The Parliamentary Under-Secretary of State for Wales (Huw Irranca-Davies): I beg to move,

May I say what a pleasure it is, Mr. Chope, to serve under your stewardship? This is my first appearance before the Committee as a new Minister, and I hope that this afternoon’s proceedings will be both amicable and enjoyable.

I beg the Committee’s indulgence for a moment in sending our best wishes to the First Minister, Rhodri Morgan. He has now left hospital, but the past few days have clearly been trying. As a former Member of the House—he was Member for Cardiff, West—I am sure that we would wish to send him our very best wishes for a speedy return to good health.

During the passage through Parliament of the Government of Wales Act 2006, the Government gave an undertaking to Parliament to ensure that schedule 7 was complete and accurate. The order flows from that commitment. In the process of drafting the order, the Wales Office facilitated discussions between other Departments and the Welsh Assembly in order to confirm the content of schedule 7. This amending order is the product of those intensive discussions. I pay tribute to the work of the civil servants, who have worked hard and extensively in preparing the order.

The amendments put forward in the draft order seek to define the boundaries of the devolution settlement, not to extend them. Since 25 July 2006, when the Government of Wales Act received Royal Assent, the Government have undertaken a substantial programme of secondary legislation. That programme comprised 13 orders that properly settle matters of technical detail that flow from the Act. The programme included the orders on staff transfer, property rights and liabilities, and transitional provisions for finance, to name but a few.

The order before us is but one part of that wider programme. The process of clarifying and defining the exact boundaries of schedule 7, to match the existing executive functions of Welsh Ministers, has of course involved detailed discussions between UK Government Departments and the Welsh Assembly Government. That process has been undertaken over the past seven months.

The 2006 Act provides the Assembly with the power to pass legislation, to be known as Assembly Measures, in relation to matters authorised by Parliament on a case-by-case basis. However, the Act also provides for the Assembly to acquire primary legislative powers, subject to endorsement by a referendum. Under part 4 of the Act, the Assembly would be able to pass Acts of the Assembly in relation to the full range of devolved subjects without further recourse to Parliament. Those subjects are listed in schedule 7.

The order amends schedule 7 to the Government of Wales Act 2006, in respect of section 108, in order to define the primary legislative competence of the National Assembly for Wales in the event of a successful referendum to that effect. By virtue of section 109(4), the first Order in Council made under section 109 must be approved by resolution of both Houses of Parliament, whereas subsequent orders must also be approved by the Assembly. This is the first order to be made under section 109, so the approval of the Assembly is not required.

The reason for that difference in procedure is that the first order to amend schedule 7 is intended to ensure that the schedule is a complete and accurate description of the Assembly’s current devolved responsibilities. It is not intended to give effect to any substantive change in policy. In contrast, subsequent orders will provide a mechanism whereby schedule 7 can be updated if changes to the boundaries of the devolution settlement are agreed by Parliament. Future amendments to schedule 7 will therefore properly require Assembly consent. The purpose of schedule 7 is to define the Assembly’s competence to pass legislation—Acts of the Assembly—in the event of a yes vote in a future referendum.

The outcome of a referendum can be unpredictable, and it is sensible to ensure that one is not triggered unless there is clear evidence of strong public support. Not only are referendums very costly—it is estimated that a referendum for Wales could cost at least £7 million—but a no vote would be a significant setback for devolution in Wales, so it is not something that would be embarked on lightly.

Schedule 7 lists the subjects that would be within the primary legislative competence of the Assembly, based on the current executive functions of the Welsh Ministers. If a subject is not listed, it will not be within the Assembly’s primary legislative competence. However, the schedule also contains general restrictions and exceptions from those restrictions. In particular, the Assembly will not be able to legislate so as to modify any Minister of the Crown function without the consent of the Secretary of State. That means that, where there are isolated Minister of the Crown functions within subjects that are generally devolved, the protection of those functions need not be expressed by any specific reservation.

I do not wish to detain the Committee further by explaining all the modifications individually; the explanatory memorandum explains what each modification does. On that basis, I commend the draft order to the Committee.

