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Lord Williams of Mostyn moved Amendment No. 66A:

Page 13, line 25, at end insert--
("( ) Schedule (Transfer etc. of functions: further provisions) (which makes further provision about the transfer etc. of functions by Order in Council under this section) has effect.").

The noble Lord said: Amendment No. 66A is largely self-explanatory. It gives us the opportunity of debating what functions the assembly is to have in England with respect to cross-border bodies; that is, bodies whose activities relate to Wales and other parts of the United Kingdom. In moving Amendment No. 66A, I shall speak also to the other amendments in my name in this grouping.

The main effect of the Government's amendments is to replace Clause 23 with a new schedule and I shall therefore concentrate on the paragraphs of the new schedule that are new or changed and on the amendments to Clauses 30, 45 and 59 that flow from them. It may be helpful if I reply at the end of our discussions on this matter to questions raised in relation to Amendments Nos. 80, 81 and 196B, which are also included in the group.

The present position is that the Government have flexible arrangements to deal with issues which straddle the border between Wales and England. Obviously, the Rivers Severn, the Wye and the Dee all rise in Wales and flow through parts of England. Cross-boundary issues plainly arise in that regard. For many years we have had in place sensible arrangements whereby the Welsh Office looks after the administration of some issues to do with waters and rivers which extend beyond Wales into parts of Herefordshire and Cheshire and, similarly, the DETR administers some matters for Montgomeryshire.

There does not seem any compelling reason why we should now draw a doctrinaire line down the border between Wales and England and command the waters to part, or why we should have more costly and complex administrative arrangements on the ground. This is the reason why Clause 23(6) allows the assembly to be given functions with respect to cross-border areas, that is, areas including a part but not the whole of England as well as the whole or part of Wales.

We have looked again at the drafting of these provisions, bearing in mind what was said in debates in the other place. Paragraph 3 of the new schedule replaces paragraphs (c) and (d) of Clause 23(6). The Committee will have seen that the amendment limits the range of functions that the assembly can be given in England to those related to watery matters such as rivers, water courses, water supply and land drainage. It makes clear that the assembly can be given functions only in parts of England that adjoin Wales and only if the assembly is given the equivalent function for the whole or part of Wales. This is a narrowing compared to Clause 23(6)(c) as it presently is.

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Paragraph 3 of the new schedule makes clear that the assembly can be given functions in respect of any cross-border body rather than those mentioned in Clause 23(6)(d). This is to ensure that there is no doubt about the ability of the transfer order to confer functions on the assembly in respect of bodies as diverse as the Environment Agency, Audit Commission, Intervention Board and the North West and North Wales Sea Fisheries Committee, to give some examples, as well as undertakers such as Dwr Cymru.

The Bill contains appropriate mechanisms to reflect the fact that, while the assembly may be given functions in parts of England, it will not be elected by people who live there. These mechanisms will not be affected.

The first point I would make is that Parliament has to approve the transfer order before it takes effect. All Members of this House and of the other place will be able to have their say.

We accept that it is important for the necessary accountability arrangements in Parliament to exist in those limited cases where the assembly is exercising functions in parts of England. That is why Clause 45(5) of the Bill ensures that when the assembly makes secondary legislation applying to parts of England it will continue to be subject to the usual parliamentary procedures.

Paragraph 6 of the new schedule provides that in relation to assembly functions in an English border area--which may include secondary legislation and matters such as determinations or directions--the transfer order can require that the assembly should consult, or obtain the agreement of, a UK Government Minister before it exercises the function. The transfer order will in due course set out our proposals for the use of this power.

In developing these proposals it has become apparent that there are a limited number of functions which the assembly will exercise in Wales but whose principal effect may be felt in England. That could, in effect, have a serious adverse impact on water resources, water supply or the quality of water in England. Those relate to abstractions from, and discharges into, rivers that cross the border. We have thought carefully about this and decided that, to recognise the interests of people living in England who may be affected by the assembly's decisions in Wales, there should be a limited override power for the Secretary of State to intervene and to take certain decisions in place of the assembly. This is provided for in paragraph 5 of the new schedule. The override power can be applied to functions in parts of two named Acts only. The transfer order will set out our proposals in due course for the precise cases where the override power will be available. This question was pre-figured by the intervention of the noble Lord, Lord Roberts of Conwy.

Paragraph 7 of the new schedule provides that in determining a formula for how much housing revenue account subsidy local authorities in Wales should receive, the transfer order can require the assembly to obtain the agreement of the Secretary of State for Social Security in relation to the rent rebate element of the subsidy formula. That is necessary because housing

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policy, which will be a matter for the assembly, and social security matters, which will continue to operate on a UK-wide basis, are locked together in a single provision. Making the exercise of these subsidy powers by the assembly subject to agreement will therefore legitimately safeguard UK-wide social security interests.

Section 80 of the Local Government and Housing Act 1989 empowers the Secretary of State to decide the amount of housing revenue account subsidy payable to local authorities. In Wales these powers are currently exercised by the Secretary of State for Wales and in England by the Secretary of State for the Environment, Transport and the Regions. There are different arrangements in Scotland and Northern Ireland.

This subsidy is a deficit subsidy to local authorities' housing revenue accounts which relate to council housing. In setting the subsidy formula, various assumptions are made about each authority's rent and other income to the housing revenue account and expenditure by way of management, maintenance, capital charges and other items. These assumptions are a powerful influence on the average rents set by local authorities and on their expenditure decisions.

