Oral Answers to Questions
Geraint Davies Excerpts(9 years, 10 months ago)
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Geraint Davies (Swansea West) (Lab/Co-op)
Is the Secretary of State aware of the innovative medical centre at the end of Wind street in Swansea, which treats intoxicated people on the spot, freeing up ambulances, police and accident and emergency departments? Will he inform the Secretary of State for Health in England of the success of that venture, and suggest to him that similar facilities here could help to reduce the pressures caused by the removal of walk-in centres?
Stephen Crabb
I am not familiar with that facility, although I am familiar with Wind street—from what I have read, not from what I have experienced. However, we will certainly look at that project in some detail and I will raise the matter with Health Ministers.
Wales Bill
Geraint Davies Excerpts(9 years, 11 months ago)
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Jonathan Edwards
The commission’s remit is not one of its own choosing, but the SNP decided to act in the best interests of the country and move the process forward. Making out that the Smith commission proposals are what were included in the vow is not right. It was essentially home rule or devolution max, and on any definition of devo max, it means the full devolution of all powers apart from defence, foreign affairs, the monarchy and military policy. That is not included in the Smith commission proposals, which were less significant than what was promised to the people of Scotland on the eve of the referendum.
As I was saying, the Smith commission is vastly more progressive in its trajectory of travel, offering 100% of income tax in comparison with the Wales Bill offer of only a paltry income tax sharing arrangement—and even then, only following a referendum many years down the line.
Geraint Davies
(Swansea West) (Lab/Co-op): Does the hon. Gentleman accept that if Wales has its own powers to set both a higher and a lower rate of tax and it chooses to reduce the higher rate so that a lot of millionaires move to Monmouthshire, the overall tax take to the United Kingdom would be dramatically reduced because those people would all evade tax by moving to Wales? Does he think that is a good thing to set in motion, and does he have any idea whether the Government have calculated the cost of that possibility?
Jonathan Edwards
I am interested in this line of tax harmony across the UK being put forward by the Labour party. In Wales, of course, we had at the last count 22 local authorities all setting different rates of council tax, and we are a key part of a single market across the European Union with its different members setting different tax rates. If Labour Members’ arguments were to hold water, surely they would argue for tax harmonisation across the whole of local government in Wales and across all member states of the European Union. It does not make much sense to me.
Jonathan Edwards
I think I have answered the hon. Gentleman’s point.
In conclusion, the general election is fast approaching, and I can assure this House and the people of Wales that Plaid Cymru will fight that election on the basis that we will not allow our country to be treated as a second-class nation by the Westminster establishment.
Geraint Davies
I come here with an open mind about these tax issues, but I must confess that I have major concerns because I fear that the incentive for the Government to devolve tax powers is not one of freeing the nation of Wales to make its own decisions, but one of distracting attention from the fact that Wales is grossly underfunded both in revenue under the Barnett formula by some £300 million and in capital receipts. If we had our fair share of HS2, for instance, we would have an extra £2 billion.
Jonathan Edwards
The hon. Gentleman and I are both Swansea city supporters and I am grateful that he has been kind enough to allow me to intervene.
Jonathan Edwards
This is my wedding suit, or rather the suit I had with my wedding suit. It has led to much comment. [Interruption.]
Jonathan Edwards
I am grateful to you, Madam Deputy Speaker, for saving me because my good friend was distracting me on the basis of some spurious points. Is it the position of the Labour party, should it form the next UK Government, that HS2 will be seen as an England-only project and not a UK-wide project, thus giving Wales its rightful consequentials of £2 billion, which the hon. Gentleman mentioned?
Madam Deputy Speaker
Order. The hon. Member for Carmarthen East and Dinefwr is now trying to tempt his friend—having claimed that his friend was tempting him—to go down a route that we are not discussing today. We are debating Lords amendments on the tax-raising powers in the Wales Bill. Geraint Davies now has the Floor.
Geraint Davies
Let me publicly assure Mrs Edwards that the wedding was not spurious. I congratulate the hon. Gentleman on both his point and his suit. It is a very nice suit, in black and white.
As I mentioned earlier, the differential rates pose a real problem. There is a presumption that Wales will not lower the higher rate, but a very small number of people in Wales earn more than £150,000 a year. They currently pay 45%, and will pay 50% under a new Labour Government. In theory, if a new Labour Government in Cardiff or Westminster—or any other Government, for that matter—reduced the top rate and a large number of people simply slipped across the border, they would be evading large amounts of tax. Obviously Wales would benefit, because more money would be coming in, but for the overall tax-paying community, the amount would go down, and that is of legitimate concern.
I should like to hear from Ministers what evaluation the Office for Budget Responsibility has made, producing different forecasts with different scenarios. My guess is that it has made none, and that this legislation is being rushed through in the hurried aftermath of what happened in Scotland, so that Wales can be given something comparable to the quick settlement that was made following electoral concerns in Scotland as we move towards a general election. That is not the way in which to establish a new constitutional settlement and a settled financial regime. It is all very well the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards) saying “You want harmony, we have difference, so it does not matter what happens.” Such changes and differences bring pressures that are not settled, and which will be replicated in the future.
Air passenger duty has been mentioned. Other things being equal, if someone says, “Can I set my own air passenger duty?”, the response might be, “That’s brilliant: we can raise some money.” But what if Boris Johnson in London says, “Hold on, there is a precedent here, I want the money for Heathrow, and I am going to lower air passenger duty”, which is what he has said about stamp duty? We are talking about major shifts in the financial powers across the Union, which will unsettle the Union itself. Obviously we want a devolved settlement that is stable rather than ever-changing, rather than the setting in motion—by means of a quickstep to avoid short-term political advantage—of a system that will unravel into chaos.
I know that there seems to be consensus across the Floor of the House today. It is a case of “Don’t worry; we will have a referendum, and hopefully it will be all right on the night.” What I have just described will probably not happen in Wales, because what prospect is there of our suddenly having five UKIP Assembly Members and a regional list? Oh, there is such a prospect; well there we are. What prospect is there of a newly emerging rainbow alliance—perhaps a very unfortunate rainbow with not a crock of gold but a crock of something much more unpleasant at the bottom of it, which will generate a cynical, unfair tax proposition that will lead us back into the dark ages? That is possible. [Interruption.] Obviously there is agreement, as laughter leads the room.
