Written Response to the Richard Commission by Andrew Davies AM

Annex 1

I am pleased to set out my written evidence to your Commission. I look forward to giving oral evidence on the afternoon of Thursday, 7 November. The material below follows the structure and order suggested in your letter. In presenting this material, I have attempted to provide a broad picture of the operation of devolution in the economic development context, with my general assessment of how this has enabled the Assembly Government to pursue distinctive policies for Wales.

This submission only covers my present ministerial portfolio. However, I will be submitting further written evidence later this week on the portfolio I held from the inception of the Assembly until February this year, Minister for Assembly Business.

Regulatory Framework

Economic development powers in UK primary legislation are usually drawn in broad terms and authorise a range of administrative activity, although they rarely confer subordinate order-making powers. These economic development powers have generally been transferred to or made exercisable by the Assembly in respect of Wales. The real practical constraint on the use of these powers lies in the fact that all support to industry has to comply with relevant UK legislation and EC guidance on State Aid.

The operation of schemes providing assistance to industry is covered by the multi-lateral Concordat on Financial Assistance to Industry between the Department of Trade and Industry, Foreign and Commonwealth Office, Treasury, Office of the Deputy Prime Minister (formerly DETR) and the devolved administrations.

Businesses in Wales can, however, be affected by secondary legislation passed by the Assembly where the lead is not the Minister for Economic Development. As part of the Regulatory Appraisal process, Assembly Standing Orders and guidance requires that an assessment is made of the impact of each proposed Assembly order on business in Wales and states that consultation must take place where this is considered to be significant.

My response to the specific questions posed by the Commission are as follows:

Q. Please describe the range of issues covered within your Ministerial portfolio and include in that a summary description of the powers that you have available to implement new policies responsibility for.

I am responsible for the implementation of the Welsh Assembly Government’s national economic development strategy "A Winning Wales", which sets out policy on a broad range of economic development matters. Many of these are in my area of responsibility but some - notably training and skills, and transport infrastructure - fall to other Cabinet colleagues.

I share responsibility with the Minister for Education and Life-Long Learning for the recently launched Life-Long Learning Network providing broadband access and equipment to schools, colleges and libraries in Wales. And, although my remit covers the economic agencies representing Wales overseas, there are obvious shared Ministerial responsibilities when it comes to capitalising on these agencies’ presence abroad to raise Wales’ profile in the world.

As well as the more obvious economic development responsibilities such as support for investment and job creation and provision of advice to business, I also cover:

My role involves working closely with Cabinet colleagues, public and voluntary sector bodies and social partner organisations to provide a coherent framework for economic development in Wales. Operationally my responsibilities are discharged through officials in the Economic Development Department and the Cymru Arlein Division (which includes the Broadband Unit of the Welsh Assembly Government), and the Welsh European Funding Office ("WEFO"), which is an executive agency within the National Assembly for Wales.

I have responsibility for two executive Assembly Sponsored Public Bodies, the Welsh Development Agency and the Wales Tourist Board, and two advisory bodies, the Welsh Industrial Development Advisory Board and the Economic Research Advisory Panel.

A list of the main powers available to me in my role as Minister for Economic Development is at Annex 1. These are mainly used for assistance to and promotion of industry in Wales and include business support and advice, financial assistance, promotion of inward investment, development of international trade and the setting up and growth of indigenous companies. Within these activities, my focus is to encourage and foster a culture of innovation and entrepreneurship. My role also covers policy for the energy and steel industries in Wales.

The Department of Trade and Industry retains responsibility for Employment issues (Minimum Wage, working hours and individual employment rights etc.) and is the lead Department for the UK Government on European Commission matters relating to financial assistance to industry.

Q. Can you give examples of policy development using these powers in the Assembly’s first term?

Since July 1999, the following have been achieved:

There are areas where I have encountered issues relating the Assembly’s powers in implementing my policies:

My officials and I are in regular contact with UK Government Departments about these issues. In particular, we are discussing the possible transfer of decision making powers for power generating facilities (including wind farms) of over 50 megawatts.

Q. Have you been able to influence policy on non devolved matters which are relevant to your portfolio?

The Regulatory Reform Act 2001 aims to make it easier to remove redundant legislation or legislation which imposes unnecessary burdens on businesses and others. Functions under the Act were not transferred to the Assembly as such a provision would have been the equivalent of making new primary legislation, and therefore inconsistent with the devolution settlement.

However, negotiations between Assembly officials and officials at the Cabinet Office ensured that the Assembly must be consulted on any regulatory reform orders that extend to Wales and such an order can be made only with the agreement of the Assembly. The Assembly can also be empowered to make Subordinate Provisions Order, if the Regulatory Reform Order provides for it.

Q. Are there areas of policy where responsibilities are divided between the Assembly and Whitehall in ways which have

a) worked well

In most respects, the economic development agenda in Wales draws on primary legislation alone. The powers tend to be fairly widely drawn and, apart from the important exceptions highlighted in this letter, have not hampered efforts to frame an agenda fit for purpose in Wales.

A specific example of good joint working is the Telecommunications Act 1984. Responsibility for this is a matter for the Secretary of State for Trade and Industry. However, we view access to affordable broadband connectivity as a key building block to economic success and use the Assembly’s economic and education powers to drive our broadband agenda forward, involving DTI as appropriate. The Assembly Government is about to jointly appoint, with the Department of Trade and Industry an individual who will work on the Broadband Wales programme but also report to the DTI.

b) presented practical problems?

Although the Regulatory Reform Act was designed with the devolution settlement in mind, it requires Assembly agreement to be signified when the Order is about to be made. Some UK Departments have discovered that this requirement can be an unexpected source of delay. Although it has not happened yet, there is a possibility that, after the committees have reported on a proposal, the Assembly plenary session could withhold its consent or that it could attach conditions. If that were to happen the UK Government would need to consider carefully whether to proceed with the order. There may need to be a further consultation; the Order may need to be re-tabled; or, alternatively, the Order may be dropped or confined to England only.