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Mr. Livsey: I am grateful to the hon. Gentleman to allow me to intervene, because it seems that I shall not be able to make a speech during the debate. I apologise for being absent earlier. Some Territorial Army units in my constituency are under threat and I had to leave the Chamber on that account.
The news yesterday was that the international division of the WDA might be cut by four people while the DBRW might be cut by 60. If that is true, the social development and business connect functions of the DBRW are under threat. I hope that the Minister will reassure us that these cuts will not take place as a result of amalgamating and restructuring the WDA into a powerhouse.
Mr. Morgan:
If what the hon. Gentleman is saying is true, we want to know from the Minister from where the savings of £3 million will come. Will each part share the cuts and misery proportionately so that ex-DBRW parts are subject to a cut, along with the WDA and its international division? Will it be proportional? The suspicion is that the international division will be subject to the biggest cut and may, as a result, fall below the level of a critical mass in overseas matters.
Mr. Letwin:
I shall be brief, as time is pressing. My speech flows from the remarks, as has often been the case during the Bill's consideration in Committee, of the right hon. Member for Llanelli (Mr. Davies). I draw the Committee's attention to a constitutional question that arises as a result of the definition of social development.
I remind the Committee that there is something procedurally odd about what is going on in this clause, as clause 29(1) gives the Welsh assembly enormous powers to redefine, as the Secretary of State has eloquently described on other occasions, the role of the Welsh Development Agency, and, indeed, to terminate its functions entirely, if I am not mistaken. It is therefore odd that the Government have chosen to extend the WDA's role by statute of the House rather than allow the assembly to make that decision, as the assembly will be allowed to do in relation to the continuance or restriction of the WDA's function. We must therefore look at what importance will be attached to the change in the WDA's function.
Like the right hon. Gentleman, I have looked at different sources for a definition of "social development". The European literature, which will be extremely important guidance to United Kingdom courts in determining this, has a much wider definition than that suggested by the right hon. Gentleman. The transfer of functions order lists all the classes of activity that could be classed as economic.
When one sees the classes of activity that will be transferred to the assembly, it could be argued--if time permitted, I would do so--that each and every one of the remaining non-economic functions could be classed as social development. There is at least a risk--perhaps a severe one--that the WDA, if it so chose, could gradually establish a right to intervene in every area of government in which the assembly will also have a right to intervene.
Section 1(6) of the Welsh Development Agency Act 1975 states what the agency's powers are in relation to its scope. It says:
We must then look at where the money flows. We have, I fear, a confused picture. Perhaps the Minister can reassure us that I have misunderstood the position. I believe that, although the assembly will be responsible for the current expenditure of the WDA, under section 18(3) of the Welsh Development Agency Act 1975, which does not appear to contain an order-making power that is being transferred under the transfer of functions order, the Treasury and the Secretary of State will determine the total expenditure of the WDA, because it falls to them to determine its aggregate level of external financing.
Looking some years ahead, to an assembly that is dominated by a political party or parties different from those that dominate the House and constitute the Government of the United Kingdom, we see the classic recipe for constitutional tension: an agency which can do everything which, broadly speaking, the assembly can do; which has the widest powers in relation to that scope; which is funded, at least in part, directly from the Government of the United Kingdom; and which can set itself up in opposition to the Welsh assembly.
The assembly will, of course, in part be the agency's paymaster. What a fertile field in which constitutional problems can arise, for example, if the Secretary of State of the day or the Treasury seek to use the WDA as a means of directing funding through the external financing limit powers, against the interests of its nominal paymaster--its current expenditure paymaster--and the body that is meant to be in charge of it.
Mr. Hain:
I am sorry to have to reply to the debate at this point. I realise that I might have stopped some of my hon. Friends from speaking, for which I apologise.
Amendments Nos. 374 and 493 would mean that the social development powers of the Development Board for Rural Wales were lost with the abolition of the board.
That is the important point. The White Paper "A Voice for Wales" set out the Government's plan to consolidate the functions of the DBRW and the Land Authority for Wales into the WDA, to provide a unified and comprehensive range of services for the whole of Wales. Indeed, that is done at local authority level, where regeneration plans reflect a comprehensive approach, involving economic, social and environmental development.
In the past, the DBRW has made effective use of its social powers to contribute to the development of rural communities, complementing the role of local authorities--for example, a £25,000 project in Ceredigion to convert a warehouse into a sports centre. Other instances include support for jazz and music festivals, opera performances and youth clubs.
The Bill clearly establishes the powers of the new agency to be a full and effective partner in economic and social development schemes all over Wales. Obviously, the way in which this power is used in the future will be subject to the wishes and guidance of the assembly, but these amendments would deny any prospect of progress in that direction.
I shall respond specifically to the typical probing and forensic points made by my right hon. Friend the Member for Llanelli (Mr. Davies). He raised legitimate points, in contrast to the somewhat legalistic points of the hon. Member for West Dorset (Mr. Letwin). I would not for a moment accuse the hon. Gentleman of misunderstanding the Bill, but he missed its point entirely and sought to confuse it in an argument--one that is fundamental to the Conservatives' opposition to the Bill--about tension between Westminster, which sets the funds for the assembly, and the assembly, which would control the new WDA powerhouse agency.
The social activities envisaged are pretty small-scale. I gave examples a moment ago. They would not threaten the overwhelming industrial and economic focus for the activities of the powerhouse. The new WDA will, of course, be accountable to the assembly. Its programmes, including social development, will therefore be subject to scrutiny by the assembly under section 1(14) of the Welsh Development Agency Act 1975. No Treasury consent will be required. If there were any question about the activity of the powerhouse veering too much, say, in a social direction, the assembly would be able to call it to account. It would scrutinise that and deal with any problems that arose.
My right hon. Friend the Member for Llanelli and my hon. Friend the Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) asked about the definition of the term "industrial" and the balance between business and industry. We propose to substitute the term "business" or "businesses" for "industry" or "industrial", which is used in the Welsh Development Agency Act. We have made that change simply to use a more up-to-date expression which better captures the nature of the modern Welsh economy.
"The Agency shall have power to do anything"--
a remarkable statement--
"whether in Wales or elsewhere, which is calculated to facilitate the discharge of their functions . . . or is incidental or conducive to their discharge."
That is the widest definition that could be given of the powers that a body could have, given to it by statute. If the scope of power given to it by statute broadly approximates that given to the Welsh assembly, there will be two bodies in Wales--one will be reformed; the other established--both of which appear to have, within roughly the same scope, broadly unlimited powers to do broadly anything, so long as they do it procedurally in the right manner.
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