Wales: Silk Report

Baroness Humphreys Excerpts

Tuesday 21st January 2014 Grand Committee

[Baroness Humphreys (LD)]

My Lords, I, too, join in the tributes to Lord Roberts of Conwy and add my thanks to the noble Lord, Lord Bourne, for initiating this debate.

At the outset, I pay tribute to my colleagues in the National Assembly for Wales who called for, and supported, the establishment of a commission to examine the need for a different financial structure for Wales, one which would bring more accountability and responsibility to the Welsh Government. My Westminster colleagues also fought for the inclusion of the commission as part of the coalition agreement. I am grateful for their readiness to listen to Welsh concerns and their desire to move the devolution process forward. We all, I am sure, await the opportunity to debate further the devolution settlement in general when we receive the second part of the Silk commission’s report.

The Silk commission’s report provides us with an historic opportunity to increase the accountability of the Welsh Government, making them accountable for their policies and making them responsible for raising some of the money they spend. I was pleased to see the UK Government’s offer of devolving income tax on the same basis as that legislated for in the Scotland Act 2012. While not the preferred method of many for devolving income tax, I welcome this as a major step forward in the devolution settlement for Wales. However, I have some sympathy with the commission’s recommendation against the lock-step system. One cannot help but wonder how many more opportunities would have been open to Wales had it been given the freedom to vary the basic, higher and additional rates of tax independently.

The devolution of stamp duty, as other noble Lords have said, provides the National Assembly with the opportunity to address the acute housing crisis in Wales by helping to lower the cost of developing and buying houses in Wales. Greater control over business rates will allow the Welsh Government to deliver a more coherent reform of those rates and will, I hope, give the National Assembly an additional tool to encourage business. I certainly look forward to seeing, for instance, which measures the Ministers in Cardiff Bay will employ to help those smaller businesses on our high streets which sometimes struggle against crippling overheads.

I must admit that when I read the announcement of the granting of borrowing powers to the National Assembly, I uttered a silent “Thank goodness”. This now addresses an historic and, in some eyes, offensive inequality where other public institutions, including community councils in Wales, are able to borrow yet the Assembly is not. My own small town council, for example, with an annual budget of less than £40,000 a year, has the right to borrow, yet our national Government and the National Assembly have been unable to secure capital funding for projects, including the much needed major improvement of the M4 in south Wales. I am also pleased to see that the Chief Secretary to the Treasury has announced that the UK Government will provide early access to borrowing powers for the Welsh Government to enable schemes such as the M4 improvement to take place. I look forward to taking my place in the queue to make the case for further investment in the road building and improvement programme in north Wales and seeing the advantages to local economies and road safety which should follow.

These new borrowing powers do not apply just to roads. I certainly welcome them as a way to provide the Welsh Government with more scope to stimulate the economy with investment in other capital expenditure projects. The Silk commission report and the draft Wales Bill which emanates from it must not be seen as merely dealing with taxes, borrowing and financial matters. They are a unique opportunity to shape democracy in Wales. We must ensure that the Welsh and UK Governments take this opportunity and do not let progress pass them by.

Liberal Democrats have long supported a federal system as part of our vision for the UK’s constitutional future, and we believe that the United Kingdom is slowly moving towards a federal state. However, in the early stages of devolution, its constitutional and financial systems had not been developed sufficiently to compensate for these changes. The Silk commission and the draft Wales Bill present politicians across the UK with a unique opportunity to strengthen the framework as far as Wales is concerned. Our support for devolution and federalism has been coupled with a belief that additional responsibility must be accompanied by additional accountability and additional capacity to deliver. That is why we have regularly supported reforms to increase the responsibility that Welsh Ministers have over the money they spend, but also to ensure that they have the right legal and financial powers to deliver a wide range of solutions.

I realise that I have come to the end of my time. The challenge that the Welsh Government face in education and health services needs to be addressed.