Rate Support and Other Grants

Orders of the Day — Wales Bill – in the House of Commons at 12:00 am on 5th April 1978.

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Photo of Mr Alec Jones Mr Alec Jones , Rhondda 12:00 am, 5th April 1978

I beg to move Amendment No. 89, in page 23, line 34, leave out from 'year' to 'fall' in line 35 and insert 'which after the coming into force of this section.'. I have a sneaking suspicion that although this amendment is somewhat technical, discussion of it might roam a little more widely.

The clause as it stands provides that the transfer to the Assembly of the function of paying the rate support grant is to operate only in relation to a complete new financial year. If the Assembly came into being at the beginning of the financial year, there would be no doubts about the powers that it might have, but if the Assembly came into being in the middle or part way through a financial year, doubts have been expressed whether it would have power to pay under RSG orders.

The amendment will remove that doubt so that the Assembly will be able to make payments under such orders without any shadow of doubt, at whatever time of the year it comes into being. The amendment parallels a Government amendment which was introduced to the Scotland Bill on Report and subsequently accepted.

Photo of Mr Nicholas Edwards Mr Nicholas Edwards , Pembroke

Let me at once reassure the Minister that I do not intend to widen the debate. This seems to be a particular and narrow point. However, I have one question to ask the Minister.

I understand that if the Assembly comes into being half way through the year, it will be able to pay out of rate support grant. I wish to discover on what basis it will receive moneys to do so. The negotiating timetable in respect of RSG is prolonged and involved, it goes on for more than a year, in practice, and presumably the Assembly will not have been involved in the process and it will be complete or half way through. Is the process to be that moneys negotiated by central Government are handed over at that point, lock, stock and barrel, to the Assembly, which then carries out the function of passing them on?

Photo of Mr Alec Jones Mr Alec Jones , Rhondda

That is true. If the Assembly takes over half way through, the money allocated in RSG orders prior to the takeover will be immediately handed over.

Amendment agreed to.

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

6.45 p.m.

Photo of Mr Nicholas Edwards Mr Nicholas Edwards , Pembroke

We now come to a clause that is of critical importance to local authorities, which are so greatly threatened by the provision of the Bill. Owing to the operation of the guillotine, we were unable to debate the undermining of their position and the confusion that would be caused by the transfer of functions under Schedule 2; nor were we able to consider the interference with their operations that is bound to arise from the committee structure proposed in the Bill. We are, however, now able to consider in more detail part of the Bill that fundamentally undermines and weakens their position. As part of a scheme that is supposed to bring government closer to the people, we are seeing an attack on the position of the democratic bodies which are closest to the people.

We tabled an amendment which has not been called but which had the object of putting back the Welsh local authorities in a direct relationship with Government in their negotiation of the rate support grant. That amendment would have enabled them to negotiate their own rate support grant, instead of having it negotiated for them.

We have been told that the Bill will bring no reduction in local authority powers, but it is hard to imagine a more crucial reduction of powers than for them to be removed from the negotiation of their own finances. Yet that is what is effectively to happen if the clause is allowed to stand and if the complex and obscure arrangements set out in it are to remain unaltered.

I refer to the arrangements as "complex and obscure" and I freely confess that, after a good deal of study, thought and consultation, I do not understand how they are to work. Most of the people in this Committee would confess to a certain bewilderment over rate support grant generally. Few would claim to be authorities or experts in this respect. But on the particular confusion that arises, I am comforted by the knowledge that local government officials who have spent much of their working lives dealing with these matters are as baffled as I am. People to whom the rate support grant is as simple as ABC find this Bill and this clause confusing.

The fundamental difficulty is that we have two parallel processes, and it is hard to see exactly how the system interlocks. The first process is that every four years or so Government and Assembly are to negotiate a block grant. I keep on saying "every four years" because this is what the White Paper said would happen. It is not in the Bill, and no Minister has yet confirmed or denied it, so I assume that the period will be every four years.

In that negotiation the local authorities will not be involved. If the White Paper is to be taken as a guide Assembly and Government are to thrash out the relationship between devolved public expenditure in Scotland and Wales with comparable expenditure elsewhere in the country on the basis of relative need, and they will have it expressed as a percentage of comparable expenditure in the country as a whole. Payments are then to be made to the Assembly by order under Clause 46. Yet about half of the block grant—£500 million—will consist of RSG. the level of which for the United Kingdom as a whole will be negotiated separately on an annual basis by the local authority associations and central Government.

How will these two independent negotiations dovetail? Presumably, when negotiations begin on the block grant the Assembly will be informed of the total of the RSG settlement in that particular year for the United Kingdom as a whole and will then, without the direct involvement of the Welsh local authorities, seek to secure a fair share of it for Wales. But what will happen if, during subsequent RSG negotiations in the years after the block grant has operated in its four-year course, the level of support is raised or varied by substantial amounts? Is there then to be an immediate adjustment of the block grant, or is Wales to have to wait until the fourth year for the block grant to be altered?

There appear to be two possibilities. There has either to be some kind of automatic adjustment of the block grant, in which case we have the remarkable situation that the grant, to the extent of half its total, is negotiated by the local authorities during the RSG negotiations and not by the Assembly at all; or there is no such automatic adjustment, in which case the money received by Wales for RSG may bear no relationship at all to the local authorities' needs or to the sums received by comparable authorities in England.

The present role of local authorities in the negotiation of their own funds will be fundamentally altered. I understand that the Welsh share of the rate support grant will be decided without any direct local government involvement. No role is envisaged for local authorities in Section 46 negotiations which decide the total share that comes to Wales—whether it is to be £476 million, as it was in 1975–76, £500 million, or any other sum. Considering that the interest of local authorities amounts to about half of the block grant total, that seems to be an extraordinary position.

Presumably, Welsh local authorities, through their membership of local authority associations, will play a part, as at present, in the year-long process of discussion which leads up to the rate support grant settlement, though whether they will be able to have the separate discussions that go on with Secretaries of State during that process, and with the Secretary of State for Wales in particular, is not clear.

What is to be the position of the Assembly during this process? In due course, it will have to allocate the Welsh share among the Welsh counties and it is hard to see how it can do that properly if it has played no part in, and has been excluded from, the United Kingdom rate support grant negotiating process. On the other hand, if it is to be included, what is to be its relationship with the local authority associations? It seems that the presence of the Assembly alongside the local authorities in the negotiations would be an immense complication.

We come to the critical point in the whole affair. When the rate support grant negotiations have been completed and the size of the block grant has been fixed, the Assembly will have to allocate the funds between Welsh local authorities. It is an indication of the obscurity of the Bill and the way that the Government have explained it, not just publicly but in their private discussions with local authorities, that the authorities, particularly the Association of County Councils, are uncertain whether they have the right to be consulted by the Assembly about this stage of the process.

I have two papers from the Association of County Councils, one dated 23rd March and the other 29th March, and they draw precisely opposite conclusions on this point. In the covering letter, the secretary of the association says: I should, however, point out that the notes are prepared —well, at least one set of notes— on the assumption that the Assembly is not required to consult local authorities. This position is, however, far from clear and the effect of clause 60 could be to import the procedures laid down in the Local Government Act, 1974, except that with regard to devolved functions, the Assembly takes the place of the Secretary of State: if this is correct then the Assembly will be obliged to consult the local authorities through their Associations. I do not think that the uncertainty is the fault of the associations. However, as I read the clause the provisions of the Local Government Act 1974 stand except that in Wales the Assembly takes the place of the Secretary of State. That being so, presumably the Welsh local authorities must be consulted, but we want the Minister to confirm that. I know that the Minister is always helpful in replying to our debates—unlike some of his colleagues—so I am confident that we shall get an answer on this point, which is of so much concern to local authorities.

There is one further complication. In addition to the duplication that arises through the existence of the block grant and the rate support grant, another parallel consultation must take place. It is one from which the Assembly is apparently excluded. It takes place directly between the Secretary of State and the local authorities and concerns the reserved functions dealt with in Schedule 5. The most important of those functions is the police. That provides by tar the largest sum of money.

This matter was debated during the proceedings of the Scotland Bill and, if I understand the explanations given there, the negotiations on the reserved functions are wholly separate. It is a matter solely for the Secretary of State, but once the sum has been negotiated, it is then put into the total that is handed over to the Assembly and the Assembly is responsible for passing it on to the appropriate bodies. That seems to be an added complication. It is not surprising that the Association of County Councils should comment, in its letter: However, even if an express requirement to consult were incorporated in the Bill, it would not affect our fundamental concern, namely, that the whole procedure will be both cumbersome and protracted and there will be two sets of consultations taking place simultaneously, namely, the one with regard to devolved functions with the Assembly, and the other with regard to the reserved functions with the Secretary of State. Our concern is that the whole machinery is much too involved and that local government will be so far removed from the ultimate source of finance that its voice will not be effectively heard. I believe that the association is being unduly charitable, because there will be three parallel sets of consultations, adding confusion to existing confusion and delaying what is already a lengthy process.

It is not surprising that in one of the papers the Association of County Councils should refer to the dangerous weakening of the present direct involvement of local government in Wales in decision making on the amount and distribution of Government funds. It says: It is true that the Wales Bill provides for these decisions to be made by a democratically elected body, namely the Welsh Assembly, but it is equally true to say that the proposals take away from local authorities, who are also democratically elected, the rights of consultation which they now enjoy and who it might be argued, are closer to the electorate than are the Welsh Assembly members.Yet another doubt is about the time-scale of the negotiations—if any—on the Rate Support Grant in Wales.Consultations and negotiations on the amount and distribution of grant to local authorities are at present protracted and complicated and it is to be hoped that the creation of the Welsh Assembly will not result in any further delay in the notification to local authorities of their entitlement. The Welsh local authorities have every reason to be anxious. The Government have made clear that the Assembly is free to distribute the rate support grant to the Welsh councils as it is received—or not distribute it, as it pleases. It can if it wishes, leave the Welsh counties significantly worse off than their English counterparts. It may do this because it attaches higher priority to some other public expenditure programmes or because it wishes deliberately to impose an indirect tax on the Welsh people.

As I pointed out in a debate yesterday, the Assembly can effectively tax without incurring the odium for doing so. It simply has to pay out less rate support grant to local authorities, forcing them to increase rates. It has, by that simple method, increased the resources available for non local government expenditure. There is no doubt that that is the position.

7.0 p.m.

The matter is clearly set out in paragraph 228 of the White Paper and was confirmed by the Secretary of State for Scotland during the Scotland Bill, in terms which were contemptuous of the Opposition spokesmen, who had expressed some doubt about the proceedings and was charitable enough to think that he might possibly have got it wrong. He was told that of course he had not got it wrong and that it should have been obvious to anyone that that was the position.

Photo of Mr Tam Dalyell Mr Tam Dalyell , West Lothian

Since then the hon. Member will not be surprised to hear that some of the most senior and experienced local government heavyweights of Scotland have expressed extreme dissatisfaction since they have tumbled to what is on.

Photo of Mr Nicholas Edwards Mr Nicholas Edwards , Pembroke

I am sure that that is so. I am not sure that the Welsh local authorities are fully aware of the position. They are aware of the confusion and full of uncertainties about how it is going, but it has not come home to them that this power of indirect taxation is to lie with the Assembly. District authorities at present will fully understand the dangers, because they have the job of passing on to their electors the precepts from the counties. We know the feelings that this arouses. We know the blame that is attached to counties for levels of taxation and rate burdens which they do not themselves control.

This will be precisely the position. The Assembly, perhaps for very good reasons, will decide that there is an urgent need in a particular year to spend more money and that it can extract money from central Government in Westminster for social or industrial purposes. It might wish to spend more on hospitals in that year. The burden for doing so will then fall not on the taxpayers as a whole and not on the Assembly. It will not accept the responsibility in financial terms. It will fall on the unfortunate local authorities, who will have no say in the matter.

It is clear that the proposals of the Government would make Welsh local authorities wholly subservient to the Assembly. The clause that we are debating also, on its own, demolishes the "no extra tier" argument that we have heard so often from the Secretary of State. This point was mentioned yesterday by the hon. Member for Bedwellty (Mr. Kinnock), who raised the "no extra tier" argument. This is the point at which it it finally demolished, when that absurdity is put to rest.

What could be a more solid tier than one that provides and distributes the money? The money goes from central Government to the Assembly and then, in whole or in part, at its discretion and at its whims, it is handed over to local government. We cannot be told that this is not an extra process but a mere duplication of an existing Government function. It is a separate and additional function. It is clear that we have got an additional tier of government. It is a wholly additional stage in the process at its most fundamental point, the financial one.

It shows how fatuous are the repeated mouthings, in particular, of the Secretary of State for Wales on this point. He seems to have the impression that if he repeats an untruth sufficiently often it will be transformed into reality, but reality is now clearly before us. Through this clause we are seeing a weakening of local government. We are seeing a weakening of those parts of the democratic process that are closest to the people.

Far from bringing government closer to the people, we are seeing it being taken further away. We can see no reason why this should be so. We can see no reason for the introduction of this complex and cumbersome process. We can see no reason for the introduction of an extra tier between the local authorities and the central Government—an extra tier which, incidentally, because of its committee structure, inevitably will want to interfere and play an active part in the activities of the local authorities.

We can see no reason why the Assembly should dictate to local authorities the scale and distribution of their finances. We think that local authorities should be able to negotiate with the central Government direct. That is what the local authorities themselves think, and that is what they want. We think that the clause is an abomination. I therefore ask the Committee to reject it.

Photo of Mr Ioan Evans Mr Ioan Evans , Aberdare

In the clause we are dealing with the rate support grant as it affects local government. It is interesting to recall the statement that I made during the Scotland and Wales Bill that I believed that local government would be affected. There was then a strong argument that local government would not be affected. The White Paper said that local government would not be affected.

We have already passed Clause 13—unlucky for some. That is the clause which states that the Assembly is to deal with the review of local government structure. Everyone here knows that if the Assembly is to be established we cannot continue a system of local government in Wales where we will still have eight counties and 37 district authorities. Therefore, it is now self-evident, as the argument develops, that local government will be seriously affected if the Welsh Assembly comes into being.

The hon. Member for Pembroke (Mr. Edwards) referred to correspondence that he had received from the counties of England and Wales. I have a letter from the honorary secretary of the Welsh Counties Committee. Writing on behalf of the eight counties in Wales, he says: I have already expressed to you the concern felt by the Welsh Counties Committee regarding the provisions of the Wales Bill in connection with the Rate Support Grant, but perhaps the following may be of some assistance to you when the matter is under consideration in the House.It is not clear whether the Assembly, if established, will be required to consult local authorities. It could be that the effect of Clause 60 would be to import the procedure laid down in the Local Government Act 1974 except that with regard to devolved countries, the Assembly takes the place of the Secretary of State; if this is correct, then the Assembly will be obliged to consult the local authorities through their Associations.However, even if an expressed requirement to consult were incorporated in the Bill it would not affect our fundamental concern, namely that the procedure will be both cumbersome and protracted and there will be two sets of consultations taking place simultaneously, namely, the one with regard to devolved functions with the Assembly, and the other with regard to the reserved functions with the Secretary of State. Our concern is that the whole machinery is much too involved and that local government will be so far removed from the ultimate source of finance that its voice will not be effectively heard. We are presumably trying to make government more effective, but the organisation representing the eight counties in Wales is concerned at the apparent centralisation of powers away from the counties and into Cardiff. This is a fundamental weakness of the Bill.

I said before, but I think that it needs to be repeated, that the way in which we have gone about devolving powers—I believe in devolving powers—is by maintaining the existing local government structure in Wales and between the House of Commons and the existing local government structure, which some Labour Members have criticised because it is too bureaucratic. We have maintained it without change and we have created this new Assembly which will be dealing with the rate support grant.

The hon. Member for Pembroke has referred to some of the items mentioned in the document that he received from the counties of England and Wales. From the Welsh counties there are three or four points that I would like to make which have not been covered. The document says: There is considerable concern in local government in Wales over the danger inherent in the Wales Bill that local government will have far less influence than it now has in decisions about (a) the total amount of Government grant to local authorities in Wales and (b) the manner in which the grant is allocated to individual councils.Whereas the Bill appears to give local government the same rights as at present in discussing the total amount of Government grant to England and Wales, local authorities appear not to have any right to participate in the division of that amount between England and Wales. That is a fundamental change. It continues: Similarly, in regard to the distribution of grants to individual councils, the Bill appears to give the Assembly total discretion with no obligation whatever to consult local authorities directly—merely to take advice from the Secretary of State who, in turn, may or may not consult with local authority associations. Another disturbing feature is that the Welsh Assembly, having been allocated money by Parliament appears to have the freedom to allocate it between local government and other services such as health or even to retain it for its own purposes without the obligation to consult local authorities beforehand. This is a significant and, in the view of the local authorities, dangerous weakening of the present direct involvement by local government in Wales in decision making on the amount and distribution of Government funds. That is fundamental to the Bill. We are talking here about devolving power to the people, but 37 district authorities and eight county councils are now in danger of suffering from the centralisation of local government power within Wales. That is a fundamental weakness of the Bill.

