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21 Oct 2009 : Column GC1

Grand Committee

Wednesday, 21 October 2009.

Arrangement of Business


3.45 pm

The Deputy Chairman of Committees (Lord Haskel): Before the Minister moves the first statutory instrument to be considered, could I remind noble Lords that in the case of each statutory instrument, the Motion before the Committee will be that the Committee do consider the statutory instrument in question? I should perhaps make it clear that the Motion to approve the statutory instrument will be moved in the Chamber in the usual way. I would add that Divisions are expected in the Chamber. If there is a Division, the Committee will adjourn for 10 minutes.

Welsh Ministers (Transfer of Functions) (No. 2) Order 2009

Welsh Ministers (Transfer of Functions) (No. 2) Order 2009

Considered in Grand Committee

3.47 pm

Moved By Lord Davies of Oldham

Lord Davies of Oldham: With the leave of the Committee, I shall speak also to the draft Government of Wales Act 2006 (Consequential Modifications, Transitional Provisions and Saving) Order 2009. This draft order for Welsh Ministers would transfer a range of functions relating to building standards from UK Government Ministers to Welsh Ministers. In particular, it would transfer the power to make building regulations for Wales. The proposed transfer of functions has the approval and support of the Departments for Communities and Local Government, Energy and Climate Change, and Business, Innovation and Skills.

The draft order transfers to Welsh Ministers functions of the Secretary of State under the Building Act 1984 and associated legislation. These include the function of making building regulations that set functional performance requirements for building work. Building regulations address a range of health, safety and sustainability issues including structural stability, fire protection, resistance to moisture and contamination, energy and energy efficiency, ventilation, combustion and accessibility. The 1984 Act also confers functions on the Secretary of State in relation to the administration of the regulations, and imposes a duty to establish and maintain a Building Regulations Advisory Committee (BRAC) for England and Wales to advise on changes to the regulations.

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Lord Jones: I am grateful to my noble friend. With regard to the building regulations provisions in paragraph 9, is there to be a payment of any kind made to members? What are the terms and conditions of appointment, and are the committee positions in Wales to be advertised?

Lord Davies of Oldham: I think I am grateful to my noble friend for notice of his questions. I will respond to them later when I hope to be able to respond to other contributions to the debate. I hope that he will bide a little time before we get to that stage.

Some functions under the 1984 Act relating to appeals and determinations have already been transferred to Welsh Ministers. The proposed transfer will include all of the Secretary of State's remaining functions under the 1984 Act and related secondary legislation, with a small number of specific exceptions. For example, functions are not transferred in relation to energy infrastructure buildings, except where planning functions are already devolved or where the buildings are not used to carry out an energy function-for example, houses or office buildings on the site of a power station. It will be recognised by the Committee that energy is not a devolved matter.

Although energy infrastructure buildings are exempt from the building regulations, this exemption will come to an end if and when Section 5 of the Sustainable and Secure Buildings Act 2004 is brought into force. When that happens, the power to set construction standards for those buildings should remain with UK Government Ministers.

The order will also transfer functions under the amended regulations made in 2000 in respect of energy performance certificates, but only in relation to certificates which are required on the construction or alteration of buildings. As I have mentioned, the 1984 Act requires the Secretary of State to appoint a Building Regulations Advisory Committee and consult the committee before making certain building regulations.

It is appropriate that Welsh Ministers, when they propose to exercise the power to make building regulations for Wales, should receive advice from a committee with specific knowledge and expertise relating to Wales. The draft order therefore provides for the BRAC to be replaced by separate committees-for England and for Wales. In addition to functions under the 1984 Act and regulations, the order will transfer reporting functions under two other Acts.

Section 6 of the Sustainable and Secure Buildings Act 2004 requires the Secretary of State to report on the building stock in England and Wales every two years, covering changes to building regulations and matters relating to energy efficiency, emissions, on-site energy generation and recycling. Section 14 of the Climate Change and Sustainable Energy Act 2006 provides for reports on steps which the Secretary of State has taken to secure greater compliance with environmental requirements of building regulations.

The transfer of these reporting functions is wholly consistent with the transfer of functions under the Building Act and with the Welsh Assembly Government's policies and strategies relating to climate change and waste.

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The Welsh Assembly Government have sought the devolution of building regulations as a key element in achieving its climate change and sustainable development objectives in Wales. They have begun a process of informal engagement with the public and industry, but a significant amount of work remains to be done in respect of the development of changes to the energy efficiency requirements of the regulations. The period before the order comes into force in 2011 will ensure that Wales benefits from the changes to those requirements which the UK Government propose for 2010, and give the Welsh Assembly Government the opportunity to further develop their proposals and engage with the industry in Wales.

