COMMISSION ON THE POWERS AND ELECTORAL ARRANGEMENTS OF THE NATIONAL ASSEMBLY FOR WALES

 MINUTES OF PROCEEDINGS

 of the

 EVIDENCE OF:

 Chamber Wales

 held at

 The Civic Centre, Merthyr County Borough Council

on

THURSDAY 26^th JUNE 2003

 In Attendance

Paul Rutter, Chairman, Chamber Wales

Eira Davies

Tom Jones

Laura McAllister

Peter Price

Lord Richard

Ted Rowlands

Viv Sugar

Huw Thomas

Paul Valerio

Sir Michael Wheeler-Booth

 Proceedings

 Lord Richard

Thank you very much for coming. I'm sorry there has been a slight hiccup over the timing of everything and also I apologise because we're running late anyway. Could you identify yourself for the purpose of the transcript and, then, if you'd be good enough to open the subject up to us, we can perhaps pursue the issues.

Paul Rutter

I'm Paul Rutter. I'm presently Chairman of Chamber Wales, a voluntary organisation which has a membership of some 40 local chambers spread throughout Wales. It includes members of the South Wales Chamber Group – that's Cardiff, Newport and Swansea, North Wales chambers and local and county chambers throughout Wales. As an organisation, we therefore represent some 4,000 to 5,000 businesses throughout Wales. We are a voluntary organisation. We have no back staff, so my knowledge may be somewhat limited. The paper that has been presented to the Commission was distributed to all members of chambers prior to finalisation, and the submission has been endorsed by the board of Chamber Wales. I can briefly say that we recognise as a business community that we are not, so to speak, a separate and individual pressure group, but we work within the context of Wales as a whole.

There are certain issues which we need to address in connection with the powers of the Assembly. Our particular concerns relate perhaps most clearly to issues of accountability and responsibility which are not clear under the current settings, at least as far as we are concerned. It may, as I said, be partly our ignorance, but I think, having read some of the evidence presented to the Commission, it's not just we who have ignorance of it. The First Minister, for instance, in his evidence, and Andrew Davies in his evidence also indicated similar difficulties and similar concerns. We work from a principle that in as far as possible we recognise that Wales is a nation and that, therefore, the powers that are devolved to it, in principle, should be all those which are reasonably justifiable, and by saying that we think that it is for those who hold the power at the moment to justify their retention rather than for us to go, so to speak, with a begging bowl and say, "Please may we have some of them back?"

We recognise, however, that that does create certain practical issues and practical problems and, in particular, there are the issues of funding and cost and we need to be sure that, whatever happens, there aren't any financial ramifications that occur which are likely to have a disadvantageous effect upon the profitability or competitiveness of Welsh industry. In principle, we would seek to look at it on the basis of not only devolution of primary powers, but also devolution of tax raising powers; but, I do recognise – and we recognise – that there are issues relating to that and some of those were raised by the First Minister in his presentation to you, particularly with regard to the continuation of the Barnett formula and that matter. We are working in a slightly different context than we were 6 months ago because of the development of regionalisation in England.

That brings me to one other issue, which is that it seems to us the dispensation proposed for the regional developments in northern England, in particular, suggest that there is going to be a greater democratisation of the regional development funds, and we have some concerns that there isn't a substantial democratic accountability from e.g. the WDA, which, in reality, controls a vast amount of the budget, which affects directly the business interests in Wales. I did raise in the paper which we presented the question of local authorities because that also was raised in one of the consultation papers issued by the Commission. It seems to me that it's going to be difficult to justify increased powers and potentially increased numbers of AMs if it's simply to add another layer and yet another number of politicians. That's going to be difficult to sell. It's also clear to me, I think, that the current county council structure raises certain difficulties in terms of size. I think there is an argument for saying that in looking at any proposed as a whole, there is room and scope to consider whether some Assembly powers that they already have, the same questions should be asked of the Assembly as we're asking of Westminster: do you need to have all the powers with you, or are there some Assembly democratic institutions – not necessarily, as I say, the current county councils, but democratic institutions – which may be better at delivering on a local level? That's my introduction.

Lord Richard

Thank you very much indeed. I might say the last point is an interesting one. We spend all our time, or a large part of it, considering what powers should come down to the Assembly. We haven't considered at all what powers the Assembly should in turn devolve and, if so, to what local institutions.

Paul Rutter

It may be something which is directly outside the remit of...

Lord Richard

I sincerely hope that it is.

Paul Rutter

I think it's a point worth making.

Lord Richard

Yes, I think it's a point well worth making.

