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Ian Lucas: Just as a point of clarity, will the hon. Gentleman confirm that the Richard commission was set up by a Labour-Liberal coalition in the Welsh Assembly Government and that it was the price of the Liberals going into coalition?

Mr. Williams: I do not know whether it was the price of the Liberals going into coalition, but it was certainly a great virtue. Setting up the Richard commission was a great advance in the understanding of devolution in Wales, because it gave lots of people the opportunity to participate and to be consulted. Having set up the commission with the Labour Assembly Government's agreement, more consideration should have been given to it, as it was certainly a very expensive exercise.

Mrs. Gillan: I presume that the hon. Gentleman would agree that the introduction of the complicated process of Orders in Council was a surprise to Lord Richard and his commission. Does the hon. Gentleman agree that perhaps it would be better to allow the fledgling Assembly that is facing difficulties in the House today to develop and to absorb the separation of the Executive from the legislature before overburdening it with the complex Orders-in-Council procedure that very few people seem to understand?

Mr. Williams: I agree with the hon. Lady is one respect, namely, that the Orders-in-Council procedure is unnecessarily complicated. The Assembly will need some time to get to grips with the separation of the Executive from the legislature, but a commitment should have been given to follow the Richard commission's recommendation to move towards full legislative powers by 2011.

We want to give politicians in Wales the powers to make the decisions that will shape the future of Wales, without having to respond to the diktats of Whitehall. We want to give the people of Wales the opportunity to hold those politicians to account. Instead of that, the Bill contains a detailed, empire-building plan for the Secretary of State, under which Wales will not be governed by sound constitutional principles, but by the mood and whim of its ruler. What we are witnessing is the making of a self-proclaimed king of Wales. I have some experience of that in my constituency, where Richard Booth proclaimed himself king of Hay, and I have some understanding of a regal coup when I see one, but the Secretary of State is taking powers that are completely out of proportion and certainly unnecessary.

The truth is that Labour is split on devolution and always has been. That is why it gave birth to an emasculated Assembly in 1999, instead of a fully fledged Parliament. Six years on, Labour's devolution child may
 
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have been finally allowed to walk, but it has been placed in such powerful restrainers that it does so through no strength of its own. Indeed, under the Government's current proposals, the Welsh Assembly will be little more than a poodle on a retractable lead, held firmly in the Secretary of State's grip.

The Welsh Liberal Democrats want the Assembly to be set free of Westminster meddling on devolved issues, so that it is capable of doing what is right for the interests of the people of Wales, not what is right for the Welsh Labour party. On the basis of our pro-devolution stance alone, the Government will have our support on Second Reading, as it is only reasonable to give everyone the opportunity to have a mature and open discussion about how Wales should move forward. However, let us be clear that we fundamentally disagree with many provisions in the Bill, such as the Orders in Council procedure, the Secretary of State's role, the trigger mechanism for the referendum, the electoral system and the Assembly's size, to name but a few. We will table a series of amendments during proceedings on the Bill to turn the Welsh Assembly into what we believe it should be—a Welsh Senedd with primary law-making powers.

Mrs. Gillan: I hope that the hon. Gentleman will forgive me, but on the basis of what he has just said I invite him to join me in the Lobby tonight to vote for our reasoned amendment. As I have made very clear, we are not opposed to everything in the Bill—we want to work constructively with the Government on building on what the Assembly has achieved already and improving it—and the hon. Gentleman has just articulated the very reason for my reasoned amendment. We do not intend to vote against the Bill on Second Reading, but if what he has just said is Liberal party policy, I invite him and his hon. Friends to join us in the Lobby tonight.

Mr. Williams: We will not vote to decline the Bill a Second Reading and we will not vote with the Conservatives on their reasoned amendment because we believe that the Bill has enough structure to be improved, so that we can move towards the image and symbol that we believe the Welsh Senedd can be for the Welsh people.

Mr. David : Will the hon. Gentleman clarify whether he is in favour of the Assembly having tax-raising powers?

Mr. Williams: I will come to that later in my speech.

Despite the extensive and costly consultation by the Richard commission, the only solution that the Welsh Labour party came up with to move Wales forward was to turn to the Secretary of State's other hat as the Secretary of State for Northern Ireland. Is that lack of fresh thinking proof that his dual role is starting to take its toll? We cannot find anywhere other than Northern Ireland where Orders in Council exist or any example where they have worked well.