The other major component of the subsidy formula is the cost of rent rebated to tenants who cannot afford their rent. Such rebates are a social security benefit. Nothing under Section 80 of the 1989 Act bears directly on an individual's entitlement to social security benefits. The rules of entitlement to benefit remain a matter for the Secretary of State for Social Security and we do not intend to disturb this. However, subsidy rules made under Section 80 can be as important as the rules on benefit entitlement in ensuring that housing benefit is delivered equitably and effectively.

A number of the rules within the subsidy determinations relate to rent rebates. These rules are intended to ensure that local authorities administer rent rebates properly and consistently with other housing benefit. They also ensure that rent rebates are not used to deliver a different level of support through the benefit system or to introduce differences in the social security regime from that which operates elsewhere in the UK.

It is important to maintain these safeguards for the wider social security system under the assembly. The mechanism introduced by this paragraph of the new schedule will allow the Secretary of State for Social Security to be satisfied that these interests have been recognised when the assembly makes its subsidy determinations. They will also ensure that the UK Government will be able to carry through any long-term reforms of the benefits system. The amendment is focused on the rent rebate element of the subsidy. We do not intend that the consent mechanism should be used to prevent the assembly from pursuing its legitimate policy interests in devolved matters such as rent policies or that it should encroach on housing policy more generally. Nor is it the intention to impose complete uniformity in the operation of the rent rebate element of the subsidy formula as between England and Wales. However, we do intend that the Secretary of State should be able to withhold consent where the assembly's actions or omissions risk distorting social security policy or

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adversely affect the proper management and control of housing benefit. It is agreed that the assembly will fund any increases in rent rebate expenditure which are a consequence of its own policies.

In the longer term, we will consider providing for a separate rent rebate subsidy payable by a UK Minister similar to the current arrangements in Scotland. This will provide for a clear separation of responsibilities between social security matters taken forward on a UK basis and housing policy matters devolved to the assembly. This would remove the need for a consent mechanism.

However, such changes will need to be considered in the context of the Government's comprehensive spending review. This may reach conclusions that would entail amending the relevant provisions of the 1989 Act for both England and Wales. We would want to avoid cutting across the conclusions of that review by making changes to the 1989 Act only in respect of Wales. For that reason we are not making such amendments now.

The government amendments to Clauses 30 and 45 are consequential on the new schedule. They ensure that the assembly's subordinate legislation is subject to parliamentary procedures if it is made jointly with or contains provision made by a Minister; or if it relates to England; or if it relates to the functions or activities of a cross-border body outside Wales. The amendment to Clause 59 ensures that the definition of "Assembly general subordinate legislation" excludes any legislation that is subject to parliamentary procedures. Finally, there are four consequential amendments to the definitions in Clause 156.

I have spoken at length. The changes are substantial. They clarify which functions the assembly may be given in areas of England that adjoin Wales and they provide a range of mechanisms to ensure that the interests of people living in England are adequately protected. They will also ensure that the assembly's decisions on housing revenue account subsidy are consistent with the Government's policy of a common level of benefits across the United Kingdom. I beg to move.

6.30 p.m.

Lord Roberts of Conwy: We are grateful to the Minister for having given us advanced warning of the very extensive changes proposed in the cross-border areas; and very broad they are too, as we have just heard, involving the deletion of Clause 23 and its replacement in effect by a new schedule. The Government clearly took note of points raised in the other place and looked deeper and more closely at cross-border issues. That has resulted in a sharper focus on the functional areas, including rivers, water courses, water supply and drainage. That is certainly an improvement on what was there previously, in particular in Clause 23(6)(c).

I note that the Government intend to retain the provisions in Clause 45(5), which requires that any assembly subordinate legislation applying to English border areas is to be subject to parliamentary procedure and that assembly functions in such areas or in respect of cross-border bodies may be exercised subject to

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consultation or with the agreement of a Minister of the Crown. Our amendments to Clause 23, as it then stood, Amendments Nos. 80 and 81, were more prescriptive and required the consent of the English Minister rather than consultation. Perhaps the Minister may wish to consider those amendments again. They might help to avoid cross-border problems in years to come.

Am I right in thinking that there is as yet no guarantee that a transfer order would require the assembly to consult with or seek the approval of Ministers before acting in England? If that is the position, these provisions are somewhat inimical to democracy. People in England could be seriously affected by the assembly and yet, because they do not elect representatives to that body, they would have no way of seeking redress. Such arrangements might result in conflict between England and Wales. I should be grateful to the Minister for some assurance and clarification on that point.

We appreciate the fact that the Government have seen fit to include an override power for the Secretary of State to intervene on behalf of those living in England who may be adversely affected by the assembly's decisions. That is a wise precaution. However, it reads oddly to a person like myself living in Wales because the implication is that the assembly can do what it likes with "our water", "our water resources", and so on; we shall just have to endure it; the Secretary of State will not be able to intervene on our behalf.

As the Minister outlined, the new schedule incorporates provisions to ensure that the assembly's exercise of its housing responsibilities in relation to the calculation of the housing revenue account subsidy is subject to the agreement of the Secretary of State. That part of the schedule is very prescriptive. The assembly does not have much choice about accepting the formula. It has to. While all that is perfectly understandable, what worries me is the Minister's admission in his letter that the need for the amendment was identified only recently. It makes one wonder just how many more problematic areas remain to be discovered.

I should be grateful to the Minister for an assurance that English MPs receiving complaints from constituents about actions of the assembly can approach the appropriate Minister in England and that he will then get a response from the executive of the assembly.

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