UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 246-iii

House of COMMONS

MINUTES OF EVIDENCE

TAKEN BEFORE

WELSH AFFAIRS COMMITTEE

WALES AND WHITEHALL

Tuesday 26 January 2010

SIR EMYR JONES PARRY, MR ALED EDWARDS and MR PAUL VALERIO

MR GERALD HOLTHAM

Evidence heard in Public Questions 224 - 327

USE OF THE TRANSCRIPT

1.	This is an uncorrected transcript of evidence taken in public and reported to the House. The transcript has been placed on the internet on the authority of the Committee, and copies have been made available by the Vote Office for the use of Members and others.
2.	Any public use of, or reference to, the contents should make clear that neither witnesses nor Members have had the opportunity to correct the record. The transcript is not yet an approved formal record of these proceedings.
3.	Members who receive this for the purpose of correcting questions addressed by them to witnesses are asked to send corrections to the Committee Assistant.
4.	Prospective witnesses may receive this in preparation for any written or oral evidence they may in due course give to the Committee.
5.	Transcribed by the Official Shorthand Writers to the Houses of Parliament: W B Gurney & Sons LLP, Hope House, 45 Great Peter Street, London, SW1P 3LT Telephone Number: 020 7233 1935

Oral Evidence

Taken before the Welsh Affairs Committee

on Tuesday 26 January 2010

Members present

Dr Hywel Francis, in the Chair

Nia Griffith

Mrs Siân C James

Mr David Jones

Alun Michael

Albert Owen

Hywel Williams

Mark Williams

________________

Witnesses: Sir Emyr Jones Parry, Chair, Mr Aled Edwards, Executive Committee Member, and Mr Paul Valerio, Executive Committee Member, All Wales Convention, gave evidence.

Q224 Chairman: Welcome to the Welsh Affairs Committee and this inquiry into Wales and Whitehall. For the record, Sir Emyr, could you introduce yourself and your colleagues please?

Sir Emyr Jones Parry: Thank you very much indeed for the welcome. Emyr Jones Parry. With me are Aled Edwards and Paul Valerio.

Q225 Chairman: Could I begin by making a statement about this inquiry. It takes two to tango, Wales and Whitehall. In the first few weeks the spotlight has been on Whitehall. We want to ensure that the spotlight is on both and the inter-relationship. Sir Emyr, we would be interested to know about your own unique position in that you were appointed to lead the All Wales Convention as a distinguished diplomat. Much of what we are looking at is shaped by the events of both 1979 and 1997. Could you tell us where you were at that time in 1979 and in 1997 and whether or not that has any bearing on the way in which you have approached the challenge before you?

Sir Emyr Jones Parry: Back in 1979, Chairman, I was just coming back from Canada. I remember it vividly because when my heavy baggage turned up, the driver refused to unload it and there was no-one else to unload it, and I had a seven-months pregnant wife. Let me just remind you that the mortgage rate was 12%. I got my first house in London and within a month the mortgage rate was 16.25%. I remember that vividly, but it had no impact on this. In 1997 I was just about to take over responsibility for the European Union in the Foreign Office so I lived through that period up until 2001 firstly responsible for EU and then as the Political Director in the Foreign Office, the number two in the Foreign Office and, as I said in a previous meeting with some of you, responsible for devolution in the Foreign Office. So I had a hand in how the Foreign Office reacted to the events and I and somebody who represented me sat on the Lord Chancellor's Committee looking at the whole process, so I saw it from the inside. That is where I was. If you want some reflections on Wales in Westminster over that period, having done European affairs for 20 years, the big, striking thing that comes out in the Convention report is the maturity of the Welsh contribution to EU affairs compared to what it was.

Q226 Chairman: What are you comparing with what?

Sir Emyr Jones Parry: I am comparing through the 1980s where traditionally in inter-departmental discussions in Whitehall the major Welsh contribution from the then Welsh Office tended to be at the end of the discussion, "Mr Chairman, I would like to reserve the position of my Secretary of State," but without having made any contribution prior to that in the debate. What we have seen now in the last two years is a very strong Welsh presence in the formulation of policy, in the negotiation of policy, in the way it is implemented, and a far more interactive approach by Wales, and that has evolved since 1998, but it is particularly true now, and I very much welcome, having seen it at the sharp end in Brussels, and having had a session specifically on EU affairs, there is no question that the maturity of the contribution is much greater than it was.

Q227 Chairman: You were talking about 1997 and of course the legacy was the asymmetrical nature of the existing settlement in 1997 and the continued asymmetrical settlement post-democratic devolution. Can you give us some observations on that? I know that you have said publicly that you felt - and I am not sure whether you regretted saying it - that it was a little unfair that Wales did not have what Scotland had but that was the nature of the settlement and that was the nature of the legacy.

Sir Emyr Jones Parry: I am not going to apologise for any remarks I have made, Chairman, but you misquote me. Let me be clear, prompted by the BBC, and at the third time of asking, I did describe the settlement as being "incongruous" in terms of the treatment of Wales and Scotland. The incongruity stemmed from the simple choice in any federal arrangement as to whether or not residual power should rest in the centre or should rest in the provinces or the states. We are not in a federal system, of course, but I remember putting out a piece of paper to Robin Cook and saying the key choice now in the Lord Chancellor's Committee is what power does Scotland get? Does Scotland get something or does Scotland get everything less something? And he was quite clear in what he wanted me to argue for. The Welsh situation, as you know far better than I, is quite different. I described those two situations as incongruous and I stand by incongruous.

Q228 Chairman: Right, so what you are saying is that if we re-visit that period, if a set of arguments had been put that was opposite to what you were doing, then we would not be faced with these sets of challenges that we have today?

Sir Emyr Jones Parry: No, I am not saying that at all. We are where we are and there is no point in going back to what happened in 1997/98. We have ended up with two Government of Wales Acts and now the question is how does one move forward on the basis of the more recent Act.

Q229 Chairman: Let me just approach it in a different way then. One of the underlying themes of your report is that there is a lack of public understanding, for want of a better phrase, of the devolution settlement. Is that as a consequence of the asymmetrical nature of the devolution settlement of 1997 to 1999?

Sir Emyr Jones Parry: I think it is far more complicated than that. It is partly public disenchantment with politics, which I find deeply distressing; the interest in institutions and in politics is much diminished. That is part of it. It is partly that if you came to explain the processes of Westminster they are impenetrable to most people out there. That is part of the nature of our institutions. However, it is the case, as we found throughout Wales and in most of the evidence we got, that people do not understand the present arrangements. One of the things we have flagged up is the risk of embarking on a referendum when the lack of understanding is there and when of course things can be open to misinterpretation very easily. If you ask me, if there is one thing that I wish we had put in the report it would have been to have emphasised the very simple reality that it is easier to oppose in any referendum than it is to make a case for a proposition.

Q230 Chairman: You mentioned embarking on a referendum. Are you referring to 1997 or 1979 or the up-coming one?

Sir Emyr Jones Parry: Looking forward to a possible referendum.

Q231 Albert Owen: I am very interested in what you are saying about the "Scotland-lite" scenario but do you not recall that in 1997 and indeed in my Party's manifesto, what we were concerned about was an over-centralised state, and that devolution was taking place to London, to Belfast as well as to Edinburgh and Wales, and all those had a different degree of power being transferred, so it was a little bit more complex than just let us have the same as Scotland?

Sir Emyr Jones Parry: I am not arguing for the same as Scotland.

Q232 Albert Owen: The point I am making is that devolution was not simply about London to Cardiff or London to Edinburgh. It was about breaking up an over-centralised state.

Sir Emyr Jones Parry: Let me take that in two parts. Firstly, is the series of constitutional changes post-1997 is probably the greatest in this century. It is not just devolution. It is the Human Rights Act, bringing the ECHR into law; it is devolution; it is the mayoralties, Middlesbrough and three in London, apart from the Mayor of London. Of course they are all changes but they did produce this asymmetry, beyond question, and that asymmetry has consequences. Part of that is that we have anomalies at the borders. Part of it is that the structures are different and therefore not as understood perhaps, but we are where we are.

Q233 Albert Owen: It is about democracy as well. A final point on what you were saying, Chairman, we are talking about democratic devolution; it was making London more democratic, having its own Assembly after what had happened in the previous period; it is about making Belfast and Northern Ireland more democratic as well.

Sir Emyr Jones Parry: Belfast is an understandable response to the Troubles and the very honourable efforts made by successive Prime Ministers, and today again, to try and get that situation under control. You could argue, Mr Owen, that democracy and better governance was a motive. Some people would say it probably was not the primary motive. The primary interest was actually to assuage growing nationalism and to preserve the unity of the Kingdom. Second to that came whether we would end up with a better system of governance?

Q234 Albert Owen: Would you argue that there was a regional element to it as well within England?

Sir Emyr Jones Parry: If you look at the English reaction, the rejection of regional authorities and the fact that the bodies that have been set up really have no power as such, they are all nominated. The mayoralties are different. There are not that many of them and of course we have had some cases where they have been rejected by the electorate. If you looked at England as a whole and said what is the quantum change, it is nothing like as great a change in the governance of England as has happened in Scotland and in Wales.

Q235 Mr Jones: You speak of the hazards of proceeding to the referendum given the current level of understanding of the devolution settlement. In the course of your inquiry did you seek to establish to what extent the degree of understanding of devolution had increased since 1997 when the referendum was held on the establishment of the Assembly in the first place? Has this changed at all or has it remained static?

Sir Emyr Jones Parry: Certainly support for devolution has consistently increased and has matured at a level of 72% in favour of either what they have or would like something else. I do not think I can quantify this precisely but along the way I think knowledge has improved. Civic society is much more aware. There is a big effort made with school children, the Assembly works diligently on that, but we still found that the average person did not understand. I hope we have brought it out the extent to which the complexities, as in who is responsible for what, the distinction between what is authorised for the ministers and what is the prerogative of the Assembly, the differences, the nuances are really not understood. Where people are more familiar with and appreciate devolution it tends to be when they come into a specific contact with it. If you are talking about a policy for their school children, if it is how the National Health Service is now managed, they are things that people understand because they come into contact with them, but there is not such a great understanding of the general constitutional nature of it.

