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Lord Dean of Beswick: One mistake is being made. It was made by my noble friend Lord Davies. It is that the new assembly, once it is under way, will decide how much it wishes to spend, and on what, and that it is bound to be given the okay on spending levels by the Parliament at Westminster. My noble friend referred to the assembly being brought into being to govern Wales. That is not the case. It is being given certain areas of responsibility. The final governance of Wales will happen in another place, as will that of Scotland, and of Britain. So we shall never arrive at a stage when the Secretary of State for Wales makes out his tab for what he wants, goes in to see the Chancellor of the Exchequer and automatically receives that amount. The Chancellor of the Exchequer may well say, "I'm sorry, but that is far too high. The ratio is not correct. You are even exceeding the amount that Scotland receives per capita". So it will not be as easy as all that.

Amendment No. 207A can be construed as having various interpretations. During the passage of the Scottish Bill, I shall attempt to wreck the Barnett formula. I shall move an amendment seeking a fresh start as regards allocations of finance based on equal distribution. Does the amendment tabled by the noble Lord, Lord Elis-Thomas, accept the very generous settlement that Scotland presently receives, and the much poorer one for Wales?

In Scotland, per capita spending is £871 more than in England; the excess is over twice the amount. I am sure that anybody who wants to battle the case for Wales will not accept Scotland being so generously treated. If we start to cut back on that £871 differential for over 5 million people, there will be a lot more money to spend in Wales and the English regions.

Members present may recall that, some time ago, I tabled a Question on the different per capita spending in England, Scotland and Wales. I asked the Minister what it would cost to bring up the levels of spending per capita for the English regions, for the 50 million people in England, so that it is equal to spending for Scotland, instead of reducing the amount for Scotland. The figure was over £300 billion. It is a sum that cannot even be contemplated.

Whatever happens in relation to this Bill, we have to be careful if we change the Barnett formula. The Scots will say that that is the sort of differential they have, that is the sum they wish to remain in place. It may well be that the pressures are now starting in the English regions. Some of those regions, like the regions of Wales, are probably much poorer than the poorest parts of Scotland. There are now terrible areas in the English regions. In some of the big cities, deserts of squalor have appeared. Houses have been bulldozed that were built less than 20 years ago at enormous expense. Industrial buildings have been bulldozed. They were a total waste of time. There is nothing in their place, merely desert.

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My point is that, if more money is required, we should not be too ready to talk about the Barnett formula unless we are prepared to think that government will cut the funding for Scotland. Money of the dimension that is asked for will not be available.

I shall say no more on this Bill. However, I give notice now that I shall attempt to wreck the special financial arrangement which is totally over-generous to the Scots.

Lord Thomas of Gresford: We are opposed to the Barnett formula appearing on the face of the Bill, or indeed any formula. What is necessary is maximum flexibility.

Two arguments are advanced to support the idea of having a formula, guidance, reference to needs, and so on, on the face of the Bill. One is a fear that is said to be widespread in Wales--though I confess that I have not come across it myself--that this Government will starve Wales of funds as soon as the Welsh assembly is in position. I rather agree with the noble Lord, Lord Davies of Coity. This being the important part of the present Government's legislative programme, it is inconceivable that they will starve Wales of funds in the years to come. Should they do so, or should any future government of a different hue attempt to do so, they will meet their nemesis in the usual democratic way through the ballot box. They will lose their seats in Wales, and there will be pressures from all parts of Wales to ensure that fairness continues and that the needs of Wales are met.

The second argument appears to be this. Unless there is guidance, a reference to needs, or a formula--as the noble Lord, Lord Dixon-Smith, said, that causes problems with local government--there will be rows and arguments. The people of Wales will use London government, to use a phrase that the noble Lord, Lord Elis-Thomas, now eschews completely in his vocabulary. There will be rows about London government.

I do not see it that way at all. My view is that there will be constructive argument as to what are the needs of Wales. There will be constructive debate and discussion. Different responsibilities will be exercised by the assembly from those of the current Secretary of State for Wales. They may not be all that different; but they will be different. Over a period of time, arrangements which are practical and achieved in a flexible way may result in some formula which will avoid future argument. But that day is in the future. It will be for the parties on both sides, for the assembly and for the Westminster Government to discuss among themselves what is the appropriate level of funding to cope with Welsh needs and to see whether that cannot be reduced at a later date, after all the arguments have been gone through, into something that is sensible and acceptable and avoids further problems.