Sammy Wilson
I am glad to learn that the hon. Gentleman has now joined the Unionists in his heart, but does he accept that once we start to disaggregate the fiscal arrangements for the United Kingdom, real constitutional issues become involved? The danger is that the more fiscal powers are devolved to regional administrations, the looser the Union will become. [Interruption.]
Geraint Davies
Thank you for that clarification, Madam Deputy Speaker.
The focus of this debate is the differential between the lower and the higher rates—how that moves up and down and squeezes in and out, and what the implications of it are. In terms of the last intervention, the implications are that if that gives rise to great differences between the two rates across the border—or, indeed, across the Scottish or Northern Ireland border—it will generate distortions, not just on the border itself, but in terms of investment decisions, where people choose to live and work, and social security arrangements, whether they are devolved or not. It will extend beyond personal taxation because corporations coming in will bear in mind what they think their workers are going to be paying. As has been mentioned, therefore, corporation tax is part of that broader conversation.
The Government are looking to give corporation tax flexibility for Northern Ireland because Ireland has got it. We could then follow through and say that perhaps Scotland should have it or perhaps somewhere else, and we would end up again with a bidding war downwards where—as I have just mentioned for income tax—the overall corporation tax-take for the UK would go down. At a time when corporations are migrating based on research and development and access to Europe as opposed to corporation tax rates, maybe this is the wrong route to follow, when taken together with income tax.
Geraint Davies
That is an interesting point, but it does intrinsically depend on the elasticity of demand. At a time when corporation tax is already the lowest in the G8, I suggest that inward investors are not looking to Britain to lower its corporation tax and making a marginal decision to invest. They are looking at the level of research and development and the prospects of being part of Europe. One issue for inward investors is the uncertainty of a referendum ending up with us as a sort of chip shop England floating out into obscurity with UKIP and the Tories.
In my view, if we cut corporation tax again there will be a net reduction in corporation tax revenues. On the income tax issue, I have an open mind. I am just throwing forward some of the scenarios whereby we can lose out in England and in Wales and making a point, which I ask the Minister to respond to in his summing up. I want to know what analysis has been done of the potential downside to the Exchequer of Wales reducing the top rate of tax and people migrating to Monmouth? What are those numbers and what consideration has he made? My guess is that he has made no consideration, and if so we should not be hurtling ahead in this way.
Stephen Crabb
I will be very brief as there is another set of Lords amendments that we need to debate.
We spent most of this debate not debating the specifics of the Lords amendments about the removal of the lockstep. Most of the time has been spent listening to the weight of arguments, largely from Labour Members, against fiscal devolution full-stop. So we end the parliamentary passage of the Wales Bill exactly where we started: with three parties in this Chamber recognising the potential benefits to Wales of devolving a portion of fiscal powers—we are not talking about a full step down the road of full fiscal devolution, but a strong step forward —and one party resolutely digging in, trying to pretend that there is some kind of plot or conspiracy; we have had all those words and that language used before.
Alun Cairns
I suggest that the age of majority is different for different processes across the United Kingdom. It is a major constitutional change to extend the franchise for all elections. The scope of this Bill is specific about extending powers to the Welsh Assembly, and it is for the Assembly to decide. Who knows, the Welsh Assembly may not decide to extend the franchise to younger voters. It is up to it to decide on a referendum for income tax varying powers in Wales. That is the answer that the hon. Gentleman might wish to give to his constituents. This measure is not about extending the franchise to 16-year-olds, but about granting the power and the opportunity for the Assembly to decide on that basis.
Geraint Davies
It is one thing to say that there is a strong case for people of 16 to have a vote as they have a general knowledge of politics in the round and can make an informed decision, but the argument we are trying to make is whether young voters who have never voted can suddenly grasp the technicalities of setting different rates at different levels and what that implies. That is not much of an encouragement to enter the world of democracy. It is a highly technical issue. Will the Minister now at least serve notice on the fact that he will be championing a general franchise for people of 16 to vote in future elections?
Alun Cairns
I think the hon. Gentleman is underestimating the capacity of young people to grasp technicalities. I have far more confidence in younger people to be able to consider such matters. He makes an important point, but it could easily be made in another debate. This is about extending the power to the Assembly to decide, and not about extending the franchise to young people per se. We are simply devolving the power. The Assembly has had a vote on extending the franchise to younger voters, and there was a majority in favour of it, but when it comes to make its own choice specifically on a matter such as this, who knows what will ultimately come forward.
As a result, on Third Reading in the other place we tabled amendments to allow the Assembly to decide whether 16 and 17-year-olds should be able to vote in an income tax referendum. As the volume of interventions we have heard indicates, this is the first opportunity the House has had to consider the matter, and I look forward to hearing the contributions that are to follow. It is the Assembly that will decide when to call a referendum, and it is right that it should decide who can vote in it. The amendment puts that decision in the hands of the Assembly, just as it was put in the hands of the Scottish Parliament for September’s referendum.
These amendments also provide that if the Assembly resolves that the voting age is to be lowered to 16, the resulting order to be laid by the Secretary of State would also provide for the creation of a register of young voters. That register would include those who will have attained the age of 16 on the date of the income tax referendum and those age 17 who are not already listed on the register of local government electors as an attainer—that is, a 17-year-old who will turn 18 before the next electoral register is published. The important point is that those who have attained the age of 16 on the date of the poll will be eligible to vote in an income tax referendum if they appear on either the register of young voters or the register of local government electors.
I should also be clear about what these amendments do not do. They do not devolve competence over the wider franchise to the Assembly, as I have previously stated, and they do not allow the Assembly to decide the voting age for any poll other than that for an income tax referendum. The franchise for elections in Wales remains solely within the power of this Parliament. I know that there are strongly held views on both sides of the House about reducing the voting age—we heard some of them earlier. I want to reassure hon. Members who might be concerned that these amendments set a precedent for future elections that they do not. It is important to underline that they do not set a precedent. They relate specifically to an income tax referendum in Wales, and to no other poll. They give the Assembly a choice for that referendum. If and when a trigger vote is held, it would be for the Assembly to decide whether the voting age will be 16 or 18. I therefore ask the House to support these amendments.
