Quango cuts to cover cost of assembly

The pounds 20m it is expected to cost to run a Welsh Assembly would be more than met by cuts in the pounds 826m spent annually by the principality's ubiquitous quangos, Ron Davies, the Secretary of State for Wales, said yesterday.

"This is the definitive blow that sidelines the 'no' campaign," Mr Davies told a news conference in Cardiff. "Even the Tories concede that devolution will not lead to the break-up of the United Kingdom and now it is clear that savings from quangos will at least equal the assembly's running costs."

Mr Davies promised that there would be no cuts to hospitals or schools as a result of running the assembly. He added: "As well as immediate savings, I shall be looking at efficiency savings from the whole of the quango state to help me meet my pledge to the Welsh people."

Among the 81 quangos in Wales, five big spenders will be axed initially: The Welsh Development Agency (annual budget pounds 150m), the Development Board for Rural Wales (pounds 20m) and the Land Authority for Wales (pounds 27.5m) will be merged to form what Mr Davies described as an economic powerhouse.

Consultations are already in train between the three at board level to identify savings. At present, the chief executives of the three bodies all earn more than pounds 70,000 a year. Paring down head offices - there are two in Cardiff and one in Newtown, Mid Wales - will produce further savings. The amalgamation inevitably means redundancies, and severance payments may constrain the initial impact of the change.

The Cardiff Bay Development Corporation - chaired by Sir Geoffrey Inkin, who unsuccessfully contested Ebbw Vale for the Tories at the 1979 election and now earns pounds 34,000 a year for two-and-a-half days' work per week - and the Residual Body for Wales will be wound up before the assembly convenes. The Development Corporation's annual expenditure tops pounds 50m, with the residual body spending pounds 900,000.

The assembly, which is due to begin sitting in 1999, will be empowered to abolish or restructure most of the remaining quangos, which range from the Higher Education Funding Council for Wales (annual budget pounds 236m) to the little-known Place Names Advisory Committee, a minuscule body which consults infrequently, usually by telephone.