Photo of Mr Emlyn Hooson Mr Emlyn Hooson , Montgomery

Can the hon. Gentleman point to any part of the Bill that removes the legal requirement that representatives of local government should be consulted about these matters? That is the law under the Local Government Act and nothing in this Bill changes that.

Photo of Mr Ioan Evans Mr Ioan Evans , Aberdare

I have read out the views of the eight counties in Wales. The honorary secretary representing the hon. and learned Gentleman's county—Powys—and my county—Mid-Glamorgan—has sent out this statement. At present, all the local authorities are involved, through the English and Welsh associations, in consultations with the Government. To change the method of financial allocation in the way proposed means that in future there will be a block grant to the Assembly and that the local authorities will not be able to involve themselves in the discussions.

Photo of Sir Raymond Gower Sir Raymond Gower , Barry

There appears to be some doubt whether there is any obligation to consult. The Under-Secretary could put us out of our misery immediately by telling us. We need debate this subject no further if the Minister says that there is an obligation to consult.

Photo of Mr Alec Jones Mr Alec Jones , Rhondda

I am astonished at the ignorance which persists on this matter. Let me repeat yet again that the Welsh Assembly will inherit the responsibilities of the Secretary of State to consult the local authorities in Wales in deciding the rate support grant.

Photo of Mr Ioan Evans Mr Ioan Evans , Aberdare

So the Assembly will take over the responsibilities now being exercised in this House by the Secretary of State.

Photo of Mr Alec Jones Mr Alec Jones , Rhondda

They will have to consult.

Photo of Mr Ioan Evans Mr Ioan Evans , Aberdare

Yes, but the point is that the Assembly will be making the decisions. Now there is a direct contact between the local authorities and this House through the Government. That connection will be broken, because in future the authorities will have to deal entirely with the Assembly.

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

Does the hon. Member accept that in no sense is there now a separate Welsh support grant negotiation because there is a total allocation on an England and Wales basis. There is negotiation between the Treasury and the Welsh Office, but as far as I am aware the Welsh counties do not negotiate separately for their share. That is negotiated at Welsh Office level.

7.15 p.m.

Photo of Mr Ioan Evans Mr Ioan Evans , Aberdare

The Welsh local authorities, with their counterparts in England, are involved through their associations in making representations to the Government. It is done on an England and Wales basis. Under the Bill that will cease to happen. In future, if rate support grant powers are given to the Assembly, the only discussion will be between the local authorities and the Assembly. The local authorities in Wales will not join the English local authorities to determine the allocation.

Photo of Mr Neil Kinnock Mr Neil Kinnock , Bedwellty

The impression that I gained from what my hon. Friend the Under-Secretary said is that there will be one other series of conversations and that will be either between the Welsh Office and the Treasury, as now, or between the Welsh Assembly and the Treasury, in which case either the Welsh Office will become redundant or the Assembly irrelevant. The most important discussion will clearly be with the people at the head of the well who are holding the purse strings very firmly—too firmly in some respects—and that is the Treasury.

Photo of Mr Ioan Evans Mr Ioan Evans , Aberdare

We have had this semantic argument about whether there will be another tier of government. There will be another tier of government between the district and county councils and this House. That tier will be the element in government that will determine the allocation of the rate support grant.

The next factor is that we do not know the amount that will be allocated. It might be a little less than hitherto because the administration of the Assembly could well take a part of the grant. Let us presume, however, that it is exactly the same and that there will be an additional allowance for the administration of the Assembly. We must presume that nothing in the Bill will give additional public resources to Wales. The rate support grant in future will not be any greater. Whereas at present the counties and districts have been discussing how that allocation should be made with their English counterparts, the determination of the priorities of public expenditure will in future rest with the Assembly. That fear has been expressed in the document that we have had from the counties. I can see all sorts of problems arising. Instead of our getting an extra allocation, for example, for hospitals in Wales, we may find that far less satisfactory arrangements will apply.

Mr. Tom Ellis:

If I understood my hon. Friend's argument in terms of the amount of money involved—not so much the actual distribution of the block grant—he said that local government would now be further away from the source of the money and it would therefore be likely to get less. He presumably meant that its influence would be less.

I wonder how my hon. Friend reconciles that argument with the arguments that we heard earlier this afternoon from the right hon. Member for Cambridge-shire (Mr. Pym), who set before us the dangers of establishing a quasi-Parliament that would be so powerful as to change this Parliament. It is difficult to argue, on the one hand, that it will be tremendously powerful and, on the other, that it will be less powerful because it will be negotiating with the Treasury and the local authorities.

Photo of Mr Ioan Evans Mr Ioan Evans , Aberdare

My hon. Friend is a very good debater. He puts forward a point that he claims I made and he then presumes to answer it. I never said anything of the kind. In these days of communications, when one can travel around the world so quickly, the question whether the money was deposited in the bank in London or Cardiff would be of no consequence. The point is that this is a significant and, in the view of the local authorities, dangerous weakening of the present involvement by local government in Wales in decision making on the amount and distribution of Government funds. The authorities say that the present arrangements involve them in the general discussions, but that the Bill means that the Assembly will assume that role. The authorities will be reduced to having discussions only with the Assembly itself. They will not be involved in discussions with us. I believe that that is a weakening of democracy and not a strengthening.

Photo of Mr Emlyn Hooson Mr Emlyn Hooson , Montgomery

The hon. Gentleman must not continue to make these misstatements. We in the House of Commons do not have any discussions with local authorities. Only the Welsh Office and the Department of the Environment have discussions with loca lauthorities.

Photo of Mr Ioan Evans Mr Ioan Evans , Aberdare

Is the hon. and learned Gentleman saying that the Welsh Office is an autonomous body? The Welsh Office is answerable to us. We have Welsh Questions and a Welsh Grand Committee. The Welsh Office has its premises down the road. There are Welsh Office civil servants in this place. Welsh Office Ministers are on the Government Front Bench. They are answerable to us. The allocation of the rate support grant is not decided purely by the Welsh Office. In that respect local authorities in England and Wales have been more together than local authorities in Scotland, which have been dealt with separately. Local authorities in England and Wales have cone together in joint associations. They negotiate with Government, and the various Departments, including the Treasury, determine the allocation of the rate support grant. What applies to Wales it similar to that which applies to England.

We are now creating a situation that is more in line with the autonomy that the Scottish Office has had at Scottish local government level. We shall have a situation in which the Welsh rate support grant is a separate issue. The Scottish rate support grant has been a matter in which Ministers are answerable to the House of Commons, but presumably under the Scotland Bill it will go to Edinburgh. Under the Bill before the Committee, the Welsh rate support grant will go to Wales.

Fears have been expressed by those in local government in Wales about that development. There are those who say "vested interest". Who is there who talks about devolution without a vested interest? All of us have vested interests After all, Members in this place will be affected. It is a cheap gibe to tell the counties that they are concerned about these matters only because they are afraid that the counties will be removed at a later stage. Their participation in the argument is valid.

We have reorganised local government. As the Committee knows, it is my opinion that we should have reorganised it differently. However, the people of Wales have gone through the traumatic experience of local government reorganisation. Although the structure could be improved, we must give the matter careful consideration and ensure that the next time we make a change it is one that will make local government really effective.

The effect of the Bill is to create uncertainty. For example, we do not know who will constitute the Assembly, but will the Assembly have powers to reorganise local government or to make recommendations to reorganise? The uncertainty will begin if the decision is taken by the referendum to create a Welsh Assembly.

What is to become of those who are employed in the county councils? If we had created a top-tier local government structure, the existing Civil Service need not have been affected. If that had been done, we need not have employed a new group of civil servants to cater for the Welsh Assembly. The problem that we shall run into in future when talking about the allocation of the rate support grant is the creation of a new Civil Service, or an extension of the British Civil Service, to cater for the Assembly.

It will be given the function of removing a tier of local government. If it decides to remove the county councils, it may decide that the district councils are too small and the county councils are too large and that both should be scrapped. It may decide that we should have something in between. What is to become of those who are now involved in the administration of county councils and district councils? These are the uncertainties of which we should be aware as matters proceed.

Photo of Mr Tam Dalyell Mr Tam Dalyell , West Lothian

My hon. Friend has referred to the extension of the home Civil Service. In fact, it is responsible to a very different body. That brings us back to a question that has not been answered. For example, are the same civil servants to serve a Labour Chief Executive in Cardiff and a Conservative Secretary of State?

Photo of Mr Ioan Evans Mr Ioan Evans , Aberdare

That is another aspect of the problem with which we are faced. I believe that I am right in saying that the Government's intention was not to create a separate Civil Service. It was the intention that by means of promotion, for example, civil servants would be able to move from serving the Assembly into other sections? However, that is one of the problems that we have to consider.

I revert to the rate support grant and the fears that have been expressed. It is important in discussing this issue not to think that what the people of Wales are getting is something that will bring them tremendous benefit. A great deal of harm will be done to the Assembly, if it is created, if people's expectations are raised. If that happens, I am sure that their expectations will not be fulfilled. There will not be an increasing number of hospitals, schools, roads or houses merely as a result of altering the machinery of government.

In this debate we are involved with the machinery of government in the allocation of the rate support grant. We are not saying that the grant will be increased. Indeed, we do not know what will happen. There is the danger that it will be diminished if the present allocation of public expenditure to Wales is to be absorbed in the Assembly. That is what we should have in mind.

I hope that my hon. Friend the Under-Secretary will reply to the real fears that have been expressed by the county councils and the district councils, including my own local authority, the Cynon Valley Borough Council. The borough council, the Mid Glamorgan County Council and all the counties in Wales have expressed their fears about the effect of the Bill as regards financial allocation. I hope that my hon. Friend will be able to allay at least some of those fears.

Photo of Mr Peter Temple-Morris Mr Peter Temple-Morris , Leominster

I make a brief intervention to follow the hon. Member for Aberdare (Mr. Evans). I agree with very much of what he said. My intervention is a cry from the border. It is a cry from the English constituencies that neighbour Wales.

Some years ago I left Wales, politically speaking, and by a somewhat circuitous route I found myself representing an English constituency in a border area. I now represent, as does my hon. Friend the Member for Hereford (Mr. Shepherd) an English border constituency. I look at the land that I left and I see that it has many advantages already, irrespective of who wins the argument that is now concerning the Committee. It has many advantages, whether control is to rest with the Secretary of State or is to go to the Assembly.

The plain fact is that, collectively speaking, hon. Members from both sides of the Chamber who represent Welsh constituencies are doing extremely well. A short while ago I heard the voice of the hon. and learned Member for Montgomery (Mr. Hooson). The hon. and learned Gentleman was speaking, amiably as usual, from a sedentary position. I hope that he will agree that he represents a good example of what I am trying to say about the present situation.

I made my maiden speech in the House in 1974 during a rate support grant debate. At the time it was an issue that welled up, comparatively speaking, to the most enormous political proportions. The argument comes down to the difference—I shall come to Montgomery as a specific example—in the domestic relief element of the rate support grant. I do not have the latest figures, but the purport of what I am saying is that the situation could become worse under the provisions of this measure. There was an enormous difference between Wales and the border areas a regards benefits or detrimental effects.

7.30 p.m.

In other words, one of the results was a disparity in domestic relief in those days of about 33p as compared with 16p, and I think that there is still such a disparity. It is a considerable difference when one has exactly the same problems on either side of the Welsh border.

One of the reasons for this was the Welsh National Water Development Authority. It supplies very nice water—but also very expensive water that has to be consumed by us on our side of the border as much as by those on the Welsh side. They, incidentally, will be controlling politically the affairs of that authority to no mean extent under these measures, and increasingly so. We on our side prefer to rest, as far as we can, with Whitehall, be it the Welsh Office or the Minister of Agriculture.

Photo of Mr Alec Jones Mr Alec Jones , Rhondda

Will the hon. Member give way?

Photo of Mr Peter Temple-Morris Mr Peter Temple-Morris , Leominster

No, I just want to finish, because I sense that the hon. and learned Member for Montgomery is wondering what I shall say about his constituency. I want to finish the point to which I have been building a long time because it represents a good example of what I am saying.

As one gazed across the border and up towards the halcyon areas of Montgomeryshire, one saw there the benefits of this domestic relief, to the extent that I have described, and because of hydrological boundaries, and so on, the fact that one of the reasons for that relief was the cost of Welsh water was not shared by the citizens of Montgomeryshire, who, very sensibly, got themselves into the Severn-Trent Water Authority and had the best of both parts of the question.

Photo of Mr Emlyn Hooson Mr Emlyn Hooson , Montgomery

Of course, as the hon. Member appreciates, Montgomeryshire produces most of the water for the Severn-Trent Water Authority.

Photo of Mr Peter Temple-Morris Mr Peter Temple-Morris , Leominster

I quite appreciate that, too, but at the same time, the ordinary people of Montgomeryshire, his constituents, as with my constituents, do much the same work mainly in an agricultural area, and have much the same wages. There are low wage areas on both sides of the border. It so happens that the hon. Member's constituents are a lot luckier than mine.

The sort of thing that we are discussing here can continue. Here I want to wheel into the main theme of the argument the fact that the sort of things that we have here give the opportunity for greater disparities from the one to the other. I speak very much in support of what my hon. Friend the Member for Pembroke (Mr. Edwards) has said about this, together with other hon. Members. Essentially, we are dealing here with something that is best centrally negotiated and where exactly the same rules of the game apply on whatever side of the border one happens to be. We are dealing with English counties, which are at present negotiated and with Welsh counties, which are at present negotiated very much on the same principles and with the same expertise.

An additional point is that by taking this matter away from the Welsh Office and putting it with the Assembly, we are dealing, as has been mentioned, with an extremely complex matter. It is something that even those possibly most intimately associated with it do not fully understand. I and, I am sure, other hon. Members, have been on various deputations concerning this matter to the Department of the Environment. When one goes there one wonders who on earth understands what he is talking about. I do not want to be disparaging in any way, but usually some rather junior and comparatively insignificant civil servant is wheeled into the room, and perhaps he is the only man who understands the particular matter of the whole discussion. He rescues his Minister—we shall keep this anonymous—and the members of the deputation and everyone else. Then he departs in the sure knowledge that he can do the same thing again next year because no one has in the least understood what he has done this year.

However, bringing that through to the Welsh Assembly, this complex thing will be carried out by the Assembly and its civil service. I shall not go into the due loyalties of the civil servants, and that sort of thing, but great expertise will be needed, and the Assembly will very rapidly have to acquire it, almost in midstream, in the middle of one year.

One wonders whether the Assembly will be able to do that. In addition to that, even if it can do that—even if the Assembly took over the apocryphal young gentleman to whom I have just been referring even if it borrows him for a little while—one wonders whether it will be able to do that in quite the same manner as that with which we and the Government here seem somehow to get away with the matter.

Parliamentary time is a rarified thing. Indeed, concerning the rate support grant debates, it is perhaps a little rarer than it is with some other things. Hon. Members will recollect that it is often very difficult to get around one's hospitals at Christmas time and to attend a debate which almost traditionally occurs, if not on Christmas Eve, about two days before then.

That is the situation. It is a fait accompli. It is done by negotiation and close co-operation between local authorities and Government Departments concerned. Then it comes to us here. We have a debate somewhat late in the day. After that debate, what has been decided previously carries on its governmental march to the inevitability of law.

If we translate that, as it happens here, to what could happen in the Assembly, which, while it may have many things about which to talk, will not perhaps have the same pressures that we have and will be able to make its own rules, what happens if we then get a tearing political pressure? If the local authorities are, as they fear, to subside in this matter, it will increasingly become—furthering the argument that was made by the hon. Member for Aberdare—the responsibility of the individual Assemblymen, and there will be that much greater inclination for people to fight cats and dogs with each other for their share of whatever gold, or whatever it is, is available.

Photo of Mr Peter Temple-Morris Mr Peter Temple-Morris , Leominster

The hon. Member may have that in his constituency. I do not know. I certainly have not got it in mine. All that I know is that the low-flying aircraft that pass over my constituency seem to make a habit of crashing in his, and that is the nearest connection that I have with his constituency, apart from happy social connections.

However, returning to the serious point, as I see it, we could have extremely disorderly circumstances for the administration of the rate support grant. It is a threat. It is a logical carrying on of the arguments that have been expressed already.

One additional point concerns something that arises out of the clause and applies equally on both sides of the border. In any debate concerned with rate support grant, this should be mentioned, because as we are striking out into new pastures, we might at least have the imagination—with due deference to the Under-Secretary—perhaps to try something a little different. If we are all to be so separate and the rest, why cannot we change the concept of the rate support grant? As it stands, the clause talks about the grants for any financial year.

