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LORD RICHARD: I think we will make a
start. Thank you very much for coming. We enjoyed listening
to you in Aberystwyth and we look forward to listening
to you today. We will kick off and pursue things afterwards.
PROFESSOR LAFFIN: Thank you, Lord Richard,
and thank you to the Commission for inviting me along
today.
What I want to do today is to some extent
recapitulate some of the issues that I raised in Aberystwyth.
I gather there was some interest in revisiting those
but I want to develop those points a bit further by
just giving you some examples of the sorts of principles
which have been kicked around in two of the federal
systems I know best, the Australian and the US federal
system, and make some comments on that.
Before I begin I would just like to mention
that my comments are part of a wider study with two
colleagues from Glamorgan University. What we are trying
to do in the study is clarify the key concepts involved
in the debate over the future powers of the Assembly,
review international lessons and also analyse the Assembly’s
experience to date. We are still at the data collection
stage. We produced, which I have already submitted to
the inquiry, this paper here which I think has been
of some interest, which is the scoping paper for the
study. We are planning to complete a longer report towards
the end of December which we will send on to the Commission,
of course.
LORD RICHARD: Have we got that scoping
paper?
TED ROWLANDS: Yes.
LORD RICHARD: We have. Okay.
CARYS EVANS: It was sent out just before
the Aberystwyth session.
LORD RICHARD: Okay. Please carry on.
PROFESSOR LAFFIN: So today what I want
to do is to make some comments on the broad lessons
from international experience, firstly some conceptual
points which to some extent we covered in Aberystwyth,
commenting on the division of powers, the nature of
accountability and intergovernmental systems. Then I
want to develop on those points by looking at some examples.
I think this overhead might be slightly
misleading because it says ’International practice’.
In actual fact both examples I am giving you, one has
been superseded and the other one has never actually
been implemented. It is more to give you some feel about
the sorts of principles which have been suggested in
federal systems. It is not intended to be an account
of what the practice is at present in Australia or the
US. I would just like to emphasise that.
SIR MICHAEL WHEELER BOOTH: Do you mind
if we ask you questions as you go along?
PROFESSOR LAFFIN: Not at all, no. Shall
I carry on?
SIR MICHAEL WHEELER BOOTH: Yes.
PROFESSOR LAFFIN: First of all then the
broad lessons from the international experience. I think,
if you like, the crucial topology in understanding federal
systems or the nature of federal power is the distinction
between co-ordinate and current federalism. They are
often referred to as layer cake or marble cake federalism.
Co-ordinate federalism, layer cake federalism, is where
federal state powers are allocated so that each sphere
of government retains separate and distinct policy responsibilities.
Concurrent is where federal state powers are largely
shared so that policy responsibilities are typically
complex and overlapping. If you look at the great federal
constitutions of the world, at first glance most (but
not all) look very co-ordinate. Typically they declare
that these certain powers are reserved to the states
or to the federal government, there is a list of powers
which go to a particular level and then perhaps some
all encompassing laws which says that the remaining
powers shall reside with typically the state but sometimes
the federal government. So, if you like, the constitutional
templates often look very co-ordinate.
There has been a continuing debate in
federal systems, particularly the Australian and the
US systems, about the advantages of co-ordinate settlements,
the advantages of going back to the original constitution.
There is a continuing debate in both the US and Australia,
perhaps more in the US, over whether the federal government
should really have, for example, a department of education
or department of health since in both constitutions
the federal governments are not supposed to have those
responsibilities. Quite honestly, for the most part
the founding fathers - and of course they all were men
at the time - never foresaw the massive expansion of
the welfare state. The advantage of co-ordinate settlements
is the apparent neatness of how the whole thing works,
it also tends to be a view of the constitution which
is pushed by the states who feel often they will do
better if there is a very clear statement which is enforceable,
in some way, about what their responsibilities are and
what those are at the federal level. However, in practice,
co-ordinacy is actually very difficult to achieve. In
most federal systems, particularly Australia and the
US systems, and I believe the Canadian system too, in
practice almost all spheres of activity that the states
are involved in really involve a great deal of overlapping
and very complex lines of responsibility with the federal
level.
SIR MICHAEL WHEELER BOOTH: The thing
that is worrying me is that in the case of the United
States or Australia you had states which were independent
or more or less independent.
PROFESSOR LAFFIN: Yes.
SIR MICHAEL WHEELER BOOTH: One from each
other. Then they formed a federation, for reasons which
were explained in the great Pennsylvania discussions.
Here we are in completely the other end of the telescope,
so to speak, in that you have a sovereign parliament
which has given to 15 per cent of the United Kingdom
a sort of partial half devolved institution.
TED ROWLANDS: It is totally different.
SIR MICHAEL WHEELER BOOTH: It is so very
different. Surely we have to build on what we have.
Thinking too much about Australia, it is slightly pie
in the sky, so to speak.
PROFESSOR LAFFIN: I think there are two
answers to that. In the UK we definitely do not have
a federal system in that sense. If anything it is some
sort of semi-federal system because of the asymmetries.
I think it is helpful to try out these concepts, which
have been developed by people thinking about federal
systems, and applythem to the situation in the UK. Maybe
it is a matter of personal judgment, but I have certainly
found it is very helpful in trying to understand and
raise questions about the UK to look at the other federal
systems.
LORD RICHARD: All these federal systems
are symmetrical not asymmetrical.
PROFESSOR LAFFIN: Reasonably symmetrical.
LORD RICHARD: As I recall in all the
states, on paper at least, there are the same relationships
with the federal government and Washington.
PROFESSOR LAFFIN: Yes.
LORD RICHARD: I think that is true in
Australia too.
PROFESSOR LAFFIN: Yes. That is broadly
true. There are interesting issues raised by the fact
that, for example, California is considerably bigger
than South Dakota. South Dakota’s total is three
quarters of a million people compared with the population
of Californiaat 34 million. These are quite big differences
and have implications for federal state relations. Similarly
in Australia, Tasmania is 230,000, New South Wales is
about 7.5 million.