Q236 Mark Williams: You have answered my first question. I was going to ask you to look back on those evidence sessions and the scale to which there was that lack or perceived lack of understanding of the devolution settlement. You have mentioned that there is a difference between people in their everyday lives, be it the Health Service or education, and the bigger picture. Looking back to those evidence sessions, you were not charged with an educative role in terms of explaining the current system but was that a product of those meetings? Did you feel that people were appreciative of the finer points of the system through your inquiry?

Sir Emyr Jones Parry: I think we scratched the surface, to be honest, Mr Williams. I do not think we did much more than that. But we were charged with stimulating a debate. You cannot stimulate a debate without trying to pass out information. You need a certain level of understanding if you are going to have a decent, meaningful debate. We did spend quite a lot of time trying to (i) get the history right, and the early document we produced set out, I think neutrally, a lot of the history and how the whole thing had evolved, and (ii) look forward and try to tease out issues. We tried to set that out as fairly as we could and do justice to it.

Q237 Mark Williams: You used the word "impenetrable" earlier on. How impenetrable? Can you quantify that in terms of those meetings and the scale to which people shared that view?

Sir Emyr Jones Parry: I think elected representatives know far better than I the perils and the advantages of public meetings. In terms of turn-out we did reasonably well. We tried to hold meetings across Wales but the fact is in terms of turn-out, what do you get at a meeting? You get the committed on one side, and the True Wales "groupies" came with me to almost every meeting I was at. I cannot genuinely tell you how many people in Port Talbot actually came from Port Talbot as opposed to people who set themselves up to come to create a scene.

Q238 Chairman: It was about 30 out of 78.

Sir Emyr Jones Parry: That is an authoritative view. 37% shall we say. The public meetings are something we needed to do but our consultation was of course much broader. We took large amounts of evidence all around the place. We polled. We tried to give everybody the opportunity. Not many took it, but many more took it than had done previously, including on an interactive website. What we reported is a summation of what we gleaned from all those sources, not just from public meetings.

Mark Williams: Thank you.

Q239 Mrs James: Turning to inter-governmental arrangements; do you have concerns that inter-governmental arrangements are of a non-binding, non-statutory nature? Are they robust enough to survive different Governments at Whitehall and in the Bay?

Sir Emyr Jones Parry: To go back to one of the things I have felt quite strongly about from the very beginning, it is the extent to which Wales and its bureaucracy is engaged in Whitehall, engaged with Whitehall, and the extent to which that bureaucracy reflects Wales and is acceptable in Wales, which is a dimension, but at the same time is one which is competitive and has the same standards and levels of expertise as Whitehall. So a public service which is every bit as good, preferably better if it could be, as that in Whitehall but, at the same time, responsive, and that is a difficult tension. When I was speaking at the National Eisteddfod in Bala in August I was quite surprised that one of the early questions was from someone who attacked the bureaucracy in Cardiff as being non-representative and not reacting, and everybody in the tent applauded, and I was the one who had to stand up for the bureaucracy. They are in a different position but I think we have had too long a period of not necessarily being as engaged as we should have been. I think that is changing. Why do we need to be engaged? Because - I would say this, would I not - time spent on reconnaissance, as the military say, is never wasted. Lubricating the system of government permits government to work. What I mean by that is when proposals are put forward in Whitehall that is normally on the basis of an inter-departmental discussion before and an agreement on what is put forward. The more that officials and ministers in Cardiff are engaged with their opposite numbers in London, the more that is an automatic part of the process, the better will be the proposals that come forward to Parliament for powers, the better drafted will be the LCOs, the quicker they will proceed because there will have been that working. Getting a system which permits all that to function efficiently is very important. Is it resilient enough to cope with different circumstances? Of course, there has been this privileged position that it has been the same party in power predominantly in Cardiff and that has facilitated things, up to a point. It does not follow that it automatically makes things work. Conversely, it is the fact that it seems to me that the Whitehall and governmental response to devolution has evolved markedly, shall we say, in the last three years following the changes in Scotland. Whitehall, which had been rather quiescent on devolution and had assumed that it was a comfortable relationship that was working, in confronting the Scottish Nationalist administration in Scotland people became more vigilant and on their guard, and I think that affected officials and it affected ministers in their response to Scotland and with a side-effect as to how they then dealt with Wales.

Q240 Mrs James: Coming back to that comfortableness, the Memorandum of Understanding is based on very high principles of co-operation, consultation and communication. It has not changed since 1999. Do you think a review is due? Do you think that the attitude between the Government and the Parliament is more important in that review in growing that comfortable communicative attitude?

Sir Emyr Jones Parry: I think it works both ways. You could argue that Cardiff and Wales need to be more engaged in Whitehall. Whitehall certainly needs to be more responsive and conscious and aware of devolution. Again, I think Whitehall, in responding to Scotland and to events, has to sharpen up its act too. Some of that comes out as confrontation. We see this on some of the environmental issues where I am not sure that all of Whitehall necessarily fully understood what was being put in the Government of Wales Act 2006 and that afterwards partly a bureaucrat reaction is that sense of, "I am not sure we wanted to see that power move away from us". Parliament has legislated so the need for officials and ministers to understand that on both sides is very important.

Q241 Mrs James: Just as a final supplementary to that, do you consider that the revival of the operation of the Joint Ministerial Committee on Devolution, with a new responsibility for promoting dialogue, will help to improve the UK's Government's relations with devolved administrations?

Sir Emyr Jones Parry: The problem with memoranda or occasions like is whether they are living documents or living events. I think what is more important at the end of the day is that there is a practice of consultation, of communication, of engagement, and that it happens. You rightly say, Mrs James, that the memoranda have not been updated. My worry about memoranda is that they tend to be things that are negotiated. The risk is that they are put somewhere on the shelf in the cupboard and forgotten about. When we asked some pertinent questions in Cardiff as to how things operated and what was written down, there was a lot of scurrying around and it was not immediately something of which people were conscious. It probably applies more at the London end than it does in Cardiff. What really matters is that when you are working on a policy you know who your opposite numbers are, and for that I say throughout the British Isles, and that actually you are in a process of engagement and working with in a spirit of co-operation and communication, and where we come back then to what Mr Owen was saying is that you have government more accountable to local situations profiting from how others do it, deciding what you want to do for yourselves, but doing that in a more dynamic, engaged manner. Of course you have got to have the grandstands but remember no summit or any meeting of that sort is ever successful unless there has been an awful lot of preparation.

Q242 Mr Jones: Sir Emyr, could we return to the non-binding nature of the relations between the Government and the devolved administrations. The concern I have got is where does this leave the citizen, because clearly non-binding arrangements are usually something you cannot rely on in court action, and at some stage the aggrieved citizen may want to take court action against whoever is the provider of the services that he wants to use and he may not be able fully to exercise those rights because whatever relationship exists between central government and the devolved administration is in non-binding form. Do you think that this is a weakness so far as the citizen is concerned? Is the citizen being shortchanged as a result of these arrangements?

Sir Emyr Jones Parry: I cannot help thinking that the greater problem for the citizen is not whether these arrangements are formal or informal but where the power rests? One of the things we did find was that most people in this state of what I describe as a "fog" did not understand who was responsible, so if you are a member of the public and you did feel aggrieved, the question of to whom you go with that complaint, where is your grievance going to be exercised, I think is a greater problem than whether there is a binding or non-binding relationship between governments.

Q243 Mr Jones: We have had evidence, for example in our cross-border health inquiry, that the arrangements between the Welsh Assembly Government and the various health trusts and other providers on the other side of the border were in the form of protocols which were obviously non-binding. From a legal point of view, that leaves a missing nexus, so if the aggrieved citizen who is attempting to seek treatment wishes to pursue what he sees are his rights he is going to find that there is a break in the legal relationships between the various bodies that he is dealing with, with the consequence that he probably will not be able to secure those rights. It seems to me - this is a personal point of view - that that citizen probably is being shortchanged as a result of those arrangements.

Sir Emyr Jones Parry: We flagged up the risk of being shortchanged. Indeed, it was said to us, especially in Wrexham and Newport, that where people were particularly affected by the border consequences and where perhaps your normal hospital for treatment might have been Hereford, what did that mean for the services you got, and where there was a risk of two queues, the sense that you are in a longer queue, people felt disadvantaged. I suspect the solution to that is less in the binding or other nature but that the authorities in Wales in the arrangements that they make for any treatment which is on the other side of the border should take account of the interests of all their citizens and try and avoid what I call in the report the "distortions" that do occur. Can I ask Mr Edwards to comment.

Mr Edwards: Going back to the earlier point of the two accountabilities, one of the things that we did pick up in the evidence was the engagement of the third sector in particular. I would say after being on the Third Sector Partnership Council in the Assembly for many years that one of the things that is characteristic of that dynamic is an accountability of values. Going back to the original Government of Wales Act, that led to a certain value base of sustainable development, equal opportunities and also, I am sure you will recall, human rights. I think that there is in that respect an enhanced sense of accountability to a value base, but I concur with what Sir Emyr said about the cross-border issues and it is something that we did set our minds to. If you recall, we pressed in the report for enhanced distribution of those issues and we welcome the endeavours you have made to research that aspect of the work and the divide between the two administrations.

Q244 Albert Owen: Just to develop this theme a bit further and your responses to Mrs James and Mr Jones with regards to the evidence that you received on this and the obvious effect of devolution with different policies on both sides of the border, and indeed the unintended consequences, which we have developed in our inquiry. You talk about people being confused by this and you call for a more co-ordinated, more coherent and more transparent system. What can the Welsh Assembly Government and indeed Whitehall do to address that?

