Welsh Consolidated Fund and Loans Fund

Orders of the Day — Wales Bill – in the House of Commons at 12:00 am on 4th April 1978.

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Photo of Mr Nicholas Edwards Mr Nicholas Edwards , Pembroke 12:00 am, 4th April 1978

I beg to move Amendment No. 239, in page 15, line 31, leave out from "Fund" to end of line 35.

The clause has something positively Biblical about it:" There shall be a Welsh Consolidated Fund". One is tempted to add "and the Ministers saw that it was good, and on the seventh day they rested." But there is a good deal of labour—and the referendum—to come before they can contemplate that.

Inevitably, the financial provisions are the centre-piece of the Bill, and an examination of them may reveal a good deal about the nature of the legislation. When, shortly, I hope, we come to debate whether Clause 42 should be part of the Bill, there will be a great many questions to be considered.

First, however, and very briefly, we have an amendment which asks a simple question: why have two funds? We can understand that There shall be a Welsh Consolidated Fund. It is a very credible proposition that there shall be a Welsh Loans Fund. It is, of course, a distinct possibility that an Assembly should decide to have both of them. But why should Parliament insist in such stentorian terms on this particular bookkeeping exercise? Bookkeeping exercise it is, no more and no less.

Separate funds may be created in this grandiloquent way, but at any time the Executive Committee—that is to say, the Welsh Cabinet;—it is good to be reminded so clearly by the clause of the nature of the Executive Committee—or the Welsh Government, call it what we will, can, under subsection (2) of the clause, transfer sums from one fund to another whenever it pleases. It can apparently transfer up to the full £250 million that can be advanced to the Welsh Loans Fund from the National Loans Fund. The treasurer can, if he wishes, stand in the centre of the Coal Exchange and juggle the funds—tossing money from one to the other—until committee Members feel sick at the sight of his dexterity. At least, it will be an improvement on the occupation reported in the Welsh Press on 1st April, when we were informed—admittedly, before midday on that particular date—that there would be a bilingual bingo hall in the Assembly to amuse the Members. Bilingual bingo and juggling are likely to ensure that there will be a roaring demand for membership of the Assembly.

There are, apparently, to be no controls over this switching of funds. As I understand it, the Welsh Auditor General cannot stop it. He can stop payment out of the Welsh Consolidated Fund. That is provided in Clause 43. Under Clause 45, he can stop payment out of the Welsh Loans Fund. But in neither case do his powers extend to transfers between the two funds. The only explanation given to us for the creation of these two separate funds is contained in paragraph 230 of the White Paper "Our Changing Democracy", which states: Capital expenditure by local authorities and by other public bodies in devolved fields will continue to be financed by borrowing. Local authorities will continue to have access to the Public Works Loan Board. Other public bodies will have access to a new Welsh Loans Fund for longer-term borrowing, financed from the National Loans Fund and controlled by the Assembly. The main condition on its use will be that on-lending should not be at a lower rate of interest than the corresponding loan from the National Loans Fund.

Photo of Mr Tam Dalyell Mr Tam Dalyell , West Lothian

With regard to the question of a roaring demand for the Welsh Assembly, can it be a matter of record that the roaring demand from the Labour Back Benches consists of my hon. Friends the Members for Bedwellty (Mr. Kinnock), for Aberdare (Mr. Evans)—who likes the idea about as much as I do—and for Wrexham (Mr. Ellis), who wants something very different from the Government?

Photo of Mr Nicholas Edwards Mr Nicholas Edwards , Pembroke

That is absolutely right, but that has been the position throughout the proceedings on the Bill. We have one additional Member on the Government Benches. We welcome the fact that a Treasury Minister from Wales will reply to the debates on these financial provisions. If it was not for that, the numbers attending the debate would be even thinner.

The use of the Welsh Loans Fund is, therefore, apparently to be confined to loans to public bodies other than local authorities and is controlled by Clause 45. But, as I have already pointed out, that clause does not limit the interchange-ability of the funds—the juggling operation which the Assembly is free to carry out. It is also true that Clause 47 states: Payments … into the Welsh Loans Fund shall be deemed to be advances … and shall be repayable and subject to interest. As I see it, we do not have to create a separate fund to ensure that certain payments into it are repayable and subject to interest. If the Minister doubts that statement—if his credit is good enough—he had better go to see his bank manager to discover whether certain payments into his current account might not be repayable and subject to interest.

This is a little curious. I put it no higher than that. Throughout the proceedings on the Bill, Ministers have lectured us on how wrong it is for Parliament to dictate to the Assembly, which is to be a free and independent body. Yet here, on what appears to be an unimportant point on a matter of administration—on a matter concerned only with the way in which it keeps its books—there is the portentous pronouncement that "There shall be two funds, not one. Man and woman created He both."

The difference is that man and woman were not interchangeable. They both had an essential part to play. If a single fund, instead of two funds, had been created by the Bill, there would have been no difference at all. Therefore, before we get on to the major issues raised by the clause, I ask two simple questions. Why insist in the Bill on separate funds, and why be so dictatorial about it?

6.45 p.m.

Photo of Mr Tam Dalyell Mr Tam Dalyell , West Lothian

I should like to ask two questions at this stage. The first concerns the nature of the Executive. I have regularly attended every debate on the Wales Bill. Forgive me if I am ignorant, but I am still not at all clear about the nature of the Executive—about the nuts and bolts. Indeed, we never got round to discussing the nuts and bolts of the so-called Scottish Cabinet.

It is right that one should ask these questions of a Treasury Minister, because he has to deal with the Civil Service aspects. Is it intended that the Executive should comprise full-time Members or part-time Members? Is it at all clear whether Members of the Welsh Assembly are to be full-time or part-time? If they are full-time, what on earth are they going to find to do for 37 weeks of the year, five days a week? If they are part-time, it throws a very different light on all these matters which we are discussing.

Photo of Mr Myer Galpern Mr Myer Galpern , Glasgow Shettleston

Order. I was hoping that during the Easter Recess the hon. Gentleman would have reflected upon his interventions during these debates on devolution. He must not get annoyed, but there is no question but that what he is saying with regard to this amendment is absolutely irrelevant and is out of order.

Photo of Mr Tam Dalyell Mr Tam Dalyell , West Lothian

Sir Myer, I am simply asking for information about—

Photo of Mr Myer Galpern Mr Myer Galpern , Glasgow Shettleston

Order. But it is not appropriate to ask for it at this stage. That is my point.

Photo of Mr Tam Dalyell Mr Tam Dalyell , West Lothian

I shall be brief. Am I not entitled to ask precisely what will be the nature of the Executive that we are discussing, because it is crucial to the amendment? Indeed, the whole question of the nature of the Civil Service is crucial to the amendment. I am asking factual questions as to the nature of the Executive and whether the Secretary of State will have his own Civil Service—

Photo of Mr Myer Galpern Mr Myer Galpern , Glasgow Shettleston

Order. The hon. Gentleman has addressed the question to me. The amendment deals with the question of whether there will be a Welsh Loans Fund. That is what we are discussing. It is unfortunate that the hon. Gentleman uses every amendment to ask questions which he himself knows are wholly irrelevant to the amendments under discussion.

Photo of Mr Tam Dalyell Mr Tam Dalyell , West Lothian

Sir Myer, the amendment is certainly about a Welsh Loans Fund. But subsection (2) of the clause states: The Executive Committee of the Assembly may from time to time cause sums to be transferred from one to the other of those Funds. I am simply asking who does it and what is the nature of their jobs.

Photo of Sir Raymond Gower Sir Raymond Gower , Barry

I, too, would like to ask the Minister what is the reason for having this arrangement of the two Welsh funds. I can imagine the reason for having some money dealt with by the Consolidated Fund and some money by a Loans Fund, but it would appear from what my hon. Friend the Member for Pembroke (Mr. Edwards) said in his introductory speech that there can be a regular movement of money from the Welsh Consolidated Fund to the Welsh Loans Fund and, presumably, back again. That really does seem to be an extraordinarily strange position.

In each case, payments can be made out of the Welsh Consolidated Fund and the Welsh Loans Fund only in accordance with certain credits granted on the fund by the Welsh Comptroller and Auditor General. In the case of payments out of the Consolidated Fund—the conditions are laid down in Clause 43—and in the case of the Loans Fund, under Clause 45 it is prescribed that these payments shall be granted at the request of the Executive Committee of the Assembly.

This could be done in a number of ways. It could be done in the form prescribed in the Bill with a separate Welsh Consolidated Fund and a Welsh Loans Fund. It could be done by relying on the general Consolidated Fund for the whole of the United Kingdom and a separate Welsh Loans Fund, or it could be done with one single fund. These are the main alternatives. I wonder what reason there is for the particular formula in the Bill, because it seems somewhat cumbersome. I may be misinterpreting the arrangements, but I believe that the objective could be achieved in a simpler way.

Photo of Mr Ioan Evans Mr Ioan Evans , Aberdare

We are dealing with the financial provisions of the Bill and the establishment and management of the Welsh Funds. The amendment seeks to delete the second part of Clause 42, which states: The Executive Committee of the Assembly may from time to time cause sums to be transferred from one to the other of those Funds. Before we come to the question of the functions of the Executive Committee of the Assembly, I want to raise one or two questions about the identifiable public expenditure per head that is coming into Wales. Under the present arrangements in agriculture, the identifiable public expenditure per head is £29 in Wales compared with £15 in England. Therefore, Wales is better off.

In trade and industry and employment, the identifiable public expenditure per head is £65 for Wales compared with £30 for England. Therefore, we are far better off under the existing arrangements. Similarly, with Government lending to the nationalised industries the amount of expenditure per head for England is minus £3 compared with £31 for Wales. Once again, we are much better off. On roads and transport, expenditure in Wales is £52 a head compared with £4 in England.

Photo of Mr Ioan Evans Mr Ioan Evans , Aberdare

I shall give way to the hon. Member, but I hope that his intervention on this occasion is not as misleading as on the previous occasion. When he last intervened, he asked about the views of my council as though he had more up-to-date information than I had But as I told him on that occasion the Cynon Valley Borough Council has thrown out the White Paper on this Bill. He should apologise for his last interruption.

Photo of Mr Dafydd Elis Thomas Mr Dafydd Elis Thomas , Merioneth

I shall not be drawn into a discussion on my previous interventions in this debate. Will the hon. Member give the per capita figures for housing in England and Wales?

Photo of Mr Ioan Evans Mr Ioan Evans , Aberdare

I knew that the hon. Member for Merioneth (Mr. Thomas) would come to that. On this side of the Committee we want a fair and complete examination of the proposals before us. The trouble with the Plaid Cymru Party is that its Members scrape up the worst possible statistics, whereas we like to give a complete picture. If the hon. Member is patient, I shall come to the sectors of public expenditure in which Wales is at a disadvantage. I must add that his intervention on the last occasion was completely misleading, and I thought that he would have had the grace to apologise for a wrong interruption.

On education, libraries, science and the arts, the identifiable public expenditure per head is £152 in Wales and £149 in England. On health and personal social services, it is £131 in Wales as compared with £129 in England. On social security—

Photo of Mr Myer Galpern Mr Myer Galpern , Glasgow Shettleston

Order. I am quite sure that the hon. Member knows that this has nothing to do with the question. The amendment raises the simple question of whether there should be one fund or two.

Photo of Mr Nicholas Edwards Mr Nicholas Edwards , Pembroke

On a point of order, Sir Myer. Would not the points being made by the hon. Member for Aberdare (Mr. Evans) be wholly appropriate in the next debate on whether the clause should stand part of the Bill?

Photo of Mr Myer Galpern Mr Myer Galpern , Glasgow Shettleston

I agree entirely. His remarks would be more appropriate then.

Photo of Mr Ioan Evans Mr Ioan Evans , Aberdare

I accept your ruling, Sir Myer. I shall continue with my argument then.

What we are debating is the fact that the Executive Committee of the Assembly may from time to time cause sums to be transferred from one fund to another. The argument I am putting forward is this. Where is the extra expenditure to come from if not from the Consolidated Fund? I suggest that we would then need to think in terms of having this Welsh Loans Fund. If the Welsh Assembly is to be limited in public spending, which at the moment is far greater in Wales than in England, it will need power to raise money. Then we are dealing with the question of whether the Executive Committee would have to transfer funds from one fund to another. That is the point I want to make. Am I in order if I proceed along those lines?

Photo of Mr Myer Galpern Mr Myer Galpern , Glasgow Shettleston

No. The hon. Member should keep it until the clause stand part debate.

Photo of Mr David Renton Mr David Renton , Huntingdonshire

I wish to seek information about the significance of the two funds. Before doing so, I must point out that I tried to get the information from the Explanatory Memorandum, but it is remarkably uninformative. It runs to half a page for the whole of Part V of the Bill, which contains eight pages of complicated clauses on financial matters.

I remind the Minister that the Committee on the Preparation of Legislation, which reported nearly three years ago and which the Government have largely ignored, said—and both Houses accepted this—that more explanation should be given of the contents of Bills brought before the House, especially those Bills that were complicated and related to financial matters. If ever there was a case when the House of Commons deserved to be better informed by the Explanatory and Financial Memorandum, this is it.

Being unable to find an explanation in the Financial Memorandum, I must ask the Minister whether I have understood the position correctly. I take the reference to the Welsh Consolidated Fund to mean the annual block grant and the way in which that grant is to be placed in a fund at the disposal of the Welsh Assembly. I assume that that grant will be for expenditure mainly on current account but to some extent, no doubt, also on capital account. That matter should be clarified.

Clause 42(2) says that: The Executive Committee of the Assembly may from time to time cause sums to be transferred from one to the other of those Funds. That provision has several implications which we should try to understand. If I am wrong in my view, perhaps I may be told where I have gone wrong.

7.0 p.m.

The first implication is that if the Assembly finds that its block grant paid into the Consolidated Fund is not large enough, it can get round that by getting the money out of the Welsh Loans Fund. That Loans Fund will be an indirect, perhaps surreptitious, way of topping up the Consolidated Fund and of getting money for current expenditure, even though Parliament in its Estimates when considering the amount to be paid into the Consolidated Fund has not approved that expenditure. It appears to me that that is a way of getting round the decision of Parliament.

Let me take the converse possibility—namely, the payment of money from the Welsh Consolidated Fund to the Welsh Loans Fund. One assumes that that would occur only if rather more money than was needed had been paid into the Consolidated Fund by way of block grant and that there was some surplus cash. Those concerned would not want to part with that money and would pay it into the Loans Fund—in other words, they would make a loan to themselves.

Why should we have such contrivances? The House of Commons is accustomed to voting large sums of money to the Government and we do so in a fairly straightforward way. The Consolidated Fund plays a very important part in the process, but we do not encourage Government Departments—which are, so to speak, under our direct supervision—to jolly things along in the way I have described. We say to Government Departments "We have approved these Estimates and in due course they will be subject to appropriations-in-aid". If we find that there is not enough and loans have to be raised by one means or another, we do not say to the Department "Pay the money into your departmental account in the ordinary way". The loan is expected to be for some specific purpose for which the Minister is accountable to Parliament. I am not a financier—I am a lawyer—but it seems to me that the Welsh Assembly will have a privileged financial opportunity which is not enjoyed by Government Departments.

Photo of Sir Raymond Gower Sir Raymond Gower , Barry

No doubt my right hon. and learned Friend will have noted that by Clause 47(1) such funds are referred to as such sums as he may with the consent of the Treasury determine". We see in subsection (4) that the sums will not exceed £250 million.

Photo of Mr David Renton Mr David Renton , Huntingdonshire

I am grateful to my hon. Friend for pointing that out, because to that extent it completes the picture, but it does not answer completely either of my two main points.

I am very much in the hands of the Chair in discussing whether the idea of a Welsh Loans Fund should be excluded. One should be clear in one's mind how the amounts of payments into the Consolidated Fund and the Welsh Loans Fund are to be determined and by what principles. We know from later clauses and from the Explanatory Memorandum that it will be the Secretary of State who, with the Treasury's consent, will be the responsible Minister in deciding how much is to be paid into those funds. But surely we should also determine on what broad principles the Secretary of State will make this annual decision—or, in the case of loans, it may be more frequent than an annual decision as long as it does not exceed £250 million in aggregate in regard to the Loans Fund.

Those are the questions to which we require answers so that we may be able to deal with the amendment, understand the clause and be clear in our minds about the implications of the clauses that follow. I hope that the Minister will give the necessary explanations.

Photo of Mr Wyn Roberts Mr Wyn Roberts , Conway

I draw my right hon. and learned Friend's attention to the latter part of Clause 45(1), which states: No payment shall be made out of the Welsh Loans Fund except in accordance with credits granted on the Fund by the Welsh Comptroller and Auditor General; but this subsetion does not apply to transfers under Section 42(2) above".

Photo of Mr David Renton Mr David Renton , Huntingdonshire

My hon. Friend for Conway (Mr. Roberts) has a more adventurous disposition that I have. He referred to Clause 45, and there are various questions on the implications of those provisions on which we shall ask various questions in due course. For the time being I am trying to confine my remarks to Clause 42, and it might be better if I did not answer my hon. Friend's comment now.

Photo of Mr Charles Morrison Mr Charles Morrison , Devizes

The longer one listens to this debate, the more extraordinary the arrangement seems. Each intervention produces evidence that goes against the arrangement proposed in the Bill.

Why have two funds under which money can be swapped from one to the other under Clause 42(2)? Why have two funds when, although one fund may have an aggregate outstanding which should not exceed £250 million, that fund can borrow from the other fund? Why have two funds when, under Clause 48, short-term borrowings can be undertaken and such borrowings can be undertaken by swapping from one fund to the other? It appears to me that the whole arrangement is not simply cumbersome but is much more bureaucratic than it needs to be, and that it is likely to add considerably to the cost of administration.

Perhaps there are good reasons for this arrangement, and, if there are, no doubt we shall hear them given in due course by the Minister. If there are good reasons, why on earth are they not included in the Explanatory Memorandum? If they were included, we would not have needed this probing amendment. This is of considerable importance when we are subjected to a guillotine. With a guillotine, the argument for the Explanatory Memorandum being full and comprehensive is strengthened.

We have been landed with this legislation but without adequate explanation. In effect, we are being told "Accept it as it is". I trust that the Minister will be able to produce some explanation of why it has been suggested that there should be two funds. Perhaps what has been said will persuade the Minister, even if he cannot accept this amendment, to put forward later amendments to ensure that there will be only one fund.

Photo of Mr Denzil Davies Mr Denzil Davies , Llanelli

Perhaps I may try to assist the Committee by explaining the reasons for this clause, although strictly directing my remarks to the amendment. The amendment seeks to delete everything after the word "Fund" in Clause 42. The effect of the amendment, which apparently is now a probing amendment, would be to do away with the Welsh Loans Fund. As a consequence, subsection (2) would fall anyway because there would not be any other fund into which to switch money.

Several hon. Members have asked why there should be two funds. This point has been answered, at least by implication. The hon. Member for Pembroke (Mr. Edwards) answered the question, as did the right hon. and learned Member for Huntingdonshire (Sir D. Renton). The Consolidated Fund is in receipt of Government grants for capital and some current expenditure. The Welsh Loans Fund is the devolved corollary of the National Loans Fund. I am sure that Tory Members would not wish to mix up a fund which is in receipt of grants with a fund which has the purpose of borrowing money and paying interest. It is to some extent a bookkeeping exercise, as the hon. Member for Pembroke said. He described it as such in a pejorative sense.

The Tory Party is not, apparently, interested in bookkeeping and does not want to see something done properly. It is somehow bad to have proper financial mechanisms and control. We saw what happened when the Tories were in Government. We saw their failure in financial control.

Photo of Mr Nicholas Edwards Mr Nicholas Edwards , Pembroke

If we are setting up what is supposed to be an independent, democratic national Assembly, why is it necessary to insist exactly upon the structure of the bookkeeping at this stage in the proceedings?

Photo of Mr Denzil Davies Mr Denzil Davies , Llanelli

Because it is right that the House of Commons, which is the sovereign body of the United Kingdom, should have a say in this and that the Act which sets up the Assembly should also set up these most important mechanisms. We think that these mechanisms, dealing with the control of money, to which expenditure is to be devolved and how it is to be controlled, are important. These are matters which should be covered in the Bill and should be debated here.

Photo of Mr Neil Kinnock Mr Neil Kinnock , Bedwellty

I entirely agree with my right hon. Friend's general sentiments about expenditure control. Can he tell us on what basis the Consolidated Fund is to be calculated as this seems to be a central question posed by this and subsequent clauses?

Photo of Mr Denzil Davies Mr Denzil Davies , Llanelli

Whether it is a central question posed by this clause I will leave to your discretion, Sir Myer. I beg to differ with my hon. Friend. It is a central question to other parts of the Bill. Here we are concerned with the mechanism. I have explained what the mechanism is. Grants go to the Consolidated Fund, loans to the Welsh Loans Fund.

Photo of Mr Ian Grist Mr Ian Grist , Cardiff North

I do not quite follow that because Clause 48 (2) provides: Sums borrowed by the Assembly shall be paid into the Welsh Loans Fund or the Welsh Consolidated Fund. It carries on in that style.