LORD RICHARD: Why does that have legal
implications for relations?
PROFESSOR LAFFIN: It does not have legal
implications, it has practical policy implications.
The policy capacity of Tasmania is obviously quite small
compared with that of New South Wales. Obviously in
the federal-state bargaining process New South Wales
is in a much stronger position than Tasmania. A lot
of what is going on is trying to balance the different
states together. While it would be absolutely true to
say that Australia, America, the US do not face the
same problems of asymmetry that the UK faces, where
it is really tilted right over, some of the same issues
do still arise in a different sort of way.
TED ROWLANDS: Devolution is a concept.
You said it was a semi-federal system. You see devolution
not as a separate concept but very much belonging to
the federal family of constitutions.
PROFESSOR LAFFIN: What I am saying is
that it can be understood against federal systems. I
am not saying I would put in a topology which says the
great federal systems of the world, US, Australia, Canada,
etc, and the UK. I definitely would not put it in that
category. One might say - I still feel open minded about
this - maybe one should not think in terms of federal
systems in the UK, maybe we should think in terms of
something slightly different, some sort of confederal
type of system. Even that still raises issues that you
can still talk about in terms of the language of federalism
that hasdeveloped, the notion of asymmetry, for example,
that arose in debates over the nature of federalism.
The second point I was going to make
about why I think thislanguage might be helpful is that
there have been various attempts in federal systems
to come up with a set of principles which elaborate
more on what is in the constitution and also reflect
the realities of the modern welfare state. I thought
it might be useful to the Commission to draw attention
to these and look at the pros and cons. In a minute,
when you look at them, you realise they are not a million
miles away from the sorts of things which have been
suggested for organising the relationship between Wales
and the UK central government, and for that matter Scotland
or Northern Ireland and the UK central government.
LORD RICHARD: Have you looked at a country
where the devolution has been asymmetrical, for example
in Spain?
PROFESSOR LAFFIN: No, I am not an expert
on Spain. I would not like to comment.
LORD RICHARD: In a sense that is nearer
what we have got in this country at the moment prima
facie rather than either the American system or
the Australian system.
PROFESSOR LAFFIN: It is and it is not.
There are some significant differences. It does not
have a national party system, if I recollect correctly,
whereas the UK does. There is also a lot of competition
in Spain over responsibilities between the autonomous
communities, i.e the provincial governments, and the
central government. You may well be getting an expert
on Spain and it may be worth having some expert advice
on Spain. I think they are having considerable difficulty
in drawing up some sort of plan, some sort of principles
which are enforceable on how the relationship should
be carried forward. There is a lot of duplication in
Spain between provincial and the national level, at
least that is my impression, but I am not an expert.
Of course I think the other point to
bear in mind, particularly if we are thinking about
the US and Australia, is that the themes in those countries
in the post-war period have been broadly speaking a
general trend towards greater centralisation whereas,
as you said, Sir Michael, we are seeing this country
in a sense going in a different direction. That is another
contrast.
SIR MICHAEL WHEELER BOOTH: A long time
ago on parliamentary affairs you published an article
called Designing the Welsh Assembly.
PROFESSOR LAFFIN: Yes.
SIR MICHAEL WHEELER BOOTH: It is a wonderfully
pragmatic history that you tell of the way in which
the Government of Wales Act settlement came into being.
In a way that seems to me much closer to the starting
point, our starting point, than Australia or the United
States.
PROFESSOR LAFFIN: I was operating on
the assumption that one of the areas the committee was
exploring was the possibility of having a set of principles
on which devolution could be organised. If you go back
and look at the historical trajectory of devolution,
not just in Wales but Northern Ireland and Scotland
as well, as you have said, Sir Michael, it has been
a very pragmatic one and not a great deal of thought
was given to any basic principles of devolution. They
said ’Devolution is a good thing, Wales is not
going to have the full Scottish cake, if you like, therefore
we simply democratise the powers that the Secretary
of State for Wales had pre-devolution’
VIVIENNE SUGAR: Can we ask Martin to
go on to his next slide which is more about the practicality
of balancing regional and provincial arms.
PROFESSOR LAFFIN: I will move on. I think
the third lesson, accountable issue number three, is
again an illustration where looking at federal systems
can be quite helpful in clarifying our concepts from
the thinking about the present UK and Wales situation.
The typical British notion of political accountability
is that of responsible government, that Cabinet ministers
are responsible to Parliament, everything that is done
by Government ultimately goes back to the minister in
Parliament. There is a very simple line of responsibility
in the unitary system. As soon as you get a federal
system, or for that matter a system of comprehensive
devolution, you have got a problem of diffuse accountability,
and some people have been arguing the challenge facing
the Commission is to draw up a very clear set of who
is responsible for what functions or activities.
I think looking at federal systems there
are, if you like, two traditions, two ways of thinking
about the federal system. One obviously is that traditional
tight idea that you need to have very clear lines of
responsibility. The other argument about accountability
in federal systems goes back to The Federalist Papers
and Madison in the US and all the rest of it, that
accountability is better achieved through a system of
checks and balances. The debate has developed on from
that and it is now argued that federal systems are better
at ensuring a broad accountability to the public because
they offer at least two points of access to citizens.
If you have got overlapping powers that might actually
be an advantage, because citizens can take up problems
not just at the state or federal level, but they can
play them off against each other to some extent, you
have got two points of access, two centres of power
competing with each other.
LORD RICHARD: That is a big if. If there
are overlapping powers it could be very difficult.
PROFESSOR LAFFIN: I will come back to
this in a minute. I think the debate in Australia has
been particularly interesting because in Australia obviously
you have got the tradition of the Westminster system.