Of course, we are back to the same thing, which is very difficult—this is not strictly a devolution point, although it arises out of the clause—that many people, not least county treasurers, borough treasurers and so on, have been complaining about for years. They never know the sum of money that they will be getting until just before they get it. Here, with the Assembly, they may well have a political fight on their hands as to the distribution of that money. There is a serious danger that the county authorities will be cut through to the end of the line until they know where they stand.

It is certainly a difficult system. I am no lover of it. One of its worst features, to take my own county of Hereford-Worcester as an example, is that in the present rating year. 1977–78, rate support grant cut about £8 million, or an 8p rate into which that sum translates, off the county of Hereford-Worcester. That was done with about three months' notice. One can imagine the tortuous gyrations of any county treasurer, ours in particular, when he is having to make up the necessary cuts, and the councillors who, until the announcement is made, cannot get the necessary political battle lines drawn in order to decide where those cuts will fall most.

All these things can be translated into the Assembly and this discussion on the clause, All of them add up to one thing —that is most certainly greater chaos than there was previously.

This is a classic example of the extra tier being introduced. There are eight counties and 37 district authorities, all of which are fearful. Above them is Whitehall and between them there is this awkward Assembly struggling for some kind of influence along the way. If and when the Assembly overcomes these difficulties, one will still have the sinister connotation that was so well brought out by my hon. Friend the Member for Pembroke that there is a hidden power of direct taxation and a built-in possible political imbalance between the power of the Assembly and the power of the local authorities. This is a real fear. I appreciate it. It is not for me to speak for Welsh authorities, but I do appreciate their concern. If the Bill ever sees the statute book, I am sure that this is but another example of the difficulties and confusions that will be created by it.

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

We have had two interesting and contradictory speeches from successive hon. Members. The hon. Member for Leominster (Mr. Temple-Morris) expressed deep concern that the Welsh Assembly arrangements by which it will take over the functions of the Secretary of State for rate support grant will ensure an increase in the resources available to Welsh local authorities compared with his own border area. Earlier the hon. Member for Aberdare (Mr. Evans), raising bogeys as always, expressed deep concern that somehow the changes proposed in Clause 60 would result in lower rate support grant resources being made available to Welsh local authorities.

The hon. Member for Leominster read his brief from the Welsh counties that take the same view as he about this clause. However, the hon. Member did not explain sufficiently clearly the way in which the present system operates and the differences that will result from the clause.

I welcome the clause, regardless of the Bill in which it is contained, because it is a step forward in the way in which we allocate resources to Wales.

Photo of Mr Ioan Evans Mr Ioan Evans , Aberdare

I know that the hon. Member believes in a separate, independent Wales datganoli. We are talking not about that but about devolution. How does the hon. Member see the future of local government? Does he believe that the counties should go? Does he believe that the districts should go? Should they both go, or should they remain as they are?

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

The hon. Member made a Clause 13 speech on Clause 60. I shall restrict myself to dealing with the way in which the rate support grant system will be organised. The hon. Member did not explain the difference between the present system and the proposed system. The proposed system is a step forward, leaving aside the whole concept of the Assembly. For the first time we shall have a rate support grant negotiation for Wales. We have not had that in the past.

7.45 p.m.

The present system is that negotiations are conducted between the Association of County Councils and the Department of the Environment with Civil Service representation from the Welsh Office. There is also a separate meeting—I stand corrected if my chronology of events is wrong—between the Welsh Counties Committee and the Secretary of State for Wales, where the global allocation for Wales is discussed. The actual negotiation is handled between the Association of County Councils in London with the Department of the Environment as the major partner and the Welsh Office as the minor partner in the discussion.

The result of this is that we have a county-by-county allocation of the rate suport grant. That is the argument that the hon. Member for Leominster made. It is an allocation not to Wales but direct to the Welsh counties. Consequently, there are continuing complaints from the counties, as we experienced in the last rate support grant settlement.

My own county of Clwyd has written to me to say that this is terrible and that resources are being transferred from Clwyd to the inner cities and London. I have received a letter from Gwynedd, the other county in my constituency, which complains that resources are being transferred from Gwynedd to the inner cities. We have a county-by-county allocation, not an all-Wales allocation.

The result of the new system—it is a system that should have been introduced years ago, with the setting up of the Welsh Office—is that there will be an all-Wales allocation. There will be a discussion between the Assembly, taking over from the Secretary of State and the Treasury in London, about the total amount of the block grant to the Assembly and the element of that which will be rate support grant.

Photo of Mr Nicholas Edwards Mr Nicholas Edwards , Pembroke

Surely the only difference is that the counties will again write and complain that their resources are inadequate and that they are being transferred to the inner cities and London. The only difference will be that they will not be involved in the discussions, whereas previously, through their associations, they were involved in the discussion.

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

The strong impression that I get is that the county councils feel that they have been bypassed in the negotiations that take place on an England and Wales basis. The allocation takes place on an England and Wales basis, on a county-by-county basis and does not involve an allocation to Wales.

The new system will result in allocation to Wales and the counties will be involved in negotiating the way in which that allocation will be divided amongst themselves. That is the basic difference that is proposed in the clause.

Photo of Sir Raymond Gower Sir Raymond Gower , Barry

The hon. Member made a point about certain Welsh counties complaining that money had been diverted. But for about 30 or 40 years the movements have been the other way. The money has been diverted from London and the richer parts of the South-East to the regions, including Wales, the North-East of England and Scotland. In all that time there has been no complaint. The complaints have been made by the big cities in England. That has been the general policy. This is an exceptional event which has not occurred for a long time.

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

I was not complaining about the allocation of resources to the inner cities. As I said in the debate on the rate support grant order, when this reallocation took place, the issue of the allocation of resources to the inner cities was confused with the issue of how much of the resources should be allocated to Wales and the specific problems of the valleys and rural communities in Wales. With a separate rate support grant negotiation for Wales we shall be able to consider the merits of the relevant factors in terms of a transfer of resources to Wales. That is a separate issue from the question of the resources allocated to the inner cities. It will not involve a county allocation within England and Wales. It will be a national allocation of the cake to Wales which will be split up, within Wales, among the eight counties and 37 districts.

Photo of Mr Neil Kinnock Mr Neil Kinnock , Bedwellty

How does the hon. Member think that a difference in the arrangements will change the attitudes of any authority in Wales to its own position on relative priorities? Will that change make any difference to the amount of money coming in or to the way in which those who need that money for different purposes will strive to get it? Will it make any difference in effect, or will it be just a different talking shop?

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

As a Socialist, I happen to believe that the structure of government profoundly affects the quality of decisions made. I believe that the decentralisation of the rate support grant system will enable us to identify the needs of the Welsh counties more specifically and to argue those needs more cogently with the Treasury in London, and it will enable the Assembly to argue those needs more cogently.

At present, the rate support grant settlement is worked out—or at least the needs element is worked out—according to a complex regression analysis formula. The majority of factors in that formula—there is a consensus about this among social policy experts—are not really relevant to the bulk of the spending. We have extensive personal social service factors which do not relate to the bulk of education spending within the needs element of the rate support grant itself.

I should like the Under-Secretary of State to confirm that it will be open to the Welsh Assembly to decide the way in which resources are to be allocated within Wales, and I hope that he will clarify the sort of formula that might be adopted for the allocation of resources among the eight counties. I am not talking now about the allocation of the block grant from the Treasury in London to the Welsh Assembly. That was the subject of our earlier debate. I am talking now about the internal allocation within Wales and how that will be done.

Photo of Mr Tam Dalyell Mr Tam Dalyell , West Lothian

Why on earth should the hon. Gentleman think—to use his own words—that the Assembly could argue more cogently with the Treasury in London than could a man in the position of my right hon, and learned Friend the Secretary of State for Wales, who sits at the British Cabinet table every Tuesday and Thursday when it meets? As for cogent argument with the Treasury and cutting ice with the Treasury, surely a member of the Cabinet is much more likely to cut ice than is an Assembly that is somewhat distant from it.

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

I do not accept that argument for a moment, because I believe that there ought to be a democratic tier at the lower level, and such a democratic tier—

Photo of Mr Tam Dalyell Mr Tam Dalyell , West Lothian

That is an entirely different point.

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

No, it is directly related. A democratic tier, with political representatives from the 36 Welsh constituencies, will have more political muscle than one member of the British Cabinet in terms of the way in which, as part of its responsibility, it will, be directly negotiating its block grant with the Government in London.

Photo of Mr Nicholas Edwards Mr Nicholas Edwards , Pembroke

I am sorry to intervene again, but the hon. Gentleman keeps making the assumption that the Assembly will be negotiating the rate support grant. What ground has he for assuming that the Assembly will be involved in the year-long process of the rate support grant negotiations? Nothing has been stated by the Government. The hon. Gentleman may have some inside information. Can he enlighten the Committee?

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

I was making two points and trying to distinguish between them, but the hon. Member for West Lothian (Mr. Dalyell) was confusing the issue, as he has done in earlier debates. I was being drawn to comment on the transfer payments through the block grant from the Treasury in London to the Welsh Assembly, although I was in fact talking about the internal allocation of resources within Wales.

When I spoke of the Assembly's being involved in negotiations about the rate support grant, I was referring specifically to negotiations with the Welsh counties and the allocation within Wales. The negotiating over the external position will be undertaken by the Secretary of State as he negotiates the block grant for the Assembly itself, but obviously in those discussions the Welsh Assembly civil servants will be fully consulted and will be taking part in the total block grant allocation for the Assembly from the Treasury in London. Is that clear to the hon. Gentleman? If not, I am ready to give way again.

Photo of Mr Nicholas Edwards Mr Nicholas Edwards , Pembroke

The hon. Gentleman invites me to intervene, and I say at once that it is not clear. It is true that the Secretary of State will be involved in the negotiation over the block grant, but quite separately there will be a negotiation on the total of the rate support grant going on between the local authorities in England and Wales and the Government in Westminster. I posed the question earlier about the relationship between that negotiation and the quite separate negotiation of the block grant, over half of which will come from the rate support grant negotiation.

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

I cannot comment in detail on what the Government consider the position to be, and I do not propose to do so. I shall merely put what I consider to be the logical position. In my view, the negotiations under the new structure should take place between the Welsh counties and the Assembly in terms of the internal allocation, and then negotiations should take place between the Secretary of State, on behalf of the Assembly, and the Treasury on the rate support grant element in the total block grant to the Assembly. To my mind, that would seem to be the logical position.

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

But will the hon. Gentleman concede the point that has been made, that where the Secretary of State for Wales is negotiating in the Cabinet or with the Treasury for advantages for Wales, he must always be in a much stronger position than would any representative of the Welsh Assembly in negotiation with—as the hon. Gentleman would put it—the English Government or English Cabinet, because the advantage which the Secretary of State for Wales has in negotiating is that as Secretary of State he can trade his support or agreement on one issue with Treasury Ministers for agreement or support on another issue, whereas a representative of the Assembly has no bargaining position at any stage; all he can do is gratefully accept that which is given?

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

With respect, the hon. Gentleman has added to the confusion because he seems to envisage Members of the Welsh Assembly in negotiation with the Cabinet. Under the Bill, negotiations on behalf of the Welsh Assembly with the central Government in London will be conducted by the Secretary of State on behalf of the Assembly. Obviously, Assemblymen can lobby Members of Parliament, but the actual formal negotiation will take place through the agency or, rather, the statutory powers of the Secretary of State. That is how it will happen, and I assume that the Secretary of State will have his arm strengthened in the Cabinet if he knows that he is negotiating on behalf of an Assembly which has arrived at and expressed a certain figure. His position will therefore be that much stronger in that he will be negotiating on behalf of the Assembly for the level of block grant which it considers will be adequate to meet all its commitments, including its rate support grant commitment.

Photo of Mr Neil Kinnock Mr Neil Kinnock , Bedwellty

The hon. Gentleman has used the phrase "on behalf of" several times, and I assume that he does so deliberately. Does he therefore see the role of the Secretary of State for Wales as being a sort of super-delegate mandated by the Welsh Assembly in order to assert the bids or aims made clear by the Welsh Assembly by resolution? If he does, how does he think that the Secretary of State could possibly avoid having to resign if he did not accomplish what he was required to do by the Assembly, or, on the other hand, how could he fulfil the function of being the intermediary between an Assembly which he did not represent and a Cabinet which would not listen to him?

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

The hon. Gentleman is again taking us into a hypothetical scenario, and I shall follow him briefly along that line, although I do not wish to be drawn out of order. Let us consider the scenario for the rate support grant negotiations. The Welsh counties negotiate with the Assembly about their relative needs. The Assembly then draws up a budget for the four-year cycle of its block grant, including its rate support grant component. Presumably, this is then presented to and discussed with the Secretary of State, who arrives at a figure as being appropriate for the total block grant allocation to Wales, including the rate support grant element. That is then subject to negotiation in the Cabinet.

That is my understanding of how the mechanism of decision will work. In my view, that mechanism, under which the Secretary of State is supported in his submission by an elected Welsh Assembly which has analysed in detail the needs of each of the eight Welsh counties, will put those Welsh counties into a far stronger position than they are now, being alongside all the other English counties negotiating their rate support grant position. That is my considered view, and that is why I say that this is a step forward from the present system.

Photo of Mr Gwynfor Evans Mr Gwynfor Evans , Carmarthen

Some of the points being made now were made in the debate yesterday evening, and someone who does have inside knowledge answered them, namely, the Minister of State at the Treasury. He said that in this matter of negotiation the hand of the Secretary of State would be very much strengthened by the existence of an elected Assembly in Wales. I think that we ought to accept that from one who knows from the inside.

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

I am grateful to my hon. Friend for that intervention, but I should like to return to the basic question about which I was talking before I was sidetracked into talking about the relationship between the Treasury, the Assembly and the Secretary of State. I come back to my simple question to the Under-Secretary, the hon. Member for Rhondda (Mr. Jones), about the way in which the Assembly will be allowed by the clause to distribute resources within Wales. For those of us who represent constituencies in the North of Wales, the question of internal distribution within Wales is second only to the question of the distribution of resources to Wales.

8.0 p.m.

We have recently seen in the exercises of the area health authorities and the reseource allocation working party in the Welsh Office, representing also the health authorities, an attempt to allocate health care resources more equitably throughout Wales. I hope that that will serve as a model for the distribution of the rate support grant moneys, rather than the model of the regression analysis formula which now exists to distribute rate support grant money.

I want to see a way of allocating resources which is related to the needs of the various counties. The kind of consultative machinery for distributing resources which already exists on an all-Wales basis should provide the basis for the Assembly's undertaking the allocation of resources within Wales.

Although the hon. Members for Aberdare and Bedwellty (Mr. Kinnock) always try to suggest that we are imposing a new tier of government, the resource allocation working party, the area health authorities in Wales and the health division of the Welsh Office are an all-Wales bureaucratic tier of government which is today allocating health care resources to all area health authorities in Wales. It is on the basis of the results of that working party that decisions are made about hospitals, about the building of a hospital which serves my constituency and that of the hon. Member for Wrexham (Mr. Ellis). It is according to that resource allocation Working Party that these decisions are now being made on an all-Wales basis through a bureaucratic system.

A similar thing happens in housing. The Under-Secretary recently set up his advisory committee on housing.

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

I must finish this point.

The Under-Secretary set up his housing advisory committee, which has been looking at the way in which another block grant, the block grant for housing, is distributed within Wales from the Welsh Office to the housing authorities. Because of the problems of liaison between the Department and the underspending authorities within Wales, he has had to set up a consultative body. That body is discussing ways in which the housing investment programmes and so on will work to ensure that there is adequate monitoring of the funding to be disbursed from the Welsh Office to the district authorities in Wales. This, too, will become a responsibility of the Assembly.

I hope that a similar monitoring system will function between the Assembly and the county councils in the distribution of the rate support grant. What I am pressing for is a flexibility for the Assembly in determining how it allocates its rate support grant within Wales. However that is to be distributed within the block grant from London, it is important that the Assembly should have flexibility to determine resources within the counties according to need. I now give way to the hon. Gentleman.

Photo of Mr Ioan Evans Mr Ioan Evans , Aberdare

The hon. Gentleman has passed the point on which I wished to intervene. He was saying that my hon. Friend the Member for Bedwellty (Mr. Kinnock) and I had said that the Welsh Assembly was another tier of government. Is he saying that it is not another tier? How would he describe it, if it is not a tier of government?

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

The hon. Gentleman is again making a Second Reading point.

Photo of Mr Ioan Evans Mr Ioan Evans , Aberdare

I was referring to a point that the hon. Gentleman made.

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

I made it specifically about the way in which resources were being distributed. I specified that there were non-elected agencies of distribution now operating on an all-Wales basis and distributing resources on an all-Wales basis. I tell the hon. Gentleman that the Assembly is not a new tier of government. It will be having the debate about who gets what in the Health Service openly broadcast in Cardiff.