Nia Griffith
Perhaps the Minister will clarify that later.
In my long experience as a teacher, I always found that young people are ready to engage in discussion on a range of issues, and I have every confidence that 16 and 17-year-olds can be as well informed as other adults in respect of voting options. They have access to a far wider range of media and sources of information than back in 1969, when the voting age was last lowered. Indeed, when many of us were at school, our only access to current affairs came through being encouraged to read the daily papers in the school library.
Sixteen-year-olds can join the armed forces and, with parental consent, get married. Many of them are active in the world of work, whether full or part time, and are therefore subject to employment law and health and safety law, or the lack thereof. They are subject to the law on national insurance contributions and income tax. It is wholly appropriate that the Bill should allow the Welsh Government to state in a resolution to cause an income tax referendum whether the age for qualifying to vote in that referendum should be 18 or 16. We support the Lords amendments.
Geraint Davies
In general, for the reasons that we have just heard, I am in favour of reducing the voting age to 16, both because of the increased awareness of young people and because the focus of budgetary control and discussion in the parliamentary arena will shift more towards education and investment in our future. My concern about this move in isolation, with 16-year-olds being allowed to vote on the highly technical issue of marginal tax rates and thresholds, is that the turnout in the referendum will be low, and the turnout of 16 to 18-year-olds will be extremely low and may discredit some of the excellent arguments that have been made for reducing the voting age to 16. I wonder what efforts the Government will make to educate these prospective voters so that they have an informed view about this technical issue.
I was fortunate enough to study economics at university—obviously I understand all these issues—but a lot of people aged 16 to 18 will not have had that benefit. The issues are difficult. I support the move in general, but I am concerned that the turnout will be low, so I wonder what the Government will do about that.
Chris Ruane
I welcome the Government’s proposals to give 16 to 18-year-olds a vote in a referendum on income tax raising powers. I would also like those young people to have a general right to vote in all elections —general elections, Assembly elections, local elections and other referendums.
I share the concern of the hon. Member for Brecon and Radnorshire (Roger Williams), however, as the move needs to be accompanied by civic education. My hon. Friend the Member for Swansea West (Geraint Davies) has a degree in economics, but even the great Member himself does not quite understand everything about the subject.
Chris Ruane
That is as may be.
It is incumbent on us and the National Assembly for Wales to make sure that, if young people aged 16, 17 or 18 are to have the right to vote in the referendum, they have the relevant education, background and knowledge.
Chris Ruane
My hon. Friend is taking issue with the right hon. Gentleman. There is a place for such terminology in some debates, but perhaps not those with 16-year-olds.
The issue of civics should go beyond finance and how we organise our economy. The finances of a country can impinge on wider issues such as racism, sexism and consumerism. There are threats from parties out there that are against the fabric of our British society. They want to promote the issue of race. It is fine if they want to discuss that, but it has to be done with intelligence, not bigotry.
The introduction of voting rights for young people at the age of 16 for the income tax raising powers referendum is a good idea. We should be very wary of what the Electoral Commission has done—or has not done—in the past if we are to make sure that these young people are registered. The Electoral Commission should be contacting electoral registration officers in the 22 authorities in Wales to make sure that they know how to register these young people. It should be regularly monitoring best practice from around the UK—indeed, around the world—and relaying that information to the Welsh Government in Cardiff to make sure that best practice is pursued in Wales for the purposes of registration for the referendum.
Best practice in registering young people exists in Northern Ireland. The EROs in Northern Ireland are proactive in going out to schools to register young people. We should be doing that, but the Electoral Commission has refused to replicate in the rest of the UK what is now done in Northern Ireland.
The Electoral Commission has failed to ensure that electoral registration officers obey the law. Statutorily, they must knock on the door of non-responders. If a 16-year-old was not registered to vote for the referendum, for example, the local ERO would have to go round, knock on the door and register that 16-year-old. Even though that requirement has been set out in law for many years, there has not been a single prosecution of an ERO who has broken the law. One ERO in Devon has broken the law by not conducting a door-to-door canvass for five years on the trot, but the Electoral Commission has done nothing about it.
We should make sure that the Electoral Commission warns EROs in Wales about that. We do have best practice in Wales. My own electoral registration officer, Gareth Evans, is one of best performing EROs in the whole country, but not all officers are as good as him, and we need to make sure that they all perform at the standards of the best so that young people are registered.
The Electoral Commission has failed miserably to use the most effective and efficient third-party organisations, such as Bite the Ballot, to get young people on to the electoral register. Bite the Ballot can register young people for as little as 25p per registration, but when one compares the cost of the Electoral Commission’s advertising campaign with the number of registration forms downloaded from the internet, it spent £80 per registration in 2005. The commission should therefore work with EROs in Wales, as well as with Bite the Ballot, to encourage them to ensure that 16-year-olds are registered from the outset.
This is a great opportunity, and I congratulate both elements of the coalition, especially the Conservatives. It is not in their nature to extend the vote. They are rightly fearful of young people, which is perhaps why they are not talking much about the lack of registration at national level. Registration rates in some wards in student areas of big university cities such as Manchester and Liverpool are as low as 20% following the move over to IER. I congratulate everyone, including my Front-Bench colleagues, and I hope that we will learn from this opportunity and go on to extend to 16 to 18-year-olds the right to vote in all elections.
Government Policies (Wales)
Geraint Davies Excerpts(9 years, 12 months ago)
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Owen Smith
It is nonsense to suggest that we are proposing a cut in the minimum wage. We will increase the minimum wage to £8, which will bring massive benefits for hard-pressed workers in Wales.
Geraint Davies (Swansea West) (Lab/Co-op)
On the income of the poorest workers, should we not bear in mind the impact of the bedroom tax? There simply is not smaller council housing for people to move into. In the event that people move into private housing, their rent goes up and the housing benefit goes up. In other words, it is simply a tax on the poorest for the sake of it. We will take it away when we get in, which will raise their incomes.
Owen Smith
My hon. Friend is of course right. That is why it looks increasingly as though the bedroom tax will cost the Exchequer money, not save it money. It is voodoo economics of the worst kind, because it penalises the most vulnerable people in our society. It is having an even greater impact in Wales, and the Secretary of State should acknowledge that.
