COMMISSION ON THE POWERS AND ELECTORAL ARRANGEMENTS OF
THE NATIONAL ASSEMBLY FOR WALES

MINUTES OF PROCEEDINGS
of the
EVIDENCE OF:
WELSH ASSEMBLY GOVERNMENT MINISTER FOR ECONOMIC DEVELOPMENT
ANDREW DAVIES

held at
National Museum & Gallery, Cardiff
on
7^th November 2002

LORD RICHARD: Thank you very much for coming, Mr Davies.

LORD RICHARD: We are grateful to you for taking the time. Looking into your papers it seems that your responsibility falls into two distinct areas: one is the ministerial portfolio side and the other is the business management side. What we thought, if you think it is sensible, is if we did the ministerial portfolio bit first for perhaps half an hour or thereabouts, and then if we spend a little time on the business management side. Is that all right with you?

LORD RICHARD: Good. I wonder if I could ask you to do two other things. One is formally to introduce yourselves for the record and, secondly, if you could open up the discussion for five minutes or so and then we will take it from there.

MR DAVIES: Thank you very much, Lord Richard. I am Andrew Davies, Minister for Economic Development. I am elected for the Swansea West constituency. I was formerly the Business Secretary or, as it is now known, the Minister for Assembly Business, from the start of May 1999 until I was given my current portfolio by the First Minister in late February of this year.

Under my previous portfolio and my previous role I was responsible for establishing the Assembly mechanism on the Government's side and for running the Government's business in the National Assembly.

If I could just introduce two of my officials. On my right is David Pritchard, who is head of the Economic Development Department, the senior official on my side of the House, as it were. Behind is David Hobbs of the Investment and Corporate Management Department within the Economic Development Department.

I suppose my commitment to devolution goes back some time. I was the co-ordinator of the Labour Party's referendum campaign in 1997 when I was invited by the then Secretary of State for Wales and the Junior Minister, Peter Hain, to head up the campaign. I had quite a bit of input into the referendum campaign itself and working with the other pro devolution political parties in setting up the Assembly. As I say, my primary role initially was to run the Government's business and to establish many of the procedures, including managing the subordinate legislative procedure.

As you will be aware, the way in which subordinate legislation was dealt with under the Welsh Office was very different from the model we have now when essentially most legislation was drafted in Whitehall by officials in the then Welsh Office and in many cases - I am sure David will confirm - the changes to our legislation were fairly minimal. We now have a system whereby we deal with all the subordinate legislation and it is a very open system of legislation making. It is very complex. I am sure that the Commission may want to look at the way in which we deal with our secondary legislation because it is immensely complex, much more complex than pertains in Westminster or, in fact, in the Scottish Parliament.

My major role was to manage the Government's business. I was involved in running the plenary business and the Assembly legislative process. It was a very major management and organisational task which involved working not only with political colleagues but closely with officials, particularly with the Office of the Counsel General. I do not know if that is all right.

LORD RICHARD: That is fine. Do you want to open up the paper on the economic development?

MR DAVIES: Thank you. Within my economic development brief in many ways perhaps the powers that I have are much more broadly drawn than those of many of my other ministerial colleagues. They are largely drawn up using primary legislation. Many of my other colleagues under the Transfer of Functions deal with legislation which has been devolved to the Assembly. Most of the powers that I have are very broadly drawn. The main constraint that I have is, in fact, largely dealing with European Union guidance on State Aid matters, but that does not refer just to Wales, that refers to Scotland and the rest of England as well.

I have the ability to amend the various schemes or to create, in fact, new schemes without having to get the approval of other government departments, although obviously there is the Concordat on Financial Assistance which in terms of relationships with Whitehall departments is largely with the Department of Trade and Industry.

LORD RICHARD: Thank you very much. You say that you have got the right to vary the scheme without going to Westminster, although there is the Financial Concordat. Have you actually done this or not?

MR DAVIES: On various aids to business, for example. We have introduced a new grant scheme for small companies, the Assembly Investment Grant, which gives grants of between , 5,000 and , 50,000. That started this year. I launched this with the First Minister back in April. In general terms we find that our room for manoeuvre is within the constraints provided by the EU but we are able to vary and to match. I do not know if David wants to give more detail.

MR PRITCHARD: Broadly speaking, Europe sets out a very general framework within which we can operate using our powers. The Minister mentioned the Assembly Investment Grant, that is one obvious example of it. More generally, and it is not a constraint of Europe, there are very broad powers for the Assembly and its agencies to be able to offer business advice of various kinds that are broadly drawn in primary legislation.

LORD RICHARD: You say that the Commission draws up the guidelines but if you need to get a Commission chop, if you like, on a particular scheme, do you go to Brussels to act or does it go through the UK Government?

MR PRITCHARD: We go through the UK Government.

LORD RICHARD: So UKREP does it for you?

MR PRITCHARD: That is right. We work very closely with UKREP. The onus is on us to develop the scheme and the proposition but we go through UKREP and DTI in order to make the case. We do not do that passively, we follow that up in Brussels with the relevant contacts there and generally it works well.

SIR MICHAEL WHEELER BOOTH: Can I just follow that up. The Welsh Assembly office in Brussels, the National Assembly office, is that under UKREP, within the cloak of UKREP, or is it independent?

MR PRITCHARD: That is independent but one of the lead civil servants in Brussels for the Welsh Assembly is accredited by UKREP, so we actually have the best of both worlds really. He works in Brussels as the lead civil servant for the Assembly Government but is accredited as a diplomat in effect by UKREP so he can have access to all the information and the corridors of power that you need to be effective.

SIR MICHAEL WHEELER BOOTH: Does he go to the Council meetings in the train of the UK delegation?

LORD RICHARD: Coreper.

SIR MICHAEL WHEELER BOOTH: Coreper or at ministerial level.

MR PRITCHARD: He will accompany ministers. Ministers go to the Council and our lead official will support that minister in those meetings.

LORD RICHARD: So the chain is you decide on something here, you talk to them in Westminster about it first, it then goes to Brussels and in Brussels the Welsh representative at UKREP will put your case as part of the UK's general case?

MR DAVIES: Yes. I would not say it is that linear. We are obviously discussing with European Commission officials on a regular basis. Obviously often on many issues we will want to test the ground and see what is the Commission's view, whether it is on the use of Objective 1 or whatever it might be, we try and get an early steer and then at the same time the formal negotiations and raising of issues will be through the UK Government.

PAUL VALERIO: Can you expand on that a little bit, Andrew, dealing with the whole business taxation as well. You mentioned the Assembly Grants are between 5 and 50K but above 50K what is the situation with that?

MR DAVIES: Let me just explain the concept. We have tried to streamline the system of grants. Up to , 5,000 it is provided by local authorities, most local authorities in Wales. Between , 5,000 and , 50,000 under the Assembly Investment Grant it is done directly with David's division. Over and above , 50,000 is what we call Regional Selective Assistance and we have a system, once again handled by officials, whereby those will be applications dealt with from individual companies for grant assistance. They also have the wider forum of the Welsh Industrial Development Advisory Board which considers claims of, I think it is, over , 250,000. Any granting of , 250,000 is dealt with independently by an appointed board of business people with widespread business experience who will examine the business case for that grant.

PAUL VALERIO: Who are they accountable to?

MR DAVIES: They are directly accountable to me. They make a recommendation to me but because they are quasi-independent, autonomous, I am not aware of their recommendations having been overturned.

PAUL VALERIO: Is this unique to Wales?

MR DAVIES: No. The Regional Selective Assistance Scheme operates throughout ----

PAUL VALERIO: The implementation of it.

MR DAVIES: Assembly Investment Grants are available throughout Wales. Regional Selective Assistance is available to those companies located within those areas which have Assisted Area Status. Other parts of the UK will have Assisted Area Status and will be eligible to apply for RSA and that will be handled through the DTI and Regional Development Agencies.

MR PRITCHARD: But it is a general scheme throughout the United Kingdom that has been agreed by Brussels. It is up to the Assembly Government to manage the scheme in accordance with its policy priorities in its own way within those broad parameters on things like aid intensity, how much you actually apply to safeguarding jobs, as to creating new ones, and similar issues. That is the policy judgment that is taken here but the general scheme is one that has been agreed by Brussels. We implement that scheme using the very broad powers that are available in primary legislation.

PAUL VALERIO: Am I not right in saying that you feel constrained by Europe rather than by the UK Government, those are your limitations?