Sir Emyr Jones Parry: You realise, Mr Owen, better than I that you have done more work on this than we possibly could and I pay tribute to the things you have done.

Q245 Albert Owen: It is a whole series of things you have done.

Sir Emyr Jones Parry: It is partly as a result of looking at one of your reports that did not so much set us off on on that route but we were stimulated by what people said to us along the border to then follow some of your work. It is something people do not feel very attached to. I cannot easily answer your question. I will tell you why. In the preparation we did coming up to the publication of the report we had a number of exchanges with the Welsh Assembly Government but it did include a fairly lengthy letter I sent posing some questions to the Permanent Secretary and it included, I remember: "What is my answer to the lady who says her problem with health, et cetera, is ..." and I have to tell you that I did not get a clear answer to that. I got a repetition of what was policy. There is a need clearly to (i) recognise there is a problem and (ii) then with the providers of the service to try and work out a means by which, while respecting the differences in which the NHS operates on both sides, where people because they happen to live in an area distant from Swansea traditionally used the Liverpool hospital, that is recognised. I think more and more that is being done, but I think the obligation is strongly on ministers and officials to see where there is a distortion which discriminates disadvantageously so that should be taken account of, yes.

Albert Owen: I understand that you do not want to encroach on devising policies or solutions to this, but what I am saying is from your report you talk about the need for greater transparency; how can that be achieved? Are you talking about greater notes from Welsh Assembly ministers when they meet with departmental ministers? The media is not very helpful in this in that the television sometimes shows policies that do not apply to people when they are watching, so the confusion is sometimes in the way it is delivered by the media. Although we have the broadcasting, we do not really have the transparency.

Q246 Chairman: Could I illustrate that by a recent newspaper article which perpetuated that confusion unnecessarily in which it was reported that Whitehall, or Westminster, were the cause of two years' delay in the fire sprinkler going through. In fact, it had absolutely nothing at all to do with the process.

Sir Emyr Jones Parry: Thank you, Chairman. Of course in this report we were generous in our interpretation of our terms of reference, so we did stray onto areas which might have come as a surprise to those who asked us to embark on this task, but we did it precisely because they were issues that people raised with us. We did not in the time available and because of the lack of expertise, and it was not our job, try and formulate policy responses, of course not, but we did flag up a number of things which we felt deserved attention. I hope very much as this report is debated now in the Assembly that it is not just focused on a referendum which, after all, was not for us to recommend (and we did not recommend one) but all those other recommendations we made which I think address particular issues and concerns. I hope somebody does follow those up because I think they are worthy of it. We were of course, Chairman, as you have been in the past, quite critical of the media because of the coverage that we managed to get. We were unstinting in our efforts but it was very difficult. I have often said that I wrote to 42 newspapers very succinctly just explaining what we were going to be doing, and six were prepared to publish that letter, and they were tailored to each particular newspaper. By the end we got all 42 to do something, but it was a huge effort and getting them to recognise an obligation of public service, to actually talk about politics and talk about things that really matter is not at all easy, and that is part of the problem. In our report we were not trying to castigate anyone as being responsible. What we were saying was partly because of individuals' own volition and lack of interest in politics and partly because of what they are fed and partly because the government as a whole has not done enough between all of us, the end result is one which we did not think was good for the body politic in Wales or the Kingdom.

Q247 Albert Owen: I am referring more to the broadcast TV and radio rather than the newspapers which do have a local dimension. For instance, somebody who is watching Newsnight might hear of a policy which is England-only and it is not explained, that type of thing. My question really is: would greater transparency between Whitehall departments and Welsh Assembly Government dispel some of those differences or misunderstandings?

Sir Emyr Jones Parry: It depends how you are going to define transparency. If it is a clearer delineation of power I think that would help.

Q248 Albert Owen: I am quoting your report. You called for it.

Sir Emyr Jones Parry: I am not naive enough to suggest that there should be greater transparency in the contacts between the Welsh Assembly Government and Whitehall. That is the way government operates and certain of those things, by definition, need to be confidential. However, in principle, for the citizen, it comes back to Mr Jones' point about how does one address a grievance, and we think that having some clearer view of who is responsible for what and where power resides would be helpful.

Q249 Chairman: I think Mr Owen is driving at what appears to be in the report an over-simplification of the legislative process. The legislative process is complex, it is confusing, so to try somehow or other to imply, as you do in the report, that it can be simplified is in itself confusing and misleading. Is that a fair comment?

Sir Emyr Jones Parry: I am afraid I do not think it is, Chairman.

Q250 Chairman: To what extent have you and your members any direct experience of the legislative process? Have any members of your Committee any experience of the legislative process?

Sir Emyr Jones Parry: Are you talking about in the United Kingdom or in Wales?

Q251 Chairman: Anywhere.

Sir Emyr Jones Parry: Elected representatives, yes they were. Mr Valerio, on my right, has been. We have the leaders of the 22 local councils of Wales on with us. Mr Edwards for his part has worked in the Assembly. He has direct experience of it not as an elected representative. My experience of government is perhaps naive but it is reasonably extensive. Yes, we have some knowledge of these things, but we were set up precisely as a collection of individuals to report, which we have done fairly. It is totally fair. I think we have said it in the report, that Westminster and its processes are not understood either. Fine. It is the same as saying that people are disillusioned with politics in England as they are in Wales. I do not draw any satisfaction from either of those statements. I would wish that people had a greater interest in and awareness of and knowledge of the democratic process and how it proceeds, but the difference about understanding is - and I have read your comments as well, Chairman, as a Committee - you have got to draw a distinction between a legislative process that is not fully understood and a secondary process which is a pre-condition to the legislative process which is, by the way, this is how power rests and we are not very clear about where it rests but if you want to change that distribution of power, there is a process which most people do not understand and a process which itself is perceived by most of the people who gave evidence to us as being somewhat lengthy and a bit opaque. You have been very clear in the comments you have written and said that is not true. I must beg to differ on that, but what I am clear about is that the perception of how this operates is widely felt to be one which is reflected in our report.

Q252 Hywel Williams: We have talked at a number of points this morning about the degree of understanding in Whitehall and in Cardiff amongst the Civil Service about the devolution settlement. Sir John Shortridge gave us evidence a few weeks ago and he said that initially there was if not enthusiasm then at least an active understanding in Whitehall of what was happening and that has declined over the years. You said a moment ago that there has been a change over the last three years due to the change in Government in Cardiff.

Sir Emyr Jones Parry: I think Scotland was the trigger.

Q253 Hywel Williams: Scotland, sorry, but also that there was a certain amount of misunderstanding of the nature of the 2006 Government of Wales Act. Can you just give us your broad impression of the degree of understanding of the devolution settlement, both by the Civil Service in Whitehall and in Wales?

Sir Emyr Jones Parry: What I do not think we are in a position to do is try to give you any definitive or numerical idea of who understands what. Mr Williams, I would not want you to take too much out of context what I said about the bureaucratic retrenchment and perhaps surprise at what was agreed in the detail of the 2006 Act. That is not the same as saying people did not understand the Act or devolution. What I am hinting at was the suggestion, "Did we realise we gave that away potentially?" That is a different point, but I do think in the run-up to the adoption of an Act in the process of finalising that Act, the sponsors of the Act - this is a personal view - did rather well to get into that Act what they did, but I am not sure that everyone quite understood what was being put in the Act. That is what I am saying. The broad understanding of devolution is there. On a daily basis do people understand how it impacts? No. I think my former department is probably as good as anyone, especially out there, in representing the Kingdom and its different bits. Whether or not the average department understands the complexities, I do not know. It is something that you have drawn attention to very effectively, which is the unintended consequences; that because people are not as aware as they perhaps ought to be, they do not do a check and think how is this going to affect it or sometimes just the assumption that they are responsible and they are not. There are of course cases of that. On both sides of Offa's Dyke, the need to up that understanding at the official level and I would argue in Wales it must be of public interest that there should be more appreciation of how we are governed in Wales and how the system operates, that has got to be good for our democracy at the end of the day.

Q254 Hywel Williams: In the reports, when you refer to the problems affecting Wales arising out of the language issue, you say that arises more from insufficient thought and knowledge than deliberate policy. If there is a lack of understanding, is it broadly one of omission or one of commission, do you think? I should say, by the way, that Sir John Shortridge referred - I do not know if this is relevant or not - to ministers here not telling colleagues down in Cardiff about key appointments because they were not sufficiently trustful of colleagues down in Cardiff, that the cat might be let out of the bag, for example. I do not know if that is relevant. It was very striking when he said that. Is it a commission or omission?

Sir Emyr Jones Parry: This week of all weeks, Mr Williams, I am not going to comment about which ministers can be trusted to be told what. I pass on that question. Again, what Sir John is referring to is better addressed by having the sort of relationship and engagement between two administrations which actually - I used the phrase, let me repeat it - lubricates the system, delivers communication and an understanding and that people work these things out together. For too long both sides did not do enough. I think that is being righted, but in the end if you are going to get legislation through, it is not just what happens with the elected representatives - this comes back partly to your question, Chairman - it is actually all that is done before in the formulation of drafts so you increase the chances of what is proposed from, say, Cardiff arrives in London and is more likely to be accepted, to be expeditiously handled if, in fact, it has all been cleared in advance and that is what is now tending to happen, but you need to do that.

Q255 Hywel Williams: You pointed previously to the difficulties that arise when there is too much dependence on individuals within departments having an awareness and knowledge and when those individuals move on perhaps the departments are unsighted on issues. Would you say there needs to be a cultural change rather than perhaps the suggestion made, again by Sir John Shortridge, that we would have a devolution expert in each department, and that would be the person to turn to? Is it a broad change that is needed or some sort of technical fix?