There was a long tradition of criticism of the federal
system in Australia because the argument was that you
could not have responsible government with a federal
system as that compromised the notion of simple lines
of accountability. Ultimately the argument against that
was against the whole notion of federalism in Australia
altogether. For many years the Labour Party in Australia
had that as its policy – the abolition of the states
- which they only dropped about 20 years ago or so from
their agenda. Obviously it would have been a very difficult
thing to implement, not least because you have got to
have a majority in all the states voting for it and
it is very difficult to amend the Australian constitution.
VIVIENNE SUGAR: Martin, one of the things
we were talking about yesterday was the plethora of
quangos. That was one of the motivating factors for
the yes vote in the referendum, to try and get more
accountability and control. Do the other governments
that you have studied place as much importance on arms-
length agencies and how does accountability work?
PROFESSOR LAFFIN: Traditionally in Australia
there has been a long tradition of what they call statutory
corporations, which are what we call quangos. Historically
they were particularly important at state level, but
from about the 1980s onwards successive state governments
have either privatised those quangos, if they operated
in a commercial environment or they have brought them
under tighter control or departmentalised them. So if
you look at state governments in Australia there is
a very clear trend towards getting rid of state level
quangos.
VIVIENNE SUGAR: Either by privatisation
or by bringing them into departments----
PROFESSOR LAFFIN: So they are directly
responsible to the minister, getting rid of the independent
boards. You have even got things like in New South Wales
the Environmental Protection Authority which is like
a semi-quango because it has a separate sort of authority
but it is very much subject to tight control by the
minister. It looks like a quango but I do not think
you would say in practice it is a quango. I think the
history of state governments in Australia - I think
it is true for all five of them - is that over the last
20 or 30 years they have had a reassertion of political
control over the states and many quangos have disappeared
as part of that.
Coming back, just summing up this point
about accountability, I guess the reason I am floating
this is to point out that there has been this debate
in federal systems about the nature of accountability,
and arguments saying we should not think about accountability
in that traditional sense but maybe think in terms of,
if you do have multi-tiered government (or multi-tiered
governance in the latest jargon) that opens up the possibility
of greater access to citizens and there are some advantages,
arguably, towards having some levels of government competing
with each other to some extent.
I think the third group of points I would
make about comparative lessons are about intergovernmental
relations and I think the first very obvious point to
make is that federal systems have ways of entrenching
powers. I mentioned earlier about the difficulty of
amending the Australian constitution and similarly the
US constitution is relatively difficult to amend and
the powers of the states and federal government, in
formal terms at least, are set out in the constitutions
and are difficult to change. Of course, the challenge
in the British context is that we do not have a written
constitution, so you cannot entrench the powers of the
Assembly in quite the way that you could in a system
that has a written constitution. There has been an interesting
debate - we alluded to it at Aberystwyth - that some
people have argued, I think perhaps with some justification,
that where you have got devolution based on a referendum,
as you have in the three devolved administrations, in
the British context that really should be regarded as
an entrenchment It is as strong a safeguard against
change, against the abolition of the Assemblies, as
a formal safeguard in a written constitution. I think
the other general observation about federal systems
is that there has been a continual debate about the
national interest versus states’rights, and that
has cut through the whole history of the federal systems
and been a continual tension. I will come back to that
in a minute when I give some examples.
I think the other important thing about
federal systems is they all contain some mechanisms
for representation of the state interests at the centre.
The classic mechanism is to have a senate, and as you
know, in senates in major federal systemsthe statesare
equally represented regardless of their population in
upper houses, and it is the lower houses - the House
of Representatives - which are based on constituencies,
if you like they are based on the popular vote. If you
look at Australia, the Senate has not turned out to
be any great guardian of states’rights, not in
the same way that the US Senate has turned out to be.
I think the interesting thing about Australia, and we
will come back to this in a minute, is the way in which
the Australian system has given rise to a whole developed
set of mechanisms to co-ordinate activity between Commonwealth
and states and across the states. Those intergovernmental
mechanisms, which obviously have no formal constitutional
backing, have been crucial in the way in which federalism
has evolved in Australia. I think there may be some
lessons there again for the UK.
I mentioned that what I would draw your
attention to are some of the attempts in the US and
Australia to try to formalise powers, to try to come
up with some set of principles on top of those on their
respective constitutions. I have dug out a couple of
examples which I think are quite interesting. The first
one is an Executive Order promulgated by Clinton in
1998. This Executive Order replaced the previous Executive
Order which dated from President Reagan’s day.
Obviously Reagan was trying to strengthen states’rights
and the policy guidance the Reagan administration gave,
which carried over to Bush, was that wherever possible
power should be passed down to the states.
Now the real practical effect of that
is still being debated by policy analysts, and I will
not go into that debate. I thought that this particular
set of Clinton principles might be of some interest,
both because of the way in which they are formulated
but also because it gives you some idea of the difficulties
of trying to arrive at some set of principles, even
in a formal federal system.
LORD RICHARD: Was this accepted by the
Republicans?
PROFESSOR LAFFIN: It was not accepted
by the Republicans, it became a matter of great contention.
The following year it was replaced by a set of principles
to emphasise state rights more. I produced this because
this was a more centralist version and I thought these
principles made a bit more sense in the British context
than the principles contained in the later Executive
Orders.
SIR MICHAEL WHEELER BOOTH: What was the
legal status? Could this be challenged before the courts
or before the Supreme Court?
PROFESSOR LAFFIN: It could be, yes. It
is not like a policy issued by the UK central government
because obviously Congress is not bound by this. Congress
can just completely ignore this.
LORD RICHARD: This Executive Order could
be challenged or any action taken, could it?
PROFESSOR LAFFIN: Yes, it is essentially
guidance for the executive branch of government for
how they should conduct their affairs and how they prepare
legislation.
LORD RICHARD: It is a source of much
work for the deserving members of my profession.
