uttered by every hon. Member. He wrote an article recently about what will be left for Scottish and Welsh Members of Parliament to debate. That is a question that we should consider.

My hon. Friend the Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) sat on the Committee yesterday that dealt with 506 pages of concessions, options and responsibilities that are to be given to the Welsh Assembly. Other hon. Members and I sat on another Committee on Tuesday which made representation of the people in Wales different from the election of parliamentary candidates.

That brings me to an important matter that affects my constituency and that of my hon. Friend the Member for Bridgend (Mr. Griffiths). The document that we debated on Tuesday dealt, among other things, with polling stations. We accepted the proposal that all constituency polling stations that were used during parliamentary elections should be used for the election of Welsh Assembly Members and councillors.

In the Bridgend county borough council area, a number of polling stations are to be closed to save the funding that would be necessary to keep them open. I protested on Tuesday and received an assurance from the Secretary of State that he would take up the matter. I understand that in today's press the closure of the polling stations is announced.

The existing six polling stations in the area are to be reduced to one. That will cause considerable difficulty for many of our electors in an area such as Nantymoel in the Ogmore valley, which is very hilly. The majority of people living there are elderly and cannot climb the hills. It is time that we understood that polling stations—such as the ones in which we were elected to Parliament—are usually sited near homes in order to get the electorate interested enough to vote. That will be even more crucial on 5 May—

On 6 May.

I am glad that my hon. Friend corrected me—I would not want voters to turn up on the wrong day. In the elections on 6 May, people will be voting not only for Members of the Welsh Assembly—that will be an historic election throughout Wales—but for local councillors. However, councillors have decided to reduce the number of polling stations. Perhaps they do not want people to vote for them, but I am sure that candidates for the Welsh Assembly, who have worked hard to be selected, would expect all the polling stations to be open.

A few weeks later, some time in June—I do not remember the exact date—there will be European elections and community council elections. The Ogmore constituency has within it 22 community councils, each with a mayor and councillors, so those elections are important to the local community. That is why the council should take the decision to allow all the polling stations to remain open.

Another domestic issue that is causing concern in my constituency is the campaign that has been waged for years for the reopening of a station at Llanharan. That would serve the population of Bryna, Llanharan, Llanharry and an extensive surrounding area. The weight of public opinion and the thousands of signatures in support of the campaign that have been sent to British Rail, and which I shall pass on to the Secretary of State, should persuade him to support the moves to have the station reopened.

I do not want to take up too much time and prevent my hon. Friends from speaking in the debate. When I listened to my right hon. Friend the Secretary of State for Wales speaking today, I realised that there is compassion in him. That was evident when he became justifiably annoyed by the remarks of the right hon. Member for Caernarfon (Mr. Wigley). My right hon. Friend spoke about the suffering of the families of people—male and female members of society—who are unemployed, and the problems that they face when they lose their jobs. I recall the difficulties that we have experienced in the Ogmore constituency since 1979. For instance, all our mines were closed when the Thatcher Government started closing all the mines and demanning the steel industry. Ten thousand workers were deprived of their jobs at the Margam steel works, and 8,000 miners lost their jobs. In the Ogmore constituency alone, 20,000 people were made unemployed in four years. Such people could not secure new jobs even in 10 years; but we endured 18 years of Tory government. We have suffered ever since, and we have not yet recovered.

Is it any wonder that people such as my right hon. Friend the Secretary of State, and other Labour Members, are now eager to implement the policies that they promised the electorate that they would implement? I do not want to go into the details of what we have achieved during the time—nearly two years—during which Labour has been in government, because my hon. Friend the Member for Islwyn (Mr. Touhig) has already done so. I listened carefully to his speech, to that of my right hon. Friend the Secretary of State and to other speeches that have been made today, all of which referred to what we have already achieved.

Not enough has been achieved, however, and not enough will have been achieved until everyone has a job and my constituents have no problems in obtaining jobs. My right hon. Friend the Secretary of State should consider renewing schemes that were introduced years ago, before the invention of training and enterprise councils. TECs seem to restrict what we can do to encourage new employment.

In Ogmore and Bridgend we had a take-up scheme, which worked differently from TECs. It was a wide and varied scheme, creating 650 training places for adults and 250 places for young people. After two years in training, 95 per cent. of young people were given jobs. Why? Because of the diversity of jobs provided by the scheme. It was described as a community enterprise scheme, and it is time that the Government readopted it. Perhaps my hon. Friend the Minister will consider that. The scheme was well known in Wales and well known to the Government, and at the time it proved so successful that the Government decided that they must change it. As a result, Ogmore lost 650 adult places and 250 places for young people.