MR DAVIES: I would not say that necessarily on RSA because we feel that has been very successful. In fact, the DTI issued figures earlier this year which showed that Wales is actually top of the UK league both in terms of numbers and amounts of grant that have been given. We feel that system works but it is about the implications of State Aids and competition rules where we have to work within that framework.

PAUL VALERIO: Can I put one last point regarding this. In relation to other forms of business taxation, the unified business rate, etc., how do you feel regarding the powers that are available to you at present? Are they sufficient or do you feel that you require more scope?

This does not actually come within my portfolio, it is Edwina Hart, the Finance Minister, who is responsible for that. We feel that the powers that we have in this area actually are suitable for our needs and we have the flexibility so we can adapt to Welsh demands.

SIR MICHAEL WHEELER BOOTH: This is a question from profound ignorance. You just referred to being best in the scale in the UK. That is on this one scheme but generally how successful is Wales now being in getting EU money into the Principality on a comparative basis with England, Scotland and Northern Ireland and, if you know - just a ball park - with Eire?

MR DAVIES: In terms of the Regional Selective Assistance and the non-EU money, looking at the whole area of inward investment, I think we have been phenomenally successful. On inward investment I believe the figures show that at a time when the UK generally had dropped in terms of both the number of inward investment projects and the value of them, Wales had increased their share and also the number of projects. I think in our area we are able to bring an increased focus and success. I know it is a hackneyed phrase but the Team Wales approach is phenomenally successful. I have some very, very able officials within the ICM division who are very proactive, who work very closely not just with business in the private sector but also the WDA and our other agencies. We have been very successful in that area.

On the issue of European money, much of Wales is now in receipt of significant amounts of money provided by the European Structural Funds. Two-thirds of Wales is covered by the Objective 1 programme, and then there is Objective 2 and 3. It is a very significant amount of money that we have available over the Objective 1 period of six years from 2000 to 2006. Looking at other areas of the UK which currently have Objective 1 status, I think we have performed as well as, if not better than, the other Objective 1 areas in England, for example Merseyside, South Yorkshire and Cornwall.

SIR MICHAEL WHEELER BOOTH: What is the cost of the Welsh office, whatever it is called, at Brussels?

MR DAVIES: Sorry?

SIR MICHAEL WHEELER BOOTH: The annual cost of the Welsh office which acts in conjunction with or under the shadow of UKREP.

MR DAVIES: This is the Wales European centre?

SIR MICHAEL WHEELER BOOTH: Yes.

MR DAVIES: I believe it is in the region of half a million pounds.

MR PRITCHARD: That is our element of it, local government and others are out of it.

PETER PRICE: Before we go off the previous point about the constraints of EU competition policy and particularly relating to State Aids as compared with any additional constraints imposed by UK primary legislation, would it be fair to say that almost entirely the constraints are Brussels constraints? How much are you additionally constrained by UK primary legislation?

MR DAVIES: I think the major constraint is EU. For example, in the recent case of the steel company in Cardiff, ASW, which went into receivership, we were forbidden by the European State Aids rule and the European coal and steel community rules from giving any direct financial assistance to ASW. That was purely the State Aids rule. Some of the other areas where we are in the process of negotiating with the UK Government are areas like the transfer of powers for power generation, electricity power generation over 50 megawatts. We are in ongoing negotiations with the UK Government on that. I would say largely it is the constraints within the EU on State Aids rules which are the major constraint. I would not want to exaggerate that but I would say that would be the general position.

PETER PRICE: Are there any examples of UK primary legislation constraining you in terms of this whole field of business development aid because the 50 megawatts case is a totally different exercise, is it not?

MR DAVIES: Off the top of my head I am not aware of any where it has really inconvenienced us in any way.

MR PRITCHARD: The tourism one, Minister, referring to statutory registration as against that. That is more of an irritant.

MR DAVIES: We are very much at the beginning of that stage. The Wales Tourist Board, which is our tourism arm, which is accountable to me as a minister, they are very clear that they want to introduce a statutory registration scheme for accommodation, hotels and bed and breakfast accommodation, to raise the quality. They feel the best way to do this is to have a statutory registration scheme. They have widely consulted on this, they have now put the scheme to me and I am considering that and what my and the Government's response will be to that. If we wanted to introduce that it would actually require effectively primary legislation and we are still very much at the early stages of negotiating with the UK Government, in this case the DCMS, on that.

LAURA McALLISTER: When you were talking about the Structural Fund operation in Wales you said that Wales is currently performing at a level that is at least comparable with the English regions. I wonder if you can say a little bit about how advantageous it has been for Wales to have, for want of a better term, a new tier of democracy in terms of operation of the Structural Fund. Clearly areas like Merseyside do not have the same coherence in terms of institutional structures, nor the same accountability links. Given the new structure of multi-level governance that we have in Wales now, will we be able to utilise or exhaust all of the potential for accountability links between local authority level, the new tiers that have been partly created through post-devolution and the National Assembly itself, and from there to Member State level and to the European Commission? There are direct comparisons that could be drawn pre and post-devolution in terms of operation of if not Objective 1 then Objective 2 programmes.

MR DAVIES: Sure. The previous Structural Fund round reminded me of the distillation of Schleswig-Holstein question when only three people ever knew how it worked, one was mad, one was dead and one had forgotten what it was all about. There was a complete lack of transparency and accountability, frankly, in the way that the previous Structural Fund was conducted. You could say that the present system has an overdose of scrutiny and transparency but it is a very complex programme. It is the largest programme that Wales has ever had to deal with. It was decided some time ago that the way in which this would be developed would be on the basis of a combination of local partnerships based on the 15 local authorities within the Objective 1 area and, as Viv would know as a former chief executive of a local authority, the local authorities were at the heart of this process involved with the private business sector on the one hand but also the voluntary sector on the other. There is a huge amount of accountability built into the system. The whole idea is that there is a large degree of responsibility on the local communities to come forward with ideas for regenerating the local communities.

I am not sure if Wales has more coherence compared with Merseyside and South Yorkshire but it could be argued because it is a larger area and the area of Objective 1 is so diverse; it covers my own City of Swansea, it covers the former coal mining areas of the Valleys as well as rural West and North West Wales. I think because of the scale of the programme and the diversity of the communities it covers we have got it right. At one level there is local delivery through partnerships but also there is a strategic overview provided by the strategic partnerships within each of the programmes and also accountability to me as Minister. It is a huge programme, it is quite complex, but the evidence is that we are beginning to deliver.

LORD RICHARD: Could I go back to inward investment. If I am a Japanese manufacturer, whatever it is that is currently popular, and I decide that I want to invest in Wales because it has a good labour force and all the rest of it, who do I come to to get my sweeteners?

MR DAVIES: Personally I do not have any sweeteners for inward investment.

LORD RICHARD: You know what I mean: grants, favourable terms.

MR DAVIES: Informally approaches can be made at a political level and official level. The way it works formally is that the Welsh Development Agency has lead responsibility for this. It was immensely successful through the 1970s and 1980s at this. Wales has been very successful at attracting inward investment, particularly American companies. American companies are by far the most significant investors.

LORD RICHARD: Say I am an American.

MR DAVIES: There will be an account manager within that particular arm of the Development Agency who will be assigned to work with that company.

LORD RICHARD: What is your accountability? Are you part of the exercise at all?

MR DAVIES: Formally the WDA is accountable to me and I meet regularly with the chairman and chief executive to review progress.

LORD RICHARD: Accountable to you?

MR DAVIES: Accountable to me, as is the Welsh Tourist Board. Two of the largest quangos, ASPBs, are accountable to me.

HUW VAUGHAN THOMAS: In relation to the WDA and the WTB, how do you see the primary powers that we have in Wales on those? Are there areas in which you would like to see that expanded in terms of greater control by the Assembly or are they adequate at present?

MR DAVIES: I suppose it shaves into the other paper I gave as the former Minister for Assembly Business. I think what has been remarkable has been the transformation and the transition from the old Welsh Office to the new National Assembly and Welsh Assembly Government. As I said in my evidence on my current portfolio, I feel that the powers I have as a minister are adequate. Obviously there are specific areas which I have identified where we would want to have greater powers and we are in negotiation with the UK Government on that, but generally I am aware across all the portfolios of very few instances where the current constitutional settlement has been defective in that it has not allowed us to do things. The major constraint often has been whether there would be parliamentary time for particular legislation, primary legislation, at Westminster but that would be an issue for any Whitehall department. If you look at our success rate in terms of bids and the outturn in terms of Whitehall legislation then I think we have probably outperformed most Whitehall departments.