Welsh Ministers have given an assurance that they intend to continue with the current building control system and to develop changes only in respect of energy efficiency in the first two years. Welsh Ministers have further confirmed support for the UK Government's proposals for reform of the building control system, the implementation of which may fall to Wales to implement after the transfer. There will be no budgetary transfer from the UK Government to the Welsh Consolidated Fund when the executive functions concerned transfer. The full costs of devolution in this case will be borne by the Welsh Assembly Government.

The post-transfer financial consequences external to government of any proposed changes to the building regulations will be considered through regulatory impact assessment, in accordance with the statutory code of practice required under Section 76 of the Government of Wales Act. Any proposals for changes to the regulations will also be subject to consultation, in accordance with the requirements of the Building Act.

The proposed transfer of building regulations functions would complement existing devolved planning and development control functions enabling the Welsh Ministers to exercise more coherent policy control over the development process, through the stages of planning, design and construction. Delivering sustainability in the built environment increasingly relies on a co-ordinated approach, taking into account matters of location, site arrangement and detailed design.

The draft Government of Wales Act 2006 order recognises that the legal separation of the National Assembly for Wales and the Welsh Assembly Government under the Government of Wales Act 2006 has required a large number of consequential modifications to other enactments. This order makes further consequential modifications to three Acts and related revocations, transitional and saving provisions. Part 2 of the order deals with modifications to British nationality legislation; Part 3 deals with modifications to the Constitutional Reform Act 2005 and the Companies Act 2006.

On Part 2, Articles 3 to 6 relate to Section 2(1)(b) of the British Nationality Act 1981. This provides for a child who is born overseas to a British citizen serving overseas in Crown service, or in closely associated service which has been designated by order of the Secretary of State under Section 2(3) of that Act, to be a British citizen. The present designation order is the British Citizenship (Designated Service) Order 2006.

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In the case of Crown service, provided that either parent is serving overseas in Crown service under the Government of the United Kingdom and was recruited for that service in the UK, their child will be at birth a British citizen. In effect, for British citizenship purposes, that means that the child will be treated as if it was born in the UK.

The Government of Wales Act 2006 has established the Crown in right of the Welsh Assembly Government as a separate emanation of the Crown. Article 3 modifies the definition in Section 50 to include service under the Welsh Assembly Government as Crown service.

If the order is made, service with the Welsh Assembly Government overseas will henceforth be Crown service under the Government of the United Kingdom on a par with service with the other emanations of the Crown in the United Kingdom. Consequently, Articles 4 and 5 make appropriate revocations in respect of the 2006 and 2008 orders. Article 6 makes related transitional provision to deal with children born overseas to a member of staff of the Welsh Assembly Government during the period from 25 May 2007, when the Welsh Assembly Government came into being, until 14 February 2008, when the 2008 designation order came into force.

The effect of that transitional provision is that for such a child's British citizenship, the service overseas of the parent with the Welsh Assembly Government is treated as if it had been Crown service under the Government of the UK. That means that the child will become a British citizen otherwise than by descent rather than, as at present, a British citizen by descent.

Article 6 also makes a saving provision in respect of children born between 14 February 2008 and the date that the order comes into force. In that case, the effect is to ensure that the status of that child as a British citizen is unaffected by the revocation of the 2008 order. Such a child will continue to be a British citizen otherwise than by descent. Inquiries have revealed that there are three children covered by the transitional provision and four children by the saving.

Turning to Part 3, Article 7 modifiesSection 41 of the Constitutional Reform Act 2005. Section 41 provides for the relationship of the new Supreme Court of the United Kingdom with other courts in the UK. In particular, it provides that decisions of the Supreme Court on a devolution matter coming before it are not binding upon the Supreme Court itself but are otherwise binding in all legal proceedings. The modification to the definition of devolution matters means that it now covers proceedings before the new Supreme Court in respect of the new legislative powers of the National Assembly for Wales.

Articles 8 to 12 make modifications to a number of provisions in the Companies Act 2006. Sections 54 and 1193 of the Companies Act 2006 place restrictions on companies and businesses adopting names that suggest a connection with branches of government.

Articles 9 and 11 amend respectively Sections 54 and 1193 to include reference to the Welsh Assembly Government alongside the existing references to Her Majesty's Government and others, the effect of which is that companies and businesses cannot adopt names which suggest a connection with any of those bodies

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or the public authorities set out in the draft Company, Limited Liability Partnership and Business Names (Public Authorities) Regulations 2009.