Sir Emyr Jones Parry: There is always this issue, is there not, with expertise. If I take the European Union, for example, every government department used to have an EU department and then over time they said, "Well why are you introducing this extra level, what we ought to have is mainstream EU knowledge into all bits of a department and then you do not need that department and everybody should be aware of this dimension". You cannot make everybody aware of all dimensions, but the fallback ought to be that every department ought to have somebody who is alive to the interests of devolution and can if necessary say, "Hang on a minute". It would be better if people dealing with policy were clear. If you are sitting in the Department of the Environment, or Defra now, and if you know that actually much of your competences are in Scotland handled entirely differently and in Wales somewhat differently, that you are in a relationship with your opposite numbers in Edinburgh and in Cardiff and the problem does not arise in that way because if you are drafting a bill in London for England primarily then you are aware of the implications and if you have been sensible you have spoken to your colleagues in the devolved administrations and worked out where you ought to be going. This comes back to transparency of how it is being handled. I should have come back at you when you used the phrase on the language, that occasionally things crop up inadvertently, it is lack of thought. I think that pertains particularly to the section on law and how different aspects of that were handled. Let me be clear, that section was gone through at the highest level of the legal authorities of England and Wales.

Chairman: We do have a large number of other questions if, with respect, I could ask you to be a bit more brief in your responses.

Q256 Mr Jones: In terms of being mindful of the devolution settlement, would you say that there is something to be said for each relevant Whitehall ministry having a minister who is charged specifically with taking devolution into account because it seems to me at the moment that is an aspect that is lacking?

Sir Emyr Jones Parry: I am not sure that all need ---

Q257 Mr Jones: I said relevant ministries.

Sir Emyr Jones Parry: For the relevant ones, there certainly ought to be an awareness at ministerial level. Yes, I suppose you can argue putting one there. It is more fallback territory for me. I would hope that any minister, knowing that the subject area, the competences, were devolved in part would actually factor that in, but there certainly needs to be somebody making sure, if you like, simply on any submission that goes to ministers that there is a paragraph which says, "Devolved implications" and somebody is working through them.

Q258 Nia Griffith: Could I take you up on that? I actually do not think it is the departments that deal mostly with devolution which need it most, I think it is some of the others. When you say there could be exceptions, to give you an example I think when we have seen Defra at work on the Marine Bill or on the Flood and Water Bill it starts right from the word go because they know there is a vast complex of different things that are devolved in different ways to Scotland and Wales. I think to exclude any department could be very dangerous. To give you an example, if you look at provision for service wives or something like that, okay you say it is MoD but it may have a knock-on effect to what would be DCLG in England and obviously would be devolved in Wales. Would you not think that every department regardless should take responsibility very seriously for this and yes let us maybe have a minister or somebody who has ultimate responsibility but with something like equality you cannot just have one person who believes in it, it has got to be imbued, like you said about the EU dimension, across a whole department, we have just got to up the stakes and say everybody needs to be trained right across Westminster.

Sir Emyr Jones Parry: You make a persuasive case, Ms Griffith, but the extent to which you need to be trained does vary with each department. The case I was thinking of, Ministry of Defence, was the exception because there is no devolution in defence. There may be implications of the sort you have mentioned that ought to be touched on, yes, I cannot argue that case.

Mr Edwards: Can I just quickly reply to something that was said earlier on. My experience of observing how the third sector has dealt with the legislative process in the first ten years would tell me that your point has a validity. I have looked at Defra and felt comfortable with the way that Defra has approached devolution. I have been challenged, for example, over the issue of the way in which the Home Office has been aware of the need to do ID cards through the medium of the Welsh language, for example, and have bilingual cards. It would have been extremely helpful if there had been a lead in that department of government that would have been aware of not only devolution but of distinctively Welsh legislation that predates devolution.

Q259 Alun Michael: The question of scrutiny and the task that the Assembly Members have, there are three separate bits in a way, are there not? There is the scrutiny of the Welsh Assembly Government, scrutiny of ministers and the actions of the Executive, there is the constructive role the committees play in looking at a particular issue and coming forward with recommendations and then, although this has been very slow to develop, there is the legislative side. They have played a part, and a very constructive one, in relation to the LCOs but we have not seen very much as yet in terms of the measures which will flow from those LCOs so that is going to be an increasing area. Nevertheless, given that it is a fairly small group of backbenchers once you have taken on the party leaderships and the ministerial roles, you do not recommend increasing the number of Assembly Members. Why do you think the current number of 60 is sufficient for the scrutiny and constructive roles that I have just referred to? Is there not some evidence that people are stretched?

Sir Emyr Jones Parry: I think, Mr Michael, there is certainly evidence that people are stretched. Within the times currently allocated it is not easy to make all the arrangements. I took part in the debate with the Establishing Committee on the terms of reference for the Convention and there was a clear view there that the Convention should not address the number of Members currently in the Assembly but we should take as a given that there were 60.

Q260 Alun Michael: Any consideration of numbers was put outside your terms of reference?

Sir Emyr Jones Parry: It was not included, let me put it like that. I thought the greatest service that I could do was to ensure that we did not address that issue in terms which might be divisive.

Q261 Alun Michael: Given that the issues that you did address carry an implication for the capacity of the Assembly, could you share with us what conclusion you might have come to if you had not been so constrained by your terms of reference?

Sir Emyr Jones Parry: No, because deliberately, Mr Michael, we did not go down that route and I do not want to speculate. What I can tell you is that we were quite clear in our recommendations that there ought to be more systematic, regular scrutiny, that you had to put it on a basis not unlike the EU committees in both Lords and Commons here where there is an obligation to look within a time at certain proposals. More systematic, more resources dedicated to it, both by elective representatives and in support of them, but we did lots of probing and we were assured by all, the Assembly, the Ministers and officials, that the present membership could cope.

Q262 Alun Michael: Was that view shared by the current backbenchers?

Sir Emyr Jones Parry: All backbenchers were given an opportunity, as was everyone else, to make their views known.

Q263 Alun Michael: But you asked that question of ministers and officials.

Sir Emyr Jones Parry: In evidence sessions and put it quite deliberately to the Assembly itself. We had a long session with the Chairman of the Legislative Committee which was quite useful in terms of what she believed.

Q264 Alun Michael: Essentially you had confirmation of the view that there should not be an increase from those who had excluded that from the terms of reference in the first place?

Sir Emyr Jones Parry: No, confirmation that they could cope within the existing numbers is the way I would put it.

Mr Valerio: Can I just add a little bit to that? Clearly it is never a good time to advocate creating more jobs for politicians but, nevertheless, the previous Richard Commission did clearly say they felt there should be an increase in numbers to 80. That was done at that time because of the evidence that we had taken on the basis of examining the workings of the Assembly and scrutiny, we felt at that time, was deficient. In the intervening years, when we looked at it again with the Convention, it has clearly improved, there is definitely a far better system of scrutiny. They are more experienced at it, they understand the system and it is evolving, although I would say that my opinion is a personal opinion, I still think there are grounds for creating more members. I believe the importance of good legislation is paramount and that can only be done if there is sufficient time and sufficient scrutiny. If you compare the Assembly in Wales with any of the other assemblies of devolution, you will find we are under-represented.

Q265 Chairman: Because you were constrained you were not allowed to make any observation at all on that?

Mr Valerio: No, we reacted to public opinion and I can honestly say I do not think any member of the public ever advocated to us that we needed more AMs.

Chairman: Could I suggest to you that there is a degree of irresponsibility in that because you will know, Mr Valerio, I assume given your own particular background in 1979 and maybe in 1997, and Mr Edwards also on the other side, that one of the biggest weapons against devolution was cost in 1979 particularly but also in 1997. I think there is a degree of irresponsibility to avoid that issue today. You must have engaged in a debate over the terms of reference. It is a little naďve to think that, never mind about politicians, the great unwashed out there, the public, could be misled, could be confused. They would not be confused; they would know that extra powers lead to more politicians.

Q266 Albert Owen: Sir Emyr, you said in the beginning that the people who gave you the responsibility to carry out this report would be surprised and were surprised by some of the outcomes. I am surprised that nobody has raised this as an issue, either positively or negatively, that there should be more than 60 Members. If that was the case, have you excluded it? You said it was not, but that was part of the debate as you were gathering evidence. Part of the debate was the cost element and also the numbers. I am very surprised that this was not gathered in your evidence.

Sir Emyr Jones Parry: Can I be clear, Chairman, you used the phrase were we allowed or not allowed, which is not a phrase I recognise. We had terms of reference and we interpreted them as we wished and were independent to do that. Naivety is not a charge which I think is fair because if we had addressed full frontal and come up with a recommendation for 80 Members then the charge of naivety would have been, "Why on earth did you do that when, given what Richard had said, the Government of Wales Act 2006 deliberately did not take it up". You know and I know how divisive that issue would be because of its implications for, among other things, Westminster representation. So faced with that, the political advice, and our remit came from your colleagues, some of whom from this House were represented on that Committee, was very clear that they did not want that issue to be raised. The fact that we followed it should give succor to those from those parties who felt very strongly that we should not raise it.

Q267 Albert Owen: I am just surprised that nobody raised it in your evidence sessions.

Sir Emyr Jones Parry: People raised the question of cost, yes, and it is there as an element, I cannot pretend it is not, but also, as I robustly said in public sessions, democracy and systems of government bring costs. Devolution has a cost, and we quantified it, but it is a cost which if you believe, your question earlier, in better governance, that is why we pay more for it because of the benefits it brings.

Q268 Albert Owen: Could I just go back to an issue you were asked about and responded to Mr Hywel Williams with regard to civil servants and their attitude has changed. Is there sufficient capacity in Wales, do you think, to deal with the level of policy development and legislation of the programme that is taking place both Cathays Park and Whitehall? We talked about attitudes, is there sufficient resource? That is the nub of the question.