PROFESSOR LAFFIN: Yes. Just going through
these quickly. Obviously we have an issue about boundaries,
interstate, and there is an argument for the role of
the federal government. Then there is one where something
happening in one state has implications for another
state. There is then uniform national standards, the
cost of government, the protection of individual rights
and liberties. I think there are two interesting ones
here about regulations. To prevent a ‘race to the
bottom’, providing a more business friendly type
environment, this attempts to prevent the states competingwith
each other to lower their regulatory standards.
Number seven is again about costs, the
availability of specialised expertise. Again that could
be the sort of issue which might affect Wales when we
are talking about regulatory agencies, how much specialised
expertise would Wales want to have duplicating what
might already be available at the UK or England and
Wales level? Then there is federal property and Indian
tribal governments which I do not think really applies
or has much analogy in the UK arrangement. This list
is an example and it is not supposed to be an account
of what is happening in the US government, it is simply
an illustration of the type of principles that have
been kicked around.
Moving to my second example, which I
have divided up into three parts, powers and functions,
accountability and scrutiny. By giving this example
I want to illustrate further the issues about what sort
of principles you can have, but also just to make one
or two further points about the Australian system which
might be of interest.
Obviously this has not been implemented
in any particular sense. This is a response from the
Victorian Parliamentary Government. At the time this
report was written both the Parliament and the Victorian
Government were run by the same party. It was a response
by the Victorian Parliament to a sense that the federal
government was getting overweening in its powers. The
federal government, after many years of Labour Government
(1983 to 1995)- about 12 years of a very activist Labour
Governmentparticularly in the micro-economic reform
area, had come to dominate the policy agenda in the
many areas in which state governments traditionally
have had considerable freedom, particularly in terms
of economic development. This example was an attempt
to try and draw some lines in the sand. This is just
a selection. If you want to find out some more it is
worth looking at the whole report which is easily available
on the web, one of the reasons for using this. I think
probably looking through that report will give you as
good a sense about the issues and limitations of the
federal approach in Australia as anything else.
Coming back to this. The first point
is this thing about overriding national imperatives
for a single policy. The second point, which I think
is very interesting, is that the states in Australia
- I think more so probably the states in the USfor obvious
reasons,probably size as much as anything else - have
tried to push the idea of joint policy making on the
Commonwealth Government. Interstate policy making as
well as interstate- Commonwealth policy making, that
is the second point. The third point I think is interesting
because the parliamentary committee here was trying
to make a distinction between national policy frameworks
and implementations saying ’Yes, okay, in some
areas we agree there is room for national policy frameworks
but the states should be left to implement it as much
as they want to do’. There again it is an interesting
thought thinking about some areas of the National Assembly’s
activities, perhaps in areas like health. The third
point again talks about the need for joint decision
making over certain areas of policy. Again that is an
attempt by the states to try and pull back the initiative
from the Commonwealth level. I will come back to those
points in a minute in my general summing up comments.
Just moving on to accountability. I think
it is interesting to note, first of all, that the Victorian
report accepts that wider sense of accountability that
I was talking about earlier. It accepts the arguments
for federalism, that it provides multiple points of
access, but also it emphasises that state interests
should be represented as far as possible where national
decisions are made.
The final example here, I think, goes
back to the issue about legislative scrutiny. I put
this up here partly to illustrate principles, but I
have put it up here also to indicate that there is an
issue of scrutiny in the Australian system as well.
Over the last 20 or 30 years I suppose in Australia
there has been a considerable shift towards policy being
made at an interstate level or more often at a Commonwealth-
interstate level. So that policies have been agreed
at that level and then the Commonwealth and state governments
have said ’Here is the consequent legislation,
please pass it now through your own parliament. We cannot
amend it significantly because it reflects agreements
which have been made at an Australia-wide level’
I think that raises issues, as you can see from these
recommendations, of legislative scrutiny. You do get
some legislation going through state parliaments, and
perhaps even the Commonwealth parliament, which has
not been scrutinised in a conventional parliamentary
way. Also a related point, I think, is something like
mutual recognition. I forget exactly when this was agreed
but the states agreed they would each recognise each
other’s trading standards, consumer standards,
etc. because up to that point all the states had different
sets of standards for consumer products and things like
that. You could buy something in Victoria and move to
New South Wales and be told ’You cannot use this
in New South Wales because it doesn’t meet our
regulations’. This was a restriction on economic
development obviously. At the time people argued it
was easier to trade across boundaries in the EU than
it was to trade interstate in Australia. One consequence
of this was an acceptance by the states of mutual recognition.
That one move had tremendous implications. There was
an argument about whether there was a proper debate,
proper scrutiny of the way in which that was enacted.
These principles that the Victorian parliamentary
committee were trying to put out were attempts to try
to improve scrutiny in the Australian system.
LORD RICHARD: What is the Council of
Australian Governments?
PROFESSOR LAFFIN: That is the peak intergovernmental
body which includes the Prime Minister, state premiers
and the Chief Minister from the Northern Territories
LORD RICHARD: Was that a new institution?
PROFESSOR LAFFIN: Just a minute. I think
it was a relatively new institution. It was formed in
1992.
LORD RICHARD: Much used?
PROFESSOR LAFFIN: Yes, I think it is
a very important forum. Probably more important than
the actual Council are the various ministerial committees,
Commonwealth-State ministerial councils which sit underneath
it. If you look in each policy area there are ministerial
committees, so in a great deal of policy making, for
example in health, all the health ministers meet together
and try to arrive at some uniform national framework
for health.
LORD RICHARD: But that is formalised.
PROFESSOR LAFFIN: Yes.
SIR MICHAEL WHEELER BOOTH: What is the
infrastructure? Who provides the secretariat? Who does
the work?
PROFESSOR LAFFIN: It is supported by
a secretariatbased in the Department of Prime Minister
and Cabinet in Canberra.
VIVIENNE SUGAR: Why do they then pass
the legal framework down to individual states to pass
rather than doing it at an all Australia level? We were
hearing yesterday about the Sewell device in Scotland
and I am just wondering why they chose to do it in a
different way.