Mr. David Jones (Clwyd, West) (Con): It is a pleasure to serve under your chairmanship, Mr. Chope. I welcome the Minister to his position, and on behalf of my party, may I say how pleased we are to hear that the right hon. Rhodri Morgan has been discharged from hospital?

I am grateful to the Minister for his explanation of the draft order, and for putting it into the context of the Government of Wales Act 2006. Like him, I feel that a tribute is due to the civil servants, who must have worked long and hard on the mammoth task of cross-referencing the matters referred to in the schedule. The purpose of the order is to define the boundaries of the devolution settlement, as it would apply in the event of a referendum held pursuant to the provisions of part 4 of the Act proving in favour of the devolution of primary powers to the Assembly, and schedule 7 outlines the limits of the Assembly’s powers in such circumstances.

Last July, the Secretary of State made a commitment to bring forward an amendment order to ensure that the schedule was “complete and accurate”. He further undertook to introduce the draft order under consideration today before the Assembly elections in May, so that

Of course, the Assembly elections have come and gone. It follows that at the time of those elections nobody was clear as to what the new footing was on which the Assembly would start. I cannot, in all honesty, say that I have been aware of widespread consternation in the streets of Wales about the absence of this order. Nevertheless, it would be interesting to hear from the Minister why it was not introduced before the Assembly elections, in accordance with the Secretary of State’s commitment.

Given that the order was not introduced within the promised time frame, can the Minister explain why it is thought to be necessary to introduce it at this precise stage? The powers that are defined in the order will not, after all, arise unless and until a referendum is held that proves in favour of the commencement of the part 4 powers. In that respect, the Secretary of State holds the key. Section 104 of the Act provides that he has, effectively, the power of life or death over the referendum procedure—as, indeed, he does over much else that is contained in the Act. It is true that Labour’s recent accommodation with Plaid Cymru—the so-called “One Wales” document—contains a commitment to proceed to a referendum under part 4

In passing, may I say how interested I am to see the hon. Member for Carmarthen, East and Dinefwr sitting on the Opposition side of the Committee Room? Presumably, he is fully supportive of the proposals that are under discussion, and no doubt he will address the Committee to that effect.

The Secretary of State, notwithstanding the commitment contained in the “One Wales” document, was quoted in The Western Mail as recently as last Saturday as saying that the referendum would be held only

He added that

It would therefore appear that the Secretary of State was sounding a note of caution. Indeed, it might reasonably be suggested that his remarks reflected an attitude that was something less than the enthusiasm expressed in “One Wales”.

In the circumstances, it is hard to see why the order has to come forward now. Indeed, it might have been preferable for it to have been delayed until a time nearer the referendum—whenever the Assembly decides to apply for one and the Secretary of State decides to consent, of course—so as to define more precisely the full extent of the powers to be conferred on the Assembly in the wake of the referendum.

As the Minister has pointed out, this is the only occasion when schedule 7 can be amended by order of Parliament acting alone. If the schedule is to be changed again by order, it must be done by resolution of the Assembly, as laid down in section 109, as well as by both Houses of Parliament. The reason that the Minister gave as to why there is no need for Assembly approval on such an occasion was that the first order amending schedule 7 is intended to ensure that the schedule constitutes a complete and accurate description of the Assembly’s current devolved responsibilities, and is not intended to give effect to any substantive change in policy.

The Minister went on to say that, in contrast, the purpose of any subsequent orders would be to provide a mechanism whereby schedule 7 could be updated if any changes to the boundaries of the devolution settlement were agreed in future by Parliament. Frankly, I cannot see that there is any substantive difference, as was suggested by the Minister. If Parliament agrees to changes in the devolution settlement in future, it is hard to see why the consent of the Assembly should ever be necessary. After all, it is Parliament that disposes in such circumstances, and any necessary order should logically be the sole preserve of Parliament.

Although the Conservative party does not intend to oppose the order, there are a number of matters on which the Minster’s clarification would be welcome. The order seeks to trim the powers of the Assembly by inserting into schedule 7 a significant number of exceptions to the powers proposed to be devolved to the Assembly. A new exception is inserted under the heading “Economic development”; it provides that nuclear energy and installations will not be part of the Assembly’s devolved competence. That is obviously correct, as was recognised in the debate in the other place. Nuclear generation, of which Wales has significant experience, is a strategic UK-wide issue, and it is therefore proper that it should be excepted from the Assembly’s powers.

