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Lord Dean of Beswick: During my short speech on this amendment I brought in the Scottish factor as regards the Barnett formula. I was making the point that the Scottish allocation should be a more realistic figure. There must be something wrong with the Barnett formula because, per head of population, Scotland is much richer than Wales, but it can still draw £871 per capita more than England. Wales comes about one-third of the way in between. I do not accept the Government's statement that the Barnett formula has worked well. It has worked very well for the Scots, but not for those south of the Border.
Lord Falconer of Thoroton: It is a formula that has stood the test of time. It has many of the advantages that have been referred to in the debate, particularly those referred to by the noble and learned Lord, Lord Simon of Glaisdale, as to certainty and the noble Lord, Lord Callaghan. It gives the Secretary of State for Wales a great degree of protection in his disputes with other Ministers.
It does not take into account, or seek to reflect, spending needs; it is simply a fair way of dealing with year-to-year changes in public expenditure. Our basic position is that we stick with that approach. We believe that it brings certainty and sense to the position and that it has stood the test of time. We believe that we bring transparency to the arrangements. We also believe that it would be wrong to try to incorporate into the Bill the provisions of the Barnett formula.
Lord Simon of Glaisdale: Is the noble and learned Lord being more "Barnett" than the noble and eponymous Lord himself?
Lord Falconer of Thoroton: I am sorry that the noble Lord, Lord Barnett, is not in his place at the moment. I believe that he was being too modest in defending his own formula. We believe that it is the appropriate means for dealing with the spending needs of Wales at present. We have no intention of changing it at the moment. If there were to be a change in the expenditure system, it would be only after a full
spending needs assessment had been undertaken. The review would have to take into account factors such as the levels of GDP, deprivation and unemployment. The assembly would be fully involved in any such review. But we have no plans for such--
Lord Dean of Beswick: Is the Minister saying that there is a review under way at present?
Lord Falconer of Thoroton: I am saying two things. There is certainly no review under way at the moment and there is no intention to start one. I said that if there were one--
Lord Dean of Beswick: Then why did the Minister use the word? Why did he bring in the word "review"?
Lord Falconer of Thoroton: Simply to say that there is neither a review going on nor any intention to have such a review. I apologise if, by using that word, I gave rise to any other impression. I did not intend to do so. I hope that I have made that clear.
Lord Elis-Thomas: I am trying to be helpful. Would the Minister care to speculate on the scenario of a possible review? For example, the noble Lord, Lord Dean of Beswick, quite rightly spoke for the English regions. Were those regions to have regional assemblies, would there not then perhaps be a case for reviewing public expenditure and its allocation throughout the regions and nations of these islands?
Lord Falconer of Thoroton: I do not believe that it would be particularly helpful for me to speculate about the circumstances in which it might be appropriate to have a review. I hope that I have made it clear that no review is taking place at the moment and that there is no intention at present for such a review. We believe it important that that is made clear so that the people of Wales know the basis on which the sums of money will be allocated to Wales once the assembly is operating.
Lord Mackay of Ardbrecknish: I wish to be clear in my own mind. I presume that we are talking about a review of the Barnett formula. There is a review going on of government expenditure called the fundamental expenditure review. It is being conducted by the Treasury. In my capacity as the Treasury shadowman here, I am assured that it is looking at all aspects of government expenditure. The Minister should be careful because of the review that is going on covering all aspects of government expenditure.
Lord Falconer of Thoroton: There is a comprehensive spending review going on, but it is not looking at the application of the Barnett formula.
Lord Dixon-Smith: I accept entirely that the review may not be looking at the "Barnett formula". That deals
with year-on-year change. Can the Minister also tell the Committee whether that review might involve the base line which is where the fundamental debate lies?
Lord Falconer of Thoroton: Of course it may. The comprehensive spending review will be looking at expenditure in all major departments of state. If there are changes in those departments, they will extend into Wales through the Barnett formula. But with great respect to the noble Lord, that is a completely different point. The suggestion that any government does not look at their expenditure for such things as health, education or whatever, is absurd. I simply point out that we are looking at expenditure, but that does not seem to me to take the debate very much further forward.
In the light of that basic structure, which we have set out as our policy in relation to payments to the assembly, perhaps I may deal with the amendments proposed, first making the point that there has been much debate about whether we should put the Barnett formula on the face of the Bill. We believe that it would be wrong to put on the face of the Bill any formula or statement in relation to funding. That would almost certainly lead to unworkable complexity.
However, there is a further fundamental constitutional point. The money that will go to the Welsh assembly ultimately has to be voted to it by the UK Parliament. As noble Lords opposite have repeatedly made clear, supply is ultimately a matter for the other House, which is sovereign in that respect. Irrespective of what might be put on the face of the Bill, Parliament--in effect, that means the other place--must approve the supply for the government of Wales, for the assembly. In the light of that fundamental constitutional point, it seems wrong to specify on the face of the Bill how those sums should be calculated. However, I hope that I have made clear on behalf of the Government our policy on the funding of the assembly.