PROFESSOR LAFFIN: Because anything that
is a state responsibility requires state legislation.
For the moment I cannot think of a good example offhand.
Probably things like mutual recognition, for example.
You would agree mutual recognition but then that requires
legislation in each state parliament.
VIVIENNE SUGAR: But you said that it
was virtually unamendable.
PROFESSOR LAFFIN: Yes, because where
you have got situations in which agreements have been
made across the states and Commonwealth, and perhaps
after maybe months, sometimes years on occasion, of
debate, a package is produced and if state parliaments
then say ’we cannot accept this‘or ’we
are going to amend it in some way’, the whole agreement
falls apart. It is rather like renegotiating a bit of
the whole federal settlement all over again. To try
to get shared legislation can be difficult on controversial
issues but on lots of issues stuff goes through routinely.
It is a common complaint of state parliamentarians that
they are presented with legislation and are then told
’we have no alternative but to pass this’.
Of course, it can be more complicated in situations,
which are not completely unknown, where the government
does not have a clear majority in the lower house or,
more frequently, a state upper house, because four of
the Australian states have upper houses, the government
does not have a clear majority in the upper house.
This goes back to the issue about whether
Welsh legislation receives enough scrutiny. Yes, I think
there is an issue there, but it is interesting that
in the Australian situation there is an issue there
as well despite the states havingprimary legislative
power.
VIVIENNE SUGAR: And the drafting is done
by the secretariat? Who actually does the drafting?
PROFESSOR LAFFIN: It depends from policy
area to policy area, I would not like to generalise.
Each ministerial committee has a parallel officer level
committee and drafting might be done in that. I cannot
tell you whether the real drafting is done by Commonwealth
parliamentary draftsmen or state draftsmen, I am not
sure.
LORD RICHARD: If you have got a symmetrical
system of devolution you can have these mechanisms,
can you not? It is much more difficult if you have got
an asymmetrical system.
PROFESSOR LAFFIN: Yes. I think the point
I am making is that you can have a problem of legislative
scrutiny in a relatively symmetrical system like the
Australian one.
SIR MICHAEL WHEELER BOOTH: Much closer
to home, there is a comparison with the EU and national
parliaments.
PROFESSOR LAFFIN: Yes.
SIR MICHAEL WHEELER BOOTH: Or national
administration, because after all the system provides
or the treaties provide for regulations and for directives,
regulations being directly applicable and directives
being applied by each national parliament. That is very
much the kind of situation that you have described in
Australia, is that right?
PROFESSOR LAFFIN: It is, yes.
LORD RICHARD: Subsidiarity writ large.
PROFESSOR LAFFIN: Except, of course,
in the Australian system in theory you should have more
accountability because at the Commonwealth level the
ministers making decisions are directly elected and
not delegates from their particular states.
TED ROWLANDS: The Australian federal
government does not have any power, I presume, to suspend
any part of the federation, does it?
PROFESSOR LAFFIN: No, it does not.
LORD RICHARD: Westminster has in theory.
PROFESSOR LAFFIN: Of course. The other
element of it is the High Court, the Australian version
of the supreme court, where if there are disputes those
can be taken there. And of course the whole constitutional
principle of having a supreme court is that that should
judge disputes. For the most part, and I am not an expert
on the Australian High Court, the sort of cases that
get referred to it tend to be things to do with inter-state
commerce, inter-state disputes. . Those tend to be the
things that go to the supreme court.
SIR MICHAEL WHEELER BOOTH: Is there a
convention for having judges from each state in the
supreme court, anyway from New South Wales and Victoria?
PROFESSOR LAFFIN: To be honest I would
not like to say.
SIR MICHAEL WHEELER BOOTH: It seems inevitable
that there is.
PROFESSOR LAFFIN: I am not sure. There
may be an informal sense that states should have ----
SIR MICHAEL WHEELER BOOTH: We have got
two Scottish Law Lords.
PROFESSOR LAFFIN: You would be unwise
to have a High Court that had nobody from New South
Wales, but given that New South Wales constitutes almost
half of the population of Australia it is almost inevitable
that you are going to have a significant representation
from New South Wales on the High Court.
TOM JONES: You mentioned earlier the
role of the senate in America and Australia. Should
there be an equivalent layer in this country in the
sense that within the Commons you have the Secretary
of State for Wales playing a pleading role on behalf
of Wales or the Assembly and in the House of Lords,
if it is ever reformed in any way, should there be some
consideration of some tier of representation there giving
the Welsh focus or Welsh voice in terms of scrutiny?
PROFESSOR LAFFIN: This is the sort of
challenge facing you, that in all federal systems they
have got some mechanism for relating the states back
to the federal government. As I mentioned earlier, the
formal mechanism has always been seen as the senate
in constitutional theory, but in practice, in the Australian
case in particular, that has tended to be these various
more or less formal committees and councils between
the states and the Commonwealth government, and they
perform that function. There is no secretary of state
type function in Australia. There is no formal convention
in Australia that in the cabinet all the states should
be represented. Obviously politically it makes sense,
if you can achieve it, but there is not a convention
whereas, if I have understood it correctly, in the Canadian
system there is a convention that you do represent all
the provinces in the federal cabinet, but I am not quite
sure how that works.
PETER PRICE: This whole area of co-ordination
presents significant problems it seems to me and what
comes out from what you have just said - and I am going
to use the word ‘federal’ knowing that it
means different things to different people and is imbued
with all sorts of other senses but I think it is the
most useful word - is in any kind of system which has
the different tiers of government and has overlapping
functions, which are inevitable in the light of what
you were saying that there will be lots of them perhaps,
you have got to find some means of dealing with those
overlaps which is institutional, not just a goodwill
type of format, if you are looking long-term. The system
that we have at the moment is one which does depend
heavily on the informal and it depends heavily on the
joint role of the Westminster/Whitehall end of things
as both the UK Government and the English government
and that creates a disparity of a kind which it seems
to me may create in time an additional difficulty.
