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Mr. Mark Francois (Rayleigh) (Con): I am sure that the hon. Gentleman is aware that a meeting took place last week at which revised housing targets were set for the east of England. As a result, the number of houses to be built in Essex up to 2021 was increased from 110,000 to 131,400, very much against the wishes of the people of Essex. That was a regional level decision. Do the Liberal Democrats support that new housing target for Essex?

Mr. Davey: The problem that we have with the regional housing boards is that they are not democratic. They cannot therefore take into account the views of the people of Essex, for example. Our argument about these regional tiers of government is that, if they were made more accountable, the people could ensure that they answered for the decisions that they took.

Mr. Francois: I entirely take the hon. Gentleman's point, but do the Liberal Democrats support that new target—yes or no?

Mr. Davey: The hon. Gentleman is missing the point. He wants to ensure that the voice of the people of Essex is heard, but will he support an elected regional assembly in that part of the world?

I turn now to transport. The most dispiriting aspect of the White Paper "Your Region, Your Choice" was its failure to devolve powers in respect of transport. I understand that there are people in the Cabinet and at other senior levels of the Government who believe that many aspects of transport powers should be devolved. That would make huge sense, given the other economic functions involved.

The first element of transport policy that I want to look at is roads. The Highways Agency already operates and produces plans on a regional basis. It would therefore be relatively easy to reorganise the functions of its officials as part of the draft Bill. That would make sense, as the agency would then be able to link in with the regional planning boards and regional development agencies, and with the sustainable duties to be placed on the elected regional assemblies. Transferring trunk road powers from the Secretary of State to the elected regional assemblies would send a clear signal that the Government were committed to devolution.

The constituency of my right hon. Friend the Member for Berwick-upon-Tweed offers an example. There, people have been fighting for many years to secure the

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dualling of the A1, a move that has been resisted by successive Secretaries of State here in London. An elected regional assembly with powers over trunk roads would mean that the people of the north-east would be able to get the A1 turned into a dual carriageway. That would be a good example of devolution representing the interests of a region, by making sure that the things that people want to get done do get done.

Mr. Gordon Prentice: How would a region raise the money for that? Does the hon. Gentleman advocate a regional income tax as well as a local income tax? Is he arguing that there should be legislative as well as administrative devolution, on a par with what is happening in Wales?

Mr. Davey: No, I am not in favour of legislative devolution. However, my party is very much against regional council tax precepting. We think that it would be much fairer and more efficient if the money were obtained through the income tax system. We want the block grants that are spent by Secretaries of State to be given to the regional assemblies, so that they can decide priorities. That is what happens in Scotland and Wales, and it works. I presume that the hon. Gentleman supported Scottish and Welsh devolution, although, as he does not often agree with his own Front Bench, he may not have done. We believe that the block grant money could be used in the way that I have set out.

Mr. George Osborne: I am not following the hon. Gentleman's argument. Decisions to dual the A1 or expand the M6 have to be taken by national Government. The costs are so huge that no regional block grant would be big enough. He is therefore erroneous in saying that a regional government could decide to dual the A1.

Mr. Davey: First of all, I did not mention motorways, only trunk roads. If the hon. Gentleman thinks that dualling the A1 is the same as making it a motorway he clearly has no knowledge of road transport policy. Moreover, the costs involved are not so great as he seems to think. If the budgets come down from Whitehall to the regional assemblies, they can make decisions about priorities. That is what devolution ought to be about.

Other aspects of transport policy could be devolved in due course. I do not suggest that this is the right time to devolve the strategy governing the rail industry. The Government are in a mess on the matter, and have put the industry in turmoil, but it could happen in time. The Strategic Rail Authority is already organised on a regional basis, so it is possible that it could be properly regionalised in five or 10 years.

Other transport policy powers could be devolved to the regions. The lesson is that organising transport policy in Whitehall has not produced happy results. The Deputy Prime Minister must know that, as he had enough problems sorting out transport policy across the country. The problem is that, in many cases, Whitehall does not know best and it has too many other things to do. Giving away powers so that other elected bodies can deal with some matters would ensure that the country's transport policy was far more effective overall.

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I have mentioned two matters—the role of the learning and skills councils, and the Highways Agency's potential in respect of transport—that the Government need to consider before producing the draft Bill. The environment is a third area worth looking at. The Department for Environment, Food and Rural Affairs contains a number of quangos, some aspects of whose work should be devolved, either to regional government or, at a lower level, local authorities. We know that Lord Haskins was pointing in that direction in his review. Aspects of the work of the Environment Agency, the Forestry Commission and the Countryside Agency must be prime targets for regionalisation, or even localisation.

Some of the money that is spent by the Office of the Deputy Prime Minister on area-based initiatives, for example, should be given to regional assemblies so that they can decide their priorities on economic regeneration. If the Government did that, how attractive would it be to people in the regions? The chances of winning a yes vote in a referendum would be massively improved.

I wish the Deputy Prime Minister well in his battles in Whitehall and his ministerial colleagues. He might be reluctant to reopen some of the negotiations that must have been held before the White Paper was published, but from his sojourns throughout the three northern regions, he will know that a real political dynamic exists and that he must reopen the negotiations to ensure that what the Government offer is richer.

I also wish the Deputy Prime Minister well in the major public hearings about which we are learning, but to take the point made by the right hon. Member for Skipton and Ripon (Mr. Curry), I hope that he will allow the House to debate in Government time how we should devolve more powers. I hope that we will hear in the reply that when we get an announcement on the basket of further powers to be devolved, a statement will be made in the House and a proper publication will be produced prior to, or to coincide with, publication of the draft Bill.

I thought that it was brave of the Conservatives to initiate this debate. We discovered from the Deputy Prime Minister and Labour Members' interventions that they have not exactly sorted out what they want to do. The right hon. Member for Skipton and Ripon has some problems in trying to balance his views with those of his party. His position is distinguished and well thought through, but the problem is that it is diametrically opposed to that of the party for which he speaks. When we debated the matter during the Queen's Speech debate, it was interesting that he said:

The Conservative party seems to be showing an almost Disraelian attitude to regional devolution under the right hon. Gentleman. He wants to outbid the Labour Government and go even further. I hope that he will come forward with detailed policies and try to persuade

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the right hon. and learned Member for Folkestone and Hythe (Mr. Howard) of that, because it really would represent a contribution to the debate.

Geraldine Smith: Does the hon. Gentleman think that the matter should not be turned into a party political issue? Does he accept that there are different views on both sides of the House? I appreciate that the Liberal view is to support both sides, but that is nothing new for the Liberals.

Mr. Davey: I wish that I had not given way to the hon. Lady, just as the Deputy Prime Minister wishes that he had not given way to her. I am afraid that we have a clear position: we support much stronger devolution, and we are on the Deputy Prime Minister's side, as far as he goes, but we want him to go further. We are very much against the position adopted by the hon. Lady.

I have succour for the right hon. Member for Skipton and Ripon because some thinkers in the Conservative party actually agree with him.

Mr. Dawson: Name them.

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