Wales: Public Services
Baroness Randerson Excerpts(2 weeks, 6 days ago)
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Lord Livermore (Lab)
I do not think the Government have any such plans, but the Budget delivered for all the devolved assemblies a record amount in settlements since devolution.
Baroness Randerson (LD)
My Lords, the previous Conservative Government decided that, despite the fact that not a single yard of HS2 would be built in Wales, it would not get any Barnett consequential funding from that. That decision was criticised from the Labour Benches and deeply criticised by the Welsh Labour Government. How is it that the new Government can defend the decision of their Conservative predecessor?
Lord Livermore (Lab)
As I understand it, as heavy rail is a reserved matter and the UK Government are therefore responsible for heavy rail infrastructure across England and Wales, they spend money on this in Wales rather than funding the Welsh Government to do so through the Barnett formula. This approach applies to investment in HS2 and is consistent with the funding arrangements for all other policy areas that are reserved in Wales, as set out in the Statement of Funding Policy.
Arrivals Duty Free at UK Airports
Baroness Randerson Excerpts(1 year, 8 months ago)
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Baroness Penn (Con)
My Lords, I will repeat what I said to the noble Lord, Lord Foulkes, that this absolutely demonstrates that the priorities of the Scottish Government lie in the wrong place and are not aligned with the people in Scotland.
Baroness Randerson (LD)
My Lords, returning to the abolition in 2020-21 of the right to reclaim VAT on purchases made in high-street shops, I think the Minister said that nowadays that would cost a considerable amount. But the tourism and retail industries contest that claim. It is two years since that decision was made. Surely the Treasury has up-to-date details.
Baroness Penn (Con)
The noble Baroness is right that there are direct costs of offering any scheme through VAT being refunded but there may be indirect benefits in terms of stimulating tourism and other spending. The Treasury seeks to take both those issues into account when looking at these issues. When the decision was taken to withdraw VAT-free shopping for visitors, the Treasury also held a round table with the industry to hear those views. As I said to my noble friend Lord Vaizey, we continue to welcome representations to help to inform future decisions.
European Structural and Investment Funds and the European Agricultural Guarantee Fund
Baroness Randerson Excerpts(1 year, 8 months ago)
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Baroness Penn (Con)
My Lords, the commitment that the Government have made is that the replacement of EU funding in each nation will meet the levels that they previously received. That is the commitment that we are delivering through the shared prosperity fund.
Baroness Randerson (LD)
My Lords, Wales was a beneficiary of EU funding, as one of the poorest parts of the EU. The Welsh Government used a big slice of that funding to support university support partnerships across Wales and beyond. Because the new shared prosperity fund is administered by the UK Government and local authorities, there is no scope for universities to benefit in the same way, leaving a big hole in the amount available for university research, which is of course essential for levelling up. Will the Minister undertake that she will, with her colleagues, examine this problem and amend the UK’s funding mechanisms in order to solve the big hole that is appearing in university research funding? I declare an interest as chancellor of Cardiff University.
Baroness Penn (Con)
My Lords, the UK shared prosperity fund was designed to give local areas more discretion about how they spend that funding, aligned with local priorities. The UK Government provide significant support to our research sector, including through universities, but I am happy to take the noble Baroness’s feedback back to the Treasury.
IMF Economic Outlook
Baroness Randerson Excerpts(1 year, 9 months ago)
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Baroness Penn (Con)
My Lords, I believe that that is not a forecast but a modelling assumption. We will look at the record of the UK economy since leaving the EU, and we continue to grow. Since the Brexit referendum, we have grown at a similar rate to Germany, and, last year, we had one of the highest growth rates in Europe. So we look at the record and the outturn, not just the predictions.
Baroness Randerson (LD)
My Lords, last week, Tony Danker, the leader of the CBI, made a speech in which he remarked on the fact that private investment was flooding out of the UK because of the Government’s lack of a strategy to deal with the economic mess we are in. What is the noble Baroness’s response to that criticism from the main representative of business in the UK?
Baroness Penn (Con)
I believe that, last week, Tony Danker also welcomed a speech by my right honourable friend the Chancellor of the Exchequer that set out his vision for growth in the UK, looking at the sectors that we are most competitive in, setting out proposals for new regulatory freedoms in those sectors and investing in the drivers of our economy, such as education and enterprise.
