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Lord Strathclyde: My Lords, I thank the noble Lord the Government Chief Whip for his kindness in answering fully the questions I put to him. It is not my intention for this to become a weekly event. However, it is an important issue which needed to be raised rather more widely than the usual channels.

I asked one further question. Can the noble Lord reply? If we are to have a debate in the spill-over, shall we be able to have before us the Green Paper, or the options paper, that the Government have promised? In other words, will it be published by the time we return in October?

Lord Carter: My Lords, the date of publication of the Green Paper has not yet been decided. It will be published, and the Government's plans and proposals will be made available when we are ready.

Government of Wales Bill

3.52 p.m.

Lord Williams of Mostyn: My Lords, I beg to move that the Bill be now further considered on Report.

Moved, That the Bill be further considered on Report.--(Lord Williams of Mostyn.)

On Question, Motion agreed to.

Clause 80 [Grants to Assembly]:

Lord Roberts of Conwy moved Amendment No. 103:

Page 41, line 23, after ("State") insert (", recognising the needs of Wales in relation to the United Kingdom as a whole,").

The noble Lord said: My Lords, Clause 80 of the Government of Wales Bill deals with the all-important matter of government grants to the national assembly for Wales. Our first amendment requires that the Secretary of State should recognise the needs of Wales in relation to the United Kingdom as a whole. We withdrew a similar amendment in Committee because

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the noble and learned Lord the Solicitor-General said unequivocally in winding up the debate at col. 923 of the Official Report of 9th June:

    "The amendment 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".
The Minister's assertion was based on his understanding, stated at col. 924 of Hansard, that the Barnett formula,

    "is based solely on applying a particular formula to increase the baseline figure year on year. It is not calculated by reference to need. It is simply a formula".
However, opinion clearly varies on that point. The formula has a bearing on need according to the noble Lord, Lord Barnett, himself. He said at col. 904 of Hansard, with reference to the formula,

    "It is more than being based only on population ... as my noble friend rightly said"--
he was referring to the noble Lord, Lord Callaghan--

    "it is based on the needs of the population. And rightly so; it should be based on the needs of the population".
So we have a clear difference of view on the relationship between the formula and need.

The noble Lord, Lord Barnett, thinks that the formula should now be revised. So does the Welsh Affairs Committee, which agrees with the Treasury Select Committee. Paragraph 90 of its report states:

    "The needs assessment within the formula should be brought up to date".
If the Government are determined not to change the formula for the time being, so be it, although one must wonder just how long their resolution will last. The Government may come under mounting pressure for change.

In those circumstances, I find some attraction in Amendment No. 105 put forward by the noble Lord, Lord Elis-Thomas, to the effect that Ministers should have regard to the Barnett formula while it prevails and to any new arrangements that develop from it; and that the assembly should be consulted on any successor arrangements.

Amendment No. 103 goes beyond the annual increases or decreases in spending to which the Barnett formula applies. It goes to the heart of the matter: the basic allocations. It asks that they be based on the needs of Wales as assessed in relation to the rest of the United Kingdom. That is an area which requires a fresh study if the needs of Wales in the context of the United Kingdom are to be fairly addressed. If there is no commitment to the principle of a proper needs assessment study, the Government must understand that there will be continuing concern and that every shortfall in grants to whichever sector complains of inadequate resources will be attributed to the arbitrariness of Ministers and possibly even to the careless attitude of the Government towards Wales and its people's interests.

The sheer bareness of this grants clause, its lack of any underlying principle, its total dependence on the discretion of Ministers, give no security whatsoever to

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the assembly about the resources that will be made available to it to meet future needs. That causes us grave concern.

As it stands, the clause will cause endless argument and trouble. It provides no reassurance and no guarantee that present levels of spending will be maintained or that the differential per capita spend will continue. Ministers--indeed all your Lordships--will know that in 1995-96, for example, government expenditure per head in Wales was some £4,352, £609 more than was spent in England. The Scottish differential was rather more at £871. The Northern Irish figure was still higher at £1,396. Of course there were good reasons for the different spend per head.