Photo of Mr Denzil Davies Mr Denzil Davies , Llanelli

We shall no doubt come to Clause 48. That clause deals with temporary, short-term borrowing, which is different from the kind of borrowing we speak of when we talk about the National Loans Fund and its corollary, the Welsh Loans Fund. The Welsh Loans Fund has been set up because there are certain bodies which at the moment have their borrowing done for them by the Secretary of State, with the consent of the Treasury. These bodies are listed in Clause 50(3). These bodies can borrow with the consent of the Secretary of State, or perhaps the Secretary of State borrows for them, from the National Loans Fund. They then use the borrowed money for authorised purposes.

7.15 p.m.

Since, in future, control over those bodies listed in Clause 50(3) will be transferred from the Secretary of State to the Assembly it will not be appropriate constitutionally for them to borrow direct from the National Loans Fund because the National Loans Fund is responsible to the House and so is the Secretary of State. Since the Assembly would be controlling the borrowing of these bodies it is necessary that the Assembly should borrow from the Welsh Loans Fund. If we follow through these clauses, it will be seen that the Secretary of State has recourse to the National Loans Fund, which is responsible to the House of Commons. Its activities can be looked at by the United Kingdom Comptroller and Auditor General. We have a mirror image of that in the Welsh Assembly. These bodies will borrow from the Welsh Loans Fund through the Welsh Assembly which will be controlling their borrowing. The scrutiny of the Welsh Loans Fund will fall to the Welsh Comptroller and Auditor General.

Photo of Sir Raymond Gower Sir Raymond Gower , Barry

I believe that the Minister of State has gone some way to explaining the situation. Would it not be preferable, if there are to be two funds, that there should not be this transferability? In other words, if the money is granted from the Consolidated Fund of the United Kingdom into the Welsh Consolidated Fund and other sums of money are transferred from the National Loans Fund into the Welsh Loans Fund, why is it necessary to have this distortion, this topping-up process as my right hon. and learned Friend the Member for Huntingdonshire (Sir D. Renton) described it, which may arise because of the transferability?

Photo of Mr Denzil Davies Mr Denzil Davies , Llanelli

I am coming to that point. The hon. Member for Pembroke rightly made the point that this transfer of money was only between the one fund and the other. It will be seen that money cannot be paid out for purposes other than the original purposes of the fund. In other words, if money is transferred from the Welsh Consolidated Fund to the Welsh Loans Fund—and I will give die reason for that in a moment—that money cannot be transferred out of those two funds except for the purposes for which it was paid into the Welsh Consolidated Fund.

In other words, one could not use grant money for loans out of the Welsh Loans Fund because the Comptroller and Auditor General has to issue a certificate and the Assembly has to give the authorisation. The reason why there can be a transfer between the funds, not out of the funds, for purposes different from the original purpose connected with the giving of the money has to do with simple cash flow. One fund might be in surplus while another might be in deficit. Money may have been paid into the Welsh Consolidated Fund and no money may have been paid out because various authorisations were not needed. There might be a surplus in that fund and a deficit on the Welsh Loans Fund because money had been paid out and not borrowed One of the funds could go to the bank and get an overdraft to cover its cash problems.

Clause 48 deals with short-term borrowing. It is possible for a fund to borrow by way of overdraft or otherwise on a temporary basis to meet a cash problem because payments in and out may not match each other. Contract payments may not become due. To obviate the need for that, and, I would have thought, acting on the principles of good housekeeping which the Tory Party sometimes adheres to, if there is a surplus in one fund and a deficit in the other and money is needed, instead of one fund having to go to a bank and pay interest, the surplus from one fund can be transferred so that excessive interest charges do not have to be paid.

Photo of Mr Nicholas Edwards Mr Nicholas Edwards , Pembroke

I can understand the point about getting back into balance a fund which was previously in deficit, but the Minister of State has said that moneys can be paid out of either fund only for the original purpose for which the moneys were provided. In other words, loan fund moneys can be paid out only for loans and Consolidated Fund loans can be paid out only for Consolidated Fund purposes. In those circumstances I do not see how one can conceivably make up the deficit in the other fund, because the fact that there is a deficit means that moneys have been paid out for other purposes. What the Minister is saying now is in direct contradiction to what he said in his previous sentence.

Photo of Mr Denzil Davies Mr Denzil Davies , Llanelli

I am surprised at the financial innocence, if I may put it in a nice way, of Conservative Members. All I am saying is that in one of the funds there may be a deficit and that it may have to borrow from the bank to cover the deficit on a short-term basis. Instead of having to do that, money can be put into the account which is in overdraft, which then eliminates the overdraft. The money does not go out of the fund. It is not used for any other purposes. It means that the bank does not get the interest on the overdraft. That is all.

Photo of Mr Charles Morrison Mr Charles Morrison , Devizes

The right hon. Gentleman says that the money does not come out again having been transferred, but what happens if a positive decision is made to overdraw on the first fund so as to enable moneys from the other fund to be transferred to write off the overdraft?

Photo of Mr Denzil Davies Mr Denzil Davies , Llanelli

The hon. Gentleman is now becoming extremely clever and postulating all sorts of odd situations. Why should anybody wish to do that anyway? It is a simple proposition that here we have a Welsh Assembly with two funds and one happens to be in surplus and the other in deficit. If it evens them out, it does not have to pay interest to the bank.

Photo of Mr Neil Kinnock Mr Neil Kinnock , Bedwellty

Are we to depend on the fortuitous event of a surplus existing in one fund, that is to say, the Consolidated Fund? I understood my right hon. Friend to say that moneys cannot be moved from the loan fund into the Consolidated Fund. It can only be a one-way flow for this evening-out, debt-avoiding and overdraft-avoiding purpose. Are we to depend upon this coincidence of a surplus in one fund occurring at the same time as there is a deficit in the other?

Far from its being an extraordinary circumstance, does my right hon. Friend believe, against a background of today's realities, that it is likely to be a conventional situation or one which will arise with every other blue moon?

Photo of Mr Denzil Davies Mr Denzil Davies , Llanelli

My hon. Friend began his intervention by saying that there could only be a one-way transfer of moneys from one fund to the other. There is positively a two-way transfer from the one fund to the other. How often this will happen I do not know. There is no way of knowing. But it is a safeguard to enable the Assembly—I am sure my hon. Friend would agree with this—not to have to pay exorbitant interest charges that the bankers demand from time to time. It is to keep down the expenditure of the Welsh Assembly.

Photo of Mr Tam Dalyell Mr Tam Dalyell , West Lothian

Is it either wrong or over simplifying the matter to say that funds earmarked or authorised for one purpose are to be used for another purpose? Am I wrong in that proposition?

Photo of Mr Denzil Davies Mr Denzil Davies , Llanelli

They will not be used for another purpose because the moneys cannot leave the fund for any purpose other than the original one. Moneys can be used to reduce an overdraft, but that is to discharge a debt to the bank—a debt of interest. It is not a payment out of the fund.

Photo of Mr Neil Kinnock Mr Neil Kinnock , Bedwellty

Other than when playing darts, I become confused at the mere mention of figures. As it is impossible and not tenable to use moneys for purposes other than those for which they have been allocated, can my right hon. Friend describe circumstances in which allocations made to the Welsh Assembly by the Treasury for the purpose of road expenditure are used to balance up a deficit in the loan fund simply because a road contractor has not sent in his bill on a monthly basis? Is that the situation we are considering, or is it more complex and esoteric?

Photo of Mr Denzil Davies Mr Denzil Davies , Llanelli

It is perhaps simpler than that. My hon. Friend should not get carried away with the specific items of expenditure. We simply have in the one fund a surplus. That may be money not earmarked for any purpose except that it is a grant from the Government. In the other fund we have a deficit, for various reasons, which is quite possible when payments are moving in and out. It does not make sense. No company would operate on that basis. If a company had two bank accounts it would not keep one in surplus and one in deficit and incur interest on the one in deficit. No company would keep the one in surplus and the other in deficit and incur interest charges. This is a normal power given to the Welsh Assembly to obviate the need to pay out interest so that the money can go to road building and not to bankers.

Photo of Sir Raymond Gower Sir Raymond Gower , Barry

The Minister is saying in a very plausible way—to some people in a reassuring way—that this is merely meant to stop an overdraft. He also made some fulminations about the bankers. But there is nothing in the Bill about overdrafts. There is nothing to say that the money is to be used only for overdraft purposes. That is merely the Minister's view.

Photo of Mr Denzil Davies Mr Denzil Davies , Llanelli

It cannot be used for any other purpose. There is in the Bill something about overdrafts. There is a provision which the hon. Member for Pembroke mentioned. He said that the moneys cannot be transferred from the funds; they can be transferred only within the funds. To transfer the money out of the funds would require a certificate from the Auditor and Comptroller General and authorisation from the Assembly. The Assembly cannot authorise capital moneys to be used for any other purposes.

Photo of Mr Nicholas Edwards Mr Nicholas Edwards , Pembroke

Will the right hon. Gentleman give way?

Photo of Mr Denzil Davies Mr Denzil Davies , Llanelli

I shall not give way yet. I am answering the point raised by the hon. Member for Barry (Sir R. Gower). If the hon. Member for Pembroke is not satisfied he can make another intervention. The hon. Member for Pembroke said, quite rightly, that moneys cannot be paid out of the one fund without the authorisation of the Comptroller and Auditor General and, indeed, of the Welsh Assembly. This is provided for in Clauses 43, 44 and 45. There can be only a transfer between one fund and the other. Money can only be placed from the bank account of one fund into the bank account of the other. If the funds want to shift it backwards and forwards for no reason they can do it.

Photo of Mr Geraint Howells Mr Geraint Howells , Cardigan

Does the Minister agree that if we did away with the Welsh Loans Fund we would make life difficult for whoever would be responsible for administering the finances of the Welsh Assembly? Why deny the Welsh people the right to have two funds to run a successful Assembly for the people of Wales?

Photo of Mr Denzil Davies Mr Denzil Davies , Llanelli

The hon. Gentleman is absolutely right. These worthy bodies have been approved by the House and they need a mechanism to borrow money for worthy capital expenditure. This clause provides them with that mechanism.

Photo of Mr Nicholas Edwards Mr Nicholas Edwards , Pembroke

I am genuinely seeking information. When I tabled the amendment, I thought that I was making a very innocent point in order to obtain information. It is in that spirit only that I intervene again. The Minister has satisfied us on all but one point, on which I still require guidance. It is a matter of interpretation of the Bill.

The Minister has made clear that money can be taken out of the funds only for specified purposes. I understand that in relation to the money while it is in the funds, but I am not clear where the Bill states that once money has been transferred it can still be used only for the original purpose for which it was restricted in the fund in which it was first placed.

When the money is in the loans fund, clearly it can be used only for loans fund purposes and when money is in the Consolidated Fund it can be used only for Consolidated Fund purposes. I am not clear where the Bill says that money transferred from the loans fund to the Consolidated Fund can still be used only for loans fund purposes.

If the Minister can satisfy me on that point, I shall be fully satisfied with his explanation.

7.30 p.m.

Photo of Mr Denzil Davies Mr Denzil Davies , Llanelli

The hon. Gentleman will find the explanation in Clauses 43 to 45 where reservation is made in respect of transfers under Clause 42(2). In respect of any other transfers, credits must be granted by the Comptroller and Auditor General. Of course the money is still the money of the original fund and not the money of the other fund. That is why it cannot be used for any other purpose. The Assembly cannot authorise it to be used for any other purpose. The moneys have to be kept separate.

Photo of Mr David Renton Mr David Renton , Huntingdonshire

A good deal of the right hon. Gentleman's explanation appears rather more Irish than Welsh.

There is one point on which I am still perplexed. Despite there being nothing in the Bill about overdrafts, the Minister said—and it is a reasonable proposition—that high interest charges should not be incurred. But suppose the Consolidated Fund runs into deficit. To whom is the interest to be paid? Is not the interest, in any event, to be fixed by the Treasury? If the Welsh Loans Fund runs into deficit to whom is that interest to be paid? Will the Treasury have any say in the amount of interest that is to be charged? On what relationship to the minimum lending rate will such interest charges be made.

As the Minister has based a part of his case on the threat of high interest charges, he should make clear what he really has in mind.

Photo of Mr Denzil Davies Mr Denzil Davies , Llanelli

Perhaps we should start from Clause 48. Each fund has the power to borrow if it is in deficit, which it could very well be, as my hon. Friend the Member for Bedwellty said. The contract payment may have to be paid when money has not come in. Normally the fund would have to borrow.

We are concerned here with short-term borrowing, although there is a limit on the amount. If it has to borrow, then it has to incur interest charges. Rather than having to pay interest charges, which may not always be exorbitant—I accept that there are beneficent bankers—if there is a surplus in one fund, one avoids the interest payments.

Photo of Mr David Renton Mr David Renton , Huntingdonshire

The Minister has sought refuge in Clause 48, though he told one of my hon. Friends, who relied upon it, that it was not relevant to the situation that arises under Clause 42. Clause 48 refers to short-term borrowing, and the Bill is rather more specific there than in these earlier clauses.

Is there anything in Clauses 43 to 47 which gives us any idea as to how the interest liability will be met or of the dilemma in which the executive committee of the Assembly may find itself as a result of having to pay what the Minister described as high interest charges that bankers make? Is it not a fact that all interest charges will be under the control of the Treasury?

Photo of Mr Denzil Davies Mr Denzil Davies , Llanelli

No. In Clause 48 there is the power of short-term temporary borrowing, which the Treasury defines as borrowing for less than 12 months. I do not want to go into Clause 48 now. That deals with borrowing by overdraft from banks. I do not think that the Treasury gives overdrafts. To obviate the need for such borrowing, we have provided in Clause 42(2) that if there is a surplus in one fund, the Assembly will not have to borrow by overdraft from the banks.

Photo of Mr Wyn Roberts Mr Wyn Roberts , Conway

Why does the Comptroller and Auditor General not have to authorise or be informed of any transfer under Clause 42(2)?

Photo of Mr Denzil Davies Mr Denzil Davies , Llanelli

Because it is purely a book transfer and a levelling out of the balance between one fund and another. The character of the money does not change. That character changes only when a certificate is given by the Comptroller and Auditor General. The original purpose of the money does not change until it goes out of the fund for purposes authorised by the Assembly.

Photo of Mr Ioan Evans Mr Ioan Evans , Aberdare

My right hon. Friend has great knowledge about this subject and this is a complex financial matter. Unfortunately, it is likely that we shall not be able to debate Clause 48. My right hon. Friend has mentioned that under that clause the Assembly may borrow in sterling by way of overdraft to meet the eventuality of its expenditure exceeding its funds. The clause mentions that the principal of sums borrowed by the Assembly shall not exceed £35 million, but how is this to be controlled? If there are special circumstances, the amount could be well in excess of that figure. Will this mean that the Assembly will have to go into the red?

Photo of Mr Denzil Davies Mr Denzil Davies , Llanelli

It would mean that the Assembly could not borrow any more. It can borrow up to £35 million and not a penny more. Clearly there must be financial rectitude in the Assembly, and that is why we were concerned to lay down a limit. However, this refers only to temporary borrowing by overdraft and not to borrowing for capital expenditure.

I presume that this is a probing amendment. We have had a useful debate and I hope that I have dealt with the points raised by hon. Members. If the Opposition seek to press the amendment, I urge the Committee to resist it.

Photo of Mr Nicholas Edwards Mr Nicholas Edwards , Pembroke

I had not intended to speak again, but when we started on this little amendment I did not imagine that it would raise so many issues or that the explanations of the Minister of State would be so unsatisfactory. I am not fully satisfied with the answer that the Minister has given to my last question. I have read the clauses again and I am not satisfied that there is anything to prevent the funds, once they have been transferred, being used for the purposes of the new fund rather than the original fund.

I think that the proper course is to consider carefully what the Minister has said and to leave the matter for the moment. If we are not satisfied and we find that the Minister has misled us, we may return to the matter at a later stage. I am bound to say that I am not satisfied that there is the control that the right hon. Gentleman says exists. In his explanation to me, he did not point out in either clause where the safeguard is supposed to lie.

Photo of Mr Tam Dalyell Mr Tam Dalyell , West Lothian

Why should the hon. Gentleman be surprised that this probing amendment should reveal these difficulties? Has not it been the story throughout the 36 days that we have considered devolution for Scotland and Wales? Whenever we have had the time to go into any detail, difficulties have arisen. Much more has been revealed when we have opened the manhole than any of us expected.

Photo of Mr Nicholas Edwards Mr Nicholas Edwards , Pembroke

The hon. Gentleman has much more experience in these matters than I have. That is because he played a notable part in the proceedings on the Scotland Bill, from which duty I was substantially spared. I am sure that he is right. It is true that at every stage we have come up against matters that do not bear thorough examination. The Minister has offered an explanation on an extremely complicated set of clauses. We shall have to read in Hansard what he says and consider his remarks carefully. I do not intend to press the amendment at this stage.

Photo of Mr David Renton Mr David Renton , Huntingdonshire

Before my hon. Friend seeks to withdraw the amendment, which I presume he intends to do, I should like to ask the Minister of State if he will be so good—we realise that he has done his best—as to consider between now and Report having some amendments drafted, and in due course moving them, to enable effect to be given to the explanation that he has attempted to give to the Committee today. I do not say that such amendments should go into great detail.

However, we are dealing with public money. We are the people who will have to account to our constituents, whether in England, Scotland or Wales, for whatever money is voted for the Welsh Assembly. Therefore, I suggest that there should be a plainer statement in the statute. Normally I am against too much detail in statutes, and I am on record as saying so, but when we have public money to be voted I believe that the principle on which it is voted should be stated without going into much detail.

Photo of Mr Nicholas Edwards Mr Nicholas Edwards , Pembroke

I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Question proposed, That the clause stand part of the Bill.

7.45 p.m.

Photo of Mr Ioan Evans Mr Ioan Evans , Aberdare

I take up the point that I made when speaking on the amendment. I shall try to be brief in developing it. Identifiable public expenditure per head by programme and country according to the 1976–77 provision is better in Wales than in England in terms of agriculture, fisheries, food and forestry. The same applies to industry, employment, Government lending to nationalised industries, road and transport, education, libraries, science, art, health, personal social services, social security and other public services.

I appreciate that the hon. Member for Merioneth (Mr. Thomas), speaking for Plaid Cymru, said from a sedentary position that the needs for such services may be greater in Wales, as they are in Scotland, than in parts of England, and that is why the present situation is as it is.

We are talking about the financial provisions of the Bill, and I hope, Sir Myer, that you will allow some latitude on this clause as it is likely that some of the other clauses dealing with financial provision will not be reached because of the implementation of the guillotine.

Photo of Mr Myer Galpern Mr Myer Galpern , Glasgow Shettleston

Generally speaking, the Chair cannot allow clauses that are not before the Committee to be discussed because of the existence of the guillotine.

Photo of Mr Ioan Evans Mr Ioan Evans , Aberdare

I merely point out, Sir Myer, that the clause deals with financial provision and that the Committee's attention is being directed to the purpose for which the funds are to be used.

It is true that expenditure on housing, law and order and common services is higher in England than it is in Wales. However, there is a whole range of services on which expenditure in Wales is greater than in England. There are other environmental services on which expenditures per head of population are equal as between Wales and England. However, whereas in England the total identifiable public expenditure per head by programme and country for 1976–77, which is provisional, is £754, in Wales, under the existing financial arrangements, it is £875. There is a difference of £121 per head of the population between Wales and England.

There is a good case for Wales obtaining a larger share of public expenditure. That is because of need. For example, there will be more pensions to be paid out in an ageing population. In Wales there is a need for higher expenditure than in England for a variety of reasons. The geography of an area has to be considered. Scotland gets more than Wales, and Scotland is entitled to receive more than Wales and England because of its geography.

Photo of Mr Tam Dalyell Mr Tam Dalyell , West Lothian

Let us suppose that in a previous incarnation my hon. Friend was the Member of Parliament for Birmingham, Yardley, and Birmingham had unemployment and inner city problems. Given that the Scots and the Welsh had Assemblies of their own, for how long would my hon. Friend settle, as the Member of Parliament for Birmingham, Yardley, for anything other than neither more nor less strict per capita expenditure, not based on need? Once we start introducing the question of national identity, there will be others looking hawk-like at expenditure that goes above per capita expenditure.

Photo of Mr Ioan Evans Mr Ioan Evans , Aberdare

My hon. Friend leads me to the point that I was about to make. Everyone accepts under present arrangements that it is on the basis of need that we should make a financial allocation, but what will happen with the Welsh Consolidated Fund when the Assembly is created, or with the Scottish Consolidated Fund when the Scottish Assembly is created? We are bound to anticipate a situation in which Members of the House of Commons who come from England will ask "How is it that the amount being given to the Welsh Consolidated Fund is so much when Merseyside, the North-West, the North-East and other parts of England have been affected in the same way by the Industrial Revolution?"

Photo of Mr Neil Kinnock Mr Neil Kinnock , Bedwellty

An interesting sidelight is thrown on the case that my hon. Friend is now advancing by quoting Councillor Aneurin Richards, the leader of the Plaid Cymru group of my local borough council, who told the council a fortnight ago when it was considering devolution that we have to have devolution in Wales because if we do not do what the Scots do we in Wales will be paying for the Scots. That is an interesting sidelight on the fraternity of the nationalists.

Photo of Mr Ioan Evans Mr Ioan Evans , Aberdare

We all know what the Scottish nationalists think about the oil in Scotland. Unlike most Scottish people, the Scottish nationalists have an attitude that amounts to greed. However, the Shetlands put a spanner in the works. The Shetlanders say that the oil is theirs and that it should be shared among the people of Britain as a whole.

