2Moving to a reserved model
Reserved and conferred powers models
13.One of the signature features of the draft Bill is its proposal to move Welsh devolution from a conferred to a reserved powers model. Conventionally, a conferred powers model is a system that limits the competence of a devolved institution to those powers specifically granted to it in statute.26 Under a reserved powers model of devolution, all areas that are not explicitly reserved to Westminster are within the general competence of a devolved body.27 Both Scotland and Northern Ireland’s devolution arrangements operate under a reserved powers model. Calls for a reserved powers model for Wales have been present for the best part of the Assembly’s existence. This was a recommendation of both the Richard Commission in 200428 and the Silk Commission’s second report in 2014.29
14.Moving from the current basis of devolution to a new model is not an entirely straightforward process. The Silk Commission’s second report suggested that changing models is “likely to require a good deal of discussion and to be a substantial drafting exercise”.30 Silk, therefore, considered that “it would require a clear political commitment in order to ensure the necessary cross-Whitehall process of determining what should be reserved”.31 Importantly, said Silk, this should not be a process confined to Whitehall, but one that is undertaken in partnership with the Welsh Government. As Sir Paul Silk reflected, “goodwill and a willingness to collaborate will be necessary on both sides”.32
15.The First Minister told us that the Welsh Government “offered to help with the drafting of the Bill” on a non-partisan basis, but that offer was not taken up.33 The Secretary of State explained that over a period of six weeks leading up to the publication of the draft Bill there was “an opportunity for private discussions between … the Wales Office and … the Welsh Government officials” and that these discussions were continuing.34
16.Whilst we welcome the discussions that are ongoing between the Wales Office and the Welsh Government on the draft Bill, these discussions should have concluded prior to the draft Bill being published. This dialogue would have aired some of the views that have been shared with us in this inquiry and would have informed the drafting of the Bill. However, the drafting of the Bill is the responsibility of the Secretary of State.
17.The Wales Governance Centre at Cardiff University and the Constitution Unit at University College London have undertaken work exploring how to deliver a reserved powers model for Wales (the Cardiff-UCL report). They have identified problems with the current Welsh settlement, indicated by a sequence of references of Welsh legislation to the Supreme Court. Furthermore, they emphasised that the varied arguments and reasoning in such cases, and the rulings of the Court “make it extremely difficult to say with any certainty what is likely to be within devolved competence”.35 In terms of the transition to a reserved powers model, the Cardiff-UCL report highlighted that “much depends on … how it is drafted, the scope of the matters reserved to Westminster, and how these impinge on the powers of the National Assembly and Welsh Government”.36 The way in which a reserved powers model is crafted, and the extent of the reservations, are therefore matters of key significance for the competence of the National Assembly.
Identification of reservations by Whitehall
18.The reservations listed in the new Schedule 7A to be inserted into the Government of Wales Act 2006 (GOWA) by the draft Bill are the product of a multi-layered process that involved the Silk Commission’s recommendations, the cross-party St David’s Day negotiations that resulted in Powers for a Purpose, and a Whitehall exercise in which UK Government departments were tasked with identifying where the devolution boundary should lie in their respective ministries.37
The St David’s Day Process
19.Established by the Secretary of State in late 2014, the St David’s Day process involved cross-party negotiations involving representatives from each of the four Welsh Westminster parties, and at a later stage, Assembly party leaders. These negotiations were based on the recommendations of the second Silk Commission report, alongside the work of the Smith Commission in Scotland.38 The process sought to reach a “political consensus on further devolution to Wales”. As a result, Powers for a Purpose does not “discuss those [Silk Commission] recommendations where there is no consensus”.39
20.Professor Richard Wyn Jones told us that the St David’s Day process was focused on achieving consensus, rather than providing a “cohesive, clear devolution settlement for Wales”.40 As a result, he argued:
What happened was they sat down, they looked at what was proposed by Silk and by [the Smith Commission] … and then the parties could say ‘I agree or disagree with that’. The parties didn’t have to explain why they took those positions. They didn’t have to explain how what they suggested was going to lead to a settlement that would appear to be permanent and provided clarity, and so on. It was a lowest common denominator approach.41
21.Sir Paul Silk told us that, while he could “completely understand” why the Secretary of State sought to “come up with something that all parties at Westminster were prepared to go along with”, the outcome was “obviously a lower bar than [the Silk Commission] thought was the right bar”.42
22.We agree with these analyses, and note that the desire for political consensus was the overwhelming driver of this settlement.
