Y Pwyllgor Cyllid

Finance Committee


Aelodau'r Pwyllgor a oedd yn bresennol

Committee Members in Attendance

Mike Hedges
Peredur Owen Griffiths Cadeirydd y Pwyllgor
Committee Chair
Peter Fox

Y rhai eraill a oedd yn bresennol

Others in Attendance

Ed Williams Cyfarwyddwr Adnoddau, Comisiwn y Senedd
Director of Senedd Resources, Senedd Commission
Hefin David Comisiynydd y Senedd sydd â chyfrifoldeb dros y ​Gyllideb a Llywodraethu
Senedd Commissioner with responsibility for Budget and Governance
Kate Innes Prif Swyddog Cyllid y Senedd
Chief Finance Officer of the Senedd
Manon Antoniazzi Prif Weithredwr a Chlerc y Senedd
Chief Executive and Clerk of the Senedd
Paul Evans cyn-Glerc Pwyllgorau yn Nhŷ’r Cyffredin
former Clerk of Committees in the House of Commons
Sir Paul Silk cyn-Glerc yn Nhŷ’r Cyffredin a Senedd Cymru
former Clerk at both the House of Commons and Senedd Cymru

Swyddogion y Senedd a oedd yn bresennol

Senedd Officials in Attendance

Ben Harris Cynghorydd Cyfreithiol
Legal Adviser
Christian Tipples Ymchwilydd
Leanne Hatcher Ail Glerc
Second Clerk
Martin Jennings Ymchwilydd
Mike Lewis Dirprwy Glerc
Deputy Clerk
Owain Roberts Clerc
Owen Holzinger Ymchwilydd

Cofnodir y trafodion yn yr iaith y llefarwyd hwy ynddi yn y pwyllgor. Yn ogystal, cynhwysir trawsgrifiad o’r cyfieithu ar y pryd. Lle mae cyfranwyr wedi darparu cywiriadau i’w tystiolaeth, nodir y rheini yn y trawsgrifiad.

The proceedings are reported in the language in which they were spoken in the committee. In addition, a transcription of the simultaneous interpretation is included. Where contributors have supplied corrections to their evidence, these are noted in the transcript.

Cyfarfu’r pwyllgor yn y Senedd a thrwy gynhadledd fideo.

Dechreuodd y cyfarfod am 09:30.

The committee met in the Senedd and by video-conference.

The meeting began at 09:30.

1. Cyflwyniad, ymddiheuriadau, dirprwyon a datgan buddiannau
1. Introductions, apologies, substitutions and declarations of interest

Croeso cynnes i'r cyfarfod yma o'r Pwyllgor Cyllid; mae'n dda eich gweld chi y bore yma. Fel arfer, mae'r cyfarfod yma'n cael ei ddarlledu yn fyw ar Senedd.tv, a bydd y trafodion ar gael wedi'u cyhoeddi yn ôl yr arfer, ac wrth gwrs mae'r cyfarfod yma yn ddwyieithog. Rydyn ni wedi derbyn ymddiheuriad gan Rhianon Passmore. Dydy hi ddim yn dda, felly rydyn ni'n anfon ein dymuniadau gorau ati hi. Dydyn ni ddim wedi derbyn sub ar gyfer hynny, felly rydyn ni'n nodi ei hymddiheuriad. Dwi jest yn gofyn: a oes gan unrhyw Aelod fuddiannau i'w datgan?

A warm welcome to this meeting of the Finance Committee; it's great to see you this morning. As usual, this meeting is being broadcast live on Senedd.tv, and the Record of Proceedings will be published as usual, and of course this meeting is bilingual. We've received apologies from Rhianon Passmore. She's not well, so we wish her well. We haven't received a sub for her, so we just note her apologies. I'll just ask now whether Members have any interests to declare.

Can I declare two? One is that I chair the PCS cross-party group in the Senedd, for which I get no remuneration whatsoever. The second one is I'm a pension fund trustee, which I also get no remuneration for whatsoever.

2. Papurau i'w nodi
2. Papers to note

Okay. If we move on to the second item on the agenda, which is the papers to note, we have one paper. Happy to accept that? Yes. Thank you very much.

3. Cyllideb Atodol Gyntaf 2024-25: Sesiwn dystiolaeth gyda Chomisiwn y Senedd
3. First Supplementary Budget 2024-25: Evidence session with the Senedd Commission

Okay. So, we'll move, then, on to our third item this morning, which is our substantive item this morning.

Croeso cynnes i chi i gyd. Mae gyda ni ein tystion yma y bore yma.

A warm welcome to you all. We have our witnesses here this morning.

We're looking at the first supplementary budget in the evidence session with the Senedd Commission, and we've got a newly minted Commissioner with us. Croeso, Hefin. Maybe you could introduce yourself, and then the rest of the witnesses could introduce themselves as well.

Yes, Hefin David, Member of the Senedd for Caerphilly. I was elected as Commissioner about three or four weeks ago, so pretty new to all of this, but getting to grips with it pretty fast. My brief within the Commission is for finance and governance, so that's what brings me here today.

Diolch. Manon Antoniazzi, Clerc a Phrif Weithredwr Comisiwn y Senedd.

Thank you. Manon Antoniazzi, Clerk and Chief Executive of the Senedd.

Ed Williams, director of resources for Senedd Cymru.

Kate Innes, chief finance officer for Senedd Cymru.

Fantastic, thank you very much. We've received the draft supplementary budget from yourselves and some supporting documentation. We considered that last week and looked at the three points within there that were the substantive requests that you were making.

The one request with regard to increasing the Commission's operating budget by £275,000 to reflect the change to the employer's contribution to the civil service pension scheme, this is a consolidated change to the baseline costs, and we understand the rationale behind that, and we were in agreement with that element.

Also then, the reduction to the budget for Members' salaries relating to the costs of £96,000, reflecting the reduction in the employer's pension contribution from 19.8 per cent to 18 per cent by the scheme actuaries, this is a consolidated reduction as well, and we were quite comfortable with that, and I'm speaking on behalf of the committee on that.

The one that caused us to ask you to come in to clarify some further information was the third element, which was increasing the staffing costs by £456,000 in the overall budget, a net cash requirement for the fund and adjustment to the lowest three Commission pay scales in recognition of recent inflationary pressures, and this is also a consolidated change to the baseline costs for future years. 

So, I'd like to start by looking at the reasons behind this and, maybe going back a step, previously, in the draft budget that we had from you, you included a target of £315,000 of savings for 2024-25, which your letter states have been identified. Can you describe the actions that you've taken to identify those savings and whether these savings are recurrent?

Yes. So, these savings were non-staff savings. They were things that came out of the non-staff budget. There was a service planning review to consider how we could deliver differently without Member service impact, a historical expenditure analysis and review of working practices due to hybrid, but also the fact that posts that were advertised, which were vacant and then advertised, were delayed in being filled by six months. So, that brought in the £315,000 across that, without having a direct impact on staffing other than the slightly delayed filling of posts.


So, has that impacted, then, on the services that the Commission provided?

No. The intention was to not impact services, other than the fact that you may not be filling posts as quickly as possible, but that didn't have a direct impact on service. This was probably the most you could save without having that direct impact.

And with delaying filling vacancies and some of that, and that being baked into future years, what's the longer term aspect of that? Is it going to create any future problems, rather than just in this in-year?

No. It's not strictly the delaying of filling vacancies, it's just taking your time to go through the process—so, the external advertising, the appointments and that process was taken to its maximum. So, it wasn't that you weren't filling vacancies, you were just maximising the amount of time before you did, and that brought in those savings. It was an opportunistic approach, in order to create savings, without having to come back and ask for more money from the Welsh consolidated fund. So, that was the idea behind it. And, of course, that £315,000 was due to the gross domestic product deflator coming in higher than expected. And inflation, of course, is very difficult to predict, and that's why that £315,000 was needed, and it was done without recourse to the Welsh consolidated fund.