There is the danger of a selfish approach to the situation. As an island, we have tended to look at the financial needs of areas irrespective of whether they are Welsh, Scottish, English or Northern Irish. Those needs have been met by the House of Commons on criteria which know no boundaries. That is the important part.

If we create an Assembly to function in a geographical area, we shall inevitably get to a situation where in future the allocation will be on a per capita basis. It will be difficult to create a financial formula which gives Scotland more than Wales and England and which gives Wales more than England. We must address ourselves to that matter. That is the question that the people of Wales will be looking at when they vote in the referendum. The danger is that, when talking about creating an Assembly for Wales, we may give the impression that we are giving the people of Wales something without their having to pay for it in some other way.

Photo of Mr Geraint Howells Mr Geraint Howells , Cardigan

I hope that the hon. Gentleman is not suggesting to the people of Wales that the Labour Government will not grant moneys to the Welsh Assembly to look after the interests of the Welsh people on the same basis as at present.

Photo of Mr Ioan Evans Mr Ioan Evans , Aberdare

I was making no such suggestion. At the moment, public expenditure throughout these islands is met on certain criteria which are laid down by the House of Commons. In future, if we change the method of allocating finance to Wales and to Scotland, as my hon. Friend the Member for West Lothian (Mr. Dalyell) said, there will be closer examination by hon. Members here of the allocations to those Assemblies.

Mr. Geraint Ho wells:

Why?

Photo of Mr Ioan Evans Mr Ioan Evans , Aberdare

Because they will be performing their functions as Members of the House of Commons. We shall then find that, instead of the allocations being based on need as now, they will be based on a per capita formula. I may not carry the hon. Gentleman with me, despite the Lib-Lab pact, but I say that it is good Socialism. It should be according to the needs of the people, not according to any geographical criteria.

Once we create Assemblies with powers to deal with financial arrangements, I believe that there will be a close examination here. It may be that in the Assembly the hon. Member for Merioneth will make the point that Wales is not spending as much as England on housing. The hon. Gentleman nods his head. The Members in England will then give a whole catalogue of services on which expenditure in Wales exceeds that in England. That is how the argument will be put.

Photo of Mr William Benyon Mr William Benyon , Buckingham

Surely it is more than that. Will any Welsh Assemblyman worth his salt press for an increase, not a decrease, in the various amounts?

Photo of Mr Ioan Evans Mr Ioan Evans , Aberdare

I shall be coming to that point later.

The capital expenditure is explained in the Explanatory and Financial Memorandum. The capital expenditure to be incurred to establish the Welsh Assembly is estimated to comprise (at November 1977 prices):

  1. (i) about £3 million on the adaptation and equipment of the Exchange in Cardiff for use of the Assembly;
  2. (ii) about £1 million on the provision and equipment of office accommodation arising from the creation of the Assembly and the consequent reorganisation of the Welsh Office.
Additional annual running costs, from the takeover of responsibilities, are broadly assessed as follows (at November 1977 prices):(iii) about £3 million in respect of salaries and related costs of members of the Welsh Assembly and in respect of services for the Assembly;(iv) about £9½ million in respect of additional civil servants in Wales, including staff of the Welsh Comptroller and Audtitor General and related costs, including accommodation costs. Are those running costs to come from the Consolidated Fund, or are they to be in addition to the funds allocated to the Consolidated Fund?

If in future the amount allocated to Wales is to be on a different formula, the cost of running the Assembly will be deducted from that amount. That will be to the detriment of public expenditure in Wales. Are these additional costs to be added to the existing public expenditure allowed to Wales or are they to be deducted from it? That important question needs to be posed in determining the function of these funds.

I fear that, as the years go by and we determine the allocations for England, Wales and Scotland, the basis will be not on need but on £X per head of the population. There is a tendency when talking of the Welsh Assembly to give the impression that Wales is getting something extra. I believe that we shall get something in place of the existing structure which financially could be detrimental. We do not know. We cannot say with certainty what the effect will be but it could be detrimental.

What will happen if expenditure exceeds the block grant to the Welsh Consolidated Fund? What will happen if the Welsh Assembly, having spent money on certain services, exceeded the allocated amount? We know that it will be given certain powers to raise loans. We know that for the time being it will be allowed to run an overdraft. But where will that lead us? How long would it be before the Assembly sought additional taxation powers? The hon. Member for Merioneth nods his head.

Photo of Mr Ioan Evans Mr Ioan Evans , Aberdare

I thought that the hon. Gentleman was agreeing. I suggest that he had better watch that matter. If, in addition to existing taxes, Wales—and Scotland for that matter—is to have additional taxes, I believe that that would have to be examined very carefully. I do not think that we shall attract industry to Wales if the Assembly is to have powers of taxation in addition to those on the other side of the boundary.

I believe that the question of tax-raising powers has been examined by those who drafted both the Scotland and the Wales Bills. There are serious problems. Indeed, we cannot deal with them because there is no Ways and Means resolution before the Committee. Additional taxation powers would require a Ways and Means resolution. That point must be borne in mind in both Wales and Scotland. If the Assembly is not to be tied absolutely to the allocation of funds made by the House of Commons, there will be an attempt to try to bring forward amending legislation in future to provide additional revenue-raising powers. As has been said, a district council or a county council has the power to raise money through rates. The Welsh Assembly will be a purely spending authority. It will be allocated funds by the House of Commons, but it will have no power to raise its own funds.

Photo of Mr Wyn Roberts Mr Wyn Roberts , Conway

Is the hon. Gentleman aware that the Assembly will control the rate support grant? It will therefore be able to hold back support from local authorities, force them to raise their rates and thereby add to the total of resources available to the local authorities and to the Assembly.

8.0 p.m.

Photo of Mr Ioan Evans Mr Ioan Evans , Aberdare

The hon. Member would agree with me that the future is a little uncertain. If the Assembly is established and carries on for many years, we do not know what the future of local government will be.

It has been said that the district and county councils will go and that new local government units will be created. This is something for the future. The county councils committee is worried that the financial provisions in the Bill will effect the present rate support grant. After the Assembly is established, the Welsh Assembly will be able to have some say in determining what funds are to be allocated to local authorities.

When the House of Commons has to go to the people to raise taxation, it is answerable for raising that money. However, if we create a body which is not answerable for raising taxes it will be only a spending authority. That arrangement will sow the seeds of conflict.

The hon. and learned Member for Montgomery (Mr. Hooson) said that Members of an elected Assembly will be responsible men. Of course they will. But, if a minority says that not enough is being spent by the Assembly on education, housing, roads and other services, does anyone believe that the Liberals will say that the Assembly is spending too much? Of course not. The situation will affect all the Members of the Assembly.

My right hon. Friend the Minister of State knows more than anyone that the books have to be balanced and that thought has to be given to where the money is to come from.

Photo of Mr Denzil Davies Mr Denzil Davies , Llanelli

My hon. Friend appears to be saying that democratic bodies should not have the power to control their own spending but that some other body should have that power.

Photo of Mr Ioan Evans Mr Ioan Evans , Aberdare

No. My right hon. Friend is missing the point. The Bill creates a body which is not responsible for raising money. The allocation of money will be made by the House of Commons. The only power that the Assembly will have is for spending that money. The Assembly will have to come to the House and ask for increases. All the Members of the Welsh Assembly will want to spend more money, as we want more money to be spent on Wales. That is natural. We have argued well the case for more money to be spent on Wales. Public expenditure per head in Wales is now greater than it is in England. But the Bill creates a situation in which the Assembly will not have the duty to raise revenue but will have power to spend money. The separation of the spending and the raising of money will create difficulties.

The local government problem is different. Local authorities are given a specific grant. If they want to spend more, they have to raise their rates. The restraint on local authorities is that they must go back to the local people and tell them that they must pay more rates, and the demand is then diminished. That will not happen in the Assembly.

Photo of Mr Donald Anderson Mr Donald Anderson , Swansea East

Does my hon. Friend accept that this lack of responsibility for the Assembly will lead to an inherently unstable situation which is bound to lead to demands for the Assembly to have its own taxation policies, and that it proves the case that the Assembly as envisaged can only be a staging post?

Photo of Mr Ioan Evans Mr Ioan Evans , Aberdare

We have had these proposals from the Government Front Bench, and it is felt that they will unify the people of these islands. But I am convinced that, as my hon. Friend the Member for Wrexham (Mr. Ellis) said, this is only a move on the way to other things. This will not be permanent but will be temporary. The demand will be created for the Assembly to have financial powers, and we shall then move towards separatism. The purpose of the Bill is to reject that.

The financial provisions in the Bill will create a source of conflict if the people of Wales decide by referendum to have an Assembly.

Photo of Mr Nicholas Edwards Mr Nicholas Edwards , Pembroke

From what the hon. Member for Aberdare (Mr. Evans) has said, it is clear that these financial clauses bring us to some of the central issues of the whole debate. There are to be funds and in the explanation of their nature much of the Government's intentions will be revealed.

The clause does something important, but it tells us very little about the process of doing it. The clause is qualified or elaborated in various ways in subsequent clauses, but they, too, leave many of the questions unanswered. We have come to one of the great unsolved mysteries of the Bill. We shall have to refer in passing to later clauses because they help to explain the nature of what is happening in this clause.

We all agree that the financial provisions are central to any structure of government, yet there seems to be a deliberate attempt by the Government to hide their intentions in obscurity. Paragraph 77 of the White Paper on finance tells us that these intentions cannot be defined in statute. Paragraph 78 says that Ministers intend to propose an approach, on the lines set out in paragraph 76, to the devolved Administrations as soon as they are elected. But the key paragraph, paragraph 76, sets out what is described as no more than "a promising approach". It would be to relate the total of devolved public expenditure in Scotland and Wales to comparable expenditure elsewhere in the country on the basis of relative need and to express it as a percentage of comparable expenditure in the country as a whole.

Surely, even in these extraordinary times, it must be considered a little unusual for us to be asked to pass legislation which makes no attempt to define the Government's intentions in statutory form but leaves us with writing what amounts to a blank cheque based on no more than "a promising approach" and the hope that negotiations with a future Assembly might be successful.

The House, in considering the orders that no doubt will be laid in due course under the provisions of Clauses 46 and 47, and the Assembly, in preparing its approach to the negotiations when they take place, are surely entitled to have a concept of what Parliament intended when it prepared the legislation.

Our Amendment No. 253, which has not been called, and later Amendments Nos. 248 and 249 attempt to spell out the "promising approach" described by the Government in paragraph 76. They would provide a minimum safeguard for the Assembly and, more importantly, for the people of Wales that, whatever formula is reached in the negotiations—which, we are told in the White Paper, but not in the Bill, are to take place every four years—each year Wales will get as much as England on a per capita basis and that, in addition, proper regard will be paid to the needs of the Assembly. As we shall see, and as the hon. Member for Aberdare has said, per capita equality on its own would not be enough.

So modest are our Amendments Nos. 248 and 249 that if we had had the opportunity of pressing them to a vote I think that the Government would have been bound to accept them. However, we now have to discuss the skeleton of the Government's proposals. I hope that the Minister of State will spell out with greater clarity than has been done so far exactly what the Government have in mind.

So important are the financial provisions that it is no exaggeration to say that the success or failure of any scheme for devolution must depend on the soundness of their design. They are the linchpin of the structure. If they are faulty, the consequences must be the friction, bad government and bitterness to which the hon. Member for Aberdare referred.

Unfortunately, as the Kilbrandon Commission told us frankly in paragraph 565, Such schemes are difficult to devise. If they provide a substantial measure of financial autonomy for the subordinate Government, they will invite a much greater degree of political controversy between regions, and between regions and the centre, than now exists. It goes on to say: Some regional pressures are brought to bear on questions of finance under the present system, but everything is negotiated and decided within the ambit of one central government. Financial autonomy in the regions would make the debate public, and the attitudes of the negotiating parties would inevitably harden. Such a development could introduce a spirit of contention and divisiveness into British politics which would weaken the unity of the country. On the other hand people may feel that more open controversy is needed in the interests of democracy and to ensure that financial justice is being done to all regions There is some force in both these points of view. We are therefore warned that if the Government get this difficult business wrong we are likely to produce the increase in conflict that those of us who value unity fear and in which those who look to the break-up of the United Kingdom positively revel. As Mr. John Osmond triumphantly proclaims in his book, The block grant negotiations conceived in the Labour Government's devolution policy would become a major arena for conflict between Wales and Westminster. Wales, for reasons that I shall elaborate later and which have been explained to us, obtains a good deal more than its per capita share because of its special needs. At the moment, this process happens without much argument and without arousing jealousy from the English regions, some of which finance the process and others of which face comparable problems.

The hon. Member for West Lothian (Mr. Dalyell) referred a short time ago to some of the problems of the inner city regions. That is because part of the process at present happens automatically through, for example, payments of social security or disability benefit and some of it happens because of the pressures and influence of the Secretary of State, but the debate then goes on within the Government and if a row occurs it does so within the confines of the Cabinet or Cabinet committees. In any case, the argument is conducted piecemeal, programme by programme. It deals with education, housing, roads and so on separately. In that form, the extra sums involved do not appear very large. However, the block grant will be negotiated as a lump sum. It will be a large sum—probably, by now, about £1,000 million. It will be subject to debate in the House and to a good deal of public argument in the Assembly and in the English regions. As the Kilbrandon Commission said in paragraph 595 of its report, technical difficulties would inevitably arise in attempting to formalise what is now informal; and political difficulties could be expected to arise from revealing year by year what is now not merely undisclosed but largely unrecorded. It is a delusion to imagine that the Government could have avoided these difficulties if, instead of a block grant system—that is, the expenditure-based system—they had gone for a revenue system in which the Assembly raised most of its own taxes. The arguments against such a system seem considerable. Kilbrandon felt that for most people equity was more important than regional independence, and, therefore, opted for the expenditure basis.

8.15 p.m.

In the White Paper on finance, paragraph 12 points out that, because Wales needs to spend so much more than it can raise in taxes, there will have to be a topping-up process by the central Government, and there would still have to be an assessment of needs even if we approached the matter in that way. Since people want to enjoy broadly comparable standards, some kind of block grant system is almost inevitable. Northern Ireland in practice, faced by the realities of the situation, moved away from the revenue-based system that it had been given at the outset.

The complications and the potential for conflict arise not from the fact that the Government have selected from among the possible options the one least likely to succeed but because these complications and conflicts are unavoidable in a set-up in which there are two Governments in a single States, one of which is responsible for providing the money and the other for spending it. That was the point that was rightly and forcefully made by the hon. Member for Aberdare. It is the nature of the devolution scheme rather than of the financial solution which is at the hub of the problem.

There will be two Governments, yet in "Our Changing Democracy" Ministers tell us that Further study has confirmed that this is inescapable. Economic unity requires a system which considers the expenditure needs of the whole United Kingdom, including the claims of regions with special problems. This requires a decision each year on public expenditure for all parts of the United Kingdom by the Government, answerable to Parliament. So we have one Government deciding on public expenditure in the United Kingdom as a whole and another with a completely different interest—that of maximising the expenditure in its own particular area, and maximising it for perfectly respectable and legitimate reasons.

There is no point at which conflict is more inevitable than at this point in the Bill. There is no point at which it is more fundamental in its consequences. Even the Government admit in their White Paper that the task involves judgments of grave complexity and political sensitivity. It is clear that the problems inherent in a block grant system are very formidable. Kilbrandon summed them up very well. I quote: At one extreme there is the detailed measurement of needs in individual services, together with specific payments to match those needs; at the other extreme there is the general measurement of needs by an arbitrary formula, and the satisfaction of those needs by a block grant. The first approach allows for maximum equity. The second gives most independence. The more refined the process of measurement becomes, the closer will be the investigation of expenditure plans. The danger with a block grant formula, on the other hand, is that it will break down in practice because its measurement of needs is too rough. The poorer regions particularly would fear this danger. The Kilbrandon Commissioners were led on to propose a solution of labyrinthine complexity involving an independent Exchequer Board which would adjudicate on the different allocations between the various parts of the United Kingdom. That scheme has been turned down by the Government on the grounds that these things cannot be done on a scientific basis and that the matter of deciding on the allocation of funds is essentially political. Yet the process to take the place of the Exchequer Board system remains obscure.

We are told in paragraph 71 of the White Paper that it would be rather nice to have some information on which to make these political judgments. It continues Studies are now being undertaken within Government Departments with the aim of collecting objective information on needs and standards of public services in all four countries of the United Kingdom. The Government hope this information will help them and the devolved administrations to make informed judgments on levels of expenditure and to explain them publicly. They may hope so, and we hope so too, but we would like to know how these studies are getting on. I put these specific questions to the Minister: what progress has been made, and what are the results?

Then the Government propose establishing an independent advisory body to collect information and advise on its implications. What form is the body to take? What is to be its size? How many civil servants will it employ? What will be its costs? Are the costs and the numbers involved included in the total figures given in the Explanatory and Financial Memorandum to the Bill? We must have answers on these points.

It really is not good enough to come to the House of Commons and ask approval for a scheme that in 1975–76 would have involved expenditure on devolved services in Wales of about £1,200 million, on the Government's own estimate, of which three-quarters will be paid for by block grant on a basis of pure speculation and the declaration in "Our Changing Democracy "that it will be the outcome of a close and thorough process of discussion each year with the Assembly. That sounds to me rather as if the Government have not got a clue about how the whole thing will work out but are simply waiting hopefully for something to turn up or for someone else to clear up the mess that they are creating.

There is another sentence in "Our Changing Democracy" that is pregnant with implications of a disturbing kind. It comes at the tail end of appendix C, which describes the whole process to us. It says: Note: Arrangements will be made during the financial year for Supplementary Estimates procedures to vote any appropriate additional finance to the devolved services. Most hon. Members know a good deal about Supplementary Estimates procedures in this place, and we can understand very well what is likely to happen. But what exactly is the implication? Is it that, for all the advice of the independent advisory board, and despite the close and thorough process of discussion, the assessment of needs is likely to prove inaccurate and the Assembly will come back for more, or is the implication wider and a good deal more sinister than that? What happens if the Assembly ignores the stern supervising eye of the Treasury and exceeds its budget?

After the previous debate, I became quite alarmed at the stern eye of the Minister of State, Treasury, and we have respect for the way in which the Treasury seeks to control these measures. But what happens if the Assembly simply ignores Treasury Ministers' advice? What happens if it launches capital programmes that create their own momentum of revenue expenditure, as capital programmes are rather inclined to do?

Photo of Mr Tam Dalyell Mr Tam Dalyell , West Lothian

If either the hon. Gentleman or myself were an Assemblyman, would we not succumb to the temptation to have precisely such a confrontation for our own political advantage, in order to cover up our own shortcomings? It is hardly a question of "if there is a confrontation". It is a fact that people will find it in their interests normally to manufacture precisely such a conflict.

Photo of Mr Nicholas Edwards Mr Nicholas Edwards , Pembroke

Of course they will. Every time a complaint is made about a hospital, a school, a road or whatever, of course the Assembly will turn round and say "It is not our fault, of course. It is those fools up at Westminster who will not give us the money." Of course, it is in its interests to say just that.

But what happens if this excessive expenditure occurs? Surely the Assembly will come back to the Government and demand funds to keep essential services going. Unlike the local authorities, it will not face the unpleasant discipline of raising the money by additional rates, because it has no power to do so.

No doubt we shall be told that the Government can simply refuse additional funds. But, if that involves the closing of hospitals and schools or the sacking of staff, I wonder whether it will happen in practice. To take up the point made by the hon. Member for West Lothian, let me say that, if it does, we can imagine the bitterness as the Assembly blames the disaster on the inadequate funding by central Government. The scope for conflict is obviously immense.

I said a moment ago that the Assembly will not be able to boost its funds by increasing rates. But, as my hon. Friend the Member for Conway (Mr. Roberts) pointed out in an intervention, there is, in fact, the possibility that it will be able to do just that by the back door. A very large proportion of the block grant to Wales will consist of funds available to local government by way of rate support grant. As we shall discover during our debate on a later amendment, if we get to it, the local authorities in Wales will be excluded from the process of direct negotiation with the central Government over the rate support grant. But what happens once the overall size of the rate support grant has been decided? There is absolutely no obligation on the Assembly to pass all of it on to local government.

That is made absolutely plain in paragraph 228 of "Our Changing Democracy", which says: The Assembly will decide both how much of the block grant should be distributed to local government and how to allocate it among individual authorities. In calculating the block grant the Government will in general assume that Welsh local authorities will receive, in relation to their expenditure needs and their taxable resources, provision comparable with that for local authorities in England; whether they in fact levy more or less local tax, and are assigned more or less subsidy from the block grant, will be a matter to be settled in Wales. In other words, the Assembly has a hidden power to tax via the local authorities. At present, the RSG in Wales stands at about £500 million a year. Theoretically the Assembly could reduce that, keeping a sum for itself and forcing the local authorities to raise the extra money from the rates. In that way, the Assembly would be able to raise revenue without incurring any of the odium for doing so.

So we are to have a system which is complex, difficult and obscure, which is likely to produce raging conflict and which can be manipulated to the great disadvantage of the local authorities. It is introduced by a Bill that leaves the arrangements entirely undefined and provides no safeguards or guarantees of any kind. It is a system which has to provide for a part of the country where the needs are exceptional and the resources inadequate.

