THE IMPACT OF THE GOVERNMENT'S DEVOLUTION
PROPOSALS ON ECONOMIC DEVELOPMENT AND LOCAL GOVERNMENT IN WALES
Summary of conclusions and recommendations
(a) We believe that there is considerable
merit in the case for a merger between the Welsh Office Industry
Department and the enhanced Welsh Development Agency; and we recommend
that this should be one of the first matters which the new Assembly
addresses. (paragraph 17).
(b) As with the position of the Welsh
Office Industry Department vis-à-vis the new structure,
we are content for the moment with the existing arrangement whereby
the Wales Tourist Board remains as a freestanding organisation
outside the enhanced Welsh Development Agency. As with the WOID,
however, we feel that the position of the WTB may have to be reexamined
by the Assembly in due course (paragraph 21).
(c) While we welcome the commitment of
the Secretary of State and the Chairman of the DBRW and WDA to
a vigorous rural development policy, we recognise that the Assembly
will be subjected to conflicting pressures; and it is vital that
the problems of rural areas be properly addressed under a devolved
system (paragraph 26).
(d) The creation of the enhanced WDA has
been broadly welcomed throughout Wales. If it is to be a success,
however, it will need to be adequately resourced, focussed and
funded. The existing funds of the three uniting bodies more thinly
spread across the whole of Wales may not prove sufficient for
the tasks of regeneration faced by the new organisation. The
Agency will also need to address the concerns of small businesses,
in view of the strong criticisms made of it during the course
of our inquiry by the Federation of Small Businesses (paragraph
27).
(e) It is vital for the continuing economic
health of rural Wales that the enhanced WDA maintain financial
support for specialist consultancy services for small and medium
enterprises through agencies such as the Mid Wales Export Association-but
throughout all of rural Wales (paragraph 29).
(f) It would be presumptuous of us to
make any recommendation about the way in which the Assembly should
allocate the resources for which it will be responsible. However,
given the importance of agriculture for a large part of Wales,
we feel that the time has come for the agricultural sector to
be seen as an industry like any other-and an important one at
that-and for economic development policies to reflect that reality
in areas such as marketing and business development (paragraph
36).
(g) As our inquiry progressed, we realised
that the debate over the most effective means of encouraging investment
in industry and economic growth was not only the most important
issue facing the enhanced Welsh Development Agency, but that it
was far too complex to address within the context of what had
become a fairly wide-ranging investigation. We therefore intend
to examine the matter in depth in a further investigation into
industrial investment in Wales-on which we shall be taking evidence
in the very near future (paragraph 45).
(h) The Bill provides for a Partnership
Council between the Assembly and local government. The precise
nature of the relationship between the two sides remains to be
determined as the details of how the Assembly is to work are filled
in. Moreover, it should not be supposed that the Partnership
Council will be a panacea for the problems which inevitably arise
over such issues as local government funding (paragraph 56).
(i) We strongly support the concept of
a Association for local government in Wales as the most efficient
mechanism for consultation between local authorities, the Assembly
and the Secretary of State. Whether the present format of the
Welsh
(j) Local Government Association is
the most appropriate one for that purpose is not for us to judge;
however, we suspect that unless there be some form of consultation
machinery which brings together all the unitary authorities, the
Partnership Council may prove very unwieldy (paragraph 59).
(k) We are sure that it makes sense to
involve local authorities in the process of economic development
since they, after all, are the planning authorities and will have
to provide many of the ancillary services which inward investment
requires. Equally, however, the enhanced Welsh Development Agency
must remain responsible for overall delivery under the supervision
of the Assembly. (paragraph 62).
(l) The WLGA told us that it would like
to see fifty per cent of the Board of the new WDA to be chosen
from among elected local authority representative, in the same
manner as local authority members are currently appointed to the
LAW. While we can see merit in a degree of local authority representation
on the Board of the enhanced WDA, we feel that the vast majority
of its members must have business and technical expertise. The
Board will be responsible for carrying out the policies laid down
by the Assembly; to import a large political element on to the
Board itself would run the risk of blurring the lines of political
accountability for policy execution (paragraph 63).