PAUL VALERIO: That is something that your colleague ministers have said all along, there seems to be consistency in this. We usually respond to them by saying A it is working very well at the moment when you have a sympathetic government but how is the situation likely to be if there was not necessarily a sympathetic political partner on the other side of it or, indeed, some of the proposals you had were of a more controversial nature ?

MR DAVIES: I cannot foresee the future but all things being equal then I imagine relationships would not be more problematic. All I can say, however, is given the scale of the change, which I think is probably the most significant in terms of constitutional change since the Reform Acts in the 19^th Century and the introduction of universal suffrage, what I think is quite remarkable is how well that has been managed and how smoothly it has been managed. I suspect that would still be the case even if there was a government of a different political persuasion at Westminster or vice versa, if the situation was to change here and there was a Labour Government at Westminster and another party in power down here. The British constitution is immensely flexible and I think the present constitutional settlement has been very flexible. We have gone from the position of having a minority administration through to having a majority administration through to a coalition. The settlement has reflected that change. The point I want to make is about the corporate body nature of the National Assembly which is almost unique, certainly in the UK, and in a way I think that has been one of the major constraints on the way the Assembly has worked rather than whether we have more or fewer powers.

SIR MICHAEL WHEELER BOOTH: You said A very well managed , did you mean managed by civil servants, by politicians, by whom?

MR DAVIES: I think everybody.

SIR MICHAEL WHEELER BOOTH: If you had to give the crown of honour to one group, who would you give it to?

MR DAVIES: Politicians. This is Team Wales, both of us.

TED ROWLANDS: Let us clear one point up. Your powers of accountability on the WDA or the Welsh Tourist Board are exactly the same as those exercised by the Secretary of State previously?

MR DAVIES: That is right.

TED ROWLANDS: So, in fact, there are no additional powers and the relationship and accountability is the same in the sense that you exercise the same powers and the same legislation on accountability.

Yes.

HUW VAUGHAN THOMAS: There is a feature in the sense that your area has very broad powers that you have inherited. You build on the general competences of local authorities to work with them, the WDA has broad powers, so has WTB, and yet some of your colleagues are circumscribed by very tight bits of secondary legislation. Is there any area - you have mentioned power generation, perhaps we can return to that later on - in terms of WTA and WTB in which you feel yourself circumscribed?

MR DAVIES: I am not certainly not aware of any and the WDA have not raised any specific concerns.

TED ROWLANDS: How are they more accountable than they were before? The Secretary of State exercised his powers, he had the power to direct, he had the power to appoint, he had the power to send a remit letter, etc., exactly the same kind of powers that you are exercising. How are they more accountable now than they were under the Secretary of State?

MR DAVIES: You are quite right in that, Ted, but I want to distinguish between the formal systems and the informal systems which I think have affected the whole nature of the relationship. Certainly my understanding and view of the situation prior to 1999 was that, yes, the chair and the board of the WDA were appointed by the Secretary of State but, almost inevitably, the centre of political activity was in London, whereas we have 60 or 70 Members here, a Cabinet of nine, and the whole way in which the relationship is managed is very different. I think that is both at a political level but also at an official level.

LORD RICHARD: Surely you are accountable to the Assembly?

MR DAVIES: Yes.

LORD RICHARD: As the Secretary of State is accountable to Westminster. At the moment if something happens to the WDA then you are accountable to the Assembly for it but is the Secretary of State still technically accountable to Parliament, Westminster, or has the whole responsibility been devolved down?

MR DAVIES: Yes.

TED ROWLANDS: Devolved entirely.

LORD RICHARD: Totally?

MR DAVIES: Yes.

LORD RICHARD: So London has nothing to do with it?

MR DAVIES: Under the former powers of the Welsh Office the Secretary of State was responsible or accountable to Parliament.

LORD RICHARD: That has gone?

MR DAVIES: In terms of the WDA, yes.

TED ROWLANDS: Could I explore further with you this relationship with the DTI. You quite rightly point out in your paper that like Jane Hutt or Jane Davidson you have not got the same relationship because in a sense the powers remain basically with DTI in primary legislation and they do not spawn subordinate legislation in the same way and, therefore, the concordats, the use of concurrent powers, become more important, let us say. How many concurrent powers do you have with DTI ministers? When I say that I mean that they have to have your approval to do certain things as opposed to consultation.

MR PRITCHARD: Very few areas indeed. The only substantive areas - I am sure there are tiny little ones - are areas such as regulatory reform affecting functions of the Assembly where in effect the Assembly is a formal consultee.

TED ROWLANDS: Consultee or statutory?

MR PRITCHARD: That is right. Before Westminster, or DTI in this case, can reform some regulatory regime that affects Assembly functions they actually need de facto Andrew Davies agreement to that. So in a sense there is almost a reverse accountability.

TED ROWLANDS: You have a veto power to say the least?

MR PRITCHARD: Yes.

LORD RICHARD: De facto or de jure?

MR PRITCHARD: I suppose it is de jure. We do have an effective block on reform. We would not want to in most cases but that is the net effect of it if there was a disagreement or something.

TED ROWLANDS: So any DTI regulation governing business that could affect Welsh business has to be approved by you as opposed to just being consulted, you have to sign off as well?

MR PRITCHARD: Yes, if it affects the Assembly’s functions

MR DAVIES: Can I give another example which was not DTI but a recent example with the DCMS on the area of tourism where there were proposals by DCMS to reform the structure of the British Tourist Association and the British Tourist Council. There was very extensive consultation with us on the Wales Tourist Board as well as with our Scots colleagues. I think the outcome was quite significantly different from the original proposals as a result of consultation that took place. We feel that has strengthened the position of Welsh tourism and Wales Tourist Board and ourselves in the new arrangements which gave a direct line of accountability for the British Tourist Association to us which previously was not there.

TED ROWLANDS: Following that, the other thing that strikes one is whereas in the case of education or health, the overwhelming, huge part of the budget is totally devolved as well. In the case of your area of functions and responsibilities DTI spends money in Wales that does not fall within your budget, is that right?

MR PRITCHARD: Yes. Some.

TED ROWLANDS: What sort of proportion are we talking about?

MR PRITCHARD: A very small proportion. They are pretty niche activities to do with some very specialised technical support systems and the like. There are some advisory facilities, indeed the one you were dealing with this morning, Minister, where it is a partnership basis and it works pretty well. We get the best of the service across the UK and we can give it a Wales edge by working and offering more resources to it.

TED ROWLANDS: What was this morning?

MR DAVIES: The Manufacturing Advisory Service which I launched yesterday in Port Talbot, in the old research and development facility at the Corus Steelworks. It was going to be purely a DTI initiative. This was a UK roll-out of the Manufacturing Advisory Service. We put the case very forcefully that we felt there should be a specifically Welsh input into that involving higher education, in this case Cardiff University and UWIC, and the DTI accepted our arguments.

TED ROWLANDS: Was it a DTI budget, entirely financed by them but influenced by yourselves?

MR PRITCHARD: We topped it up.

MR DAVIES: We enhanced it to make it work for Wales. We felt we had the best of both worlds.

EIRA DAVIES: In your paper you quoted that the devolution settlement has clearly provided a framework capable of giving good government in Wales. The word A framework suggests that there is something more to be built up on there. We have also heard in previous evidence the importance of getting the right tools for the job. Do you feel that you have got the right tools, all the tools, for the job of effecting economic regeneration and perhaps closing the gap between the Wales GDP and the rest of the UK? Have you got the powers to do that and to move the agenda forward in Wales?

MR DAVIES: I think we do. Obviously I have itemised areas where I think they may be increased at the margins but certainly in terms of the mainstream effort in terms of policy development and implementation, I have the powers and the agencies who are accountable to me also have the powers to do it. I think the real challenge is changing the culture within Wales. We have an economy that was dominated by the old staple industries, the old smokestack industries, which have largely gone. We have a much more diverse economy now. We have a problem, for example, in that we have generated in the past relatively few entrepreneurs. We may not have been the most innovative perhaps. I think the challenge before us is as much cultural as it is in terms of policy. A lot of my job I see as trying to change the culture, which is obviously outside the issue of particular powers.

One has to put into context as well that the Chancellor of the Exchequer probably has as much influence, or more influence, on the health of the Welsh economy as on the UK economy in what he does in terms of the taxation regime and other measures that he might want to introduce.

VIVIENNE SUGAR: That leads nicely into my question which is about financial incentives to business. Other countries have decided that tax varying powers, credit zones and so on, are a useful part of the toolbox for the job. You do not have those powers. It may be the reason that you say you do not want them at the moment, your powers are adequate, is because you would not want to exercise them but you do not have the power to stop somebody else exercising them. Would you like to comment on that?