Sir Emyr Jones Parry: One of the more difficult debates we had when we were drafting the report was on something I put in the first draft which drew a comparison between the resources available in Cardiff and in London. The simple comparison I made was that if you were expecting Welsh Assembly Government officials to match Defra, where Defra might have five or six people at deputy secretary level and yet in Cardiff there was one deputy secretary who was covering five similar departments, person for person you have a difficulty of how do you match up time and expertise, et cetera. That was amended in discussion because some took it as a slur on the calibre of people in the Welsh Assembly Government and that was not how it was intended or drafted, but there was a sensitivity about that. Simply on numerical grounds there is a difficulty of competence because you are covering more and you are a smaller administration but yet you are having to duel will somebody with bigger competences. Is Wales sufficiently well-served by its public service is a very big question, but what I do want to say as a personal view very strongly is that Wales needs and deserves a public service of the highest level and that an insular Welsh public service is not in my view the direction to go. What I want is one that has the same equality of standard, of merit driven British wide and delivers for Wales the service it is entitled to.

Q269 Albert Owen: I respect that view, but is there a legislative deficit which slows up the process in your opinion?

Sir Emyr Jones Parry: We pointed to a deficit in the drafting of legislation. In this House it is assumed there is a seven year apprenticeship before anybody is technically able to be a draftsman because of the particular skills it brings. I think certainly at the earlier stages - I will come back to you, Chairman, with the word naivety - there was a degree of perhaps naivety and lack of experience at the Cardiff end, but that is improving and again we flagged up that more needs to be done. I think it was recognised one of the additional costs would be in that very specialist legal area. On the policy area, person for person, it comes close to matching.

Q270 Hywel Williams: Briefly, I am a member of Plaid Cmyru, one of three MPs trying to deal with the huge range of material that we have here in Westminster, and I have a great deal of sympathy with single Assembly officials trying to deal with the five or six people here. Were you able to draw on the experiences elsewhere in Scotland and Northern Ireland as to how this structural problem is coped with and were there any lessons for Wales?

Sir Emyr Jones Parry: We did not pursue the Northern Ireland example, no. There were some discussions with the Scottish side but none that gave us any real help on this.

Q271 Hywel Williams: Magic bullet.

Sir Emyr Jones Parry: It comes down to, as you know, the resource and expertise you can deploy given how few there are to do it. It is a dilemma.

Q272 Mr Jones: The supplementary I want to raise in terms of the issue of legislative capacity in the Assembly and cost is might not one solution be to require Assembly Members to work similar hours to Members of Parliament?

Sir Emyr Jones Parry: I could not possibly comment.

Q273 Mr Jones: It does seem to me that given they only work two or two and a half days a week as opposed to the four Members of Parliament do, you could actually avoid needing to increase their numbers from 60 to 80.

Sir Emyr Jones Parry: I think the transcript will show that in my first answer I said "in the time allocated to it".

Q274 Mr Jones: I would like to turn, please, to the Wales Office and your view of the future of the Wales Office? We took evidence recently from Sir John Shortridge who spoke in terms of ultimately the role of the Wales Office withering away. Do you think that he is right or do you think that the Wales Office has a continuing role in the devolution settlement?

Sir Emyr Jones Parry: I think it is a question for any prime minister as to how the interests of the individual nations of the Kingdom are reflected in Cabinet and whether there is a need to have a secretary of state for each or someone with the same responsibilities. I think it is inevitable myself that there should be a secretary of state who has responsibility. It may not be that person's only responsibilities but there has to be somebody, both legally and politically, I think that is necessary. The role of the Wales Office potentially as the arbiter, the lubricator of a system of presenting, partly selling proposals but convening meetings as necessary, that has been working and where perhaps a minister in Cardiff is not necessarily solving it directly with the competent ministers in Whitehall, the role of the Wales Offices minister can be helpful. Does it wither on the vine? I think there is a residual interest there and it is not dissimilar from the suggestion that a number of you have made in that there should be somebody in a department with an interest in Welsh Affairs, in devolution, perhaps the same for government as a whole, that there should be a member of the government and an office doing that for government. Can I just say the potential problem I see is where you are asking a secretary of state who may be of a different political persuasion to the party or parties making the proposal, if that person is the one who is charged with selling it and if they have no sympathy at all for it then that may well raise a particular problem as to who is going to do that.

Q275 Mr Jones: Do you think it is important that Wales should retain a distinctive voice in Westminster and Whitehall or would you be content to see, for example, an Office of the Nations established which did not give Wales that distinctive voice it enjoys at the moment?

Sir Emyr Jones Parry: I am old enough, unfortunately, to remember when the Minister for Local Government had added to it "and Welsh Affairs" and I always took that - without being unduly nationalistic - as something of an insult to my nation.

Q276 Mr Jones: For "Wales" read "England"?

Sir Emyr Jones Parry: Yes. That is why I said legally there was a decision taken to abolish the post of Lord Chancellor and that lasted a day because it became apparent you could not abolish the post. I think you might find there are some residual legal arguments why you need a secretary of state with functions. I certainly think the politics make it rather important that the government of the day in London for the Kingdom as a whole ought to have representatives specifically charged with responsibility for the different nations. How you work that out for England, that is a different question altogether, I can bore you at length about that, but in terms of specifically our interests in Wales I think politically somebody with that responsibility for Wales is desirable.

Q277 Mr Jones: You have acknowledged the need for a better level of communication between the Welsh Assembly Government and Whitehall. To what extent do you feel that the Wales Office should play a proactive role in this or should it merely be a conduit for such communications? Should a Secretary of State for Wales regard it as part of his duty proactively to go out and improve those communications and facilitate those communications?

Sir Emyr Jones Parry: Facilitate, ensure it happens, may not be that person's role specifically to be the conduit, but with an interest in stimulating both sides. Both sides are going to tango, so ensuring that each side is engaged, committed, yes, a responsibility.

Q278 Mr Jones: For example, if the Welsh Assembly Government were to wish to deal with a Whitehall Department, do you think it important that the existence of that communication should be communicated at the same time to the Wales Office so the Wales Office can make sure that process continues actively?

Sir Emyr Jones Parry: I think in practice you could not. If we were talking about something at ministerial level there is a case for it. I go back to when I first started working on European Union affairs and I spent most of my day on the telephone making sure that across a range of different issues there was a British Government position. There was no way that all those contacts would have been reported to anybody, but at the end of the day what it meant was we had policies across the whole range of the internal market, regional policy or whatever. In the same way my vision would be that the desk officer in Cardiff and the desk officer in Whitehall or Edinburgh, they are in such regular contact you do not need to have that communication passed on to anybody but the crucial thing is that it is happening and that it informs decisions and recommendations in the different places.

Q279 Mr Jones: Who monitors that it is happening?

Sir Emyr Jones Parry: The monitoring comes when you see what the result of the policy is and whether or not there is an unintended consequence or whether it is clear that the policy put forward on the Marine Bill, for example, actually reflects the interest of Wales and that powers as they may be moved as a result of that Bill reflect what is known and wanted by the Welsh Assembly Government, by the Ministers and so on, all of that.

Q280 Mr Jones: Can I give you an example of my concerns? We had some Wales only clauses in the Planning Bill last year. Those were not actually introduced into the draft Bill until after second reading and, in fact, until after the committee stage was well underway. It seems to me that if somebody had been there proactively liaising between Whitehall and the Welsh Assembly Government, those clauses would have been on the face of the Bill when it was first published and when it came up to be debated at the second reading. As it was, it seems to me that the people of Wales, if you like, again were short-changed because their Wales only clauses were not as fully debated as other clauses in the Bill and I think that might have been a role possibly for the Wales Office.

Sir Emyr Jones Parry: It might well have been but it also exposes, does it not, the problem of powers affecting Wales coming through framework Bills which are not the subject of scrutiny in the same way. Of course, they are subject to the scrutiny of this House and in the Lords but the fact of the matter is that it may not be knowingly considered in Wales or if it is it is by an official or two. You have to get all those things hopefully in line. It may be that the Wales Office could contribute to that , but a greater transparency at the beginning, given we are talking about a devolved area potentially, greater awareness of what is intended in legislation here. It is inappropriate to suggest that the Assembly should be scrutinising what happens here, but certainly the Assembly and the Government in Cardiff ought to have a greater awareness of what is intended at an early enough stage to be able to flag it up when it appears in the draft and that comes back to fundamental communication at all stages, including the early drafting of what is intended.

Q281 Mr Jones: That, it appears to me, would be an appropriate role for the Wales Office. I personally feel the Wales Office should have made it its business to ensure that those clauses were on the face of the Bill.

Sir Emyr Jones Parry: I do not want to disagree with that but I would say that the final responsibility ought to be with the people who were originating that Bill knowing where competences rest and they should have made absolutely certain that they had consulted.

Q282 Alun Michael: Could I turn to the process of Legislative Competence Orders. You have said to us today very clearly that the processes of Westminster and Whitehall are impenetrable, and if they are impenetrable to a diplomat of your experience then it must be true. Yet in the report have you not treated the process of legislation at Westminster as if that is very simple and as if the Legislative Competence Order process is complex and opaque? I would suggest to you there is a particularly misleading table in the report. Would you like to comment on the way the LCO processes have developed and matured over the past year or so?

Sir Emyr Jones Parry: I do not think, Mr Michael, I necessarily share your interpretation of the report and the way you put the question. We have spoken previously. I agree that the chart which shows what happens in Cardiff is not accompanied by the same degree of complexity here. I did say earlier in response to a question ----

Q283 Chairman: You paused there, Sir Emyr, and you put your hand up. You mean you acknowledge that?

Sir Emyr Jones Parry: I acknowledge that we were not trying to set out the Westminster procedure.

Q284 Chairman: We need to put that on the record.

Sir Emyr Jones Parry: I am quite open about that.

Q285 Chairman: You paused and put your hand up, but we will not have visual aids in the record.