Even at this late stage, we should reconsider implementing the Government of Wales Act 1998. We have gone through the procedures determining whom we should disbar, and other procedures determining what functions are to be devolved. Most hon. Members will remember the local government reorganisation that took place in 1974, as a result of which representatives were elected as shadow representatives for 12 months. Five local authorities in Bridgend were merged into one, Ogwr borough council, and it was essential for their councillors to be in at least a shadow position for 12 months.

During the last few years, we have experienced a different kind of local government reorganisation, and unitary authorities have been established. The same has applied: councillors have been in a shadow position for 12 months. How on earth can we expect Assembly Members to take over all the responsibilities that the Government of Wales Act confers on them, and to implement those responsibilities overnight? The election is on 6 May and they have until June to start working legally as an Assembly. That is unfair and unjust.

I understand what my hon. Friend is saying, but I think that there is a difference between local government reorganisation and the creation of the Welsh Assembly. Local government reorganisation involves the merging of four or five administrations, but the overall administration will be the same, and, as we know from all the work that was done on the Government of Wales Act, they have done a superb job for us. Given the quality of the Labour candidates—members of my hon. Friend's family, for instance— I have every confidence in their ability to assist in the creation of the Assembly.

As one who had close connections on the Front Bench, was well acquainted with the Act and made a great contribution to it, my hon. Friend would know far better than I whether the newly elected Members will be in a position to serve. One person who will be a great asset, and will probably not have to wait for 12 months, is Janet Gregory—my daughter. She is absolutely marvellous. Of course, I could not have said anything different. She was bound to follow her father, although she has not listened to him since the day when she was born. I hope that she will be elected; she has a very good name.

I must now conclude my speech. Another intervention and another drop of that orange squash, and I will be off. I do not know whether anyone put gin in it! In any event, I am grateful for the opportunity to speak on an historic occasion. I hope that although by this time next year we shall have a Welsh Assembly, we shall continue to have Welsh debates in the House of Commons.

I am sure that my hon. Friend the Member for Ogmore (Sir R. Powell) will have many more opportunities to regale us and interest us, even after devolution. I do not know whether this will be the last Welsh day debate, but, in any event, the House of Commons will still be the final arbiter—the final fund, as it were—in regard to money for the Welsh Assembly. It will also determine the level of public expenditure for areas outside the remit of the Assembly. I believe that all parties in the House have agreed to that system of financing, which will be annual. The Treasury will negotiate, following which—in theory at least—the estimates will have to be dealt with by the House.

Presumably, that could have been arranged differently. There could have been a charge on the Consolidated Fund, along the lines of—I hate to say this—the system of contributions to the European Union, which do not have to be dealt with by the House. Similarly, judges' wages need not be dealt with by the House: their salaries are not cut, for reasons that are fairly obvious in the administration of justice.

We could have chosen a different system; but all parties agreed that there should be an annual system, so we must not complain about the fact that it must come back to the Treasury and, indeed, the House, and that the House must debate it in some form or other.

Sadly, we are again debating Welsh affairs when the Welsh economy is not in very good shape, which is a source of great concern to us all. I have been a Member of the House for a long time and I am not talking my own country down. Every year for the past 18 years—although I do not think it was the case in 1979—Wales has been the poorest country, region or area in Britain and its level of gross domestic product is fairly close to that of Northern Ireland. That is not something to be happy about, but it is the reality that we face.

I represent a constituency where almost 30 per cent. of the employed work force still works in production and manufacturing. Manufacturing industry is under pressure because of the global economic situation and global deflation. It is also under pressure, I am sorry to say, because the Bank of England put interest rates up when it did not need to do so. At that time, of course, the Bank of England thought it was living in a world of inflation, and central bankers take a long time to change their orthodoxy.

I am not sure whether the central bankers have changed that orthodoxy, but we are living in a world of deflation. My right hon. Friend the Secretary of State said that one of the virtues of the present Government's tenure is that long-term interest rates are at their lowest for 40 years. That is a mixed blessing. Japanese interest rates are at their lowest for 40 years as well, but that is a consequence of deflation, and that is also the case in this country. If prices are falling, which they are not yet, interest rates fall, too, but one should not necessarily welcome that. We are living in a world of deflation and, as my hon. Friend the Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) said, that is having an effect on manufacturing industry in particular, which seems to have far less ability to increase prices than service industries.