Okay. Thank you for that. Your proposed supplementary budget, therefore, is asking for funding for the entire cost of the proposed addition to the 3 per cent pay award already included in your budget. Given the wider pressures on public funding, what consideration did you give to identifying additional funding within your existing budgets for at least part of that increase?

I think that's a fair question. Other public services are under the same level of pressure, but the £315,000 was to address inflation, and it did its job. So, you're not going to be able to use any of that money. That money has been not strictly spent, but it has done its job in addressing inflation. Now, those negotiations and discussions happened before I was a Senedd Commissioner, but I've had in-depth discussions with the Senedd Commission staff, and I can't see what further they could have done, given I've looked at the project budgets, to find further savings, without impacting on the delivery of services. So, if you start looking at savings from Member services, for example, you're going to impact on core business delivery. So, with things like security infrastructure, you may be damaging security infrastructure if you start looking at further savings to fund the £456,000 in the additional supplementary budget. So, I think, if you want to minimise risk and have value for money, which is one of the Finance Committee's core principles, I think this cannot be done by further cutting the budget in-year this year, and presenting that as a lower supplementary request.

So, thinking that through, then, if we decided that we weren't minded to agree this, could you give—? You've mentioned some ideas there of what could be affected: could you clarify exactly what would have to go, basically?

Well, you'd have to look at—. For example, security infrastructure would involve the CCTV system, things like that. It needs continual maintenance and renewal, and, if you don't do that, then there's a danger it doesn't work. So, that's one thing. Scrutiny of Government requires a degree of spend, certainly broadcasting—the fact that we're online today in good quality and able to be watched. If you start cutting that, then you end up cutting the quality of what we're able to offer the public. As I say, Members' security and Member services—I think Members would start to see a deterioration in what was offered, should that happen in-year this year. That's not to say you can’t look at the next draft budget, which is going to be discussed in October, with me back here again, that we would look at things then. But I think if you start cutting in-year further than currently, then I think you start to get into a bit of danger.

The other thing I’d say is this request for the lowest paid staff to have equalisation with the Welsh Government lowest paid staff, this is something that wasn’t predictable when the draft budget was laid in October last year. So, the negotiations were still ongoing. Therefore, I’m not blaming Ken Skates for anything—he could not make a decision while those negotiations were ongoing. There will be further staff negotiations ongoing in the next round, in order to introduce a revised pay scale. That is something that could help us with the draft budget in future, but that’s something that I can’t discuss now, because those negotiations are ongoing.


Okay. You mentioned there that sort of benchmarking against Welsh Government, and the intention is for this one-off adjustment to the pay scales to make them comparable with equivalent grades. Given that the Commission’s pay grading system is separate from the Welsh Government's, and that the timescales for agreeing pay awards are not in sync, how do your proposed pay scale adjustments compare to Welsh Government’s grades, and have you met your objectives on ensuring comparability? And then, secondly, as you’re now negotiating a new pay deal, will you still be looking to ensure comparability with Welsh Government staff, and how are you going to achieve that?

So, the ask from the trade unions was to bring this parity together, and, as a Labour Member, and speaking not as a Commissioner, I think that’s absolutely right, the right thing to do. But, as a Commissioner, there was a responsible way of going about that, and that was through negotiation, through having discussions about how it could be done. So, when you introduce, for example, the lowest three of the pay scale, you still need the 5 per cent differential between higher scales. So, you’ve got to consider how all that is done, and that takes time, it takes negotiation and it takes a process.

I’m confident that that's been matched this year, but further years will require further discussions and further negotiations, which are ongoing and Ed is leading at the moment, and will be presented to you, but cannot be presented yet because that discussion is still happening with the trade unions.

One of the things the trade unions told us is they were neutral on how we fund it. It wasn’t their decision on how we fund it. But, if it is going to be funded, this was the only realistic way it could be done, and we fully support the funding of it, the lowest paid staff having parity with the Welsh Government civil service.

Okay. You talked about some of that core stuff that I think we could probably all agree on—security and scrutiny and those elements. Are there any nice-to-haves that could be reduced to save some money towards this fairly large bill?

I was looking through the project budgets. There are small amounts in there that could be—. The library management system, for example. Do we want a physical library in the Senedd? Things like that. But I think those kinds of discussions need to be had with Members, and I don't think it's something you can quickly resolve in an in-year supplementary budget. I think if you're talking about what you might think of as nice-to-haves and you're talking about, say, removing a physical library, then that is a challenge that Members may not be happy with. So, it seems like a nice-to-have, but actually there are Members who use that facility and would be unhappy with it. So, I don't think it's something that we could just jump to in a supplementary budget. So, if you want to look through what we consider nice-to-haves to be, I think there needs to be consultation across the board to decide what those are. I don’t think I could make a judgment, and the Senedd Commissioners couldn’t make a judgment, on what we think are nice-to-haves and what others don’t. 

And what does that then look like from—? You're going to be bringing forward a draft budget for next year. Are some of those conversations happening? How will you handle it? What's going to happen?

I don't want to anticipate the draft budget, and, as I've said, I've come to this in the last month or so. So, those kinds of discussions, historically, I've not been party to. 

I'm more than happy to have discussions with Members about what they think should be saved and maybe feature and they might have ideas. But I don't think now is the time to explore those in the context of a supplementary budget. But if those discussions are needed, then I think there's an opportunity perhaps for Commission staff to come to groups, to have conversations with groups, and say, 'Where do you think we should find additional savings in the draft budget next year, and going forward?' I think that's a realistic way to proceed. But I think, if we do it without that, I think you're making an assumption that Members might not agree with, and staff as well for that matter. 


Thank you. I agree with that position; I can see that. I want to just look a little bit more at the £315,000. As you've said, it's done its job. It hasn't been spent but is committed, so it went to cover inflationary pressures and things like that. Obviously, the inflationary targets are altering a little now. We're seeing a bit of a positive move now. Does that release a little bit of pressure out of the £315,000 that may be able to be directed somewhere else? 

The problem with inflation is that it's a movable figure. The Office for National Statistics have made a prediction today. You've got to be able to have flexibility in your budget in order to account for inflationary changes. We had that flexibility in the budget, which is where the £315,000 came in, without recourse to a supplementary request. In future, I think that flexibility still needs to be there. It's incredibly difficult because an underspend is as bad as an overspend when it comes to the Welsh consolidated fund. So, we need to think about those things very carefully. But I would say that if we are looking at a lower inflationary figure next time, it's still an increase in prices, so it's still going to have a pressure on the budget, but the pressure will be slightly less. And you would hope that then would be able to be reflected both in the draft budget and any supplementary asks that might come in next year.  

I couldn't remember what sort of rates you'd predicated the savings on, what they were equating to—whether it was a 5 per cent inflationary figure, or whatever. 

If you recollect, we had introduced a managed growth target of 2.5 per cent, which was below inflation, and given that we have a 3 per cent staff pay increase, the £315,000 was the target saving in order for us to deliver a budget that had a 2.5 per cent uplift only, and well below inflation even as it stands today. So, it was a balancing figure, the £315,000, but as the Commissioner said, it reflects our absorption of the inflationary pressures that we had across all of our non-staff costs. 

I think the Senedd Commission staff should be given credit as well, and my predecessor, Ken Skates, and the whole Commission team, actually, for finding that in the budget without recourse to additional requests on the Welsh consolidated fund. I think it's really important to recognise that, and I think that's a significant success of budgeting. 

As you know, most libraries at the moment have gone over to digital newspapers, digital magazines, and the library service in Swansea tells me that's saved them substantial sums of money. I'm not asking you to do it in-year, but, actually, to start thinking about what savings could you get and which newspapers do you want to have physically, and which magazines do you want to have physically. It's not huge savings, but it shows an intent to make savings, doesn't it? 

