National Assembly for Wales

Good morning. Welcome to the meeting of the Constitutional and Legislative Affairs Committee this Monday 16 April 2018. 

Welcome to the Secretary of State for Wales. I'm grateful for your attendance this morning.

Just before we kick off, just to deal with some of the handling arrangements in this particular committee room, in the event of a fire alarm, Members should leave the room via the marked fire exits and follow instructions from the ushers and staff. There is no test forecast for today.

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There are no apologies. The committee is in full attendance.

Welcome to Alun Cairns MP, Secretary of State for Wales. Would you like to introduce your official?

Diolch yn fawr. I'll go straight into questions. We've got quite a number of areas, so we'll try and move as quickly as we can. Obviously, we've reached an important stage of the negotiations around Brexit and also the European Union (Withdrawal) Bill going through Westminster at the moment. If I can just ask you about clause 11, about how the negotiations between the UK Government and the Welsh Government have gone and the extent to which you are confident that an agreement can be reached on clause 11.

Thank you for the invitation and for the question. I remain optimistic. Of course, there are positive discussions ongoing between officials almost on a daily basis. The First Minister and I speak regularly, as do the Chancellor of the Duchy of Lancaster and the First Minister, and Mark Drakeford and I regularly engage. There are active sessions of the Joint Ministerial Committee relating to these issues ongoing. I remain optimistic, and it's only by continuing to hammer out issues—. I mean, we understand the principles. I think the Welsh Government understand the difficulty sometimes that we have in reflecting some of these issues in legislation and, again, I remain optimistic.

What would you identify as being the key issue that's preventing agreement at the moment? What is the key obstacle?

Well, the UK Government is the only body, and Parliament of course, that has to look after the interests of every part of the UK, and it's about maintaining common frameworks that work positively for organisations and businesses and communities in Wales as well as for those in Scotland, Northern Ireland and in England. Therefore, ensuring that we're providing the greatest certainty and continuity to those during what is an uncertain period as we leave the European Union is the focus of our attention. And therefore, ensuring that we get a co-ordinated approach, together with the frameworks—. That's why I'm optimistic, because it's in all our interests to come to an agreement during this uncertain time. 

Well, Secretary Of State, there's a lot of common ground, clearly. The Welsh Government identifies, I think it's fair to say, that it's the issue of consent within those frameworks where they affect devolved areas. What is it about the issue of consent from the Welsh Government that the UK Government has difficulty with?

Well, there are 64 areas of law that, as we leave the European Union, will return back to the UK. So, the amendment that has been tabled to clause 11 presumes that those powers will pass to the devolved administrations, obviously in devolved areas. And then there are 24 areas out of those 64 areas that relate to Wales in which it's in all our interests that we come to an agreement. 

Now, the process by which we can act in relation to the whole of the UK with the support of every part of the UK is important. The Sewel convention has always been honoured by the UK Government—that we don't act in areas without the support and consent of the devolved administrations. And, even in those 24 areas— they've been described as the 'deep freeze', they've been described as the 'larder'—however you want to present them, of course the Sewel convention will continue to apply to those.

So, we're talking about the process, we're talking about how we can reassure the devolved administrations that there is no wish or will in order to act against the will of the devolved administration or against the process and the principle of the Sewel convention.

Does it boil down to a lack of trust of the Welsh Government?

No, not at all. I can remember the Wales Act that has received Royal Assent. There were predictions that we couldn't get to an agreement, but ultimately we did, because it was the right thing to do for Wales and it was the right thing to do for the whole of the union of the UK. Therefore, on that basis, if we continue to negotiate in a positive, constructive way, as we are, I remain optimistic that we will get to an agreement whereby the concerns that the Welsh Government have or the Assembly has, and the concerns that stakeholders and businesses have that want that continuity so that—. Supply chains, you will appreciate, work so much across border between England, Wales, Scotland and Northern Ireland, and on that basis we need to be able to protect them so that one part of the UK doesn't advantage or disadvantage another part of the UK.

Thank you. Dai Lloyd.

Well, the whole purpose of the withdrawal Bill is to provide the greatest certainty and security to communities, to business, to industry, and the strong representation that has come from industry, business and communities is to not to see great change. And, if any one part of the UK had the capacity to disadvantage another part of the UK, then clearly, that doesn't provide the certainty and community that we all want to see. On that basis, I think that if we focus on what the outcome should be—. This is why I think there is a common positive thread to the discussions between the UK Government and the Welsh Government—that, as we focus on the outcomes of where we want to get to, we need to agree a process by which we get to it and that, then, will provide reassurance to both legislatures, but ultimately for the businesses that operate within whatever frameworks that we develop.

Secretary of State, is it fair to say then, just in summary on this particular part, that there's a desire from both Welsh Government and from UK Government to achieve change by consensus, but the obstacle is whether that consensus is put on a statutory basis?

I think that there's an element of that. We're trying to get to a position that will satisfy the fair concerns that the Welsh Government and the other devolved administrations have, as well as be able to provide that reassurance and confidence to communities and to industry and businesses as they want to invest. So, this is quite an uncertain period as we leave the European Union. Certainty and continuity is something that we want to provide to industry, otherwise the capacity for companies to invest and to attract further inward investment would be undermined.

