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Mr. Wigley: In case we do not have time otherwise, will the Minister clarify whether the assembly will be entitled to keep the revenue obtained by asset sales?

Mr. Hain: That depends on what the asset sale is. If it is a property owned by the assembly--an office block, say--there would be a case for that. If there were a privatisation in Wales--such as the privatisation of Welsh Water--the returns would go back to the Treasury.

The assembly will not be responsible for all Government expenditure in Wales and some of the expenditure for which it will be responsible will continue to be outside the block arrangements, such as most Europe-funded agriculture expenditure--a point that was mentioned by my hon. Friend the Member for Merthyr Tydfil and Rhymney.

Any reference to the Barnett formula in the Bill would mean that the whole system would need to be built into legislation. It may not be in the Bill, but the formula--this is an important point; it has not been lightly done--is referred to in the financial memorandum to the Bill, which again shows the Government's continuing commitment to retaining the present arrangements. However, it would not be meaningful or practical to include the details of the formula in the Bill itself. Changes to the Welsh block will continue to be determined by a formula, not by annual negotiations, as the amendments would require.

I remind the Committee that the formula and block rules have operated for nearly two decades without being included in legislation. During that period, they have operated entirely satisfactorily in terms of their mechanical operation, even under a Conservative Government who were hostile to Wales--[Interruption.] The Conservative Government were indeed hostile to Wales, as any of my constituents would confirm, in terms of the repeated attacks and insults heaped on Wales and the denial of our democracy.

To ensure that the formula and block rules are entirely open and subject to scrutiny, the Government, for the first time since the Barnett formula came into being--we deserve credit for this--published the principles that govern the block and formula arrangements on 8 December. I did not hear a chorus of criticism in the House when that document was published.

We are committed to publishing the full rules in due course and any revisions to them. Any major changes to the block and formula rules will be carried out only after a full study of relevant spending needs. That would be the time to consider such factors as GDP, sparsity of population and relative deprivation. The National Assembly for Wales would be fully involved in any such study.

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My right hon. Friend the Member for Llanelli raised important points about concordats with the Treasury. There will indeed be a concordat between the assembly and the Treasury. It will cover, for example, the information to be exchanged between the assembly and Treasury. The Barnett formula and block rules will be published separately from any such concordat. The principles of the formula and the block rules were published in December, and we are committed to publishing the full block and formula rules and any significant changes to them.

Mr. Denzil Davies: Is my hon. Friend saying that the Barnett formula principles will not be in the concordat--the agreement--between the assembly and the Treasury?

Mr. Hain: The Barnett formula principles have already been published. The rules will also be published and the financial arrangements between the assembly and the Treasury will be published in a concordat.

The Government's view is that the determination of the Welsh block is best handled administratively, as it is now, but in a much more open and transparent fashion. Clause 81 obliges my right hon. Friend the Secretary of State to lay before the assembly a written statement of its estimated resources for each financial year. That will include details of how the total amounts have been calculated through the block and the formula system. That statement is the proper one in which to set out how the formula has been operated in any given year.

I welcome the wish to ensure that Wales's needs for a proportionately higher share of UK resources continue to be recognised, but it would not be appropriate to insert that sentiment in the Bill. I hope that my full explanation will satisfy the Committee why it is inappropriate to include the Barnett formula in legislation. The new openness that we propose about the detail of the formula and its operation each year is a much better guarantee of a fair settlement, and Parliament and the assembly will, for the first time, be able to see exactly how the formula operates. That is a stronger and more efficient form of accountability than attempting to capture the procedures in primary legislation.

Amendment No. 18 would involve unnecessary bureaucracy. It would strangle the assembly with bureaucracy--but perhaps that is not surprising because it is a Conservative amendment. It would require certificates to precede each payment by a Minister or Department. The overall position will be adequately set out in the statement for which clause 81 provides. The amendment is typical of the Opposition's churlish and niggling approach to the Bill.

There is adequate protection in our proposed arrangements to secure the financial basis for the assembly's budget. I ask the hon. Member for Brecon and Radnorshire (Mr. Livsey) not to press his amendment to a vote, and I hope that the Committee will support the clause.

Mr. Livsey: The debate has been wide-ranging, and many important principles have been enunciated in an effort to define how the assembly will be funded. Hon. Members have tended to focus on the Barnett formula, which has been operating for two decades.