Photo of Mr Ioan Evans Mr Ioan Evans , Aberdare

It is a tier of government.

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

It is a tier of democracy. It will be having the decisions now taken behind closed doors in Cardiff about the allocation of health care moneys, a matter of essential importance to the people of Wales, taken by a democratic Assembly. It will be having decisions about education spending and personal social services spending taken openly. The decision about how much Gwynedd, Clwyd and Powys receive will be debated openly, not behind closed doors in Cardiff or in London. That is the difference, and that is what the hon. Members are opposing. They are against open government and democracy.

Photo of Mr Neil Kinnock Mr Neil Kinnock , Bedwellty

At what point in open government and democracy does the hon. Gentleman put the forging of letters by paid hacks of his party?

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

This is not the first time the hon. Gentleman has made—

Photo of Mr Dafydd Wigley Mr Dafydd Wigley , Caernarvon

Will the hon. Member for Bedwellty (Mr. Kinnock) repeat that outside the Chamber?

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

Perhaps my hon. Friend will contain himself for a moment. This is not the first time that the hon. Member for Bedwellty has made allegations in the Chamber that have not been substantiated in the course of our debates on the Bill. I will defend the right of paid officials of my party or any other to write letters in a personal capacity expressing opinions when they disagree with my own views or the policy of my party at any time. It is a democratic right that they have, and if they want to use the office typewriter after hours, that is up to them.

Photo of Mr Neil Kinnock Mr Neil Kinnock , Bedwellty

Will the hon. Gentleman give way?

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

I am not giving way again on that point.

Photo of Mr Neil Kinnock Mr Neil Kinnock , Bedwellty

The hon. Gentleman is misleading the Committee.

Photo of Mr Ioan Evans Mr Ioan Evans , Aberdare

On a point of order, Mr. Godman Irvine. The hon. Member for Merioneth (Mr. Thomas) said that my hon. Friend the Member for Bedwellty (Mr. Kinnock) has been misleading the Committee. What he could well have been doing was to quote from an editorial in today's Western Mail, which said: There are also reports that letters have been written above the signature of people who knew nothing about them but who do happen to be members of Plaid Cymru. The affair smacks of the sort of dirty trickery that is one of the less wholesome aspects of American politics.

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

That is a matter which is being dealt with in an Early-Day Motion, and it is not before the Committee.

Photo of Mr Neil Kinnock Mr Neil Kinnock , Bedwellty

Further to the point of order, Mr. Godman Irvine

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

I have just said that it is not a point of order.

Photo of Mr Neil Kinnock Mr Neil Kinnock , Bedwellty

On a different point of order, Mr. Godman Irvine. The hon. Member for Merioneth (Mr. Thomas) accused me of not substantiating matters, as he said, not for the first time. I want that withdrawn, because it is quite inaccurate.

Secondly, may I have your ruling, Mr. Godman Irvine, on the practice of persons who occupy professional posts, are paid in those posts, and in order to deceive the public do not mention their occupation of those posts in communications with the Press and the broadcasting media? The matter was raised only because a reference was made to it in the debate. If in the course of a discussion that practice should be described as deceitful, or counterfeit, or a forgery, may I have your ruling on whether that is in fact an inaccurate use of those words?

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

What I have heard so far does not amount to any of those things.

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

I am grateful to you, Mr. Godman Irvine. I will not be drawn any further on this issue, except to say that I defend the right of individual members of my party, whether or not they are paid by the party, to take part in any correspondence which they wish. But I shall not take this any further. I want to return to the specifics of the clause.

I want to pick up a point that the hon. Member for Aberdare made earlier, when he expressed horror that the distribution of health care resources and personal social services resources might be considered jointly. He was presumably quoting from a statement by the local authorities, by the seven members of the Welsh Counties Committee that support the view he supports on this clause.

I believe that in the context of the Welsh Assembly, considering health care resources and personal social services resources as one would provide us with a substantial step forward in joint planning for health care and personal social services care. The Assembly would provide an opportunity at an all-Wales level to perform the function of regional health authorities in England and perform a further function for the personal social services which RHAs cannot do, because they are Health Service bodies. At present there is no regional forum within England where the personal social services can be debated or resources for them allocated.

Therefore, we shall have the added advantage in Wales of having the all-Wales allocation of health care resources and being able to dovetail into that the all-Wales allocation of the personal social services. This will take us a step forward in the whole movement. Indeed, within the NHS itself there is a second look at the relationship between the personal social services and the Health Service. Evidence has been submitted to the Royal Commission on the National Health Service which argues for this kind of joint budgeting for the health and personal social services as one unit.

I hope that when the Minister replies he will indicate that there will be flexibility for the Assembly, in allocating resources to take, if it wants, to the rate support grant alongside the allocation of its other resources—its allocation of the housing block grant, the Health Service block grant or the Health Service allocation to area health authorities, for example—so that it can look at the whole of social policy spending in an integrated way. That is another advantage of the Welsh Assembly that has escaped the Socialists opposed to the Bill. They do not realise that it will give us a perspective and opportunity to allocate resources on an all-Wales basis in a more flexible way.

Photo of Mr Ioan Evans Mr Ioan Evans , Aberdare

I am grateful to the hon. Gentleman for giving way, because has has had a number of interruptions. We have been talking about the rate support grant and the fact that local authorities in Wales are getting similar grants to those in England at the moment. But this clause relates to the rate support grant "and other grants". Has the hon. Gentleman given some thought to the fact that there are certain requirements in Wales that are unique to Wales, such as the Welsh language and bilingual road signs, and, more recently, to the fact that the Secretary of State has given £250,000 to the national eisteddfod?

Mr. Kinnoch:

Quite rightly.

Photo of Mr Gwynfor Evans Mr Gwynfor Evans , Carmarthen

Yes, quite rightly. Indeed, in an Adjournment debate I supported the proposal that the money should go to the eisteddfod rather than to road signs. If we are to create an Assembly, will the Secretary of State have the power, in addition to the block grant, to make these extras available in Wales to meet such essential needs? Will that be affected by the Assembly?

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

The hon. Gentleman talks about goodies and extras; I am talking about an integrated approach to policy-making in Wales which is cost-effective. Let us take the hon. Gentleman's argument about cultural spending. There has been the allocation to the eisteddfod. That kind of allocation would fall within the powers of the Assembly under the relevant clause to do anything it wished in support of the Welsh language. Presumably, the Assembly would have the power and could take a democratic decision to make this kind of ad hoc spending.

But the important thing is that the Assembly would not be making ad hoc decisions. It would, I hope, have its own cultural policy committee, which, unlike the Welsh Language Council, set up with great fuss by the Conservative Government and now disbanded by the Secretary of State—which means that there is no single body taking an overall view of linguistic policy in Wales—would be able to take a continuing look at the cultural needs of both language communities—English and Welsh.

My great hope is that the Assembly will result in two things. First, it will mean that in terms of grants and resources, Welsh-speaking people, who are demanding more resources for the Welsh language, will not be able to blame the Government in London because those resources will be coming from the Welsh Assembly. English speakers in the Assembly will be called upon to take up a cultural responsibility towards the development of the Welsh language.

The Assembly will therefore provide us with a forum for debating cultural policy, for creating an effective cultural programme for the restoration of Welsh and for giving the resources to do it. That is the kind of debate we never have on linguistic policy in this House, despite the fact that half a million inhabitants of these islands speak Welsh as their first language.

Photo of Sir Raymond Gower Sir Raymond Gower , Barry

Has the hon. Gentleman reflected that a grant for the Welsh language or the Eisteddfod might well be more forthcoming from the Secretary of State for Wales or this House than from a Welsh Assembly dominated in numbers by those who, in some counties like Mid-Glamorgan, seem disinclined to make such grant?

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

I do not accept that for a moment.

Photo of Sir Raymond Gower Sir Raymond Gower , Barry

But it could happen.

8.15 p.m.

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

It could happen. What I said was that the placing of responsibility for cultural policy in a Welsh Assembly, the majority of whose members would be English-speaking, would place on that English-speaking majority a clear obligation, which I am certain that they would take up, towards the minority language. That will give us the opportunity to develop a continuing cultural policy—not an ad hoc allocation of grants to the national eisteddfod and so on, however worthy the motives or the timing may be for such grants. The Assembly will provide us with an opportunity to develop an effective cultural policy in the allocation of resources.

Hon. Members who oppose this new structure for the rate support grant have talked as though in this House we have a full and detailed debate, a full scrutiny of the allocation of the grant, before and after. But it never happens like that. Indeed, it is very difficult to obtain the actual figures for the counties. I do not want to be awkward or critical of the Under-Secretary of State tonight, but I have failed on a number of occasions to get as rapidly as I would like figures of the detailed allocation and implication of the rate support grant needs element for the various counties in Wales.

Photo of Mr Alec Jones Mr Alec Jones , Rhondda

Will the hon. Gentleman confirm that he said that timing was the problem and not reluctance to give figures? I understand and accept that sometimes all of us have to wait a little longer for figures than we would like, but I would hate to think that we were being accused of not being willing to provide the figures.

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

I never accuse the hon. Gentleman of being unwilling to provide figures, except that sometimes he tells me that information is not available. But of course I accept his word on such occasions. The timing of information very often makes it impossible for us effectively either to lobby on behalf of our counties or to make what we feel to be a justifiable case which has been presented to us in writing by local authorities in our areas.

The implication coming from local authorities tonight, in the mouth of the hon. Member for Aberdare is that somehow the present system is effective and adequate, that somehow they are getting a fair allocation of resources under the present system, yet they are continually complaining to us, in every round of rate support grant settlement, about distribution—not only about the global allocation to local authorities of central Government expenditure but about the way in which the detailed resources are distributed.

That is the kind of thing that could adequately be discussed between the counties and the Assembly and could be allocated within Wales itself.

The way in which the rate support grant settlement for Wales is reached should reflect the real needs of the Welsh counties. I do not want to rehearse again the arguments that we had last night or earlier today about the level of public expenditure within Wales and the level of the block grant. I am talking specifically about expenditure in Wales which requires to be increased because of the relatively greater need. I take specifically the case of the personal social services.

We have a higher proportion of population over 65, and particularly over 75, and are therefore in greater need of personal social services provision—home help, day care and so on. We have a higher proportion of disabled—13·1 per 1,000 households in Wales compared with 10·2 in England. We have a higher number of children in care, particularly in Mid-Glamorgan and other local authority areas in South Wales. We have higher rates of mental illness in Wales. There is also the additional on-cost of providing services over a sparsely populated rural area such as Mid-Wales.

We also have a lower proportion of trained staff in personal social services. We have a lower ratio of staff to clients in community homes and other institutions in the personal social services. We have a low level of provision within the personal social services for the mentally handicapped in Powys, Gwynedd and Dyfed. We have lack of provision for day care. Indeed, the expenditure on day care by local authorities is about one-thirtieth of the provision in England. There are many other examples that one could take to show that the provision of personal social services in Wales is on a lower level than in England.

Photo of Mr Wyn Roberts Mr Wyn Roberts , Conway

The hon. Gentleman has given us a clear picture of the detailed needs of the Principality. Much can be made from the rate support grant and so on. Who does he think will put this case forward for increasing the grant? Will it be the Assemblymen, the local authorities or Members of Parliament?

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

That intervention by the hon. Member for Cardigan (Mr. Howells) is the short answer—they all will, but at different levels and in different ways in the decision-making process. The scenario is that the Assembly has discussions with the counties and draws up its four-year budgetary cycle for devolved local government services. That will presumably be negotiated with the Welsh Office, the Secretary of State will make representations to Cabinet and Treasury about that level and it will be subject to an order in this House. The Assemblymen will be involved in fighting on behalf of their own areas and for the total resources for Wales, while Members of Parliament with Welsh constituencies will presumably be backing them and the Secretary of State will be negotiating for an adequate block grant and RSG element.

I am describing the relatively greater needs of Wales in personal social services—and in the National Health Service. The figures for the latter are not relevant to this clause but are relevant to my view that there should be joint planning of both services.

The argument of the hon. Member for Aberdare last night was that Wales has additional public expenditure—although the additional expenditure on the devolved services which are part of the RSG settlement are not all that great. Expenditure in Wales on education, libraries, science and the arts, for example, on the 1976–77 provisional figures, is no higher than the United Kingdom average. Nor is the health and social services provision, although it is slightly higher than the figure in England alone.

Despite the argument that there is higher public expenditure in Wales on health and personal social services, I believe that it should be even higher by means of the block grant, because of the greater need. The hon. Member for Bedwellty argued last night that we received handouts, that that was fine and that it was essential to maintain the present position in a devolved Assembly. What he fails to admit to himself and his constituents is the reason that we have to live on handouts—because the level of personal incomes in Wales is 40 per cent. down, social security receipts are 20 per cent. up and housing conditions are 50 per cent. worse. Our record of social conditions is matched only by the North-East of England, in some aspects and on some social indicators.

So when I argue for the Assembly to be able to allocate the rate support grant, I am arguing also that it should demand the resources to meet the needs. Those are the historic repayments which have to be made for the effects of centralist British capitalism as it has been operated by successive British Governments in Wales.

Photo of Mr Ian Grist Mr Ian Grist , Cardiff North

Is not the hon. Gentleman arguing for the Assembly to have taxation powers? Is this not the argument that will be coming out of the Assembly—that it would wish to increase its support to local authorities had it but the means to do so, that the people preventing it were in this House and that the only discipline to make it honour its words would be the power of taxing the people of Wales directly? Does the hon. Gentleman think that the Assembly should have the right to blackguard this House and blackmail the rest of the United Kingdom?

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

I will not be drawn on that in detail, because it is not relevant to the clause. However, I do not believe in the transfer of taxation powers unless one transfers to Wales all other measures of fiscal and economic control. Only then is it logical to take all aspects of the control of expenditure and raising of revenue so that one can operate the full range of fiscal policies. Only then would I be in favour of the transfer of taxation powers.

The hon. Member for Bedwellty pleaded last night for further handouts for Wales. The reason that we receive higher per capita public expenditure on a number of counts—although not those that we are discussing—than throughout the United Kingdom as a whole is that we are in a peripheral relationship to the core of the United Kingdom economy and Government, and have been throughout our modern history. That is why we have a lower level of personal incomes and a higher level of social needs.

I disagree fundamentally with the hon. Member for Bedwellty, who is a centralist, Stalinist Socialist. His view is that resources can be distributed adequately only through a central mechanism. My view is that the Assembly will give us a Wales-based mechanism for distributing resources more effectively and for demanding adequate resources for Welsh needs. That is where we disagree—not about the level of resources required but about the way in which they are distributed, the essential link in economic and regional policy between where government is and what government does and the fact that centralist interventionism in Britain has not managed to solve our regional disparities.

It is only by the transfer of fundamental powers from the centralist system of Whitehall and Westminster to Cardiff, Edinburgh and the English regions that one will achieve a greater geographical equality within Britain.

Photo of Mr Neil Kinnock Mr Neil Kinnock , Bedwellty

This is not in the Bill.

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

Part of it is in the Bill. That is why I support the Bill and why I welcome the clause as a fundamental step forward in the allocation of rate support grant moneys to Wales.

Photo of Mr Tam Dalyell Mr Tam Dalyell , West Lothian

I shall be brief, because it is with some temerity that I take part in a debate on Welsh local government. My hon. Friend the Member for Bedwellty (Mr. Kinnock) is waiting to speak. He has been called a Stalinist and various other things, but I am sure that he can more than answer for himself and does not need my defence.

Who wants this Bill? I am entitled to ask that. We have heard a long—I do not complain of that—and at times passionate speech in favour of the Bill from the hon. Member for Merioneth (Mr. Thomas). But I hope that my Front Bench will note from whom it comes—not from Members of the Labour Party but from Plaid Cymru.

As a matter of record, let me name my Labour colleagues who are here. There is my hon. Friend the Member for Gravesend (Mr. Ovenden), who voted against the Scotland Bill. If he is not actually in the Chamber, he is observing the debate. There are also my hon. Friends the Members for Bedwellty, for Aberdare (Mr. Evans), and for Bebington and Ellesmere Port (Mr. Bates), who is a Whip, and, of course, my hon. Friend the Under-Secretary of State. That is on the Government side. There is also present a supporter of the Bill from the Liberal Party

8.30 p.m.

Photo of Mr Geraint Howells Mr Geraint Howells , Cardigan

The hon. Gentleman should show respect to his hon. Friend the Member for Wrexham (Mr. Ellis), who has just left the Chamber, having been here all afternoon.

Photo of Mr Tam Dalyell Mr Tam Dalyell , West Lothian

My hon. Friend the Member for Wrexham, of course, wants something very different from the Bill, as he has demonstrated. Let us recall that the hon. Member for Wrexham is on the way to do his duty in Brussels. He can certainly be acquitted of any charge of not attending.