Sir Emyr Jones Parry: What I was going on to say was, in my earlier response, I did concede the complexity in both places, and I said I derived no particular pleasure from the fact the complexity is not understood either in what happens in Westminster or in Cardiff. I have described it as a fog, I have described it as impenetrable, I hope by now I have demonstrated that I have some awareness myself of how it works, and I have tried to reflect that in the report. Of course, the LCO process has evolved. One of the things I did early on in Cardiff, before I had any members of the Convention with me, was to convene every civil servant who had been involved in any LCO process and sit down for two hours to talk through how it works. That was the first time it had happened in Cardiff to try and share experience, just to see what is good practice, what did not work so well and how could it be improved. It has improved the level of engagement in Cardiff, at the Whitehall end, and I think the scrutiny done in the Assembly is better than it was, and, Chairman, your own processes, as you reflected in your report, have been amended and modified as you have gone along. It would be only natural.

Q286 Alun Michael: Could I ask you a question about the transparency of the processes. There was a suggestion made by Sir Jon Shortridge when he gave evidence to us that the Legislative Competence Orders should be submitted directly from the Assembly to Parliament, in other words elected body to elected body. Do you think that would help the transparency of the process?

Sir Emyr Jones Parry: I am not convinced it would make much difference.

Q287 Alun Michael: Would you accept just one further point on it which is, if we did not have a Legislative Competence Order process, the process of devolution would remain stuck at the point that it was, if not in 1998, certainly at the point it reached in 2006, and that the transfer of powers we have seen through what will shortly be 13 Legislative Competence Orders in a fairly short period of time is a very significant addition to the powers of the Welsh Assembly and the clearance of those powers indeed?

Sir Emyr Jones Parry: Mr Michael, I cannot but deny there is an absence of any primary legislative power for the Assembly, and if incrementally it was given some that would be an infinite increase.

Q288 Alun Michael: But this is in addition to the powers which have actually been transferred through framework powers in primary legislation in a series of pieces of legislation, not least on the environment, which has been particularly significant, both through the LCO process and through the framework powers process.

Sir Emyr Jones Parry: I think it is one and a half times as many have come through framework powers as have come through the LCO process, with the attendant advantages and disadvantages of that system. Let me repeat, as you know better than I, pre-2006 there was no primary legislative power, so anything afterwards has to be increased, but I have to also point out that on the evidence we received, and the comments we have done on the basis of an evidence-based report, we have described how people view the LCO process and how they view the present arrangements.

Q289 Alun Michael: Yes, evidence based on views rather than evidence based in terms of what has actually been happening?

Sir Emyr Jones Parry: There is always the problem whether evidence is fact or whether it is what we agree with.

Q290 Alun Michael: I suggest to you it is very clear to see the distinction between the two.

Sir Emyr Jones Parry: It may be but if it is what we are offered, it has to be reflected because that is the public perception. It is not always the case that we like what we hear.

Alun Michael: Indeed, reflecting perception is reflecting perception.

Q291 Chairman: Sir Emyr, I am just referring to your document. There is a perception, an opinion, quoted in here as fact. There is someone from Monmouthshire I think who refers to the process as Byzantine and then it gets embedded in the report and it becomes reality. So suddenly this issue of confusion has a real life because someone in Monmouthshire has described it as Byzantine and you have given it credibility. Would you like to make an observation on that?

Sir Emyr Jones Parry: I think you are following a path of logic I cannot share, Chairman.

Q292 Chairman: Someone offers an opinion not based on fact, it is an opinion, one does not know who that person is in terms of his or her professional experience; it is just a person who is quoted. I looked in the Index at the end and there was no evidence who that person was; it was just a name.

Sir Emyr Jones Parry: The British system of justice with juries does not assume you need to have people actually there who have a particular expertise. We have heard evidence, some of it perception, some of it fact, but there is a perception, which was in our view backed up by a considerable amount of what you would call factual evidence, that the system is complicated. I know you have asserted, "This is not true", but what I would like to say to you is that the judgment we made on the basis of evidence is that in our view the system is, you have used the word, complex. I would not use myself the word Byzantine, it is not a word I normally use, but complex I will use and say that people regard it as complex for two reasons. Firstly the process itself is difficult to understand and it is involved. We have made progress on the Environment LCO and people are attached to the progress which has been made, but it took two and a half years to get to that level. Is it unduly slow? Absolutely not, it is untrue to assert that, yet it is two and a half years to get the actual power potentially to transfer. So the confusion is two-fold; it is partly the way the power rests and how power is then changed, and then what happens as to how you go about legislation. The ordinary person in Wales, believe me, does not readily understand that the LCO process is not to get a law. This is the frustration that some of the NGOs and others feel, that they follow this process which some of them do regard as Byzantine - it is not just Mrs Jones in Monmouth, it is a number of others - and they say, "At the end of that, we lost it, and anyway we do not have the resources to do that".

Q293 Chairman: With respect, I think you have added to that confusion because you have conflated the negotiations between ministers which took over two years with the actual LCO process which barely took a few weeks.

Sir Emyr Jones Parry: Chairman, if you expect the people of Wales to understand that a draft LCO put down in July 2007 which leads to an Order which was passed by the Assembly on 3 December 2009, and the people of Wales are supposed to understand that the LCO process, as you would wish to define it, is actually something which only took weeks but meanwhile the draft took all this period. Let me stress, this is not some sort of game to attribute who is responsible for the delay, but the fact is that the draft was put down in July 2007 and has it now been approved? Done. So it has taken 30 months. Is that unduly delayed?

Q294 Mark Williams: Another criticism you noted in the LCO was that raised over the fact that the Secretary of State has discretion as to whether he should lay an LCO before Parliament for approval or not. The Government of Wales Act does not specify when the Secretary of State should say "yes" or "no" as to laying Legislative Competence Orders before Parliament. Is that a big weakness? You noted those criticisms, how wide were those criticisms?

Sir Emyr Jones Parry: I think a number of people who criticised were concerned about the potential use or non-use of the powers of the Secretary of State for Wales. Frankly, my personal view is that I regard that as being something of a red herring and that a responsible Cabinet Minister with an efficient Wales Office actually dispatches business and has both a legal and a political obligation to do that. I do not think, in my experience, there has been any effort to obstruct. It may be, as Mr Jones argues, that there might have been a more proactive effort to facilitate and encourage progress.

Q295 Mark Williams: You have talked about ministerial responsibility, could you envisage a situation where we have different governments in Wales and Whitehall, the potential for judicial reviews against decisions of the Secretary of State?

Sir Emyr Jones Parry: Potentially the judicial route is there to review a whole series of decisions and that must be there theoretically. I am not going to speculate whether that becomes more likely in the circumstances you comment on.

Q296 Mark Williams: The concerns raised were more of a fear that this could happen rather than concerns over the lack of clarity in terms of when the Secretary of State might agree to lay an Order before Parliament or when he would not?

Sir Emyr Jones Parry: I think it is more a theoretical political concern.

Q297 Mr Jones: Briefly, in terms of the Byzantine nature of LCOs, I think it depends on the LCO, and you cited the environment one which I think justly merits the description of Byzantine because even after it was completed it was almost impenetrable and impossible to read. Yesterday the Commons dealt with a mental health LCO which was, in its own way, a model of clarity, very easy to read and, frankly, is it not a case of draftsmanship in many cases and is it not also a question of whether the Assembly Government is trying to put a quart into a pint pot which it seems to me was the case in the environment LCO?

Sir Emyr Jones Parry: Certainly, Mr Jones, it is partly drafting, it is partly the degree of precision and narrowness which sometimes can verge on a snapshot of the legislation intended, and therefore becomes more acceptable all round, and it is partly, of course, the complexity. It is striking that the draft Order as I saw it on environment, the first three or four pages were about what this does not cover rather than what it does cover and that does not reflect the drafting intent in Cardiff but rather within something set up by the Government of Wales Act, that the White Paper underpinning it is very clear about how powers are to be drawn down, the net result is you have to go for some of, and when you are taking "some of" it must be clear not just that you are limited there but that exceptions come into play and restrictions, and by the time you have taken all those into account actually you end up with something which per force, in a complex area like environment, is going to be very difficult. I put in the report quite deliberately climate change is even more so. It is a consequence of the arrangements.

Q298 Mark Williams: Is there not also this issue, that there is a reluctance on the part of the Assembly Government to tell Parliament what they propose to do with the powers conferred by the LCO. Now the difference in the case of the mental health LCO was that on the face of the Explanatory Memorandum the Welsh Assembly Government made it absolutely clear what it intended to do with the powers. I would suggest that really a more mature relationship between Cardiff and Whitehall would see the Welsh Assembly Government at least giving a hint to Whitehall as to what immediate measures might flow from the powers transferred. Would you agree that would be a helpful and positive development?

Sir Emyr Jones Parry: I will answer this, if I may, Chairman, in two ways. The first is there is a dilemma for those who seek more powers for the Assembly in that they are not prepared to say what they want more powers to be used for. From the very beginning I said to most people who came to give evidence, "What do you want the powers for? Can you give me an example." Political parties and others distinguished themselves by their unwillingness to say what they wanted the powers for. I think that is a major problem for any referendum. You can have a referendum and say, "I want these powers", not a theoretical exercise, the people of Wales are entitled to say, "What do you want to do with them?" and I do not think that question has been fully resolved.

Q299 Chairman: Could I thank you for a very stimulating and rigorous evidence session. The length of it is an indication of how much we value your evidence and your colleagues' evidence. Could I leave you with this thought, for you to reflect upon. As a career diplomat you probably would be familiar with Edward Saeed's work Orientalism and when we talk about Byzantine and when we talk about confusion, it is often the case all of us in an inevitable ethnocentric way of dealing with matters tend to dismiss anything that we do not understand as confusing and problematic. I think in the use of words and language all the time you will appreciate how important that is as a diplomat. You used a word today which I have never personally used and that I rarely hear used and I think this is part of the challenge before us. You used the word "Kingdom" and you also used the word "nation", which is obviously more widely used in Wales, but the word that is used more commonly, and the one that unites us all is "country". The writer Alan Richards said: "Of course Wales is a country and that is the end of the matter". Sometimes I think we add to the confusion by using language or words that are not commonly used. I throw that up as a suggestion to you to reflect upon, not to respond here and now. I would be very grateful if you did go away and reflect on that.