On that basis, I think that all Governments want the same outcome, but it's about providing the greatest reassurance that we can that the Sewel convention and the principles of the Sewel convention will be adhered to. That, effectively, means that we won't act without the support of the devolved administrations, not only in those 64 areas of law in general, but specifically, I would say, the principles of the Sewel convention would apply in those 24 areas of law for which clause 11 suggests an Order-making power in order to pool those powers. Once those powers have then been pooled, the Sewel convention and the principles of it will equally apply to the way in which we do it.

I would hope that all devolved administrations and all the Assembly Members here, specifically in Cardiff, would take confidence that we have never broken the principles of the Sewel convention, and that's because of the respect that we show to the constitutional make-up of the UK, where devolution is a fundamental and central part of that.

Those are important points you make on the Sewel convention, but if that's right, if that commitment is so certain, it seems to me that having consensus on a statutory basis shouldn't be an issue.

The Sewel convention is not on a statutory basis as it stands, and if we were to legislate to put the Sewel convention into the law itself, then that would fundamentally change the constitutional make-up of the UK, because that would automatically switch the UK to being a federal structure. The Sewel convention is something that has been honoured and adhered to throughout, and we want to continue, absolutely, to do that. But if the Sewel convention was in legislation, then, all of a sudden, we'd change to become a federal structure, and we all know that such major constitutional changes would always need a referendum.

Well, of course, the Sewel convention is in legislation in the Wales Act 2017, but it's a question of what the status is of that, but I think this is another constitutional debate to be had. David Melding.

Thank you, Chair. Bore da, good morning, Secretary of State. You'll probably recall from your long service in this institution that this committee takes a particular interest in the operation and supervision of secondary subordinate legislation, and I think it's quite important that we drill into some of this detail because things are not quite aligned between how subordinate legislation is likely to be dealt with in relation to England and the UK and then in relation to Wales. So, I just wonder what sort of discussions have you been having with the Welsh Government and, indeed, with the Presiding Officer here when looking at likely amendments, specifically on this issue of how subordinate legislation is treated?

Well, I'm familiar with the calls from this committee about the process for the sifting committee to be binding. Of course, we also have discussions with the Presiding Officer as well as with the Welsh Government. There's also the process by which that will happen on a UK basis, and I would say that, if there was a demand for a different process here in Wales compared to that that has taken place on the UK basis, provided the Assembly has the powers with which to change that, I think that that could well be a way forward. Therefore, the advisory process that is currently contained within the Bill, if there is a will to pursue and continue on that basis and that is the structure for which there's a starting point here in Cardiff Bay, then it could be the will of the Assembly to impose that restriction, if you like, on the Executive, on the Welsh Government. Clearly, we will want to come to the most common arrangement possible, and there are discussions ongoing, quite obviously.

If we take the early days of the EU withdrawal Bill, probably one of the biggest interventions that the UK Government responded to was the call from Parliament to have a sifting mechanism, but that does not apply to the devolved administrations. What is the current view of the UK Government in terms of whether an amendment's appropriate so that there is common practice then between all the legislatures?

I think a common practice has a logic and can make sense, but, of course, it would be up to the Assembly to change that, should they want to change it on that basis. So, whether that sifting committee becomes advisory or the recommendations, as this committee has suggested, become binding will then be a matter for the Assembly itself in order to make changes and put restrictions on the powers of the Executive. The discussions that have taken place in Parliament are that the sifting committee would be advisory and that there would be a process and protocol by which they would work. Now, if there's a will to shift from that here and to have more restrictions on the Executive then, clearly, the Assembly itself could do that. Geth, do you want to add anything on that?

Yes. Can I just say that we do hope to bring forward amendments for the Lord's Report Stage on a whole range of Assembly procedural issues vis-à-vis the withdrawal Bill. That would include provision for an Assembly sifting committee. It is free for the Assembly to make additional provision, obviously, over and above whatever goes into the report, though.

So, when you give weight to these issues, because I suspect there's a similar demand in Parliament to make the recommendations of a sifting committee binding—otherwise, why do you want to sift—? It's only going to pick up the odd regulation here and there that is presumably regarded with more importance than the Executive thinks or has just been missed by the Executive. Do you think there will be a uniform system, then? That might be the easiest way to—. Or there should be, so if it is binding in terms of UK and English-only legislation, then the same thing should apply to the procedures that the devolved administrations have.

Well, I think the starting point could be a uniform system and a uniform approach, but if the Assembly, of course—it wouldn't be up to us to then tie the hands of the Assembly as to how it would want to change its process thereafter. So, let's take the hypothesis that it would be an advisory process in Westminster and the will of the Assembly would be to have a binding approach here in the Assembly, then there is nothing stopping the Assembly then changing it in order to be a binding approach thereafter. 

The Assembly has already said it wants a binding system. The Welsh Government doesn't, but that's a traditional Executive—. So, are the two Executives in cahoots here? You're not going to solve this one for us, are you?

This could be an instruction that you place on the Executive or not. It's not for me to tell you what to do. It's a matter for the committee and the Assembly to form a view and to instruct the Welsh Government, if that's something that they see fit, and of course then we will work with the views of the Assembly, the views of the Presiding Officer, as well as the views of the Government.