PROFESSOR LAFFIN: Yes.
PETER PRICE: Have you ideas about how
the existing system might be added to or amended in
some way so as to create a better format for dealing
with this issue of co-ordination?
PROFESSOR LAFFIN: No, I do not think
I do have any specific proposals, at least at the moment,
to overcome that problem. I think it is a problem where
we have a system at the moment where in federaljargon
the UK central government is both a federal and state
government, and that is trying to relate to Wales as
well. That is where many of the problems occur. It is
rather as if in Australia the Commonwealth government
was also the state government for New South Wales and
was trying to run the rest of the country at the same
time,and that would give rise to serious problems.
The real problem, if you are looking
at the position of Wales in such an asymmetrical system,
is that it seems to me that, whereas in a less asymmetrical
system you have got the possibility of all the states
getting together and bargaining with the centre and
extracting some concessions, perhaps not as much as
they may want out of the centre, in the UK you have
not got that situation. Wales has very limited bargaining
power and that is a fundamental problem. Wales, the
best it can probably get from the centre is to create
a joint problem-solving environment, which is maybe
a goodwill thing, and at other times it plays the role
of a petitioner saying . The real problem is how you
try to institutionalise the situation in which Wales
is heard but Wales is not seen, if you like, as having
a privileged position in the UK central policy or whatever
you like to call it relative to its size in the UK.
I think it is an incredibly difficult challenge. I can
formulate the problem clearly but I have not got the
answers.
TED ROWLANDS: In your Future Options
paper which you circulated to us before Aberystwyth
you did actually identify for us some of these overlapping
areas which you thought we ought to look at. One of
them is on page three where you say a ’Possible
principle: a government body should be accountable for
its own spending. Thus where an agency is spending money
that falls within Welsh spending limit, the Assembly
should have responsibility for that body (for example
over the police service in Wales)’
PROFESSOR LAFFIN: Yes.
TED ROWLANDS: I will check this later
but maybe half of all public expenditure in Wales is
outside the Assembly remit, even today.
PROFESSOR LAFFIN: Yes.
TED ROWLANDS: Are you suggesting that
the responsibility for the police is transferred to
the Welsh Assembly?
PROFESSOR LAFFIN: In that paper we were
trying to see if there were some principles that could
be derived, and I think they were principles more to
do with seem to be obviously anomalous situations. It
does seem strange that, as I understand it, the police
are funded by just over 50 per cent from Assembly money
and yet the Assembly has no direct line of accountability
over what the police are doing. Of course that raises
a further problem. If you move the police over to the
Assembly the Home Office might say ’Just a minute,
what is our line of accountability?
TED ROWLANDS: If you move the police
over, you would have to move the Home Office based expenditure
with it.
PROFESSOR LAFFIN: Yes, that is one way
out, yes. You would have to change the Barnett formula
presumably accordingly.
LORD RICHARD: Thank you very much.
LAURA McALLISTER: This is a sort of related
question. Is not the big issue, Martin, something you
have not really touched upon in terms of the difference
between federalism and devolution, if there is a difference,
the financial angle, the difficulty of financial independence
or relative autonomy that a federal sub system would
have. We have a very cloudy mix here in the United Kingdom
system because clearly Scotland has a degree of financial
autonomy that Wales does not.
Logically the answer might be that we
should be focusing our attention on the financial side
in order to create a more symmetrical or better functioning
system with devolution/federalism in the United Kingdom.
You have not given a lot of attention to that in your
paper, the whole financial angle or the fiscal angle.
PROFESSOR LAFFIN: Wales suffers, in the
jargon, from a severe vertical fiscal imbalance because
almost none of the money spent by the Assembly is directly
raised by Welsh taxation. The exception perhaps is council
tax. The general assumption in federal systems is that
the states should raise most of their revenue locally
in their region to be accountable. In the Australian
case, the states raise about 20 per cent of the money
they spend. I think there is a severe problem in federal
systems that the general trend has been for monies that
states raise themselves to fall, as a proportion of
their expenditure,
LAURA McALLISTER: If you have a local
income tax, for example, as some European federal systems
have, that does circumvent some of the problems of a
central versus local nature. It does reflect the importance
of finance to that whole federal system.
PROFESSOR LAFFIN: If you had a local
income tax system then presumably you would have to
have a different sort of formula. Money would still
have to come from the centre. You would need to have
some way of equalising it. You would have to make some
decision at the centre whether equalisation took place
on the basis of needs or income. I think that could
be quite complicated. I am not an expert on the financial
part of it.
One observation I would make is that
the block grant system is actually quite a good one.
If you look at other federal systems - and I think I
mentioned it in the paper - one of the big issues in
federal systems, and arguably maybe one of the drivers
for a lot of overlap and duplication, is the fact that
federal governments tend to want to give money on conditional
terms to the states so that there is a tendency for
them to want to give the states money in order to influence
the decisions that states are making. There are different
ways of trying to do this. In the UK the Barnett formula
or a block grant system is ’Here is a block of
money you can spend it as you will’and most states
in federal systems would give their eye teeth to have
a situation like that where the federal government says
’Here’s a single block allocation, spend it
as you will’. I think it is quite remarkable that
the UK central government has done that.
VIVIENNE SUGAR: That is not a protected
situation, is it, that could change?
PROFESSOR LAFFIN: Yes.
VIVIENNE SUGAR: It is back to this goodwill
point again. It happens to work like that at the moment.
PROFESSOR LAFFIN: Yes, exactly. One might
project, looking into the future, that the centre might
try to think of ways of trying to claw that back, particularly
if you have a situation in which different parties are
in power in London from those in power in Cardiff and
Edinburgh.
LORD RICHARD: In a sense one of the issues
that the Commission has to decide is whether there is
a constitutional imperative towards having the same
structures or whether in fact the country can go on
being reasonably well governed when you vote different
structures and different powers in different parts of
the country. Do you have views on that?