Sir Emyr Jones Parry: Chairman, if I may, because I have been very discourteous to Mr Jones, I was just going to answer the second part of his question, and it is - and I flagged it up in this report - the question of the roles of different legislatures. If you have voted for devolution there is a point at which you should allow the devolved administration to go away and legislate. As for correct terms, of course, "Kingdom" I mean United Kingdom, lest there be any doubt. If that causes confusion I apologise. Wales, as Scotland and Ireland, I term consistently as "nations" because you know that internationally there is one country called the United Kingdom which is the United Kingdom recognised in the United Nations, a member of the European Union. There should be no confusion about that. The country is the Kingdom for me and I am proud to be Welsh and British. If that clears up your confusion, Chairman, I am happy.

Chairman: I am sure that Hywel Williams and I would probably differ. We recognise the Kingdom of Hywel Dda. As a good friend of mine once said, if you are not confused, you are not up to date.

Witness: Mr Gerald Holtham, Chair, Independent Commission on Funding & Finance for Wales, gave evidence.

Q300 Chairman: Welcome to this extended session of the Welsh Affairs Committee and I apologise for keeping you waiting. For the record could you introduce yourself please?

Mr Holtham: I am Gerald Holtham, I am currently chair of the Independent Commission on Funding and Finance for Wales set up by the Welsh Assembly Government.

Q301 Chairman: Thank you very much. There have been several reviews of the Barnett Formula, does the existence of all of these reviews reflect a lack of communication between the devolved administrations or an example of what Rhodri Morgan mentioned in his evidence to us as "living laboratories within the UK"? Is that a fairer description of the situation?

Mr Holtham: Yes. I think the different reviews have had a slightly different focus. The House of Lords review under Lord Richard was looking at the Barnett Formula with respect to the whole of the United Kingdom. Our brief was to look at its impact on Wales specifically, although of course we were careful not to recommend things we did not think were principled and could be applied more generally.

Q302 Albert Owen: You mention the House of Lords report and of course there has been a House of Commons Justice Committee looking into it which was broader than your specific remit, what distinctive contribution do you think your Commission's report has made to the debate and how does it compare with other reports?

Mr Holtham: We went into a bit more detail. Other reports have looked at the philosophy underlying Barnett, or the absence of philosophy underlying Barnett, and made the philosophical case there ought to be something which is more justifiable in terms of need or some other criteria without then tackling the practical issues of how much and how you do it. We saw our role following on from the Calman Commission in Scotland, which expressed a general view that the block grant should be needs based but did not begin to tackle how and why. We very much saw our remit as permitting us and compelling us to go in a bit more detail, to look at the way that allocation of public resources was made in other areas, and to draw conclusions from that about what a fair allocation might look like and indeed how it might be managed going forward. So we tried to do a little more staff work, if you like.

Q303 Albert Owen: You have mentioned the Scotland one as well, so we have had one in Wales, one in Scotland and both Houses of Parliament doing separate reviews. Has there been any attempt to bring the work of the four reports together and have ministers and the different governments come together to try and formulate a single view?

Mr Holtham: I am sure each of the reports has fed into thinking but I am not aware of a formal effort to pull them together. In writing our report we were aware of the Calman Commission of course and we did refer to it, and we referred to the House of Lords report, and we tried to take that further and used some of the graphical representations in that report. In a working paper we published after the report itself, we have actually derived a needs-based formula from the expenditure decisions around the UK and, as we remarked in that working paper, it does reflect very much the conclusions of the House of Lords report but we actually put numbers on it.

Q304 Albert Owen: You say you made reference to it, did you have dialogue with the authors of it?

Mr Holtham: Yes, indeed. We have had extensive conversations with Alan Trench, who was the rapporteur, as well as meetings with the Committee itself, and indeed we did the same with Calman. We went to Scotland and I have met Sir Kenneth Calman and Jim Gallagher, the secretary to that Commission, on a number of occasions.

Q305 Albert Owen: Do you think it would be beneficial for the Ministers, to whom each of the separate committees report, and the departments, to meet together and have a similar dialogue to the one you have had with the authors?

Mr Holtham: I very much hope that the outcome of all this will be a considered and integrated series of reflections at government level, absolutely.

Albert Owen: Thank you.

Q306 Nia Griffith: I would like to look in some detail at the actual mechanism and you have described very well what actually happens in the Barnett Formula. Could we look at the past, present and future, in terms of the situation of convergence which has been occurring, could you explain to us why you think there were not any safeguards put in that? It seems to me that more funds have been allocated but they seem not to have been allocated with the 20% factor in. Do you understand why that might have been the case, that they were given as block amounts?

Mr Holtham: I think initially no one had a view as to how long the Barnett Formula was going to last and at the time it was created it applied to the expenditure decisions of the various Secretaries of State. As time went on, those devolved functions increased and on each and every occasion that happened there would have been an increase in the Barnett Formula to take account of the extra responsibility which was going to the devolved system. I do not know in detail there was any very firm or uniform set of principles behind that, it was a horse trade each time, as notoriously is currently happening over the devolution of law and order in Northern Ireland, which is an extraordinary horse trade, and it seemed to be ad hoc on each occasion. So you have a new responsibility and your block grant was upped for that. So that, plus other advantageous factors like population changes, meant that the squeeze implicit in the Barnett Formula was not evident, and indeed often was not occurring, and it is only since the democratisation of devolution, if you like, since 1999 that the squeeze in Wales has become very apparent.

Q307 Nia Griffith: So in recommending some needs-based formula, it would need to be agreed here in Westminster but also in the devolved administrations. Do you think we should be dealing with all the devolved administrations together or each one separately, and how do you envisage that process working?

Mr Holtham: For Wales we made a two-stage recommendation. The first was that the Barnett Formula should be replaced by a needs-based formula, which we denied was impossible or terribly complicated or politically unachievable; any of those things. But we did also say that if this is a prolonged process, as it may well be to arrive at a new approach, you can complete or augment the existing system by defining what the end point is; what is the floor to which the Barnett Formula should be pushing you. At the moment, it is just the English average but the regions of England do not have the same expenditure per head, they are not converging, there is no process to make them converge and there is no rationale for making them converge, so why should a devolved administration converge on an average rather than on, for example, the level it would be at if it were an English region. What we did in our report was to calculate how much Wales would get if it were treated as an English region and say, "At the very least, and it is rather a minimalist approach, that should be the floor rather than any English average." We could put that forward as a principle, that any devolved administration if you continue with Barnett should go to the point where it gets no more than it would as an English region and there should not be any further reduction in its relative expenditure per head. The beauty of that from a practical, political point of view is that it only applies to Wales; the Irish are some way away and the Scots are miles away.

Q308 Nia Griffith: Are you saying that effectively there is a usable model there in the model that is used for the regions of England and that could be worked on and looked at and used to try and get a better settlement for Wales?

Mr Holtham: Yes, that was our conclusion. For the report we, or rather our secretariat, laboriously went through taking all of the formulae from the spending ministries in England and applying them in all of their complexity to Welsh data. Subsequently we said, "It is the case that these extraordinarily complicated formulae are usually driven by a few of the variables that are in those equations", you have a hundred things in there but it is a vertical process and any time somebody wants to argue about it, you hang another element in there to satisfy the political machinations, and the truth is that there are five or six things which are doing nearly all the work. We were able to demonstrate this. We found we could explain the variation in relative expenditure across England, and indeed across Great Britain, with a formula which only had six or seven variables in it, which we boiled down from the hundreds which are in the actual expenditure formulae that are used. For example, we have the number of children under 16 and we have a measure of poverty, and I was challenged in public once, "But you do not have child poverty", and I said, "No, but we have children and we have got poverty and, on the whole, you will find child poverty is extremely highly correlated with those two; you do not need a separate child poverty variable." We did find that and therefore I do think it is practical to use a condensed formula of that sort at least to define the floor. If you do not define the whole allocation, if you continue with Barnett you can at least define the floor using a formula of that sort.

Q309 Mr Jones: Mr Holtham, when compiling your report, to what extent did you consult with the Treasury and other Whitehall departments?

Mr Holtham: We did indeed, we had a number of meetings with the Treasury and, for the second part of our report, we met the Debt Management Office and Revenue and Customs. We also met with, as I have already mentioned, Jim Gallagher in the Ministry of Justice, who is the Devolution Director-General. We have indeed met them.

Q310 Mr Jones: Did you find the Treasury helpful?

Mr Holtham: I found them correct. They answered all factual questions and provided all of the background information we requested. It was extremely difficult to draw them out on hypothetical questions. If we were to say, "Would this work if we were to do this?" or "What would you think of that?" they would tend to say, "That is not the situation and our political masters have not asked us to do that so we cannot possibly comment." So there was a sense in which they slightly worked to rule but I would not want to over-stress that, they were generally very correct and provided all the factual information we asked for.

Q311 Mr Jones: Did you have contact with the Wales Office?

Mr Holtham: Yes, we did. At various times I met both the current Secretary of State and his predecessor, Mr Paul Murphy. I would say they were receptive; they were interested in what we were going to find out.

Q312 Hywel Williams: Just going back to the answers you gave to Nia Griffith a moment ago, what is your view of the announcement by the Secretary of State that the Treasury has given a commitment that Wales will receive a fairer funding agreement than the Barnett Formula? What do you think that actually means?

Mr Holtham: I do not know. I have no inside information on that. I am in the same position as any other member of the public; I have read it with interest. One thing which does occur to me though is that the Treasury or the Government really ought not to get into a position where it seems to be saying, "Wales is poor, Wales is moaning, so we will look after it." That is the opposite of the claim they made for Barnett, that because it is a rule you avoid horse trading, it is simple, cut and dried and principled. For that reason, I accept that argument and for that reason they ought to replace it with another principle or another rule; just agreeing to an ad hoc fix if Wales moans enough I think is not the way to go. The Irish can moan too. They should refute our argument saying, "There is no way of getting around that, we accept that principle", and then you do not get into a continuous horse trade.