To say now in this Chamber that we must adopt this or that formula, or even to suggest that the Government will have no regard to the needs of Wales, and to say that the Government will have no regard, as the noble Lord, Lord Dean has put it, to the needs of other parts

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of England is fanciful. Keeping the approach simple, straightforward and without formulae in the Bill is in our view the way to proceed.

Lord Dixon-Smith: Before the noble Lord sits down, perhaps he will answer one small concern that I have. I have a great deal of sympathy with what he said, not least with his point about the problems that we shall all face in the future. What is a sensible and rational debate in the Westminster Parliament may be portrayed as such here, but may be portrayed in a totally different way, as a destructive debate, in far-flung parts of the country such as Wales or Scotland. I believe that that is a danger we all face, which has the potential to do great harm to the future unity of the United Kingdom.

5.30 p.m.

Lord Hooson: I did not intend to intervene, but I wish to make one or two comments about a point raised by the noble Lord, Lord Crickhowell. In a debate of this kind we tend to illustrate the division which is apparent in this House. Although I had doubts when I first saw the Bill, I entirely approve of the Government's flexible approach. I think they are entirely right that devolution is a process and not a formulation of something that is to be set in stone. People tend to forget that there will be Welsh MPs. The Secretary of State for Wales will be answerable to Members of Parliament in the House of Commons. He can be interrogated at Welsh Question Time. There will be a Welsh Grand Committee in the other place. That committee, unlike the Scottish Grand Committee, will be concerned with all legislation that affects England and Wales.

If we were concerned with the Scottish Bill, in which there is legislative devolution, or were concerned with giving Wales a federal government, then we would be concerned about the exact words and the dots and commas, because they would be very strictly interpreted. But this is a process. I have no doubt that adaptation will be necessary along the line. For the success of this process, a great deal depends on good will in both Cardiff and London.

The noble Lord, Lord Dixon-Smith, referred to taking legal advice when entering into a contract and being very concerned about the exact meaning of the words. I think lawyers would tell him that, where there is to be an ongoing process and there is a great need for flexibility of approach on both sides, the most dangerous form of words would be one that would restrict that flexibility.

The debate on these amendments seems to me to illustrate the division. Dozens of amendments have been submitted to us by various bodies and individuals suggesting that this or that would improve the Bill. I have come to the conclusion that the basic government approach to the Bill is the right one. We must not write things in the Bill in a way which could be interpreted as being embodied in stone, which would prevent the developing relationship which is so necessary if the assembly is to succeed.

Lord Prys-Davies: I am more cautious in my approach to Clause 82 than my noble friend Lord Davies

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of Coity and the noble Lords, Lord Thomas of Gresford and Lord Hooson. I have some sympathy with the idea behind Amendments Nos. 205 and 206. My noble and learned friend the Solicitor-General was unequivocal in stating that the present Government had no intention of departing from the existing arrangements. That is excellent, up to a point. That point could come during a process of change. Governments come and go; circumstances change. There is no assurance that the present intention, as expressed by my noble and learned friend the Solicitor-General, will outlive the present Government. Surely we have a duty to Wales to consider that position.

The omission seems to me to raise two wider issues. First, if a future United Kingdom government decided to apply different criteria for deciding the allocation to the assembly which was less favourable to Wales than the current arrangements, there would be a grave possibility that the assembly would not be able properly to perform the functions over which it has statutory responsibility as it has no revenue-raising capacity of its own. That was a point made by my noble Lord, Lord Dean. That situation would be a recipe for trouble.

Secondly, the Welsh assembly will be a powerful body, its members directly elected. Those members will be men and women of ability. An assembly made up of such members, which has no statutory say in the amount of the block grant given to it by the UK Government to perform its statutory functions, could quickly become dissatisfied with its position and could blame the UK Government for its shortcomings. I believe that in that situation the members would have a genuine grievance. That again seems to me to be a recipe for trouble and would offer no hope of stability.

It has been clear from day one of the Bill that it is a compromise between the status quo and the Scottish Bill. But the Welsh assembly must be a stable assembly if it is to have a future. It seems to me that this clause and another clause which we shall discuss at Report stage may be a recipe for instability. Surely that is not what we want.

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