MR DAVIES: I think the whole area of tax credits is an extremely interesting one and clearly the Chancellor has been influenced by the American experience, as I was when I was out there recently, the use by state governments of tax credits. I think the imaginative use of tax credits is very interesting. In fact, we did press the Chancellor for regional R&D tax credits because, as you may be aware, there is geographically, spatially, a disproportionate concentration in London and the South East, or the South East, certainly in R&D. So we pushed for a regional tax credit system for R&D. The Chancellor at that time was not persuaded but he is keeping an open mind and we continue to press the case for that.

VIVIENNE SUGAR: I would like to pursue that further with a more specific example. Your role includes energy policy. I am not sure of the extent to which this is coming up against UK Government policy and how much of it is European but there has been an issue about gas supply for new industry in South Wales and seemingly a lack of power to be able to resolve the issue, to assist with the level of investment that is needed. Could you comment on that?

MR DAVIES: I think the problem has been the market. There has been a market failure. We find this in all sorts of particular areas in Wales. For many operators Wales is not a profitable market, for example on broadband telecommunications and that is why I announced back in July a , 100 million investment into rolling out broadband across Wales because existing provision was so poor. I think it is the same with gas supplies. In fact, we are in the process of discussing with two major suppliers, one multinational supplier, about the import of liquid natural gas into the Milford Haven area and working with Transco about building a pipeline to service that supply. I do not think it is on the regulatory or statutory basis that we have had problems. Up until now it has not been a profitable market but given the decline in gas production in the North Sea then clearly that is now a very good prospect for these companies and that is what they are looking to develop.

VIVIENNE SUGAR: So you do have the powers to resolve that issue?

MR DAVIES: I think we are in the process of doing so now.

TED ROWLANDS: Regional tax credits for R&D, does the Scottish Parliament and Scottish Executive have the power to bring those about?

MR DAVIES: No.

TED ROWLANDS: It is not a power that is devolved at all?

MR PRITCHARD: It is Inland Revenue.

TED ROWLANDS: Besides the electricity one you identified, are there any other powers the Scottish Executive has in your area that you do not have?

MR PRITCHARD: The examples the Minister has put in the paper are the only ones that are there. Indeed, in the tourism one the same constraints apply as in Wales, it is a GB power. Really where it is sharp is on energy I think, the power station issue.

PETER PRICE: Can I follow up a remark you made a few minutes ago about the nature of joint regulation made by the DTI and yourself. In the majority of cases are these UK or are they England and Wales? You were illustrating how you gain from influencing the UK or it may be England and Wales joint regulation. If you were to gain primary powers would this lead to separate regulation in Wales and no longer having that influence?

MR DAVIES: There are some areas obviously where we would have separate functions, I need to get details on those. A lot of the regulations we deal with originate from Europe, for example on the management of waste we are getting Waste Directives, like the End of Life Vehicle Directive, and we are looking in that area at how we might implement that because obviously there has been a problem with the disposal of fridges and I think the disposal of cars is going to be much more problematic. We are looking at proposals for how we might deal with that. I think it is a combination of EU derived, or originated, Directives and legislation. I do not know about specific examples.

MR PRITCHARD: I could not give you a specific answer. We can perhaps come back to Carys with some numbers on that because some will be England and Wales, some will be Great Britain, some will be UK and, as the Minister said, an increasing number of them are from Europe.

PETER PRICE: What is the feeling of the importance of regulations which are UK as compared with England and Wales? What has the big impact? What do you feel, is it likely to be mainly the big impact ones are England and Wales or UK?

MR PRITCHARD: Employment law.

MR DAVIES: I think as David just said it is mainly employment law, health and safety.

LORD RICHARD: As I understand it, if I can sum up the general position, the main constraints on your activities are cash, obviously, and Europe. In the relationship with Europe you have got a series of ways of negotiating inside the British delegation which makes sure that your views get put properly to the Commission and to the Council of Ministers and those are the constraints on what you want to do rather than any legal or constitutional prohibitions?

MR DAVIES: Certainly that has been my experience.

LORD RICHARD: So you are operating within that particular framework and obviously from what you tell us it seems to be working. If the framework was larger do you think your activities would become greater?

MR DAVIES: When you say the A framework , what do you mean?

LORD RICHARD: If you had more powers you would still have cash constraints.

MR DAVIES: I would like to refer to my other paper.

TED ROWLANDS: Your Annex 2.

MR DAVIES: Paragraph six in my paper as former Minister for Assembly Business.

TED ROWLANDS: Annex 2 on the question of the wind farm. There are two kinds of problems in these paragraphs, one is you did not have the power and the other one is you wished you had the power to overrule local authorities, is that right? Talk us through Annex 2.

MR PRITCHARD: Cefn Croes.

MR DAVIES: Currently we have an influence or role in any planning consents for power stations up to 50 megawatts. Anything over 50 megawatts is decided by DTI. We do not have any formal role in that because on one level the planning authority is the local authority and it is the DTI that has the statutory power. The way in which we respond, like over Cefn Croes, we have to be very careful in terms of not impinging either on the powers of the local authority on the one hand or the DTI on the other. Our powers in that are fairly constrained.

PAUL VALERIO: Would you like more powers?

MR DAVIES: Yes. That is something that we have been in negotiation through the Secretary of State for Wales with the DTI on. We have had several meetings at political and official level with Whitehall on these powers. That negotiation is still ongoing.

PAUL VALERIO: It occurs to me that with your other hat, tourism, the proliferation of wind generating sites also has an impact and it would be necessary that any powers would be centralised in one body.

MR DAVIES: Onshore wind farms often can be very contentious, especially in areas like Mid Wales, as the Cefn Croes decision demonstrated. There is no actual concrete evidence that it has a direct effect on tourism. It is often stated that is the case but I am not aware of any research that shows that is the case.

HUW VAUGHAN THOMAS: What I am not sure about is I can see the desire to tidy it up and to have the same kind of decision making as in Scotland but what difference would it have made to the outcome of this?

MR DAVIES: We feel, for example, in the area of sustainable energy, renewable energies production, given the problems with global warning and carbon emissions that in broad terms there is a huge capacity in Wales for using renewable energy sources. We feel it would be much more in line with our major policy areas, like energy production and renewables, if we had the power to deal with applications over 50 megawatts. That is not to say we would approve them necessarily but we feel it would be more appropriate for us to make other decisions rather than it to be done by the DTI.

MR PRITCHARD: I think the general feeling is that this is an anomaly. Ministers can make big decisions about whether there is a new motorway, big infrastructure schemes that impact upon the economy of Wales, and this one seems to be a big infrastructure issue that is inappropriately cited outside of Wales. We are grown up and big enough to be able to make the decisions.

LORD RICHARD: If I had to categorise that particular intervention it is A please, we have got quite a lot of power now, we think we can handle quite a lot of power in the future, this anomaly should not happen.

MR PRITCHARD: In this area.

LORD RICHARD: Do not look so tentative, Mr Davies.

MR DAVIES: Sorry, I thought Sir Michael was going to talk first.

SIR MICHAEL WHEELER BOOTH: You have the comparison with the Scottish position, which is a very good point, but in practice presumably you co-operate with those responsible for policy on energy in Scotland very actively and, in fact, you are always looking over your shoulder to see if they do it better, I imagine. This is a question in pure ignorance but that is what I imagine to be the case.

MR DAVIES: Yes, we have a very constructive dialogue with our Scottish colleagues and friendly competition.

LORD RICHARD: Is the playing field even?

MR DAVIES: I am not aware within my portfolio where the powers that the Scots have under the constitutional settlement actually disadvantage us. As I say, I think there will be issues which are outside the area of legislation and in primary powers.

TED ROWLANDS: I am not clear what we are supposed to infer from these two paragraphs on Cefn Croes and Rassau. In the case of Cefn Croes wind farm you point out that the decision was taken against the recommendation of officials by the council. You then have a part explaining about the countryside commissions and then you have got this statement that the Energy Minister decided to approve. If you had been the Energy Minister, if you had been the minister responsible, would you have approved or not approved this scheme?

MR DAVIES: It is difficult for me to say.

TED ROWLANDS: What was the burden of your evidence?

MR DAVIES: That was part of the problem, that because our power was constrained we had to make sure we did not infringe either the decision of the local authority or the DTI in this case. It was trying to walk a very fine tightrope in terms of expressing a view. It is difficult for me to judge on this particular case because it has gone but in both cases I think it was an issue that we were not able to really influence a decision which we felt was of importance within Wales.