Sir Michael Wheeler-Booth

Are you suggesting this devolution of powers to local authorities without any change in the electoral arrangements for constituting these local authorities?

Paul Rutter

What I'm trying to say in principle is this: if I look at my local authority area, which is Monmouthshire, it seems to me that it is too small effectively to deliver the services which it is supposed to deliver; but, equally, below the county council there are a range of town and parish councils which equally seem to me to be ineffective. Monmouthshire County Council has, in fact, divided itself into four areas with subgroups, if I can put it like that, of locally elected councillors taking some but not many devolved decisions. Whether that is an appropriate sort of structure which would get rid of the bottom layer, enhance the powers of the more discrete but larger area covering, say, half a dozen parish and town councils, with a county council which was larger in, say, the case of Monmouthshire if it went back to a Gwent County Council. I'm not saying that's a solution, but it's the sort of debate I think we should be having, and, yes, you'd have to have county councillors elected. If you're asking me should we go down the proportional representation route – is that it?

Sir Michael Wheeler-Booth

That's exactly what I was asking.

Paul Rutter

We have not, as a chamber movement, addressed that issue because I think it's primarily political. The nature of elections, in theory, doesn't affect us as a business community. It may affect us as individuals within it. What we're concerned about is: does the system produce the right sort of people at that level? You can argue either way. If you ask me my personal opinion, yes, I'd go for proportionality, but that's purely personal.

Paul Valerio

How do you or your organisation lobby the Welsh Assembly? When you have a particular problem you want to pursue, would you go to your AM who is the constituency one, regional one, or would you go to the Assembly direct or the Minister?

Paul Rutter

As Chamber Wales, we sit on a number of bodies, including the Business Partnership Council, so we lobby through that. As chair, I have meetings from time to time with the Ministers; for instance, I have a meeting with Andrew Davies in about five or six weeks' time. If we have other issues, I or another member of the board will go and see the appropriate Minister. Bear in mind we were formed at about the time the Assembly came into being with a view to seeking to represent the chamber movement on a pan Welsh basis. A lot of business issues, particularly, say, Objective 1 area issues, are strictly speaking not pan Welsh, although they do necessarily impinge across Wales, but strictly speaking they relate to a particular Objective 1 area, or Objective 2, or 3 for that matter. We are very careful not to impinge upon local autonomy. So, for instance, if Cardiff have an issue which is purely related to Cardiff, then they will deal with it through Cardiff AMs and by their own representations directly as a Cardiff Chamber, for instance. Equally, North Wales would deal with the North Wales area.

Paul Valerio

You mention about the potential of scrutiny of the WDA and other development authorities in other parts of the country and you hinted that perhaps there was something about having a more democratic system with the WDA. What did you actually mean by that? Do you want to see that function absorbed into the Assembly Government, or do you think that the system...

Paul Rutter

On balance, the answer to that is yes.

Paul Valerio

You'd rather it be abolished?

Paul Rutter

No, I'd rather have it within the Assembly. More accountable.

Paul Valerio

Become a part of government.

Lord Richard

How do you find dealing with the Assembly? What's your impression of it?

Paul Rutter

Can I say that I personally have only been in this exalted position for six months. My predecessors have found that the Assembly is open. They do listen. But, as in all matters, you don't always get the answer you want. But, it is fair to say, I think, that those who go back far enough – and I don't, but those who go back far enough to the Welsh Office days would say that the Assembly is a much better organisation to deal with than the old Welsh Office was. I can't say fairer than that.

Ted Rowlands

Would you make your support for a Welsh Parliament in your submission conditional upon the rearrangement and reorganisation of local government, which you provided in your earlier statement? Is your support for a Welsh Parliament conditional upon a merger of either authorities to make them bigger units, therefore reducing the overall numbers of politicians and numbers of government units?

Paul Rutter

I wouldn't go so far to say I'd make it a condition. I think what I was seeking to say was that I think we have to bear in mind the Assembly, although it's increasingly popular, has not yet fully made its case. My assessment from reading the evidence seems to me to be that if you're going to go down a more Scottish route, the likelihood is that there would be more AMs. That may be difficult to sell if there isn't some way of making savings elsewhere and that's why I think that other debate is important.

Ted Rowlands

Do you believe that change of this kind would be sufficient enough to justify or require a referendum of the Welsh people to endorse it, or otherwise?