The Orders in Council set a precedent for political interference in a formal constitutional process by putting in the Secretary of State as doorkeeper to the new legislative initiatives. His party might hold high hopes of being in power for ever, but surely the role of
 
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any sensible politician in the devolved nation is to ensure that the long-term interest of Wales is secured above and beyond ephemeral political victories. To misunderstand that is fundamentally to misunderstand the nature of devolution. Perhaps Wales Office staff should also write a memo on devolution for the Secretary of State's attention. I understand that such a memo has been sent to all other central Government offices.

I would like to say a few words about part 5, which deals with finance. We welcome the setting up of a Welsh Consolidated Fund. That will bring more scrutiny and accountability to the finances of the Welsh Assembly and enable Welsh Assembly Members better to engage in the issues of probity and value for money. As the running costs of the Welsh Assembly and the Secretary of State for Wales will be deducted from the Welsh block grant before being put into the Welsh Consolidated Fund, will the Auditor General for Wales be able to investigate and comment on the expenditure of the Wales Office? This money comes directly out of the Wales block grant.

During the Bill's consideration in Committee, we also wish to consider the Barnett formula, which has been mentioned before. It was set up in 1978 and has been updated on a regular population-related basis. The 1978 element still remains and, since then, the population of Scotland has fallen in absolute terms as well as relative to the populations of England and Wales, while the Welsh population has risen. Although it has fallen in terms of England, it has risen substantially in terms of Scotland. This is no way to continue to fund the devolved Assemblies and Parliament and it would have been good if the Government had taken the opportunity to address this anachronism and anomaly that even Lord Barnett now says is inappropriate.

The Welsh Assembly does not have the powers to vary taxation that the Scottish Parliament has, so would the Government consider including in any referendum the opportunity for the Welsh people to express an opinion on that issue? Income tax-varying powers have been difficult to utilise in Scotland, but it may be that Wales should have powers over corporation tax or the unified business rate to encourage the economic development in Wales that still lags behind that in England. It would be interesting to hear the Government's view on these matters.

The Liberal Democrats will certainly support the Bill's Second Reading. However, there is much work to be done in Committee, so that the people of Wales will have confidence that the Welsh Assembly has the necessary powers to guide the delivery of services for which it is responsible.

8.13 pm

Mark Tami (Alyn and Deeside) (Lab): I, too, welcome the hon. Member for Chesham and Amersham (Mrs. Gillan) to her new job on the Opposition Front Bench. I also express my sorrow at the loss of Lord Merlyn-Rees and Lord Stratford—Tony Banks—who was a good friend. He was missed when he left this House, and Parliament will certainly miss him. He was a great character, and we really lack such people. It is a very sad day.
 
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I welcome the Bill which, in the main, strikes the right balance between building on the existing settlement and addressing at least some of the problems that have arisen since devolution. However, on some issues, I would have liked it to go further. We should recognise that the Assembly is a new institution. Although there is always a temptation and, for some, a desire to run before one can walk, it is important that the Assembly establishes itself in the minds and the hearts of the people of Wales. If devolution is to be a process, the process must have the support of the people at every stage. For that reason, I do not believe that we can have a pre-defined time scale for any change to, or enhancement of, the Assembly's powers. Equally, the people of Wales may well decide that the process has gone as far as it should. I therefore welcome the provision in the Bill for a two-thirds majority for the sanctioning of a referendum in respect of primary powers, although I cannot see the provision being used in the short or probably the medium term.

The system of Orders in Council strikes the right balance, with the aim of providing the Assembly with a mechanism to modify, or address, issues not covered by statute within devolved areas while retaining the sovereignty of Parliament and clearly not extending to affecting primary legislation in non-devolved areas.

I recognise that many speakers have referred to the pre-legislative scrutiny of Orders in Council and the process of how they will be considered in the House. I do not intend to go into detail on that, but hon. Members have already made it clear that the Welsh Affairs Select Committee has already considered the issue. I am sure that proposals will be made to bring forward ideas in that regard. The separation of the Executive from the legislature is a sensible change and it seems to have been welcomed on all sides. It mirrors what we have seen in local government.

Unlike Lord Richard, I do not believe that there is a requirement—or more to the point, public appetite or acceptance—for an increase in the number of Assembly Members from 60 to 80. There will clearly be an increased work load and increased hours, but it is fair to say that there is scope to accommodate that.

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