Sections 54 and 1193, which came into force on 1 October, replaced provisions previously contained in Section 26(2)(a) of the Companies Act 1985 and Section 2(1)(a) of the Business Names Act 1985. The Government of Wales Act 2006 (Consequential Modifications and Transitional Provisions) Order 2007 modified those Acts so that the Welsh Assembly Government were treated for the purposes of those provisions the same as Her Majesty's Government and the Scottish Administration. This instrument ensures that Sections 54 and 1193 of the Companies Act 2006 include the Welsh Assembly Government as well as Her Majesty's Government and the other devolved Administrations.

The Companies Act 2006 and Limited Liability Partnerships (Transitional Provisions and Savings) (Amendment) Regulations 2009, made on 9 September, contained a saving for the provisions in the Companies Act 1985 and the Business Names Act 1985 that applied in respect of the Welsh Assembly Government. That saving will now cease to have effect. Articles 10 and 12 modify respectively Sections 482 and 1231 of the Companies Act 2006. Those sections contain references to the Government of Wales Act 1998 that now need to refer to corresponding references in the Government of Wales Act 2006.

4 pm

Sitting suspended for a Division in the House.

4.10 pm

Lord Davies of Oldham: My Lords, I was speaking on a not unimportant but relatively minor point to do with the Companies Act. Articles 10 and 12 of the order modify respectively Sections 482 and 1231 of the Companies Act 2006. Those sections contain references to the Government of Wales Act 1998, which now of course need to refer to the corresponding references in the Government of Wales Act 2006. In addition, Article 12(3) requires the First Minister for Wales to lay before the National Assembly a copy of each report received from the independent supervisor of the Auditors General. That requirement will not apply to calendar years before 2010. It is, however, appropriate, following the Government of Wales Act 2006, that the consequential modifications to the three Acts should be made. I commend the orders to the House and beg to move the first one.

Lord Glentoran: My Lords, I thank the Minister for explaining the order and the consequential order to us. If I understand it correctly, they largely involve building regulations. I have spent a lot of my life-probably about 30 years of it-involved in and around building regulations, so I suppose that I must declare an interest, having worked for Redland as a buildings materials producer and then been a director of the NHBC.

The purpose of the order is, as the Minister said, to transfer to the Welsh Ministers functions currently exercised by the Secretary of State under the Building Act 1984 and associated legislation. The Explanatory

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Memorandum indicates that the purpose of the proposed transfer is to help to advance the Welsh Assembly Government's policies to tackle climate change. The Assembly Government intend to pursue even more stringent carbon reduction targets than those applicable in the rest of the country, and aim to achieve that by, inter alia, reducing still further the environmental impact of the building industry-a brave objective. To help to advance that policy, the Assembly Government consider it necessary to develop their own building regulations-another brave challenge.

Although the pursuit of policy to tackle climate change is of course laudable, I am concerned that the creation of a different building regulations regime in Wales from that of England may have a severe impact on both the Welsh construction industry and Welsh house buyers. It appears self-evident that complying with more stringent building regulations will inevitably lead to greater costs on the building industry, which is at present already suffering grievously in Wales. Indeed, Redrow Homes, Wales's largest house building company, recently posted its worst ever set of results.

The housing market in Wales is very fragile. It must be a concern that any additional costs that fall on house builders and are passed on to house buyers will have the effect of further depressing the market. At a time when the goal of increasing the supply of affordable housing is being pursued, it is hard to see that any proposal that has the effect of increasing the cost of houses will do anything to allay what is a serious problem, especially in rural Wales.

4.15 pm

It is a concern that, according to the Explanatory Memorandum, no impact assessment has been undertaken. The Minister will no doubt respond by saying that that matter should be left to the Assembly Government to conduct during the pre-measure stage. However, I note from the memorandum that engagement with industry and other stakeholders over potential changes to the regulations in Wales has actually begun. What initial responses have been received from the industry so far? Is it the case, as anecdotal evidence has it, that the response of the building industry to date has been wholly adverse? What do the Government propose to do to address the concerns of the industry? What initial assessment have the Government made about the likely additional cost to the industry of complying with the kind of regulations that are foreseen as a consequence of the Assembly Government's policy?

What assessment have the Government made of the likely impact of more stringent regulations on house prices, the housing market generally and, perhaps most important of all, the availability of affordable housing? What assessment have they made of the likely impact of the availability of mortgages? Do the Government recognise that with more stringent building regulations in place in Wales than in England there will be a significant incentive to Welsh builders to move their operations out of the Principality into England, which in the most populous parts of Wales is less than an hour down the road? What consideration have the Government given to the potential of more stringent regulations deterring English builders from pursuing building operations in Wales?

