Select Committee on Delegated Powers and Deregulation Twenty-Third Report



Supplementary Memorandum by Her Majesty's Treasury


1. The Government Resources and Accounts Bill (the Bill) was introduced in the House of Commons by the Chancellor of the Exchequer on 18 November 1999 and was brought from the House of Commons on 1st March 2000. Report Stage in the House of Lords has been set for 4th July 2000.

2. A Memorandum was submitted to the Committee on 9th March 2000. This Supplemental Memorandum has been prepared in conjunction with the Wales Office and the National Assembly for Wales' Cabinet. It deals with:

-the Government's proposal to amend the Bill by substituting a new clause 15; and
-the Government's proposal to amend the Bill by introducing a new clause to enable the devolved administrations to invest in the body (currently known as Partnerships UK) described in clause 16.



3. By way of background, the Committee will wish to note that given the different nature of the devolution settlement in Wales from those in Scotland or Northern Ireland, the provision in the Government of Wales Act 1998 (c.38) ('GOWA') as to the funding of the National Assembly is different from that in relation to the funding of the devolved constitutions in Scotland and Northern Ireland. The GOWA more closely defines the provision of funds to and the budgetary processes of the National Assembly in relation to the UK Government (and in particular, the Secretary of State who in practice is the Secretary of State for Wales).


4. Part IV of GOWA deals with the National Assembly's Finance. Sections 80 to 89 may loosely be described as the budgetary side of its finances. In brief, this represents the National Assembly's version of the supply estimates for Her Majesty's Government in Parliament. At present the National Assembly's "estimates" are, in common with the UK Government, prepared on a cash basis but it is anticipated that when the UK Government goes over to a resources based system so will the National Assembly.


5. In order that the National Assembly may effectively plan its activities, this section requires the Secretary of State (in practice the Secretary of State for Wales) to make a statement each year showing the amount of money he estimates the National Assembly will receive each year under section 80 (Grants to Assembly). It also sets out certain related matters which the Secretary of State must cover in his statement including (see subsection (3)) a statement of the total amount which the Secretary of State for Wales proposes to spend out of the noted monies other than on making payments to the Assembly. In effect, it requires the Secretary of State for Wales to state how much of the money voted by Parliament for the "Welsh block" will be used by him in respect of his office expenditure.


6. This section limits the purposes for which the Assembly may incur expenditure. It may do so only in pursuit of its functions or under other statutory authority.


7. This section requires the National Assembly to publish an annual statement of its proposed expenditure for the financial year to which the statement relates. The statement is to cover the level and purposes of the Assembly's proposed expenditure, along with its estimated receipts, whether from the Secretary of State under section 80 or otherwise.


8. The existing clause 15 amends section 81(3). That amendment provides that in making his annual statement to the National Assembly for Wales the Secretary of State for Wales should state the amount of the resources he will use for that year.

9. However, it is considered that the changes to the system of resources for and accounting by the UK Government introduced by this bill and the associated changes to be reflected in the voting of supply and, in particular, changes in the format of the annual Appropriation Act will require further amendment not just to section 81 but also to sections 85 and 86. However, until those changes to the supply system are finalised it will not be possible to be certain as to what precise changes may be necessary to these provisions of the Government of Wales Act. Consequently, it is considered that the prudent way to proceed is to take in this bill a power to amend sections 81, 85 and 86 of GOWA.


10. It is proposed to give the Secretary of State a power to amend sections 81, 85 and 86 of GOWA. While in principle this will mean any one of Her Majesty's Principal Secretaries of State, in practice, this will be the Secretary of State for Wales.

11. The Secretary of State will have power to make, as it appears to him necessary or expedient, amendments (including repeals or making similar provision) in relation to sections 81, 85 and 86. The power will only be exercisable in consequence of:

(a) any provision of the Bill;
(b) changes in the accounting methods used by the National Assembly;
(c) changes in the procedures of the House of Commons relating to public money; and
(d) a change in the form of Appropriation Acts.


12. The power is exercisable by Order which is to be a Statutory Instrument. The Secretary of State will be required to lay a draft of an Order before each House of Parliament for their approval before the Order can be made. It is considered that this type of order­making power warrants this degree of Parliamentary scrutiny before it can be made.

13. The Secretary of State will, insofar as he proposes to make an Order amending section 81, be required first to consult the National Assembly. In relation to a proposal to amend section 85 or 86, then a draft of the Order will need to be approved by a resolution of the National Assembly. This is similar to the provision in section 22(4)(b) of GOWA where it is proposed to vary or revoke an existing 'transfer of functions' Order under that section. It is considered that given the different nature of the provisions in section 81 compared with sections 85 and 86, this difference of approach is justified.


14. It is regretted that this provision is being brought forward at this relatively late stage in the bill. However, because it is not yet certain how precisely the new House of Commons supply system will operate in providing resources to UK Ministers and how that will affect sections 81, 85 and 86 of GOWA, it has not been possible to come forward with amendments now that we can be confident will cover the new system once it is in operation. We appreciate the concerns of this Committee, on behalf of Parliament, that powers to amend primary legislation under delegated powers are kept to a minimum. It is hoped that this Memorandum will reassure the Committee of the need for the power in this case; that the power has been closely constrained; that it is made subject to a high degree of Parliamentary scrutiny and that the interests of the National Assembly will be properly protected.


15. The Bill is to be amended at Report stage in the House of Lords by the insertion of a new clause to give power to the devolved authorities in Scotland, Wales and Northern Ireland to invest in the body mentioned in clause 16, which is Partnerships UK PLC. Clause 16 authorises the Treasury to incur expenditure for the purposes of establishment of this body, investment in it and the making of other financial provision for it. Legislative provision is needed to permit the devolved authorities to invest in Partnerships UK PLC because it will carry on business throughout the United Kingdom and therefore to an extent beyond the legislative and executive competence of each devolved authority.

16. The new clause gives the devolved authorities immediate power to invest in shares of the same class as under the articles of association of Partnerships UK PLC must be first issued to the Treasury and held by or on behalf of the Crown. However, subsection (3)(b) of the clause also enables them to invest in such other forms of investment as the Treasury may specify by order. If it becomes appropriate to enable any of the devolved authorities to make other investments in Partnerships UK PLC, for any reason, (for example, because of particular projects or business expansion in one of the devolved countries) the Treasury will be able to make an order to confer the additional power.

17. The order making powers are specified in subsection (4). An order may be made relating to all or any one or more of the devolved countries. Different provision may be made for different purposes, so that different investments could if appropriate be authorised for the different authorities. The order is to be made by statutory instrument and, when made, will be subject to annulment pursuant to a resolution of either House of Parliament. The scope of investment which may be authorised by order is the same as for the Treasury's investment under clause 16(1)(b). Any investment by any of the devolved authorities will of course require due approval in accord with their respective constitutions. The negative resolution procedure is therefore considered appropriate.

June 2000

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