Work in progress

Welsh voters were lukewarm about devolution over a decade ago. But now the All Wales Convention is gauging citizens’ support for wider law-making powers – and meeting with some success.

You could be forgiven for being pessimistic about the work of the All Wales Convention, the body set up to stimulate discussion on the future of devolution. In the midst of the recession, it has to start encouraging public debate on the National Assembly and gauge opinion on whether full law-making powers should be devolved. Conservative leader David Cameron might have struck a chord on his recent visit to south Wales, when he criticised ‘endless arguments about more and more processes’ around devolution, and urged people instead to talk about real concerns, such as jobs and credit for business.

Even at the best of economic times, tackling governance in Wales would be challenging. The devolution settlement is complex, in part the result of the lukewarm support the Welsh have demonstrated. Only a tiny majority voted in favour of devolution in the 1997 referendum, after a resounding ‘No’ vote almost 20 years earlier. More recently, the 2006 Government of Wales Act allowed the Welsh Assembly Government to propose legislation, albeit in a circuitous fashion. The 1997 settlement simply devolved the responsibilities of the Welsh secretary to the Assembly Government, but gave it no primary law-making powers.

But whatever the success of the convention, 2009 is likely to be a pivotal year for devolution. Increasing pressure on public spending as a result of the economic slump is likely to bring into sharper relief dissatisfaction with how devolution is funded. The work of the convention will provide a valuable litmus test of public feeling about decentralised government.

Convention chair Sir Emyr Jones Parry, the former UK permanent representative to the UN, is clear about one thing: the challenge for the convention is to explain the current devolution settlement simply. ‘I don’t believe that there are many people anywhere in Cardiff or in London who have much idea of the detail of how it actually works,’ he tells Public Finance.

Jones Parry is referring to the constitutional fix that allows the Assembly Government to bring in new legislation, via Westminster. The process begins with Legislative Competence Orders that are drawn up in Cardiff, considered by the Welsh affairs select committee in Westminster and a committee of Assembly members in Cardiff before being handed to the Welsh secretary as a draft order.

The secretary then lays the order before Parliament or gives notice of refusal to do so. Once the LCO has passed through this process and been approved by both Houses of Parliament, an Assembly Measure can be proposed in this area, for a vote in Cardiff Bay.

The All Wales Convention was a commitment of the Plaid Cymru/Labour coalition government’s programme. It is made up of a 16-member executive committee, with members nominated by parties or organisations, or appointed by open competition. It is carrying out a range of public meetings, surveys and formal evidence sessions and will report by the end of 2009. Jones Parry says its role is to ‘stimulate the debate and the debate by definition is in part about saying, “So, ten years on, what do you think about devolution?”.’

Plaid Cymru’s economics adviser, Eurfyl ap Gwilym, who is deputy chair of the Principality Building Society, is highly critical of the current constitutional arrangements. They are ‘incredibly cumbersome,’ he says, while ‘disgruntled [Westminster] MPs’ are able to block legislative plans formulated in Cardiff as ‘they see their own role being undermined’. He would like an agreement along the lines of the Salisbury Convention (or Doctrine), which ensures the House of Lords does not vote down manifesto legislation.

But the chair of the Welsh affairs select committee, Labour MP Hywel Francis, refutes any claims that his Labour majority committee is ‘anti-devolutionist’ or slows down the process for Assembly Measures, attributing the view to ‘elements of the press trying to create conflict between the two institutions’. He describes the current process as a learning experience. ‘A lot of it is down to a commitment to build mutual respect and a stronger partnership between the Assembly and Westminster, and I believe that is what we are doing.’

Devolution in the UK is often described as ‘asymmetric’, with significant differences between the three devolved administrations of Wales, Scotland and Northern Ireland. These are due to a host of reasons, from history and politics to the practice of government and legal systems.

The original 1997 settlement left Wales without primary law-making powers. A referendum on the powers would authorise the Assembly to make law on all of these ‘fields of competence’ without recourse to Parliament, more akin to the Scottish model. The Labour-Plaid coalition government has promised to campaign for such a referendum if sufficient levels of public support were established. Even if this were done, Parliament in Westminster would still have to give Cardiff the go-ahead to allow a vote to take place.