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The order provides for a commencement date of 31 December 2011, which according to the Explanatory Memorandum is intended to provide a lead-in period for the establishment of Welsh Assembly Government capacity for the transfer of functions and development and engagement work in respect of the first proposed changes to the building regulations. How satisfied is the Minister that the Welsh Assembly Government are able to build such additional capacity in time for the commencement date?

The order provides for the establishment of a building regulation advisory committee for Wales and a separate committee for England. What assessment has been made of the effect of such separation on the capacity of the committee for England? What are the implications of such a separation? On costs generally, is it intended that any and all additional costs generated by the new Welsh regime will be absorbed by the Assembly out of the existing budget? As the Minister will gather from my questions, we on this side of the Committee have serious reservations about this proposal. Having spent a lifetime involved with building regulations, I would also like to know how long it took to reproduce the building regulations from Northern Ireland, which were completed about five years ago. There are also separate building regulations for Scotland, so we should know how long it took for them to be produced. At least the Scots have the advantage of being a long way away from the main building of England. From where I stand, I hope that Her Majesty's Government will have a little more thought about passing this burden-and I believe that it is a burden-to the Welsh Assembly.

The second order seems to be largely technical and administrative and a tidying-up exercise. I have no particular comments to add to the Minister's explanation of it.

Lord Livsey of Talgarth: My Lords, in contrast, this order is welcome, given that it transfers building standards functions from the Secretary of State to Welsh Ministers. It enables the power to make building regulations and create a Welsh advisory committee. Given the National Assembly's commitment to sustainability required by the Government of Wales Act 1998, the order is especially important, because it transfers functions under the Sustainable and Secure Buildings Act 2004 and the Climate Change and Sustainable Energy Act 2006.

The functions within these Acts will assist Welsh Ministers to meet the carbon-reduction targets of climate-change policies for Wales. The Climate Change Commission for Wales and a promised 3 per cent per annum carbon-reduction target in operation by 2011 will be drivers to achieve objectives for the buildings defined in the order. What distresses me is the time that it has taken to obtain this order to transfer functions-from 29 November 2007 to enactment by the end of 2011. This is an enormous length of time to get a simple piece of legislation through the parliamentary and Assembly procedures. It proves that the clumsy bureaucratic process of transferring functions in the Government of Wales Act 2006 is far too slow, and the sooner that more primary legislative powers are transferred to the Assembly, the better.

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Part 4 of the 2006 Act needs to be enacted as soon as possible, and a referendum needs to be brought forward, to give the Assembly the new powers. I agree with the opposition Front Bench that the affordability and impact of the regulation need to be examined. However, in my experience in Wales, building companies from the other side of Offa's Dyke tend to build a lot of executive houses that local people cannot afford. This is not necessarily the disaster that the opposition Front Bench is promulgating.

The second order makes changes consequential to the Government of Wales Act 2006. I agree that this contains a much simpler series of technical amendments relating to Acts of Parliament-three in this case. The impact of the 2006 Act on separation of powers from the Assembly and UK Government to the Executive and Welsh Ministers is a desirable reform. The Secretary of State may make modification orders to enactments as he considers appropriate, as a result of the Government of Wales Act 2006. This is a tidying-up exercise. As the Minister said, the modifying enactments are the British Nationality Act 1981, the Constitutional Reform Act 2005 and the Companies Act 2006. The changes are all consequential on the Government of Wales Act 2006, but there is a drip-feed of gradual transferral.

Paragraph 7.3 in the Explanatory Memorandum stresses:

"Most of the executive functions of the old Assembly became functions of the Welsh Ministers",

and it sets out the process consequential to the 2006 Act.

The new Assembly now has legislative powers to pass Assembly measures for the Executive, who are the Ministers, to have Executive powers. My party agrees with that, but it is a terribly slow process towards giving the Assembly full legislative powers, and we could spend time better ensuring that the Assembly gets those powers as soon as practicable.

Lord Elystan-Morgan: My Lords, I certainly welcome the content of the two orders that we are now considering. In many respects, both involve what might be described as consequential developments. In the case of the second order, it clearly deals mechanically with matters which arise from the passing of the Government of Wales Act 2006. It is worth noting that although that Act received Royal Assent on 26 July 2006, we are now in the third tranche of consequential amendments. The Act itself, a rather bulky piece of legislation, contains dozens if not more consequential amendments. In 2007, there was a very substantial clutch, again dealt with by way of regulation, and now we are in the third tranche. If I was of a mischievous disposition, I would ask the Minister whether he can give an undertaking signed, as it were, in his heart's blood, that there will be no further tranches but, not being of that disposition, I allow that to remain as a wholly rhetorical question.

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