Yes, absolutely. I think the only way you can do that, as you said, is with dialogue. I was telling Manon yesterday I wrote a whole PhD and I visited the library about three times in the time I wrote it. All the resources were electronic and available that way. So, yes, you're absolutely right. I don't use the Senedd library, but I know there are Members who do. I wouldn't want to fixate just on that as a potential saving. There are other savings you could be looking at. But I think we need to be engaging with Members when we approach that. I won't say anything other than that, otherwise I would be second-guessing what Members might want. 

That was just one example of how people are using electronic devices and electronic means in order to save. I could say it's the environmental benefit of not having all that paper, but, really, there are benefits, and I'm just asking you to look at them; I don't expect you to be able to solve it and do it this year, but in future years it might well be useful. 

The other thing I would mention is the structure of the Commission. You know more about management structures than I do, Dr David, but realistically, it does seem to be a very elongated structure, where most organisations have flatter structures. I'm just asking you if you can go and look at it. 


Interestingly, one of the first things I asked when I was elected as a Commissioner was for an organogram, a structure of the organisation. I wanted to understand clearly how this Commission organisation is structured. I think there are 531 staff, and what you can see clearly is that the majority of those staff are employed delivering the service. It actually surprised me how relatively flat the organisation was, given the things that I'd heard before becoming a Commissioner. But the majority of people you see doing things in the Senedd are people who are actually delivering the service.

One of the things that we are talking about is insourcing services. I think it's right to talk about that. But if you do, you will need to bring in another layer of management to do that. What the Commission will do is produce a paper on that for Members to see, in order to discuss that in the future. It will undoubtedly add an additional cost, and will have an effect on the management structure.

But at the moment, looking at the management structure, I think the structure is as flat as it could be given the number of people that are in the organisation. And as I said at the beginning, the filling of posts is something that was considered very carefully, in order to provide savings. So, there are savings within the staff structure. That's not to say that the Commission isn't continually thinking about the efficiency of the delivery of that organisation. But, don't forget, culture also follows structure, and if you start changing those things, there could be unintended consequences.

Mike, before you go on, we didn't explore it too much before, the filling of posts and taking time to fill posts. Did that create any additional pressure on the members of staff doing roles within those teams? How did that delay or elongating some of that recruitment process impact on the well-being of staff and that element of staff morale? Maybe you could explore some of that. I know you've only been there a few weeks. 

My first answer, having known about this, having studied this area, is it's inevitable that existing staff will then be stretched—it's inevitable that that's the case. But I don't want to speak for the head of paid service, because that is a staff management issue. So, maybe, Manon, do you want to say anything about that?

Yes. I'd like to bring Ed in as well as the director of resources and the person who has been leading our negotiation with the unions. I think there is some evidence in our staff surveys that, in some areas, we need to take action to make sure that staff are not being given more work than can be fitted into their hours. We're heading into two years now during which we're going to have to redesign a lot of services. Speaking to the Commissioner's point earlier and committee members' concerns about looking at services, we are designing programmes of engagement with Members and conversations between the various committees of the Senedd, which will enable us to come up with some new thinking in preparation for the seventh Senedd. But I don't know whether Ed wants to add anything on the impact of the new management protocols we've brought in for staff recruitment.

It's work in progress. We're working very closely with trade union colleagues and managers to assess feedback and our well-being scores. The external recruitment target start date is actually shorter than the average time, so there's an improvement there, and no real impact. The impact is on an extension of the time it takes to fill a post internally. That is where there may be an impact, as the average time moves from around four to six months. It's also part of a wider package. This falls within our workforce plan. So, this isn't just a one-off measure, as we undertook to fund the cost-of-living payment last year, which we discussed with the committee and the Senedd, where that was more of an unplanned measure, and definitely had an impact. This is now part of a wider workforce plan, so it's coupled with what we call a 'grow your own' strategy, so that we are looking to develop our workforce, to develop their skills, and to develop pathways as an explicit part of our framework. So, we do this, the target start date, as part of a wider offer to staff, and it's something that we're in active conversations with trade union colleagues about as well.


If we were to be minded to agree this, does that help in those trade union negotiations, to be able to show a statement of intent, I suppose, or that support?

Without this, the next stage of trade union negotiations would be undermined, I think. I don't want to speak for Ed, because he's in the process of negotiating, so I will take the pressure off Ed; he's got a job to do. But as far as I'm concerned, if we don't sort out these pay bands, you can't then move on to the next stage and sort out the future, in the way that Ed's just described. So, I think you've got to have this issue dealt with and covered off before you can actually complete the next stage of pay negotiations. So, I think you would be helping us by supporting this, and helping staff, most importantly, and helping the trade unions come to a conclusion with the management side, and get that complete.

It's not quite on the same subject, but around staffing. I've got a slow process; mine's not a very fast one. Looking back, I remember having to deal with budgets every year, over many years, and I had a set amount I had to work within. There were various budget assumptions I would have to adhere to each year, be they staffing efficiencies, non-staffing efficiencies. What targets do you set yourself? So, for instance, vacant positions, which you may not be filling now, that's a saving, which you can defer or put on hold or whatever. Do you factor in, when you build your budget, those efficiencies? Because most public services, any council, will have to do that every year; I had to do it for years and years. I'd think, 'How do I keep finding these efficiencies, because I've taken 3 per cent out of staffing each year, but I'm still delivering the services—how do I do it?'

That was done in the way I described earlier, in the £315,000. I was a county councillor for 10 years and I was elected in 2007, when the financial crisis hit, so all I've known is this. You set yourselves those principles from the beginning, don't you? I think the Finance Committee have set us a set of principles we've got to work to: value for money is vital, no additional spend that cannot be justified. You've added those additional savings, in addition to the public service requirement of funding that is there. We welcome that, because I think it gives you that extra guide that you're referring to. When I was a county councillor, the first thing we'd look at is what will impact customers first, members of the public first, how do you limit the impact on those, and work backwards from there, what's the thing that's going to be the easiest thing to manage. I think that's what the Commission have done. But, unfortunately, I think we're at the point now where Members, as customers, but also members of the public who use our services, will start to see things diminish if any further things are cut. One thing I'd say is that yesterday, with the Welsh National Opera protest on the steps of the Senedd, security were there managing that. You had members of the public coming in and out of the building. You cannot do those things, you cannot help those protests run effectively, if you start removing money from those areas, and I think that's where we are now.

I'm only raising the points to give us—. I know where you're at; I can see where you're at. But I think people expect us to have confidence that all of those areas are exhausted, and I think they probably are.

I think the fact that the £315,000 was not required as a supplementary—it was done within the funds, and without recourse to the Welsh consolidated fund—is an example of that. The fact that we're coming to you now with this, additional to the supplementary budget, is not because there was anything unexpected, but because those negotiations hadn't completed until after the draft budget was laid. I think if this isn't agreed, there would be consequences for the stability of the Commission when it comes to later negotiations with trade unions.

We're coming very close to time. I have two very brief questions; I'll put them together. I hope the answer to both is 'yes'. If you're looking at insourcing, are you then netting off the saving from managing contracts? And the second one is: will you ensure increases in funding requests in future years are controlled?

Yes. But the important thing is that we still adhere to the principles of the Finance Committee. We need to do a piece of work to decide and present and show that there would be a saving from insourcing, and I think that needs to be a discussion we have more widely. So, there was a reason why it wasn't in the supplementary budget, because that discussion still needs to be had more widely at a longer time when Members can engage with it. And we've got to demonstrate to you, Chair, that if we did go down that route it would provide that value for money. And that can't be a subjective judgment. So, it's got to be something that—. I don't want to be here in that position where I can't make an objective judgment about that. So, yes, the answer to both those questions is 'yes', but with that caveat that it must provide that value for money. 