I think that I am entitled to suggest two things: first, that such a system is not likely to be of any advantage to Wales—a point already made by the hon. Member for Aberdare—and, secondly, that, if we are to have it, we should write some basic principles into the Bill with a view to safeguarding the interests of the Welsh people.

We are told in "Our Changing Democracy" in paragraph 224, that The Government's decision on the total amount for all the devolved services will not be a matter of simply imposing an arbitrary figure; it will be the outcome of a close and thorough process of discussion. I say that it will be the outcome of a major battle. The Assembly will inevitably blame all the inadequacies of its administration upon shortage of funds.

But it must be said that many of the inadequacies are likely to arise from the fact that social conditions in Wales are worse than they are in the rest of Britain. Low activity rates underlie low per capita gross domestic product. We have high unemployment, more sick and disabled, more people dependent on supplementary benefit, and poor housing, poor roads and poor infrastructure. The reason why we get more than England is accounted for and fully justified by these facts.

But the fad is that we get more funds. In 1976–77—I repeat the figures that have already been given to the Committee—we got £875 per head in Wales of identifiable public expenditure as compared with £754 in England. This is despite the fact that we produce much less in tax—£390 per head, compared with £516 in England excluding revenue from local authorities and national insurance contributions.

If Wales had to manage on its own natural wealth, as the nationalists would like, we should be in a desperate state. Our contribution in terms of gross domestic product per head is significantly lower than that of either Scotland or England—£1,455 per head as compared with £1,686 in England in 1975–76.

Photo of Mr Tam Dalyell Mr Tam Dalyell , West Lothian

Every time grant is allocated in future, if there is a Welsh Assembly, will not MPs from the North-East of England, the West Country and East Anglia, where there are low wages, be failing in their duty if they do not question why Wales should get more than its per capita share? Even if the MPs do not have the inclination to do so, their constituency associations will begin to ask questions.

8.30 p.m.

Photo of Mr Nicholas Edwards Mr Nicholas Edwards , Pembroke

We have already dealt with that point and explained how, because these things are now clearly identified in the public eye, they will be the subject of argument and debate. English Members will undoubtedly act in this way, and Welsh Members may be in difficulties because they will have to try to get adequate resources for Wales, although they may wholly disagree with the Assembly's policies.

There is no reason to blame the present system for our condition in Wales, because that system is taking account of Welsh needs. It is not obvious that the confrontation method proposed in the Bill—for that is what it is—will produce a better result. Our fate depends, in the Government's words, on "understanding on both sides". But it is much more difficult to get that understanding in an annual stand-up debate than it is in the discussions which go on within a single Government.

The fact that the grant allocation will take place on a four-year basis—or so we are told in the White Paper, although this is not mentioned in the Bill—will not apparently eliminate the need for annual Votes, and, therefore, presumably annual rows, even if we do not have annual Supplementary Estimates as well.

It is terrifying that the Government should be putting so much at risk, that there should be so much uncertainty on matters so central to the welfare of the people and that we should be asked to pass a Bill which creates a vacuum rather than giving rights or imposing obligations. In asking us to pass this clause, the Government are taking an enormous gamble with the welfare of the people. For that reason and many others, I believe that I am genuinely justified in asking my right hon. and hon. Friends to vote against it.

Mr. Tom Ellis:

I became more and more depressed as I listened to my hon. Friend the Member for Aberdare (Mr. Evans) and the hon. Member for Pembroke (Mr. Edwards). What they were saying can be summed up in one sentence, and my hon. Friend almost said that he would be appealing to the Welsh people in the referendum campaign on this basis: "Do not establish a Welsh Assembly or you will undermine our ability to get more charity from the British Government."

Photo of Mr Ioan Evans Mr Ioan Evans , Aberdare

It is not charity.

Mr. Ellis:

That was my hon. Friend's message—charity.

Photo of Mr Ioan Evans Mr Ioan Evans , Aberdare

I did not use the word "charity". That is an offensive word, and I hope that my hon. Friend will withdraw it. I argued that the matter should be based on need. That is fully justified. My hon. Friend should use his own words in his own arguments and not put words into my mouth.

Mr. Ellis:

Put baldly, the word "charity" might appear offensive, but when I have explained it I think that my hon. Friend will see that it is appropriate. The case of both he and the hon. Member for Pembroke can be summed up in the word "need".

Photo of Mr Ioan Evans Mr Ioan Evans , Aberdare

It is a Socialist argument.

Mr. Ellis:

I do not question the need to deal with the matter in this way. But what exactly are the real needs? To my hon. Friend—this is where the word "charity" came into my mind—the need of the Welsh people is for more money per head to be spent in Wales than in England on health, social services, education and so on. To me, those are not the fundamental needs but consequences of the fundamental needs. Expenditure on those matters is to me so much cosmetic to hide the fundamental needs.

Perhaps I can explain what I mean by the real needs. I should like to give one example, speaking from memory. I will endeavour to give my hon. Friend the correct reference later. I refer to a Government response to a report by a Sub-Committee of the Expenditure Committee which was chaired by my right hon. Friend the Secretary of State for Transport. The report dealt with the effectiveness of regional policy over a decade. I may be slightly wrong in my figures but they are correct within 5 per cent. The report made the point that, in the decade ending 1974, had the proportion of employment in Scotland, the North of England and Wales remained in 1974 what it had been in 1964—that is, 45 per cent, of the total employment of the United Kingdom—there would have been about 360,000 more jobs in those regions than there were. Almost all those jobs had been transferred from those three regions to the South-East and the West Midlands.

That is an example of the real needs, as a consequence of which all the other cosmetic needs have to be met, to provide some kind of palliative to deal with critical situations. That is the nub of the question.

It is a fundamentally misconceived and misguided policy to suggest to the Welsh people that, if we set up an Assembly, it will undermine our ability to go to the Government in Westminster for more money for the social services and so on in Wales. That is the last thing that I would dream of saying to the Welsh people.

Photo of Mr Ioan Evans Mr Ioan Evans , Aberdare

We all know that it is part of the history of these islands that the Industrial Revolution came to Wales and Scotland and also affected Yorkshire and Lancashire. We also know that because of the expansion of industrial development in the South-East the needs in certain geographical areas are greater than in certain other areas. My hon. Friend need not dwell only in Wales in this respect, because there are very great problems on Merseyside. Birkenhead has an unemployment figure of 20 per cent. Unemployment is higher in some parts of England than it is in Wales.

I hope that when we determine how much should be spent on education, housing, welfare and so on, the criterion adopted by this House will be that the expenditure should be based on actual needs. My hon. Friend is suggesting that if we solve the problem of unemployment we can solve some of the other problems. Of course, but the problem of unemployment needs to be solved in these islands generally rather than on a geographical basis.

Mr. Ellis:

I agree with every word that my hon. Friend has just said, but he is making great play with the extra expenditure, as if it were an enormous argument against the establishment of a Welsh Assembly. I question that argument—

Mr. Ellis:

My hon. Friend will not allow me to develop my argument.

Photo of Mr Ioan Evans Mr Ioan Evans , Aberdare

If my hon. Friend does not get this point right, he will not understand the argument. The point that we are making is a very simple one and it has been made on both sides of the Committee. As the moment the argument is based on needs.

Mr. Ellis:

I am coming to that.

Photo of Mr Ioan Evans Mr Ioan Evans , Aberdare

Fair enough, but my hon. Friend should not try to argue from a point which has not been made.

Mr. Ellis:

If my hon. Friend will do me the courtesy of listening to me while I develop my argument, he can by all means intervene later, if he wishes to do so.

Education is a need which is usually met through the machinery of local government. Together with some of my friends in Wales, I am becoming seriously concerned about educational attainments in Wales. Certain information has been produced quite recently in this connection. We are particularly concerned about certain areas of Wales from which for a long time the cream—the more intellectual type of child—has been drained. In certain areas of Wales people are becoming seriously concerned that there is now an inherent and fundamental intellectual shortfall in the average attainments of children as compared with the average over the whole of the United Kingdom. This has come about over a long time and the educational need is so crucial and so profound that it could not be met merely by the normal forms of education.

It is in this sense that I am pointing out that these are the first and fundamental needs. Having said that, I do not advocate what the nationalists advocate. I think they are profoundly wrong to suggest that Wales on its own would be better. It would not be better. I believe that Britain on its own would not be better, let alone Wales on its own. Britain is clearly dependent on a lot of other countries. I am not saying that Wales ought to go it alone.

I would not get up in a Parliament or in an Assembly and argue that if we had an established Assembly we should have greater and greater conflict with similar bodies such as Assemblies in Scotland, embyronic regions perhaps and the Parliament in London. If I said that, I would be saying in effect that politicians are not sufficiently responsible people to appreciate the true requirements, in the most fundamental sense, of various parts of the United Kingdom.

The problem goes even deeper. One of the most fundamental difficulties facing the British Government is economic steering. Within that overall economic steering there is a disproportion between the regions: while we need to reflate in one region we may need to deflate in another region at the same time. It is in that fundamental sense that the establishment of the Assembly should be considered.

I implore my hon. Friend the Member for Aberdare to cease arguing that if we set up an Assembly we shall establish some kind of continuous conflict between the rest of the United Kingdom and Wales.

Photo of Mr Ioan Evans Mr Ioan Evans , Aberdare

My hon. Friend is not getting the point. At present these islands are treated equally. The point I was making was that if there are needs in different parts of Britain they are met according to the criteria of need. But if we create an Assembly, instead of allocating the funds on the basis of need, as has been the case in the past, we may well have a formula where funds might be allocated per head of population. I know that this is hypothetical. I am not saying that this will come about. The point I am making is that it might come about.

I am saying that there might be a desire to have a formula on the basis of per head of population. But that creates the possibility of conflict. It is not a question of the people not wanting it. But if we create new financial or political institutions, certain things follow. What I am criticising are the possible consequences.

My hon. Friend should not suggest that the people of Wales can get something without their realising that it will cost something. If it is the will of the people of Wales to have it, even if it means less being spent on education and health, for example, then so be it—

Photo of Sir Arthur Irvine Sir Arthur Irvine , Liverpool Edge Hill

Order. One hon. Member ought to make a speech at a time. The hon. Member for Aberdare (Mr. Evans) may catch my eye later.

Mr. Ellis:

I have not misunderstood my hon. Friend at all. The first part of what he said can be summed up in what the hon. Member for Pembroke said. My hon. Friend said that the present system takes account of Welsh needs. That is precisely the point that I am challenging. In fact, the present system does not take account of Welsh needs. It all boils down to the definition of "needs". The regional employment premium has been scrapped. The industrial development certificate system has been emasculated. The reason for this is that there is 6 per cent. unemployment in the West Midlands. But there is 13 per cent, unemployment in my constituency, and there is probably 13 or 14 per cent, in the constituency of my hon. Friend the Member for Liverpool, Walton (Mr. Heffer).

8.45 p.m.

Because the position in the West Midlands is now so serious, we cannot tolerate this business of handing out all the goodies to the regions. I challenge the statement that the present system is taking account of Welsh needs, because it manifestly is not. It boils down to a definition of the word "needs".

Finally, in his rather long intervention, my hon. Friend talked about conflict. I do not see that. I should have liked to see regional Assemblies set up in England. I would have welcomed those before Assemblies in Scotland and Wales because it would have kept out of the argument the emotive issues that are clouding the scene and are really red herrings. If the North-West of England is to meet its needs, it must develop a political clout vis-à-vis the Government. That is the fundamental issue. To cloud the discussion with all this talk about social security payments per head is misleading, particularly to the people who will in due course have to vote in the referendum.

Photo of Sir Raymond Gower Sir Raymond Gower , Barry

I wish that I could agree entirely with the hon. Member for Wrexham (Mr. Ellis) because plainly he speaks with feeling and elan. However, he stretches his argument very far. His argument that there has been a weakening recently in the IDC system and that this is primarily due to the increase in unemployment in parts of the Midlands is taking things a bit far. Does he really suppose that if there was an Assembly in Wales this would in some way improve the position, even if there was unemployment in the Midlands or the South-East of England? Does he really believe that this would, in itself, enable Wales to have a larger share of the global resources of the United Kingdom? That argument is hard to sustain.

Mr. Tom Ellis:

I shall not pursue this now because it would be out of order, but perhaps at some other date we shall have the opportunity to put forward that very case. There are very good examples of regions with political clout making regional policy work.

Photo of Sir Raymond Gower Sir Raymond Gower , Barry

What the hon. Member is saying is that the mere existence of an Assembly will enable Wales to have a better deal vis-à-vis the rest of the United Kingdom. I would not go along with that. Nor would I go all the way with the hon. Member for Aberdare (Mr. Evans). I cannot see that either argument is as clear as the hon. Members would have us believe.

We are discussing the setting up of two agencies prescribed in Clause 42—the Welsh Consolidated Fund and the Welsh Loans Fund. These are the two parts of the establishment and management of Welsh funds. These are the financial provisions for the Welsh Assembly. Basically one cannot argue with the feeling that we are establishing solely a spending agency—a spending agency of Government.

Perhaps the Assembly will have wide-ranging debates on all sorts of subjects, but I regard it as a serious defect in the Bill that it will have none of the discipline imposed by the unpopularity which practically all Parliaments have to face when collecting money. The imposition of taxes in any form is a salutary exercise, because it is not popular.

Photo of Mr Emlyn Hooson Mr Emlyn Hooson , Montgomery

Is the hon. Gentleman in favour of the Assembly having a tax-raising function so that it may raise its own revenues?

Photo of Sir Raymond Gower Sir Raymond Gower , Barry

Certainly that would be preferable to the present formula. This is only one part of the normal business of any Assembly of this nature.

Photo of Sir Raymond Gower Sir Raymond Gower , Barry

No; I am saying that that would be preferable to the formula in the Bill. I do not necessarily put forward that view as something I would desire at this stage, but I repeat that it is vastly preferable to the system in the Bill. The sole raison d'etre of the membership of the Assembly will be to find ways to dispose of the money in the most effective way.

Photo of Mr Tam Dalyell Mr Tam Dalyell , West Lothian

Will it not be the raison d'etre of Welsh and Scottish Members of Parliament, if these Assemblies are set up, to screw more money out of the English Treasury?

Photo of Sir Raymond Gower Sir Raymond Gower , Barry

That also is true. The Assembly will have a certain amount of money per annum, but will have no responsibility for collecting it. Its sole reason for existence, to use the English term, will be to spend this money.

Photo of Mr Alec Jones Mr Alec Jones , Rhondda

I am interested in this point. Will the hon. Gentleman explain why he finds it so offensive to have a Welsh Assembly spending money but not being responsible for raising it when he and his party have consistently, over a long time, flooded Wales with nominated bodies which have spent money and have never been asked to raise one farthing of it?

Photo of Sir Raymond Gower Sir Raymond Gower , Barry

Those are agencies of Government. The proposals we are now discussing relate to a form of government, an embryo Parliament—an entirely different matter.

Photo of Mr Emlyn Hooson Mr Emlyn Hooson , Montgomery

The hon. Gentleman is not answering the point.

Photo of Sir Raymond Gower Sir Raymond Gower , Barry

I am. I am saying that the two matters are not comparable. The powers may extend, for example, to the tourist agency, but that agency has a limited remit. In this Bill we are talking about an embryo Parliament. That is the context in which I criticise this set-up. It is desirable in all public authorities that there should be the salutary corrective of the unpopularity that is associated with the collection of money, the collection of rates, and so on. Therefore, I submit that an Assembly which lacks that responsibility will be defective, and will be liable in the longer term to change itself into a complete Parliament. That is why many of us are so anxious about this matter.

The hon. Member for Wrexham made one point with which I entirely agree. Had this been carried out in a federal context, it would have been far less dangerous. The trouble is that the positions are different in Scotland, Wales and England and the situation is divisive, and I deeply regret that.

Photo of Mr Tam Dalyell Mr Tam Dalyell , West Lothian

I shall speak briefly. Like other hon. Members, I want to get on to other important amendments and other clauses.

I congratulate the Welsh on something that the Scots failed to achieve. At least for the Welsh a member of the Treasury has come to answer questions. Day after day during the Scotland Bill some of us thought that the Treasury Ministers ought to be answering. So the Welsh have succeeded where the Scots have failed.

There was a fascinating moment on which one should comment during the speech of my hon. Friend the Member for Aberdare (Mr. Evans) when he was interrupted by the hon. Member for Cardigan (Mr. Howells) from the Liberal Benches. It was a sotto voce interruption but I think it was accurate. When my hon. Friend the Member for Aberdare was saying that, of course, the Welsh should expect no more than per capita treatment and would not receive the favourable treatment that he outlined, the hon. Member for Cardigan from a sedentary position said "Why on earth should not they?" I make no complaint about the hon. Member's absence because he has attended very well. His hon. and learned Friend the Member for Montgomery (Mr. Hooson) is present.

The answer to the hon. Member for Cardigan is that a lot of people, not only in England but in Scotland and Wales, think that people can have their cake and eat it. The idea that one can go on for any length of time having one's cake and eating it is the idea of someone living in fairyland.

Photo of Mr Emlyn Hooson Mr Emlyn Hooson , Montgomery

Surely the answer to that point is that the House of Commons would be as anxious then as it is now to preserve the unity of the United Kingdom. So will the Welsh Members who come here. That is why they want equality of payments and social services grants to each part of the United Kingdom.

Photo of Mr Tam Dalyell Mr Tam Dalyell , West Lothian

I wonder whether this generous treatment will continue. Once people have had an Assembly, and once the Assembly trumpets views of national identity and the idea of a separate set-up and makes claims the like of which are not made now, it is stretching the generosity of other people to expect them to behave as they do at present.

Photo of Mr Ioan Evans Mr Ioan Evans , Aberdare

There is the other point that, whereas at the moment there are certain criteria laid down for the whole of Britain, if we are to have a block grant system, the Assembly will be able to determine that less will be spent on education and more on something else. It is inevitable that with a block grant system there will be great disparities in future in what is spent on roads, education and other services.

Photo of Mr Tam Dalyell Mr Tam Dalyell , West Lothian

Furthermore, there will be occasion for this kind of dispute every time there is an estimate and every time there is a supplementary estimate. It will be a series of running sores. That is a realistic view of what will happen.

My right hon. Friend the Minister of State, Treasury was not entirely agreed, so let me put this proposition to him. I have been longing to say this face to face in these debates to a Treasury Minister. Whenever anything goes wrong—any time Assemblymen find that there are houses that are not built which should have been built, whenever roads which should have been repaired are not repaired and whenever hospitals that should have been created are not created—what will happen? They will say "Of course, it is not our fault. It is the responsibility of the English." They will say that they do not have sufficient power from Westminster, and in particular, they will say that it is the fault of parsimonious English Treasury Ministers. Good Welshman as he is, the Minister will, in the popular view, be put in that position.

9.0 p.m.

I do not speak for Wales. It would be impertinent of me to do so. Certainly in Scotland he will be put in the position of a parsimonious English Treasury Minister—the man they love to hate. For his sake, I hope that before any Assemblies are formed he is promoted out of the Treasury to some Department of his own. In that way he will be spared the constant pillorying that will take place. This is an inevitable result of human nature.

I want to ask some factual questions, so perhaps my hon. Friend will get his pen out. What is this Executive Committee of the Assembly? I have been here during all of these debates, and I may be thick and obtuse, but I still have not discovered who these folk are who make up the Executive Committee of the Assembly. This raises the question of the nature of the Assembly. After all those days on the Scotland Bill, we still did not know, at the fag-end of the debate, whether the Government thought that Assemblymen should be full-time or part-time.

Photo of Sir Arthur Irvine Sir Arthur Irvine , Liverpool Edge Hill

No doubt the hon. Gentleman knows where this subject is in the Bill. It does not appear to be in the clause we are dealing with at the moment.

Photo of Mr Tam Dalyell Mr Tam Dalyell , West Lothian

This is Clause 42(2). It refers to the Executive Committee of the Assembly. I am asking what this committee is. Is it a Welsh Cabinet?

Photo of Mr Neil Kinnock Mr Neil Kinnock , Bedwellty

Or a Welsh dresser?

Photo of Mr Tam Dalyell Mr Tam Dalyell , West Lothian

Is there to be a Welsh Chancellor of a Welsh Exchequer? I do not know how decisions like this can be made unless there is an Exchequer or a sub-Exchequer or something of that nature. This raises another question—whether the Welsh Chancellor of the Welsh Exchequer will be shadowed by someone responsible, or by the Secretary of State himself.

With all the good will in the world, which perhaps I do not have, there will have to be a parallel set of civil servants in this set-up. I do not say that every civil servant working for the Welsh Assembly has to be shadowed by someone responsible to the Secretary of State, but I ask my right hon. Friend, who is a Treasury Minister, what the arrangements for the Civil Service are to be. If we do not have two sets of civil servants, how will the Secretary of State get his advice?

If the hon. Member for Pembroke (Mr. Edwards) was Secretary of State for Wales in a Conservative Government in London, and if there were a Labour Administration in the Coal Exchange, are we saying that the Secretary of State and the Administration in the Coal Exchange should be advised on delicate financial and fiscal matters by the same civil servants? If this is so, serious questions of loyalty are bound to arise. Every senior civil servant would have to make up his mind whether his first loyalty was to the Coal Exchange or to Westminster.