Indeed, it might fairly be contended that including a specific exception for nuclear energy and installations is otiose, given that schedule 7 already contains an exception on the generation, transmission and supply of electricity. It would appear that, by inserting a specific saving for nuclear energy, the Government are drawing not only a red line, but a double red line in respect of that important strategic resource.

Given that nuclear energy is so emphatically excepted from the powers of the Assembly, it is interesting to note that no amendment has been made under the heading “Environment” in paragraph 6 of schedule 7, to except nuclear waste from the Assembly’s competence. As currently drawn, schedule 7 gives the Assembly competence in respect of hazardous substances. Will the Minister please explain why no exception has been made in respect of nuclear materials? It would appear to me that failing to except such materials from the Assembly’s competence means that there is potential for conflict at a later date between Parliament and the Welsh Assembly, which could be avoided by inserting a suitable exception.

In a similar vein, article 10 of the draft order amends paragraph 18 of schedule 7 by deleting the words “hazardous substances”. It would appear that the management and disposal of hazardous substances, including nuclear materials, will not be within the competence of the Assembly for town and country planning purposes. Is that the case, and if so, where will such competence reside? I assume that it will reside at Westminster, but perhaps the Minister could confirm that.

Article 11, which relates to water and flood defence, makes extensive amendments to paragraph 19 of schedule 7. The words “water industry” and “water charges”, which figure in paragraph 19 as originally drawn, are omitted. What is the reason for those omissions? Similarly, the words “abstraction” and “impounding of water”, which appear in the original paragraph, are effectively deleted. Again, perhaps the Minister would explain the reason why.

The competence of the Assembly has been extended to include reservoirs, but that is not the only form of water impoundment. For example, there are active proposals for the impoundment of tidal waters for the generation of electricity; I know of at least two projects in Wales that would fall under that category. Will the Minister explain whether competence for that form of impoundment would remain with Westminster?

Under the same article, the word “sewerage” is effectively deleted from paragraph 19, although, oddly, the words

are specifically included. Will the Minister explain why?

I also wish to raise an issue relating to water undertakers that I touched on in December, during the debate on the National Assembly for Wales (Transfer of Functions) (No. 2) Order 2006, with which I am sure that the Minister is wholly familiar. Article 11 of the draft order contains an exception in respect of the following:

Similarly, it contains an exception in respect of the licensing and regulation of licensed water suppliers:

Will the Minister explain whether the Assembly will be responsible for the appointment and regulation of water undertakers whose areas are wholly or mainly in Wales and the licensing and regulation of licensed water suppliers using the supply system of water undertakers whose area is wholly or mainly in Wales? If so, will the Assembly be responsible for regulation in respect of water undertakers whose area, although mainly in Wales, is also in England?

There are two prime examples of those, the larger of which is Dwr Cymru, which has many customers in Herefordshire and other English border regions; the other is Dee Valley Water plc, which supplies many homes in north-west England. Will English water consumers in those areas therefore be subject to the administrative fiat of the Welsh Assembly—a body in which they have no elected representatives? If so, to whom could they look for democratic recourse? Does the Minister agree that a democratic deficit has been created, and that, so far, it has not been addressed? Neither does the order seek to address it.

In the debate on the draft order in the other place, Lord Rowlands expressed considerable concern about the fact that the changes had not been the subject of the kind of pre-legislative scrutiny that might have been expected. Certainly, the present order contains a number of significant amendments to the proposed devolution settlement that would apply were a referendum to come down in favour of further devolution.

A number of troubling issues arise from the order that cannot be dealt with by amendment, as we can only confirm that we have considered the order. I anticipate that the Minister will be able to provide comments and explanations on those issues. However, it will be impossible for me or any other member of the Committee to make what I believe to be desirable amendments to the provisions relating to the environment and to town and country planning. If, on further reflection, the Government were to decide that such amendments were necessary, the consent of the Assembly would be required.