Okay. And then, just to confirm what Mr Williams said, the amendments are likely to come in at Report Stage, is that right? 

Yes.

In the House of Lords.

Yes.

And then, obviously, it will be for the Commons to react to those, but if it has the Government's backing, one assumes that that will get support in the Commons also. Thank you.

There are a few questions—. We move on to now the—I'll refer to it as the continuity Bill, because that's the current terminology, but it's the Law Derived from the European Union (Wales) Bill, which you'll be familiar with, and the similar legislation introduced in Scotland. It has been passed. The Welsh Bill is obviously different from the Scottish Bill, and is also on a slightly different legislative basis as well. There have been indications that this matter may be referred to the Supreme Court and that possibly you might use your powers under section 114 of the Government of Wales Act 2006 as well in preventing it going for Royal Assent. I was just wondering, bearing in mind that we're probably now within the last two days for any referral to take place, whether any decision has been taken on this.

A decision has been taken in principle, but of course there's a process by which the law officers need to follow in order to act across Government in relation to every department across Whitehall. So, a statement will be made very soon on that basis. But I would, whatever that—. I'm not able to say what that statement is today, because that's a matter for the law officers, but of course there have been considerations across Government. I would say, though, that this is—. I said earlier about continuity and clarity and certainty in terms of the process that we're trying to give business and industry as well as other key stakeholders, like the UK Parliament, like the Welsh Assembly and so on, and all that work within the laws that are drafted—if there is a decision for reference to the Supreme Court, it should be considered as seeking to provide the clarity, potentially, rather than any particular challenge in terms of what's there. The Scottish Presiding Officer believes it's outside their competence. The Presiding Officer here in the Assembly said it was finely balanced, and I think that we all want a statute book that is functional, operational and accurate, and provides that clarity to those that operate within it. So, it's a finely balanced issue, and the law officers are going through that process in order to make a comprehensive statement in due course.

Thank you for that. I appreciate the difficulty you're in. I think we take it that a statement is probably imminent, and we know what the timescale is.

In terms, though, of if there were to be a referral, has any consideration been given as to timescale and so on?

The legislation provides a limit to the—. There's a defined window for which the law officers need to—

I appreciate that, but in terms of timescale, in terms of this matter, the clarity that might be sought, whether the matter would be expedited, and whether that's something that's been considered, are you able to comment on—?

Well, that's a matter for the Supreme Court. It's not for us.

In terms of the rationale behind certainly the Welsh legislation, the Welsh continuity legislation, bearing in mind what you've said about the Sewel convention—that is, if legislative consent is not given to the EU withdrawal Bill, and the importance of Sewel and the UK Government honouring Sewel—the potential is, if that legislation does not pass, or isn't upheld for any reason, that we could end up with, I suppose, a legislative lacuna in terms of the powers that currently reside in Brussels that relate to devolved matters. So, within that context, do you consider that the continuity Bill serves at least a prudent purpose in ensuring that we don't go over a legislative clifftop without any legislation within Wales with regard to those particular powers?

Well, I think any Bill for which there's a view that it's not necessarily certain as to whether it falls within competence or not just creates greater uncertainty. The greatest certainty that we can provide in the process—it should never be considered as a challenge, whatever the ultimate decision of the law officers are. It's about seeking to buy that greater certainty and continuity to those who operate within the law. Therefore, a continuity Bill that is within scope or outside of scope needs to be accurate and relevant. And if it's outside of scope, then, potentially, it isn't therefore as relevant at it would be if it was within scope. And, again, as it stands, there are different legal views, and as a lawyer yourself, you'll appreciate that this is finely balanced as the Presiding Officer has said, and it's interesting to have different interpretations from different Presiding Officers in different parts of the UK.

Thank you for that answer. David Melding.

You know, I think if we take a step back and look at the very big picture here, we're in a frustrating position, I think—those who are really passionate about the constitutional integrity of the United Kingdom. This huge decision to leave the European Union now requires us to deal with the common governance that currently rests at a European level. All the Governments of the UK agree that some form of framework is going to be required over some of the big issues like environment and agriculture, but there's this huge argument about how we construct these frameworks, which now is leading to these issues around the continuity Bill and the likes. But in many ways, it's as important to think about how those frameworks in the future are likely to be administered, changed, and governed indeed. And I just wonder, from your perspective as Secretary of State for Wales, and given that the position you raise is very different from the political gravity, say, Scotland and Northern Ireland have, for very obvious reasons, have there been any particular issues you've tried to emphasise to your colleagues about how we apply frameworks in the UK to reflect properly the justified interests of Wales?

Well, 80 per cent of Welsh output goes to the rest of the UK and therefore a common framework would clearly serve Wales's interests very well. And therefore, coming to a process by which—in devolved areas, of course—the Welsh Government can reflect the position here in Wales and act on that within the legislation as transferred is pretty fundamental. So, from earlier questions—it would not serve well.