It's pretty straightforward, really. The next supplementary budget, obviously, applicable to this year won't be until February, and obviously you'll have pretty robust budget monitoring and you're projecting ahead where your pressures might be. Are you already identifying pressures that might require you to come back with a supplementary budget in February, or are you starting to worry about things?

No, we're not worried about the supplementary budget in February. That will be a tidying-up exercise that's more likely to be, actually, returning money than spending it. But you don't want to be in the position where you're returning money either; you want to be in the position where you're hitting the nail on the head. That's incredibly difficult for an organisation that can't generate revenue, which is partly why you need supplementary budgets. But I don't think it's going to cause the committee concern. 

Yes. Excellent. Well, thank you very much for your time this morning, and at pretty short notice as well, so I do appreciate that. There will be a transcript available for you to check for accuracy.

4. Cynnig o dan Reol Sefydlog 17.42(ix) i benderfynu gwahardd y cyhoedd o eitemau 5 ,6, 7 a 9
4. Motion under Standing Order 17.42(ix) to resolve to exclude the public from the items 5, 6, 7 and 9


bod y pwyllgor yn penderfynu gwahardd y cyhoedd o eitemau 5, 6, 7 a 9 yn unol â Rheol Sefydlog 17.42(ix).


that the committee resolves to exclude the public from items 5, 6, 7 and 9 in accordance with Standing Order 17.42(ix).

Cynigiwyd y cynnig.

Motion moved.

I'm now going to propose, in accordance with Standing Order 17.42, that the committee resolves to exclude the public from items 5, 6, 7 and 9. So, we'll go into private. Diolch yn fawr iawn. 

Derbyniwyd y cynnig.

Daeth rhan gyhoeddus y cyfarfod i ben am 10:02.

Motion agreed.

The public part of the meeting ended at 10:02.


Ailymgynullodd y pwyllgor yn gyhoeddus am 10:44.

The committee reconvened in public at 10:44.

8. Cysylltiadau rhynglywodraethol cyllidol: Sesiwn dystiolaeth 6
8. Fiscal Inter-governmental Relations: Evidence session 6

Croeso nôl i'r cyfarfod yma o'r Pwyllgor Cyllid. Rydyn ni'n symud ymlaen rŵan i eitem 8.

Welcome back to this meeting of the Finance Committee. We will move on now to item 8.

The next item is the fiscal inter-governmental relations evidence session 6. And I'd like to welcome our witnesses here—croeso cynnes. It's good to see you both. I wonder if you would introduce yourselves for the record, please.


I'm Paul Silk. I was an official here in what was then the National Assembly, and also in the House of Commons.

I'm Paul Evans. I worked for many years in the House of Commons service.

Lovely. Well, thank you very much. Thank you. We appreciate your time this morning—coming in and sharing your, hopefully, expertise with us this morning and your thoughts on inter-governmental relations when it comes to fiscal aspects. 

I'd like to start this morning by looking at those inter-governmental structures—the Dunlop review and the Finance: Interministerial Standing Committee. Could you summarise your views on reforms to the inter-governmental relations structures and what improvements have been made to encourage equitable partnerships between all Governments?

Well, I think that the Dunlop reforms were—. It took a very long time before the Government responded to them, but they were very sensible and wise reforms, and I think that how the Government in London then responded to those was very welcome and quite a hopeful sign of what could be achieved. So much, of course, depends on personalities—no doubt we'll come on to talk about that; that is one of the problems in this whole area. But I was quite hopeful when I read Mr Gove's response to the Dunlop committee's recommendations—not committee, of course, it was himself, his own recommendations.

There we are. Any thoughts in general, really, on the reforms that have been going through and some of that work that—?

I think the new structures are clearly a step forward and have promised much better IGR in principle. Of course, the proof of the pudding is in the eating and the real problem is that, since they were introduced, there has been so much churn in the Government, and it's been distracted by many other issues, that I don't think they've been really tested consistently. Paul said that so much depends on personalities, and building up personal relationships is key. I don't think there's been a lot of opportunity, given this amount of churn that we've seen over the last couple of years, for those personal relationships to really flower. I don't know anything about official level, I have to say—I have no data on that.

So, do you think—? I suppose it's early days yet to see how that beds in, but, because of that churn, is it that we're not able to draw any conclusions yet or are there encouraging shoots there?

Well, I'm very much an outsider to this, but, from what I observe, the FISC area is actually more promising than some of the other areas of inter-governmental co-operation, where there have been very few meetings of inter-ministerial groups in other areas. In fact, in some areas, I think there have been no meetings yet. The meeting of the council—there was one at the very beginning of Mr Sunak's premiership and I don't think there's been one since. So, that's slightly concerning. But, as I understand it, from what I've read about it, the FISC has met on a quarterly basis, and those meetings appear to have been relatively successful.

So, you've both worked in Whitehall and around Westminster. Are Westminster and Whitehall geared up to deal with devolution?

Well, it certainly wasn't at the time that we produced our report, which, of course, is 10 years ago now. 'Byw mewn gobaith'—I try to have that approach to things. [Laughter.] And one hopes that things have changed in Whitehall, but I wouldn't be entirely sanguine that they have.

I broadly agree with that. I think, within Westminster, within the two Houses, there is a lot of goodwill, but it's quite patchy, in the sense that it's concentrated, essentially, principally in those MPs who represent the devolved nations, and there isn't a structure within which Westminster as a whole can really get a handle on devolution.

Slightly going back to your question about the green shoots and things, we don't know enough about these inter-governmental relations, partly because the legislatures haven't got enough information. They're not exposed to daylight very much, and so it's quite difficult for those on the outside to make a judgment about how effective they are and, although the three territorial committees, as they were referred to in Westminster, in the House of Commons, devolved areas committees, do good work, even they tend to work, again, quite separate paths, so the co-ordinating element isn't there to get the full story and also to draw in the English MPs and peers into the conversation.


One of the things I think we identified when we produced our report about two years ago now was that so many Members of Parliament, both Commons and the Lords, who don’t have any particular—they’re not from Wales or from Scotland or from Northern Ireland—it’s very difficult to get them interested in this, even if they support the idea of the union, and that’s a very hard nut, I think, to crack, to get an MP from Norfolk interested in inter-governmental relations when she or he may not see that as something directly of interest [correction: particular interest] to them.

And that absence—. Whitehall is a responsive machine, so I think, again, in Whitehall there are elements who are trying hard to make IGR work, but, because they’re not being held to account, because it’s not being made transparent, the incentives for them to do better are relatively weak, I think. So, they’ve got other priorities and they will follow those other priorities.

We’ve got the three devolved nations of Northern Ireland, Wales and Scotland, but we’ve also got a substantial number of English mayors, which will grow again next year, and appears to be something that is moving forward with great rapidity. Now, different mayors have different powers, as different areas of devolution have different powers. Surely, at some stage, there’s going to have to be a means of dealing with all those devolved areas together—and, whilst I’m somebody who believes that we need symmetrical devolution, I’m not sure that we’re going to have that in the very near future, but—some means of dealing with those, isn’t there?

I think you’re absolutely right; I’ve been involved with something called the Constitution Reform Group and, last week, there was a report produced on English local government, which I wasn’t involved with, written by David Lidington and, it now escapes me, but someone who was a Labour Cabinet MinisterFootnoteLink, and that pointed out the need for some more coherent approach to English devolution, and, indeed, to recognising, when we talk about fiscal transfers, we’re talking about fiscal transfers to the north of England and to the other parts of England that need them in a way which, when one talks about the Barnett formula, it’s an assumption that something different is happening in Scotland, Wales and Northern Ireland from what is actually happening inside England, and that’s not transparent.

I’m sure you’re right that greater English devolution will be an incentive to setting up better mechanisms of co-ordination and communication in the end—or it should be.