I have four questions to put, if I could have the attention of my hon. Friend the Under-Secretary—

Photo of Mr Alec Jones Mr Alec Jones , Rhondda

I find that remark offensive. I have listened to and put up with more drivel talked by my hon. Friend in the last few days than from any other Member of this House.

Photo of Mr Tam Dalyell Mr Tam Dalyell , West Lothian

I was just trying to be helpful in asking these questions. However, if I have talked drivel, I can only say that I asked questions that a great number of my colleagues have also been asking, so that there is a great deal of drivel being talked, apparently, in the Minister's view, by his hon. Friends. But, of course, it was not always so. I will leave it at that.

My first question is this. What is the extra cost of the mechanism of putting in an Assembly as an extra tier to deal with the rate support grant? It may be very small. I am asking about the manpower and financial costs, because presumably this should be known.

Secondly, is it not a fact that in the Scotland Bill and in the Wales Bill, raising moneys through the local authorities to finance an institution other than the local authorities will create a great deal of trouble? The people who have to raise the money will incur the odium of raising cash that they are not responsible for spending. Scottish local authorities are kicking up rough about what they now see as a back-door way for the Assembly to raise money.

I ask whether there have been consultations with the Welsh local authorities, and whether they clearly understand that this is a back-door way of raising money. Do they understand the position in this respect? I do not want to interfere in Welsh affairs, but if the position is anything like that in Scotland, there will be a great deal of difficulty about it. What I am geting at is the correctness and propriety of the principle of raising money through one institution to be spent by another institution.

Thirdly, I refer to a matter which has been raised throughout the debate, and I should like to put this in the form of a question. The argument is not about the loyalty of civil servants. We all know, of course, in the context of the British Civil Service, that whenever an Administration changes, it is perfectly easy for civil servants to transfer with complete loyalty from one Administration to another.

What is different about this new situation is that it apears that the same civil servants will have to have different loyalties concurrently. It is one thing to serve, for example, a Conservative Government one weekend and, after a General Election, a Labour Government the next weekend, or vice versa. That is no problem in terms of the Civil Service. What is a problem is the idea that the same civil servants should concurrently give advice, shall we say, to a Labour Chief Executive in Cardiff and to a Conservative Secretary of State for Wales in Westminster. This issue has not yet been dealt with.

I see that my right hon. Friend the Home Secretary has joined us. He is most welcome, if I may say so, to these debates. He, as a senior member of the Government, will recognise this problem very well. I believe that it is time that we had an authoritative answer to a question which has been raised constantly in these debates, because so far no answer has been forthcoming on this delicate issue.

In fact, I take the view of the Civil Service unions that there will have to be a massive duplication if the system is to work at all. Of course, massive duplication leads to increase in costs.

Photo of Mr Neil Kinnock Mr Neil Kinnock , Bedwellty

I enjoyed my hon. Friend's reference to our right hon. Friend the Home Secretary. One of the ways in which the Prime Minister marked his warm affection to the Home Secretary was to give him absolutely nothing at all to do with devolution.

Photo of Mr Tam Dalyell Mr Tam Dalyell , West Lothian

Our right hon. Friend the Home Secretary is a very shrewd politician and perhaps, with that clear instinct of political reality, he knew when to get involved and when not to get involved. I suspect that those famous political antennae of my right hon. Friend warned him at an early stage that it would be as well to concentrate on more relevant matters to the future of the Government than matters of devolution and to give them a wide berth, The Home Secretary is a wise man and in this, if he took nothing to do—

Photo of Mr Myer Galpern Mr Myer Galpern , Glasgow Shettleston

I hope that the hon. Gentleman will not forget the Chairman.

Photo of Mr Tam Dalyell Mr Tam Dalyell , West Lothian

Sir Myer, when you are Chairman, how can I conceivably forget the Chairman? One of the difficulties of this whole debate is that we are now on day 36 or day 37. I should have liked to see a number of the more senior members of the Government in other Departments involved, because we have the classic instance of my hon. Friend the Minister of State at the Treasury who spoke last night as if it were day 2 rather than day 36 of our proceedings.

I shall be guided by you, Sir Myer, with regard to my final point. At some stage we are due to discuss Schedule 7. Would I be in order under this amendment in asking, first, about the future of the Forestry Commission in relation to the Assembly and, secondly, of the Inland Waterways Board, both of which have protested strongly about the possible break-up of the Forestry Commission?

Photo of Mr Myer Galpern Mr Myer Galpern , Glasgow Shettleston

Order. I think I ought to correct the hon. Gentleman. We are not discussing an amendment. The hon. Gentleman has got lost in his own argument. We are discussing whether Clause 60, as amended, should stand part of the Bill.

Photo of Mr Tam Dalyell Mr Tam Dalyell , West Lothian

If forestry is to be taken at a later stage, then I give my hon. Friend the Minister warning that I shall ask him at a later stage whether Welsh forests are to be run from Edinburgh, London or wherever or if there is to be fragmentation. I give my hon. Friend that warning now.

Photo of Sir Raymond Gower Sir Raymond Gower , Barry

I imagine that any chance listener to this debate would wonder what we have been discussing. It is right that the Chair has shown a certain generosity in interpreting the discussion on this clause because it is rather an important one. It is one of the vital parts of this Bill.

As my hon. Friend the Member for Pembroke (Mr. Edwards) pointed out, this clause gives the Assembly the function and the duty of distributing the rate support grant to the local authorities in the Principality. This is an unusual format because it is difficult to think of many constitutional arrangements where one has an elected Assembly whose main function is merely to distribute. That is why many of us are anxious about the durability of such an Assembly. The hon. Member for Aberdare (Mr. Evans) has repeatedly pointed out in his interventions the unusual nature of this function and the fact that the Assembly will not have the much more unpopular duty of collecting this money.

In reply to the hon. Member for Merioneth (Mr. Thomas) who made some interesting observations, I agree that there is a lot to be said about the advantages of democratic discussions. But in relation to this clause the assessment of the rate support grant has been worked out on a highly sophisticated and scientific formula—

Photo of Sir Raymond Gower Sir Raymond Gower , Barry

The hon. Gentleman may say that, and I am quite ready to admit that it is imperfect. However, it has been evolved by trial and error over many years and every attempt has been made by successive Governments and those who advise them to forge an instrument that will meet the differing requirements of different areas.

We are proposing to transfer this very difficult operation of assessing the requirements of different local authorities to another elected body. This elected body will be an emotional and political assembly which is subject to all kinds of pressures, and this will not make sophisticated and scientific judgments any easier. Therefore, the advantages of democratic participation would appear to be less desirable in this function that we are discussing.

It is conceivable that with experience the Assembly could do the job. I hope that this will prove to be the case, and I hope that the fears expressed by the existing local authorities in Wales will prove unfounded. But let us not blame the local authorities for having these fears because the very way in which the Bill was drawn up gave rise to them. It includes a clause to give the elected new Assembly, as one of its first duties, the task of examining the structure of local government organisation in Wales and reporting to the Secretary of State. This task is not calculated to inspire much confidence in the local authorities.

Indeed, this is a highly undesirable clause in a Bill of this kind. A newly-elected Assembly of this kind is the least proper and suitable instrument to assess a system of local government which has been running far longer than the people who will examine it. This is one of the most objectionable features of the Bill.

Photo of Mr Geraint Howells Mr Geraint Howells , Cardigan

If the hon. Member is against the Welsh Assembly Members looking at the organisation of local government in Wales, who does he think should be responsible for this task?

Photo of Sir Raymond Gower Sir Raymond Gower , Barry

All I have said is that the last person in the world who should look at it should be a newly-elected person to a new body. Yet he is being asked, as one of his first duties, to study an established system which has not really had enough time to settle down since its reorganisation.

Photo of Mr Ioan Evans Mr Ioan Evans , Aberdare

Will the hon. Member agree, first of all, that we do not know whether any of the people who are elected to the Welsh Assembly will have local government expertise? They may have it, but as yet we do not know where they will come from. Obviously, if the Assembly is to work in the long term, it will have to remove the other tiers of local government. Therefore it will not approach the task objectively. It will approach it with a view to removing the tiers underneath. For this reason NALGO is very disturbed about the fact that the Assembly is to be set up, because of the threat facing local government.

8.45 p.m.

Photo of Sir Raymond Gower Sir Raymond Gower , Barry

I am fully aware of all these considerations, and at an earlier stage I commented on the position of those employed in local government, such as NALGO members and members of one or two other associations. Let us hope that these fears will prove to be exaggerated.

If we pass this clause as it stands, it will give the Assembly a duty to distribute grants to the local authorities out of the Welsh Consolidated Fund. I am glad that the Minister gave an assurance that local authorities will be consulted before any such decisions are made, because there appeared to be a good deal of doubt on that matter.

There is a danger that when these negotiations begin, the local authorities may, nevertheless, not have as full consideration under the new system as they have had under the old. If anything the Minister says can remove that fear from the minds of those in the authorities, it will serve a good purpose.

The other point which has arisen is that it seems possible that the Assembly could distort the aplication of this grant. Perhaps I am using an unfortunate phrase, and I do not want to be unfair, but it seems to me that they could hold back distribution of the grant, or delay it or be niggardly in its application. This could impose on local authorities the obligation to levy more of their resources out of rates—not a popular or desirable function.

The Government stated in an earlier publication that in calculating block grant the Government would assume that Welsh local authorities would receive in relation to their expenditure needs provision comparable with that of local authorities in the United Kingdom as a whole. I hope that that will be the case, but I wish to ask how that situation can be enforced once the Assembly is set up.

Photo of Mr Harry Gourlay Mr Harry Gourlay , Kirkcaldy

Let me say at the outset that I am in favour of devolution and not against it, but surely the hon. Gentleman is arguing that he has no trust in an elected Assembly for Wales. In other words, he is saying that hon. Members in this House—Members from English, Scottish and Northern Irish constituencies—have a better knowledge of how to distribute block grant in Wales than will Members of an elected Welsh Assembly. Surely that is not the case.

Photo of Sir Raymond Gower Sir Raymond Gower , Barry

No, I do not take that view, but it would surely be the case that newly elected Assemblymen will be less experienced than hon. Members in this place who have been undertaking this job for many years. The Assemblymen will be more subject in some respects to certain pressures than the Secretary of State would be. He will be answerable to this House but will not be subjected to the kind of pressures which may conceivably be exerted on Assemblymen.

In posing these questions I have stressed that I hope that some of the fears which have been expressed are exaggerated and will prove to some extent to be unjustified. The fears of local authorities have been caused partly by the inclusion in the Bill of a clause giving the Assembly power to examine the needs of local authorities and to report to the Secretary of State. Local authorities naturally fear that they will not have such an objective study of their needs as they have enjoyed in the past, but rather a more subjective study by Assemblymen. Whatever the defects of the old system, it was objective and was carried out in a scientific rather than a political mood. We are not so sure about the Assembly, which will be a much more political operation.

Photo of Mr Neil Kinnock Mr Neil Kinnock , Bedwellty

The hon. Member for Merioneth (Mr. Thomas) made, for him, extensive comments about me and among the least charitable, though not the least charitable, was to equate me with someone called Stalin. In order to reassure the hon. Gentleman and the House, I should tell hon. Members that I once took the name Stalin as a nom de plume in an inter-college eisteddfod. But it was the name Llewellyn Stalin, and I am happy to report that I won third prize in the handicrafts competition, much to my surprise and to the illumination of the person who marked my entry, which was a stone inkwell.

However, if the hon. Gentleman was talking not about Llewellyn Stalin but about Joseph Stalin, I must remind him that Joseph Stalin was the father of the sort of devolution being proposed in the Bill and to which I so strongly object. The Russian system operated for many years—and, sadly, still not substantially changed even since Stalin's passing—so as to retain centralist control while giving the appearance of allocations to the constituent Soviets of the Union of Soviet Socialist Republics.

I would not accuse the Government of drawing inspiration from the Soviet constitution or the dreaded memory of Joseph Stalin, but if anyone has any Stalinism in him, he must continue to worship at the shrine of the Wales Bill. I do not count myself among that number.

On the contrary, I am for the diversification of decision making, the devolution of financial control and many of the things that the hon. Member for Merioneth and the Government say that they are for. But I am for these things for all the people, because I believe that sort of devolution to be a virtue of itself and a necessary development for our democracy. The Government and the nationalists, for a mixture of motives, are for these things for entirely different reasons, and for only some of the people for part of the time.

The hon. Member for Merioneth also characterised some of the remarks that I made yesterday as being an acceptance of, or even showing enthusiasm for, handouts. Since the per capita expenditure from public resources is higher in Wales than in many other areas while subscriptions through various forms of taxation from Wales, because of its great economic disadvantages, to the central Exchequer, are smaller than in many other regions of the United Kingdom, we run a public expenditure deficit. I do not consider that deficit to be in any sense a handout. I think that that is allocated, especially in the context of this debate on the gate support grant, on the basis of proven, demonstrated need which has been argued for through democratic channels by people who have been democratically elected at local government level, at national level, all of whom must submit themselves and their judgment for democratic assessment at elections at local and national level.

That is not perfect. There have not been hon. Members on this side of the House to make defences of the Bill, but when Conservative Members characterise the view that we express about the present system of deciding upon and making allocations of rate support grant as being contentment with the current system, they show either an elementary misunderstanding of all that we have been saying or they are deliberately misrepresenting what we have been saying, because it is far from perfect.

I repeat that our function in deciding on the Wales Bill and on the whole proposition of devolution is not to describe necessarily what is wrong now but to decide whether the Bill will make the people of Wales better off or worse oft. If it is to make them worse off, in our considered opinion, it is our business to throw it out. By saying that we are not expressing contentment or complacency about the current system. I am at least as critical of the operation of this system as Conservative Members, but we do not clear the problems of this system by creating another dimension of the problems to the disadvantage of the people of Wales and the United Kingdom by implementing the Bill. I am glad to repeat my absolute confidence that at the referendum the people of Wales will entirely reject the Bill and so save us that problem.

Opposition to the Bill—I must ask the hon. Member for Merioneth to desist in future from putting his construction on these words—does not mean a full-hearted sympathetic endorsement of the system that we have at present.

I want to address questions to the hon. Members who have gone to some lengths poetically to describe what is wrong with Wales, how miserably poor it is in many respects and what the apparent causes are of that poverty. It is because of an ageing population, because of geographical difficulties and inherited problems arising from industrial and environmental pollution, because of deficiencies in diet during childhood and a dozen other social and economic causes which mean that Wales is heavily dependent and insufficiently provided for in its needs for personal social services, health services and so on. I have to ask hon. Gentlemen who described the situation so accurately not even what they would do about it if they had responsibility for bringing succour and change and answering these problems, but, in the context of devolution and the rate support grant, where they would make the cuts in other provisions. From whom would they steal in order to improve the allocation of personal social services were such decisions to become the business of an Assembly in Cardiff?

The point that they have to answer is not a description of the problems. We are not interested in this debate in sporting chips on shoulders. We want to know which chips will be removed from whose shoulders and who else will have to suffer a bigger chip in order to assist with the alleviation of the burden on somebody else. Without additional resources we are left with only the description, the misery and the tears and without any answer to the question posed by devolution.

If the Welsh Assembly has responsibility for the allocation of resources, will it have any more influence on getting more resources from the central Exchequer? From everything that I have heard this afternoon during the debate my answer to those questions is that it cannot, because of the dangers of demarcation of Wales from the remainder of the United Kingdom. The Welsh Assembly cannot have any more influence because in no way does that constitutional change reduce the problems of Wales or assist us by providing extra resources to meet those problems.

9.0 p.m.

Photo of Mr Tam Dalyell Mr Tam Dalyell , West Lothian

These resources are finite. Does not the expense of the Assembly itself—a considerable and mounting expense, as we have discovered—come out of precisely these resources? Is it not therefore true that all the desirable things that have been outlined by my hon. Friend and by the hon. Member for Merioneth (Mr. Thomas) will suffer because of the extra administrative costs? Is it unfair to say that every pound spent on setting up the Assembly is a pound less for home helps and other desirable services? Is that an exaggeration?

Photo of Mr Neil Kinnock Mr Neil Kinnock , Bedwellty

What my hon. Friend says is precisely the case. We have had difficulty in finding out so far the areas of need that those who support the Assembly will deny resources to in order to pay for this panoply of power in Cardiff. Whose personal social services will they reduce? Whose roads programme will they abbreviate? Whose health services will they make less effective and financially less secure in order to find the money?

The general secretary of Plaid Cymru, who is as little renowned throughout Wales for his veracity as he is well known for his counterfeiting capacity, says that the cost of the Assembly will come to less than a penny a head, or less than the cost of military bands. But they are not the questions to be posed in the devolution debate. We are not talking about a penny a head. If we were to levy a penny a head in Wales, I am sure that the people could think of a much better reason for paying it than providing and equipping an Assembly in Cardiff to talk about next to nothing. If they were voluntarily to subscribe a penny, that would amount to £15 million, which would provide nearly the whole of a modern district general hospital. It would build getting on for 10 comprehensive schools. I am sure that if the people of Wales had to make that subscription they would prefer to do that rather than endow second division MPs with all the pomp and circumstance of an Assembly in Cardiff.