Stephen Crabb
We are delivering this project. We have worked very constructively with the Welsh Government to put the deal in place. We will see trains running on the electrified service to Swansea in 2018, and on the valleys lines in 2022. Obviously, those timetables are subject to how quickly the Welsh Government move in managing the project, but they understand its strategic importance and urgency for people and businesses in south Wales.
Geraint Davies
I welcome the news of the financial deal and the certainty of the timetable, with a date of 2018 for the Swansea service. However, the economics of austerity and low wages have meant that instead of increasing by 7% this year, income tax receipts are flatlining, and the projected income from national insurance and income tax is £13 billion down, so the Chancellor will not now be able to reduce the deficit by £11 billion. Does the Secretary of State not accept that the politics and economics of low wages and hitting the poor hardest simply are not working, and debt is being driven up?
Stephen Crabb
I am not sure that I follow the hon. Gentleman’s argument. If he is expressing concern about the deficit, let me ask him why, for the last four and a half years, he and his colleagues have pursued policies with the exact objective of increasing the deficit and increasing the debt, and have argued and voted against every measure we have tried to introduce to restore stability and sanity to our national finances.
Effective transport links are a vital part of any modern economy, and few areas in the United Kingdom are more in need of the improved commuter costs, reduced travel times and more frequent train services that electrification will bring than the valleys communities. Yet again, investment has Welsh people at its heart. The Government’s programme of investment in rail infrastructure in Wales and throughout the UK is one of the most ambitious since the development of the rail network in the 19th century. By 2019, we shall have put in place more than 870 miles of electrification, whereas Labour Governments have managed less than eight miles.
Rail electrification is only one example of the constructive and co-operative relationship that we have struck with the Welsh Government to help deliver for the people of Wales. In contrast to the Labour party in Westminster, we do not posture and play silly games; we roll up our sleeves, put partisan interest aside and do our very best to help get Wales moving again.
Opposition Members may recall the NATO summit in Newport just two months ago, which was a stunning success for Wales—a great example of two Governments working in co-operation to deliver for the people of Wales. We hosted the largest gathering of world leaders in Britain’s history, putting Wales on the world stage. We worked with local business, local councils—I pay particular tribute to Newport city and Cardiff city councils—the Welsh Government and the local people, and they all delivered superbly. NATO showcased the excellent hospitality Wales has to offer and created jobs for local people, and this success paved the way for last week’s investment summit—another example of this Government working positively with the Welsh Government in the interests of Wales.
It could not be any clearer: the UK Government are putting business at the forefront of the recovery and they are delivering. I refuse to accept the Opposition’s argument that the private sector in Wales is too weak for the rebalancing of the economy to work, and I certainly refuse to accept the constant bashing the shadow Secretary of State delivers in respect of Welsh businesses.
These two historic events—the NATO summit in September and the investment summit last week—should convince the shadow Secretary of State that Wales can deliver on a scale matching any other nation in the world. Joint working on this scale demonstrates how the Welsh and UK Governments can co-operate and collaborate in the interests of the people of Wales.
Securing good quality jobs for people in Wales is a priority shared by both the UK and Welsh Administrations. Airbus in north Wales continues to be a shining example of the quality of jobs and the skills sets Wales has on offer. I was therefore delighted that investment from both Governments last week has secured 6,000 jobs in the long term at the firm’s factory in Flintshire, in the constituency of the hon. Member for Alyn and Deeside (Mark Tami).
The Parliamentary Under-Secretary of State for Wales (Alun Cairns)
I thank all Members for their valuable contributions. It is fair to say that the tone of the debate changed somewhat from the negative one that prevailed at the outset to the more measured contributions by the hon. Members for Islwyn (Chris Evans), for Aberavon (Dr Francis) and for Ogmore (Huw Irranca-Davies).
This coalition Government inherited an economy that was on its knees. Throughout the past decade, we have had an unstable model for the economy. There was an over-reliance on the public sector, the financial services sector and economic growth from London and the south-east. In spite of the crocodile tears and the synthetic anger that we saw from the shadow Secretary of State, the situation was even more perilous in Wales. One of the saddest legacies that we inherited from the previous Administration was that Wales was the poorest part of the United Kingdom, and that was after 13 years of control from Labour Members. Ultimately, their economic model came crashing down.
We have a long-term economic plan that is working and delivering the recovery for Wales. It is based on investment in infrastructure—both digital and traditional —the development of skills, welfare reform, and making Wales and the rest of the UK a more competitive environment for business, which is something that some Labour Members have recognised today. I pay tribute to my hon. Friend the Member for Aberconwy (Guto Bebb) for being a strong and doughty champion for small businesses and the self-employed in his constituency.
Geraint Davies
Does the hon. Gentleman not accept that the British economy grew by 40% in the 10 years to 2008, before the banking crisis? Since then it has virtually flatlined, which is why his party has borrowed more in four years than the Labour party did in 13. It is a disaster.
Alun Cairns
I will happily repeat that, in 1997, Wales was not the poorest part of the United Kingdom. But between 1997 and 2010, Wales sadly and tragically became so. That was when the hon. Gentleman was a Member for Croydon Central, before he decided to come back home to Wales, so he will have played a part in the policies that led to such a devastating consequence for Wales and the Welsh people, and that is something for which he should apologise. Investing in infrastructure is key to our economic plan, and Wales has rightly received significant sums for some major projects.
I cannot mention railways without paying tribute to my right hon. Friend the Secretary of State for Wales for his hard work and persistence in seeking a solution to secure the electrification of the line all the way to Swansea and of the valley lines as well. That is the largest investment in railways in Wales since Victorian times. Wales was sadly left in the slow lane when it came to railways. After 13 years of a Labour Administration, Wales, Moldova and Albania were the only three countries in Europe that did not have any electrified railways. Wales is now set to benefit from rail investment worth £2 billion. Our north Wales link to Liverpool is being renewed through the Halton Curve, which is welcomed by all businesses in north-east Wales and north-west England. Crewe is becoming a hub station for HS2, which offers new opportunities to the whole of north Wales, ensuring that we all benefit from this major UK strategic investment.