We have talked about devolution and the Welsh Assembly. One consequence of devolution is greater transparency in respect of the amount of money and public expenditure that goes to the devolved areas and the amount of taxation and public money that is produced by those areas. Years ago, the Treasury would set its face against producing budgets for various regions and countries in the United Kingdom. It would argue that the United Kingdom was a unified state—a single market, to use the language of Brussels—with a single currency, no trade barriers and complete freedom of movement of capital and labour: the ultimate in political, economic and monetary union.

Quite apart from the difficulty of doing so, the Treasury would say, "Why do we need to produce budgets for Wales, the north-west of England and Scotland, because we are living in a unified economic and monetary state?" There was also the difficulty of finding the figures. All that has changed because of the political pressures of the past 20 or 30 years and through the use of computers, which can store so much more information. We are now in a position to produce devolved budgets, or budgets for devolved areas, showing the amount of money that goes into the area and the amount produced by it. That transparency will become more and more relevant as the budget of the Welsh Assembly and of Wales has to be considered.

The figures show that the position of Wales is not good and we should not go into the Welsh Assembly with some starry-eyed idea of the prosperity of the Welsh economy. Figures for Government expenditure—not only that of the Welsh Office, but of other Departments—and for the tax base in Wales from the past few years show a massive fiscal deficit, and we might as well face that.

The fiscal deficit is probably about £5 billion or £6 billion. One could argue a little about the figure, and it is never possible to be completely precise, but let us round it down to £5 billion. About £10 billion or £11 billion is raised in taxation, and there is about £16 billion of public expenditure, including the £7 billion that will go to the Welsh Assembly. That is the order of the deficit that has to be financed.

Let us be clear about the fact that that £5 billion comes from the United Kingdom—the London Government, or the dreaded British state, as some people call it. We can call it what we may, but that money comes from the centre—the dreaded Treasury, which, apparently, will not give us any additionality money on top of the £5 billion.

The £5 billion can be broken down into regional budgets, but it does not come from Scotland, I am sorry to say. It does not come from Northern Ireland. I do not know how much of it comes from the north of England. It must come from the more prosperous areas of England. The English will be providing the £5 billion that is necessary to fund the Welsh economy. They are doing so now, and have been for the past few years. There is nothing wrong with that in a unified state, but we must be clear about where the money is coming from. It probably comes from the home counties.

Does my right hon. Friend agree that that is one reason why the economics of separatism, which are pursued by the nationalists, are pure fantasy?

That is what I am trying to say, in my less dramatic way. They are, indeed, pure fantasy, because Wales could not possibly sustain a borrowing requirement of £5 billion: it could not possibly borrow that kind of money. We would either have to raise taxation—which we could not do, because we do not have the tax base—or cut public expenditure. Without that £5 billion, the Welsh economy, certainly in terms of public expenditure, would lie somewhere around the level of Slovakia, or one of the other countries that have left the Soviet empire. That is the reality, and it is better for the Welsh Assembly to face it.

The right hon. Gentleman is arguing that the taxes that finance the block are levied across the United Kingdom as a whole and under policies set by this House. Does he therefore agree that it is logical to retain in this House a mechanism for scrutinising how that money is spent?

Logical or not, such a mechanism will be retained. That is the reality of devolution. These days, we are apparently all in favour of transparency, which is the vogue word. There will be transparency. When my right hon. Friend the Secretary of State negotiates with the dreaded Treasury, the figures will be on the table and will show quite clearly the payment of £5 billion a year, which comes from the Exchequer to the Welsh economy.

Some people in Wales—certainly among the chattering classes—believe that there is an escape from all that reality in Europe. I do not want to discuss Europe in the way that it has been discussed in some interventions, except to say that those people seem to think that Europe can provide a substitute for the £5 billion, which the English are providing for the Welsh economy.

I predict that one of the first acts of the Welsh Assembly will be to acquire expensive premises in the rue de la Loi, not too far from the Charlemagne building—although its name may have been changed since asbestos was found in it. The hon. Member for Brecon and Radnorshire (Mr. Livsey) will know it well, because he spent some time in Brussels. Expensive premises, flying the red dragon banner, will be acquired. People will get on the Brussels cocktail circuit and acquire influence, and perhaps other things as well, in the process.

We have heard about the Institute of Economic Affairs and we have heard about Professor Kevin Morgan and such people. They are also financed by the English money that comes in. No doubt there will be an attempt to escape into Europe, but there is no escape in Europe from the position of the Welsh economy.