Paul Rutter

I don't think so. I think the decision is based on a matter of principle and the principle of devolved powers has been, in a sense, already determined. There seems to be an argument at least – I put it no higher than that – that for much of the Assembly work its existing powers to effect change are sufficiently great. The issue isn't therefore what difference can the Welsh Assembly make. It's almost a sense of perception and responsibility. So that if you're looking at it on the basis that what is the Welsh nation entitled to, you've come to the decision that you're entitled to devolved powers, no worse or better, say, than Scotland or Northern Ireland. What difference will that make? I think it makes a substantial difference that you have a body of persons who are directly accountable and can't, in a sense, hide and obfuscate the issues. I'm not suggesting that they've been trying to do that, but the potential for it is there, but, equally, you don't have a sense of a nation saying, "Please, Mr. Whitehall, can we do this?" and I think that's important.

Ted Rowlands

If I understand it, in 1997 when the referendum was held, the distinction between the Welsh devolution settlement and the Scottish devolution settlement was very clearly made. There were two major distinctions: it wasn't a legislative Parliament – and it didn't have the capacity or power to raise taxes. If those are the two big distinctions between the Scottish and the Welsh, and if, as you say at the end of your paper, you want to recommend the Scottish thing, then surely the Welsh nation would be entitled to be asked if they wish to endorse that change.

Paul Rutter

I'm not sitting here saying no. I'm just saying that I think from a purely practical point of view there may not be that necessity.

Eira Davies

Can you elaborate on the findings of your recent opinion poll which suggests an increase in public support for the Assembly?

Paul Rutter

That was a poll which was carried out by the Western Mail, I think, in January or February of this year, which indicated – I haven't got the figures in front of me – that there had been a marginal increase in support for the Assembly in the sense that more people would have been prepared to have voted "yes", had the referendum been held now, given the experience of the Welsh Assembly, than actually did vote. Even in places like Monmouthshire, which were notoriously anti, although there was not yet a majority in favour of the Assembly, the number who were opposing the Assembly's principle had been reduced.

Eira Davies

You've not taken a poll amongst your members at all?

Paul Rutter

No, no. I assume our membership – as I said at the beginning, we're in the context – the views of our membership will be reflected.

Dr Laura McAllister

I wanted to ask you something similar because the paper is very radical and it's a refreshing one to read and you're talking about primary legislative powers, tax varying powers, pretty much abolition of the quangos, and I took your point on the WDA. So, it's an interesting one, but I just wonder – it seems very much out of tune with the voice of business more generally. I appreciate that the Welsh CBI is a very different organisation to yourself, but we had a fairly negative appraisal of the devolution settlement from them some months ago. I wonder if you could explain why the Chambers of Commerce feel the devolution settlement has worked in your interests in terms of business and in terms of commerce locally? What aspects of it give you this confidence that adding powers to the National Assembly would actually bring about further enhancement of your members' interests and so on?

Paul Rutter

Can I answer that by looking at the negatives, then saying why I think the negatives might improve us? I was thinking about this this morning. One of the critical issues that we have with members in North Wales is the quality of the rail line which, of course, is not part of the current settlement. I know you're talking about slightly different issues. If we wanted to improve the rail line, then we're dealing with a privatised company at the present time, which is responsible to a UK quango, which in turn is responsible to Westminster and we've got tangential interest or influence over them. If you've got the full powers, it seems to me there is the possibility that you can make that sort of change. The positive side is I genuinely think that as a business community we have a greater voice. I'm not saying the partnerships are all working perfectly and so on and so forth because they're clearly not in some senses, but our ability to influence the Assembly at present is greater than it was before. I think that to regard the settlement in a negative light is unfortunate.

Dr Laura McAllister

Can you think of any specific examples of policies the Assembly has pursued which has benefited your organisations?

Paul Rutter

No, no direct ones, to be perfectly honest, because a lot of what I would call the good things have been in terms of health and education, and so on. When you look at those sort of things, I say to you that that benefits the business community because if you've got a better health and better education system and so on and so forth, you're improving the competitiveness of Wales, if we can create a better environment and so on and so forth. We live in Wales as a business community. We employ people who live in Wales. We want people to bring their businesses to Wales. It's those sort of bigger issues, which is why I said at the beginning we're part and parcel of a context, not just a pressure group saying, "We want this for business," because business is part of the whole.