Although the Conservative party will not oppose the draft order, we have no great enthusiasm for it. I suggest that the order should have been the subject of greater scrutiny and less haste. Indeed, despite the Government’s protestations prior to and after the passing of the Act, it appears that effective pre-legislative scrutiny is an element that is missing from the procedure today. Thus, although I voice my party’s misgivings and concerns, we will not oppose the order.

Mark Williams (Ceredigion) (LD): It is a pleasure, Mr. Chope, to serve under your chairmanship this afternoon. I echo the comments about the well-being of the First Minister, and I wish him well in his convalescence. I welcome the Minister to his new position. My dealings with him have always been courteous and pleasant, and I am sure that they will continue to be so in the months ahead.

My first point relates to the timing of the order. The Minister in another place, Lord Evans, was clear when stated:

Things have moved on significantly since 3 July, given events Cardiff on Friday and in Pontrhydfendigaid on Saturday. We now have a joint Administration and, judging from press reports, a joint commitment to proceed, under the full provisions of part 3 of the Government of Wales Act 2006, to the successful outcome of a referendum, or, under part 4, to full law-making powers as soon as is practicable, at or before the end of the Assembly term.

The hon. Member for Clwyd, West referred to the Secretary of State’s assurance, given during the passage of the Bill that became the Government of Wales Act 2006, that he anticipated the making of this order before the Assembly elections. That timetable was not met. It is presented before us now, however. When the 2006 Act was passed, a referendum looked some way off; it now looks appreciably closer. I welcome that, but I wonder whether the anticipated arrangement between the Labour party and Plaid Cymru, or the emergence of speculation about a rainbow coalition involving three Opposition parties, has necessitated the making of this order now.

The Minister referred to an earlier commitment to tidy up the list of subjects in schedule 7 that would be within the primary legislative competence of the Assembly. I wonder how much recent developments, or the expectation of such, have contributed to the timing.

I have participated in proceedings such as this on several occasions. We are well used to incisive questioning by the hon. Member for Clwyd, West, particularly about water undertakers—a subject that he has pursued with some energy. I shall refer only to the exclusion of energy policy.

We had great debates on that matter during the passage of the Government of Wales Bill. I deeply regret the re-emergence in the order of the re-exclusion—the hon. Gentleman talked about a red line and a double red line. I regret that the issues of nuclear energy, nuclear installations and nuclear waste are not to be devolved to the National Assembly. At least three parties in the Assembly have expressed opposition to the development of nuclear energy in Wales. I suspect that that was the majority position in the last Assembly and, notwithstanding the views of the soon-to-be-anointed Deputy First Minister from Plaid Cymru, it might well be the current position. The Assembly should have an ultimate veto.

From my own constituency, I know that energy schemes of more than 50 MW at Cefn Croes wind farm have evoked great controversy. This Committee might not be the place for a general debate on the extent of the energy mix that we would wish to see at UK or Wales level, but the debate about national energy policy should take place within a Welsh context as well. The National Assembly should have the capacity to voice its concerns and act on them, and enable us to move away from decision making in the Department of Trade and Industry, which is perceived to be remote. In that context, some would interpret the order as having the potential to clip the wings of a democratic institution that some of us hope will flourish.

Adam Price (Carmarthen, East and Dinefwr) (PC): It is a pleasure to serve under your chairmanship, Mr. Chope. I echo the Committee’s best wishes to Rhodri. Robust is an overused word in politics, but it certainly well describes the normal physical and mental characteristics of our First Minister in Wales. We wish him well.

This is my first opportunity to welcome the Under-Secretary to his new position. I look forward to working with him and with other Labour Members to secure a successful outcome to the referendum, which will be held some time between now and early May 2011. In order to dispel what Aneurin Bevan in some of his bleaker moments used to describe, with capital letters, as “the Invasion of Doubt”, perhaps the Minister could put on the record that the successful outcome is, of course, a yes vote in that referendum, whenever it is held in the next four years.

Mr. Don Touhig (Islwyn) (Lab/Co-op): If the hon. Gentleman looks at page 6 of the document, it does not say which way Labour will be voting or campaigning.