Finally, on the detail, money could not go from the Secretary of State to the assembly without Clause 82 because, despite the ingenious argument of the noble Lord, Lord Dixon-Smith, Clause 83 deals only with statements of what is to come; it does not give the Secretary of State the power to release that money. We have to have Clause 82; otherwise there will be no power for the Secretary of State to give the assembly any money.
6 p.m.
Lord Crickhowell: I am grateful to the noble and learned Lord for giving way. He has made some helpful remarks about the details to be provided under Clause 83. However, can he answer my question about the way in which Parliament is to be informed of those details? The Bill states:
- "The Secretary of State shall lay before the Assembly any statement made under this section".
That Vote must not be lost in any general Vote which provides funds. We need a clear statement of detail to be given to this Parliament as well as to the assembly in Wales.
Lord Falconer of Thoroton: The noble Lord is right to point out that Clause 83 relates to written statements
made to the assembly, not to this House. The amount to be given to the assembly will have to be referred to in the supply provisions considered by the other place. I cannot give the detail of how that will be done, but I shall write to the noble Lord about it.I turn now to the detail of the amendments. Amendments Nos. 205 and 206 would require the Secretary of State to take into account the needs of Wales in relation to the United Kingdom as a whole in determining the money he makes available to the assembly. The amendments would require changes to, or even the complete abandonment of, the Barnett formula and I have already said that we have no plans to do that.
Amendment No. 207A seeks to require that payments made to the assembly should have regard to the Barnett formula or any arrangements which replace it. As I have just said, to include any references to the Barnett formula on the face of the Bill would mean that the whole system would need to be built into the Bill and we do not believe that it would be helpful or practical to freeze the details in statute. The amendment would also require the Secretary of State to consult the assembly about any proposals to change the Barnett system. I have already given my assurance that the assembly would be consulted; there is no need for the requirement to be included on the face of the Bill. In view of this, Amendment No. 207A is unnecessary.
Amendment No. 207 provides for statutory consultation. The assembly will be able to make any representations to the Secretary of State about funding that it wishes. We gave this commitment in paragraph D.14 of the White Paper, which stated:
- "The Secretary of State will provide the channel through which the Assembly can conduct any discussions it might wish to have with the Government on financial matters. Thus, for example, if it has any concerns about the detailed operation of the Block formula, the Assembly will be able to make representations to him".
Clause 34 of the Bill already allows the assembly to consider and make appropriate representations about any matter affecting Wales. So the assembly may make such representations to the Secretary of State, if it so wishes. During Committee stage in another place, my honourable friend, the Parliamentary Under-Secretary, gave the Government's commitment that there would be discussions about funding between the Secretary of State for Wales and the assembly during the public expenditure survey. No doubt the assembly will wish to give its views on the resources which should be made available to it and any special factors it believes the Government should take into account in reaching their decision. It may also want to give its views on the operation of the block formula.
Amendment No. 208 seeks to amend Clause 83 to insert a reference to the approval by Parliament of the payments the Secretary of State made to the assembly. I remind your Lordships that Clause 82(1) already makes clear that the grant paid by the Secretary of State to the assembly will be out of the moneys provided by Parliament. Thus Parliament will have already approved the money available to the Secretary of State and I hope that the noble Lord, Lord Dixon-Smith, will therefore agree that his amendment is not needed.
Amendment No. 209 seeks to require the statement under Clause 83 in respect of the first financial year to be made prior to the assembly taking up its authority. The first financial year is defined in Clause 155 and means the period from the first elections on 6th May 1999 to 31st March 2000. While the Government have not taken a final decision yet, we would expect that the final transfer order might come into effect in June or July 1999. There is no need for the Bill to spell out when the Secretary of State is to give the statement. For obvious reasons, the assembly will need to know the amount of money available to it before it starts business. There is no need to have a specific provision in the Bill.
I would submit to the noble Lord, Lord Elis-Thomas, that his amendment, Amendment No. 208A, is inappropriate. Subsections (1)(b) and (1)(c) of Clause 83 already require the financial statement to include details of payments received from a Minister or government department, thus covering EU payments received through the intervention board for example, and otherwise than from a Minister or government department, which would cover any payments received direct for the European Union.
The Government very much appreciate the concerns that the noble Lords in whose names these amendments stand have shown for the funding of the assembly. However, I respectfully suggest that their solutions are not practical. We have thought this through carefully and this is the best method of funding, legally, from the point of view of Wales. I invite noble Lords not to press their amendments.
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