Scrutator: Welcome revival in valleys

PERISH the thought, but on present evidence it looks as though Ted Heath got it plumb right with his vision - the antithesis of Thatcherism - of a corporate Britain, with unions, government and industry working in harmony.

As the recession/slump has deepened, so the boundary between former 'development areas' and the once-prosperous South-east has become increasingly blurred.

Nowhere is the line more imprecise than in South Wales, where unemployment now hovers around the national average. Yet the region, especially the mining valleys such as the Rhondda, has been a basket- case since the coal industry started to decline in the 1920s.

Over the decades, things got worse, as new industries attracted by government grants (first given as long ago as 1934) battled unsuccessfully against a steady stream of job losses from the mines, steelworks and docks. But over the past decade, despite the closure of the Ebbw Vale steelworks and the virtual disappearance of coal mining, it looks as though the fortunes of the employment war have turned in favour of the principality.

This is due largely, if not entirely, to the fact that government policy there has been totally at odds with the pure Thatcherite doctrine being purveyed in the rest of Britain. A series of secretaries of state for Wales, notably that arch-Heathite Peter Walker, have forged ahead with a highly interventionist policy, crusading for new investment at home and abroad, and supervising a dense network of government- funded bodies - the sort of positive policy scorned by the rest of the administration.

Moreover, and crucially, the machinery was intended to attract a balance of manufacturing and service industries, at the very time that official opinion was bleating about transforming Britain into a post-industrial, purely service-oriented economy - possibly the silliest and most economically damaging credo ever evolved by the Great and the Good (and that's saying a lot).

The result is that the manufacturing companies attracted to Wales - especially Japanese transplants - have proved far more resistant to recession than those in the candy-floss economy of the South-east.

Indeed, if present trends continue for even a few more months, Wales could lose the development area advantages it has enjoyed for nigh on 60 years, in favour of such newly stricken regions as Surrey or Hampshire.

Nevertheless, and ignoring the evidence, loyal Thatcherites prefer to blame our current troubles on Whitehall's disastrous love affair with the exchange rate mechanism.

In last week's Spectator Lord Ridley attributed our recent industrial decline to the way the ERM debate 'diverted attention from the productive side of the economy'. When he was at the DTI 'the Chancellor took little or no notice of me or my department's views on the impact of his policies on industry . . . the interests of industry should have a far bigger input into the way macro- economic policy is developed'.

But he still believes 'the industry budget of the DTI should be abolished'. Not a remark calculated to be welcome in the valleys.