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Lord Roberts of Conwy: My Lords, I said earlier that I would not press the amendment to a Division. I thank my noble friend Lord Dixon-Smith for the thought he has given to this issue. Although the reception which his idea has received this evening may not be altogether satisfactory, it may well be the start of something that could develop in the not so distant future. I think that his formula is right to concentrate on the Welsh figure for GDP, which is about 83 per cent. compared with the average of 100 per cent. Wales has very substantial needs and it would benefit under my noble friend's formula, which is generous in that respect.

A number of speakers have said that perhaps it is as well to leave the formula outside the Bill. I am not sure how long we can go on talking about needs while knowing that those needs are met through a formula calculation. I am not sure how long we can listen to the author saying that it needs revision and how long we can abstain from carrying it out.

One must also have some sympathy for the views expressed by the noble Lord, Lord Dean, who I am sure understands that the principle that I have been enunciating takes into account the needs of the English regions as well. The fact that we have asked for the needs of Wales be met in relation to the United Kingdom as a whole indicates that we have the interests

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of England as well as Wales very much in our minds. I believe that it is only a matter of time before the Government are forced to reconsider their view on the Barnett formula and the way in which both Scotland and Wales benefit from it. They will have to have new thinking. I am sure that the thoughts put forward by my noble friend Lord Dixon-Smith will figure in anybody's consideration of what should be done in the future. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

9.45 p.m.

Lord Dixon-Smith had given notice of his intention to move Amendment No. 40.

Page 41, line 42, leave out from ("Parliament") to end of line 43 and insert--
("(2A) The first payments under subsection (1) shall be calculated in accordance with subsections (2B) to (2F).
(2B) The relevant average Government expenditure per head of the population of the United Kingdom shall be multiplied by the population of Wales.
(2C) The figure arrived at by virtue of subsection (2B) shall be increased by 5 per cent. to take account of Wales' population density compared with the United Kingdom.
(2D) The figure arrived at by virtue of subsection (2C) may be increased or decreased by 1 per cent. in respect of every 1 per cent. by which average gross domestic product per capita is less or more (as the case may be) than the average gross domestic product per capita for the United Kingdom.
(2E) The formula set out in subsections (2B) to (2D)--
(a) shall be used to recalculate the basis on which payments under subsection (2) are to be made every three years after the first calculation is made and every three years thereafter;
(b) may be amended by order made by the Secretary of State after consultation with the Assembly.
(2F) The power to make an order under subsection (2E)(b) shall be exercised by statutory instrument which shall be laid in draft before Parliament for approval by resolution of each House.").

The noble Lord said: My Lords, we have had an interesting discussion. I shall not add very much. I say to the noble Lord, Lord Desai, that if my formula proves to be unsatisfactory at some point in the future, he will be aware--since he has read my amendment--that there is provision for it to be changed. The noble Lord, Lord Prys-Davies, hit the nail precisely on the head when he mentioned the potential for dissatisfaction with funding in the Welsh national assembly or in Wales at large under the present arrangements. Although we have a Government who believe greatly in openness, the way in which these aspects of funding are calculated is something of a closed book.

For better or worse, as the years roll by the Welsh national assembly budget and that of the Scottish parliament will be shredded by Members in the other place and possibly even by Members of this House. Comparisons will be made item by item. Regrettably, it will become a battlefield. I do not wish to say anything more. I accept the point that the Minister made about the roundabout effects of my amendment. That is the disadvantage of putting it forward at this stage of the Bill. I accept that. I also accept that it would be wholly inappropriate to take it further.

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[Amendment No. 40 not moved.]

Clause 82 [Loans to Assembly by Secretary of State]:

Lord Simon of Glaisdale moved Amendment No. 41:

Page 43, line 5, leave out ("with the consent of the Treasury").

The noble and learned Lord said: My Lords, this is my last attempt to remove unnecessary words from the Bill. The phrase to be omitted in this case is unnecessary beyond any rational argument. I emphasise "rational". The noble and learned Lord the Solicitor-General at Committee stage at least accepted that the words were unnecessary. The tune was changed at Report stage. I ask noble Lords to look at Clause 82. Subsection (1) allows the Secretary of State to make loans to the assembly. Subsection (2) is vital:

    "The Treasury may issue to the Secretary of State out of the National Loans Fund such sums as he needs for making loans under this section".