Let me take a step back, as you suggested at the beginning. Providing the focus on the outcomes of where we want to get to, so that a business that operates smoothly across the UK common market as it stands can continue to do so without fear of being disadvantaged by another part of the UK—then I think that we will have succeeded. And if we all focus on that outcome, that is absolutely in Wales's interest. So, as we have a debate about where powers sit and so on, which is relevant, because it matters to the constitutional make-up of the UK—but an organisation that's out there that is looking to invest, if there's added uncertainty because of one part of the UK having the capacity to disadvantage another part of the UK, then, all of a sudden, that then will start impacting on businesses that are out there.

I formed an expert panel, for which the Welsh Government were openly invited to every meeting, and there was one large operator that turned up that I invited to give their perspective, on one occasion, about not only the UK and European standards, but the global standards in this particular field, and they hadn't even appreciated this potential political argument that's taking place about how we operate these new powers that return from the European Union. And that potentially spooked them until there was a demonstration of a joint will in order to come to a positive outcome in the long run.

Now, if that was—. Thankfully, these minutiae that although very important, which we know as meat and drink to us, day in, day out—. To businesses and industry out there, at the moment, it's not quite on their radar, the detail of it. If this was elevated to get on to their radar then certainly I think there would be detrimental impacts on their investment decisions, and I think, if we're focusing on the outcomes all along—. And that's why I'm optimistic that we can get to an agreement with the Welsh Government.

So, if you—. You know, I share your vision for much for this, that we need effective frameworks, but then they've got to be administered, they've got to be decided, they've got to be amended in the future—all these things. We're now getting used to talking about the single market within the UK, and you talk about minutiae and what businesspeople think, and I can see that, but single markets are not abstract technical economic concepts, they're deeply political. It's the EU single market that's driven us out of the EU, after all, because of its alleged implications for our political process.

There's a danger in the UK that, if common frameworks are basically owned by the UK Government, the devolved administrations, even if they agree initially, are not going to stay in the game with equanimity—let me put it as miserly as that. So, as Secretary of State, raising these issues—and there are very particular issues for Wales, because, as I said, we just don't cause the trouble, potentially, that Scotland and Northern Ireland might.

I think that that's a very fair point, and forgive me if I misunderstood it from your first question.

I would also say in response: don't underestimate the engagement, the positive engagement, that takes place from departments with devolved administrations on an ongoing basis in this sort of area. So, as you rightly said, in relation to the single European market, there will have been changes, evolutions, of that over the last sort of—well, since it was formed. But certainly in my time as Secretary of State, and previously as the Minister, I would attend a whole host of engagements that involve the Welsh Government. Jane Hutt will have attended on a regular basis, Mark Drakeford will have attended on a regular basis, the Joint Ministerial Committee, for which the UK Government has come to a view, with representation and agreement from every part of the UK to come to a common UK position in order to argue in the European Union. Therefore, the point I'm making is that this engagement is ongoing on a constant basis, so, therefore, don't underestimate that.

I'm not saying that that maybe doesn't need to evolve, because that is part of the—and that will have evolved in the time that I was there. There have been some views aired by the Welsh Government in terms of how, in devolved areas, they can play a part, even, in reflecting the views of the Welsh Government as part of ongoing discussions with Europe now, even in relation to withdrawal and how that works. But that is part of an ongoing process rather than around defined, specific initiatives that almost provide, sometimes, undue attention when there's an ongoing engagement. Because it's in the interests of the UK Government to act in the interests of every part of the UK because Members of Parliament from Scotland, Northern Ireland or Wales would certainly be—and England—would be drawing attention if there was any one part disadvantaged. But it's also in the interests, even if you want to think of England, to have a properly functioning market in Scotland, Wales and Northern Ireland as well. But I would say, to us, as a smaller nation, having that common UK market is pretty fundamental—50 per cent of the population of Wales live within 25 miles of the border.

And then, building on that response—and I do agree with you that aspects of the JMC, particularly the European committee, during the life of devolution, have operated well. There's been extensive involvement, then, from the devolved administrations in negotiations, or the negotiating position of the British Government in the EU or in the EU Council. So, there is a lot to build on there, but I just wonder if the UK Government fully grasped the scale of the challenge to have the consent and participation that a very strong system will require to govern frameworks in the future. Last week the Institute for Government said, for instance, that the JMC process would have to be fundamentally strengthened. The Welsh Government has said something very similar and, indeed, I commend this committee's report on governance in the UK, which basically said that whatever emerges from the current JMC process has to be more independent of all the Governments. So, it can't just be owned by the UK Government, even with extensive invitations and participation to the devolved administrations. It's got to have some sort of robust, institutional, predictable structure. Speaking as a Welsh Conservative, I think this is hugely important for unionists to see that type of institution emerge, but I have to say I don't see much encouragement from the current UK Government's position. It seems to me: amend JMC; it doesn't need a radical overhaul.

Well, first of all, can I say that the JMC plays an important part as it stands? And I think I paid tribute to the Prime Minister and to her predecessor for how they use the JMC as an important way of binding all nations of the UK together, because from 2002 until 2008 a JMC(P) didn't meet, which I think is quite staggering. This Prime Minister has committed that there will be JMCs at least once a year and on a much more regular basis.