TED ROWLANDS: On the second case, again I do not think it would be wrong for any reader to infer from this that you would have overruled the local planning authority and said A go ahead because of the regional economic implications of it. Is that right? But you did not have the power to do it.

MR DAVIES: For the sake of argument we might have said that we felt that it was of strategic significance for a deprived area to have a power station.

TED ROWLANDS: And you did not have a statutory responsibility in either of those cases to make a decision?

MR DAVIES: No. Obviously access to energy is a big issue, as Mrs Sugar has said. Access to power is a big issue, electricity in South West Wales, for example. Power generation is a big issue and that is one of the reasons why we are delighted that General Electric are building their new gas fired power station at the Baglan Energy Park. Obviously more indigenous power generation within Wales we felt would be to our economic advantage.

LORD RICHARD: I think we ought to move on to the second part of what it is that we want from you on evidence. That is really the work of the Assembly as such. I think we have all got questions about it, the capacity of the Assembly to cope with what it is doing at the moment and if it is given other powers would it be able to cope with them. Let me start with the first one, the corporate body status. As a lawyer I really do not understand this. It seems to me absolutely anomalous. It runs against almost every political current one can think of and it is inevitable, it seems to me, that it will break down. What about the relationship between the two, the Assembly and the executive, the government, how is that changing?

MR DAVIES: As I said in my paper, clearly the original vision as laid down in the Voice for Wales White Paper was what was then a local government model for a committee structure but during the consultation it was clear, particularly from the business community, that it was felt an executive form of government was preferable. I am not a constitution lawyer but I understand under the Devolution of the Government of Wales Act you can see that the Act changed quite substantially as it went through. I think an executive form of government was grafted on to the corporate body status. It affects the way in which we work at all sorts of levels, from the Civil Service, the fact that the Permanent Secretary is the Permanent Secretary accountable to the National Assembly or is he accountable to the Assembly Government, the executive, even down to the level of ----

LORD RICHARD: What is the answer to that question?

MR DAVIES: On a day-to-day basis then he clearly works to the Government but also he is responsible ultimately for the staff who work for the Office of the Presiding Officer. Although de jure we are still a corporate body, de facto we have moved to a clearer separation of powers between the legislature on the one hand and the executive on the other.

LORD RICHARD: Do you not think that ought to be tidied up?

MR DAVIES: I am sure the Permanent Secretary will answer for himself but my own view is that it would make for greater clarity if there was a clearer separation. I think it has affected the way the Assembly works in all sorts of ways. Even down to the situation we have with our e-mail system where, it may seem bizarre, we have problems because everybody, including officials, Assembly Members, support staff and officials, civil servants, is on the same e-mail system, whereas in Parliament you have a separate system for Parliament and a separate system for Government. We are increasingly moving towards a separation, whether it is in the Office of the Presiding Officer who, having his own budget now, clearly will be much more responsible for his own staff.

LORD RICHARD: The people who are sitting here with you this afternoon to help, who are they responsible to?

MR DAVIES: The officials who work for David are accountable to me. It has always been a very grey area actually. If the accounting officer for the Civil Service is the Permanent Secretary, it is a very grey area.

SIR MICHAEL WHEELER BOOTH: Who has the ultimate power over performance pay? I do not want to ask about locally but just, say, the Clerk to the Assembly or other officials because performance pay is quite essential. When they brought it in in Whitehall it was laid down that the Clerks of the two Houses should be paid like High Court judges so that they did not have to suck up to the Government or, indeed, to anybody else.

MR DAVIES: Obviously the Assembly Civil Service belong to the British Civil Service as well and I think that helps in terms of relationships in Whitehall and the free flow of civil servants from one to the other. On the specific issue of performance pay, I presume the Permanent Secretary is ultimately responsible.

MR PRITCHARD: Ultimately the Permanent Secretary. There is not a political judgment taken about the pay of individual civil servants, it is the Permanent Secretary who operates that system within the general framework of the home Civil Service.

SIR MICHAEL WHEELER BOOTH: It does not lead to clarity at all, it cannot do. There was, for example, an exchange between the Permanent Secretary and the chairman of one of the committees of the National Assembly for Wales which was quite outwith anything that had ever been written in Whitehall, quite outwith, and it would have just been unthinkable.

MR DAVIES: The construction and operation of the subject committees in a way goes to the heart of the problem in that as a minister I am a member of the relevant committee, which is the Economic Development Committee, so I am a full member but at the same time I am also accountable to that committee. The committee has a scrutiny role as a select committee would in Westminster, but they also have a policy role. In some ways I think that is an advantage but it is also a disadvantage. For example, committees will have investigations and develop policy in a particular area and maybe it is my role as a minister, as it is with my other colleagues, to respond as government to that. I have interpreted that on the basis that as a member of the committee, or formal member of the committee, I think it is better if I step outside that and then respond because there are all sorts of problems if you are part of the committee and you then have to respond as minister. This is one of the problems we have as a corporate body and the day-to-day operation of committees reflects that.

LORD RICHARD: What about access? If I was an opposition member of the committee and your colleague there, I am not sure who he is working for but he may work for me and would be obliged to make available to me the benefit of his thoughts, wisdom and insights, perceptions and, most important of all, pieces of paper, do I have the right to go to him and say A What is your advice on x, y and z ?

MR DAVIES: The system has evolved.

LORD RICHARD: Just as well.

MR DAVIES: Particularly when we had a minority administration and it was unclear who had executive or decision making powers, at that time the committees in many cases felt they were the executive or decision making body, at that stage it was very unclear. That may just be because it reflected the political reality that no party had a real majority. I think officials did feel very uncomfortable because on the one hand they were reporting to ministers but at the same time they were being requested by committees to produce papers. I think we have moved to a clearer separation but often committees will ask for Commission papers or Commission information and increasingly that is done through the minister, through myself for example, and then I will ask officials to do that.

PAUL VALERIO: How relevant to the numbers is the maintenance of ministers on committees? If the ministers were to be removed from all the committees, would that create problems regarding the proportion of members on the committees and therefore make some things unviable?

MR DAVIES: If that were to happen I do not think it would actually affect the amount of work on officials or the pressure on officials. That is my own view.

MR PRITCHARD: It is difficult to say. The practical reality is that - to make it personal - I work for Andrew but it is within the Civil Service framework and, if you like, the big line manager is the Permanent Secretary but day-to-day the reality is I take my instructions and I am accountable to Andrew for delivering his agenda.

LORD RICHARD: Not the Assembly?

MR PRITCHARD: I do not feel that, no. I think that is the arrangement that has evolved over a period of time. When it comes to a committee I am clear in my own mind, and my team is clear, that when we are sitting at the committee, and I sit next to Andrew on the committee, I am there supporting Andrew, providing merely information, factual information, to the committee. We contribute. For example, the committee has been doing a major study on energy and for that I have got one of the best energy experts in Wales working in my team. It would have been silly for that person not to be able to contribute their expertise to the work of the committee, but that person's accountability continues to me and then to Andrew. Increasingly the committees are developing their own capacity to do research and that is probably right.

PETER PRICE: Can I follow up on the corporate body side of things. You were saying about the policy development role of committees. How would it change, and your relationship with the committee in its policy development role, if it was clear that the executive was the corporate body?

MR DAVIES: Sorry?

PETER PRICE: If the corporate body structure changed to reflect the reality as it is now, how would that affect the policy development role of the committees?

MR DAVIES: I am open to correction on this but I understand that the Scottish Parliament works in a broadly similar way to our committees in terms of their policy development role and ministers are not members of the committees there, so they have a dual role, as we do, in terms of scrutiny and also policy development. My view is that it would not necessarily change that. I would not want to see the committees change into a select committee model where it is largely scrutiny of government decisions, I think having both roles is beneficial and has added hugely to the capacity within the Assembly to make policy.

PETER PRICE: Are you saying that such a change would mean that you would now step outside the committee in terms of membership of it?

MR DAVIES: Yes.

PETER PRICE: If so, would that not lead to more of this select committee scrutiny type role rather than participating in policy formation?

MR DAVIES: There is a danger but my understanding of the Scottish system is that that has not happened, the committees do have a very clear policy making role.

EIRA DAVIES: Could I just follow up with a question on the issue of confidentiality. As a minister and a member of committee I can appreciate the need to be open and transparent but there are times when confidentiality has to be considered. On that basis, would it be best to remove the minister as a member of the committee?