This question as it applies to Scotland was never answered. This is a Morton's fork situation. Either there is a parallel set of civil servants or we put impossible strains on their loyalties. If we have a parallel set of civil servants, what is the extra manpower cost of all these arrangements?

I wish to ask a question to which the Government should have an answer. Given the establishment of a Welsh Consolidated Fund, a Welsh Loans Fund and a Welsh Comptroller and Auditor General, with all the other things in this part of the Bill, what will be the extra manpower costs of this system over and above the present system which is responsible for Wales? I am asking for a fairly simple calculation.

All the talk in Scotland is that the Government have fantastically underestimated the administrative cost of the proposals in the Scotland Bill, and I suspect that there is the same underestimate in this Bill. If the Government say that they will use existing civil servants for both set-ups, we come back, on Morton's Fork, to the question of loyalties.

Has the Minister of State had any difficulty in comprehending my question?

Photo of Mr Denzil Davies Mr Denzil Davies , Llanelli

I have understood it.

Photo of Mr Tam Dalyell Mr Tam Dalyell , West Lothian

Good. I look forward to receiving an answer.

Photo of Mr Wyn Roberts Mr Wyn Roberts , Conway

The debate has been largely devoted to the two funds referred to in Clause 42 which will provide the resources to meet the needs of the Principality. No doubt the Government will say that they intend to allocate moneys to Wales in future according to need and the general availability of resources in the United Kingdom, as they have done in the past. But need is not constant. It varies from time to time, and people's awarness of need changes.

There is not much doubt that our needs in Wales will change. I have seen the awareness of need change a great deal in my lifetime, from the 1930s onwards. Changes in awarness reflected real changes in need. I have childhood memories of the extensive suffering caused by tuberculosis and the untold misery and devastation that it caused to many families in the Gwynedd area. That disease, which killed so many people in the prime of life, has virtually been eradicated, but there are now other health needs.

Health needs in Wales remain great. The number of days lost from work through sickness in Wales is 209 per cent, of the English figure. Each Welsh family practitioner dispenses 31 per cent, more prescriptions per person and sees 27 per cent, more people than does the average English GP.

The Welsh Office consultative document proposed the policies and priorities for the planning and provision of health and personal social services from 1977 to 1980 and noted serious gaps in the provision for the mentally ill, the physically handicapped and the elderly and in personal social services, but the document envisaged a standstill in health care provision. Despite the pressing need for extra resources, the Welsh share of public expenditure on health was only slightly greater—at 101 per cent.—than the United Kingdom figure in 1975–76. In every area of Government expenditure in 1976–77, the figure per head of the population in Wales was higher than that in England—with certain notable exceptions. As a Welshman I am concerned to ensure that we do at least as well in future as we have done in the past. There have been areas of expenditure where, for various reasons, provision has been inadequate, as the hon. Member for Wrexham (Mr. Ellis) said.

The housing situation is a national scandal, as all of us know who hold surgeries in our constituencies. Nearly 10 per cent, of our housing stock is unfit for human habitation. Another 9 per cent. lacks either one or more of the basic amenities or is badly in need of repair. All in all, about half a million of our people live in inferior housing. However, Government spending on housing in Wales in 1976–77, at a provisional figure of £77 per head, was lower than that in England of £86 per head and far lower than that in Scotland at £113 per head. The number of new homes started last year was lower than in any year since 1959.

Law and order is another area of lower expenditure per head in Wales. It is doubtful whether that should be so bearing in mind that there has been a 520 per cent, increase in violent crime in Wales since 1960, compared with a 390 per cent, increase in England over the same period. It came as a great shock to me and, I think, to the Minister of State, Home Office when I elicited that figure from him at the end of 1977.

Photo of Mr Emlyn Hooson Mr Emlyn Hooson , Montgomery

Surely the hon. Gentleman appreciates that the crime rate is still lower in Wales than in England.

Photo of Mr Wyn Roberts Mr Wyn Roberts , Conway

I was astonished at the tremendous increase in crime. That is the point that I am making. The hon. and learned Gentleman knows only too well that he is talking about a different set of figures. I am talking about the increase in violent crime in Wales as opposed to England. The rate may still be lower, but the increase has been greater.

The only other area of lower expenditure in Wales than in England is under the head of common services. That is not surprising as the services are provided mainly from London. However, the overall picture of Government expenditure in Wales is, I think, a fair one. It is 8½ per cent, higher than the per capita expenditure for the United Kingdom as a whole. As my hon. Friend the Member for Pembroke (Mr. Edwards) indicated, set against our gross domestic product per head and tax raised per head, we in Wales are certainly receiving our fair share in the most generous sense of the word. There is no doubt that the general standard of living in Wales has improved since the war and will, we hope, improve still further.

When I last spoke about Government expenditure in Wales on the first day allotted to the Bill, the hon. Member for Carmarthen (Mr. Evans) intervened to say that there was another possible interpretation of the figures. The hon. Gentleman said that I said that Wales and Scotland receive more from the public purse. Is not that because Wales has more unemployment, and more poverty, and because the social services there demand more? Are not those facts the consequence of misgovernment, and is not that an argument that there is more misgovernment …?"—[Official Report, 1st March 1978; Vol. 945, c. 521.] If ever there were a case of putting the cart before the horse, I think that that is it. It is no wonder that the Plaid Cymru horse is a non-starter at General Elections, despite much spurring and flogging. At one moment Plaid Cymru is calling for more money from the Treasury to tackle Welsh problems, and the next moment it is saying that we in Wales would be better on our own. There is a contradiction in its statements which it resolves in Wales by misleading people, but it cannot get away with it here.

9.15 p.m.

Of course, Wales has greater needs than many parts of England. But, much as I should like to lay them all at the feet of this Government, I cannot in all honesty do so. However, I can press the Government to recognise needs, many of which arise from the accident of or peripheral location. I can also seek to ensure that the problems of Wales are in the forefront of the Government's mind when they are allocating resources. To do that successfully we, as Members of Parliament, realise that we must be here in the House of Commons in strength, not fighting over the bones of a block grant thrown to an Assembly in Cardiff.

Amendment No. 248, which I doubt whether we shall reach, seeks to ensure a basic equality of treatment with England in the event of the Bill going through. I have been talking about how well Wales has done. There is no guarantee for the future that we shall do as well as the rest of the country in terms of expenditure. The amendment implies that we may not do as well as we have done in the past in securing a share of the available resources related to our needs rather than to any other principle of distribution.

I am convinced that we are right to try to establish this fall-back position. I have always been suspicious of the central Government's motive in pushing the Bill and all that it entails and in seeking to foist it upon the people of Wales. Time and again I have said that I believe the underlying motive for this form of devolution to be financial. The block grant system—not wholly recommended by the Royal Commission—is a powerful attraction for the central Government in that it avoids those occasional pressures and calls for more resources here and there.

Let us not forget that the four-year negotiation has been suggested because annual negotiation would be too combative. Therefore, we are to have a four-yearly struggle instead of an annual struggle. It is a formula to provide an easier life for the central Government. It will enable the central Government to turn a deaf ear to pleas by Members of Parliament. When there is special pleading, Ministers—I can hear them now—will say "This is a matter for the Assembly. It has the resources within the block grant." If the matter under discussion is not attended to, it will be the fault of the Assembly, not of Westminster or Whitehall. I think that it will be six of one, half a dozen of the other. There will be conflict on both sides.

Of course, we know that the Assembly will not be silent. It will say that the block grant is not enough, as the hon. Member for West Lothian (Mr. Dalyell) said, and it will build up a deep and abiding resentment in Wales against Westminster and Whitehall—a resentment which may well overflow into extremist political action.

The Government must give some guarantee for the future. If they try to pooh-pooh that as unnecessary and seek to assure us that they intend to deal with Wales as they have done in the past, the people of Wales should know that they are being quietly outflanked and out-manoeuvred in the battle for a proper share of resources appropriate to their needs.

We have come a long way from the Royal Commission's report. In paragraph 655, it said that its inquiries suggest that those people who welcome the idea of regional independence would nevertheless regard financial equity as ultimately more important. In paragraph 669 the Commission continued: in view of the practice which has been built up for the detailed measurement of needs, service by service, it is very doubtful whether an arbitrary formula, resulting in a fixed grant for say five years, would be acceptable or indeed workable. It would be necessary to construct a more flexible system which, whilst retaining the block grant idea, would include a fairly sensitive measurement of marginal need, probably every year. The Commission then proposed an independent Exchequer Board. That is not what is proposed in the Bill. We do not have any really detailed proposals about how the block grant system will work. We have clauses setting out the funds and so on, but it is by no means clear how the block grant system will work. What we do know, if we may still rely on "Our Changing Democracy: Devolution for Scotland and Wales"—is that The amount will be a matter of political judgment on the basis of an assessment of relative needs made jointly with the Scottish"— and presumably Welsh— administration through close and continuous collaboration. The Government went on to say: The task involves judgments of great complexity and political sensitivity. Those who have talked in this debate about political clout are absolutely right. Nevertheless, objective information on standards and needs would help those concerned with these judgments. We understand that there is to be an advisory board, but we have not been told how that objective information is to be obtained or how the grant is to be calculated. Will the information be gathered by civil servants in London or Cardiff? Who will sift the information? To whom will it be presented? Will the Assembly have the information and base the block grant application upon it, or will the information be supplied direct to the central Government, who will then tell the Assembly what it is to receive?

Is the negotiation—be it on a four-year basis or whatever happens—to be held in public? Shall we know about it, or will it take place behind closed doors? There is a vagueness about the financial provisions which I find disquieting.

Photo of Mr Tam Dalyell Mr Tam Dalyell , West Lothian

Does not the hon. Member believe that a four-year basis is wholly unrealistic in the light of post-war experience? Who would say that economic forecasting in this country is of such a kind that we can possibly do this on a four-year basis?

Photo of Mr Wyn Roberts Mr Wyn Roberts , Conway

I agree. I understand that the idea of a four-year or quinquennial grant was evolved because it was expected that there would be too much conflict and argument if it were negotiated on an annual basis.

Far from making me feel confident about the future—and I speak as a Welshman—these provisions encourage my doubts and suspicions about the real motivation behind the Bill.

Photo of Mr Neil Kinnock Mr Neil Kinnock , Bedwellty

I shall be brief because the whole question of the block grant and the Consolidated Fund has been rehearsed frequently in previous debates and last year. However, the case is not hurt by repetition. I wish to save the time of the Committee because there are several other clauses that require detailed responses.

I ask my right hon. Friend the Minister to recall that we are talking about a country which, through no fault of its own, will for many years be, as it is now and as it has been for several years—for as long as we have had a compassionate State—in financial deficit with the remainder of the United Kingdom. That single consideration must form a great many of our attitudes to the appropriateness of the kind of financial devolution that the Government are proposing by this clause and subsequent clauses.

Therefore, we require answers about the nature of the Welsh Consolidated Fund and the powers open to elected representatives of the people of Wales to influence the resources made available to the people of Wales, with their great and growing needs, especially in the areas of employment provision, social services, housing, transport improvements and so on. All these questions must be very major concerns and must have specific answers.

The fact is that there is a bald statement in Clause 42: There shall be a Welsh Consolidated Fund. It is a bit reminiscent of "Let there be light". But whereas in the latter case we could rely on divine intervention and the poetry of those who described the event of the manufacturer of the world, we cannot rely on that divinity to ensure that the Welsh Consolidated Fund shall be funded, let alone consolidated.

The problem is that in none of the subsequent clauses is there a specific description of where the money will come from for the Consolidated Fund, how it will be calculated, what needs will be taken into account in its calculation, and how the Welsh Assembly can take powers from those who now have responsibility for spending the money, the local and statutory authorities, and exercise that responsibility fairly in terms of all of the interests of the Welsh people or, indeed, efficiently to the general advantage of the Welsh people.

I think that my right hon. Friend can answer the question very simply. Without going into too much Treasury mathematics, which probably hynotise the Treasury as much as they baffle everyone outside the Treasury, he can tell us now. If he were calculating on the basis of today's needs and today's resources, he could tell us how much the Welsh Consolidated Fund would be. If it were the case that next week he and our right hon. Friend the Chancellor of the Exchequer were introducing a Budget in some misbegotten year after devolution, what kind of figure would he be thinking of, either in the public expenditure White Paper earlier in the year or in the Budget, or in some special announcement to be made?

Would my right hon. Friend be thinking of £1,000 million or £2,000 million? How would he be calculating that? Would he be looking at the applications of the local authorities and their demands for rate support grant, the hopes that they have for expenditures on treasured projects and the expenditure that they have to undertake in order to keep the law and in order to meet their statutory obligations?

Would my right hon. Friend be taking all these into account, adding them up all together, dividing by the parsimony of the Treasury and then making an allocation to Wales? Would he be making a calculation on the basis of demonstrated local authority and statutory body need and then making an allocation based on a calculation of that need to a Welsh Assembly which has no responsibility even for collecting rates, let alone collecting taxes, but does have the authority for the allocation and the expenditure of the block grant—the Consolidated Fund—awarded to it?

These issues really must have more serious treatment than they have had hitherto recently or in the debates that we had last year. They are a very major consideration for the people of Wales.

9.30 p.m.

The objection to devolution in Wales, which is very substantial and very widespread, is based to a great degree on the feeling that we cannot afford devolution. It is not just that we have no spare resources to allocate to the petty Parliament that is proposed for the Coal Exchange in Cardiff; nor even that we do not have some additional spare capacity or resources in order to fund a parallel Civil Service, which will be necessary in order to avoid the difficulties mentioned by my hon. Friend the Member for West Lothian (Mr. Dalyell) of requiring honourable men and women in the Civil Service to serve two masters. That must be an unavoidable eventuality in the case of the Assembly setting a political course that diverges democratically from the course set by the majority and forming the Government in Westminster. There will not even be considerations of whether we can afford that dual outlay. The major consideration is how we gamble with the resources that we already have, awarded on the basis of demonstrated need by centralised financial resources and centralised financial government.

The feeling of the people of Wales is that the reaction to the new demarcation of devolution in England among the English taxpayers and the English politicians will be that those who govern themselves, or even nearly govern themselves, can damned well pay for themselves. My right hon. Friends will be as tired of hearing me say that as I am of hearing it myself. But it is a question which has to be answered.

Here we are, a nation in deficit, dependent on the generosity—not necessarily the spontaneous generosity—of the taxpayers of the rest of the United Kingdom which, because of the deficits run by Northern Ireland and Scotland, means the generosity of the people of England, which in turn, because of the unfortunate circumstances of people in the North-East and Merseyside and of the stranded rural areas and the decayed inner city slums of much of England, actually means the people of relatively prosperous South-East England. They are not, to take the word of my hon. Friend the Member for Wrexham (Mr. Ellis), awarding us charity.

Neither do those who make donations in the form of their taxation payments, which help us to maintain a civilised standard of living in Wales, dependent as we are on public expenditure, see it as charity. At least, they do not do so at present, but when, repeatedly, year after year and even quarter after quarter, in the House of Commons and in the Press we debate how much the Welsh and the Scots are running a deficit to a particular part of England, can we then count on people's generosity and tolerance remaining at its historically high level?

It would not be beyond the realms of possibility that just as, for instance, Plaid Cymru or the SNP has managed to mobilise certain jingoistic resentments among a small number of people in Wales and Scotland about their status as Welshmen and Scotsmen, populist politicians in England, for the same purposes and using the same language with the same motivation, should not seek to generate the same resentments for the different purpose of excluding the Welsh and Scots in order to save themselves and their constituents considerable sums of money.

Mr. Tom Ellis:

It was my hon. Friend's use of the word "generosity"—it might have been a Freudian slip—that led me to use the word "charity".

Photo of Mr Neil Kinnock Mr Neil Kinnock , Bedwellty

Generosity, if I may coin a definition that is not too far from the dictionary and which my hon. Friend will accept, is the act of unnecessary giving. If, however, taxpayers in England wished deliberately to assert that they did not mind what their tax was spent on as long as it was not spent in Wales or Scotland, they would not be generous. They do not do that because they know that there are reciprocal benefits in being citizens and taxpayers in the United Kingdom.

Because of the relationships enjoyed throughout the United Kingdom, of family and economic ties which I hope are unbreakable, under one Parliament, in one State, their contribution is defensible and comprehensible to them—and also generous, in the sense that they are giving not receiving directly in material terms as a consequence. If my hon. Friend would give me his definition of charity in those circumstances, it would further clarify the situation.

Photo of Mr Nicholas Budgen Mr Nicholas Budgen , Wolverhampton South West

Will the hon. Gentleman comment on the point made by the hon. Member for West Lothian (Mr. Dalyell)? Is it not likely that the generosity will wear even thinner if those who are making the generous gestures—as he says, because of the important reciprocal advantages of being part of the United Kingdom—find that, in being generous, they are also being perpetually blamed for their alleged meanness by those representing Welsh areas in the Welsh petty Parliament?

Photo of Mr Alec Jones Mr Alec Jones , Rhondda

Who says that they are being mean?

Photo of Mr Neil Kinnock Mr Neil Kinnock , Bedwellty

The Under-Secretary of State's intervention was even more illuminating than the hon. Member's question. The Under-Secretary does not say that the people of England are being mean. I do not say it. Most of the Welsh people do not say it. But the Under-Secretary will be even more familiar than I with the repetitive war cries of nationalism in Wales and Scotland about the continued parsimony, insularity and calculated insult delivered by the people of England and the Westminster Government against the people of Wales and Scotland.

My hon. Friend and I am familiar with the view of nationalism that, in order to justify itself, it has to blame the ills of a nation on some other nation. I resent that deeply as a Socialist, because I think that it diverts the working people of Wales from the true nature of our crisis in Wales—the way in which resources are wasted, abused and misused in a capitalist system.

Photo of Mr Neil Kinnock Mr Neil Kinnock , Bedwellty

It is no good the hon. Member saying "Hear, hear" when he destroys the very possibility of getting democratic Socialism and commanding Socialist machinery in this country by diminishing the Labour vote, as I am sure he will continue to do in his constituency and elsewhere, and permitting the triumph of Conservatism—which, whatever else it is dedicated to, is not dedicated to the triumph of Socialism.

How is the Consolidated Fund money to be allocated? Who is to be responsible for administering it? What will be the role of the local authorities? Can they continue to receive at least the moneys they currently receive? Will there be a wedge, a new imposition of inserted bureaucratic authority, between the people of Wales as they receive the money and services of their local authorities and those who originally provide those resources through the Treasury?

Will the Welsh Assembly, as the distributor of largesse from a Consolidated Fund, be literally a new tier of government? At present, the applications by the local authority associations, the demonstrated needs for local expenditure, whether capital or current, are the means used to secure resources from the holders of money—the Treasury or individual Departments of State secondary to the Treasury.

Will there, between those applicants and those providers, be insinuated not the democratic tier that my right hon. and hon. Friends protest, in the form of a Welsh Assembly, but simply a totally unnecessary and unwanted additional framework for chewing over the fat as to where the money should go without generating an extra halfpenny of financial resources to meet the needs of Wales?

Is not there also a danger when we say, as the Bill does, that there shall be a Welsh Consolidated Fund? There is nothing in the Bill, in Clause 42 or in subsequent clauses, which establishes how the contending claims for resources among the different parts, the different interests and the different people of Wales shall be met, arbitrated and considered in justice.

Different areas in Wales, as all hon. Members will acknowledge, have different priorities for expenditure—the rural, the industrial, the Welsh-speaking, the east and west, the north and south. There are also those whose main problems stem from their isolation and whose main needs are for massive improvements in transport. There are others whose needs arise from the difficulties they encounter with inner city decay, as in our two or three substantial cities around Cardiff.

The contest over the block grant, for limited resources, is on an entirely new level when we say that there shall be a Welsh Consolidated Fund, and the battle for those resources will have to be fought in an entirely different way. This is especially the case since there is not now to be a direct path, as it were, leading to the door of the Welsh Office, or to another Department of State, such as the Treasury, where the need can be argued and demonstrated, and the necessary money, or at least a proportion of it, awarded—or even a refusal. Now there will be a new authority, a new decider, a new arbitrator, and again without responsibilty for the collection of resources. It will have authority solely for asserting which of the contesting claims should be favoured in the scramble for resources out of the Welsh Consolidated Fund.

I thought that devolution, however conceived—even in the distorted form that we have it in the Bill—was at least intended to promote harmony inside the United Kingdom generally, and especially within the communities that it is designed to govern. If this is the pattern that is to be established in Wales, with a Consolidated Fund and little else, with no definition, and with the hope that it might just grow, and that the Assembly can somehow hone responsibilities and fashion procedures for making these decisions—because there is no formula laid down in the Bill for establishing those procedures—I believe that such an open-ended and incompetent proposition can have been made only in one of two sets of circumstances. It can only have been made either by people who hoped that the Bill would never become the new constitution of Wales, or by those who knew that, because of the referendum, it could never become the new constitution of Wales.

Anyone who put forward a serious proposition concerning devolution in Wales, and who spent obviously such a short time in forming a sensible, logical, comprehensible, framework for the government of that country, must have been deluding himself even more than those who are seeking to delude the Welsh people—

Photo of Mr Emlyn Hooson Mr Emlyn Hooson , Montgomery

The hon. Gentleman has made the point that there is no formula laid down in the Bill for the allocation of resources between competing areas. There is no formula laid down in the House of Commons for the allocation of resources. It is the Executive always which arranges the formula with the competing claimants in the country as a whole. Surely the position will be no different in Wales.