The noble and learned Lord the Solicitor-General at Committee stage drew attention to that provision which means that the consent of the Treasury is in any event required if the Treasury stands on the path between the Secretary of State and the national loans commissioners. Subsection (5) limits the amount of loans that may be outstanding to £500 million, but subsection (6) provides:

    "The Secretary of State may from time to time by order made with the consent of the Treasury substitute for the amount specified in subsection (5) such greater amount as is specified in the order".

It is perfectly obvious that the words "made with the consent of the Treasury" are unnecessary.

When the great jurist, Sir Frederick Pollock, handed over the chair of the Law Quarterly Review to another great jurist, the father of the noble Lord, Lord Goodhart, he gave the following advice about commenting upon judicial pronouncements. If one needed to criticise a judgment one should say, "With respect"; if the judgment was clearly wrong one must say, "With great respect"; but if it had to be read to be believed one must say,"With the most profound respect".

It is with the most profound respect that I turn to the Government's argument on this provision. At Committee stage the noble and learned Lord the Solicitor-General accepted that the words were unnecessary but bravely went on to say that that was not a matter for criticism; on the contrary, it was a matter for congratulation because the Government were making plain what was necessary.

By the time we came to Report stage that argument could not be sustained; indeed, it was expressly withdrawn. The Government then accepted that unnecessary words should not be in the Bill. But the first argument having failed another two were cooked up. The noble and learned Lord's first argument was that although your Lordships know and others know that the consent of the Treasury is necessary under the circumstance the members of the assembly and the general public might not know. That is a completely fantastic argument. They have only to look at the clause to see that the consent of the Treasury is required under subsection (2), to which I have just referred.

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There are only three people under the clause who are concerned: the Secretary of State, the Treasury official and the national loans commissioner. Nobody else. So that argument was obviously not a very convincing one. Indeed, the noble and learned Lord went on to a second argument which he said was more substantial. Well, it could hardly be less substantial than the first. However, when one looks at it, it has no substantiality at all. The argument was that under the draft transfer of functions order made under Clause 2 the consent of the Treasury under a number of statutory provisions and secondary legislation is no longer required. That, as far as I have been able to ascertain, is because they were inconsistent with devolution. The noble and learned Lord went on to say:

    "While I accept that that process is somewhat removed from that of raising the assembly's borrowing limit".--[Official Report, 9/7/98; col. 1400.]

That was real understatement. Not only is it somewhat remote; it is utterly irrelevant. Will the Minister say whether he stands by those two arguments, the only ones we now have? In particular, what is the possible relevance to the abrogation of the need for Treasury consent under the draft order?

The House will remember that the famous philosopher, Bradley, described metaphysics as finding bad reasons for what we believe on instinct. What have been advanced so far are bad reasons for what the Government do not wish to concede because they once put their hands to the letter. I beg to move.

Lord Williams of Mostyn: My Lords, with the utmost ineffable respect I cannot agree with what the noble and learned Lord, Lord Simon of Glaisdale, said. We have debated this interesting point at some length. There are many Acts over the past decades dealing with borrowing from the National Loans Fund and the like where legislation has explicitly imposed a requirement for the Secretary of State to obtain the Treasury's consent. I refer to the well known paragraph 4, of Schedule 3 to the Welsh Development Agency Act 1975 as an example.

I do not resile from anything that the noble and learned Lord the Solicitor-General said. He has every confidence that I shall maintain his position steadfastly--so much confidence that he demonstrates it by not being here on this occasion. It is appropriate to have it on this occasion. At the end of the day, the noble and learned Lord, Lord Simon of Glaisdale, is saying that what he says three times is true; I am saying that what the Solicitor-General has said twice and I a third time is true. We are not going to agree.

10 p.m.

Lord Simon of Glaisdale: My Lords, it is not enough to say that we think it is appropriate. None of the arguments has been addressed. It is absurd for a government who parade under the banner inscribed "Modernisation" to cling to these ancient phrases just because they turn up in the computer in parliamentary counsel's office. However, as I have said, these matters

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are not suitable for a Division. Therefore, without thinking for a moment that the case has been made out, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 115 [Consultation with business]:

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