MR DAVIES: I think on the whole members and the committees themselves would respect the need for confidentiality. For example, in my area that is commercial confidentiality and I have never been aware of cases where that has not been accepted. We do have a commitment as a government and as an institution, particularly led by the First Minister, about being as open as possible in terms of sharing information. The presumption on our policy is information should be made available unless there are clear reasons for that not happening. That is the basis on which we operate.

VIVIENNE SUGAR: It seems to me that we might be following different principles for different tiers of government here. You are saying that you think there might well be a need for separation in the Civil Service as to who is accountable to whom but you would be loath to see separation between scrutiny and policy development. In local government the senior officials are appointed by the whole of the council and are responsible to the council and serve both the executive and the scrutiny arms and local government committees now are forbidden from having both a scrutiny and a policy development role. It seems to me we seem to be moving on completely different principles for very similar issues.

MR DAVIES: I accept that. I can only really speak from my own experience over the last three and a half years. I think the corporate body status we have has been unclear and clearly it has caused practical problems in decision making.

LAURA McALLISTER: This has partly been answered but not entirely. You mentioned, I think, that members of committees can ask for information if they do it via yourself to your officer. Do they get it? If it is not confidential, do they get it? If we asked the subject committee chairs, in what circumstances would they not get it? Have you had complaints from the committees that the information has not been entirely forthcoming?

MR DAVIES: I think I would say it is only in those areas where there may be issues of commercial confidentiality. Where information has been asked for, unless there are reasons of commercial confidentiality for example, we have always provided that information for committee members.

MR PRITCHARD: I can only think of one other area and that is if, in fact, you have been in correspondence with a ministry in Whitehall and it is covered by general sensitivity and it would not be effective outing that sort of correspondence.

MR DAVIES: We follow the principle that if, for example, the Secretary of State for Wales wishes to divulge correspondence then that is a matter for him but as a matter of course we would not do it unless we had his express permission.

LAURA McALLISTER: Is there an issue of timing because obviously the timing of the release of information is a pretty powerful mechanism. We have read the literature and we have already seen some members of the committees complaining that they do not see material when they want to see it. I am not suggesting that you deliberately delay the dissemination of information but in terms of the actual timetable of meetings, plenaries and so on, is that a practical problem?

MR DAVIES: I think if there are delays it is largely down to capacity, it is just sheer volume of work. David can speak as a civil servant but certainly my impression, and before I took this job I had regular meetings with all policy divisions, I used to go and talk to civil servants from the top of the Civil Service right down to the administrative officers and just get their views and this was a clear story that came through, that officials did feel under huge pressure given the scale of change where the Welsh Office was responsible for three politicians, the Secretary of State and two junior ministers, who spent much of their week not in Cardiff but in London, and now there are 60 or 70 Members, nine ministers and a committee cycle where subject committees meet every two weeks, you have other standing committees, so the volume of work on civil servants is immense. I think if there are any delays it is almost exclusively down to the fact that----

LAURA McALLISTER: We need more civil servants is the sub text of that.

MR DAVIES: I think there are issues and it comes back to the point I made that the Civil Service previously was not largely a policy making body.

TED ROWLANDS: However well intentioned that you want to be more open, if you move towards a full scale cabinet system of government, which is what you are going to do, then there is an inclination at least, if not a tendency, to become more closed, to control information more to the Assembly. For example, we have been told that if ministers apply for legislation in Whitehall and there is correspondence between yourself and Whitehall ministers about getting a piece of legislation, this is all now hush-hush, this is already part of the closed world. Is there not a danger that gradually more and more this will happen?

MR DAVIES: No. As I said, we have a commitment to freedom of information. We publish cabinet minutes and, as far as we are aware, this is the only case where cabinet minutes are published six weeks after the meeting. Wherever possible our code of conduct is that we will publish information.

TED ROWLANDS: Say you made a bid for legislation to a minister in Whitehall, you would be in a position to divulge this to the committee and the ministerial response from Whitehall would be available to the committee?

MR DAVIES: Effectively we make our bid for inclusion in the Queen's Speech public knowledge and the gist of the bids that we make as part of the Queen's Speech are in the public domain. What may not be in the public domain are individual items of correspondence unless the specific Whitehall minister is content for that to be in the public domain.

HUW VAUGHAN THOMAS: I can see in a sense that you are participating in a committee for which, if I can simplify, you have at times not to disclose information, therefore in a sense you are already not sharing in the committee. Equally that committee may be structured in such a way that it is pursuing or wishes to examine a policy which you may not wish to examine or you may not wish to accept. In that circumstance is it possible for a minister to be both a committee member and to be scrutinised by that committee?

MR DAVIES: Obviously it is a very unique situation to be in. You have to be aware of your dual role, or our dual role, in that situation. My practice, as I am sure is that of my other colleagues, is to be as open as possible, to provide as much information as possible within the character we have established. Clearly there are areas where we would not want to divulge information for all sorts of reasons, particularly commercial confidentiality. A recent example was the ongoing negotiations regarding the attempt to keep ASW in production and subsequently when it went into receivership the negotiations that had been between the receivers, ourselves and potential purchasers, we obviously would not want that to be in the public domain.

SIR MICHAEL WHEELER BOOTH: In a way you are saying that you are practising the freedom of information policy along the lines of the Labour Party Manifesto of 1997 rather than along the lines of the Freedom of Information Act when they changed their mind under pressure from the Home Office in 1999 or whenever it was. I think that is what it comes down to, is it not? That is going to lead to difficulties with Whitehall.

MR DAVIES: If it is I think it is more of a perception than a reality. I am not aware of any communications or any negotiations between us and Whitehall that have been leaked or made available. We have gone beyond the 1997 commitment on Freedom of Information in terms of making information available. I think we are far more open than maybe the other legislatures in the UK.

SIR MICHAEL WHEELER BOOTH: More open than Scotland also?

MR DAVIES: We are always looking to see what we can do in terms of making information available wherever it is practicably possible. In general terms we do not feel that freedom of information is a barrier to government, in fact we feel it helps the government.

MR PRITCHARD: Can I just make one point to illustrate that. One of the things that we will be doing, and I am sure it is ahead of what other parts of the UK are doing, is on a very regular basis Andrew will get advice from officials on a whole range of issues and what we are piloting at the moment ahead of going live with it is that advice will in essence be publishable. Certainly the basic analysis supporting that advice will be publishable. The bit that will not be publishable, because it will be counterproductive, will be specifically the judgments and the advice on the evidence and that information will be covered by protocol that is ahead of the rest of the UK. As a civil servant who has worked for many years in the Welsh Office I can only tell you what it feels like and it feels entirely different when it comes to sharing information and being comfortable with that.

LORD RICHARD: Sir Humphrey is getting transparency.

MR DAVIES: Sir David is.

MR PRITCHARD: Sir David, in my case, would be nice.

LORD RICHARD: Can we move on to the next issue, the assembly of the legislature.

PETER PRICE: I am interested in pursuing the advantages of dealing with things in primary legislative form rather than secondary. You have drawn attention already to the wide scope of the secondary legislative powers but the normal hierarchy is that you find the principles in primary legislation and you only need to delve into secondary legislation for the detail. If the Assembly has only secondary legislative powers and acquires more and more opportunities to encompass the principles in the secondary legislation, does that not lead to opacity in legislation?

MR DAVIES: Clearly there is a potential for that. I have never worked in Westminster but my impression, my close observation on it, is that primary legislation is the engine that drives the House of Commons and Parliament. Secondary legislation does not have the same generative power within the Assembly for all sorts of reasons. I spent a lot of time as Minister for Assembly Business trying to raise the awareness of the importance of secondary legislation, not just within the Assembly but outside. What I tried to do was to get the subject committees to engage with the legislative process. Many of them saw it as somehow outside their experience or their powers and it was seen as somehow irrelevant to what they did. Increasingly what we are doing now with my ministerial colleagues is to engage at a very early stage with the legislative process. For example, in any policy initiatives on our part it is not just a case of making the bid directly to Whitehall and through the Secretary of State but engaging with the committee in that policy formulation. For example, a classic case was what was then the Education and Life-Long Committee, a post-16 Education Committee which looked at the whole area of post-16 education as part of the Education and Training Action Group. The committee were very much involved in the formulation of the policy and then subsequently when the Learning and Skills Bill went through and the secondary legislation which fell out of that was dealt with, the committee then had an active role in terms of driving the legislation. It has been quite a task to get committees to engage in the process. I have to say it has not been easy.

PETER PRICE: You have given me an in-house answer in the sense that you can pull out the principles and get the committee to focus on those principles even if the principles are later to be found in secondary legislation, but if we now look outside the house, as it were, as far as the public are concerned, the users of the laws you make, if both principles and the mass of detail are all there in these vast tomes of secondary legislation, does it not make it very difficult for people to handle this new great body of Welsh legislation?