It was 12 months ago that my right hon. Friend the Chancellor announced a funding package to enable the upgrade of the M4 around Newport, which was something for which businesses had been calling across the whole of the south Wales corridor. That project was cancelled by the previous Administration in 1997 after my right hon. Friend, the current Leader of the House, committed to it when he was the Secretary of State for Wales. The project was cancelled by Labour but reinstated by the Conservatives.
I was sorry that the hon. Member for Wrexham (Ian Lucas) did not welcome the £212 million investment for a new prison in Wrexham. Even after it is up and running, its operational activity will involve £23 million being pumped into the economy each year.
Wales is playing its part in our energy infrastructure upgrade after years of neglect that led to the risk of the lights going out throughout the United Kingdom.
Wales Bill
Geraint Davies Excerpts(10 years, 7 months ago)
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The Secretary of State for Wales (Mr David Jones)
I beg to move, That the Bill be now read a Second time.
The legislation before the House today delivers an ambitious package of devolved powers for Wales, including powers providing incentives and opportunities for the Welsh Government to grow the Welsh economy and increase prosperity; powers making the devolved institutions in Wales more accountable for raising some of the money they spend; and powers that make devolved governance in Wales fairer.
The Government have a strong record on Welsh devolution. We have delivered a referendum on full law-making powers, established the Silk Commission on Devolution in Wales, which has since published two comprehensive reports, and have now introduced the first Wales Bill in more than eight years. The Bill implements most of the recommendations that the Silk commission made in its first report. I wish to record my thanks to Paul Silk and his commissioners for the dedication and hard work with which they reviewed the case for devolving fiscal powers to the National Assembly.
The powers devolved to Wales by this Bill will, for the first time, make the devolved institutions in Wales—both the Welsh Government and the Assembly—directly accountable to the electorate for raising some of the money they spend. The Bill will give the Welsh Government more levers to enable it to deliver sustainable economic growth in Wales. It will also deliver borrowing powers that will allow the Welsh Government to invest more in critical infrastructure, not only in transport links such as the M4 and the A55, but in schools and hospitals.
The Silk commission included commissioners from all four political parties in the Assembly, and reached unanimous agreement on its recommendations. I hope that the same spirit of co-operation and broad consensus will extend to all parts of this House today in respect of the Bill.
Let me turn to the detail of the legislation. The Bill provides that the Assembly will assume responsibility for devolved taxes. These are, initially, a tax on land transactions and a tax on disposals to landfill, replacing stamp duty land tax and landfill tax in Wales. The commission recommended the devolution of both taxes. This will put new economic levers in the hands of the Assembly and the Welsh Government.
Geraint Davies (Swansea West) (Lab/Co-op)
What does the Secretary of State say to the Mayor of London, Boris Johnson, who has now asked for stamp duty to be devolved to London, which would give him £1.3 billion? Is this not a charter for the proliferation of all sorts of competitive taxes across different parts of the United Kingdom?
Mr Jones
It seems to me that that is a concern of the Mayor of London and does not really fall within the scope of today’s discussion.
Our proposal will put new economic levers in the hands of the Assembly and Welsh Government, while also providing independent streams of revenue to facilitate borrowing. It will help Welsh Ministers to grow the Welsh economy and ensure that its performance has a direct impact on their budget.
Mr Jones
What I will say is that we made it absolutely clear that this Government were paying, directly and indirectly, for the upgrade of the main line as far as Swansea and for the valleys lines. I think that if the hon. Gentleman has a word with his friend the First Minister, he will find that there was an exchange of correspondence between the two Administrations which made the funding arrangements very clear, as did an e-mail from the Office of Rail Regulation.
Mr Jones
No; I will make some progress.
The Bill also provides for a referendum to be held in Wales on the devolution of an element of income tax, should the Assembly decide to call one. The Silk commission recommended that income tax devolution should be subject to a referendum, as it was in Scotland in 1997, and the Government agree with that recommendation. As I have said in the House on several occasions, I should like the Assembly to call a referendum as soon as it is able to do so, and I personally would support a yes vote in such a referendum. It would make the Welsh Government, and the Assembly, significantly more accountable to the people who elect them.
Mr Jones
No, I will not give way.
Subject to the outcome of a referendum, the legislation provides for the introduction of a Welsh rate of income tax. The main UK rates of income tax would be reduced by 10p for Welsh taxpayers, and the Assembly would be able to set a new Welsh rate—a whole number or half a whole number—which would be added to the reduced UK rates. The rest of the income tax structure would remain a matter for this Parliament.
The Silk commission estimated that reducing the Welsh rate of income tax by 1p would cost the Welsh Government around £185 million, without taking account of any gains resulting from people moving to Wales to take advantage of lower tax rates. That is not an insignificant amount of money, but lower rates of income tax would boost the spending power of working people in Wales and bolster growth in the Welsh economy. Stronger economic growth in Wales could deliver a real boost in tax revenues, providing the Welsh Government with more resources to invest in devolved services and infrastructure across Wales.
Some Opposition Members, most notably the hon. Member for Pontypridd, have suggested that the devolution of an element of income tax is some sort of unspecified coalition trap, set to ensnare the Welsh Government.
Geraint Davies
May I ask for clarification on something, because my right hon. Friend the Member for Neath (Mr Hain) talked about the levels up to the current rate? At a marginal tax rate of one extra penny, the gross value added in Wales is 70% that of the UK. My understanding is therefore that the extra penny charged locally in Wales would generate less income than an extra penny charged across the UK and then transferred over to Wales—so we would lose out, would we not?
Mr Jones
For the reasons I have explained, there would be no loss. May I remind the hon. Gentleman, as I reminded the right hon. Member for Neath, that there would be no compulsion on the Assembly Government to change the rate of tax? This is simply an issue of whether or not the competence should be devolved. Once it is devolved, it is then a matter for the Assembly to decide what the Welsh rate of tax should be.
Owen Smith
That is a very good point that we ought to consider. I would, of course, not support parliamentary or Assembly expenses being deployed for party political reasons.
I will move on to the minor taxes, particularly stamp duty land tax and landfill tax. We heard very little detail from the Secretary of Sport—[Interruption.] Well, there was very little sport there for anyone to have, to be perfectly honest. Hopefully we will have a bit more sport with the Secretary of State now. We will support the devolution of stamp duty land tax and landfill tax to Wales. However, there are many questions about how that will be implemented, so we will seek clarification during the passage of the Bill. Perhaps he will take note of some of these points now so that his Minister can respond to some of them later.