So, is there an element there, as Mike says, as mayoral areas are finding their feet more and more, and that sort of devolution is happening within England—? Does it open the door to a conversation around Barnett and fiscal structures and understanding how fiscal arrangements happen within these islands? And maybe you could comment on if you’ve got any thoughts on how that could look and what could it look like—if you were given a blank piece of paper, I suppose, saying Barnett doesn’t exist, how would you design it, or what would be the principles that would go into it, I suppose?


I think more transparency about how there are fiscal transfers inside England would be something that would be very desirable, not least to put an end to the idea that Scotland, Wales and Northern Ireland are uniquely benefiting from Barnett in a way that England is not. So, greater transparency is something I would like to see in the future in the way in which fiscal transfers are identified.

You said it has opened the door, it has, but whether anyone will go through the door is the question. [Laughter.] In inter-governmental relations, and in this, I would include the relations within English devolution, there are a lot of incentives to keep them private, keep them out of the public eye, and only if there is a sufficient political will on the part of the legislators to open the door and cast some light on these things will that really happen. I don't think it will happen just of its own nature, it's got to be pushed, but I do think the increased English devolution will increase the pressure. Things like transport and health being devolved to a degree, greater or lesser, obviously bring in clear parallels with devolved powers in the three other nations. So, that debate will get louder, but it is up to politicians to push for the transparency that might follow, and there are incentives in both directions on that.

So, it feels that one of the key principles is transparency and being able to understand what's happening, because I suppose if you're trying to design something new you'd need to know what you're dealing with to start off with, and if that's cloaked in some mystery and not completely transparent, then it's very difficult to know what you're trying to fix. That, obviously, then boils down to the Treasury being transparent about its workings, and we've heard in numerous evidence sessions that trying to get information out of the Treasury is quite difficult.

I have to confess I'm quite an enthusiast for the senate of the nations and regions concept, though there are a lot of good arguments against it as well. But that would be one natural development from greater devolution, clearly, and it would provide a focus, but it's probably not going to happen.

It's not going to happen in the next Parliament, let's say.

Okay. You talked earlier about FISC and that that was something that has been happening, and Ministers and Cabinet Secretaries have been liaising on that and working. We've also heard that FISC has its own rules compared with other standing committees. What do you think is the rationale for that and how does that separate the achievement and impact on the power balance between the devolved Governments and Treasury?

This is really not something that I have any particular expertise in—

Hypothesise. I did look at the rules without any inward knowledge about the way in which either of these operate, and it didn't seem to me that the difference was so fundamental in the rules between the inter-ministerial groups and FISC. Clearly, one suspects that the Treasury can be rather grand and rather proud of its own position inside the central Government, and I can imagine that people in the Treasury said, 'Well, we'll write our own rules in our own way and you other departments can have different rules.' But it didn't seem to me to be so fundamentally different, but, as I say, I'm not an expert on this, so I may have missed something that is obvious to others.

But it might be, then, that it's more down to, as you both said earlier, relationships, and that the interpersonal relationships of Ministers and Cabinet Secretaries might have more of a bearing than the actual rules that are laid out. 


Yes. And that, of course, is, as I think I've said before, potentially dangerous, because we've seen some of the problems about relying on an unwritten constitution and conventions, and conventions can be broken by people if they're not firmly established in law. And I guess that was why the Rowan Williams and Laura McAllister commission's report recommended that inter-governmental relations should be legislated for, so that it would be much more difficult for people to say, 'Well, I simply don't fancy going to the FISC, so I'm not going to bother to go'—a putative future Chief Secretary might say.

Like Paul, I'm no expert in this area, but I feel there's probably a bit of a cultural thing—Treasury is different—but there is also a logic that fiscal policy isn't really devolved, to any significant degree. So, when the health group are meeting, when the environment group are meeting and so on, there are competing policies going on. I think what the FISC emphasises, perhaps unfortunately, is the top-down nature of the fiscal relationship between the UK Government and the devolved Governments, essentially. It's not the same. You know, the arms are even more unequal on each side in FISC, so inevitably, that will colour the way it deals with its work. Like Paul, I don't think the rules are that significant; the rules, in the end, won't be the important thing that makes them work or not, I suspect it will be the culture. 

One of the key differences between some of the others and FISC is that FISC does have a secretariat that is able to drive some of that. So, rather than the rules, they have a body that tries to do some of that work. Does that stem out of the Treasury liking to do things differently and being a bit grand, as you said, or is it a practicality of trying to get people together to be able to drive some of those relationships forward, or a different reason completely?

I think I would go back to my point. Fiscal devolution, limited as it is, is different from the other devolved areas, and therefore, there is an argument that you need a different structure. The Treasury is well known for having a control-freak kind of culture, and I suspect that probably they said, 'Well, you know, these people who you're going to employ in the secretariat won't even understand what we're talking about, never mind be able to deal with it, so we need a separate structure.' But money is—I mean, it's a complicated issue and it doesn't seem to me overly significant that there's a different structure there, but it does emphasise that fiscal area matters are treated, generally, in a different way to other devolved areas, and that's something you're obviously concerned about.

Okay. There we are. Well, I'll bring Mike Hedges in to take things forward. 

As you're aware and as we're aware, devolved funding can be unpredictable in terms of timing and it can be unpredictable in its lack of transparency, and how much you think you're going to get and how much you actually get are quite often not the same. I'm not sure that we're going to change the way the Treasury communicates with us and I'm not sure that we can have any effect whatsoever on the timing of fiscal decisions.

Do you agree that enabling devolved Governments to manage Barnett consequentials allocated after a UK autumn fiscal event should be allowed across financial years? And money brought in even after the budget or a major fiscal event in autumn, which quite often drifts into winter, and is then sometimes followed up by additional money on or off in February and March, do you agree that it ought to be able to be used across years or taken off across years, rather than having to be dealt with within year?


I was going to say, I'm not an expert in this area, but it does seem to me that that is absolutely right, that it does make sense. Obviously, you have to have some regularity in the way in which public money is dealt with. You can't have entire flexibility, but flexibility over year-ends does seem to make sense, particularly when, as you say, Welsh Government and the Scottish Government and the Northern Ireland Executive don't have information well in advance so that they can make their planning.

I would just say unpredictability and unknowingness and opacity are factors that the House of Commons itself comes across in relation to money all the time. There's a growing fashion for fiscal events; there seems to be an increasing trend towards a less regular rhythm of the settlement, spending plans and so forth, and the budget and the consequences. There's always been a system in place for in-year changes, known as the supplementary estimates, when you can move money around, sometimes bring new money in and so forth. It seems to me, speaking very much as an amateur in this area, that it's obvious that, if supplementary estimates would impact on the Barnett formula or whatever replaces it, that should be possible in-year. But I think you raise a slightly dangerous thing, in that you said 'take money away'. If the fiscal event actually impacts negatively on the Barnett formula, as it were, it's going to be really difficult for the Welsh Government or any other Government to plan when they suddenly have a few billion pounds snatched away in the middle of a financial year, if they budgeted to spend it. So, there are probably pros and cons to this.

I think that what we find is they net it off, don't they, the plus, the minuses, and normally they end up on a plus. But if they ended up on a minus, it would only be in the tens of millions, rather than in the billions, and actually being able to plan to make savings after March rather than having to make those £10 million savings in March would make life a lot easier. If I make it £12 million, that means that you'd have to take £12 million off in March, or you'd have to take £1 million off a month in the following year. It would be much easier to do the second one, wouldn't it?

It would, and the carry-over over year-ends is obviously entirely sensible. We all know the stories about people relaying a road or retiling all the public toilets in the county because you're coming to the end of the financial year and they have to spend their budget. I'm mayor of Crickhowell, which has a budget of £70,000 a year, but even there it's a challenge. It's really annoying to have to comply with these year-end rules, because quite often, as you say, what you want to do is you save money here and you want to spend it there, but it doesn't fit in easily with the year-end rules. It seems obvious that you should write into the fiscal rules some degree of year-end flexibility, I would have thought.