Photo of Mr Neil Kinnock Mr Neil Kinnock , Bedwellty

Indeed, the position would be no different in Wales were it not for the fact that the Welsh Assembly will not be raising taxes as the House of Commons raises taxes. The Welsh Assembly will have to operate within a limited Consolidated Fund imposed on it from elsewhere, and not one that is voted for as it is in the House of Commons—and not, as the Welsh nationalists want, as a completely separate, self-sufficient and autonomous body.

But—and here is the big but of devolution—it is impossible for the hon. and learned Member for Montgomery (Mr. Hooson), as I have said to him on other occasions, to draw analogies between the practices of the House of Commons without a written constitution and sovereign unto itself and a devolved body which by its very definition is a subordinate, limited and irresponsible body that does not have to carry the can for its own actions. It is no good the hon. and learned Gentleman saying that because things do not happen here, because situations do not arise here or because problems are not encountered here they will not be encountered in the Welsh Assembly. He might as well say that because they do not happen here there is no reason to fear that they happen in the Kremlin or in the White House or in the estates general. Those Parliaments are as different in their conceptions and responsibilities as the Welsh Assembly, as conceived, with the responsibilities allocated to it.

9.45 p.m.

There are no analogies to be drawn in that regard. Until the hon. and learned Gentleman begins to understand that the whole nature of devolution is in essence different from the nature of sovereignty—even sovereignty as we now conceive it in the House of Commons—he is not talking about the same kind of devolution as I am talking about or about the same kind of devolution as the Government are proposing. The hon. and learned Gentleman is welcome to propose his own kind of devolution. But even if he does he still cannot draw the analogy of the practice, custom, responsibilities, representation or anything else of the House of Commons because the two institutions exist for different purposes and will exist with different responsibilities.

Photo of Mr Emlyn Hooson Mr Emlyn Hooson , Montgomery

I should be more impressed by the hon. Gentleman's argument if there were not any number of examples in the world of subordinate legislatures in relationship to the mother Parliament. Let us take our own country. For many years there was the relationship between the Northern Ireland Parliament and this Parliament. The Northern Ireland Parliament was always indebted but not because of the relationship with this country. There was the peculiar religious problem of Northern Ireland which does not apply to Scotland or Wales.

Photo of Mr Neil Kinnock Mr Neil Kinnock , Bedwellty

During the earliest days of this debate I made an agreement with my right hon. and learned Friend the Member for Aberavon (Mr. Morris). I did so shortly after we had seen six or seven people slaughtered in the streets of Belfast. I said that as long as he promised not to mention Northern Ireland I would not raise the matter. But, since the hon. and learned Member for Montgomery has brought the matter up, and since I have a somewhat less comradely association with him than I have with my right hon. and learned Friend the Member for Aberavon, he would be the last to pretend that the experience of Stormont as a subordinate Parliament for the Province of Northern Ireland had been a success in any respect whatever. In the advancement of democracy, in the government of the people, in the assistance of economic development—whatever criteria could be established and imposed on modern democratic Government—Stormont failed.

The hon. and learned Gentleman will say that that was because of partisan gerrymandering. If he said that, I would agree with him. But the fact was that if that excuse did not exist—if we had had a full-blown democracy or even one that bore a resemblance to the mainland democracy in this country for those 50 years in Northern Ireland—can he really pretend that with that kind of deficit Stormont would have remained unchanged for those years? Can he really pretend that if the people had had the self-confidence of not being in deficit, and had they not been distracted by the dogmatic rebellion that they conducted against themselves to divide their community, they would not have concentrated on the real economic and political issues of being subordinate to Westminster?

Can the hon. and learned Gentleman really pretend that if that Province had been sending Members to this House of Commons of a number more than equivalent to the majority of Governments in the House of Commons over that number of years, they would have been treated with the same friendly bonhomie that they have received? Can he really suggest that they would have experienced only rarely a challenge as to their business in speaking in the British Parliament?

Photo of Mr Emlyn Hooson Mr Emlyn Hooson , Montgomery

Answer my question.

Photo of Mr Neil Kinnock Mr Neil Kinnock , Bedwellty

I am answering the question by posing more realistic questions, instead of pretending that Stormont presented the model of a subordinate Parliament that we can usefully use in these debates. The hon. and learned Member should ask himself when Stormont raised taxes or had responsibility for spending its own money. The answer is never, and that is why the analogy falls down completely.

Photo of Mr Tam Dalyell Mr Tam Dalyell , West Lothian

Will my hon. Friend concede that it would have been inconceivable not only for the Labour Government of Clement Attlee and Herbert Morrison, but for the Conservative Government of 13 years that followed, of Harold Macmillan and Iain Macleod, had they had direct responsibility for Northern Ireland, to have discriminated over housing on religious grounds?

Photo of Mr Neil Kinnock Mr Neil Kinnock , Bedwellty

So the story continues. Perhaps we could debate the whole relevance of Northern Ireland in the devolutionary context on other occasions. I think that we have exhausted it now.

My purpose in intervening was to try to get answers from the Minister that I have been unable to obtain in various approaches, both written and oral. I want answers about the way in which the Consolidated Fund will operate, who is responsible for spending the money, and how representations can be made for getting increased allocations out of it. My only interest is to ensure that we do not lose a brass farthing in resources as a result of this Bill. If we have to have changes in Wales, they must be changes that will be of material and social benefit. No one has yet demonstrated how this Bill will accomplish those ends.

Photo of Sir Anthony Meyer Sir Anthony Meyer , Flint West

We have had a characteristically brilliant speech from the hon. Member for Bedwellty (Mr. Kinnock), and quite a lot of it concerned the subject under discussion. We are debating the interaction between the need of Wales to get what is, strictly speaking, more than its fair share of United Kingdom resources and the creation of an Assembly which has spending but no money-raising powers. We are also discussing the interaction of relations between Wales and the rest of the United Kingdom.

The figures available for public expenditure in Wales, both in total and in terms of income per head, show that in the period for which figures are available Wales has received a disproportionately large share of United Kingdom revenue It is no refutation of that argument to say that Wales needs a higher proportion because the incomes of its people are so low.

The hon. Member for Wrexham (Mr. Ellis) put his finger fair and square on this by arguing that a lot of the expenditure was cosmetic. He said that we had not discussed the fact that there has been a shortfall in expenditure on and investment in the things that would enable Wales to have a level of economic activity equal to that of the rest of the United Kingdom, thus diminshing the need for very large transfer payments in favour of Wales.

Nobody is suggesting that it is any criticism of the people of Wales that they have to take more out of the pool than they put in. It is simply the fact that the figures available to us grossly understate the imbalance. The latest figures, to 1975–76, antedate the huge losses made by the British Steel Corporation, of which a high proportion must be attributable to losses incurred in Wales, if only because so much of the steel industry is in Wales. Neither do they reflect the huge sums of investment capital which was to have been poured into Port Talbot to make it into a major integrated steelworks able to compete with the giant steel producers abroad, it is true that this investment programme has been slashed. It is easy to imagine that this cruel dashing of once-high hopes will be just about the first bone which the elected Welsh Assembly will want to pick with the House of Commons.

Photo of Mr Dafydd Wigley Mr Dafydd Wigley , Caernarvon

Does not the hon. Member accept that the difficulties in trying to define the revenue raised in Wales and expenditure within Wales are very great indeed, if for no other reasons than that, first, the income tax that is collected from the people of Wales is collected in offices outside Wales and not in Wales as such, and, secondly, in regard to expenditure in Wales, particularly of the capital type which he described, very often the vast majority of such expenditure is incurred outside Wales? For example, the CEGB project at Dinorwig involves a figure of £240 million expenditure, only £40 million of which will go back into the local economy.

Photo of Sir Anthony Meyer Sir Anthony Meyer , Flint West

It is difficult to attribute these costs and receipts with accuracy, but so many figures have been quoted in this debate, on both sides, that I do not want to get involved in a long statistical argument or to have to return to sources and read out tables. Such tables as we have undoubtedly support the thesis which I have been putting forward, but I freely admit that there can be differences of interpretation.

I revert to the quarrel which, I suspect, will be the first quarrel between the elected Welsh Assembly and the House of Commons—namely, over the level of investment in the steel industry. There will be a demand that the reduced investment programmes should be allowed to go ahead. A Welsh Assembly will wish to maintain a steel industry and a coal industry.

Photo of Mr Alec Jones Mr Alec Jones , Rhondda

How does the hon. Gentleman think that investment in the steel industry is affected by the Bill? The subject of steel is not being devolved.

Photo of Sir Anthony Meyer Sir Anthony Meyer , Flint West

I am not suggesting that steel is being devolved. I am suggesting that, because of the mechanism by which the Assembly will be responsible for spending money and will not be responsible in any way for raising it, it will inevitably become the focus of every demand in Wales that more money should be spent on maintaining a steel industry and a coal industry at a level higher than would be case if the United Kingdom was balancing its investment programmes as a whole. I shall come to the mechanisms by which this will operate in the political relationship between the Assembly and the United Kingdom Parliament.

Photo of Mr Alec Jones Mr Alec Jones , Rhondda

Surely the hon. Gentleman will agree that, whether we are talking about investment in the steel industry or in the coal industry, after devolution there will be no stronger pressures for investment in steel and coal in Wales than there are now. This House will be responsible for those matters, and Welsh Members on both sides of the House will be pressing as strongly after devolution as they now press for expenditure in those industries.

Photo of Sir Anthony Meyer Sir Anthony Meyer , Flint West

If the Minister believes that there will be no increase in pressures, I think he will believe anything. Perhaps there will be no increase in powers, but I shall shortly explain why I believe that those pressures will become very powerful indeed.

The coal industry and the steel industry, both of which are vital to Wales, account for the lion's share of the financial help which Wales obtains from England. This has gone on for so long that it is taken for granted to the extent that it is not realistic to expect any elected Welsh representative to accept that any pit or steel mill should be closed down or reduced in output merely because the money to subsidise it is not available out of purely Welsh resources. I could not possibly accept the closure of steel-making at Shotton merely because the £25 million needed to equip its ageing open-hearth furnaces with tandem furnaces is not readily to be found within the investment capital available in Wales.

10.0 p.m.

I have no doubt that the 12 or so Wales will prove equally unwilling to accept that steel-making at Shotton should be allowed to be phased out in this way. What is more, I should expect the Assemblymen in the Swansea area to be a great deal more robust than the Secretary of State has been in insisting that the money has to be found to enable the big expansion to go ahead at Port Talbot and for the jobs so badly needed there to be created.

I cannot imagine their behaving like those who complained that the 1973 plan for the expansion of the steel industry was too small but who now accept the abandonment of even that inadequate target. The Assemblymen of the Swansea area will not accept this. Nor will there be any incentive for them to do so. As United Kingdom Members of Parliament, we have at least to balance priorities. I am in a position to say that I want the United Kingdom taxpayer to subsidise Shotton to the extent of £25 million for tandem furnaces.

By the same token, I am to some extent handicapped when I come to demand a cut in the level of taxation. It is a cross which I have to bear and one with which every hon. Member is familiar. A Member argues for more money for his constituency and is immediately met by a Minister with the complaint "You are demanding increases in public expenditure." The Assemblyman will be under no such constraint. He can win votes by arguing that he wants more money spent on investment on this and that in his constituency, and he is under no obligation to defend the level of expenditure thereby involved and the level of taxation which it implies.

For those reasons, I am convinced that the Assembly will operate as a powerful irritant. I once used the word "corrosive". I stick to that word. The Assembly will operate as a corrosive factor in the relations between England and Wales. The form of financing which has been chosen in the clause is the very worst form from that point of view.

Photo of Mr Emlyn Hooson Mr Emlyn Hooson , Montgomery

I have been provoked into making a contribution to the debate largely by the speech of the hon. Member for Bedwellty (Mr. Kinnock). He is preoccupied with his fear of nationalism. It seems to me that he sees bogymen where they need not exist.

There are overwhelming reasons why the people of the United Kingdom as a whole and the people of Wales will want the United Kingdom to remain as an integrated whole, whether we have an Assembly or not. Every speech that the hon. Member makes is a Second Reading speech against the Bill. If we are to have an Assembly, we need a Consolidated Fund and a Loans Fund. The hon. Member was using the arguments against the clause simply as a means of attacking the Bill as a whole.

Every debate on the Bill has been a Second Reading debate. In The Times today, there is a letter by an erstwhile Commons colleague of the Conservative Benches, Lord Hailsham, which suggests that the House of Commons has no control or very little control over the Executive and that the House has virtually become a means whereby an elected dictatorship rules the country. Listening to the thrust of many of the speeches in this debate, anybody would have thought that the House of Commons has a tight control over expenditure and that it controls the allocations of funds in this country. It does nothing of the kind.

I have seen the formula for the allocation of funds to local authorities. It is produced by the Treasury, and because of the Lib-Lab pact we were enabled to see it. We were asked to comment on it. The Treasury arranges it. The allocation of funds is no more obscure under the provisions of this Bill than it is at present. The hon. Member for Bed-wellty knows that perfectly well.

I gave earlier as an example to the hon. Member the worst example of a devolved assembly that I know of, Northern Ireland. The hon. Member knows perfectly well that, although the Northern Ireland Parliament was always in deficit, there was never any serious argument in the House of Commons that there ought not to be United Kingdom financing of that deficit. Consider the subordinate Assemblies in West Germany or in Canada. I know that there the constitutions are different, but there is no precedent for this form of devolution which we are considering. We must therefore look at the relationship between such subordinate Assemblies and their mother Parliaments to see whether there have been the kind of frictions which the hon. Member suggests will occur here and be virtually impossible to solve. I do not think that a study of the many subordinate Assemblies of which we know supports that thesis.

What the hon. Member for Bedwellty is doing is arguing "I am against an Assembly because I am afraid of the nationalists taking it over". That is his theme. He is described in today's Liverpool Daily Post as the folk hero of the North Wales Coast, the hero of all those many Left wingers in Colwyn Bay and Llandudno because of his objections to the Bill. The truth is that he is deliberately trying to create fear in the hearts of the Welsh voters, to make them think that the Bill will be a vehicle for nationalism when it will be nothing of the kind.

Photo of Mr Neil Kinnock Mr Neil Kinnock , Bedwellty

I am sure that the hon. and learned Gentleman would like to give that assurance. Suffice it to say that the Bill is the greatest step forward which nationalism has yet achieved, and I cannot recognise that as a victory for his point of view or for mine.

The hon. and learned Member is putting to me the example of other subordinate Assemblies. He is asking me to believe that in Germany, for instance, there are merely the Bundestag in Bonn and, let us say, Assemblies in North Rhine Westphalia or Bayern, and that in Canada there are simply federal Assemblies in Saskatchewan and Quebec. If the hon. and learned Member will not understand that the major weakness of what the Government are proposing is that they are proposing to deal only with areas that will stick out like a sore thumb and which cannot afford to do so—Scotland and Wales—he still does not understand the Bill, in spite of my repeated instruction.

Photo of Mr Emlyn Hooson Mr Emlyn Hooson , Montgomery

If I had my way, I would have regional Assemblies in England as well.

Let us deal with the situation as it is. The hon. Member is suggesting that the taxpayers of England will get fed up subsidising the people of Scotland and Wales. I do not think that anything of that kind will happen. For one thing, the taxpayers of England realise that it is to their advantage to preserve the unity of the kingdom. So also do taxpayers in Scotland and Wales. Everything else will dictate this. The conditions of the modern world will dictate this. When the hon. Member suggests that the taxpayers of England have been excessively generous—

Photo of Mr Emlyn Hooson Mr Emlyn Hooson , Montgomery

The hon. Member spoke constantly of "generosity". He used the term "generosity of the taxpayers" several times. Much of the earlier money in the South-East of England is second and third and generation money made in the industrial areas of Wales, Scotland, the North of England and the Midlands. Much of it is investment money. The hon. Member for Bedwellty is trying to use his arguments to frighten the people of Wales.

The Welsh Assembly needs proper financial funds and controls which are no different from the sort of controls that we have in the House of Commons. I have sufficient faith in and knowledge of the Welsh people to know that they will be entirely responsible in the running of their affairs, just as they have been in the House of Commons. The hon. Gentleman's comments do no good to Wales or to his cause.

Photo of Mr Leon Brittan Mr Leon Brittan , Cleveland and Whitby

The basis of our objections to the financial provisions relating to the Welsh Assembly is simple. It is that the provisions will not improve the standard of life of the people of Wales and will lead inexorably to serious conflict between Wales and the rest of the United Kingdom, to the disadvantage of both.

The question of the improvement in the standard of life in Wales can be dealt with extremely briefly, because during a fairly long debate no one has even attempted to suggest that any positive benefit to the standard of life of the people of Wales will derive from the provisions of the Bill. Not a single halfpenny extra will accrue to the benefit of the people of Wales because of the Bill as a whole or because of the financial provisions in particular.

We can therefore move rapidly on to our second fundamental objection to the financial provisions, namely, that they are likely to lead to conflict between Wales and the rest of the United Kingdom. I start with the basic fact that per capita public expenditure in Wales is, totally justifiably, substantially higher than in the rest of the United Kingdom. The latest estimates suggest that public expenditure per capita is 16 per cent, higher in Wales than in England. It has been explained from all parts of the Committee why that is so and why it is justified. It is because of the particular history, geographic and social needs of Wales.

The first limb of the conflict argument is that there is little doubt that, despite the complacent words of the hon. and learned Member for Montgomery (Mr. Hooson), a position in which we spend publicly more per head in Wales than in the United Kingdom generally will be increasingly difficult to sustain once the Assembly has been set up.

It is one thing for the extent of public expenditure in Wales to be determined within a single Parliament and Cabinet on a piecemeal basis, but it is quite different for the matter to be determined by negotiation between two separate bodies—the Parliament of the United Kingdom and the Welsh Assembly—elected in different ways and having different loyalties. The hon. and learned Member for Montgomery was excessively optimistic when he talked about the people of Wales being far too sensible to allow that to happen. It is not so much a question of the people of Wales being too sensible or not sensible enough as a question of the people of England continuing to be as sensible as they have been in the past.

As the Member for an English constituency, I can give no guarantee that the people whom I represent in the North-East, who have problems every bit as great as those of the people in Wales, will continue to be as rational, understanding and properly tolerant towards the higher per capita public expenditure in Wales as they have been in the past. The hon. and learned Member for Montgomery cannot give such a guarantee either.

Photo of Mr Dafydd Wigley Mr Dafydd Wigley , Caernarvon

As a Member for the North-East, the hon. and learned Gentleman will surely recall that last year, especially at the time of the passage of the Scotland and Wales Bill, the great fear that many hon. Members and others in the North-East had was that if Welsh and Scottish Assemblies were established they would have greater leverage and power over economic resources and would deprive the North-East of resources that it needed. The hon. and learned Gentleman is now arguing the contrary. Surely, both arguments cannot be right.

10.15 p.m.

Photo of Mr Leon Brittan Mr Leon Brittan , Cleveland and Whitby

There is no inconsistency. The point that the hon. Gentleman makes relates to fears. I am not talking about fears of what the Scottish and Welsh Assemblies will be able to do. It is consistent to fear, on the one hand, that they will succeed in getting more than their share and, on the other hand, to begrudge them even their fair share. I do not regard that as inconsistent. I regard the risk of that as being typical of the sort of danger that one faces by setting up an arrangement of this sort. That is precisely the point that I was about to make.

On the one hand, the people of the United Kingdom are likely to be very much less ready to accept the proper degree of expenditure for Wales. On the other hand, there will be pressure in the opposite direction, as the hon. Member for West Lothian (Mr. Dalyell) observed. There will be pressure from the Members of the Welsh Assembly in demanding increasing sums from the Treasury as a whole and to regard every deficiency in the needs that should be met from public expenditure in Wales as being the fault of a mean British Exchequer, which will be regarded, as the hon. Member for West Lothian has repeatedly said, as the English Exchequer.

The basis for such claims on the part of the Welsh Assembly will start in the first instance because of the problem of calculating what the block grant should be, even if there is good will on all sides. As has been said, the Government in their White Paper, in bringing devolution to Scotland and Wales, recognise that the calculation of the block grant is not an easy matter. According to paragraph 100 of the White Paper "Our Changing Democracy: Devolution to Scotland and Wales", it is a task which involves judgments of great complexity and political sensitivity. In the first year it may be that there is a possible basis for the calculation of the block grant. In the first year, in which the history behind both parts of the United Kingdom is one in which needs have been calculated on a common basis, it will be possible to extrapolate further forward social changes and to say that the needs for the United Kingdom will be X and that the needs for Wales will be Y. However, as the hon. Member for Aberdare (Mr. Evans) remarked, once the Assembly comes into existence the whole essence of devolution involves that the Assembly will be able to decide to spend more on one devolved area and less on another. In other words, it will be able to use the block grant according to its own sense of priorities.

It may be that the Assembly will decide to spend comparatively more on housing and comparatively less on schools. The comparison will be with what the Secretary of State for Wales, as a member of a United Kingdom Government, was spending within the Principality in the year before the Assembly came into existence. Once that happens, standards will instantly start to vary. The standard of services between England and Wales will start to diverge. They may be better in certain respects in Wales and better in other respects in England.