Wales: Additional Financial Resources
Baroness Randerson Excerpts(1 year, 10 months ago)
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Baroness Penn (Con)
My Lords, the fiscal framework between the UK and the Welsh Governments was agreed in 2016; that added a needs-based factor into the Barnett formula to ensure that Wales receives fair funding. It receives at least 15% more funding per person than the equivalent UK government spending in the rest of the UK. In fact, in the current spending review period, that additional amount is 20%.
Baroness Randerson (LD)
My Lords, the lack of Barnett consequentials from the HS2 rail project—a railway not a foot of which will be built in Wales—is a glaring injustice. The recently confirmed extension of the project means that additional Barnett formula funding was confirmed for Scotland and Northern Ireland. Why not Wales?
Baroness Penn (Con)
As the noble Baroness will know, the Welsh Government do not receive Barnett on HS2 spending because rail infrastructure in Wales is a reserved matter and the UK Government continue to invest in rail infrastructure in both England and Wales.
Queen’s Speech
Baroness Randerson Excerpts(8 years, 6 months ago)
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Baroness Randerson (LD)
My Lords, it seems that you wait years for a transport Bill and then three come along together. I congratulate the Minister on his powers of persuasion, as I know how difficult it is to insert Bills into the Queen’s Speech. After the disappointment of last year, when we waited all year for a Bill on buses which never turned up, it is heartening to see that we will be off promptly after the recess with the Second Reading of the Bus Services Bill. As we will therefore have our chance to set out our views on that issue soon, I will say very little about it now, beyond saying that I welcome the Bill. It is a long overdue opportunity to deal with the problems created across the country, outside London, by the deregulation of bus services. That reform was the first major issue I dealt with as a member of the transport committee of Cardiff council, my very first role as an elected member, at a time when I was a young mother. It has taken far too long to address those issues, and I believe that there is fairly broad agreement with the general direction of the Bill. However, I urge the Government to take the opportunity to set the pace on this. We are now well into the 21st century and need to create a comprehensive modern transport network.
To be successful, the new regime needs to go further than planned to attract new passengers, and therefore needs to encourage young people to use buses and ensure all buses are accessible for people with disabilities. It needs to achieve the lowest possible emission levels. The air quality emergency that we face in our urban areas is so severe that we are well past the time when decisions on this can be voluntary. There is a major role for government in ensuring that our buses reach the highest air quality standards. We remain to be convinced that this Bill will address the bus crisis that is hitting so many rural areas.
I was delighted to hear Her Majesty say that there will be a modern transport Bill. The Government are right to seek to keep us at the forefront of technological developments and there are thorny issues to be grappled with, such as the way we insure driverless cars and data protection and security. For example, who will own and control the information on where I have travelled to in my autonomous vehicle? These vehicles promise a brave new world where we no longer need to own our own car, but the Government need to tackle the way in which we use such vehicles from the start, by encouraging carpooling via legislation for instance. We do not have the luxury of time. The revolution is happening right now on the streets of Bristol, Greenwich, Milton Keynes and Coventry.
I have raised before in this House my frustration that the Government have been so slow in dealing with the challenges raised by drone technology. The news last week about the use of drones to smuggle drugs and weapons into prisons highlights the fact that better regulation is overdue, so I welcome the inclusion of drones in this Bill. There are big issues about safety and security as well as privacy.
My disappointment comes with the Government’s limited understanding of the phrase “modern transport”. It should be about so much more than drones and spaceports, exciting as they are. As Lib Dems, we would like to see such a Bill encompassing all the strategic objectives of a modern sustainable transport system. Any traveller in Britain today knows that we patently do not have transport infrastructure fit for the 21st century. It is the fault of successive Governments. The future prosperity of our nation is at stake on this, so we need a modern transport Bill that sets out a comprehensive strategy. If you are standing on the 7.15 am into Euston with hardly room to breathe, you are not thinking about the site for a spaceport—you have heavier things on your mind. The Government need to address the daily grind of commuting because that is what will really sharpen the edge of our economy. The environment must be at the heart of our modern infrastructure.