The first point concerns the suggestion that properties on the border between Wales and England would somehow be split, with stamp duty land tax being charged on the English portion and whatever its successor tax is being charged on the Welsh portion. It is an interesting concept. Will the Secretary of State tell us at some point during the passage of the Bill how many such properties there are on the border, given how populous it is? Will he tell us how the Government propose splitting those properties, as in many instances they are houses straddling the border? Will there be a number of bedrooms in England and a number in Wales? We know that the Government are keen on taxing bedrooms.
The second point relates to the cost of devolving that to Wales. We understand from the Bill that the Welsh Government will be asked to pay for the administration of any new tax, which is fair and just, and that that will be offset by any reduction in the cost to Her Majesty’s Government of administering the taxes as they had previously done in Wales. Given that the Secretary of State and the Treasury—this was confirmed by the Exchequer Secretary—have conducted little or no analysis of the impact of those various schemes in Wales, will he tell us how much he thinks it will cost the Welsh Government to administer and how much the offset will be?
On the even more important question of the reduction in the block grant that will come about as a result of the changes—it will be reduced by around £200 million and reviewed periodically—will the Secretary of State comment at some point during the Bill’s passage on the volatility associated with stamp duty land tax, because that figure of £200 million varies radically over time? Will he also tell us how he will calculate any differential in the rise and fall of house prices in England and Wales? By way of illustration, stamp duty land tax revenues in Wales have varied wildly over the past 20 years. They were £20 million in 1997, up to £95 million in 2003 and £130 million in 2005, and then down to £55 million in 2008-09 and £65 million last year. It is an extremely volatile tax, so I would be intrigued to know how the Treasury will account for it in any indexed reduction in the block grant, because that will have a significant impact on both the borrowing powers and, potentially, the revenues of the Welsh Assembly Government.
Geraint Davies
As I am sure my hon. Friend knows, over the past year house price inflation has been 13.2% in London and 6.8% across the UK. As I mentioned earlier, Boris Johnson is asking for stamp duty in London, where historically prices have always gone up faster. Is my hon. Friend at all concerned about the differential impact of stamp duty revenues, which he has alluded to already, plus pressure from elsewhere in the UK to have that tax resulting in a less fair and more complicated and confusing situation?
Owen Smith
That is a legitimate question. I have said previously that although we will support the devolution of stamp duty land tax and landfill tax and the putting of the income tax question to Wales, we remain concerned about tax competition. Over time, that might result in other parts of Britain wishing for similar degrees of autonomy, thereby reducing the ability of the central Exchequer to pool resources, share risk and redistribute from wealthier to less wealthy parts of Britain. That abiding concern of mine needs to be considered.
Owen Smith
No, I am going to move on. If the hon. Gentleman holds his water, I shall come back to income tax later.
Landfill tax is relatively uncontroversial save for the link to borrowing, to which I shall come later. There is also the link to the landfill communities fund. We heard nothing from the Secretary of State about that, but it is paid to communities with landfill sites within their boundaries. Has the Secretary of State done any analysis about the value of that fund to Wales? How much is collected and how much has been spent in Wales? How many landfill sites are there in Wales in comparison with England?
The Secretary of State is proposing that the landfill tax community fund also be devolved to Wales and that Wales should become responsible for meeting the costs of implementing a revised Welsh landfill scheme. Given that elsewhere in the Bill, the Secretary of State proposes that HMRC duties should not be replicated in Wales, why does he think the implementation of the landfill communities fund should be devolved? Is that yet another example of his wishing to pass responsibilities to Wales without there being the requisite resources?
We absolutely support the extension of borrowing powers to Wales. They are vital to make up for the £1.7 billion cut in funding for Wales—an almost 40% cut in capital funds—that the Government have implemented since 2010.
It is crucial that the Welsh Government be given the ability to borrow in order to try to back-fill the enormous holes in their budget left by the Secretary of State and his colleagues.
There are two measures relating to borrowing in the Bill, both with limits of £500 million—one to cover volatility in tax receipts and the other to cover capital. I wish to talk about the latter. The Silk commission, whose recommendations the Secretary of State keeps telling us he has largely stuck to, said that £1.3 billion should be devolved to Wales for capital borrowing, but the Bill limits it to £500 million. The Secretary of State says, as he repeated earlier, that the rationale for that is to draw a connection between the amount of money devolved to Wales—the volume of taxes—and the volume of money that might be borrowed. The Secretary of State says, as does the Command Paper on the Bill, that that is just like the position of Scotland. In fact, the Command Paper goes further than he did in saying that the Bill is generous given that in Scotland over £5 billion of taxes are devolved and £2.2 billion of borrowing is allowed—£220 million each year—and that if a similar ratio were applied to Wales, then Wales would get not £500 million but £100 million.
The problem with that rationale is that it is not true. The Scotland Act does not draw a connection, as the Secretary of State suggests, between the amount of taxes devolved to Scotland and the amount of borrowing. The Command Paper associated with the Scotland Bill said:
“Scottish Ministers will be allowed to borrow up to 10% of the Scottish capital budget any year to fund capital expenditure”—
that is, £230 million of an overall stock of £2.2 billion. The Scotland Act drew a clear correlation between the size of the capital budget and the amount that could be borrowed. The Command Paper for the Wales Bill, which the Secretary of State said was just like that for the Scotland Bill, reads:
“Specifically, the Scottish Government’s capital borrowing limit is £2.2 billion while it is taking on responsibility for tax revenues that are currently worth around £5 billion. Hence the ratio between the two is slightly less than 1:2. Applying the same tax/borrowing ratio in Wales would have given the Welsh Government a limit of around £100 million.”
The crucial question is why the Government have moved the goalposts for Wales. Why cannot Wales have the same rationale for its volume of borrowing as the Scots? That would give us about £1 billion-worth of borrowing—between £1 billion and £1.5 billion—rather than the paltry £500 million on offer.
Moreover, given the volatility of all tax returns, how sensible is it for the Government to draw a direct line between the receipts that Wales receives and the amount it can borrow? What if those receipts declined? What if we were in another recession? We would therefore see, I presume, a reduction in the amount of borrowing that Wales could undertake, which would frankly be economic stupidity.