The right hon. Member for Llanelli (Mr. Davies) raised several important issues and said that much more money is coming in than is calculated by the Barnett formula

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because of social security and other payments. The resource transfer mechanism needs to be better defined in the Bill, and the amendments relate to the Barnett formula. As the right hon. Member for Devizes (Mr. Ancram) raised similar issues, there seems to be some agreement that the method of funding should be defined. There is no complacency in the Treasury. The Secretary of State has taken a great interest in trying to ensure adequate funding for the assembly.

The hon. Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) said that the Barnett formula was convenient because it avoided negotiations. That is a strong point. I understand the views of the right hon. Member for Caernarfon (Mr. Wigley) who tabled amendment No. 435 on the crucial issue of need. As hon. Members have said, Wales has many needs. It has low wages, a low gross domestic product, high unemployment and high social deprivation. I did not quite understand the rather intemperate speech made by the hon. Member for Aldridge-Brownhills (Mr. Shepherd). I am not a nationalist, but many members of my family lost the Welsh language because of discrimination. There are historical reasons for the majority of people in Wales no longer speaking the native tongue. Only about 20 per cent. of its people speak Welsh.

6.45 pm

The hon. Member for Clwyd, West (Mr. Thomas) spoke about an insurance policy in relation to the Barnett formula advanced by the right hon. Member for Llanelli. We have certainly had a healthy and open debate on many matters. The hon. Member for Cardiff, West (Mr. Morgan) rightly said that there was a need for a defined formula. The debate has identified the many problems that arise from rural and urban deprivation in Wales and has shown the requirement for a definition of need. That has not been spelt out in the Bill. We have debated the complex issues. In some respects, the Barnett formula has stood Wales in good stead, but there has been a reduction in GDP.

I was glad to hear the Minister say that the concordat will be different from the statement in the explanatory and financial memorandum, in that the Barnett formula will be acknowledged. He spoke about deprivation in Wales. The Bill must refer to the principles of resource transfer. If it is not acceptable to put the Barnett formula in the Bill, some kind of statement must be made about how to proceed.

In the light of the full debate on it, I beg to ask leave to withdraw the amendment. Amendment, by leave, withdrawn.

Mr. Robert Syms (Poole): I beg to move amendment No. 15, in page 38, line 32, at end insert--

'(3) The Secretary of State shall receive representations and consult interested parties, including the Assembly, as to payments made under this section.'.

The Secretary of State will continue to be accountable to Parliament, but he will become the paymaster of the assembly. That is made clear in the notes on clauses, which state that he will be free to determine the amount of such payments. His role will be as a conduit for resources and it is important to amend the Bill to make him more accountable to the people of Wales.

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The assembly will be one of the few examples of an elected body with no direct financial link with voters. Local authorities and even parish councils have some sort of financial link. The briefing paper in the Library states:

We are not so sure about Cardiff. Those of us who love the Union wish to strengthen the arrangement by trying to get around the disadvantages of the arrangements in the Bill.

Administrative devolution is an unusual creation and will require creative and imaginative suggestions--such as our amendment--to make it work. We therefore feel that incorporating amendment No. 15 would be an improvement. We feel also that it is not unreasonable that the assembly should be consulted on financial matters. Indeed, there is no reason why it should not be consulted.

We can now clearly discern in the Bill the shape of the assembly. We cannot, however, discern the Secretary of State's role. Our amendment would ensure that the Secretary of State's future role is defined. As Secretaries of State, Members of the Assembly, hon. Members and Governments come and go, our amendment would provide a safeguard by establishing a formal consultative process so that people in Wales may feed their views back to Westminster through the Secretary of State.

We believe also that the consultation process should include other bodies, such as trade unions and the Confederation of British Industry. A formal consultative procedure could be useful to the Secretary of State in establishing a financial background for those from Wales who provide advice and participate in consultation.

We have heard that the Bill is not an event but a process and that further powers may be given. If we provide a consultative role for both the assembly and the people of Wales, there will be a useful check in ensuring that the assembly's and people's views are fed back, via the Secretary of State, to the House.

We have heard much about accountability, inclusiveness and openness, yet clause 80 states nakedly the power of the Secretary of State. Although--to give credit to the Secretary of State--some of the proposals that we are debating are meant to reduce that power, our amendment would help to achieve that end. Creating a formal consultation process would help over a period of years to improve the role and relationship between the assembly and Westminster.

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