When the block grant comes to be negotiated again, whether it is after one year or four years, I do not believe that those who are complaining in Wales because their schools have fallen behind the standard of provision of schools in England will be satisfied when the Exchequer blandly says "Your schools are not as good as the schools in Cambridge, Cleveland or North Yorkshire, but that is because the Assembly has decided to spend more of the money allotted to it on housing."

The idea that that will be an acceptable answer that will allay the claims of the Welsh Assembly and the claims of the people in the Assembly, whose business it will be deliberately to foment disagreement and hostility between England and Wales, is ludicrous. It has only to be posited for it to be seen to be an unrealistic expectation and as wildly optimistic as the expectation of the hon. and learned Member for Montgomery in another context.

Mr. Tom Ellis:

Is the hon. and learned Gentleman aware that in many federal countries—for example, the Federal Republic of Germany—disparity exists between one service and another, and the Federal Republic of Germany is a far more cohesive country even than the United Kingdom?

Photo of Mr Leon Brittan Mr Leon Brittan , Cleveland and Whitby

I know that the hon. Gentleman supports federalism. He has right on his side in the sense that, within a federal structure, this kind of difference is more sustainable. But, as the hon. Member for Bedwellty (Mr. Kinnock) pointed out in answer to the hon. and learned Member for Montgomery, the position is very different when one is not setting up a federal structure but singling out two parts of the United Kingdom—Scotland and Wales—not the basis of differing needs but because it is felt that there has to be a response to the clamour from nationalism in those two parts of the United Kingdom.

In those circumstances, one has not a reorganisation of Government to distribute power to the regions on a federal basis in which it is understood that standards can vary but an ill-thought-out response to nationalist pressures. In that event, the situation will be very different. As the standards vary between Wales and England because of the exercise of the devolved powers, and as the claims that the areas which have had less money spent on them have become inadequate compared with England not because of the freely-chosen decision of the Welsh Assembly to spend less money but because the British Exchequer has been mean in the block grant, conflict will grow, and is bound to grow, because there are people who will deliberately foment it.

The Government made a spurious attempt to defuse that issue by putting forward the bogus proposal that there should be a four-yearly allocation of the block grant and an independent board to set up objective criteria.

It is significant that the board is not mentioned or created in the Bill. The answer that was given in previous debates relating to Scotland—that this should be arranged between the Assembly, when elected, and the United Kingdom Government —was unconvincing. If the final arrangement ought to be negotiated between the devolved Administration and the United Kingdom Administration, that will not absolve the Government from setting out the general outline for such a board in the Bill. Instead, it is left completely empty.

As has been pointed out by Labour Members, the idea that we shall achieve less conflict and more certainty by attempting to create and determine a block grant over a period of four years is farcical when we consider the vicissitudes in the British economy over periods far shorter than four years. It is not a credible proposition that this will reduce conflict or bring about greater stability. As my hon. Friend the Member for Conway (Mr. Roberts) pointed out, it is designed to make life easier for the central Government. But my prediction is that, if the Bill ever reaches the statute book and reality, the central Government will not find their position eased.

I ask the Minister of State, in replying to the debate, to answer a question which was posed repeatedly in the Scottish devolution debates by my hon. Friend the Member for Aylesbury (Mr. Raison): what will happen if, in the course of one year or of four years, the Government of the day decide that the economy requires massive cuts in public expenditure? How will such cuts in expenditure be achieved in Wales, or in Scotland for that matter? Will there be an ad hoc conference between the Welsh Assembly and the United Kingdom Treasury at which the Treasury will say "Under the order before the House of Commons, tranches of money are to come your way. Will you agree that the tranches should be reduced?" That is a genuine problem. It is one that arises from the block grant system.

Photo of Mr Cledwyn Hughes Mr Cledwyn Hughes , Anglesey

Can the hon. and learned Member say how that problem is resolved for the county councils?

Photo of Mr Leon Brittan Mr Leon Brittan , Cleveland and Whitby

The difference is that at the end of the day the political pressure on the county councils is different from that which is bound to occur with the Assembly. County councils may make representations individually or collectively. That is right, but they do not have the authority to speak for a nation in the way that an Assembly will. If right hon. and hon. Members on the Treasury Bench think that it will make no difference at all when there is an Assembly which purports to speak for a nation and which has been elected on that basis, they have another think coming. A county council is an administrative body which is set up to administer certain services within an area which is chosen on a particular basis. One cannot say that about a Welsh or Scottish Assembly, because if that were so there would be Assemblies in all the regions of England.

The decision of the Government to ignore all the questions that were asked in their Green Paper on devolution for England and to do nothing at all about England is the plainest indication, if any were needed, that this reform—if it can be called a reform—has absolutely nothing to do with improving the government of Wales or Scotland and everything to do with responding to nationalist pressure.

In an intervention, the Minister referred to nominated bodies. He said that nominated bodies also suffered from the same objection as we raised—namely, that the divorce within a unitary State between a body that spends money and a body that raises it is inherently unhealthy and is likely to lead to conflict. A nominated body, because it is a nominated body, is chosen to spend money for a particular purpose. The members of that body have no authority whatsoever to speak for anybody at all. They are simply given the power to discharge responsibilities and spend certain moneys.

How can one compare such a body with an Assembly which is not only directly elected but is directly elected on the basis of a national unit of administration and on the basis that it is supposed to reflect the aspirations and sentiments of the nation? There is all the difference in the world between two such bodies.

That does not mean that revenue-raising for an Assembly would be more of an attractive proposition that should be followed. The reverse is true. The Government cannot find a way of doing it, and I doubt whether the provision of revenue-raising powers for the Welsh Assembly would raise devolution from its present nadir of unpopularity in Wales to something more acceptable or more popular.

Photo of Mr Cledwyn Hughes Mr Cledwyn Hughes , Anglesey

What is the basis for the hon. and learned Member saying that this is the nadir of unpopularity in Wales, apart from what my hon. Friend the Member for Bedwellty (Mr. Kinnock) says?

Photo of Mr Leon Brittan Mr Leon Brittan , Cleveland and Whitby

The hon. Member for Bedwellty is an extremely reliable source on this matter, if not on other matters. I am not seeking to take a poll through the hon. Member for Bedwellty or others. My argument simply is that even if I am wrong and the right hon. Member for Anglesey (Mr. Hughes) is wrong and everyone in Wales is screaming for devolution—

Photo of Mr Cledwyn Hughes Mr Cledwyn Hughes , Anglesey

It is a curious way of doing it.

Photo of Mr Leon Brittan Mr Leon Brittan , Cleveland and Whitby

I hope that the right hon. Gentleman will listen to me. I have given way to him twice. I ask him to do me the courtesy of listening to the answer that I am giving. I am not concerned to make a point about the popularity of devolution in Wales. That will be determined in due course.

Photo of Mr Cledwyn Hughes Mr Cledwyn Hughes , Anglesey

Answer the point about the nadir.

Photo of Mr Leon Brittan Mr Leon Brittan , Cleveland and Whitby

The point I am putting, if the right hon. Gentleman will allow me—

Photo of Mr Cledwyn Hughes Mr Cledwyn Hughes , Anglesey

Answer the question.

10.30 p.m.

Photo of Mr Leon Brittan Mr Leon Brittan , Cleveland and Whitby

The right hon. Gentleman seems to like asking questions but not to receive the answers. He is not listening. If he insists on intervening from a sedentary position again, I shall not bother to answer him at all.

My point is that, if revenue-raising powers were granted to the Assembly, that would not increase its popularity but would achieve quite the reverse. The Government have not favoured giving revenue-raising powers. There is an illogicality in dividing revenue spending and revenue raising in the way that it is done. We are led to the conclusion that the scheme is divisive in concept, uncertain in execution and dangerous in implementation and that it should therefore be rejected.

Photo of Mr Denzil Davies Mr Denzil Davies , Llanelli

I thought that this clause dealt with various technical aspects of the Bill, and not having sat through these debates as often as some hon. Members I naively assumed that it was the kind of clause that a Treasury Minister could wind up a debate on. It merely establishes splendid Welsh institutions such as the Welsh Consolidated Fund, the Welsh Comptroller and Auditor General and the Welsh Loans Fund. But having sat through the debate and listened to some of the splendid speeches I now recognise that these debates are basically Second Reading debates on the principle of the Welsh Assembly.

The hon. and learned Member for Cleveland and Whitby (Mr. Brittan), from his great knowledge of Welsh affairs, which we all recognise, said that the Bill would not lead to an improvement in the state of life for the people of Wales. That was an a priori statement that he was unable to back up with any evidence. He said that the people of Wales received a higher per capita level of revenue than the people of the North-East of England. I should like to see his evidence for that, because one of the problems—

Photo of Mr Nicholas Edwards Mr Nicholas Edwards , Pembroke

Tell us the figures for the North-East.

Photo of Mr Denzil Davies Mr Denzil Davies , Llanelli

The hon. Gentleman was listened to in silence by my Front Bench and I would hope for the same courtesy from him.

One of the problems of these debates is that we do not have a reliable break down of the per capita expenditure in the regions of England, and without this we have to compare the whole of England with the whole of Wales—

Photo of Mr Denzil Davies Mr Denzil Davies , Llanelli

The hon. and learned Gentleman must learn to contain himself. He read out a very long speech.

So we do not have reliable figures. Comparing the whole of England with the whole of Wales and the whole of Scotland is not comparing like with like, because with the enormous service sector in the South-East of England there is a wholly different situation from that in the North of England, Wales and Scotland. Thirdly, the hon. and learned Gentleman said that the popularity of the Assembly had reached a nadir in Wales. He had no evidence to back up that proposition, either. He treated us to the kind of arrogant Tory speech to which we in Wales have become used over the years, which is why we have always rejected the Tory Party.

Photo of Mr Leon Brittan Mr Leon Brittan , Cleveland and Whitby

It may suit the right hon. Gentleman's purposes to be vituperative, but surely he would not wish to misrepresent what I said. He will find from reading Hansard that I said that the per capita expenditure in Wales was higher than in England, and that if that continued after the establishment of the Welsh Assembly the people of the North-East of England, which has problems as great as those of Wales, would object. I did not say that the per capita expenditure in Wales was higher than in the North-East. I am sure that the right hon. Gentleman will, on reflection, wish to accept that that is so, if he wishes to maintain the standards to which he aspires rather than the low standards he ascribes so readily to other people.

Photo of Mr Denzil Davies Mr Denzil Davies , Llanelli

The hon. Gentleman is getting more and more pompous. The people of the North-East would react in that way only if they did not have proper figures. In fact, the hope must be that we can provide a regional break-down for England. Then we can see what the per capita income is for the North of England and compare like with like, instead of comparing two areas which are not similar.

My hon. Friend the Member for West Lothian (Mr. Dalyell) raised two points with which I should deal. He asked, first, about the Executive Committee. Clause 19 defines the Executive Committee. Perhaps my hon. Friend would prefer it to be called the "Cabinet". That would add a certain strength to the kind of emotional arguments that he puts forward in these debates. Nevertheless, it is described as an Executive Committee. It is quite clear what it is. It is set out very clearly in Clause 19.

My hon. Friend then asked about the Civil Service and what kind of loyalties—divided loyalties, so he alleged—the Civil Service would show. He will know that the Assembly civil servants will service and be responsible for giving advice to the Assembly, and the Secretary of State's civil servants will give advice and be responsible for that advice to the Secretary of State. They will all be members of the Home Civil Service. They will not be any different from the Department of Employment civil servants, primarily responsible to that Department, or from the Treasury civil servants, whose primary responsibility is to that Department. Therefore, I do not see any bogy here for my hon. Friend.

Photo of Mr Tam Dalyell Mr Tam Dalyell , West Lothian

May we first establish a fact? Does it not mean, therefore, that there will be significantly more civil servants doing the same jobs as is done at present? Is that right or wrong?

Photo of Mr Denzil Davies Mr Denzil Davies , Llanelli

It may be half right and half wrong. There certainly will be more civil servants. I come to the question that my hon. Friend asked. He need not have asked the question, because in this case the answer is set out clearly in the Explanatory and Financial Memorandum, which says that there will be needed about £9½ million in respect of additional civil servants in Wales, including staff of the Welsh Comptroller and Auditor General and related costs, including accommodation costs ". We do not dispute the fact that the Bill will mean more civil servants. They will not be doing the same kind of work. The Welsh Assembly civil servants will be advising the Welsh Assembly. The Secretary of State's civil servants will deal with the added responsibilities and the other responsibilities that the Secretary of State has which are not to be devolved to the Assembly.

Photo of Mr Neil Kinnock Mr Neil Kinnock , Bedwellty

Does my right hon. Friend appreciate that the example that he gave of civil servants now having a primary responsibility to the Department to which they belong but still a profound general loyalty and responsibility for all of the Government and all the Civil Service is distinctly different from the situation that we shall have after devolution? That will be that in the case of there being two different Governments of two different political colours, the civil servants of the Welsh Assembly must have not just a primary but a total responsibility there, and that means a different Civil Service.

Photo of Mr Denzil Davies Mr Denzil Davies , Llanelli

Not unusually, my hon. Friend is playing with words again.

Photo of Mr Denzil Davies Mr Denzil Davies , Llanelli

My experience of Government is that in the main, civil servants, in practice, see their primary responsibility as being to fight the battles of their Department. I should have thought that the Welsh Assembly civil servants would operate in exactly the same way. I do not see any problems here. My hon. Friend is seeing bogies again.

Perhaps I may return to the main point of the debate—the fear that, somehow, things will be so terribly different, in relation to the Welsh Assembly acquiring its block grant, from the present position, in which the Welsh Office, through the Cabinet and through arguments with the Treasury, secures a sum of money which is spent exactly on these devolved services in Wales.

The reality of the situation is that there may be different mechanisms of government and a different way of doing it, but the battle for public expenditure, the battle for the block grant for the Welsh Assembly, will be fought basically and fundamentally in the same way as battles for public expenditure are fought now. They will be fought through the annual public expenditure exercise and in the Cabinet. The Secretary of State for Wales will make the case for financial resources for the whole of Wales. Indeed, he will have the Welsh Assembly at his door, pressing for increases in the money spent in Wales. But the fundamental choices on priorities will be made in exactly the same way as at present.

So I see no basic difference, except in the mechanism. I do not think that there can be a difference, when we maintain the unity of the United Kingdom and when the Government, the Executive and the Treasury are still responsible for general economic and financial management.

Photo of Mr Dafydd Wigley Mr Dafydd Wigley , Caernarvon

Since we now have a Secretary of State for Wales arguing our case in Cabinet, and in future we shall also have an Assembly arguing our case, is it not true that Wales can only have a stronger voice to argue for the resources that we need?

Photo of Mr Denzil Davies Mr Denzil Davies , Llanelli

I accept that pressure from a democratically elected Assembly must be greater than less cohesive pressure from different parts of Wales, but basically the elected Government will have to decide. The best safeguard for the people of Wales getting the resources they need is a Labour Government at Westminster and not that lot sitting on the Opposition Benches.

But the difference in this Bill lies not in the initial allocation of resources but in how those resources are to be distributed and on what priorities. At the moment, once the allocation is made, and despite the fact that Ministers are responsible to this House, it is then an executive act which determines priorities, whether in the Welsh Office, between the Welsh Office and the Treasury, or among other Departments. Although these decisions are taken by Ministers, they are largely debated in the Civil Service, in Whitehall, behind closed doors.

If the Bill goes through, the difference is that that debate will take place in the open. The debate about the £876 million of devolved expenditure will then take place not in the Welsh Office, the Treasury or the Department of the Environment, but in the Cardiff Assembly, among the elected representatives of the people. Some hon. Members may not like it—perhaps at the end of the day their decisions and priorities would be different—but if we believe in democracy, in the fact that people have the right to control their own destinies in an imperfect and difficult world, we must believe that the elected representatives of the people have the right to debate the allocation of moneys of that kind.

Photo of Mr Neil Kinnock Mr Neil Kinnock , Bedwellty

My right hon. Friend is playing with words, especially since he is a Treasury Minister speaking for a Department in which Ministers have been known not even to give evidence to a Select Committee, let alone debate things in the open. Fine words about the necessity for public debate do not come too well from a Treasury Minister, although I know my hon. Friend's commitment to openness. [HON. MEMBERS: "Come on!"] It is no good saying, "Come on." These things have to be examined. Commitments to being against the Common Market, for instance, have to be examined; commitments to open and free expression about the allocation of resources have to be examined. We shall examine all these things in due course in the open, as it should be. My right hon. Friend understands that. May I put it to him—

10.45 p.m.

The Chairman:

Order. The hon. Member for Bedwellty (Mr. Kinnock) has made a number of speeches today and his views are well known to the Committee. I think that the Minister should be allowed to continue his speech.

Photo of Mr Neil Kinnock Mr Neil Kinnock , Bedwellty

On a point of order, Mr. Murton. First, I am not seeking to teach you your business, but this is the Committee stage. Second, I have a specific question to ask. Third, the length of my remarks has been due entirely to the interventions of my hon. Friends, and they deserved and needed an answer.

The Chairman:

Ask the question.

Photo of Mr Neil Kinnock Mr Neil Kinnock , Bedwellty

Even though I applaud openness of debate as much as my right hon. Friend does, I point out that we have got more in Wales than the £876 million. Even if we had only the £876 million, would the sums awarded from that £876 million to local and statutory bodies be more or less equitably distributed as a result of their being debated in the fashion that he wants?

Photo of Mr Denzil Davies Mr Denzil Davies , Llanelli

The answer to both questions is that I do not know. I do not know whether we would get more in Wales if we had a block grant system. I do not know whether there would be more than the £876 million. I do not know whether the Welsh Assembly would be as wise as my hon. Friend in distributing this kind of money. Perhaps the Members would be very foolish people and distribute it very inequitably. I agree with my hon. Friend's commitment to open government. I should like to see greater control, through Select Committees, of what goes on in the Executive. But how can my hon. Friend, with his commitment to democracy, say that it is better for the Executive to distribute the £876 million than it is for the elected representatives of the people of Wales, many of them from his own constituency and many of them from his own local party? Is he saying that they are not wise enough to do the job properly, or that they are too foolish to distribute this kind of money? I do not believe that that is his view. Knowing him, I am very surprised that he has put forward that kind of argument.

Photo of Mr Denzil Davies Mr Denzil Davies , Llanelli

That is not the language of Socialism. We are concerned, surely with the priorities in terms of expenditure. I think it is better that those should be determined, as I have said, by the elected representatives of the people of Wales than in the way they are determined at the moment.

I turn now to the point, also raised by my hon. Friend, about how the moneys would be distributed or decided upon. In Clause 46 it is made quite clear that the Secretary of State brings forward an order to this House, which is then passed by affirmative resolution—or not so passed—determining the amount of block grant, the amount of money that goes into the Welsh Assembly. I ask my hon. Friend again to consider whether that is not a better procedure than we have at the moment, with a public expenditure White Paper voted upon en bloc, in one piece, without any attempt to consider the different areas of expenditure? Here we are putting forward a greater measure of parliamentary control, and I should have thought he would wish to have this The Secretary of State for Wales has to come here and argue his case and get an affirmative resolution through the House of Commons as to the amount of money—after the Government have determined it, usually through Cabinet—that will go to this elected body of the Welsh people. I should have thought that was preferable to the kind of system that we have at the moment, with too much power put into the hands of the Executive and too little in the hands of the House of Commons, and nothing at all in the hands of the people of Wales, who should be allowed to distribute this kind of money.

Photo of Mr Denzil Davies Mr Denzil Davies , Llanelli

My hon. Friend is very keen on getting more. I am sure that those from his area sitting in the Welsh Assembly would do their best to get more for Wales and for his own locality.

Photo of Mr Nicholas Edwards Mr Nicholas Edwards , Pembroke

I put some specific questions to the Minister. Will he answer them before he concludes his speech?

Photo of Mr Denzil Davies Mr Denzil Davies , Llanelli

I have answered most of the hon. Gentleman's questions. I think that he asked a specific question in relation to the independent body as he liked to call it. He will have read the White Paper and seen that it is stated there quite sensibly, that it may very well be necessary to have a forum whereby needs can be determined. But this will not be the kind of body which I think he was envisaging or that is set up to determine and assess needs. It is the kind of body that is needed for research purposes in order that we can see the best way of allocating resources.

I come back to the point that I made at the beginning. At the end of the day this money will not be allocated by bodies, civil servants, studies or anything else. It will be allocated through the normal procedure of government—through the public expenditure review and through Cabinet and departmental Ministers arguing the case. In that respect nothing has changed in the Bill.

What has changed is that we have a better system of determining how these resources will be distributed—given the special needs of Wales, the special needs of different areas and the need to have these matters debated in public instead as of at present in the main behind closed doors.

I hope that the Committee will allow the clause to stand part of the Bill.

Photo of Mr Tam Dalyell Mr Tam Dalyell , West Lothian

Normally we would have proceeded to a vote, but there are some hon. Members who feel that crucial questions have been put and that no kind it detailed convincing answers have been given.

I want to be fair to the Minister of State. His opening remarks were very revealing. He said that he had come to the Committee thinking that this was a simple clause, which the Treasury could easily answer. I expect he was under the impression that he could wait here for half an hour, have some kind of polite debate, and then go on his way and get back to Treasury business.