I return to the £5 billion deficit and take my cue from the references to the single currency. If the budget deficit was related to GDP—which is about £30 billion, or perhaps more in the past year—Wales could never qualify for the single currency. With a £5 billion deficit and a GDP of £30 billion, Wales has a budget deficit of more than 15 per cent., so it does not meet the criteria set out in the Maastricht treaty. Even if we round the figure down to 15 per cent., we have to remember that Greece has a deficit of 8 per cent. and cannot get into the single currency. On that score alone, there is no escape in Europe from the reality of Wales being part of the United Kingdom.

We have rightly talked a lot about objective 1 status. It is not easy to find out how much money comes to Wales from the various European funds. I have excluded from my estimates any payments under the common agricultural policy, because I cannot work that figure out. I have also excluded any notional expenditure that Wales makes into Europe, because Britain is a net contributor. Perhaps they balance each other out—I hope so.

I estimate that, over the past five years, Wales has received about £300 million a year from European Union structural funds—under objectives 2 and 5b—and Community funds such as RECHAR and various other odds and ends. That is a lot of money, but set against the £5 billion a year that comes from the British Union it is a mere drop in the ocean.

If the assorted ranks of Plaid Cymru had all been present for the debate, rather than just the reasonable hon. Member for Meirionnydd Nant Conwy (Mr. Llwyd), they would no doubt have jumped up and shouted at me about the cohesion fund. The Republic of Ireland receives payments from the cohesion fund because its GDP is lower than that of the United Kingdom. As Wales is not treated as a separate nation state in the Council of Ministers, we do not receive such funds. However, let us add the cohesion funds, which would be about the same as Ireland receives—

They have been abolished.

I do not know whether they have been abolished—I think the Spaniards would have something to say about that—but I am talking about the past five years. Perhaps they will be abolished. If we had qualified for cohesion funds in the past five years, we would have received £150 million—this time I have rounded the figure up. However, we would have lost the £5 billion. We do not receive the cohesion funds because we are a member of the British Union, whose GDP is too high. Leaving that aside, let us add the £150 million of cohesion funds.

We have been told that the next six years will be bonanza years, because there will be objective 1 money. I hope so. I have heard the figure of £2 billion, but I do not know whether that will survive the meetings in Berlin this weekend—let us hope that it does. If my mathematics are not too bad, that comes to £330 million a year over the next six years. What would happen to objective 2 and 5b assistance if we received objective 1 money? I have no idea, but presumably it would be slightly less. If it were halved, and we received £2 billion-worth of objective 1 assistance plus a little objective 2 money, we would get £500 million over the next six years. [Interruption.] The hon. Member for Brecon and Radnorshire (Mr. Livsey) seems to be nodding. He understands these matters, because he goes to Brussels and talks to people.

Occasionally.

Not too often, I hope.

Plaid Cymru wants to trade in the British Union and get the European Union—

Will the right hon. Gentleman give way?

I have at last managed to provoke the hon. Gentleman to intervene.

I have not intervened before, because quite frankly this is fag packet economics. I can think of several amounts that the right hon. Gentleman could take into account. For example, every large company operating in Wales pays tax outside Wales. That is a huge figure, and there are many such others. I should be delighted to argue these points with him at another time, but at the moment he is, with respect, talking fag packet, unrealistic rubbish.

I am glad that I managed to provoke the hon. Gentleman. I was hoping that the right hon. Member for Caernarfon (Mr. Wigley) would be here, because he would have got on his feet much sooner. Over the years, the nationalists have tried to knock these figures down—there have been various articles in the Western Mail and other worthy publications—but they have never managed to do so. It is quite simple: if Wales has the lowest income per head in the United Kingdom, obviously expenditure must be greater than the tax raised. The nationalists used to talk about defence expenditure, but they have gone off that now.

That is a good point.

Indeed. I am surprised that the hon. Gentleman did not mention defence expenditure.

That is the position we are in, and £500 million against £5 billion is a small sum.

I have always thought that Welsh day debates, the Welsh Office, which was established in 1964, and now the Welsh Assembly, were introduced to preserve Welsh identity. There is also the democratic element, and the notion that the Welsh Office can runs things better than the Department of Trade and Industry or the Home Office. However, underlying all that is the need for institutions in Wales to preserve national identity—I think that is the vogue word. They are required even more now because we live in a world of global capitalism and global economics, in which the driving force of economics breaks down loyalties in communities, between individuals and between nation states.