Getting the Whitehall machine thinking about Wales
23.The St David’s Day process can be seen as an attempt to harvest the areas of Silk where a political consensus existed at that time, resulting in the illustrative list of reservations provided in Annex B of Powers for a Purpose.43 However, the substance of Schedule 7A is the product of Whitehall departments being tasked with identifying where they consider the devolution boundary to lie. As the Secretary of State explained:
Whitehall has been engaged for the best part of a year in identifying those reservations and trying to get … Departments all across Whitehall to sit down and try to spell out where they consider the devolution boundary [should] fall.44
This exercise was unique and “required a lot of muscle to get the Whitehall machine thinking about Wales in a way that it has not done ever before”.45
24.However, some witnesses have cast doubt on the process and the relative clout of the Wales Office vis-à-vis other Whitehall departments. For example, the First Minister of Wales claimed that the danger of a “write-around in Whitehall, asking what should be devolved and what should not” is that Whitehall “will err on the side of what it wants”. He argued that this was a real danger because the Wales Office “has very little influence in Whitehall; it is a very small fish in a very big pond”.46 As a result, the First Minister claimed that the ‘write-around’ was less the Wales Office telling other departments “this is what we want”, than “Whitehall Departments telling the Wales Office what the Welsh people should have”.47
25.When the Secretary of State appeared before us on 26 October, he disputed this interpretation of the ‘write-around’. He maintained that he had not allowed other Whitehall departments a free rein, and stated that there “has been plenty of pushback from myself and my officials when we felt that that is necessary and where we have challenged them on their view on the interpretation of the [devolution] boundary”.48
26.There is a range of ways in which Government departments could have gathered views on where the devolution boundary should lie. One end of the spectrum would include an approach similar to that adopted for the Government’s work on the balance of competences between the UK and the EU, whereby Government departments would consult widely and look in depth at each subject area. The results of the write-around suggest that the Whitehall departments replied with a list that maps out the existing legislative competence. We note the Secretary of State’s comments that there has been pushback from the Wales Office with regard to the list of reservations, and we would welcome examples of where this has happened, and how Westminster departments responded.
27.It is in the interests of everyone that this settlement is long lasting and we are concerned that the approach to drawing up the reservations could undermine this. We conclude that a more hands-on approach from the Wales Office would have been preferable, whereby each department was asked to consult widely and was then challenged as to what they were and were not proposing should go on the list of reservations.
The proposed Reserved Powers Model
28.Clause 3 and Schedules 1 and 2 of the draft Bill replace section 108 and Schedule 7 of GOWA with a new section 108A and new Schedules 7A and 7B. Part 1 of Schedule 7A would reserve a number of general topics, such as aspects of the constitution, foreign affairs, defence, and the single legal jurisdiction of Wales and England. Part 2 of the Schedule reserves specific policy areas by descriptions grouped under broad “Heads”, sub-divided into “Sections”.
29.Our inquiry highlighted three areas of interest in relation to the reserved powers model proposed by the draft Bill:
a)the number of reservations, and the nature of some of those reservations;
b)the principles underlying the identification, and coherence, of reservations; and
c)the treatment of “silent” subjects in the existing legislation.