PROFESSOR LAFFIN: My own view is that
I think any system really can be made to work to some
extent. The existing system is working and it is possible
that you might get different parties in power and obviously
it will raise tensions but it will still work in a sense.
It could have complications say, for example, if we
have got a Conservative government in Westminster which
decides to go down more the lines of privatising the
welfare state etc. That could have enormous implications
for Wales, not least if they start privatising health
provision for example, which would mean less money would
flow through the Barnett formula to Wales. Such decisions
made by England under the present systemcould automatically
carry through to Wales.
LAURA McALLISTER: Surely good governance
is about ensuring the sustainability of policy delivery
not about being arbitrary in the sense of saying ’This
system might work under a different political complexion’It
might not, that is our concern, is it not? It is the
key issue. It is about creating mechanisms which will
work under different political perspectives and relationships.
PROFESSOR LAFFIN: Yes. I suppose the
real issue is, say, you did get a Conservative government
- and it is conceivable a Labour government could push
the same way as well - who said ’Yes, we are going
to privatise parts of the health service. We are going
to introduce a greater element of private insurance’,
they could then say ’Well, this should apply to
Wales’ and they might even say ’It should
apply to Scotland as well’ because part of the
settlement is that we have a National Health Service
and we are changing the basic assumptions of the National
Health Service, therefore, that should apply to Wales
and Scotland. Why should we continue to fund a different
health system in Wales or Scotland? It is the converse
of the argument which says ’We should have a free
point of service health service right through the UK’.
Do you see what I mean? It is very much dependent on
the particular type of policy that comesfrom the centre.
I think that is a real difficulty. It is easy for us
to say, ‘Yes, we should have some principles that
carry across if there are different parties in power
at different times’, but the problem is that the
content of policy may be such that the party in Westminster
might say ’Yes, we are changing a national
UK policy system, therefore, we are not constrained
by the settlement’. It is the same as is happeningto
some extent in Australia where you have got Labor state
governments with the Liberal Commonwealth government
imposing a greater reliance on private insurance on
the health system which, in pure constitutional theory,
it should not be doing because it does not have powers
in that area. Obviously it can do it in effect because
it controls the financial and tax mechanisms.
Can I just round off what I was saying.
I suppose what I am delineating is what I think is your
challenge and I think it is quite a daunting one. If
we look back at those principles I was talking about
earlier, for that matter some of the other principles
we have floated in the UK, there is this problem about
how you define ‘national interests’ and ‘national
standards’. Then there is this problem of complexity.
I think one of the lessons of federal systems is the
inevitability of complexity. And I think another important
lesson from federal systems, which may be of interest,
is that you have a continual renegotiation taking place
in federal systems. There is a certain reluctance, particularly
from a federal level, to agree to castiron principles
because they are reluctant to compromise what might
happen in the future. I think, too there is an issue
about accountability. We have got to accept that maybe
there are different concepts of accountability. I think
as well this point about parliamentary scrutiny is interesting
in that it is an issue in Australia’s intergovernmental
relations. I think something that came from the Australian
example is the problemof joint policy making. And then
we have got this problem, that I mentioned earlier,
about specifying how devolved areas should be represented
at the centre. Of course there is a question of enforcement,
which is particularly acute in an asymmetrical system.
I think in presenting a set of principles, the question
is how far the centre is likely to accept those, given
that everything we know about federal systems suggests
that the centre is often very reluctant to compromise
its future discretion. However, as the last overhead
indicates, maybe the lesson coming from federal systems
is that the whole debate is often fluid and changes
rapidly. I think it is also worth noting that, while
one should be cautious about principles, nonetheless
policy and decision makers often do come back to and
do find principles important.
My final point is that I think arguments
about inconsistency and anomalies in the system do have
some strengths, which leads me back to the back end
of the paper that I submitted earlier that Ted alluded
to. What we tried to do in that paper was to begin to
float some of the more obvious principles to correct
what seem to be very clear anomalies. One obviously
is this question of: if an elected government body is
spending money then it should have pretty full accountability
or responsibility for how that money is being spent,
and that might have implications for things like the
police or the fire service in Wales.
TED ROWLANDS: You give another example
here where you say that ’the Welsh Assembly should
be able to exercise the same powers as local quangos
in England (ie in transport, English Passenger Transport
Authorities have more powers than the Assembly has over
transport in Wales).’ That is an extraordinary
situation.
PROFESSOR LAFFIN: One of the issues that
came up in doing our desk work was the strange situation
in which, say, Merseyside PTA has more powers than the
Assembly to intervene and to run public transport in
its comparable area and that seemed anomalous. If I
have understood it correctly, central government has
said that it is not going to allow Wales to create any
PTAs and it is not going to give Wales comparable powers.
That seems to be an anomaly and somewhere where, if
you like, a fairly pragmatic argument could be mounted
for saying Wales should have those powers. I think similarly
we raised an issue about quangos, that it does seem
odd, for example, that WDA is constituted under Westminster
legislation but the Assembly is responsible, so you
might say that all Welsh quangos should be constituted
under Welsh legislation which the Assembly itself is
able to amend in both the primary and secondary sense.
A couple of people have raised this issue with us- the
Assembly is going through a quinquennial review of all
its quangos, but it cannot necessarily implement the
product of the review even though they apparently have
Welsh-only implications. There is another related anomaly,
for example in health, that the Assembly is able to
abolish health authorities, but it is not able to create
new health authorities, so it is dependent on Westminister
to replace the health authorities that the Assembly
has abolished.
TED ROWLANDS: Can I just interrupt you.
I did not quite understand the point you were making
on page seven. ’Where the Assembly spends money
outside the public sector, it should enjoy the same
powers to direct how that money is used as those enjoyed
by an equivalent body in England (eg the same ability
to specify how public subsidies are spent as that enjoyed
by sub-national bodies in England‘You do not give
examples there. What are you talking about?