Q313 Hywel Williams: It does encourage people like myself in particular from my Party to up the moaning.

Mr Holtham: That is no doubt the case.

Q314 Albert Owen: On the fair funding issue and something you said to Nia Griffith earlier with regard to the English regions, some of my parliamentary colleagues from the regions have been moaning also; moaning that in comparison with London they are losing out. Did you examine those thoroughly and is there not a danger that if we have a full review they will want a larger slice of the cake as well because other factors have changed within their regions?

Mr Holtham: Indeed. I should say that we have tried very hard to avoid introducing our own political judgments into this. Much less than Emyr Jones Parry's Commission, we are not representative at all; we are just three people with technical experience but no political standing whatever. So we have not attempted to introduce our own distributional views into this in any way. What we did in the case of the English regions was to look at the existing formulae which exist at the moment. We are not saying that they are ideal, that they are the best or they could not be improved, we are not taking a view, we are simply saying, "If you use these formulae, this is the consequence", and moreover if we can boil those formulae down into something more tractable, more easy to handle, which explains 97% of the variation and then if we use that for the regions of England and the devolved authorities, we get the following results. So we are fairly fire-proof in terms of being accused of special pleading. What that would show is that Scotland, for example, should get a lot less than the North East, the North West or indeed the West Midlands and of course it gets a heck of a lot more.

Q315 Albert Owen: The logic of that is that some of the regions of England will want a larger slice of the cake, but the cake will be the same size for the English regions and the nations of the United Kingdom, so are you saying that Scotland's distribution might go to some of the poorer regions of England which might benefit from this at the expense of Scotland, Wales or Northern Ireland?

Mr Holtham: In effect that is right. These are all relative formulae, they are not saying what the size of the pot should be, they are talking about distribution. Because we use the existing formulae there is nothing in our work which says the English regions should get more, what we are in effect doing is putting them and the devolved authorities on a comparable basis. What that shows is that Wales should get slightly more, Ireland should get slightly less and Scotland should get an eye-watering 15% less, which I think is a political problem and why it might be difficult to make something happen.

Q316 Albert Owen: But you do accept there is an English element to this?

Mr Holtham: Yes, absolutely.

Q317 Mr Jones: The Secretary of State's announcement was made in direct response to the potential for convergence that was identified in your report. You referred to that as an ad hoc fix - I think that was the expression you used. It does not seem to me that it actually fixed anything. As far as I could see what the Secretary of State was saying was, in those circumstances he would speak to the Treasury and the Treasury might take some unspecified action. Have you any better understanding of what is proposed in that?

Mr Holtham: No, I think I am going to repeat what I said to Mr Williams. I do not have any insight into what that means any more than you do. I do think it would be preferable if a new principle were enunciated rather than an assurance of an ad hoc fix.

Q318 Mr Jones: That is unspecified.

Mr Holtham: To repeat the term, yes.

Q319 Hywel Williams: It appears to me that the options were that convergence were stopped, reversed or abandoned, and it is unclear as to which one he is referring to.

Mr Holtham: Of course it is the case, and the Treasury are to some extent retreating behind this, that the convergence does depend on growth in public expenditure. As public expenditure grows, the relative expenditure per head falls - not the absolute, the relative - in the devolved authorities. If expenditure does not grow, then of course that does not happen, and if expenditure in nominal terms were to shrink then it becomes a divergence formula. As the growth in public expenditure, even in nominal terms, is expected to be very low over the next few years, the Treasury is of course saying there is nothing to worry about because convergence will not be an issue. As far as that goes, I think that is true, but at some point one expects the growth in public expenditure to resume and then convergence itself will resume. We have made the point to them orally that this is a very good time to put the new principle to work because it will not cost them anything for a few years, but this so far has not been an argument which has been accepted.

Q320 Hywel Williams: That is very interesting indeed. In written evidence to this Committee, the Assembly has expressed concern that the Treasury acts as judge and jury in the case of disagreement over the Barnett Formula and how it operates in fact. Does the suggestion of an independent advisory body, which is one of the suggestions they have made, show a lack of confidence in the Treasury or is it practical?

Mr Holtham: I think we took the view that it would be better to reform the process at the front end, as it were, rather than to introduce elaborate reconciliation or adjudication mechanisms at the back. At the end of the day, these are decisions for the UK Government, they will be made politically, and one just has to accept that. I think what we felt was that political decisions ought to be clearly identified as such, not hidden in the fine print as it were, because that does lead to ill feeling. If the way the technical aspects were processed initially were done by an independent group, the Treasury could then override that. The outstanding case was the Olympics, where a whole lot of things which would normally be done under the auspices of one ministry were transferred out of it so there was no Barnett consequential; the whole of the development in East London associated with the Olympics had no Barnett consequential. That is a political decision which I am sure is perfectly defensible but it came as a surprise to the devolved authorities, and they noticed there had been things moved around under different headings which struck them as anomalous. So that did create a certain amount of ill feeling and it was presented initially as a technical matter. It did seem to us that had there been an independent body, they would simply have taken expenditure where it normally occurred and derived a consequential. If the Government had then decided that was not appropriate, we wish to override, they would of course have been free to do so. However, we did think there was an advantage in having some of the initial work on drawing up the block grant each expenditure period, as it were, done by a body which was neither attached to the devolved authority of course but nor to the Treasury either.

Q321 Hywel Williams: This Committee has looked at the Olympics decision as well and we have made our views quite clear about it. Some of the concerns about having an independent body would be around the political clout they might have if they were advisory. It is an imponderable anyway, but do you have an opinion on that?

Mr Holtham: The experience in other countries where such things exist is that their decisions are very, very seldom contested. The political cost of overriding it seems to be regarded as quite high. The obvious case is Australia where I do not think there has ever been a situation where the Commonwealth Government has said, "Okay, that is what they are saying but we do not care, we are going to do something different." That is a very heavy body and it was not something we were proposing. They have a staff of scores of people and we were not proposing anything on that scale. We would hope that a similar sort of prestige would attach to what is clearly disinterested, unprejudiced work and it would be politically fairly costly for the Government to clearly override, but it would have the freedom to do so if it felt needed to, and I do not think that is avoided.

Q322 Hywel Williams: How do you enhance the transparency of the way the Assembly is funded? You would say a clear formula and then a separate body to adjudicate?

Mr Holtham: Yes. We would recommend a separate body to calculate the consequentials and derive a first cut as to what the block grant is, and that would be the case whether or not you were continuing with the present very simple Barnett Formula, but it might be even more the case when you are using a needs-based formula where the technical work would be a little more complicated.

Q323 Mark Williams: You touched on this just now but turning to the process by which a new formula could be adopted, ultimately the UK Government has that final decision and it has had a fairly belligerent response to date. Should the Welsh Assembly Government wish to proceed with your recommendations, what avenues are available to them and what mechanisms are there in place for them to proceed?

Mr Holtham: I gather they are holding discussions in the quadrilateral meetings with the other devolved authorities, and this of course is one area where there is common cause. Obviously, our particular needs-based formula which we developed would not win universal applause in Scotland, and I do not know they would be absolutely delighted in Northern Ireland either, but they all agree they do not want to be end-run as it were by the Treasury; they do not want to be in a situation where they are confronted with something at the eleventh hour and there is very little realistic opportunity to change it. It is one of the elements in our report, perhaps one of the few elements in our report, where there is complete agreement across the devolved authorities. So I think the representations to the Government will be coming not just from Wales in this case.

Q324 Mark Williams: You pre-empt my second question. Has there ever been at any point a discussion on how the Government would decide on the funding for each devolved nation separately? Has that been considered? Is that a likely outcome in the future?

Mr Holtham: I do not know. We took it as a design criteria, if you like, that the allocation of the block grants for each devolved authority should be according to a uniform set of principles. It is the United Kingdom and it does not seem appropriate that there is one rule for Jack and one rule for Jill, as it were. Of course if circumstances differ in the different places, then uniform principles result in different allocations, but we did take it as a design criteria that anything we recommended for Wales should be applicable to the other areas as well.

Q325 Mark Williams: You are satisfied that the co-operation, the discussions at least, are taking place, have taken place and can continue?

Mr Holtham: Yes. I am not privy to all of the discussions which have taken place. I hope to be meeting the Chief Secretary to the Treasury later this week. I met his predecessor and may find more about how their thinking is progressing. Otherwise, my information has come second-hand from Welsh ministers.

Q326 Mr Jones: Your report suggests that there should be a reformed relationship between the Government and the devolved administrations. How do you think that should be achieved? Should it be formalised or maybe incorporated in protocols, or is it just a question of attitude?

Mr Holtham: I do think there is a case for a little bit of formalisation. At the moment the Barnett Formula is not covered by legislation; it is not as far as I know embodied in any legislation, it is just something which is done. The Treasury publishes its own funding policy and at the moment that is agreed by the Secretary of State with the Government. There is no requirement for the Welsh Assembly Government, for example, to express its agreement or disagreement. While as a practical matter there may be discussions, one of the parties to the discussions is not then a signatory to anything which comes out of it. It did occur to us that was slightly peculiar and that maybe there was a case for some concordat which was agreed each three-year expenditure term, where as a result of the discussion both parties said, "Fine, this is an outcome we find acceptable", and that made it clearer. We were looking at an agreed outcome rather than something which was simply imposed.

Q327 Chairman: Thank you very much for your evidence today. I believe firmly that your evidence is going to be critical in the way in which we write our report and will certainly inform the way in which we address questions to the ministers who will come before us later this month or next month. Thank you very much.

Mr Holtham: Thank you very much, Chairman.