I urge the Government to widen the modern transport Bill to use it to build the infrastructure required for the widespread use of electric vehicles. Three experts have so far told me that we do not have sufficient electricity capacity for all the electric vehicles that will be on our roads in the near future. It is a lengthy process to expand the electricity supply. Of course, there are alternatives to electricity for vehicles, but they are zero-emission in the place where we need it: on the streets of our towns.
We also need a modern, sustainable approach to air travel and airports. It is ironic that we will have a Bill that deals with spaceports when the Government cannot decide whether it should be Heathrow or Gatwick. In the meantime, the Government need to be preparing our important aviation industry for the future, and I urge them to broaden the modern transport Bill to include measures to encourage the production and use of biofuels for aviation. We are way behind our competitors on this vital issue.
It is important that I finish by celebrating our strong aviation industry; its leaders have made it clear how important it is for them and their employees that we remain in the EU. I urge the Government to look very much more broadly in the way in which they consider the idea of modern transport.
Corporation Tax (Northern Ireland) Bill
Baroness Randerson Excerpts(9 years, 8 months ago)
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The Parliamentary Under-Secretary of State, Wales Office (Baroness Randerson) (LD)
My Lords, it is very appropriate that we are discussing this Bill on St Patrick’s Day. I take this opportunity to wish noble Lords a happy St Patrick’s Day.
I shall start by highlighting the history behind the policy enshrined in this Bill. Since 2010, the UK Government and Northern Ireland Executive have shared a common objective to rebalance the Northern Ireland economy away from overdependence on the public sector and to drive faster economic growth. In 2011 this Government published a consultation document Rebalancing the Northern Ireland Economy. Among other things, the consultation considered the possibility of devolving corporation tax powers to the Executive and Assembly. Responses to that consultation from the business community and Northern Ireland political parties nearly unanimously supported the devolution of corporation tax.
After considerable work on the detail and technical work needed to make this measure possible, this Bill was introduced in the Commons on 8 January. The proposals will allow the Northern Ireland Executive and the Northern Ireland Assembly to set a different rate of corporation tax from the rest of the UK for most types of trading profits arising in Northern Ireland. The tax base, including reliefs and exemptions, will remain under the control of the UK Government. The earliest financial year for which Northern Ireland could set its own rate is 2017. This will allow time for businesses and agents to become familiar with the new rules.
Lord Forsyth of Drumlean (Con)
Can my noble friend tell me why this Bill—unlike for example the measures that gave income tax powers to the Scottish Parliament—has been certified as a money Bill and therefore all its stages have to be taken at once?
Baroness Randerson
I understand the noble Lord’s point, and indeed there are clearly constitutional issues in relation to this Bill, but it has been certified as a money Bill by the Speaker of the other place. It is important to bear in mind that unlike the other legislation to which my noble friend refers, this is a simple measure that deals entirely with one issue. I am sure my noble friend will agree it is a highly technical Bill and therefore akin to many other money Bills this House deals with.
I will go briefly over the aim of this policy and the key measures within this Bill. Northern Ireland has a unique economic position within the UK. It shares a land border with the very low corporation tax environment of the Republic of Ireland. It is more dependent on the public sector, with around 30% working there, compared with about 20% in the rest of the UK. Economic prosperity—GVA per capita—is persistently some 20% below the UK average, and has been for a number of decades and it has to deal with the challenging legacy of the Troubles.
Devolving corporation tax recognises these unique challenges. The Northern Ireland regime has been carefully designed to enable the Executive to encourage genuine investment that will create jobs and growth, while minimising opportunities for avoidance and profit shifting. It balances this with the need to keep the costs of a reduced rate proportionate, both for the Executive and in relation to any additional administrative burdens for businesses.
The design of the regime builds on the principles agreed in 2012 by the Joint Ministerial Working Group which included Ministers from HM Treasury, the Northern Ireland Office and the Northern Ireland Executive. Companies trading in Northern Ireland will attract a Northern Ireland rate on their qualifying trading profits only. Companies will continue to pay the UK rate on their profits from non-trading activities which do not generate jobs or economic growth in the same way.