Could I be really rude and interrupt you, because you've put your finger on something really important? And that's—you know, because it doesn't have an institutional structure that's in any way independent of the UK Government, the whim of a Prime Minister might change, and then it doesn't meet for six years, which is extraordinary. So, how do we counter that threat?

If you let me complete the answer, then I want to say—

Well, I was being rude.

No, no. If you allow me to complete the answer—. So, we've seen a situation where JMC(P) didn't meet between 2002 and 2008, which I think is more than disappointing. So, in credit to the Prime Minister and her predecessor, they take JMCs very seriously, and they will meet once a year, at least, as well as the structures that have been put in in and around it. But also I would say that the JMC(EN), which is the one that has been negotiating issues around the withdrawal Bill, has met on countless occasions. I mean, they're all on the record. I don't know the exact number of how many engagements have taken place. We agreed, at the last JMC(EN), to consider inter-governmental structures in principle. The terms of reference haven't yet been agreed, so clearly this demonstrates not only are we having JMC(P)s on a regular basis, rather than the experience that we've seen previously—. So, I would say to take confidence from the record and the practice of the Governments of recent times and of this Prime Minister in relation to the number of JMCs that have met, but I would also say that nor are we are a federal structure either. So, therefore, the proposal by some people, that you have an engagement of Ministers that come together on that basis, it's—nor is it a federal structure. That's a personal point of view. 

And the other good practice that I'd point to is that Michael Gove, as Secretary of State for agriculture and the environment, and Lesley Griffiths, and counterparts in Scotland, as well as officials from Northern Ireland, as it stands, in the absence of an Executive, meet very regularly. So, because this talks about policy areas that naturally cut across things like environment and agriculture, of course, a common practice, and a common understanding of the approach that each administration wants to pursue—. So, I would say I would reject your last assertion and would say: look at the record, and, particularly, compare that with what we've seen in the past and take confidence from that process.

Can I just intervene on that point? Because you present a rosier picture than perhaps the Cabinet Secretary for Finance has presented to the Assembly, and he will be giving evidence to us next week—. But I attended the inter-parliamentary forum in Edinburgh, which is an interesting development of co-operation across Scotland, Wales, the House of Lords and the House of Commons—cross party, involving the Lords, operating in a very non-partisan way, and you will have been aware of the considerable volume of constitutional reports from the Constitution Committee, from the Public Administration and Constitutional Affairs Committee, chaired by your colleague Bernard Jenkin, and others. There was a unanimous statement that was passed in Edinburgh several weeks ago, which basically said that the JMC is not fit for purpose. That is a phrase that appears increasingly in nearly all the constitutional reports. It is almost accepted at the parliamentary—outside Government—level, at the parliamentary level, that the JMC hasn't been working properly, that it isn't fit for purpose. Is that a view that you accept or you reject?

Well, I think there's always a need for ongoing analysis in terms of what can be improved. Am I saying that JMC is perfect? No. Am I saying that JMC can be evolved and developed and made into something much more effective? Then I think 'yes', and that's absolutely the point, that the JMC itself, JMC(EN), when it last met, agreed in principle that we would give absolute consideration to how inter-governmental processes work. The terms of reference haven't yet been agreed, but that demonstrates the will of the JMC to evolve itself in the first instance. But I would still say, though, let's not forget that it didn't meet for quite a long period and the actions of this administration are certainly very different to that in the past because we value JMCs in order to be part of that process. And if you take into account the JMC(E), which has considered and discussed Europe on a regular basis, as we negotiate on the European Union, I would say that that's highly effective and I think that that—that Mark Drakeford would even recognise the role the JMC(E) has played, and similar calls that have been made of how a similar model can be applied to other elements of European discussions.

But, as we face the post-Brexit era, the positions that have been put very consistently at the parliamentary levels are that (1) the JMC has to be substantially reformed, that there have to be sub-committees, it has to be properly resourced, there has to be a disputes procedure. That's rather more significant than, you know, 'We can look at the JMC and, yes, it can improve', because fitness for purpose is absolutely fundamental in the post-Brexit period. And you mentioned the point about the various frameworks that are going to need to be established. If all those parliamentary committees are put in the position that the structure we have now and the structure we are likely to have in the immediate post-Brexit position, which is arriving very quickly, is not fit for purpose, that's of some constitutional concern, is it not?

Well, there is an agreement that we need to look at this. That's the basis on which we work, and that's on the basis of the terms of reference and a paper would agree. Geth, have you got anything more to add?

So, JMC met last month. JMC commissioned a review of inter-governmental processes. That is now under way. Terms of reference for that review, which will be agreed by all four administrations, haven't yet been agreed. That's the top-of-the-shop review, if you will, that we look at JMC, JMC structures, et cetera. Beneath that, and as part of the frameworks work, there is a lot of work under way on the governance of frameworks. Mainly, that's official-level led at the moment, but Ministers will consider that shortly. That's the operational side of the structures, if you will. There will be a need to bring those together, looking at the overview of JMC and looking at how particular frameworks should be governed in the future.