Number of reservations
30.Schedule 1 to the draft Bill contains a range of express reservations, from the Crown and the union of Wales and England, to hovercraft and activities connected with outer space. The cumulative effect is that the draft Bill contains over two hundred reserved matters, a scale that the National Assembly’s Director of Legal Services, Elisabeth Jones, told us would impact on the Assembly’s legislative competence:
although detail in the reservations may appear to offer clarity … trying to legislate coherently when you have a very large number of holes … in your competence described in detail is a very difficult thing to do.49
Additionally, Professor Richard Wyn Jones warned that the scale of the envisaged reservations could spark future legal challenges. He explained that the draft Bill had imported the words “relates to” from the Scottish reserved powers model in its definition of reserved powers. He believed that whilst this might be appropriate in the Scottish context, where the list of reserved powers is much shorter, “in the context of 260 or so [reservations], that opens the door to all sorts of challenges that could quite easily end up in the Supreme Court”.50
31.On the other hand, True Wales told us the movement of power has been “a one-way street … from Westminster to Cardiff Bay”.51 They said Wales had “a different tradition from Scotland” and it was a sensible time “to think about what kind of devolution we want in Wales”.52 They argued this “ought to be … about devolving power closer to the people, rather than a more nationalist form of devolution to Cardiff Bay, which is centralist”,53 and that if devolution is to a local level, “there should not be so much for the Welsh Assembly to do if they trust the people of Wales”.54 They called for “a root and branch re-examination of how power is devolved in England and Wales”, particularly in relation to the devolution of power to Manchester, which they said was often considered more meaningful than the National Assembly by those in North East Wales.55
32.The Secretary of State has himself acknowledged some inadequacies with the list of reservations found in Schedule 7A to the draft Bill. He told us that when he reads through the list “there are items there - and I am not going to share them with you now - where I am not sure that would work”.56 He also told the National Assembly’s Constitutional and Legislative Affairs Committee that when he read through the list of reservations he saw things “where I think, you know, ‘For goodness’ sake, why is that being held back as reserved,’: street-pedlars [and hovercraft], and there are other examples as well”.57 Furthermore, he has conceded that “the list of reservations is too long” and has promised that the final Bill will have a list of reservations considerably shorter than the one found in the draft Bill.58
33. We acknowledge that the Secretary of State has sought to refine the list of reservations in the draft Bill. However, the process of moving from a conferred powers model to a reserved powers model means it was always likely to produce a list of reservations, as mapped out by Whitehall departments.
Principles for identifying reservations
34.Previous work undertaken on a reserved powers model for Wales has emphasized the importance of anchoring a reformed Welsh devolution settlement in key principles. The Silk Commission, for example, identified eight principles that underpinned the second part of their remit.59 The Secretary of State has identified three principles that have informed the draft Bill and the Government’s broader agenda on devolution in Wales. These are “strengthening the devolution settlement, clarifying it and making it fairer, which is where the fiscal side and the funding side comes in”.60 Nevertheless, a common theme in the evidence we received has been the concern at a perceived lack of principle underpinning the draft Bill, and in particular the lack of clarity underpinning the process of making reservations.
35.The Presiding Officer of the National Assembly criticised what she saw as an absence of the principle of subsidiarity from the draft Bill.61 This point was further highlighted by the Constitutional and Legislative Affairs Committee’s critique of the draft Bill in their pre-legislative scrutiny report.62 Professor Laura McAllister and Dr. Diana Stirbu’s written evidence stated that “rather than [there being] a clear, strategic overview and rationalisation of competences at each level”, the list of reservations “resembles more a collation of specific reservations requested by individual Whitehall departments”.63
36.The Secretary of State has himself admitted that if “we were starting from a blank sheet of paper … then maybe you would approach some of the questions in a different way”.64 However, he emphasised that the UK Government was “dealing with the world as it is [in] a pragmatic and practical way, taking an existing settlement and trying to improve it and make it better and strengthen it”.65 In his letter to the Committee, dated 5 November 2015, he explained:
Departments were asked initially to map out the existing legislative competence. … Then, considering appropriate reservations to capture this within the model, departments were also invited to consider issues such as the terms of any equivalent reservation in the Scotland Act 1998, whether the Assembly has legislated in a subject area in which Departments were considering reservations, whether the UK Government has transferred powers to Welsh Ministers via a Transfer of Functions or Designation Order, and any Legislative Consent Motions tabled in the Assembly. This formed a starting point for an iterative process between the Wales Office, government departments and Parliamentary Counsel to develop the reservations.66
37.The UK Government did not set out to change the principles underpinning the delineation of the devolution boundary but accepted the current settlement as its starting point. Departments were then asked to consider a number of additional factors when considering reservations. However, we are not clear about what guidance Departments were given. Furthermore, it is not clear to us what the process was that then resulted in the final list.