[Inaudible.]—not necessarily Crickhowell community council or town council, but local authorities have got a lot more fiscal flexibility than the Welsh Government have in borrowing powers and that element. Some of that hasn't changed for a decade or more, so there are things that potentially could be done, but it's down to the Treasury to say 'yes' or 'no'. The Treasury is the final arbiter. It's judge, jury and executioner, really, in that element. So, there's a power imbalance there in sorting that out.

I think I'm right in saying that the Scottish Government has more flexibility from the Treasury than the Welsh Government. I'm puzzled about what the justification for that might be.

I think you're right again. Rules, even if they're there to be broken—. We're not talking about statutory rules, but a declaration of the principles on which these things are allowed or not allowed to happen, so that you can challenge a Treasury decision that appears completely arbitrary and say, 'This doesn't comply with what we have agreed', would seem at least one minor step forward.


We saw in the autumn, when the then Minister for Finance and Local Government, now Cabinet Secretary for Finance, Constitution and Cabinet Office, put out a statement to say that one of things that she was hoping to do to manage a £900 million black hole in the budget was to switch capital to revenue. But it was predicated on whether or not the Treasury would allow her to do it, even though it was money within the Welsh budget. So, there are those elements. So, I suppose it's where does, within that element, FISC and those negotiations, when you get those people around the table—? Or can you see a time when FISC or something similar has an operational negotiating element to it that would allow for challenge to the Treasury and to say, 'This isn't fair, how do we come to a set of principles that we can work to?' Is there an opportunity there? 

From what I understand, the bilateral meetings around FISC are important and there is an intention that FISC meetings should be centred around what Paul disparagingly calls fiscal events. Those two things would encourage the development of that, but one hopes that will be the way things will move in the future, yes.

I think, if it becomes embedded, and there's continuity—. A lot of how politics works in the UK, as you're well aware, is on conventions, expectations and understandings, as well as rules. You would hope that FISC, if it had a continuity of existence and developed a culture, that some of those expectations and conventions about how one side behaves and the other side behaves would develop. It'll be a big fight to get it to be a decision-making body about things like capital to revenue expenditure, I guess, but at least you ought to know what the expectation is, so that you can challenge something that is not within the expectations, if that makes any sense at all.

I'm not going ask you this, but I would argue that once the money is given to a devolved Government, then they've got the money, what they do with it should be very much up to them, rather than having to follow Treasury rules, when the Treasury seems to treat devolved Government as just another spending Government department. I just want to put that on the record. I don't want to ask you to comment on that.

We do have problems, though, in terms of what is or isn't generating Barnett consequentials: Crossrail did, HS2 didn't; the London Olympics—the information is in the title—didn't. Coming back to what you were saying, Paul, about Norfolk, HS2 was of no more benefit to Norfolk than it was to Wales, and yet there was no Barnett consequential, or no additional expenditure, in Norfolk either. So, I think there are problems within England, as well as with Wales, Scotland and Northern Ireland. Don't you think that we do need a more transparent way of being able to tell whether something is generating a Barnett consequential or not, rather than just an arbitrary Treasury decision?

The simple answer to that is, 'Yes, I do.' I think that more transparency about that would be very helpful. I know that there were justifications made for why HS2 was a project that benefited Wales. They were, from my amateur reading of them, rather threadbare justifications of why it was something that benefited Wales. If what we suggested in our paper came to fruition—interrogation by a group of parliamentarians from around the United Kingdom about these things—then that would encourage that sort of transparency and accountability, but at present there clearly isn't in the way in which we would think is desirable. 


I wouldn't add anything to that except to just comment how the threadbare reasons for classifying HS2 as UK wide mostly have become even more threadbare recently.

Okay, thank you. The last question from me is that the Treasury can allocate funds across the UK from its central reserve without triggering Barnett consequentials. There's been concern in Wales the 2017 additional money for Northern Ireland, the 2023-24 additional money for Northern Ireland, and the additional money in the early 2000s for Northern Ireland—this seems to work outside—. You've got a Barnett consequential, but Barnett, as far as I understand it, is the minimum you get, and you can be given more if the Treasury decides to give you more, and you can't claim a Barnett consequential because more has been given to somebody else.

Yes, and clearly that has been—again, I'm not an expert on this, but there've been levelling-up funds that you've been given inside Scotland and, indeed, in Wales, which are outside the Barnett formula, so that is something that complicates the picture, in a way. 

And city deal money, which is also outside the Barnett formula. But they don't go through the Government, do they? The city deal and the money for levelling up go through local authorities, but the Northern Ireland Executive have had additional money that has gone directly to them. 

It's probably never wise to try and draw general lessons from what happens in Northern Ireland.

Thank you, and it's good to see you both. I wanted to explore a bit more around the current effectiveness of the parliamentary scrutiny of inter-government relations. Paul, you've referred a couple of times to the lack of transparency, or rather, your wish for more transparency. In your report originally you suggested that the secretariat for the IGR was committed to developing 'enhanced accountability', and there was going to be a commitment to increased transparency. To what degree has that evolved? I'm conscious it's probably not a great deal, because you suggest there are still transparency issues. 

I think that's down to the individual legislatures. Ideally, our recommendation in the future is for having an inter-legislature body that does this work. But at present it's really down to the individual legislatures to do that, and clearly this committee has a function, other committees here in the Senedd have a function, committees in the Scottish Parliament have a function, and parliamentary committees have a function. There's been some work, I think, done in the House of Lords. I don't know whether there's been much done in the House of Commons. 

Not that I'm aware of. 

The Scottish Affairs Committee has done some.

It has done some work on inter-governmental relations, yes. There's always a problem for governmental and parliamentary relations in that there is no central focus for the secretariat to work with. It's not clear to them. Certainly in the House of Commons, responsibility is divided between the three devolved area committees, the Public Administration and Constitutional Affairs Committee, which has sort of assumed for itself, not unreasonably, a role as the central body, and then there is also, obviously, the Treasury Committee for fiscal matters, and so on. It's very hard to get a handle on where the channel of greater accountability would be, and so I think the secretariat probably has quite a difficult job in increasing accountability or making it better. So I think the blame, if anything, for lack of progress is a bit on both sides of the equation. 

If I may, and I might be trampling over something you'll ask later, one of the things that this committee has done with the committees in Scotland and in Northern Ireland is set up an inter-parliamentary forum that tries to look at the commonality of the opportunities and threats that we see, and to try and discuss that. What sort of advice would you both give in terms of engagement with Westminster committees, or extrapolating what you've been talking about there and thinking about how do we have these conversations? Because it needs politicians to have these conversations in the round. I think in the last inter-parliamentary forum, we had about six or seven different parties in the room, which was good. What would you task us to do in those meetings to be able to move this forward?


In preparation for this, I did read about that forum, and I recognise that that's something that is very desirable. What was regrettable, I think, is that you weren't able to engage with Ministers in the UK Government—they weren't willing to talk to you. But you did engage, as I understand it, with the Treasury Committee, met their chair, and that's very important to build up that sort of—. Well, I talked about the problems of interpersonal relations earlier on, but there are advantages to interpersonal relations as well, and if you can build up that level of trust and confidence between individuals who chair committees, members of committees, then that will surely be beneficial. I would like to hope that, in due course, Ministers will be prepared to engage with that sort of forum as well.

We have an office in the House of Commons, and the Lords has something equivalent, of inter-parliamentary relations. I always say the starting point is for you all to say what is the official channel of communication, and each of you need to have an address, as it were. That would be an official to start with, who would actually be responsible for making sure the information went in the right direction, was received, was acknowledged, was acted on. I think we'll be coming on later to our grandiose ideas about a more inter-parliamentary body that would do that. But, essentially, it is this dispersed responsibility that's the problem. There's no clear hook on which to hang accountability, and I think what you need to do to start with is just identify who is in charge of inter-parliamentary relations.