The Welsh Assembly will exist partly to preserve Wales's national identity. I hope that it does not become a national whingeing Assembly where we are always attacking the Treasury, the London Government and the British state, and where we whinge about what more we should get, such as increased powers of taxation when there is no tax base. I hope that it does not become a place where we talk about devolution being a process and not an event, and about wanting more powers.

If we go down that road, we shall not be able fully to utilise the Assembly as a bulwark of the Welsh national identity and to improve Welsh democracy and the Welsh economy. We will be able to do that only if we recognise the realities of Wales's parlous economic condition.

I apologised to Madam Speaker earlier, and I now apologise to the House, for not having been present at the opening of the debate. My plans were made before we adopted the extraordinary arrangements for Thursdays in this part-time Parliament. The Speaker is well aware of my views on that, and I have been ruled out of order more than once for having drawn attention to them, so I shall not go down that road again today.

Several Labour Members have referred to the parlous state of the Welsh economy—or at least to the relatively less-well-off state of its economy. I want to draw attention to the regional trends survey published by the Confederation of British Industry on 9 February, which states:

"General business optimism has declined more rapidly in Wales than anywhere else in the United Kingdom … Output has fallen markedly, with similar falls expected in the next four months, in addition to 1,000 further job cuts forecast between the final quarter of last year and the first quarter of 1999."

I appreciate that the hon. Gentleman's previous arrangements prevented him from being present for the opening speeches, but surely, at the very least, communications within his party should have enabled him to check with the shadow Minister with responsibility for constitutional affairs, because that report was mentioned at length in the opening speech from your side of the House. It is old news, and we have heard it before. It would have been much better for you to address your constituents elsewhere.

Order. They are not my constituents and it is not my side of the House.

The hon. Member for Bridgend (Mr. Griffiths)—from the party of spin—will know that these messages bear repetition. Indeed, the more they are repeated, the more likely it is that the message will be received and recorded.

There has been a significant rise in the rate of home repossessions because of unpaid mortgage repayments—an increase of 1,000 last year. In addition to the problems in the Welsh economy, there are problems for the agricultural sector. The problems of Welsh agriculture are not new. In recent years, as a result of those problems, my family withdrew from farming at Whitland on the border between Carmarthenshire and Pembrokeshire to farm in New South Wales. Although the problems have been compounding for years, it is now true that farmers in Wales have never been poorer, and they face new problems. We know that the arrangements under discussion for reform of the common agricultural policy will pose new challenges and problems to Welsh agriculture.

I wonder whether Ministers and hon. Members recognise the potential problems facing agriculture as a consequence of the increase in charges to be levied by the meat hygiene service, and the potential devastation that that may do to many livestock markets. There are huge challenges for agriculture and industry in Wales.

The right hon. Member for Llanelli (Mr. Davies) referred to the fiscal deficit; the huge challenge facing the Welsh economy in the coming years will compound that fiscal deficit. The single European currency was mentioned by the right hon. Gentleman. The problem that the Welsh economy will face is that it runs counter-cyclical to the average European economy. Its peaks and troughs are at a different time from the average European cycle.

The European central bank is insulated from any lobbying by the regions of Europe that will be adversely affected by its interest rate policy. Indeed, Governments that make representations will stand to be fined under the existing treaty structure. Counter-cyclical economies, such as that of Wales, will find that their fiscal deficits will be exaggerated. In times of inflation, the rate of inflation in Wales will be exaggerated, and at times of unemployment, its unemployment rate will be exaggerated by the interest rate policy pursued on behalf of the European norm.

It was instructive that the right hon. Member for Llanelli drew attention to fiscal deficits, which are seen as a way around the differential effects on regions which suffer disadvantages, as Wales would. There would be an expectation that the fiscal deficit would grow, and be required to grow, so that Wales could be compensated for the adverse interest rate policy by receiving a much larger fiscal inflow from the rest of the EU.

The problem is that the arrangements to do that are not in place in Europe, as they are in the United States. A state in the United States suffering adversely as a consequence of the policies of the Federal Reserve—for example, running a recession when the rest of the economy was in boom—would expect to receive a considerable increase in federal funding to ameliorate the effects. That is not in place in terms of any single currency that we might enter. Therefore, the full brunt of the adverse consequences of the interest rate policy will be felt in terms of unemployment in Wales.

That is a challenge with which the leadership in Wales and Welsh Members of Parliament must come to terms, and about which they must make representations to the Government. Given the Government's ability to take representations from this House, I suspect that the best way of getting through to Alastair Campbell might be to ring The Sun poll on the issue. They can do so by dialling 0660 100 721.