“Silent subjects”
38.The Secretary of State’s approach has been to take the existing devolution settlement, alongside the commitments made in Powers for a Purpose and “transpose it into a reserved powers model”.67 In doing so, the Government’s principle of clarifying the devolution settlement can be seen as an attempt to eliminate the “silent subjects” which, according to the Secretary of State, were never intended to be devolved to the Assembly.68
39.As a conferred powers model, GOWA identifies 20 subject areas as devolved. However, the Supreme Court ruling, in the Agricultural Sector (Wales) Bill case,69 broadened the competence of the Assembly to include “silent subjects”70 when legislation also relates to a devolved area. This ruling followed the abolition of the Agricultural Wages Board in 2013, and the introduction of National Assembly legislation to retain a system of agricultural wage regulation in Wales. The Bill was referred to the Supreme Court by the Attorney General under section 112(1) of GOWA.71 The Welsh Government argued that it had legislative competence to establish such a regulatory regime as it related to a devolved matter (agriculture). The Attorney General disagreed, submitting that the real purpose and effect of the Bill related to employment and industrial relations (areas that had not been listed as devolved to the Assembly). However, employment and industrial relations were not the subject of general exceptions in GOWA.72 The Supreme Court found for the Welsh Government, ruling that provided that a Bill:
fairly and realistically satisfies the test set out in section 108(4) and (7) and is not within an exception, it does not matter whether in principle it might also be capable of being classified as relating to a subject which has not been devolved.73
40.According to the UK Government, the ability of the Assembly to legislate on “silent subjects” undermines the continued operation of the conferred powers model, a model that “was not designed to deliver this level of uncertainty in the devolution boundary”.74 As a consequence, Powers for a Purpose stated it was time to develop a new model on the basis of reserved powers, which would “bring clarity and consistency to the Welsh settlement, make future referrals to the Supreme Court less likely and so help consolidate a more stable settlement for the longer-term”.75
41.It has been claimed that the effect of the draft Bill would be to reverse the agricultural wages case,76 but the Secretary of State has said that the UK Government recognises that agricultural wages are a devolved matter. Nevertheless, the Secretary of State did stress that accepting this particular ruling does not mean that “silent subjects are now the other side of the devolution line”.77 Given the Government’s focus, on identifying the boundaries of the current devolution settlement78 and on reducing the scope for “silent subjects”, it is not surprising that, as Huw Williams noted:
the Bill does give the impression that the exceptions that previously existed have simply been converted into reservations, and that some of the silent subjects have now found a place in the reservations.79
42.Under the draft Bill, many previously “silent subjects” will now be reserved. Some of these, for example international relations, are uncontroversial. There are strong opinions about others, and about whether this constitutes a reversal of the Supreme Court’s decision in relation to “silent subjects” in the agricultural wages case. This will be an area of contention in the final Bill, so it is important that the Government does the hard work now to ensure that the list of reservations is justifiable as a whole. This will be necessary to satisfy the National Assembly of Wales, which will be asked to pass a Legislative Consent Motion for the Bill. Each subject will also have to be individually justifiable as they will be scrutinised during the Bill’s passage. This is a large task, and requires collaboration and discussion with other key stakeholders. This pre-legislative process will have kick-started that process, which should help overcome these future challenges.
43.In this Chapter, we have identified a number of criticisms concerning the reservations in the draft Bill. We recommend that Whitehall be given a second attempt to come up with a list of the powers to be reserved. However, departments must be given clear guidance about the questions they should ask themselves before deciding whether or not to reserve a power. This guidance should make clear that UK Government departments should be considering what they need to reserve or devolve. It must be published prior to the publication of the Bill, so that the final list of reservations can be assessed against the criteria given. We further recommend that, at the same time, the UK Government carries out a consultation exercise with the Welsh Government regarding their expectations. This exercise should both make the final list of reservations more coherent, and also provide a defensible justification for each decision, which will have to be expressed when the final Bill is debated.