Paul Valerio

I want to ask about the consultation aspects of the National Assembly because much of what you've been saying rests on the possibility of exerting influence on the Assembly in a positive way in getting the sort of outcomes you would see as beneficial for Wales and business in Wales. Let me ask three very specific points about the nature of consultation. The first is perhaps difficult in view of your six months and they would have been untypical. Is the volume of paper which you receive for the purposes of consultation something which you find difficult as an organisation without administering staff to handle it, and I don't know whether you can go back beyond the six months in that? The second thing is that business organisations are being asked to provide representatives on to various committees. We know because we've heard that from the CBI. Are you being asked in parallel to the CBI? How does that operate as far as your organisation is concerned? And are you finding it difficult to find those representatives to serve on those groups? The third point is feedback. I'm interested in your perspective before you took your current role as much as now, when you were, as it were, close to the inner core of your organisation but not actually holding the chairmanship. Were you aware of any feedback and are you aware of any feedback now from the results of processes of consultation where your organisation has submitted views?

Paul Rutter

I hope my notes are adequate enough. The volume of paper is an issue. Having said that, and it reminds me of a positive, the Assembly did set up the Wales Social Partners Unit, as you're well aware, and that does have the great advantage from my point of view that although I still continue to get large numbers of e-mails weekly, the Wales Social Partners Unit precis the documentation that comes out of the Assembly and also, hopefully, heads it so that I can organise myself to do a certain amount of editing, so some things get put in the waste-paper bin metaphorically; other things I look at and it's those things that I regard as being important to me that I can then deal with in terms of pursuing matters through my board. It remains a difficulty, but it's nothing like the problem that prevailed two years ago when either you didn't look at anything because you couldn't be bothered, or you got the whole ream of the Assembly consultation document and you're reading twenty-odd pages or even more in some cases. So, the position has significantly improved. Representation is a problem. It's a continuing concern of the private sector that the principle of partnership has the three prongs, but, of the three prongs, the only ones who go who are not being paid for going are the private sector. Because of the nature of businesses in Wales – we're a small and medium size enterprise community – the reality is that not many businesses can spare people for half a day or more to disappear to places all over Wales. For instance, I sit on the Objective 1 HRD Monitoring Committee and I have to go to Newtown four times a year to do so, if I'm going to do it properly – four or five times a year. From Chepstow, it takes two hours to drive there, two hours to drive back and I go for a meeting for an hour and a half, or an hour and three-quarters. I do it, and there are numbers of others who do it, but the reality is that it's a very, very small cohort. Unfortunately, it's a diminishing cohort. That leads on to other issues as to whether these committees do have any effect in reality. That's a separate issue. Your third question, feedback. In the sense of whenever members of my board or members of chambers go and speak to officials or Ministers or AMs we seek to have on our agenda a feedback period when we get that feedback, but that's our process rather than anything else.

Huw Thomas

Laura mentioned earlier that this was a radical document and, certainly from my normal discussions with the business community in North Wales, I would feel that it was most particularly radical as regards your comments on the granting of tax raising powers. Is this, in a sense, because we need to follow the Scottish model even though we might not use them? Or, do your members genuinely believe that there is, if you like, scope for using tax raising powers?

Paul Valerio

Can I put my sixpenneth in? It was on tax raising powers. Don't you think your argument in support of tax raising powers is diminished considerably by the fact that you say you want it to exclude your members and their interests, but never mind that you have the Scottish model, it's your employees who would actually be paying them? Everybody is happy with tax if somebody else has to pay it.

Paul Rutter

We produced the paper – I'll be honest: I wrote the paper, and it's got submitted, as I have explained. There may be an argument for people to turn round and say private business isn't that interested, so they read it and thought they can't be bothered to respond, so it went in as it stands. I'll take that on the chin, but it's there because of the principle. It seems to me that the First Minister talked about the five possibilities, when he gave evidence to you, and said, "We've got the middle way." It seems to me that the middle way isn't working and, it seems to me, if you're going to do it, you go the whole hog. I'm not saying we shouldn't be taxed – I think, if I remember rightly.

Paul Valerio

You want to restrict it so that there is no corporation tax and any other business taxes, so Chambers of Commerce and...

Paul Rutter

I say there may be a need. It depends on how you look at it. You can argue that any imposition of any tax in any separate area of the country or continent, whatever it is, which is different to other areas, is bound to lead to potential loss of competitiveness because, for the sake of argument, if we had tax raising powers in Wales, which said we could put a penny on income tax, there is an argument for saying that that, by its very nature, diminishes our competitiveness because are we going to be able to attract individuals into Wales to work if they have to pay extra?

Paul Valerio

You could have said tax varying powers, which meant you could lower taxes which would make you more competitive, but you chose just to raise taxes.

Paul Rutter

I take your point. I'm not averse to tax varying powers.

Paul Valerio

We're winning.

Lord Richard

Can I thank you very much indeed for coming. I'm glad we're winning. That was very helpful. Thank you very much.