For some of us, this is day 36 of the argument. My right hon. Friend has been spared 35 days of it. That is precisely what concerns many hon. Members on both sides of the Committee. So far, the argument on the whole has been conducted by a comparatively small group of hon. Members. In the heat of the day the burden has been borne by my hon. Friend the Member for Lanarkshire, North (Mr. Smith). He has answered almost every debate, especially on the Scotland Bill.

Some of us feel it high time that other Departments and other Ministers were brought in to hear what is going on. The truth of the matter is that the more one learns what is going on the more doubtful one becomes.

Mr. Tom Ellis:

No.

Photo of Mr Tam Dalyell Mr Tam Dalyell , West Lothian

That is the truth. I shall not name my hon. Friends or embarrass them, but some of them who have voted for this measure have said "Of course, we do not want to know about it". It is high time that other Ministers in key Departments like the Treasury tumbled on to precisely what was up.

Had he been present day after day, as some of us have, my hon. Friend the Minister of State would not have made the crude speech that he has made.

Photo of Mr Alec Jones Mr Alec Jones , Rhondda

There is no need to be so damned rude.

Photo of Mr Tam Dalyell Mr Tam Dalyell , West Lothian

I am not being rude.

Photo of Mr Caerwyn Roderick Mr Caerwyn Roderick , Brecon and Radnor

Does my hon. Friend agree that the Minister of State's only misfortune was not to be in lime to get his name printed in The Sunday Times Colour Supplement?

Photo of Mr Tam Dalyell Mr Tam Dalyell , West Lothian

My hon. Friend the Member for Rhondda (Mr. Jones), who is now a Minister, used to make eloquent Back-Bench speeches on devolution. My right hon. Friend's speech was a crude one, because of the references to the Executive. Whenever I ask questions about the Executive's operations I am quickly referred to Clause 19, which says: One of the committees appointed under section 18 above shall be known as the Executive Committee and shall consist of the leaders of the other committees so appointed and no greater number of other members than one-third of the number of those leaders; Quite frankly, that is an answer that does not get us very far In the Scotland Bill we never got around to the nuts and bolts of the situation. We are still unclear about this Executive. Is it a Cabinet or not? Will the Welsh Assembly consist of full-time or part-time politicians? I shall give way to any Minister on the Government Front Bench who will inform us about this. Are the Members of this Assembly to be paid as full-time or part-time politicians? We should know the nature of the organisation that we are discussing. It is indicative of the situation that when I ask a simple nuts-and-bolts, down-to-earth question about the way in which this organisation will work, the answer is the proverbial lemon.

I repeat, will it be in the form of a Cabinet or just a glorified county council? Many people who have spoken on this matter have been forthcoming. On one level they have said that of course the Assembly will be obedient, and that just like a county council it will know its place and take directions from Westminster. Yet on another level they have said that the Assembly will meet the aspirations of the people of Wales. They cannot have it both ways.

Photo of Mr Denzil Davies Mr Denzil Davies , Llanelli

The important thing is not what this committee is called, or whether it looks like a Cabinet. The important consideration is the power of the Assembly, and these are very clearly defined in the legislation. The other important consideration is where the money is coming from, and that is also clearly defined. It does not matter what one calls the various committees.

Photo of Mr Tam Dalyell Mr Tam Dalyell , West Lothian

There has to be some kind of Welsh Treasury. Unless we have that, I do not see how the mechanism will operate.

Photo of Mr Timothy Raison Mr Timothy Raison , Aylesbury

The hon. Member for West Lothian (Mr. Dalyell) is making some pertinent points. The real tragedy is that the Minister of State in the first appearance by the Treasury has not talked about matters of absolutely crucial importance. For example, he has not told us how an incomes policy fits into the concept of this Bill, or how the economic strategy in Wales will be managed. Over the years we have been told that the Treasury must have power over the building programmes, and so on. All this has now gone with the connivance of the Government. It is pathetic that we have been told nothing of this.

Photo of Mr Tam Dalyell Mr Tam Dalyell , West Lothian

That point was made about six hours ago, when we discussed the interventions made on 9th March by the right hon. and learned Member for Huntingdonshire (Sir D. Renton), who asked how one Parliament could give instructions to another Parliament or Assembly about what it would and could not do. Here again is an unanswered question.

I see the Assistant Chief Whip here, and I know that he wants to vote tonight. But these are very important matters, and this debate must continue tomorrow. I shall be on my feet until 11 o'clock, because there are many critical unanswered questions.

There is the issue of the Civil Service. One cannot just say that this is covered by the £9·5 million. The questions of the parallel nature of the double loyalties of the Civil Service has not been

answered. I ask the Minister of State for the Civil Service tomorrow morning to discuss with his coleagues in the CSD, and others with whom he discusses these matters, the answer to the questions that have been put.

I know that the Whips, possibly on both sides, want some kind of vote, but there are critical issues involving the loyalty of the Civil Service and important matters to be discussed on other clauses.

Photo of Mr Walter Harrison Mr Walter Harrison , Wakefield

rose in his place and claimed to move, That the Question be now put.

Question put, That the Question be now put:—

The Commiteee divided: Ayes 142, Noes 125.

Division No. 157]AYES[11,00 p.m.
Allaun, FrankGrant, John (Islington C)Penhaligon, David
Armstrong, ErnestGrimond, Rt Hon J.Price, C. (Lewisham W)
Ashton, JoeGrocott, BrucePrice, William (Rugby)
Atkins, Ronald (Preston N)Harper, JosephRadice, Giles
Atkinson, NormanHarrison, Rt Hon WalterRoberts, Albert (Normanton)
Bates, AlfHooley, FrankRoderick, Caerwyn
Bean, R. E.Hooson, EmlynRodgers, George (Chorley)
Beith, A. J.Horam, JohnRodgers, Rt Hon William (Stockton)
Bennett, Andrew (Stockport N)Howells, Geraint (Cardigan)Rooker, J. W.
Bishop, Rt Hon EdwardHuckfleld, LetRoss, Stephen (Isle of Wight)
Blenkinsop, ArthurHughes, Rt Hon C. (Anglesey)Ross, Rt Hon W. (Kilmarnock)
Boardman, H.Hughes, Robert (Aberdeen N)Rowlands, Ted
Booth, Rt Hon AlbertHughes, Roy (Newport)Sedgemore, Brian
Bottomley, Rt Hon ArthurHunter, AdamShore, Rt Hon Peter
Bradley, TomIrving, Rt Hon S. (Dartford)Skinner, Dennis
Brown, Robert C. (Newcastle W)Janner, GrevilleSmith, John (N Lanarkshire)
Callaghan, Jim (Mlddleton & P)John, BrynmorSpearing, Nigel
Carmichael, NeilJohnson, James (Hull West)Stallard, A. W.
Cartwright, JohnJohnston, Russell (Inverness)Steel, Rt Hon David
Cocks Rt Hon Michael (Bristol S)Jones, Alec (Rhondda)Stewart, Rt Hon Donald
Cohen, StanleyJones, Barry (East Flint)Stewart, Rt Hon M. (Fulham)
Coleman, DonaldJones, Dan (Burnley)Stoddart, David
Cook, Robin F. (Edin C)Kaufman, GeraldStott, Roger
Cowans, HarryKerr, RussellTaylor, Mrs Ann (Bolton W)
Craigen, Jim (Maryhill)Kilroy-Silk, RobertThomas, Dafydd (Merioneth)
Crowther, Stan (Rotherham)Lamborn, HarryThomas, Ron (Bristol NW)
Cunningham, Dr J. (Whiten)Lamond, JamesThorne, Stan (Preston South)
Davies, Rt Hon DenzilLewis, Ron (Carlisle)Tierney, Sydney
Davies, Ifor (Gower)Lyon, Alexander (York)Wainwright, Edwin (Dearne V)
Davis, Clinton (Hackney C)MacFarquhar, RoderickWalker, Harold (Doncaster)
Dean, Joseph (Leeds West)MacKenzie, Rt Hon GregorWalker, Terry (Kingswood)
Dempsey, JamesMadden, MaxWatkins, David
Doig, PeterMallalieu, J. P. W.Watkinson, John
Dormand, J. D.Marshall, Dr Edmund (Goole)Weetch, Ken
Edge, GeoffMarshall, Jim (Leicester S)White, Frank R. (Bury)
Ellis, Tom (Wrexham)Maynard, Miss JoanWhitehead, Phillip
Ennals, Rt Hon DavidMendelson, JohnWhitlock, William
Evans, Gwynfor (Carmarthen)Mikardo, IanWigley, Dafydd
Evans, John (Newton)Millan, Rt Hon BruceWilson, Rt Hon Sir Harold (Huyton)
Faulds, AndrewMiller, Dr M. S. (E Kilbride)Wilson, William (Coventry SE)
Fernyhough, Rt Hon E.Morris, Alfred (Wythenshawe)Wise, Mrs Audrey
Fletcher, Ted (Darlington)Morris, Rt Hon Charles R.Woof, Robert
Foot, Rt Hon MichaelMorris, Rt Hon J. (Aberavon)Wrigglesworth, Ian
Ford, BenMoyle, RolandYoung, David (Bolton E)
Forrester, JohnOakes, Gordon
George, BruceOrme, Rt Hon StanleyTELLERS FOR THE AYES:
Golding, JohnPadley, WalterMr. James Tinn and
Gourlay, HarryPalmer, ArthurMr. Thomas Cox.
Grant, George (Morpeth)Park, George
NOES
Alison, MichaelAtkins, Rt Hon H. (Spelthorne)Awdry, Daniel
Anderson, DonaldAtkinson, David (Bournemouth, East)Bendall, Vivian (Ilford North)
Benyon, W.Grist, IanPercival, Ian
Berry, Hon AnthonyHamilton, Michael (Salisbury)Pink, R. Bonner
Biffen, JohnHampson, Dr KeithPrentice, Rt Hon Reg
Body, RichardHarrison, Col Sir Harwood (Eye)Price, David (Eastleigh)
Boscawen, Hon RobertHayhoe, BarneyPrior, Rt Hon James
Bottomley, PeterHicks, RobertPym, Rt Hon Francis
Bowden, A. (Brighton, Kemptown)Holland, PhilipRaison, Timothy
Boyson, Dr Rhodes (Brent)Hordern, PeterRees, Peter (Dover & Deal)
Brittan, LeonHunt, David (Wirral)Renton, Rt Hon Sir D. (Hunts)
Brooke, PeterHunt, John (Ravensbourne)Renton, Tim (Mid-Sussex)
Bryan, Sir PaulHutchison, Michael ClarkRhodes, James R.
Buchanan-Smith, AlickJames. DavidRidley, Hon Nicholas
Buck, AntonyJenkin, Rt Hon P. (Wanst'd&W'df'd)Ridsdale, Julian
Budgen, NickJessel, TobyRoberts, Michael (Cardiff NW)
Carson, JohnKaberry, Sir DonaldRoberts, Wyn (Conway)
Channon, PaulKinnock, NeilRossi, Hugh (Hornsey)
Clarke, Kenneth (Rushcliffe)Kitson, Sir TimothyRost, Peter (SE Derbyshire)
Cooke, Robert (Bristol W)Knox, DavidRoyle, Sir Anthony
Cope, JohnLamont, NormanShaw, Giles (Pudsey)
Dalyell, TamLewis, Kenneth (Rutland)Shepherd, Colin
Dean, Paul (N Somerset)Luce, RichardSilvester, Fred
Dodsworth, GeoffreyMcAdden, sir StephenSkeet, T. H. H.
Douglas-Hamilton, Lord JamesMacfarlane, NeilSpeed, Keith
Drayson, BurnabyMacmillan, Rt Hon M. (Farnham)Spence, John
Dunlop, JohnMcNair-Wilson, M. (Newbury)Sproat, Iain
Dykes, HughMather, CarolStainton, Keith
Eden, Rt Hon Sir JohnMawby, RayStanbrook, Ivor
Edwards, Nicholas (Pembroke)Maxwell-Hyslop, RobinSteen, Anthony (Wavertree)
Elliott, Sir WilliamMeyer, Sir AnthonyStradling Thomas, J.
Evans, Ioan (Aberdare)Moore, John (Croydon C)Tebbitt, Norman
Fairgrieve, RussellMore, Jasper (Ludlow)Temple Morris, Peter
Finsberg, GeoffreyMorris, Michael (Northampton S)Thatcher, Rt Hon Margaret
Fletcher, Alex (Edinburgh N)Morrison, Charles (Devizes)Townsend, Cyril D.
Forman, NigelMudd, DavidViggers, Peter
Fowler, Norman (Sutton C'f'd)Nelson, AnthonyWarren, Kenneth
Fox, MarcusNeubert, MichaelWells, John
Fry, PeterNewton, TonyYoung, Sir G. (Ealing, Acton)
Gilmour, Sir John (East Fife)Onslow, Cranley
Godber, Rt Hon JosephPage, John (Harrow West)TELLERS FOR THE NOES:
Gow, Ian (Eastbourne)Page, Rt Hon R. Graham (Crosby)Mr Spencer Le Marchant and
Gower, Sir Raymond (Barry)Page, Richard (Workington)Mr Peter Morrison.

Question accordingly agreed to.

Question put accordingly, That the clause stand part of the Bill:—

The Committee divided: Ayes 142, Noes 121.

Division No. 158]AYES[11.13 p.m.
Allaun, FrankEdge, GeoffJones, Barry (East Flint)
Anderson, DonaldEllis, Tom (Wrexham)Jones, Dan (Burnley)
Armstrong, ErnestEnnals, Rt Hon DavidKaufman, Gerald
Ashton, JoeEvans, Gwynfor (Carmarthen)Kerr, Russell
Atkins, Ronald (Preston N)Evans, Ioan (Aberdare)Kilroy-Silk, Robert
Atkinson, NormanEvans, John (Newton)Lamborn, Harry
Bates, AlfFaulds, AndrewLamond, James
Bean, R. E.Fernyhough, Rt Hon E.Lewis, Ron (Carlisle)
Beith, A. J.Fletcher, Ted (Darlington)Lyon, Alexander (York)
Bennett, Andrew (Stockport N)Foot, Rt Hon MichaelMacFarquhar, Roderick
Bishop, Rt Hon EdwardFord, BenMacKenzie, Rt Hon Gregor
Blenkinsop, ArthurForrester, JohnMadden, Max
Boardman, H.George, BruceMallalieu, J. P. W.
Booth. Rt Hon AlbertGolding, JohnMarshall, Dr Edmund (Goole)
Bottomley, Rt Hon ArthurGourlay, HarryMarshall, Jim (Leicester S)
Bradley, TomGrant, George (Morpeth)Maynard, Miss Joan
Brown, Robert C. (Newcastle W)Grant, John (Islington C)Mikardo, Ian
Callaghan, Jim (Middleton & P)Grocott, BruceMillan, Rt Hon Bruce
Carmichael, NeilHarper, JosephMiller, Dr M. S. (E Kllbride)
Cartwright, JohnHarrison, Rt Hon WalterMorris, Alfred (Wythenshawe)
Cocks, Rt Hon Michael (Bristol S)Hooley, FrankMorris, Rt Hon Charles R.
Cohen, StanleyHooson, EmlynMorris, Rt Hon J. (Aberavon)
Coleman, DonaldHoram, JohnMoyle, Roland
Cook, Robin F. (Edin C)Howells, Geraint (Cardigan)Oakes, Gordon
Cowans, HarryHuckfleld, LesOrme, Rt Hon Stanley
Craigen, Jim (Maryhill)Hughes, Rt Hon C. (Anglesey)Padley, Walter
Crowther, Stan (Rotherham)Hughes, Robert (Aberdeen N)Palmer, Arthur
Cunningham, Dr J. (Whiten)Hughes, Roy (Newport)Park, George
Davies, Denzll (Llanelli)Hunter, AdamPenhaligon, David
Davies, Ifor (Gower)Irving, Rt Hon S. (Dartford)Price, C. (Lewisham W)
Davis, Clinton (Hackney C)Janner, GrevillePrice, William (Rugby)
Dean, Joseph (Leads West)John, BrynmorRadice, Giles
Dempsey, JamesJohnson, James (Hull West)Roberts, Albert (Normanton)
Doig, PeterJohnston, Russell (Inverness)Roderick, Caerwyn
Dormand, J. D.Jones, Alec (Rhondda)Rodgers, George (Chorley)
Rogers, Rt Hon William (Stockton)Stoddart, DavidWhitehead, Phillip
Rooker, J. W.Stott, RogerWhitlock, William
Ross, Stephen (Isle of Wight)Taylor, Mrs Ann (Bolton W)Wigley, Dafydd
Ross, Rt Hon W. (Kilmarnock)Thomas, Dafydd (Merioneth)Wilson, Rt Hon Sir Harold (Huyton)
Rowlands, TedThomas, Ron (Bristol NW)Wilson, William (Coventry SE)
Sedgemore, BrianThorne, Stan (Preston South)Wise, Mrs Audrey
Shore, Rt Hon PeterTierney, SydneyWoof, Robert
Skinner, DennisWainwright, Edwin (Dearne V)Wrigglesworth, Ian
Smith, John (N Lanarkshire)Walker, Harold (Doncaster)Young, David (Bolton E)
Spearing, NigelWalker, Terry (Kingswood)
Stallard, A. W.Watkins, DavidTELLERS FOR THE AYES:
Steel, Rt Hon DavidWatkinson, JohnMr. James Tinn and
Stewart, Rt Hon DonaldWeetch, KenMr. Thomas Cox.
Stewart, Rt Hon M. (Fulham)White, Frank R. (Bury)
NOES
Alison, MichaelGray, HamishPink, R. Bonner
Atkins, Rt Hon H. (Spelthorne)Grist, IanPowell, Rt Hon J. Enoch
Atkinson, David (Bournemouth, East)Hamilton, Michael (Salisbury)Prentice, Rt Hon Reg
Bendall, Vivian (Ilford North)Hampson, Dr KeithPrice, David (Eastleigh)
Benyon, W.Harrison. Col Sir Harwood (Eye)Pym, Rt Hon Francis
Biffen, JohnHayhoe, BarneyRaison, Timothy
Body, RichardHicks, RobertRees, Peter (Dover & Deal)
Boscawen, Hon RobertHolland, PhilipRenton, Rt Hon Sir D. (Hunts)
Bottomley, PeterHordern, peterRenton, Tim (Mid-Sussex)
Bowden, A. (Brighton, Kemptown)Hunt, David (Wirral)Rhodes, James R.
Boyson, Dr Rhodes (Brent)Hunt, John (Ravensbourne)Ridley, Hon Nicholas
Bradford, Rev RobertHutchison. Michael ClarkRidsdale, Julian
Brittan, LeonJames, DavidRoberts, Michael (Cardiff NW)
Brooke, PeterJenkin, Rt Hon P. (Wanst'd&W'df'd)Roberts, Wyn (Conway)
Bryan, Sir PaulJessel, TobyRossi, Hugh (Hornsey)
Buchanan-Smith, AlickKaberry, Sir DonaldRost, Peter (SE Derbyshire)
Buck, AntonyKitson, Sir TimothyRoyle, Sir Anthony
Budgen, NickKnox, DavidShaw, Giles (Pudsey)
Carson, JohnLamont, NormanShepherd, Colin
Channon, PaulLe Marchant, SpencerSilvester, Fred
Clarke, Kenneth (Rushcliffe)Lewis, Kenneth (Rutland)Skeet, T. H. H.
Cooke, Robert (Bristol W)Luce, RichardSpeed, Keith
Cope, JohnMacfarlane, NeilSpence, John
Dean, Paul (N Somerset)Macmillan, Rt Hon M. (Farnham)Sproat, Iain
Dodsworth, GeoffreyMcNair-Wilson, M. (Newbury)Stainton, Keith
Drayson BurnabvMather, CarolStanbrook, Ivor
Dunlop, JohnMawby, RaySteen, Anthony (Wavertree)
Dykes, HughMaxwell-Hyslop, RobinStradling Thomas, J.
Eden, Rt Hon Sir JohnMeyer, Sir AnthonyTebbitt, Norman
Edwards, Nicholas (Pemoroke)Moore, John (Croydon C)Temple Morris, Peter
Elliott, Sir WilliamMore, Jasper (Ludlow)Thatcher, Rt Hon Margaret
Fairgrieve, RussellMorris, Michael (Northampton S)Townsend, Cyril D.
Finsberg, GeoffreyMorrison, Charles (Devizes)Viggers, Peter
Fletcher, Alex (Edinburgh N)Morrison, Hon Peter (Chester)Warren, Kenneth
Forman, NigelMudd, DavidWeatherill, Bernard
Fowler, Norman (Sutton C'f'd)Nelson, AnthonyWells, John
Fox, MarcusNeubert, MichaelYoung, Sir G. (Ealing, Acton)
Fry, PeterNewton, Tony
Gilmour, Sir John (East Fife)Page, John (Harrow West)TELLERS FOR THE NOES:
Godber, Rt Hon JosephPage, Rt Hon R. Graham (Crosby)Mr. Anthony Berry and
Gow. Ian (Eastbourne)Page, Richard (Workington)Lord James Douglas-Hamilton.
Gower, Sir Raymond (Barry)Percival, Ian

Question accordingly agreed to.

Clause 42 ordered to stand part of the Bill.

It being after Eleven o'clock, THE CHAIRMAN left the Chair to report Progress and ask leave to sit again, pursuant to Order [16th November].

Committee report Progress; to sit again tomorrow.