The rules are designed to deter businesses from seeking to exploit, through profit shifting and avoidance, a rate differential between Northern Ireland and the rest of the UK. The regime will not provide opportunities for brass-plating. Because they offer significant scope for profit shifting without the benefits of bringing substantial new jobs, the regime does not extend to profits from financial trading activity, such as lending and reinsurance. However, the policy recognises the genuine growth and employment potential for Northern Ireland offered by back-office functions, so companies with excluded profits from certain financial trades may make a one-off election to bring a notional profit attributable to the back-office functions of those excluded trades within the Northern Ireland rate.
To reduce the administrative burdens for SMEs, a special regime exists for them. A simple in-out test will mean that the majority of the companies will be spared the burden and cost of apportioning profits. More than 97% of SMEs operating in Northern Ireland meet the 75% employment test threshold and will benefit from the Northern Ireland regime.
Although this measure should go a long way in helping the Executive to encourage genuine investment that will create jobs and growth, the Government have been clear that devolving corporation tax is not an end in itself. For the full potential benefit of corporation tax devolution to be recognised, there are a number of other areas of reform that need to be addressed, such as education, skills and infrastructure.
The Stormont House agreement set out that the progress of this Bill through Parliament would proceed in parallel with implementation of key measures to deliver sustainable finances. These include agreeing and delivering a 2015-16 budget that works; progressing the Welfare Reform Bill in the Assembly; and taking the steps required to put the Executive’s finances on a stable footing for the long term. The Northern Ireland Executive agreed their budget for 2015-16, passing their Budget Bill on 24 February, and the Welfare Reform Bill also passed through further consideration stage of the Assembly on the 24 February. Sinn Fein has since withdrawn its support of the Welfare Reform Bill through its final stage in the Assembly. There can be no doubt that this decision was a setback, and the Secretary of State for Northern Ireland chaired a meeting of the party leaders last week in an attempt to help them to resolve the situation. The party leaders have since held further talks, and the Secretary of State proposes to convene another meeting with them later this week.
Changes to the welfare system in Northern Ireland were a key part of the Stormont House agreement and, as the Secretary of State has made clear, it remains pivotal that all aspects of the agreement are implemented. In simple terms, the Executive’s budget for 2015-16 does not balance without progress on these important issues. The Stormont House agreement was a major step forward and, although there has been good progress since the beginning of year, there were bound to be bumps in the road. The Government remain determined to implement the agreement and propose to continue with the progress of the corporation tax legislation through this House. The legislation contains a commencement clause, and commencement will not take place until the conditions set out in the Stormont House agreement have been met and changes to the welfare system in Northern Ireland have been implemented. This means the devolved power will be “switched on” for the planned start date of April 2017 only if the Executive are delivering their side of the agreement, including achieving sustainable public finances.
The unique challenges faced by Northern Ireland have been recognised by all parties. This Bill will allow the Northern Ireland Executive greater power to rebalance the economy towards a stronger private sector, boosting employment, growth and the standard of living in Northern Ireland, with benefits for the wider UK.
I therefore hope that noble Lords will give this Bill a Second Reading.
Wales: Barnett Formula
Baroness Randerson Excerpts(12 years, 5 months ago)
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The Chancellor of the Duchy of Lancaster (Lord Strathclyde)
My Lords, tomorrow we have a Question on the behaviour of the House, and I would not want to use this as a bad example. We have time for one more Peer, and I think that it should be the noble Lord, Lord Richard.
Debt
Baroness Randerson Excerpts(12 years, 6 months ago)
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The Chancellor of the Duchy of Lancaster (Lord Strathclyde)
My Lords, we have not heard from the Liberal Democrat Benches, so perhaps we can now.
Baroness Randerson
My Lords, the Government have stated repeatedly that reducing the deficit must take priority over reform of the Barnett formula. Can the Minister tell us whether Treasury discussions with the Government in Wales have included consideration of a temporary mechanism—the so-called Barnett floor—which, although it would not solve the problem, would at least alleviate the immediate widening of the unfairness in the funding of Wales?
Lord Sassoon
My Lords, we are ranging a little widely at this point. My understanding is that discussions with the Welsh Assembly are going on. We intend to report back by the end of the year. A Barnett floor is one of the ideas that I know has been put forward, among others, and is subject to the discussions with the Welsh Assembly.