Can I also add to that? In terms of practical, ongoing processes, take the Competition and Markets Authority, for example. So, there'll be bodies that will decide on the operational elements of the common UK market and how they work—and I'm just highlighting the Competition and Markets Authority because it already exists and it's there. So, much of this won't necessarily come to political level for discussion because they will be done on an independent basis and the integrity of the CMA, for example, has never been questioned because it's operated effectively in terms of how it achieves its functions and that, again, will be part of the wider consideration of how we ensure the integrity of the UK market.

Okay, thank you for that. Dai Lloyd.

Dai, we need to move on. 

Sorry. 

Mandy Jones. 

I think Dai Lloyd has basically covered just the civil service and how they're trying to sort out things with the UK Government. So, that's already gone. Thanks, Dai.

You said previously about your agreement between yourselves and Mark Drakeford, Jane Hutt, et cetera, that a lot of discussion has taken place on the common frameworks for the UK and the Welsh Government. The UK Government published its provisional frameworks analysis before Easter. Mark Drakeford stated, 

'it had not been agreed with us and does not represent Welsh Government views'. 

What do you think he meant by this statement? 

Well, I should clarify that—that they agree that it should be published, but there hadn't been agreement exactly of what it was, nor would I say that there had been disagreement either. This was an assertion of the lawyers' assessment of the areas of law that are there, and I would also say that under those 64 areas, there will sometimes be a relatively small element within that title, if you like, that would have been devolved. So, that's where I suspect the lack of— 

The 24. 

Well, even sub-headings within some of those, that there would have been, maybe, a lack of common phrasing in terms of our agreement around it. But I want to clarify we didn't publish this without the agreement of them to publishing it and, actually, we would have liked to have published it much, much earlier on because we were aware of the vacuum that existed on that basis, but we were seeking to get to the most common agreement possible, and we were grateful then when Mark Drakeford agreed that it should be published, but didn't necessarily agree with every element of the contents. 

Yes, so next week when we question him, he will come back to us and say, 'Yes, that's okay'? 

Well, he would say that he—. I would presume that he would say that he agreed that it should be published. He hasn't necessarily agreed to all of those 64 areas, because in a document of that type, unless you drill down to the detail within to the many sub-headings of sub-headings then, clearly, that can't be reflected in a paper of that nature.  

Okay. What's your response to Mark Drakeford's other comment that

'Language around devolving "significant brand new powers" is misleading and unhelpful. These powers are not being handed to the National Assembly, they are already here.'

Will that be covered in what you've discussed in the paper, what's coming out?  

Again, this comes back to something that Dai Lloyd raised a moment ago. The establishment of the European Union and the powers that sat with the European Union pre-dated devolution, and therefore those are, in effect, European powers rather than UK powers or Welsh powers. So, as we leave the European Union, the reality is that those, under the amendment for clause 11, will automatically be devolved. There are 19 areas that will need an informal agreement, just concordats or whatever that might be—memoranda of understanding. There are 21 areas that would be a simple transfer for which that would be the greatest discretion possible and, of course, as the current settlement allows. We're not doubting or questioning all of that, but there are those 24 areas where it's in all our interests to come to an agreement in the interests of the businesses that I was talking about earlier.

If I might just intervene there, because that seems to come to the nub of where the disagreement is between the devolved Governments and UK Government. If, for example, there was no EU withdrawal Bill, then the powers that relate to devolved areas currently in Brussels would come to this place anyway, and that seems to be the accepted constitutional position across all the constitutional committees. What the EU withdrawal Bill does is actually change that legal constitutional scenario to say, 'In actual fact, we're going to do something different', because the position is that devolution was never conditional upon the EU position; it didn't form part of that particular debate. So, isn't that the issue, the interpretation of what the constitutional position is and, to some extent, that the UK Government is out on a limb in terms of all the other constitutional bodies as to what the correct situation is?

Well, the original position of the EU withdrawal Bill was to have retained EU law that applied equally to every part of the UK that was effectively a holding pattern. So, effectively, it didn't belong to Europe, it didn't belong to devolved administrations; it was passing through a process because, naturally, this is part of a process, as devolution has been since the beginning. 

The amendment to clause 11 has the effect of presuming that those powers are automatically passing on to the devolved administrations, so it demonstrates the points that you're making. But, of course, there's the power then of an order-making power for which the Sewel convention and the principles of the Sewel convention would apply in order to bring those powers to preserve every part of the UK. Because, clearly, it wouldn't be in anyone's interest if one part of the UK had the capacity legislatively to hugely subsidise maybe agriculture, say, to the detriment of another part of the UK. So, therefore, having an agreement on how these work is the logical way of doing it to protect agriculture as a sector.

No, I understand the point on the agreement. I think the point is, though, that, constitutionally, clause 11 in its current form, without agreement so far, is effectively a re-centralisation of powers.

Well, that was classed as retained EU law that would apply equally to every part of the UK, as it currently does from Europe. I would also consider that, as David Davis will negotiate with the European Union in order to come to a trading agreement that we all would like to see—the most open trading agreement possible—we need to be able to provide reassurance to the European Union that the standards that are agreed, that the whole of the UK will work to them.

