Submission by Business Wales to the National Assembly for Wales Committee on Better Governance for Wales

Introduction

1. Business Wales is pleased to be able to contribute to the Committee on Better Governance for Wales’ considerations on the UK Government’s White Paper that sets out the proposals for changing the devolution settlement for Wales (BGW).2. Business Wales is an umbrella body for the main business representative organisations in Wales. Business Wales’ main function is to co-ordinate the input of the business representative organisations into the National Assembly for Wales Business Partnership Council.3. The membership of Business Wales comprises the Confederation of British Industry, the Federation of Small Businesses, Chamber Wales, the Institute of Directors, the Engineering Employers Federation, the National Farmers Union, the Institute of Chartered Accountants in England and Wales, the Homebuilders Federation, the Council of Mortgage Lenders, the Association of Chartered Certified Accountants, the Freight Transport Association, the Forum of Private Business, the Institution of Electrical Engineers, Community Enterprise Wales, Royal Institution of Chartered Surveyors and the Federation of Master Builders.4. We note the contents of BGW and would make the following general comments.5. As business organisations we believe that a sustainable future for the people of Wales is only possible if there is a thriving private sector. A thriving private sector can generate the wealth and employment that minimises the need for public sector intervention in society but provides a large enough tax base to allow good quality public sector intervention where appropriate.6. Therefore our criteria for assessing the structures that govern Wales are based upon how well those structures assist in the development and sustainability of a thriving private sector economy.7. Many of the business representative bodies that make up Business Wales have been a part of the devolution process since it started and have engaged constructively and effectively in the birth of the new parliamentary body, the National Assembly for Wales.8. Business Wales recognises that there is a desire by many to improve and increase the autonomy of action of the National Assembly for Wales but we believe that it is important, particularly in a time of the globalisation of the economy, that an increasingly differentiated Wales does not become so differentiated from the rest of the United Kingdom that businesses are less inclined to set up or do business within Wales.9. We would therefore urge caution in the use of additional powers in Wales and would hope that such legislative powers are used to benefit the wealth creating part of society and not to hinder it.

Structure of the National Assembly for Wales

10. In respect of the new parliamentary structure proposed for the National Assembly for Wales, Business Wales recognises many of the issues that have prompted the desire to create a formal split between the National Assembly for Wales and the Welsh Assembly Government.11. The establishment of a separate Ministerial executive authority, which derives its powers directly from the Crown, is much clearer and more efficient than the present process of delegation of authority from the National Assembly to the First Minister and onward from there.12. Business Wales believes that it is appropriate for the National Assembly for Wales and the Welsh Assembly Government to have separate legal status and therefore agrees with the proposals made in BGW on this issue.13. Business Wales is not persuaded that there is a need for salaried deputy Ministers which, at present appointment levels, means that the 'payroll vote’ in the Assembly is 21.7% of all members, which we believe is too high for a democratic institution.14. Given that the National Assembly for Wales will have a greater role as a legislature and scrutinising body we are concerned that the running costs of the National Assembly for Wales will rise which will diminish funds available for the provision of services by the Welsh Assembly Government.15. Although Business Wales recognizes that an effective legislature must be adequately resourced we believe that there must be a strong emphasis on the National Assembly only doing what it needs to do, not what it can do.

Executive functions

16. Business Wales notes that the executive functions of the National Assembly will transfer to Ministers, including the powers to make subordinate legislation. We believe that this is appropriate provided that there is an adequate mechanism for ensuring that potentially controversial legislation or legislation that is of particular importance to business can be properly scrutinised in a timely fashion.17. The statutory duty presently laid on the Assembly to establish partnership or consultative arrangements with business will become the responsibility of Ministers. The present statutory duty to consult with business is not as strong as the requirement to consult with local government or the voluntary sector.18. Under s.113 and s.114 of the Government of Wales Act 1998 the National Assembly for Wales has statutory requirements to establish schemes with local government and the voluntary sector. In the case of s.113 there is a statutory duty to establish a Partnership Council with local government.19. The present Business Partnership Council is not a statutory body and there is no requirement to provide a report to the business community on the activities of the National Assembly for Wales on an annual basis.20. We believe that the Welsh Assembly Government should be required to set up a scheme for consultation with business and that there should be a statutory requirement for the establishment of a Business Partnership Council that has a formal role with the Welsh Assembly Government. This would give proper weight to the key role that business has in generating the wealth of Wales and sustaining the ability to create wealth into the future.21. There should also be an annual report on the Welsh Assembly Government’s consultation scheme with business in the same way that at present there are annual reports on the working of the local government scheme and the voluntary sector scheme.22. We approve of the proposal to make the appointments to the posts of Auditor General for Wales and the Public Ombudsman for Wales Crown appointments to ensure their independence from executive authority in Wales.

The Legislative Process

23. Legislative powers can be used well or badly. Business Wales recognises that there is an important role for the National Assembly for Wales in passing good quality legislation for the people of Wales. Business Wales also recognises that there is a danger that legislation can be passed that can damage the competitive position of Wales in the world and which can have a long term deleterious effect on the Welsh economy and people.24. The main concern of Business Wales is that legislation is only passed where there is a definite need and not passed merely to demonstrate that the National Assembly for Wales can legislate.25. This is of particular importance in the commercial area where businesses of all sorts, from the smallest farm to the largest multi-national, already have to deal with a huge volume of regulation, which threatens to kill at birth the entrepreneurial spirit that Wales must engender if Wales is to have a sustainable prosperous future.26. Given that BGW has outlined a route for greater legislative powers for the National Assembly for Wales and that this route is likely to be followed at a greater or lesser speed, Business Wales believes that it is vitally important that within the National Assembly’s legislative processes there are strong mechanisms in place to ensure that the effect of legislation on business has been vigorously assessed.27. We believe that there is a role for a liaison body between the National Assembly for Wales and business which would have the dual role of advising the legislature of the changing needs of business in Wales and of providing an umbrella body for smaller groups that could be brought together to consider specific legislative matters as they are dealt with within the legislative process of the National Assembly.28. We believe that these sorts of arrangements would help improve the quality of legislation passing through the National Assembly and be more effective in providing a clear statutory framework for business in Wales.29. The existing split of powers between the Assembly and Parliament is not clear due to the nature of the original devolution settlement. There is a great danger that the change of balance between the Assembly and Parliament may not increase clarity in the legislative process and may even decrease it.30. We believe it is extremely important that the legislative process is as transparent as possible to ensure that the legislative process retains the confidence of the business community and society at large.31. We would also reiterate our caution against differentiating the legislative landscape in Wales too much from the rest of the United Kingdom as this could easily act as a disincentive to businesses wishing to invest or expand in Wales.

Conclusion

32. In summary we believe that the proposals of the White Paper provide an opportunity to improve some aspects of the original devolution settlement. We believe in having a government structure for Wales that is efficient, effective and provides the framework for a thriving prosperous Wales.33. To assist in achieving that goal we believe that the experience and concerns of business should have a strong voice in guiding the policies of the Welsh Assembly Government and the legislative processes of the National Assembly for Wales.34. For partnerships to work there must be a sense of shared goals and an agreement on how to achieve those goals. We look forward to such a partnership with both the Welsh Assembly Government and the National Assembly for Wales in the future.