MR DAVIES: Yes. On the basis that the bulk of legislation is secondary and subordinate rather than primary, yes. The other thing is our systems for dealing with legislation are immensely complex, I do not think anybody would describe them as simple or straightforward. Byzantine is the word that springs to mind. I do not think that derives from the Government of Wales Act, I think it derived largely from the National Assembly Advisory Group in terms of recommending how this work should be dealt with and the Standing Orders Commissioner, who drew up the Standing Orders, was trying to put into operation the recommendations of the Advisory Group. Maybe it is unnecessarily complex and maybe the legislation does not withstand that degree of scrutiny. My fear is that committees see their role as scrutinising the legislative process and not really having an input into that.

I think there is a wider issue which is the point I make in point six. There has been a real vacuum in policy making in Wales. I do not wish to be critical in any way at all but I think in the Welsh Office there was not any policy making expertise. One of the challenges I saw, and one of the challenges for me personally as Minister for Assembly Business, was to engage with civil society, to help engender that policy making culture. I think there have been huge leaps forward within the Civil Service. We have sought to engage with local authorities, the voluntary sector, the higher education sector, for example. There are centres of expertise developing as a direct result of devolution. I think the deficiency is less on the mechanics of our legislative process and more on the capacity to generate more ideas or innovative thinking.

What I am saying really is the call for primary legislation, of greater powers, however you want to phrase it, is probably putting the cart before the horse. In order to have primary legislation you need policy and you need the ideas with which to implement it.

LORD RICHARD: Can you give us some idea of the volume of secondary legislation?

MR DAVIES: Certainly within my portfolio there is very little secondary legislation. The bulk of it is within education, health. I do not have figures but obviously we can get that information for you.

PETER PRICE: If I may put one more point and that is the argument you were putting a minute ago was first of all you have got to get the horse, but having got your legislation it does not really matter whether it is in primary form or secondary form, the problems about the form of the legislation are just found in methods of adoption in their byzantine form, as you put it. That is to say that pulling out principles into primary legislation is not really important, you can get around that problem in a different way through a different procedure. What different procedure would address that problem?

MR DAVIES: I think it is less the legislative process rather than the policy making process that has been deficient. I am not aware of any particular areas where we have failed to implement through primary legislation our own primary needs through the existing constitutional settlement. The system has been extremely flexible and, as I said earlier on, we have been very successful in bidding for parliamentary time at Westminster. Many of the challenges we have are less legislative, they may be budgetary, for example, if compared with some of the things that Scotland have done. We have decided to go down a particular route because we wish to spend the money in a different way. I really do feel it is an issue of capacity in terms of policy making which is the biggest drawback. However, I do feel our secondary legislative process is extremely complex and I am not sure that it necessarily needs to be as complex as it is.

HUW VAUGHAN THOMAS: Your argument was about policies but in a sense policies can be constrained by people's horizons and if that horizon is set on secondary legislation then the fact that you do not have primary powers does not enter into it, whereas if you think you have got primary legislation you could start thinking wider than the box.

MR DAVIES: In practice I do not see the distinction because obviously we can bid for parliamentary time at Westminster for primary legislation. When you talk to people in the voluntary sector or elsewhere and say A what can the Assembly do , and I have done this to various organisations, and say A in what ways can we help you through the legislative process? , they have not actually thought of it in those terms because their immediate thought is it is either a Westminster issue or it is an issue affecting Brussels. For example, in Cardiff, although it is beginning to develop, there is no lobby culture. There is still a presumption that if you want to change legislation you do it either at Westminster level or at a European Brussels level. I think people are beginning to become aware that we can influence, we can change things, either through the current constitutional settlement, through primary legislation at Westminster or through our secondary legislation. Most secondary legislation we deal with now is as a result of the primary legislative process at Westminster which obviously would also involve some of our responses. However, there is, of course, a huge raft of legislation which has been transferred to us under the settlement, the Government of Wales Act, which we can vary. Our organisations can seek to vary that and they can influence our decisions on that. I am not aware that has actually been done.

HUW VAUGHAN THOMAS: I wondered if you were a business manager when the Assembly carried out this internal review. One of the products of that was the Rawlings Principles to transform the way in which legislation was being handled at Whitehall. How far have you and ministers tried to carry those principles to Whitehall in your ministerial meetings or in your bilateral relationships to try to lodge those principles which the Welsh Assembly agreed to within the Whitehall structure?

MR DAVIES: This has been an ongoing dialogue with Whitehall colleagues and at my invitation the Leader of the House of Commons, Robin Cook, came down to the Assembly earlier in the year and was very interested in not just our procedures, which he thought were very commendable and I think maybe influenced his reforms about how the House of Commons works, but certainly in terms of how legislation is dealt with. We were very pleased indeed at his proposals to have a greater role for pre-legislative scrutiny of Bills which we felt was a huge opportunity for us because we would be part of that pre-legislative scrutiny, both on the one hand as ministers but also it would give a role for subject committees to engage in that process. We felt it would have a huge advantage.

HUW VAUGHAN THOMAS: The Rawlings Principles go further than just pre-legislation, the way Whitehall Bills are drafted will almost automatically rather than from Bill to Bill take account of the fact that the secondary legislative power will reside in the Assembly. How far did you get with that principle with the Leader?

MR DAVIES: We are dealing with a huge government machine in Whitehall, with a system where it is not just on the political side or even civil servants, you have got parliamentary draftsmen who are used to a particular system. I think in the past Wales was not on the radar at either political or official level in this regard. It is an ongoing process of education and raising awareness about our specific needs. I think that has changed quite substantially. I do not know whether David can say anything in terms of an official level how those relationships have changed. It is very much an ongoing relationship. It is very difficult to say to parliamentary draftsmen from here A we want this done in a particular way because I think it is a process of educating them or working with them in terms of their awareness of our needs.

LORD RICHARD: Do you think the Assembly is big enough?

MR DAVIES: It is difficult to say. Certainly those Members who have been Members of Parliament have said that the workload of Members is probably greater than on individual MPs.

LORD RICHARD: Even without the constituency pressure?

MR DAVIES: Yes.

LORD RICHARD: There is obviously less here.

MR DAVIES: Ted knows the system in Parliament far better than I do. In the Assembly many AMs will be members of at least one committee, some are members of more than one committee, and as I said committees meet every fortnight. In addition to that there are the various scrutiny committees, audit, the Legislation Committee, the standing committees, such as the Equal Opportunities Committee, and others. The workload just on committee alone is extremely onerous. I know that there is a lot of pressure upon Members.

TED ROWLANDS: Is it a question of more Members? You were a business manager, say you had to carry six Bills through that process now as a piece of primary legislation, do you think you have both the hours and the time, frankly? I do not see how family friendly hours can cope with the legislative programme. Do you think that you would have to change the whole nature of the place to accommodate these powers?

MR DAVIES: Obviously if the Assembly had primary legislative powers it would change the way we work. I still come back to the point about the actual initiation of policy. I am not aware of this huge backlog of ideas and policy which is there and if only we had primary legislative powers it would transform the way we do business. I have yet to see any evidence of that, frankly.

SIR MICHAEL WHEELER BOOTH: Minister, your letter made me understand better why the Business Committee has been such a success. It is a general view that the Business Committee is one of the standard bearers of the Welsh National Assembly. The only thing in your paper that I find it rather difficult to go along with is you say men, brains in other words, rather than measures. Brains, yes, certainly they are needed, but I think you cannot go along with the system of subordinate legislation with which you are saddled, it is appalling, it is so bureaucratic, so complicated, so much waste of time and it does not allow you to concentrate on the few issues that matter. That is not the way it has been worked. Do you see my point? Tell me I am wrong.

MR DAVIES: I think there is a difference dealing with secondary legislation in the particular system we have. I think we could adequately deal with the legislation, obviously we deal with the process but it is incredibly complex and time consuming. As I said, I am not sure that it bears that degree of scrutiny. I would like to see a greater emphasis on policy making. I think secondary legislation does give us great scope for so doing.

SIR MICHAEL WHEELER BOOTH: You are the only place in the Kingdom where you can vary delegated legislation: Westminster cannot; Edinburgh cannot; you can.

MR DAVIES: Yes.

SIR MICHAEL WHEELER BOOTH: And you have hardly done it so far in three years.

MR DAVIES: I think that is largely because we have been focused on existing primary legislation, Bills that we have proposed and dealing with the secondary legislation that arises from that, plus the volume of legislation that does come down from Westminster either directly from them or indirectly from Europe.