Geraint Davies
Does my hon. Friend agree that there is a danger of moving the focus from Wales having its fair share of capital investment—for example, on transport, where there is £5,000 per head for transport in London and about £500 in Wales—because as soon as we get more borrowing powers the Government will say, “You pay for the valleys line electrification—you can borrow the money”? Is this not an excuse for making Wales pay out more from less?
Owen Smith
That is absolutely right. That is what we have been most concerned about throughout the passage of this Bill, and we describe it as a trap. The Tory party is seeking to wash its hands of Wales, and it is not interested in funding capital expenditure properly in Wales. We have therefore seen that the valleys line promise was not worth the paper it was written on, and the words of the Prime Minister and the Secretary of State were equally worthless. We are deeply concerned that this will be an excuse for the Tory Government to ask the people with the shallowest pockets in Britain to put their hands deepest into them to fund things that traditionally would have come through general taxation and from the wider benefits of our economic union.
On income tax, let me be clear: we are and remain opposed to tax competition across Britain. We believe in an economic and social union and in the ability of the central state to pool resources, share risk, and share rewards. That is especially true in Wales, as we are a net beneficiary—indeed, the greatest one—of that principle of progressivity and risk-sharing across Britain. That is why we remain opposed to the principle of undercutting one part of Britain with lower taxes in another, which is what the Secretary of State is proposing. We agree with the Government that the principle of progressivity ought to be retained. That is why we agree, broadly speaking, with the notion of the lockstep to tie bands together. But we have deep and abiding concerns about the hidden agenda that the Conservative party has, along with its nationalist colleagues, for greater tax competition in Britain.
We have reason for that concern, because the plans are not terribly well hidden. We have already heard that the leader of the Welsh Conservative group wishes to cut just the top rate of tax and that the economic adviser to the leader of the nationalist party in Wales wishes to do the same, and cut taxes only for the wealthiest in Wales. If we need any further illustration, we simply have to look at this Government’s record: they introduced a millionaire’s tax cut even as they increased VAT, which is paid, regressively, by the least well-off people in Britain.
Mrs Gillan
I am not going to trade insults with the right hon. Gentleman. He has 57,823 constituents on the roll, as of 1 December 2010. I have never, ever said that a Welsh MP was a second-class MP, as well he knows. However, if he chooses to go down that line, I have to say that the boundary change and the reduction in the number of MPs should have been carried out and I am sorry it was blocked by vested interests.
Let me turn to the financial provisions in the Bill. I have long thought that the Welsh Assembly Government—soon to be known as the Welsh Government—should understand better and share the responsibilities of tax raising that go with the luxury of spending taxpayers’ money. I therefore welcome the steps in the Bill to bring that sense of responsibility and stronger financial accountability for Welsh Assembly Ministers, as well as the option for Welsh residents to make their views on tax powers known through a referendum.
Geraint Davies
I have already made the point that the secret plot is to reduce the overall block grant and then give the powers to Wales, but is not part of that plot, as the right hon. Lady is now revealing, to reduce the number of MPs, lower the voice of Wales in this Chamber asking for a fair share of national assets and say, “You can have fewer MPs and you can raise your money yourself,” so that we have a gagged set of Members here? That is all part of what she is saying, is it not?
Mrs Gillan
I said that there would be squealing about what I was about to say before I started that passage of my speech, and indeed there has been. The hon. Gentleman really does not do me justice with those remarks.
It has always been the case that no matter how the annual financial settlement fell, it was always possible for the Assembly to aim criticism at Westminster for tightening the purse strings. No matter where the responsibility actually lies for the poor outcomes, the finger has always been pointed towards Whitehall and Westminster. The provisions in the Bill move towards reducing the opportunity for abrogating responsibility, which, particularly in the fields of health and education, lies squarely with the Labour Administration in Cardiff Bay.
The new funding framework moves from almost exclusive block funding to two revenue streams. The block grant part will remain dependent on the Barnett formula, which, even though I believe it is nearing its sell-by date, should remain firmly in place as long as we are required to continue reducing the deficit left by the last Labour Government, particularly in the light of the convergence arrangements from the October 2012 agreement. The new funding stream of business rates and the Welsh landfill and land transaction taxes—coupled with a Welsh rate of income tax following an affirming referendum—means that the Assembly will now have a real incentive to grow the economy and more responsibility for funding its spending. However, it also means that the Assembly will have an independent revenue stream to support capital borrowing—a welcome flexibility, particularly for making decisions on infrastructure funding.
I also welcome the flexibility that the Treasury is giving to the Welsh Assembly Government on borrowing to start the much-needed improvements to the M4, as well as the cash reserve powers. The UK Government will provide the Welsh Government with the ability to pay surplus tax revenues into a cash reserve that can be drawn on when future revenues are lower than forecast. This will provide the Welsh Government with a mechanism to manage the volatility in their budget resulting from the new tax powers.
I also welcome some of the inter-governmental arrangements that spring from the Bill, including the Government’s response to the Silk commission’s part I report, in recognising the need to ensure that institutional and governance arrangements continue to be appropriate as changes are made to the financial powers of the Assembly and Welsh Government—in particular, the fact that the Office for Budget Responsibility has agreed to the Government’s formal request that it starts to forecast Welsh taxes in the autumn statement 2014 and biannually thereafter. I look forward to the Wales Office letting us know the details of the OBR’s relationship with the Assembly and the Welsh Government, which I understand will be subject to further discussions.
The Government have also agreed with the Welsh Government to set up a bilateral ministerial committee to oversee the transfer of these financial powers. I was pleased to note that an early priority for the Committee would be the consideration of further details relating to the operation of the new budgetary arrangements—including the block grant adjustments—that will accompany tax devolution, and the cash management arrangements.
I have long believed that there should be better co-operation between the Assembly and the Government, and I hope that in the future the Wales Office will consider better arrangements both inter-departmentally, within the Government, and with the Assembly. One of my great hopes is that there will eventually be a forum in which Assembly Members and Members of Parliament could sit at the same time and debate subjects that are of interest to Wales. I give the Bill a warm welcome, and I shall be following its progress in the House, because it is a major constitutional Bill for Wales.