26 Trench, A. (2010). Wales and the Westminster Model, Parliamentary Affairs, 63(1), p.128
27 Tierney, S. (2007). Giving with one hand: Scottish devolution within a unitary state, International Journal of Constitutional Law, 5(4), p. 740
28 Commission on the Powers and Electoral Arrangements of the National Assembly for Wales, Report of the Richard Commission (March 2004), p.250
29 Commission on Devolution in Wales, Empowerment and Responsibility: Legislative Powers to Strengthen Wales, March 2014, p.185
30 Commission on Devolution in Wales, Empowerment and Responsibility: Legislative Powers to Strengthen Wales, March 2014, p.36
31 Commission on Devolution in Wales, Empowerment and Responsibility: Legislative Powers to Strengthen Wales, March 2014, p.38
32 Commission on Devolution in Wales, Empowerment and Responsibility: Legislative Powers to Strengthen Wales, March 2014, p.38
33 Q143
34 Q10
35 Wales Governance Centre, Cardiff University, and The Constitution Unit, University College London, Delivering a Reserved Powers Model of Devolution for Wales, September 2015, p.8
36 Wales Governance Centre, Cardiff University, and The Constitution Unit, University College London, Delivering a Reserved Powers Model of Devolution for Wales,, September 2015, p.31
37 Q314, Q325
38 Wales Office, Powers for a Purpose: Towards a lasting devolution settlement in Wales, Cm 9020, p.6
39 Wales Office, Powers for a Purpose: Towards a lasting devolution settlement in Wales, Cm 9020, p.12
40 National Assembly for Wales (NAW) Constitutional and Legislative Affairs Committee (CLAC) Record of Proceedings paragraph 173, 9 November 2015
41 National Assembly for Wales (NAW) Constitutional and Legislative Affairs Committee (CLAC) Record of Proceedings paragraph 173, 9 November 2015
42 Q114
43 Wales Office, Powers for a Purpose: Towards a lasting devolution settlement in Wales, Cm 9020, pp.57-58
44 Q8
45 Q325
46 Q148
47 Q165
48 Q20
49 Q187
50 NAW CLAC Record of Proceedings paragraph 179, 9 November 2015
51 Q260 (Banner)
52 Q260 (Banner)
53 Q260 (Banner)
54 Q267
55 Q272
56 Q13
57 NAW CLAC Record of Proceedings paragraph 114, 23 November 2015
58 NAW CLAC Record of Proceedings paragraphs 14 and 114, 23 November 2015; Q311
59 These were: accountability, clarity, coherence, collaboration, efficiency, equity, stability and subsidiarity and localism. Commission on Devolution in Wales, Empowerment and Responsibility: Legislative Powers to Strengthen Wales, March 2014, p. 28. See also National Assembly for Wales Constitutional and Legislative Affairs Committee, The UK Government’s proposals for Further Devolution to Wales, July 2015 Para 22, and Wales Governance Centre, Cardiff University, and The Constitution Unit, University College London, Delivering a Reserved Powers Model of Devolution for Wales,, September 2015
60 Q319
61 Q181
62 NAW CLAC, Report on the UK Government’s Draft Wales Bill, December 2015, p.43
64 Q319
65 Q319
66 DWB 25
67 Q20
68 Q324
69 See Agricultural Sector (Wales) Bill—Reference by the Attorney General for England and Wales [2014] UKSC 43; [2014] 1 WLR 2622.
70 Qq 8, 12, 21
71 [2014] UKSC 43. Section 112(1) states “The Counsel General or the Attorney General may refer the question whether a Bill, or any provision of a Bill, would be within the Assembly’s legislative competence to the Supreme Court for decision.” In this case, the Attorney General submitted “that in reality the Bill does not relate to agriculture but to employment and industrial relations, which have not been devolved”.
72 [2014] UKSC 43
73 [2014] UKSC 43 at [67]
74 Wales Office, Powers for a Purpose: Towards a lasting devolution settlement in Wales, Cm 9020, p.14
75 Wales Office, Powers for a Purpose: Towards a lasting devolution settlement in Wales, Cm 9020, p.14
76 Thomas, R. “The Draft Wales Bill 2015—Part 2”, UK Constitutional Law Blog (3 December 2015), accessed 11 December 2015; The National Assembly for Wales’ Constitutional and Legislative Affairs Committee called for it to be expressly stated, in the interests of openness and transparency, if the intention in the draft Bill is to reverse the effects of the Supreme Court decisions (NAW CLAC, Report on the UK Government’s Draft Wales Bill (December 2015), para 164).
77 Q324
78 Q12
79 Q216
© Parliamentary copyright 2015
Prepared 26 February 2016