That is the point on which we have yet to receive an answer. The question is, who would pay? I doubt whether even until the eleventh hour of the devolution debate leading up to the referendum we shall get an answer to that question because it is unanswerable in any terms that could be acceptable to the Welsh people who are much more conscious of their material difficulties and their social deficiencies than they are of any constitutional problems that Members in this House might have distinguished.

The hon. Member for Merioneth said that the problems arise from centralised British capitalism. As an historical point I should point out that the problems that the rate support grant assists in trying to combat arise not so much from centralised British capitalism in Wales as from capitalism. I do not say British capitalism because capitalism knows no nation as the hon. Member has probably realised in the course of his Socialist learning on which he reports to us on occasions.

The problem we encounter in Wales is the result of diversified entrepreneurial capitalism that ripped the guts out of North and South Wales and has subsequently put nothing back. It has nothing to do with capitalism being centralised. In many ways there is nothing more diversified than capitalism. It moves like the air. It is all over the place. It does not centralise itself. Capitalism has a finger in every pie in every part of the world. It is not therefore the centralisation of British capitalism but the existence of British capitalism that has caused us historic misfortune. The hon. Member will not get away with trying to equate his Socialism with an anti-centralist posture, because they do not come to the same thing.

There are other areas in which the hon. Member has a different concept of these issues. There is a major difference of conception that is general among nationalists, whether we are talking about the rate support grant or anything else. They are the only people who consistently make speeches, other than my right hon. and hon. Friends from the Government Front Bench, in favour of the Bill or the clause now being discussed by the Committee. The nationalists are the only people who speak in the Bill's favour systematically, consistently or insistently. However, the fact is that they do not really want the Bill.

It again became apparent from the speech of the hon. Member for Merioneth that the greatest applause that he could offer the Bill is to say that there are the beginnings of something in it. However, he is more impassioned and more repetitive—I say that without any pejorative use of the latter adjective—in his support of the Bill than any right hon. or hon. Members from the Labour Benches.

That must strike my right hon. and hon. Friends as peculiar, but there are other areas where the hon. Gentleman has a different conception. He says that he wants resource allocation in Wales to be more cost-effective. So do I. Socialist are by nature good husbanders of the nation's finances. We have a case to prove. We want to ensure the maximum beneficial use of resources. That is why we are in favour of planning. We want resource allocation to be made more cost-effective. I do not see how we can do that when we duplicate bureaucracies, when we duplicated civil services, when we have resources allocated to an Assembly that are unnecessary and unwanted. I do not understand how we can have more effective resource allocation if we are multiplying tiers of government and duplicating functions.

We are running UD a massive Bill without any guarantee of improved resource allocation, and certainly not in respect of rate support grant allocation. The hon. Gentleman says much the same as my right hon. Friend the Minister of State to the Treasury said last night. The hon. Gentleman says that there will be open discussion and debate in the Assembly at Cardiff that will mean improved allocation of the rate support grant together with the other resources allocated to Wales.

It seems that the Assembly will be something of a novel political institution not merely in the British context but against the background of any pluralist democracy anywhere in the world. It appears that the Assembly, in its open discussion and debate about how to allocate resources, is not to have any Whips or party lines. No one will fight an election on a manifesto. No undertakings will be given to the public. The only undertaking will be to have open and free debates.

Photo of Mr Neil Kinnock Mr Neil Kinnock , Bedwellty

Reality says that. History says that. Acquaintance with everyday life in politics says that.

We are familiar with the present machinery for deciding the rate support grant. The Government and the hon. Gentleman say that that machinery is to be replaced with open discussion about how we are to spend the money. Apparently that discussion will take place in the Assembly. We are asked to believe that partisan considerations will not enter into its debates, let alone geographical considerations. It is said that the Assembly will arrive at a universally suitable and acceptable formula for the allocation of finances in Wales because its debates will be open and free. That is the proposition that we are asked to accept, but it is totally unrealistic. We shall get the same hackery, whippery and the same divisions of partisan opinions in the Assembly with the same advantages and inadequacies that we get in this place. The only difference will be the duplication of the process that already exists.

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

The hon. Gentleman is taking us on an incredible hypothesis of how the Assembly will operate. In fact, the Assembly will operate in terms of political realities. No one is denying that. We are saying that, given the allocation of priorities within a political system based on Cardiff and representative of all areas of Wales, the result will be a fairer political allocation. The allocation will be political in the sense that all government machines are political. The balancing of resources between the various areas will have to be politically acceptable to the whole of Wales because it will be democratically scrutinised by the whole of Wales. It is not being suggested that the Assembly will function non-politically. We are saying that it will have to function as a representative political body. The Assembly will be answerable to the electorate and if it is not representative it will be disposed of in due course.

Photo of Mr Neil Kinnock Mr Neil Kinnock , Bedwellty

I understand. I have a much clearer understanding now. What we have, in fact, is much the same political division on a similar model to that which we have in the House of Commons, although I am not saying in exactly the same proportions at all. Indeed, I realise that one of the reasons why the Welsh nationalists support devolution is the hope that they can enhance their general representation by occupying this springboard that they will have in Cardiff. One of the reasons why I am against devolution is that I am against that.

We are to have a political Assembly, says the hon. Gentleman, and decisions will be taken on a political basis. I say to the hon. Gentleman, therefore, that if they are to be taken on a political basis—to use his words, not mine—on a geographical basis, where is the fairness or advantage to the people of Wales in that respect? The advantage is that it will be their own countrymen who are perpretrating injustices, to use a favourite nationalist phrase, or indulging in inadequacies or incompetence, and it is that awful centralised Cardiff Government that is ruining everything, assisting that awful centralised Westminster Government that has ruined everything before. I understand exactly what the hon. Gentleman says.

Even if he is not saying that, what we are asking, especially in the context of the rate support grant—I continually remind myself, Sir Myer, that that is what we are talking about—is that instead of allocations now being made universally to local authorities in order to assist them with the particular problems and difficulties that they have, the Welsh Assembly will exercise priorities on a national basis. I tell the hon. Gentleman this, even if he does not recognise it himself. If for the sake of the national interest of Wales, his constituents in Merioneth should be denied a mile of roadway, a hospital ward or a new school because my constituents in Bedwellty are getting a new vast improvement in their personal social services, I expect that he or whoever represents Merioneth in the Assembly would be rather circumspect about his enthusiasm for the national Welsh priority being decided in the aforesaid Assembly.

Even if that is not the case, even if there is a new era of tolerance in Merioneth, even if there is an acceptance of this national priority, whoever represents Aberbargoed in my constituency certainly will not allow any theology about the national Welsh priority to blind him to the immediate needs of that area. If as a consequence of devolution that area in my constituency gets a farthing less than it has got previously, in comparative terms, the Welsh national priority decided by the Welsh national Assembly can go to hell as far as the people of my constituency are concerned.

That is not the assertion of an ingrowing parochial jingoism. It is a statement of fact. It is an assertion of the duty that I expect all representatives in my area, regardless of their political colour, including myself, to have towards those who elected them. That is their prime consideration and prime duty.

The idea that instead of having allocations of rate support grant related directly to local needs—argued for directly by local authorities, meeting local bills and assisting in that process—we can make the allocation of £250 million or £300 million or whatever hundreds of millions of pounds it is to the Welsh national Assembly and have it decide on the priorities at that centralised level, will not be on, and we shall not tolerate that. It is a formula for the most immense division between the competing claims of different areas of Wales.

There is no virtue in secrecy. I believe that we could greatly democratise and open up our present procedures. There is no reason for them to be conducted in any secretive way. Indeed, if we had universal devolution, it might assist in the process of that debate. But the proposition before us is that only two areas of Britain shall have devolution. In the case of the area that concerns me and the hon. Member for Merioneth most, this particular kind of devolution will mean that we shall have to be dogs fighting over a bone of limited size. It is a devolved bone, a condescending bone, and one decided not by the people of Wales, even at the local authority level, but entirely on the basis of priorities decided outside Wales, awarded to Wales in a lump and simply requiring us to fight with each other over the allocations. That is not the kind of Wales that the hon. Member for Merioneth wants and even if he wants it it is certainly not one that I could accept. But it is inescapable when we have devolution financed by a block grant and a rate support grant bundled together and tossed to a Welsh Assembly so that its members can scrabble over it like cats over bits thrown from a table.

9.15 p.m.

The hon. Member for Merioneth says that decentralisation—to use his words—can have a profound effect on decisions. All constitutional changes can have a profound effect on decisions. But we are not concerned about decisions alone, especially in the debate on Clause 60. We are concerned about resources. If those profound changes do not have the effect of either increasing resources or producing a system of government, administration and representation which will result in a more equitable distribution of resources or the generation of a greater growth in those resources, they must be critically viewed. That is the situation that faces us now.

If we have less resources, or less resources in real terms, the interesting game of open debate is not really worthwhile. The invitation that we offer by this pattern of devolution is that we shall have less resources to spend because of natural reaction. The hon. Member for Merioneth is well acquainted with the debates in the House on the rate support grant. He is well acquainted with the way in which the inner city areas in recent years have asserted their interests. He is therefore well acquainted with the fact that a type of quasi-nationalism is now rearing its head, not in this case in defence of an ancient culture, with an identifiable geographical area or with any of the credentials on which we have traditionally judged nationalism, but on the areas of particular interest—in some cases rightly and in some wrongly—where people believe that only by fiercely asserting the interests of the distressed areas can they acquire the resources that they need.

The hon. Member for Merioneth has seen the reaction in practice. Can he really imagine that, when the demarcation is more clearly marked, that reaction will not be more widespread and more justifiable than it is now? Of course he cannot. It is no good having decentralisation with its profound effect if the profound effect results in reduced resources for us to use in Wales to the advantage of our people.

This afternoon I have had difficulty in deciding, in the context of this clause, what will be the role of the Secretary of State. I have had to refer continually to the hon. Member for Merioneth because he has made the only substantial pro-devolutionary contribution to the debate. Since this is a House of Commons debating Chamber we should try to answer each other's arguments. That is why I am making such extensive reference to what the hon. Member has said.

He gave the impression at one stage that the Secretary of State for Wales would be entering the Cabinet to make claims on behalf of the Assembly, or at least on behalf of Wales, using the demands that the Assembly had presented to him. The hon. Member subsequently denied that he meant that he was to be a delegate in any form.

In the context of the Bill and from what the hon. Member then said, I had the impression that everyone would go through this lovely democratic exercise of the Assembly deciding how much it wanted, what figures it would like and then have a chat with the Secretary of State for Wales who might require them to talk to the local authorities, as he saw fit. I got the impression that after this lovely three-cornered conversation around the coffee table, or possibly in a bar somewhere in Cardiff or in the openness of the debating chamber in the Corn Exchange in Cardiff, up would come the Secretary of State, girded with the strength of the Assembly and slap down his demands on the Cabinet table. We can understand the responses that he might receive from some of his Cabinet colleagues.

In that event, what does the Secretary of State do with his rate support grant bid? Does he enter a process of further negotiation, as the associations of local authorities, county and municipal, do now? On the other hand, because he is a member of the Cabinet, of the Government and of the House of Commons, with a prime duty to represent the interests of the Government—that is why he is an executive officer of the Government—does he say to the Prime Minister "Prime Minister, if I do not get either what the Assembly has asked me to get it, or something pretty near it, I shall have to resign"?

On the other hand, as a career politician, as happens more frequently, unfortunately, in conformity with the general history of politicians—I regret it but it is a fact of life—does the Secretary of State go to the Assembly and say "I am sorry, lads. It is not on. It cannot be done"? In this event, according to the mood and political affiliation of the Assembly majority and that of the Secretary of State—or depending on the lack of common affiliation and the lightness or darkness of that relationship—the Assembly may say "We have to be loyal to the Government." I have heard that phrase once or twice in local government circles in Wales—not very frequently, but I have heard it, as some of my hon. Friends have, I am sure.

The Assembly might say that. On the other hand, it might say "It is a Tory Government, so we do not have to be loyal to the Government. This satrap of a Secretary of State comes here dictating to us from Downing Street or Whitehall, and we do not accept it."

Equally, the Assembly might say, "If that is how inadequate you represent our interests in the Cabinet, there is no benefit whatever for us in being integrated." Devolution and its frustrations make nationalists of us all. I realise that that is one of the events which the hon. Member for Merioneth would like to happen.

However, whatever the outcome, the Secretary of State becomes either a delegate—successful or unsuccessful—or a gauleiter. He must either faithfully represent the orders put to him by the Assembly and try as hard as he can to push them through in the Cabinet, or he can take whatever the Prime Minister says, regardless of what the Assembly says, and say to the Welsh people and the Assembly "Lump it. Tough luck. My first responsibility is to the Government. You have made an inflated demad. I cannot allow myself to press it. My Cabinet colleagues will not accept it. Consequently, the total rate support grant allocation made to you is 60 per cent. of what you actually deminded."

If that is a formula for unity, for the continuity of the integrity of the United Kingdom—a phrase which my right hon. Friends are fairly fond of using—I am amazed. If anything is likely to light the touchpayer and lead to an explosion, that is it.

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

The hon. Gentleman is over-simplifying the position in respect of the Secretary of State. I want him to understand that the conflict which he is trying to dramatise is an extreme way occurs already under the present system. The Secretary of State within the Cabinet presents certain Welsh demands and makes certain bids. All that the Bill does is to formalise the position, make it more identifiable and more democratic. Will not the hon. Gentleman understand that?

Photo of Mr Myer Galpern Mr Myer Galpern , Glasgow Shettleston

I apologise for intervening, but I recall that the hon. Gentleman gave great comfort to the Chair when he began his speech by saying that he would be brief. I remind him that the debate has to finish at 11 o'clock.

Photo of Mr Neil Kinnock Mr Neil Kinnock , Bedwellty

I am grateful for that reminder, Sir Myer. I am surprised that the hon. Gentleman should accuse me of simplicity in a tone of criticism, because he went on ridiculously to over-simplify the current situation and the situation proposed under the Bill as well. Certainly, Secretaries of State in a Labour Government earnestly try to assert Welsh interests in the Cabinet. That is what they are there for, and in some respects, within the realms of harsh reality, that is what they succeed in doing. But when they do not succeed in doing it, that is not a major misfortune. It is something to be postponed for later representation, for an argument to be rephrased, for a set of figures to be redrawn, for another opportunity to be awaited. The most that has to happen is the regretful announcement of the Secretary of State and the reluctant understanding and acceptance of those whom he represents.

But that is not the situation which confronts us when the Secretary of State has to say publicly to the national Assembly of Wales "Tough luck", because even if he has tried as earnestly and zealously as possible to present its interests in the Cabinet, he will never get credit for it. The disappointed Assembly will in any case accuse him of not trying—and especially so if the Assembly majority is of a different political colour from the Secretary of State. I hope that the hon. Gentleman is now beginning to understand the difficulties that we can get into as a consequence.

I want to try to conclude by turning first to the question of the Consolidated Fund, the block grant and the rate support grant part of that. To some extent—I think to a great extent—the idea that this is devolution is totally counterfeit. We are talking about sums that are earmarked, sums that are allocated, sums that must be spent in a country that is desperately short of financial resources. The idea that there will be any flexibility in the Welsh Assembly enabling the hypothecation of resources from one area to another, enabling the transfer of positions from one part to another, enabling projects to be cancelled so that others can be encouraged, is absolute rot.

We are not talking about a country in which there is time to wait for the resolution of our problems, or in which there is surplus capacity or there are surplus resources that we can dedicate to luxurious enterprises. We are talking about a country that does not have a cent to bless itself with and has no spare capacity or spare resources, that needs every ha'penny it can get and cannot afford to lose money from one public expenditure sector into another sector. If it cannot juggle the finances in that fashion to the advantage of the people, the whole exercise is a total waste of time and money and a complete fraud.

I come finally to the fraud again repeated in the phrase from the clause that Grants for any financial year beginning after the coming into force of this section &to local authorities in Wales shall be made by the Assembly out of the Welsh Consolidated Fund instead of by the Secretary of State out of moneys provided by Parliament. Superficially, that looks grand. But the fact is that under previous clauses it is Parliament which must give consent for this money, it is Parliament which decides the colour of the Government, Parliament which decides the public expenditure of the Government.

The idea that somehow the Welsh Assembly is generating its own funds and then on the basis of novel democratic priorities making those funds available to the people of Wales in a new way is a nonsense. What is happening is that a centralised Government are allocating a titbit for the purpose of trying to slake nationalist thirsts, trying to get themselves off a difficult hook, and calling it devolution.