PROFESSOR LAFFIN: That arose from thinking
further about the transport issue. That was an allusion
to the ----
TED ROWLANDS: What are the sub-national
bodies that have public subsidies?
PROFESSOR LAFFIN: This was a different
way of coming at the PTA issue. If I have understood
it correctly, the Assembly gives money to the bus operators
and to the rail operators but it does not enjoy the
same powers of direction that, say, a PTA in England
enjoys. That seemed like an anomaly. What we were doing
there was - I am sorry it is not as clear as perhaps
it could be - playing around with different ways of
coming in on the same issue. I suspect if we scratch
around there may be some other examples that we can
come up with.
PETER PRICE: On this issue of transport,
if I may follow that one through, it seems to me that
this is a difficult area that we are at some point going
to need to grapple with but I am not sure that Passenger
Transport Authorities is the right parallel to draw.
The implication in what you are saying is that there
is a simple sort of solution we might adopt and that
is to argue that the Assembly ought to have the same
sort of powers to establish Passenger Transport Authorities,
but are they not for conurbations and is there any sort
of parallel in the situation in Wales? That is my first
point.
PROFESSOR LAFFIN: I think, if I have
understood it correctly, the government in Westminster
has said that all the large conurbations in the country
already have PTAs and, therefore, Wales cannot have
one. It seems to me that the area of Greater Cardiff,
or for that matter the area of most of South Wales,
is pretty much like a conurbation to me, so I think
there is a question about the definition of what is
a ‘conurbation’. I do not want to get too
hung up on the idea of PTAs as bodies but it seems to
me absurd that Merseyside PTA - I am just using Merseyside
as an example, not because I have it in for Merseyside
PTA - has more power over bus and railway operators,
etc., than the Assembly either directly or indirectly.
VIVIENNE SUGAR: I am struggling with
this line because there was a consultation only a couple
of months ago about the idea of a PTA for the whole
of Wales which was being resisted by the local authorities
who currently have power to subsidise local bus services
and so on. What you are saying very clearly is that
there is an issue over the power of the Assembly to
actually create a PTA.
PROFESSOR LAFFIN: I think there are two
issues here, just to clarify. One is power to create
a PTA, but I think the other more fundamental thing
is the Assembly does not have the same powers that a
PTA has, if I have understood it directly, to direct
bus or rail operators and so forth.
VIVIENNE SUGAR: I think, Chairman, this
is probably one of these case studies that we need more
detail about.
PETER PRICE: In relation to transport,
so much of the transport in Wales interlinks with the
border counties of England and it strikes me in most
cases they would be very happy with a greater power
residing with the Assembly as a matter of fact because
it would probably lead to a greater focus on good transport
links and they might well be the beneficiaries of it.
I suspect as a pragmatic issue that they would not be
leaping up and down opposing it for those pragmatic
reasons.
PROFESSOR LAFFIN: Yes.
PETER PRICE: How do you cope in more
constitutional terms with that sort of issue in transport?
PROFESSOR LAFFIN: In cross-border terms?
PETER PRICE: Cross-border.
PROFESSOR LAFFIN: I do not think you
can in the constitutional principles, can you? I think
the argument against the Assembly having the same power
as Scotland, because Scotland can direct the SRA to
do something and if Scotland directs the SRA to do something
they have to put up the money as well, so we must not
forget that, the Assembly cannot direct the SRA and
the argument against that ----
TED ROWLANDS: Sorry, the SRA is the Strategic
Rail Authority?
PROFESSOR LAFFIN: Yes. The argument against
that, as you have said, is that many of the rail links
that are important to Wales go across the border. That
has been solved informally, I think, at least for the
time being, as you mentioned. The Assembly has consultative
relations with the local authorities across the border
and they seem to be fairly relaxed about the sort of
changes the Assembly has put forward, at least to date.
LORD RICHARD: Thank you very much. Can
I say that I have found this sort of constitutional
exposure fascinating.
PROFESSOR LAFFIN: Thank you. I hope it
is of some interest.
LORD RICHARD: It still seems to me we
are back to the same points, the extent to which you
can divide constitutional structures for the whole country
but you have this sort of asymmetry of devolution. I
do not see how you can do that.
TED ROWLANDS: Do you devise a constitution
for the worst scenario?
LORD RICHARD: What is the worst scenario?
TED ROWLANDS: The total conflict between
a Westminster government and a National Assembly.
LORD RICHARD: Yes, but you can provide
structures and have built in mechanisms for resolving
disputes but here we are coming at it from totally the
other end.
PROFESSOR LAFFIN: I think that is a fundamental
problem. I think it goes back to the other issue that
we could have said a bit more about: how Wales is represented
on the various bodies which are England and Wales or
UK wide. There is a wide difference of practice which
we have come across, how Welsh interests are either
represented on, for example, UK wide or England and
Wales wide quangos.
TED ROWLANDS: Yes, but I do not think
we should go for the kind of tokenism you suggest. We
have a statutory Welsh problem, the Welsh man on the
Strategic Rail Authority.
PROFESSOR LAFFIN: That is part of the
problem because that person is not supposed to be a
representative of Wales. He is formally a nominee of
Wales. It hinges on personalities. It depends how good
that person is at persuading the SRA to see things from
the Welsh point of view.
TOM JONES: The interesting thing in that
is accountability. The chairman of that Authority would
see him or herself as accountable to Westminster and
the National Assembly in some passing way so the nominee
is part of corporate accountability. These lines are
always blurred as a result of direct accountability
for a personal authority.
LORD RICHARD: The trouble is we have
elevated ad hockery in this country almost to an art.
PROFESSOR LAFFIN: Yes.
LORD RICHARD: If something is there you
have to make it work and on the whole you do make it
work. Whether there is a better way of doing it to a
certain extent is irrelevant. At any rate thank you
very much indeed for provoking us.
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