(m) An alternative approach which might
be worthy of further consideration is for the regional committees
of the Assembly itself to be given powers of cooption under
which representatives of local authorities, business and the trades
unions could be brought into the process of consultation over
regional strategies and economic planning (paragraph 64).
(n) Higher education is important not
only to the culture and self-image of Wales as a modern, progressive
society, but also to the Welsh economy. Cardiff University Devolution
Group estimated that the sector generates about 23,000 jobs and
an annual turnover of some £1 billion; in short, it is a
major business producing a high-value-added product. It is therefore
important that devolution does not cause disturbance to the sector-especially
as regards research funding, where the Welsh institutions of higher
education will need to be able to compete on equal terms with
their English and Scottish counterparts if they are to continue
to be successful. It is essential that a smooth transition be
made from the present system to the devolved one; and how that
is to be achieved will have to be a matter of negotiation between
the Assembly, the Higher Education Funding Council for Wales,
and the sector itself. It is, however, vital that the importance
of the sector be recognised within the new arrangements. This
is a complex matter and, in the absence of a body of firm evidence,
we make no specific recommendations at the present juncture-but
we intend to return to the issue at a later date (paragraph 69).
(o) While we are conscious of the potential
difficulties of such a course, we nevertheless recommend that
further consideration should be given to the operation of the
system for calling-in planning applications and determining appeals.
There are a number of options which might be considered: for
example, to retain the present system under the control of the
Secretary of State or, alternatively, to make a single person
or a small panel within the Assembly structure, rather than a
full Committee, responsible under the Assembly's Standing Orders
for the exercise of those particular powers. We prefer the panel
option (paragraph 75).
(p) It is our opinion that, at the very
least, serious thought should be given to making proper medium-term
transitional arrangements for call-in of planning applications
and determination of appeals in the event of the transfer foreshadowed
in the draft Transfer of Functions (National Assembly for Wales)
Order 1998. In our view, this would be best achieved by the Secretary
of State retaining a reserve power for a twelve-month interim
period (paragraph 76).
(q) In addition, when those powers are
transferred the Assembly's Standing Orders should provide clear
criteria to govern appeals and the types of planning applications
which should be called in; and we would hope that, in developing
those criteria, the Assembly would have regard to the need to
promote sustainable development wherever possible (paragraph 77).
(r) We would very strongly urge that
the regional committees of the Assembly be established on the
same boundaries as the regional structure for the Welsh Development
Agency, Training and Enterprise Councils, the Regional Economic
Fora and similar groupings; and we suggest that the Secretary
of State draw the matter to the attention of the National Assembly
Advisory Group (paragraph 83).
(s) We are convinced that there is a continuing
need for a readily-understood mechanism for allocating expenditure
among the four constituent territories of the United Kingdom;
up to now, the Barnett Formula has, however imperfectly, provided
such a mechanism. Given the relative inflexibility of the existing
Formula, however, we feel that the time has come to move beyond
Barnett and, while we accept that any such mechanism must be dealt
with at a United Kingdom level (which means that responsibility
for its operation must remain with HM Treasury), it must be made
much more responsive to changing circumstances (paragraph 89).
(t) We welcome the Government's commitment
to an annual recalculation of the population element of the Barnett
Formula as a first step. We agree with the Treasury Committee,
however, that the needs assessment within the Formula should be
brought up to date (paragraph 90).
(u) Under devolution, Wales will continue
to need a strong voice in Cabinet in order to ensure that its
special needs are addressed in United-Kingdom-wide policy-making-and
the continuation of the office of Secretary of State for Wales
will provide that voice (paragraph 93).
(v) It seems to us to be appropriate that
there should be some kind of formal mechanism by which the Secretary
of State is able to attend meetings of the Assembly; in our view,
however, that attendance should be by invitation of the Assembly
only (paragraph 96).
(w) We have already noted the opinion
of the WLGA that the Secretary of State has a potential role as
arbiter between local government and the Assembly. We suspect
that this will be an informal function rather than a statutory
one. Indeed, we would imagine that if the new system is to work
as intended, then many of the contacts between the Secretary of
State, local government and the Assembly are, of their very nature,
going to have to be conducted on an informal basis-but they will
be no less important for that (paragraph 97).
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