No, no, it was a good question, and one I would have come on to after. But you're absolutely right, and I think it's a forum we hope can actually try to drive some of the change. As we talked about earlier, there's an enthusiasm within territorial committees to perhaps do more work on this, and they're doing that in isolation, but there's no overarching presence to pull it together.

Whilst I can see that personalities are absolutely key—if you have a Welsh prime Minister, you're likely to build better inter-governmental relations—the trouble is personalities don't last long, do they? So, there needs to be something grounded in legislation that requires it. It seems to be a natural evolvement of devolution to be able to anchor it so that those relationships have to happen in some way or another, and I suppose that's where we've got some anxieties that that isn't happening. 

Do you think legislatures are placing enough importance on scrutinising those—? Oh gosh, excuse me, my hearing aids act as ear buds, and a phone call came through them and only I can hear it, but it's extremely annoying. Do you think legislatures are placing enough importance on scrutinising inter-governmental relations, and what could they do to perhaps progress that agenda if it isn't happening? Either of you. 

One of the interesting things about parliamentary life is that there's never enough time to do the things that everybody wants to do. I'm sure there are many other things that others would advocate that the Senedd should spend its time on, the House of Commons should spend its time on. But intrinsically, no, I don't think that enough is done to scrutinise inter-governmental relations in individual Parliaments, or in an inter-parliamentary body.

There was a very good debate earlier this year in the House of Lords on inter-governmental relations. Very good people spoke and very sensible things were said. And there was a proposal made at that debate that there should be an annual debate in the House of Lords on inter-governmental relations. The House of Lords being the way in which the House of Lords operates, that probably will happen. But having that sort of thing in the House of Commons would be a good thing, and, obviously, having it in the Senedd would be a good thing too. So, annualising a debate, but also working through the individual committees, I think is very important.


I think the short answer to your question, 'Are they placing enough importance?', is 'no'. And I think that, as Paul points out, it's all to do with prioritisation, and what you have to do is push it up the priority—. There's plenty of goodwill. I know the Lords' Speaker has been particularly vocal in supporting inter-parliamentary working. There's plenty of goodwill, but they haven't put their money where their mouth is, essentially, so far. And there needs to be some resource put into this; things don't just happen, you have to resource them.

We very modestly proposed that one person should be appointed as a co-ordinator of this. It's a very modest proposal for resource, but I think that resource would be helpful.

There ought to be a Minister for inter-governmental relations, perhaps, to join it all together.

On that point, do you think the other way around as well—so, not necessarily the information and the transparency coming from Westminster, that way, but is enough information sent the other way as well, to allow for inter-parliamentary scrutiny of, not necessarily decisions, but of understanding the complexities of, 'Well, if you're doing this in health in Wales, then it will have this impact, especially on these border counties'—that element? I don't know—

Which direction, sorry?

Well, if we're challenging that there's not enough coming from Westminster out, is there enough going out, into Westminster, I suppose, or from the devolved nations into Westminster as well?

I think that's a good question, but I don't know the answer to it, really. Do you, Paul?

I don't know how much information goes that way, but, yes, it is desirable. One of the things that I think the commission on the constitution found was that people want things to work. They don't really care about the structures, they're not interested in whether the structures for inter-governmental relations are there, but they want, when they're living in, well, the county where we both live, Powys, they want health services to work across the border.

I think, even 25 years on, there's still quite a lot of dog-in-the-manger attitudes, on all sides, from all Governments. Whatever you think about it, devolution is a fact, it's a constitutional fact, and you need to catch up with behaving as though, for the time being, it's going to remain a fact. Even if you would like to sweep away the devolved bodies in due course, you've still got to behave now as if it was going to—. But I think some of the blame lies—. The dog in the manger is also in Cardiff Bay and Holyrood as well—that's my impression.

I think I agree with that. I think probably, with the current dynamic, of Wales and England at the moment, some people might suggest it's quite nice to be able to bemoan the situation. Now, if there is a change and an alignment of political parties, would that test how perhaps inter-governmental relations could be? I'm not holding my breath things will improve massively, because I think some of the devolved nations seem to be more of a convenient truth than something that is taken seriously.

One of the things that we have heard in this committee is that, on official level, things might be better than on a political level, and that might be a distinction. That is something that we've heard from different witnesses—that official to official actually works fairly well.

Well, you'd expect me and Paul to sign up to that. [Laughter.]

I was just wondering, do you think there might be room for something like an Office for Budget Responsibility to be set up, which can focus on the operations of inter-governmental relations, something that is a respected independent body—would there be room for that, do you think?


I think we start a bit—. I mean, there's the critical eye on it, inter-governmental relations, which is a thing best done outside Government, obviously, and outside Parliament. I think, in terms of a body that would support well-researched, well-understood scrutiny and good communication, you'd probably start with using the resources of the bodies now, a sort of co-ordinated use of the research capacity of all the Parliaments and Assemblies, ordained from above, so that it was clear that this was a duty expected of all of them, with a co-ordinating body and start—. Because, you know, sometimes you'll be talking about health, sometimes you'll be talking about energy, sometimes you'll be talking about the environment—to build a body big enough to provide expert advice would be expensive and, I suspect, possibly, at least in the first stage, not fully utilised. But there is a lot of expertise in our research services, which could be harnessed and brought together and used to work more co-operatively on cross-border issues, if you like, and I think that would be the place I would start with this kind of OBR idea, which is the intellectual underpinning for effective scrutiny by all the legislatures.

I think it boils down to having one version of the truth, I suppose, to be able to get to that—. Everybody's agreed on, 'Well, those are the facts', and how you interpret them is different, but it's having one fixed point, so that at least you've got a chance of—

I agree entirely with what Paul says. I mean, the quality of the research service that I know is provided here in the Senedd, but certainly I also know is provided in the House of Commons and the House of Lords and, no doubt, in Scotland and Northern Ireland—bringing those together could provide that sort of expert advice on inter-governmental relations and monitoring, in an objective way, which you can then use politically as politicians.

But I think it does need political sanction to do that. It has to be said, 'We are all agreed that this is a job you should do together, and you should try'—because officials are so excellent at co-operation. But I think you put your finger on it with the phrase 'a single version of the truth'. Well, there probably isn't ever a single version of the truth, but what you want is them not to feel they are fighting a corner in this exercise, but they are trying to bring the information together as objectively as possible.

It might not be a single version of the truth, but it can be an explanation of how you got there. We have no idea how HS2 became an England-and-Wales project. We've no idea when they made the decision not to continue it close to the Welsh border, how it stayed an England-and-Wales project, and we still have no idea why, when money has been allocated to other parts of England, because HS2 is not going to be completed, that we still don't get a Barnett consequential—there's been no explanation of that; it's just a statement by the Treasury, 'This is what's going to happen.'

Indeed. Clearly, that's unsatisfactory.

A couple more points from me. I know you mentioned in your report about the need to ensure accountability mechanisms. I just wonder, can you elaborate a little bit on those proposals and how important that might be for legislatures to work together—it's quite obvious, I'm sure—so that we can challenge the Executive dominance, when it comes to inter-governmental relationships? What should be happening?

Well, at the multilateral level, there isn't a mechanism at present, and that's where we suggested that there should be developed a mechanism to do that. Now, we both have experience—it's a different sort of body—of working with the Parliamentary Assembly of the Council of Europe. Well, that brings together 47 different nations, their parliamentarians working together. Now, in a much more modest way, you could bring together parliamentarians from the three devolved places, the two Chambers in Westminster, and they could monitor, and they could be the body to which the Governments were accountable in their inter-governmental work. And that's something I think we would like to see developed in the future, so that there was a formal mechanism for the Parliaments to co-operate, a formal mechanism for Ministers to account to them on inter-governmental matters, and that would be a body that perhaps could meet for—well, we suggested—perhaps a couple of days in the year. That's quite a modest commitment compared with the sort of commitment that Members of Parliament have when they become members of the Parliamentary Assembly of the Council of Europe. 