I can find intellectual and constitutional reasons for disagreeing with the Bill, but my most profound reason for disagreeing with it, as I come from a constituency with a significant dependence upon the rate support grant, is that it will be of immense material disadvantage, and consequently social and cultural disadvantage, to the people I represent. I hope that, like me, they will be doing everything possible to throw out the Bill and every proposition in it.

Photo of Mr Wyn Roberts Mr Wyn Roberts , Conway

It is fairly clear that the hon. Member for Bedwellty (Mr. Kinnock) prefers the evils he knows and would certainly rather not flee to the evils prognosticated in the Bill. The possibilities for wrong and the possibilities of the people of Wales suffering have never been far below the surface of this debate and our other debates.

Perhaps the first thing that I should do is to apologise to the Committee for an absence of about 20 minutes at the start of the debate. I do not think that I need apologise too profusely, because the Secretary of State for Wales has not been here at all. I understand that he is paired, but he has certainly not been here.

The effect of the clause is clear. As the hon. Gentleman said towards the end of his speech, it seeks to change the present position whereby local government grants are available through the Secretary of State out of moneys provided by Parliament and to ensure that such grants come through the Assembly out of the Welsh Consolidated Fund. The Government's proposal involves a major change not only in the position of the local authorities, which have been vociferous in their questioning of how the new system is going to work; Members of this House are clearly affected. So, too, is the Secretary of State, as we have heard from various hon. Members.

9.30 p.m.

Welsh Members will no longer be able to debate the rate support grant annually as in the past. I have contributed to those debates. We might try to take part in the debate on the rate support grant for England, but I cannot imagine that our participation will be very welcome to English Members. So there is a blow to this House in Clause 60—a very severe blow to the solar plexus—because it is almost inconceivable that we should not be able to discuss in this House some 72 per cent. of the contribution to the Welsh rate and rate support grant-borne expenditure. In 1976–77, for example, some £463 million of taxpayers' money was spent in Wales. What exactly do the Government propose?

Photo of Mr Cledwyn Hughes Mr Cledwyn Hughes , Anglesey

The hon. Gentleman is making a serious point, but will he explain under what rule we are prevented from debating the block grant in the House at that time? It will be a new situation, but it will concern a sum of money allocated by a vote by this House and there is no reason why it should not be debated.

Photo of Mr Wyn Roberts Mr Wyn Roberts , Conway

I am coming to precisely that point. Do the Goverment propose that we should discuss the grant for Wales along with the rest of the block grant, of which it is, of course, only a part? Is that what the Government have in mind for us? It is not clear from anything said so far. I would have thought that the matter of the rate support grant and how it is to be dealt with in the House would have been thought out by the Government. We must have some substitute for our participation, as Welsh Members, in the annual rate support grant debate. I do not think that to debate the grant simply as part of our debate on the block grant will be sufficient.

Then there is the matter of the negotiation of the grant with the Treasury. The implication of Clause 60—it is only an implication—is that the grant is to be negotiated with the central Government by the Assembly after consultation with the local authorities—although, I hasten to add, the position is by no means clear.

The Association of County Councils is not clear what precisely is meant by this clause and what sort of consultation will be necessary. I shall not read out the submission of the association to us, but it is clear that it does not understand the implications of the clause and the degree of consultation that there will be with local authorities and their associations. The Minister must clarify the point. We have heard in an intervention that the local authorities are to be consulted on the distribution of the grant but we have had no assurance that they will be consulted on the amount that they actually need and that has to be applied for to the central Government.

As many hon. Members have said, the Secretary of State has a very confusing role. On the one hand, I assume that he is to be consulted by the Assembly on the reserved matters listed in Schedule 5, after he has himself consulted the local authority associations. On the other hand, he is presumably to direct or guide the Assembly's negotiations with central Government. This is the answer to the question of the hon. Member for Bedwellty whether the right hon. Gentleman will be a delegate or a gauleiter in this connection. What will the Secretary of State do? It is as clear as mud in the Bill.

How will the Secretary of State be held responsible to this House? He appears to be moving out of our reach, as he has already taken care to be out of reach of the Assembly. He is becoming a law unto himself, a remote and distant figure, a moving target ducking and weaving behind a shield inscribed with the words: "The buck does not stop here."

Then there are the problematic roles of the Assembly and the local authority associations in Wales on rate support grant and the difficulty of the negotiation mechanism.

Photo of Mr Ioan Evans Mr Ioan Evans , Aberdare

There seems to be a presumption throughout this debate that we shall still have a Secretary of State for Wales. If so many of the powers now exercised by him and hon. Members are to be given to the Welsh Assembly, might not a future Government ask whether a Secretary of State is needed?

Photo of Mr Wyn Roberts Mr Wyn Roberts , Conway

The Secretary of State appears in the Bill; he has safeguarded himself. But his role in many clauses is by no means clear. It is certainly not clear what his role will be in connection with the rate support grant.

One thing seems clear; the Welsh local authority associations will no longer be able to sit beside their English counterparts to hammer out the case to put to central Government. The Welsh Counties Committee and the Association of District Councils in Wales will be silenced in this respect. I think that, to date, they have been represented in the negotiations. Is the Assembly to take their place at the negotiating table? How will the rate support grant for Wales be worked out in the first place?

As we heard yesterday, our needs are not the same as England's. We have special factors. The Government should say clearly by whom, how and when the grant for Wales will be settled. We know that it will be part of the block grant, but that confuses the issue, because we also understand that the block grant is to be negotiated every four years, while the rate support grant is negotiated annually.

We know that if the clause is accepted and the Bill becomes an Act, the distribution of grant will be done by the Assembly. As I have already pointed out, the Minister intervened to say that local authorities will be consulted on the distribution.

Let me put another question to the Minister. Is the allocation to the Secretary of State to perform his reserved functions part of the distribution? Is he to get this money from the Assembly? is he to draw it from the Welsh Consolidated Fund? Where is he to get his money? It does not appear that the Government anticipate a problem in that area, but they may yet be surprised, as the local authorities may be surprised, by the eventual distribution made to them individually, whatever may have been claimed on their behalf in the block grant negotiations.

There is nothing in the Bill to prevent the Assembly changing its priorities and holding back rate support grant, which could force local authorities to raise their rates more than they would otherwise have done. It looks as if they will be encouraged to do so by the various White Papers published by the Government. Indeed, this position was envisaged in "Our Changing Democracy", Command 6348, where paragraph 228 states: 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 cauculating 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 at matter to be settled in Wales. Paragraph 229 states: The Assembly will have an optional power to make a surcharge on local authority taxation; but it will not have to use this unless it runs into deficit or deliberately aims for a higher level of expenditure, for example to meet some particular Welsh priority for which it judges people would be willing to accept higher burdens. During the debate on the Scotland Bill, the position was made absolutely clear when my lion. Friend the Member for Ayr (Mr. Younger) said that the Scottish Assembly will be able to spend more than is expected on one part of its functions and make up the shortfall by forcing local authorities to raise rents at a higher level. The Secretary of State for Scotland replied: This fact has been clear all along. If he is only now appreciating it, that is too bad. This matter has nothing to do with the Government. The negotiations on the rate support grant, and therefore the ultimate impact on ratepayers, will pass to the Scottish Executive."—[Official Report, 24th January 1978; Vol. 942, c. 1301–2.] If we have an unequivocal statement from the Government that a similar position will occur in Wales, the implications are very serious. One is that the Government have not abandoned the idea of giving the Assembly powers of taxation. The Assembly can clearly raise extra money through the local authorities by depriving them of rate support grant and thus forcing them to raise their rates. This is made clear in paragraph 34 of the White Paper of August 1976, Cmnd. 6585, which says: If future changes are made in the taxation framework, particularly for financing local government, which would make it feasible for the Welsh Assembly to supplement the block fund while still meeting the conditions set out in paragraph 108 of Cmnd. 6348, the Government will be ready to consider incorporating the necessary revenue-raising powers in subsequent legislation. The conclusion of paragraph 108 of Cmnd. 6348 was that the only tax power suitable for devolution is a general power to levy a surcharge on local authority taxation. What do we call raising the rates except a form of surcharge? That seems to me to be quite clearly on the cards for Wales.

9.45 p.m.

On the question of the Assembly's withholding rate support grant—this is envisaged as a possibility—it is surely absolutely wrong that money claimed from the Exchequer for a specific purpose should then be withheld and applied to a totally different purpose. That is not good financial administration; it is wholly bad and unjustifiable on any and every ground.

I cannot find words strong enough to condemn the practice which the Government are about to introduce. It raises deception to an officially approved level. There is an element of deceit, surely, when the taxpayers' money is claimed for one purpose and then deliberately applied to another purpose?

Photo of Mr Alec Jones Mr Alec Jones , Rhondda

The hon. Gentleman used the word "deceit". I understand that this may be somewhat difficult to understand, but that is exactly the situation that exists now. When the rate support grant settlement is made—once the money has been passed on to the individual local authorities—those indivdual local authorities are perfectly entitled to use taxpayers' money that was earmarked for a social service for roads instead. That has been one of the main criticisms. But this is not something new, nor is it a consequence of this Bill. It is inbuilt in the present system.

Photo of Mr Wyn Roberts Mr Wyn Roberts , Conway

I would have thought that there was a considerable difference in this case, namely, that the money will have been claimed in the negotiation of the block grant on behalf of the local authorities. It is now proposed that the money should not be spent necessarily by the local authorities for those purposes but for a totally different purpose altogether.

Photo of Mr Emlyn Hooson Mr Emlyn Hooson , Montgomery

The hon. Gentleman has used strong words about people who use money that has been raised for one purpose but is used for another. What would he say about successive Conservative Governments and the way they used the Road Fund in this country?

Photo of Mr Wyn Roberts Mr Wyn Roberts , Conway

I have taken some time—rather more time than I thought—and I could not possibly go after that hare from Powys. I find the proposal that the Assembly can decide how much of the block grant should be distributed to local government—and how to allocate it among individual authorities—very dubious indeed. How are we to ensure that those areas that have most Members in the Assembly do not grab an unfair share of the available resources? Under the present system we know precisely how the authorities are compensated by the various elements of the rate support grant which plays such a vital role in the provision of local services.

I might tell the hon. and learned Member for Montgomery (Mr. Hooson) that, of course, his county of Powys is supported to the tune of 85 per cent. by rate support grant. The average for Wales is about 72 per cent. Is that fair system to be thrown to the four winds? What, indeed, is to replace it?

It is somewhat undignified to ask for more in the country's present economic position, although the Government are always implying that we in Wales shall somehow get more, and be better off, under devolution. But it is not undignified to try to ensure that we do not get less than our past fair share. When the system is changed that is always a possibility. The Minister has a great deal to explain about Clause 60. He must give us a great deal of clarification.

Photo of Mr Alec Jones Mr Alec Jones , Rhondda

I shall do my best to take up all the points that have been made in the debate. Unfortunately this means that I shall speak for longer than I would have otherwise wished, but since I have sat here almost silent for many hours I am sure that hon. Members will forgive me for that.

I was surprised that several of the contributions seemed to put forward the idea that the present system is almost satisfactory. The hon. Member for Barry (Sir R. Gower) said that it was an objective and scientific system. But that is not what local authorities tell me, whether they are county or district councils. In fact, that is not what hon. Members of this House have said in the past. For my sins I have taken part in the last two debates on the rate support grant orders and I do not recall anyone extolling the virtues of the present system. It was judged to be unfair, and this is what local authorities in Wales are saying.

Welsh local authorities told me in no uncertain terms that the recent rate support grant settlement was far too generous to London and they claim that the Department of the Environment is too London-oriented. They were not satisfied and they do not think that Wales has had its fair share. They felt that insufficient regard had been paid to the needs of Wales.

My hon. Friend the Member for Aberdare (Mr. Evans) and the hon. Member for Pembroke (Mr. Edwards) talked about local authorities having less say in the rate support grant settlement. In fact my hon. Friend the Member for Aberdare used the words "losing this sort of direct contact". I put it to him that it is somewhat stretching the imagination to believe that there is direct contact between individual local authorities in Wales and the body that made the rate support grant settlement in this country. That is not how the system works.

It seems that under the present system Welsh local authorities are small fish in a big pond. At least when the Assembly is established they will be relatively bigger fish in a relatively smaller pond.

Photo of Mr Ioan Evans Mr Ioan Evans , Aberdare

I thank the Minister for giving way so early in his speech. I was quoting, and I think that the hon. Member for Pembroke (Mr. Edwards) was as well, what the county councils are saying. There is considerable concern, because they believe that under the Wales Bill's provisions local authorities will have far less say and influence over the total grant to local government in Wales. They feel that they will have less influence over the manner in which the grant is allocated, and that is why they are expressing these fears.

Photo of Mr Alec Jones Mr Alec Jones , Rhondda

I shall do my best to come to all these points. I was specifically trying to deal with and isolate the specific suggestion that Welsh local authorities somehow, under the present system, had this direct contact. In fact, the representatives of the Welsh local authority associations have a very small representation on this body. I am not objecting to that, but I do not think that hon. Members should pretend that this gives direct contact. That is just not true.

Photo of Mr Nicholas Edwards Mr Nicholas Edwards , Pembroke

Nevertheless, the Association of County Councils considers it important and worth fighting for. Will the Minister explain how the new arrangements would strengthen Welsh involvement in the actual negotiation of the total rate support grant and the amount that comes to Wales? All he has mentioned is their part in the distribution to counties, but what matters is the total that comes to Wales. How does this make the authorities bigger fish in the negotiations?

Photo of Mr Alec Jones Mr Alec Jones , Rhondda

The hon. Gentleman must be more patient. I had not come to my peroration, but was indulging only in a warming up exercise. I shall try to deal with the problem.

We must also bear in mind the fact that many county councils, and indeed their association, are bitterly opposed to the principle of devolution. In other words, if the matter is in the blood, it is also in the head and heart. I am not trying to dodge the issue, but I was trying to deal with the question whether the contact is direct. In my experience I do not believe that it is direct at all.

The hon. Member for Pembroke said that it was a great advantage that the subject of rate support grant had up to now been debated in this House. I ask the hon. Gentleman to recall how many Welsh Members were able to get in on rate support grant debates last year or the year before. The opportunity to take part in such a debate may not exist for Welsh Members, despite their desire to wish to participate, because of the time factor. But when we come to an Assembly we can be sure that there will be adequate time to discuss rate support grant by elected Welshmen who may not be Members of Parliament but who will still have the interests of Wales very much at heart.

Photo of Mr Emlyn Hooson Mr Emlyn Hooson , Montgomery

Since the Minister was present in the rate support grant debates this year, last year and the year before that will he say how many of the hon. Members who have made great play with the negotiations that take place on the rate deficiency fund were present for those debates or tried to get in to speak?

Photo of Mr Alec Jones Mr Alec Jones , Rhondda

I shall let the hon. and learned Gentleman into a secret. I sent one of my hon. Friends to obtain that information, but unfortunately it has not been given to me in time. I do not wish to identify individuals when talking about the participation of Welsh Members in the RSG debates. Perhaps they came into the debate and, having appreciated that their chances of participating were small, may not have stayed.

Photo of Mr Wyn Roberts Mr Wyn Roberts , Conway

What is certain is that Welsh Members, after devolution, will not get in on discussions in respect of an English rate support grant. The other point the Minister has ignored is the fact that, whereas we in this Parliament can discuss the amount of the grant, the Assembly will not be able to do so.

Photo of Mr Alec Jones Mr Alec Jones , Rhondda

I have not ignored anything yet. I have not been on my feet for very long, I have received a number of interventions and am still undertaking my warming up exercises.

I wish to deal with one or two points made by the hon. Member for Pembroke. He referred to the block grant and mentioned the four-year aspect of the matter. I wish to say a few words on that subject because there seems to have been some confusion. Perhaps it is well at this time to try to find out how the level of public expenditure in Wales is allocated at present and how it will be allocated after devolution. The present position is that the level of public expenditure allocated in Wales is now a Government decision in which the Secretary of State for Wales—because, thanks to a Labour Government, he is inside the Cabinet—is in there fighting for his own corner. His corner is the needs of Wales.

That is the position and it will be exactly the same in the post-devolution period. The total block fund will be a Government decision and the Secretary of State for Wales will be inside the Cabinet fighting for his corner. There will be no sudden loss in relation to the block grant. Indeed, I believe that the Secretary of State will find it an advantage to have the Assembly advising him on the level of the grant.

10 p.m.

Even if the Assembly is trying to push the Secretary of Slate further than he wishes, or is able, to go, I cannot see that this could weaken his position in the negotiations. There is no basis for assuming that Wales will do less well after devolution. As long as needs are present, whether in Wales, Scotland, the North-West or the South-West, any reasonable Government will take them into account, as far as the general economy will allow. That would certainly be the position of a Labour Government.