LORD RICHARD: I do not really understand this sharp distinction that you and certain other ministers have been talking about between policy formulation and secondary legislation, it seems the thing is much fuzzier than that. In your portfolio if it is decided that you need secondary legislation to do x, y and z, you take that decision and the committee, one hopes, at some stage approves it, but who actually does the drafting? What is the actual parliamentary procedure for getting it through?

MR DAVIES: The lead division or area, part of the Civil Service, is the Office of the Counsel General that will deal with the actual drafting in consultation and close co-operation with policy officials in the respective policy division. They will then propose the legislation and it will go through the various stages.

LORD RICHARD: Tell me the stages.

MR DAVIES: I have to say I do not have a flow chart in front of me, I wish I had brought one. Obviously it includes a decision about whether there should be consultation on it and then you have to do a regulatory appraisal.

LORD RICHARD: Consultation within the Assembly or outside the Assembly?

MR DAVIES: If it affects the business community, for example, obviously there will be a need to consult with either the business community generally or if it affects a specific sector then with the key players or companies in that sector. Regulatory appraisal may be required on legislation in Westminster as well. Certainly we will decide whether a regulatory appraisal is necessary.

LORD RICHARD: I am sure I am being very dense but I want to try and follow this. At that stage the thing has been drafted by the appropriate ministry, does the Assembly approve it before it goes out to consultation and does it stay with the committee, the relevant committee, when it goes out to consultation? When does it actually become law?

MR DAVIES: It is a decision by the Business Committee. The Business Minister will take the proposal for legislation to the Business Committee. Because there was a realisation that there had to be some sort of categorisation of different types of legislation, rather than treating all items, Statutory Instrument Orders, whatever, in the same way, there was a hierarchy decided whereby those which were maybe for raising up the grant levels or business rates, whichever, which are automatic could be done very quickly through an accelerated procedure. Then there were those that needed a greater degree of consideration and they would go to the subject committee or if, for example, it was felt it was of such significance that the Assembly as a whole should meet to debate it, there would be a much fuller consideration. There are different levels.

LORD RICHARD: Who takes the decision as to which level it goes to?

MR DAVIES: As a Business Minister I would make a recommendation to the Business Committee and the Business Committee would either accept or reject that.

LORD RICHARD: There is slot A, slot B or slot C. Slot C is accelerated procedure.

MR DAVIES: Sorry, there is a fourth one which is executive procedure which is where basically the minister makes the executive decision because there is a matter of great urgency.

LORD RICHARD: So what is a normal slot A?

MR DAVIES: If it is accelerated, it is decided by the Business Committee, it does not have to go to a subject committee for consideration. It will then go to the plenary session, the full session of the Assembly, where because it has been agreed by all the parties it can then be pushed forward without discussion, without debate.

LORD RICHARD: That is if every party agrees to it?

MR DAVIES: That is right.

LORD RICHARD: Suppose some do not.

MR DAVIES: It is then opened up to the normal procedure where you could have a debate in subject committee. It will either be referred to subject committee for discussion and then it will go to plenary for discussion as well, if that is the wish of either the subject committee or the parties.

LORD RICHARD: It is complex.

MR DAVIES: As I said, it is immensely complex.

SIR MICHAEL WHEELER BOOTH: What is the composition of the Business Committee? Has it worked better since there has been a coalition than it did before?

MR DAVIES: The committee is made up of each of the business managers from the four political parties.

SIR MICHAEL WHEELER BOOTH: The Deputy Presiding Officer?

MR DAVIES: The Deputy Presiding Officer chairs the committee. It meets once a week on a Tuesday morning before the first plenary session on Tuesday afternoon.

SIR MICHAEL WHEELER BOOTH: Before there was a coalition you would have had two Labour and three non Labour.

MR DAVIES: Yes, but the chair of the committee, the Deputy Presiding Officer, Jane Davidson was the first DPO and John Marek is the current DPO, always have seen their role as non-party political.

SIR MICHAEL WHEELER BOOTH: It is even worse now, it is one to three or one to four. How do the things work?

MR DAVIES: At great length.

SIR MICHAEL WHEELER BOOTH: At great length?

MR DAVIES: There used to be a lot of negotiation about individual items of business between the political parties in order to get legislation or budgets through the Assembly plenary session or through subject committees. That was obviously one of the major imperatives for having a coalition because it gave a majority and allowed, certainly from my point of view as business manager, a much smoother management of business and a lot more security in knowing the outcome.

PETER PRICE: The flow chart that was mentioned sounds like it would be a useful piece of paper for us to see.

MR PRITCHARD: I am sure it is available.

PETER PRICE: You mentioned the role of the Deputy Presiding Officer in relation to subordinate legislation only in relation to chairing the Business Committee. Does that Office have a more active role in scrutinising prior to it being earmarked by the Business Committee for following down one or other of the four channels you have described?

MR DAVIES: Certainly the current DPO has a close interest in the process. I think as a former parliamentarian he brings his experience to bear in this area. He sees his role as clearly helping to manage the process and making sure there is full scrutiny of the legislation.

LORD RICHARD: Minister, you have been very generous with your time but I would like to ask one more question. Is the Civil Service big enough?

MR DAVIES: As it was or as it is?

LORD RICHARD: As it is.

MR DAVIES: This is where David starts taking notes.

LORD RICHARD: It is something we have got to look at.

MR DAVIES: I would say it has developed quite substantially, the numbers now are quite significant.

MR PRITCHARD: There are about 4,000 now. It has grown significantly from about 2,200, 2,300, to nearly 4,000. There are functions that have come in during that period that have complicated the numbers but there has been a significant increase.

LORD RICHARD: The structure is the same as it is in the rest of the UK, you have an administrative section and an executive section.

MR PRITCHARD: We have developed our own framework with an executive board that supports the Cabinet and a range of other issues. It is a smarter operation than it used to be. The broad bands and those sorts of things are the same. The same idea about departments and divisions but we are innovating in a number of areas.

SIR MICHAEL WHEELER BOOTH:Of the 4,000 how many are what used to be called, and should not now be called, fast stream?

MR PRITCHARD: We are moving towards open recruitment for all posts in Wales. We still do have fast stream posts but they are relatively small in number.

SIR MICHAEL WHEELER BOOTH: How many?

MR PRITCHARD: Offhand it must be five, ten at most. I do not know. It is a concept that is going to be more difficult to sustain in one way because each post at every level will be subject, I think quite rightly, to open competition for a number of good reasons. Therefore, what we have got is a system in place where bright people can be given particular support so that they become stronger contenders for the posts that will become available rather than just making an assumption. Carys, I am sure, can easily find out how many people there are but it is not a huge number.

MR DAVIES: I think the civil servants probably have found devolution more of a challenge than the politicians. We came to it relatively new but the Civil Service had obviously been used to the old Welsh Office system. I think the way in which they have responded and the cultural change has been huge. In terms of policy making there have been huge steps forward. Certainly in my own area of economic development there is a lot of very innovative thinking going on and I think the way in which we relate to some of the sponsored bodies, WTA and WTB, has been transformed, our relationship with higher education and other stakeholders has also been transformed. I think the capacity has improved no end. Obviously there has been a capacity issue in terms of numbers but in terms of the quality of work that civil servants do and the relationship they have with wider society that has changed quite substantially.

PETER PRICE: But you are still saying that there is a need for greater policy capacity. Now that you have 4,000 civil servants, is that a matter simply of varying the mix within the 4,000 to give greater policy making experience of capacity or are you saying that you still need more civil servants of specialised kinds in order to meet that need?

MR DAVIES: I think we need to be smarter in the way we work. I think the old days when the Welsh Office was almost a colonial ruler within Wales have gone to a large extent and there is a much greater working relationship with local government, for example, and higher education. I think we need to make better use of the resources. I am not saying we do not have good policy making capacity now, I think it has developed quite significantly over the last three and a half years, not just here within the Assembly Government but also outside. I think that will start bearing fruit over the next year or so.

TED ROWLANDS: I have to say that in my ministerial Welsh Office days I never felt like a colonial ruler.

MR DAVIES: I think it was in a different political context.

PAUL VALERIO: What financial constraints have there been on the expansion of the Civil Service?

MR DAVIES: I am not aware of any specific constraints. We have a devolved budget for the administration of the Civil Service and civil servants come within it. It has been a managerial executive decision.

LORD RICHARD: Minister, can I thank you very much for your time. I am sorry we kept you a bit later but it has been very interesting.