Do you see that body as an arbiter, or as a body of discussion?

Well, a decision-making body, no. A body to which Ministers are accountable, and are obliged to answer their questions—

So, they can't say, 'I don't want to turn up'; they're obliged to turn up. 

In the Chamber here—it would be exactly those sorts of parallel responsibilities that this body would have in relation to inter-governmental matters. 

And would that body—? I know you're talking of the legislative Houses in Westminster, and then this place and the other devolved Parliaments. Would there be scope, there, to have the voice of some of those mayors and devolved aspects of England as well, just to bring into it a bit more balance, from a power balance point of view? I'm just wondering. 

I think that's something that should be explored. I mean, when we wrote our paper, we, I think, say something like there might be an opportunity for other democratic bodies to be brought in, and we were thinking, then, of mayors—the Mayor of London, of course, particularly, but the Mayor of Greater Manchester as well. But the constitution is always in flux. There's always going to be change, and the future of English Government—governance inside England—is, I think, one of the very interesting issues that probably isn't right for discussion in the Senedd, and not something in which we're expert, but it's certainly something that will need to be considered, as it is being considered by lots of people at present, as to how you have a rational system of governance of England. 

I think the problem with mayors is they're executives, and with the exception of London, they don't have quite such a clear accountability body sitting behind them. So, mixing mayors up with parliamentarians would be a bit of chalk and cheese in some ways. But, certainly, it could be a body that—. It needs to be a body that can embrace future English devolution if that develops. And Paul mentioned the Parliamentary Assembly of the Council of Europe—it's an ambitious model, but what it essentially is is there is the inter-governmental level, which is a Committee of Ministers, and the Assembly keeps an eye on that Committee of Ministers. It has very few decision-making powers; it has some, but very few. But its committees join together and they do inquiries and they make recommendations, to which the Committee of Ministers is obliged to reply—the inter-governmental level. So, that's the structure we're looking at, shrunk to—. But, as Paul's pointed out, MPs are prepared to spend quite a lot of their year working in Strasbourg for the Parliamentary Assembly, and other international assemblies. There is no similar place where they gather—the four nations of the UK—together, their parliamentarians gather together, to think about the shared issues of the UK.

So, what we're really saying is you need something that does that, and start modestly. But I'm a great believer that you do  need political will, but also you need the vehicle for political will to express it. And our job as officials is to design the machine, but we can't put the—. We don't put the fuel in. And what we're saying is, 'Let's design the machine, let's get together and design a body that looks convincing and persuasive as an inter-parliamentary, inter-governmental body, and then let's hope the political will comes and fills it up and makes it energetic and interesting.' Because the Parliamentary Assembly of the Council of Europe is a funny old body and not many people realise that it is, actually, when you work there, interesting and creative and useful, and I think the same would be true if we managed to—. The key thing is to resource it; you can't just wish it. And the resourcing means giving it a secretariat, giving it a structure, giving it some money to do its job.


And giving it some authority, yes. 

I've just got a couple of last questions, which are looking to investigate the dispute resolution mechanism for fiscal issues. How effective, in your view, is the dispute resolution mechanism addressing previous issues of a power imbalance between the Treasury and devolved Governments when raising disputes?

Well, for me, this is beyond any knowledge that I have, I'm afraid. So, I'm not going to be very helpful in answering that, because I simply don't know. 

No, and I'm similarly ignorant. And the reason we don't know is because we haven't got effective scrutiny of the inter-governmental mechanisms, and if we did have effective scrutiny of the inter-governmental mechanisms, we would know more about the effectiveness of the dispute resolution system. As far as I can tell, it has been used very rarely—that's just an observation—which, to me, emphasises the point that looking at the rules or worrying about the rules is probably not the most important thing you should do. It's much more important to get the structures in place for people to create the political atmosphere in which accountability—. One of my favourite phrases is that people think of accountability or scrutiny as something that's done to them, but good accountability comes when people feel accountable. The people who are being scrutinised have to feel accountable as part of their make-up, and you have to create an atmosphere or structure within which the inter-governmental negotiators feel accountable to their legislatures.

That makes a lot of sense. I can see that. Let's get the body running, and if there are disputes, that's a good problem and then we'll find a way of solving them. 

The final question from me, and probably for the session, I'm not sure—

What are your thoughts on the inclusion of an independent mediation process, and would this provide a more equitable process for devolved Governments?

Well, there is, I think, provision for independent mediators, and I was just thinking about that as Paul was answering that last question, because there are a lot of provisions set out in the Government statement about the criteria for appointing an independent mediator. So, somebody has thought very carefully about the rules, but hasn't really thought about the process and whether it's desirable or not. But, I think independent mediation, if you get the right person—and perhaps I'm being unfair to those rules, because those rules are intended to show what sort of person should be the mediator—if you get the right independent mediator, then that might work. But, if you're talking about a political dispute between the UK Government and the Welsh Government, then it's going to be Solomon who is going to be that independent mediator, isn't it? [Laughter.]

I agree with everything Paul says. I'd just say that, constitutionally, in the end, an independent mediator between Governments is a bit odd. It's giving a lot of power to an unelected individual, and that's quite risky, in some ways. But, an independent mediator who offers the solution and develops the solution would be fine. All that conversation is great, but there are some political problems you can't solve—even Solomon can't solve them.

I think, in our context, more so it's generally mediating between everybody else and the Treasury, rather than being inter-governmental, because it's within Governments as well that the Treasury holds the purse strings—even dealing with other departments as opposed to other Governments. And I think that's the tricky bit—how do you mediate when somebody holds a lot of power, effectively.


And we shouldn't need mediation between Governments. Governments should have enough capacity and expertise and knowledge and professionalism to be able to foster good relationships to just iron out disputes, shouldn't they? It's a shame that we are having to have this debate, because it ought to have evolved and be better than it is. Thank you, Chair.

On that, surely the solution is to have transparency in how these decisions are being made and why HS2 is an England-and-Wales project. Rather than it just being a statement, an explanation of why and how they decided that it's 100 per cent England and Wales—that, more than mediation, is what we really need. Do you agree that we need an explanation, if something is going to be treated as an England-and-Wales project, as to why it's treated as an England-and-Wales project?

Well, I think transparency, but also, if I may say so, members of legislatures who refuse to let things go and who carry on asking questions, as you certainly do about Barnett consequentials, Mr Hedges. [Laughter.] And that's necessary and that leads to transparency—vigorous questioning.

I'm surprised, in Mike's question there, that he didn't use his catchphrase of 'show your workings', because I think that's one of the things that this committee in particular asks.

It's a common phrase to hear, but ministerial accountability is the basis of most of what we do in the UK. It's a culture of justification. It's not necessarily that you can tell them to do what to do, but they have to justify what they've done and do it in public.

Exactly. Well, that brings us to our time. Thank you so much. The hour has flown by. It's always a pleasure to have you here. Thank you so much for giving up your morning to be with us and to share your experience and understanding of the different roles that you've had and for bringing that expertise here. So, I'd like to thank you formally. There will be a draft transcript available for you to check for accuracy.

I think that brings us to the end of the public part of our meeting today. So, according to the motion that we agreed earlier, can we go not into private? Thank you. Diolch yn fawr.

Daeth rhan gyhoeddus y cyfarfod i ben am 11:47.

The public part of the meeting ended at 11:47.

Gwybodaeth gan y tyst / Information from the witness: 

the Labour Cabinet Minister was John Denham.