The quality of many of our services in Wales depends on that differential. There is no underpinning for it in the Bill. Therefore devolution is a financial gamble so far as concerns Wales, and its outcome is not known. All we can do is hope that the assembly will have at least the planned 2.75 per cent. increase in spending promised over the next three years to meet the inevitable additional costs of assembly government and the high expectations generated. I beg to move.

4 p.m.

Lord Elis-Thomas: My Lords, my Amendment No. 105, which is a re-run of the rehearsal which took place on this issue in Committee, is grouped with this amendment.

In a sense, I no longer need to make the speech I would have made because the Government have made it for me. I have in my hand off the late train to Paddington a copy of Pathway to Prosperity: A New Economic Agenda for Wales (FFordd i ffyniant agenda economaidd newydd i Gymru). The document is signed by the fair hand of the Secretary of State Mr. Ron Davies. Paragraph 3.1, entitled "Where Are We Now" states:

    "Although Wales has recovered well from profound economic change, the Welsh economy currently creates less wealth than many regions of similar size in the industrial nations. Judged against European standards, Gross Domestic Product (GDP) per head in Wales is 80 per cent. of the European Union EU average (the lowest of any G.B. region). Estimates of the GDP for west Wales and the Valleys suggest that it is likely to be just over 70 per cent. of the EU average, and for East Wales over 90 per cent. Outside Europe, the comparison suggests that Wales performs much less well than, for example, US states with similar populations".

I shall not go through the whole document. However, I wish to emphasise that it seems to me that the Government must respond to themselves in terms of what has been set out in the document.

That issue was debated in a quite sparkling and intelligent debate opened by my right honourable friend Dafydd Wigley on disadvantaged areas in Wales. I shall not quote from my leader. However, the House can be assured that my right honourable friend in the other place spelt out the analysis which is contained in the paper. He spelt out the further need for partnership of investment between public and corporate private investment. He spelt out also the importance of creating, in terms of development, an emphasis on regional

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growth in the west and the valleys based on the growth of SMEs. That is something which the Welsh Office also emphasises.

How are we to do that? How are we to ensure a partnership of the corporate sector, the commercial sector, the workforce and the public sector in Wales through the national assembly and its powers to achieve it? It seems to me that that can be done only through a real assessment of the public spending needs.

I do not argue--and I do not want to argue--any kind of special case for Wales. I do not believe in special cases for any region or nation as against another. In this sense, I am supporting the noble Lord, Lord Roberts of Conwy, because I am arguing for a proper assessment of the needs of the Welsh economy and the social, environmental and other services provided within that economy and society, and the need for an objective assessment. That is why I am again pressing Amendment No. 105 to put the Barnett formula on the face of the Bill.

In particular, I seek a firm assurance as regards subsection (4) of my Amendment No. 105 which provides that:

    "The Secretary of State",
whoever he or she may be, and I do not wish to reopen the debate that we had on the last day on Report,

    "shall consult the Assembly concerning any proposals by Ministers ... to introduce changes to the arrangements referred to";
that is, the Barnett formula.

I seek an assurance from the Minster that it is the Government's intention in assessing the economic performance of the assembly and its impact on the Welsh economy and its position as set out in the Government's own paper Pathway to Prosperity that it shall have regard to the Barnett formula.

I also seek an assurance that it will develop on from that along the lines proposed by the noble Lord, Lord Barnett, in our earlier debate in Committee. The formula should be brought up to date and a needs assessment should take place. I look forward to those assurances from the Minister that the Government intend to act on the Pathway to Prosperity. It is by far and away the best analysis of the Welsh economy produced by any government. What we need now is action and support in terms of public spending.

We are speaking before the Welsh Grand Committee Debate on this issue at Merthyr Tydfil on Monday and before we know the result of the comprehensive spending review. All those issues are crucial to ensure that the Welsh economy has the benefit of action by the national assembly with its economic powers in a way which seriously improves our present condition in relation to other nations and regions. After all, in my book at least, the test of the assembly will be the extent to which it will provide genuine sustainable development in the economic, social and environmental sense.

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