Jones Parry concedes that the narrow majority for the ‘Yes’ vote in Wales back in 1997 could reflect weaker demand for devolved government in Wales, but he also suggests it could demonstrate that people in Wales did not want to vote for the little that was on offer.

The Government of Wales Act 2006 was taken through Parliament by the then Wales Secretary Peter Hain, who describes himself as a ‘passionate devolutionist’. The Act’s halfway house devolution is seen by many as a way of appeasing a divided Labour Party, split between unionists and devolutionists.

Hain is sceptical that Parliament would agree to sanction a referendum in the current term of the WAG, despite the intention of the coalition government to hold a referendum on or before the next Assembly elections in 2011.

With a lack of cross-party or even party consensus, he believes a referendum would fail and set back devolution as the first attempt did in 1979. ‘It would be tragic if a defeat was triggered either through impatience by devolutionists, or by those who wish to contrive political ambushes for partisan purposes against Welsh Labour,’ he said in a letter to the convention.

John Osmond, director of the Institute for Welsh Affairs, says that the real political debate over devolution is going on within the Labour Party, which is divided between Westminster unionists who oppose further devolution and pro-devolution Cardiff Assembly members.

A sizeable shift in public opinion, however, would probably overtake any party political hang-ups. Osmond says polling data has shown support ‘moving towards a Scottish-type model’. The Public attitudes 2008 survey of over 2,000 people, commissioned by the Assembly, showed 39% support for an elected Parliament with full law-making and taxation powers and 31% support for the Assembly to remain as it is. But opinion polling can be an unreliable guide and Hain says some opinion polls have shown support for primary powers, while others have not.

‘One of the biggest challenges of the whole thing is to get the public to understand what is being suggested,’ Osmond says. ‘A lot of people tend to be pretty sceptical about what the Assembly can achieve, never mind getting people to decide if they are in favour or not of it having greater powers.’ The economic downturn will also be a consideration, he says, as people are more likely to take a risk with a new system when things are going well.

Hywel Francis says people are increasingly aware of actions taken by the Assembly to meet the needs of Welsh people, which shows a significant shift in opinion given the narrowness of the 1997 referendum.

Changes to the devolution funding mechanism, the Barnett Formula, are not being considered by the All Wales Convention. However, the formula, which has lasted since the 1970s relatively unscathed, is now coming under siege from various quarters.

Not only is the Calman Commission in Scotland looking at it, but an ad hoc House of Lords committee launched its inquiry into funding for the devolved administrations in January. It took evidence from Lord Barnett himself – the chief secretary to the Treasury when the formula was designed.

Barnett told the committee he was worried that figures showing greater public spending per head in Scotland as a result of the formula could lead people in England to ‘demand separation, which would be, in my view, hugely damaging because I have no wish to see the UK split into three separate countries’.

Jones Parry agrees that there is a feeling of unfairness over funding. ‘I don’t want to exaggerate it but I would say there is some resentment in England at what is perceived as policies which don’t benefit England but which they believe they are paying disproportionally for.’

The Assembly Government has established an independent commission to report on alternatives to Barnett, borrowing powers and tax varying powers in Wales. The commission, a separate commitment of the One Wales coalition government, is being led by Gerald Holtham, an economist and managing partner of investment firm Cadwyn Capital.

Eurfyl ap Gwilym led Plaid Cymru’s submission to the Holtham Commission. He says the formula is ‘unsatisfactory’, failing to account for the disproportionate effects of industrial decline in Wales in the 1980s, and is designed to seek convergence in spending across the UK despite differing and divergent needs.

Devolved spending contains anomalies and is ‘not open to effective challenges’, he says. ‘We don’t get much debate on it, which is a negative.’ He also attributes the way Scotland benefits from the formula as the reason for its survival. ‘The government in London is fearful of changing it. The threat from Wales is seen as far less serious.’

Whichever direction the debate goes in, one certainty is that, as the All Wales Convention carries out its survey, far more will be known about devolution in Wales at the end of the process.

At the same time there is likely to be increasing pressure on Whitehall to review the arrangements for funding devolution. If the convention delivers a response that triggers a referendum, it will be a strong vote of confidence in decentralised government, and further pressure for a funding system that is adequate to the task.