So, therefore, having any one part of the UK—that example I highlighted on agriculture, for example—with the capacity and freedom to go well beyond any subsidy level that's agreed now would completely undermine, or could completely undermine, a trading arrangement and therefore put every other part of the UK at a loss, because if that was the case, if there was a policy will in one part of the UK to hugely subsidise agriculture, well can you imagine the French farmers and the European Commission acting on their part ever agreeing to a trade arrangement in those circumstances? So, therefore, it's in the whole of the UK's interests that we come together to have an agreement on what limitations there are in terms of how we exercise those powers.

That takes us on to one final point, as we're getting towards the end of time and I don't think we can resolve some of those disagreements in this committee. The shared prosperity fund: what is it?

Well, the manifesto commitment is as it stands: as we leave the European Union, of course there will be European aid that is currently distributed, and we said that we will honour that up to the end of this current round of funding, and the shared prosperity fund is, effectively, I'm in listening mode. We will all remember, I think—. Mick, you weren't an Assembly Member at the time, but certainly we all had a strong interest and a part to play in the first round of Objective 1 funding, as it was called. We were told it was a once-in-a-lifetime opportunity, because we wouldn't qualify again. Well, now, having been through the third time, I think we've got a lot of experience of some of the good that has come out of European funding, but also some of the challenges that it's made in terms of the bureaucracy—

Well, that's not a good thing, is it, that Wales is so poor? It's not a good thing that we have to get this European funding.

I agree, and I wish—

It's not something to be proud of.

Absolutely right.

Can I come to the nub, though, of what the question is? I put it to you because I know that it's an issue that arises and that will come up in future discussions and there needs to be a response on it. One of the concerns about the shared prosperity fund—there are two aspects about it: first, whether it will mean that Wales will end up with the same money that it had before leaving the European Union, and secondly, if this fund is a centralised fund that is under Westminster control, effectively, how the National Assembly for Wales can exercise its devolved powers may become dependent upon getting agreement from the UK Government on how that money is to be used. That is, if it's used in that way, it will not guarantee the financial autonomy and independence of the Assembly in devolved areas.

Well, effectively, we're in listening mode in terms of how best to devolve and develop this policy. I was talking to local authorities quite recently. They have some strong views on how it should be developed as a policy. I was talking to businesses. I think we'd all probably be disappointed in terms of what the current process enables businesses to be direct participants in. I think anyone, even those who've been recipients of European aid as it stands, would probably share frustration in terms of how the current process works. It's not been the responsibility of the Assembly, not the responsibility of the UK Government; it's just about how it has worked from the European Commission and the bureaucracy associated with that. So this, therefore, provides us with an opportunity to introduce a much more streamlined, effective process that is less bureaucratic and more relevant.

But this might then be a process that is more Westminster-centric rather than Welsh Assembly-centric.

Again, as I said at the outset, let's focus on outcomes. Let's focus on what it delivers and where it gets to and the recipients and those beneficiaries. If we've all got that in mind, I'm absolutely optimistic that we can come to an agreement, from all the stakeholders that are expressing views. But, as I said, local authorities express some views to me on an ongoing basis, and as others do, as well as on the restrictions in some parts of Wales. Take Powys: some of the most deprived parts of Wales that, at the moment, don't qualify for any European aid. Well, is that sensible or not? Let's have that debate.

Should that not be a matter for the Assembly to decide in respect of devolved areas, or should it be a matter that Westminster decides?

Well, this is the open discussion that I think we can have.

But it would represent a very significant constitutional change to adopt that process.

Well, let's have the discussion in that area.

Thank you very much—[Inaudible.] We've reached the end of our time. Thank you very much for coming this morning. I think we've gone through a large number of areas and I think we've found that extremely useful, and I hope you have as well and, no doubt, our dialogue will continue. A transcript of the evidence will, of course, be forwarded to you. Thank you for your attendance.

Shall we have a five-minute comfort break, as it's called now? Thank you very much.

I'd just like to go back into the main agenda now, so on to item 3: instruments that raise no reporting issue under Standing Orders. If I go to the negative resolution instruments: the National Health Service (Dental Charges) (Wales) (Amendment) Regulations 2018—I think they are there to be noted, and a report laid before the Assembly. Are there any comments on that? Duly noted. 

Content.

We go on to item 4: the negative resolution instruments. The Land Transaction Tax (Transitional Provisions) (Wales) (Amendment) Regulations 2018—these regulations amend the Land Transaction Tax (Transitional Provisions) (Wales) Regulations 2018 to make further transitional provision in respect of a specific case where a fixed-term lease continues for a period of more than a year after its contractual termination date and is subsequently renewed and backdated to a day during holdover. You have before you the regulations, the explanatory memorandum and the letter from the Leader of the House and Chief Whip regarding the 21-day rule, as well as a report. Can I ask the lawyers for any comments?

Diolch. Yes, these regulations were laid before the Assembly on 23 March 2018. They came into force nine days later on 1 April, so there's a breach of the 21-day rule, that is the rule that 21 days pass between laying the regulations and their coming into force. The letter of 23 March from the leader of the house explains why these regulations needed to come into force so soon. In brief, the Welsh Government became aware of a small gap in the transition from UK stamp duty land tax to the Welsh land transaction tax, and these regulations fill that gap.

Okay.