It has been suggested that rather than having the block sum changing yearly, some local authorities would like a degree of continuity, though I understand that the hon. and learned. Member for Cleveland and Whitby (Mr. Brittan) said on the Scotland Bill that he would not find that acceptable. We say that the formula approach, which relates the total level of public expenditure on devolved services to expenditure on comparable services in other parts of the country and maintains that defined percentage relationship for a number of years, is something which the Government would want to discuss with the Assembly.

The hon. Member for Conway (Mr. Roberts) mentioned a four-year period, but that position has not been taken up by the Government. We have merely said that this is an option open to the Government in discussing these matters with the Assembly. It is not true to say that four years has been decided upon and is now fixed. We have drafted Clause 46 in general terms so that if the formula method is acceptable to both sides, the Bill will not inhibit the adoption of that approach.

I should like to deal with the relationship between the block fund and the rate support grant. After devolution there will not be an England and Wales rate support grant negotiation. These negotiations will be separate. The Assembly will negotiate with the Secretary of State for a block fund which will include an element for the payment of rate support grant.

In negotiating that fund the Assembly will naturally take into account what Welsh local authorities have represented about their needs in exactly the same way as central Government now takes into account what local authorities represent to us as their needs. That is not to say that central Government have always accepted the views of local authorities, but at least those representations are made. The Assembly will negotiate a separate Welsh rate support grant settlement with Welsh local authorities. There is no prior England and Wales negotiations.

Welsh local authorities, therefore, will in my view be able to play a much more influential role than they can at present. We hope and believe that the machinery which we would devise would be far less complex and much easier to understand than is the present machinery. Several hon. Members have suggested that the Bill is inadequate as it would be unable to prevent the Assembly from straying, as it were, the reserved local authority services of rate support grant. I put to the Committee that this would be impossible for the Assembly to achieve in any technical sense. Apart from that—I shall give my reason for that later—I do not believe that we should assume that an Assembly would seek to do that.

I come back to the reason for saying that it is not possible for the Assembly to do it. The level of expenditure on reserved services will be the subject of consultation between the responsible Secretary of State and Welsh local authorities. Clause 60(2) provides for this. Following this consultation, the Secretary of State will indicate to the Assembly what should be included in the total of relevant expenditure for rate support grant purposes in respect of those reserved services.

Roughly 85 per cent. of expenditure on reserved services is in respect of the police and mandatory awards to students, of which local authorities, on those two services, currently receive specific grants of 50 per cent. and 90 per cent. respectively, but it is from the responsible Departments of the United Kingdom Government. That arrangement will continue. The specific grants will continue, post-devolution. The residual element of the expenditure on reserved services—this is apart from the specific grant components—will fall to be supported by the rate support grant of the Assembly. The block fund payments to the Assembly will include provisions to enable this support to be provided for the reserved local authority services.

Hon. Members will know that the rate support grant is a block grant. No part of it can be hypothecated for any particular purposes. The central Government, for example, at present cannot say that so much of a grant is to be spent on education and so much on personal social services. Nor will the Assembly be able to hypothecate the grant between devolved and reserved services. Local authorities are free to use the grant in what ever way they wish, whatever the level at which it is set by the Assembly. That is why I said that it is impossible for the Assembly to starve the reserved services of support. Any attempt to do so could result in a cut-back in a wide variety of local authority services depending on the priorities of individual authorities and/or on the increases in local rates.

We also have to take into account that local authority ratepayers are also Assembly electors and they would soon draw their own conclusions on the matter.

Photo of Mr Neil Kinnock Mr Neil Kinnock , Bedwellty

Am I following my hon. Friend correctly? In stipulating that there can effectively be no change in reserved services, will he at least concur in the view that I earlier put forward that, however much and however openly the Assembly debates, there will be no differences resulting from the act of devolution in respect of those services?

Photo of Mr Alec Jones Mr Alec Jones , Rhondda

I do not agree with my hon. Friend on that. The difference between us would be in trying to define what is meant by "no possible variation", although I realise that my hon. Friend did not use that precise phrase. We have been dealing with this issue for long enough to know that much of local authority expenditure is continuous and committed. Of course, room to manoeuvre is limited and it is not possible to switch resources to any great extent. One could not, for example, switch from education to housing to the extent that teachers would be thrown out of work and schools would have to close. There is, however, some room to manoeuvre although it is not as great as my hon. Friend would wish.

I do not dissent from his other point that the object of the exercise for Assemblymen, as for hon. Members in this House, would be to increase the total sum thereby creating even greater elbow room.

The hon. Member for Pembroke suggested that the Assembly would be able to withhold resources from local authorities which would cause the rates to rise and that this would be an indirect method of taxation. I am surprised that he saw anything startling or new in that concept. By varying the amount of rate support grant the Assembly could vary the sums that local authorities must raise through the rates. That would be nothing new. It happens now. The local authorities tell me that because the central Government have not paid them sufficient in support they have been forced to increase the rates to levels they do not like.

When the level of rate support grant has increased, local authorities have usually clapped their hands, but not too loudly. The Government have never made any secret of the fact that this effect on the rates is possible. It is one of the acceptable consequences of devolution, and with devolution it is inevitable. The White Paper said quite clearly that devolution could lead to extra levels of rates, but we believe that any reasonable Assemblymen will take that factor into account.

Photo of Mr Nicholas Edwards Mr Nicholas Edwards , Pembroke

The Minister says that the position would be the same under the Bill as it is at present. It is different. The rate support grant can be reduced below the level that the local authorities think desirable. Under the new system the block grant will be negotiated on the basis that certain rate support grant money is needed by the local authorities, and subsequently the Assembly might decide to cut the amount it pays out to the local authorities even though it has received the block grant, including that amount, from the Government.

Photo of Mr Alec Jones Mr Alec Jones , Rhondda

One has to bear in mind that the Assembly will not be in a glass bottle on a shelf. It will be subject to the political pressures that are applied to us in this House every day. Since most of the Assemblymen will live in Wales, I can guarantee that as much as I can guarantee anything. The end result for the people who matter—those who will pay the bill—is that under the present system the withdrawal of central Government support means extra rates and that similarly, after devolution, withdrawal by the Assembly of funds would mean the same.

I do not see any rational grounds for supposing that the Assembly would exercise its powers contrary to the best interests of Welsh local authorities or ratepayers. I go even further and ask who is better able to show concern for Welsh local authorities and ratepayers. The the Assemblymen will live in Wales, I can who matter—those who will pay the bill—devolution, withdrawal by the Assembly be ratepayers and users of local authority services, too.

10.15 p.m.

Many references have been made to the hon. Member for Merioneth (Mr. Thomas). I welcomed his comments about the need for a more flexible Welsh rate support grant system. That is something that has been much in the mind of a joint Welsh Office-Welsh local authority working party. The party has now been working for over a year in trying to design a separate rate support grant system for Wales.

There is a large measure of dissatisfaction with the present method that is based on something mysterious called regression analysis. It seems that with the exception of a few experts—I do not class myself as one—it is almost an esoteric exercise in which certain criteria are put into the formula and we hope or pray that the results will come out as we thought. However, judging by the comments that I have heard during several years when Governments of both parties have been in power, I do not think that it is a method that has been welcomed with universal acclaim as being understandable, simple or concentrating on bringing out needs. That is why we set up the working party to try to devise a system that would be more in keeping with the needs of Wales.

We have in mind that the method of needs assessment that the working party has recommended is not based on multiple regression analysis but on a much simpler concept based on client groups. The working party has produced a report that has been considered by the Welsh Consultative Council on Local Government Finance. Conservative Members have made a great virtue of the consultative council. I thank the members of the council for the work that they have done thoughout the past two or three years.

The council has considered the report of the working party and endorsed it. Further work is now in hand. We are expecting a second report in May or June. We are taking steps so that we can take a dummy run, as it were, using the new Welsh proposals alongside the present system. That will enable us to test the efficacy of the system.

I think that I have sought to deal with most of the points that have been raised. [HON. MEMBERS: "Hear, hear."] If hon. Members think that I am talking out the debate, let me remind them that there are 42 minutes left. There are some hon. Members who must come to these debates more often. If they do so, they will have a greater appreciation of talking things out. I serve only to sit and wait, and have been waiting a long time to say these few words.

I apologise to my hon. Friend the Member for West Lothian (Mr. Dalyell) if I was rude to him earlier. I am sure that he will understand that even Ministers are not as cool-tempered as they might wish to be or should be. My hon. Friend asked four questions. The Chairman answered one of them—namely, that my hon. Friend was not in order to discuss forestry or inland waterways in this debate. However, he asked about the cost of manpower in the rate support grant settlement. Much of the work would be done by the present staff. I am not able to give a figure because it is not possible to split the estimates of likely costings into individual transactions, especially as we are now in the process of trying to devise new means of calculating the rate support grant.

My hon. Friend asked whether there have been consultations with Welsh local authorities, to which the answer is certainly "Yes". However, if my hon. Friend thinks that consultations meant universal acclaim, the answer to that is equally "No". As far as I can see, it depends on whether one is a county or a

district man on that issue. But certainly most local authorities and the local authority associations in Wales have been fully consulted and have made quite sure that we are fully aware of their views on these matters.

My hon. Friend again raised the question of divided loyalties of the Civil Service. I do not wish to pursue that point, but I invite my hon. Friends to read the speech made by my right hon. Friend the Secretary of State for Wales when he dealt with this subject in full, and with the costs and the part-time aspect and the salaries, in a previous debate. However, I understand my hon. Friend's view. It is not a view that I share. I do not believe that his is a view that is shared by the Civil Service unions.

I hope, therefore, that the clause will be allowed to stand part of the Bill.

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

The Committee divided: Ayes 128, Noes 112.

Division No. 163]AYES[10.21 p.m
Allaun, FrankGraham, TedRichardson, Miss Jo
Atkins, Ronald (Preston N)Grant, George (Morpeth)Roberts, Albert (Normanton)
Atkinson, NormanGrant, John (Islington C)Robinson, Geoffrey
Barnett, Guy (Greenwich)Harper, JosephRoderick, Caerwyn
Bates, AlfHarrison, Rt Hon WalterRodgers, George (Chorley)
Beith, A. J.Hooson, EmlynRodgers, Rt Hon William (Stockton)
Bidwell, SydneyHowells, Geraint (Cardigan)Ross, Stephen (Isle of Wight)
Blenkinsop, ArthurHuckfield, LesRoss, Rt Hon W. (Kilmarnock)
Booth, Rt Hon AlbertHughes, Rt Hon C. (Anglesey)Rowlands, Ted
Cant, R. B.Hughes, Roy (Newport)Shaw, Arnold (Ilford South)
Clemitson, IvorHunter, AdamSilkin, Rt Hon S. C. (Dulwich)
Cocks, Rt Hon Michael (Bristol S)Jackson, Miss Margaret (Lincoln)Skinner, Dennis
Cohen, StanleyJohn, BrynmorSmith, Cyril (Rochdale)
Coleman, DonaldJohnson, James (Hull West)Smith, John (N Lanarkshire)
Cowans, HarryJohnson, Walter (Derby S)Snape, Peter
Cox, Thomas (Tooting)Jones, Alec (Rhondda)Spriggs, Leslie
Crawshaw, RichardJones, Dan (Burnley)Stallard, A. W.
Crowther, Stan (Rotherham)Judd, FrankSteel, Rt Hon David
Cryer, BobLamble, DavidStewart, Rt Hon Donald
Davidson, ArthurLamborn, HarryStewart, Rt Hon M. (Fulham)
Davies, Bryan (Enfield N)Lamond, JamesStoddart, David
Deakins, EricLitterick, TomStott, Roger
Dean, Joseph (Leeds West)Luard, EvanSummerskill, Hon Dr Shirley
Doig, PeterMacFarquhar, RoderickTaylor, Mrs Ann (Boiton W)
Dormand, J. D.McNamara, KevinThomas, Dafydd (Merioneth)
Douglas-Mann, BruceMallalieu, J. P. W.Thomas, Mike (Newcastle E)
Duffy, A. E. P.Marshall, Dr Edmund (Goole)Thomas, Ron (Bristol NW)
Dunnett, JackMarshall, Jim (Leicester S)Thompson, George
Ellis, John (Brigg & Scun)Mikardo, IanTorney, Tom
English, MichaelMillan, Rt Hon BruceTuck, Raphael
Evans, Gwynfor (Carmarthen)Miller, Dr M. S. (E Kilbride)Varley, Rt Hon Eric G.
Evans, John (Newton)Molloy, WilliamWainwright, Edwin (Dearne V)
Ewing, Harry (Stirling)Moonman, EricWalker, Harold (Doncaster)
Fernyhough, Rt Hon E.Morris, Rt Hon Charles R.Watkins, David
Flannery, MartinMulley, Rt Hon FrederickWellbeloved, James
Fletcher, Ted (Darlington)Murray, Rt Hon Ronald KingWhitlock, William
Foot, Rt Hon MichaelNewens, StanleyWigley, Dafydd
Forrester, JohnOrme, Rt Hon StanleyWilson, Gordon (Dundee E)
Fraser, John (Lambeth, N'w'd)Palmer, ArthurWise, Mrs Audrey
Freeson, Rt Hon ReginaldPark, GeorgeWoof, Robert
George, BrucePavitt, Laurie
Goldlng, JohnPendry, TomTELLERS FOR THE AYES:
Gould, BryanPenhaligon, DavidMr. Frank R. White and
Gourlay, HarryReid, GeorgeMr. James Tinn.
NOES
Arnold, TomHamilton, Michael (Salisbury)Powell, Rt Hon J. Enoch
Atkins, Rt Hon H. (Spelthorne)Hampson, Dr KeithPrentice, Rt Hon Reg
Atkinson, David (Bournemouth, East)Harrison, Col Sir Harwood (Eye)Pym, Rt Hon Francis
Bendall, Vivian (Ilford North)Hayhoe, BarneyRenton, Tim (Mid-Sussex)
Benyon, W.Hodgson, RobinRhodes, James R.
Biggs-Davison, JohnHolland, PhilipRidley, Hon Nicholas
Boscawen, Hon RobertHordern, PeterRoberts, Michael (Cardiff NW)
Bottomley, PeterHurd, DouglasRoberts, Wyn (Conway)
Brittan, LeonJames, DavidRoss, William (Londonderry)
Brocklebank-Fowler, C.Jessel, TobyRost, Peter (SE Derbyshire)
Brooke, PeterJohnson Smith, G. (E Grinstead)Shaw, Giles (Pudsey)
Brotherton, MichaelJopling, MichaelShelton, William (Streatham)
Buchanan-Smith, AlickKaberry, Sir DonaldShepherd, Colin
Budgen, NickKing, Tom (Bridgwater)Shersby, Michael
Burden, F. A.Kinnock, NeilSims, Roger
Butler, Adam (Bosworth)Knox, DavidSkeet, T. H. H.
Chalker, Mrs LyndaLamont, NormanSmith, Dudley (Warwick)
Clarke, Kenneth (Rushcliffe)Lloyd, IanSmith, Timothy John (Ashfield)
Costain, A. P.Luce, RichardSpeed, Keith
Dean, Paul (N Somerset)McCrindle, RobertSpence, John
Douglas-Hamilton, Lord JamesMcCusker, H.Stanbrook, Ivor
Drayson, BurnabyMacfarlane, NeilStanley, John
Dunlop, JohnMcNair-Wilson, M. (Newbury)Stradling Thomas, J.
Dykes, HughMcNair-Wilson, p. (New Forest)Tebbitt, Norman
Eden, Rt Hon Sir JohnMather, CarolTemple Morris, Peter
Edwards, Nicholas (Pembroke)Mawby, RayThatcher, Rt Hon Margaret
Elliott, Sir WilliamMaxwell-Hyslop, RobinTrotter, Neville
Emery, PeterMeyer, Sir Anthonyvan Straubenzee, W. R.
Evans, Ioan (Aberdare)Mitchell, David (Baslngstoke)Vaughan, Dr Gerald
Eyre, ReginaldMontgomery, FergusViggers, Peter
Farr, JohnMoore, John (Croydon C)Walker, Rt Hon P. (Worcester)
Fell, AnthonyMorrison, Hon Peter (Chester)Warren, Kenneth
Fletcher, Alex (Edinburgh N)Nelson, AnthonyWeatherill, Bernard
Fowler, Norman (Sutton C'f'd)Neubert, MichaelYoung, Sir G. (Ealing, Acton)
Gardiner, George (Reigate)Page, John (Harrow West)
Gardner, Edward (S Fylde)Page, Rt Hon R. Graham (Crosby)TELLERS FOR THE NOES:
Gow, Ian (Eastbourne)Page, Richard (Workington)Mr. John MacGregor and
Gower, Sir Raymond (Barry)Parkinson, CecilMr. Spencer Le Marchant.
Grist, IanPercival, Ian
Question accordingly agreed to.
Clause 60, as amended, ordered to stand part of the Bill.