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Speaking at today's FMQ's, First Minister Carwyn Jones said any future inquiry would require a joint approach from both Governments
Mrs May went on to tell the House that the Government is treating Mr Messham's allegations with the utmost seriousness. She said that child abuse is a hateful, abhorrent and disgusting crime and that the allegations must not go unanswered.
Mrs May made it clear that the Home Office was ready to assist with the additional costs of this work.
The Home Secretary reminded the house that in 1991, North Wales police conducted an investigation into allegations that throughout the 1970's and 80's children in homes managed and supervised by Clwyd County Council were sexually and physically abused.
Mrs May went on to tell the house that the recommendation was that there should not be a public inquiry but an examination of the work of private care homes and the social service departments in Gwynedd and Clwyd Councils.
But Mrs May went on to say that last Friday, Mr Steve Messham, a victim of sexual abuse at one of the homes names in the report, alleged that the inquiry did not look at abuse outside the care homes and he renewed allegations against the police and several individuals.
Home Secretary Theresa May has announced that the National Crime Agency will oversee the investigation into child abuse in North Wales in the 1970s and 1980s. For more information visit ITV News.
Esther Ranzen asks what are we doing to protect the children of today? She claims we have got to learn lessons as we can't turn the clock back.
The First Minister says he supports the inquiry that the Prime Minister has announced into whether child abuse allegations about children in care in north Wales were properly investigated. Carwyn Jones says it is 'entirely appropriate' that the inquiry is carried out at a UK level.
The Prime Minister and the First Minister are calling for swift action over allegations that a senior politician was involved in a paedophile ring that abused boys from a children's home near Wrexham.
David Cameron has ordered an investigation and asked the Welsh Secretary to meet the abuse victim who's made the allegation.
The Home Office is looking at how North Wales Police investigated the original allegations.
I'm told that further details could come this evening on the 'process' announced by Number Ten which will review police responses to the original allegations of abuse in North Wales care homes. Government sources are telling me that it's likely to be handled by the National Crime Agency.
However details of the separate investigation into the Waterhouse report itself are expected to emerge in the next few days. That's partly because the Prime Minister has said a 'senior figure' will be appointed to lead it and sources say it could take some time to identify the right person.
There's also the question of what form the process would take, whether or not it would be, say, a public inquiry or review of evidence and those terms of reference would have to be agreed with the person appointed to lead the investigation.
Latest ITV News reports
A judge who spent three years investigating child abuse in North Wales 'was surprised to be told his inquiry had not heard key evidence.'
The Children's Commissioner for Wales, Keith Towler, said he's handling 66 separate cases following North Wales abuse scandal.