Presumably, it wasn't dilatory action on their part in that they had not anticipated this, it's just that, given the complexity of these matters, these things happen.

It's a rectification of an anomaly that's been identified very late. Okay, so we note that.

We now go on to the affirmative resolution instruments: the Digital Government (Welsh Bodies) (Wales) Regulations 2018. Part 5 of the Digital Economy Act 2017 allows specified persons, listed in the Schedules, to share information for specific purposes. These regulations amend Schedules 4, 5 and 6, relating to specified persons for the purposes of public service delivery; Schedule 7, specified persons for the purposes of the debt provisions; and Schedule 8, specified persons for the purposes of the fraud provisions, to the Act. The regulations add persons who are Welsh bodies to those Schedules to enable them to use the powers in Chapter 1 and Chapter 4 of the Act. There are already a number of English and non-devolved bodies listed in the Schedules to the Act.

You have before you, again, a number of papers: the regulations, the explanatory memorandum and a report. I just invite the lawyers for any comments.

There's quite a lot of focus on data protection these days, so we've just highlighted that these regulations broaden the scope for data and personal information to be shared among Welsh public bodies. The information can be shared for purposes such as improving public service delivery and fraud against the public sector, but it's important to note that, despite this new power to share personal information, the requirements of data protection law will still apply.

Any comments from Members? Do we note that?

Note.

We move on to the next item, which is the Local Authorities (Capital Finance and Accounting) (Wales) (Amendment) Regulations 2018. Part 1 of the Local Government Act 2003 introduced a legal framework within which local government may undertake capital expenditure. The Welsh Ministers may regulate that activity by regulations. Such provision was made by the Local Authorities (Capital Finance and Accounting) (Wales) Regulations 2003, which provide the regulatory regime for local government capital finance and accounting practices to be followed by local authorities in Wales. The 2003 regulations have been amended several times since coming into force and these regulations make further amendments, which the explanatory memorandum notes will

'relax the current constraints around loan capital transactions, specific share capital transactions and bonds placing local authorities in Wales on an equivalent footing to counterparts in England.'

I just invite the lawyers for any comments on this.

Only to know these regulations define 'money market fund' by reference to a directive of the European Union. This may be something that will change after exiting the EU, if the reference to that directive is no longer appropriate.

Okay. Any comments from Members? 

No.

So, we note that.

We'll take the next items together: the Welsh Revenue Authority (Powers to Investigate Criminal Offences) Regulations 2018—there's a supplementary report and a revised explanatory memorandum, and a supplementary report on the Proceeds of Crime Act 2002 (References to Welsh Revenue Authority Financial Investigators) Order 2018. There's a supplementary report there. Members will recall that the committee considered and reported on the above instruments in March. Subsequently, the Government laid a revised explanatory memorandum that covers both instruments to take into account the committee's consideration. So, the revised explanatory memorandum is now before Members, and you are invited to note it, and, of course, these supplementary reports will be laid before the Assembly. Any comments? No. No comments from the lawyers. No.

We now move on: papers to note. The European Union (Withdrawal) Bill: a letter from the Secretary of State for Wales to the Llywydd, 16 March 2018; a letter from the Llywydd to the Secretary of State for Wales, 22 March 2018; a letter from the Chair of the External Affairs and Additional Legislation Committee to the First Minister, 23 March 2018; a letter from the Leader of the House and Chief Whip, 27 March 2018; and a letter from the First Minister to the Secretary of State for Wales on 29 March 2018—if we note that correspondence and defer any discussion on it to the private session.

A letter from the Llywydd regarding the 'UK governance post-Brexit' report—I just invite Members to note the letter, which responds to our letter to the Llywydd enclosing a report on 8 February 2018. A letter from the Cabinet Secretary for Health and Social Services, Public Health (Minimum Price for Alcohol) (Wales) Bill: letter from the Cabinet Secretary for Health and Social Services, Public Health (Minimum Price for Alcohol) (Wales) Bill—again, Members are invited to note the letter from the Cabinet Secretary following the Stage 1 debate on the Bill. Noted. A letter from Simon Thomas AM, Member in charge of the Public Services Ombudsman (Wales) Bill: letter from Simon Thomas AM, Member in charge of the Public Services Ombudsman (Wales) Bill—and, again, Members are invited to note the letter from the Member in charge following the Stage 1 debate on the Bill. Welsh Government statement, draft Legislation (Wales) Bill—again, Members are invited to note the statement, and Members will wish to note that a letter has been sent to the Business Committee in relation to the handling and referral of the Bill, once introduced. And a letter from the Cabinet Secretary for Finance, Law Derived from the European Union (Wales) Bill: letter from the Cabinet Secretary for Finance—Members are invited again to note the letter from the Cabinet Secretary following consideration of the Bill, and the committee will be taking evidence and receiving an update from the Cabinet Secretary for Finance at the next meeting on 23 April, which I referred to earlier. The next item is just noting a paper from the Institute of Welsh Affairs, which is tabled as a formal paper, although Members have already received this, on the EU withdrawal Bill. 

Then on to item 9, a motion under Standing Order 17.42 to resolve to meet in private. Is that agreed?  

Agreed. 

Okay, we now move into private session.