Queen’s Speech
Baroness Randerson Excerpts(12 years, 6 months ago)
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Baroness Randerson
My Lords, we cannot legislate our way out of debt, although I seem to recall that Gordon Brown tried to do so when he was Prime Minister. However, we can use legislation to encourage enterprise, stabilise the banking system, encourage businesses to create more jobs and stimulate green investment. All those key issues were tackled in the gracious Speech, which outlined measures that reinforce the coalition’s policies for promoting growth by emphasising regional growth, rebalancing the economy away from the disastrous over-reliance on the finance sector under the previous Government. Then there is the policy of encouraging the growth of SMEs, emphasising the importance of manufacturing and developing skills.
I want to draw out two measures announced in the Queen’s Speech. The first is the Groceries Code Adjudicator Bill, which is all about the small producers being empowered to stand up to the big retailers to get a fair deal, not just for the small producers but for the consumers as well. The noble Lord, Lord Myners, who is not in his place, mocked the Bill earlier this afternoon. I fear that he might regret that, because the farming unions and consumer organisations are probably even now penning letters and e-mails to him to put him right on the importance of the Bill. It has been a very long time in coming; the first record that I found of the debate on it was in 1998 when Colin Breed, a Liberal Democrat Member in the other place, produced a report on supermarkets and competition, which led to the Competition Commission producing a voluntary code of practice in 2000. Like so many voluntary codes, it was ineffective because suppliers were afraid to make complaints. The issue was discussed very many times in the new Welsh Assembly; in the 12 years I was there I heard the debate year after year about the power of the supermarkets and the complaints of the farming unions about that power.
Another report came in 2008, and in 2010 the Competition Commission produced the groceries supply code of practice. Andrew George MP has said that the problem with that is that it is like having the rules of rugby without the referee. We need the adjudicator—we need the referee. During the passage of the Bill, I look forward to having the time to debate the place of financial penalties and the need for a third-party complaints process. I am glad that the Bill encompasses both of those.
Unlike the noble Baroness, Lady Noakes, the second Bill that I wish to welcome is the one that includes provision to establish a green investment bank. Indeed, the bank is already up and running in skeletal form, and loaning money. Globalisation of the economy has led to such fierce worldwide competition that it is sometimes difficult to see where we can have the edge as a nation in competition. We clearly cannot sell ourselves as a low-wage economy throughout the world, so we must choose sectors where we have the technical advantage. The green economy should be one such sector. It has the advantage of being good for the planet as well.
Over the last two decades, I have been increasingly frustrated at the number of cutting edge initiatives on renewable energy that have been developed in my own home country of Wales and have been rejected for development funding—either commercial funding or government grants and loans—on the grounds that they are too risky and an unknown quantity. Hey presto, a couple of years later those same initiatives have been adapted and adopted in other countries in Europe, usually in Scandinavia, where they have taken the initiative and are now at the head of the field. This is an example of how the finance sector in Britain does not look sufficiently long term at investment issues. I believe that the green investment bank will help to change that outlook and provide that vital funding.
It is customary in debates such as this to regret desirable proposals that have been omitted from the Queen’s Speech, but I welcome one omission. I was very pleased that there was no reference to the introduction of regional pay. I have not been able to follow the logic that argues that higher public sector pay crowds out private sector jobs, especially at a time of high unemployment. I do not believe that the evidence has been correctly interpreted. I accept that the UK is not economically homogenous and I know that the previous Labour Government introduced local pay in the courts system, apparently successfully, so I await the outcome of the Government’s consultation on this but am very pleased that there is nothing in this Session.
Finally, I want to express my regret that there was nothing in the Queen’s Speech on the reform of the Barnett formula. There is now wide agreement that reform is overdue; indeed, there are ongoing talks between Governments on the issue and I hope that they will soon bear fruit. I know that there is irrefutable evidence that the formula short-changes Wales and I believe that the Government accept that. I understand with the upcoming referendum in Scotland that this is not an easy time to change the formula. I understand that in the middle of an economic crisis it is not an easy time to change the formula. But there is a short-term solution that would not impact on Scotland and not cause massive financial implications for the Government —that is, the introduction of a so-called Barnett floor mechanism that prevented any further convergence in funding between Wales and England. I remind the Minister that Wales is officially the poorest part of the UK. In order to be true to the Government’s aim to stimulate regional growth, it needs special attention.