Let me end by paying a very special tribute to a man who for many years was my “shadow” in the House of Lords, Lord Roberts of Conwy. Back in 2008, he was asked by the Prime Minister and me to conduct a review of devolution in Wales. Wyn Roberts was a terrific colleague, and he carried out that review painstakingly and after consulting a broad spectrum of opinion. The genesis of much of the Bill, and indeed the Silk commission, was in his work. Following the publication of the report, he said:
“The question of governance in Wales will eventually be settled in the broad public interest and not in anyone's partisan interest.”
I think that the Bill is another building block of Welsh governance, and it has, I hope, been presented to the House in the spirit of Wyn’s wish that the broader interest be served. I wish it a speedy passage through the House, and I offer my congratulations again to the Ministers, the Department’s officials and the Silk commission, who have, I believe, produced it in the interests of Wales.
Mr Harper
I have not had time to study that proposal in detail, but on the face of it allowing patients anywhere in the United Kingdom to have choice is very sensible. That is not a policy that the Welsh Government prefer. I think they said in a letter they sent to me that they prefer “Patient voice, not choice.” They will not allow people to have choice, but they can have a voice, which will then be ignored as the Welsh Government proceed as they want to anyway.
Mr Harper
I will make a little progress before giving way again.
Let me divert a little to address the points on which the right hon. Member for Neath (Mr Hain) focused his speech, which relate to clause 2. I did not follow his argument at all. Although he was making a point about the amendment in the Bill, the thrust of his speech seemed to be a criticism of how the list system operates in Wales. He said that it was a system that we could find only in North Korea, but then he rather shot himself in the foot when he had to admit that he was the system’s author. I know that he is a supporter of proportional representation—
Geraint Davies (Swansea West) (Lab/Co-op)
It is always a pleasure to follow the hon. Member for Aberconwy (Guto Bebb). It is interesting that he should mention Ukraine at a time when Victor Yanukovych is recommending referendums across Ukraine for more autonomy for its regions.
The Bill is, at best, a pig’s breakfast, but when there is nothing else on the table I guess that the parties will coalesce around it. To be fair, one reason why it is a pig’s breakfast is that the constitutional settlement across the United Kingdom is diverse. The settlements in Northern Ireland, London and Wales—
Geraint Davies
I am coming to Monmouth in a moment—and Scotland are very different. It is worth bearing in mind that it might not be timely to make concrete decisions when we do not know the verdict of the Scottish people on becoming independent. We do not know whether that decision will gather pace for the devolutionary process in Wales.
David T. C. Davies
I just wondered whether the hon. Gentleman could clarify whether the Bill is a dog’s breakfast or a pig’s ear. I have never heard of a pig’s breakfast before.
Geraint Davies
It is a new constitutional phenomenon that I have just introduced. I am sure the hon. Gentleman will delight in it, being a person who indulges in that sort of thing.
If I may reference Scotland for a moment, rational and emotional powers are at play. There are people who thought that Scottish independence was going to go down the tube because of currency, the EU and inward investment, but now, of course, the wind is blowing in a different direction. The people of Scotland feel that they are being told that they cannot live without us and there are the emotions of divorce, so there is a mixture of rational economic argument and emotion. The feeling in Wales is that, rather than facing years and years of Tory austerity, we want to decide our own thing. The reality is that if Scotland leaves the UK we will end up with more Conservative Governments, because of the residual demography, and that will change the appetite for devolution.
Plaid Cymru would obviously like Wales to go down the road of independence and it sees this as a stepping stone. It talks about fair deals and fair funding for Wales even in the knowledge—this is an important point on what is behind the Tory agenda, too—that the difference between taxes raised versus expenditure in Wales is about £15 billion. The Conservative plot is to reduce the number of Welsh MPs, give borrowing and tax raising powers to Wales and forget about giving Wales its fair share of both revenue and capital. In the case of Scotland, the difference, coincidently, is also about £15 billion, but it currently makes up that difference in oil.
We therefore have a situation where it is convenient for everybody to go along this path, but the people of Wales want fair funding now. What that means in relation to the Barnett formula, as has been mentioned, is an extra £300 million a year. Wales should have the same needs-based formula as the English regions. It is not difficult to work that out, so that should just move forward.
With regard to capital, like other parts of Britain outside London and the south-east, Wales gets a small fraction of the investment per head that London gets—London gets about £5,000 per head and Wales gets about £500 per head. That is a problem for everyone outside London. If we migrated some of that investment outside London, we could put pressure on the system to make it more balanced. Britain is quite unusual in that respect. In Germany, for example, Berlin does not dominate Munich or Dusseldorf, so there is no necessity for that balancing.
If the response in Wales is, “Well, we are not getting enough money to do our own thing, so we will have to borrow it,” who will pay for that borrowing? That is the real fear, because there is no money on the table for that. Then there is the false analysis that the borrowing needs to be hypothecated against an income stream from income tax or other taxes, and that the amount of borrowing should be determined by the size of those streams. Frankly, that is just false. It is not the case that in order to justify more borrowing we need more income tax devolution. It is the case that the amount of money Wales will get in future, as the Secretary of State argues, will be broadly the same; it will not be distorted by this method.
My right hon. Friend the Member for Neath (Mr Hain) and I fear that we will end up with less money over time because the tax take per penny of income tax is 70% of what it is in England. If we assume for a moment that the global amount of money remains the same, then where does the extra money for paying back the borrowing come from? Well, it comes from nowhere. The reality is that the money would be paid back by top-slicing revenue, which means top-slicing the amount of money for services. That is what will happen if Wales does not get its fair share of UK funding.
We have already seen the signs and symptoms of the stealthy stranglehold that the Tories want to put on Wales, with the recent U-turns on the valleys lines. All of a sudden we hear, “Here you are. You can borrow some money.” A moment ago there was going to be electrification from Paddington to Cardiff and then through to Swansea, including the valleys, but all of a sudden we are told, “Well, the small print states that the Welsh Assembly has to do that, and it can do that by borrowing.” In fact, the commitment to go through to Swansea is not even fulfilled. The Government said that they would electrify the line from Paddington to Cardiff and then from Bridgend to Swansea, but they will not do the bit in the middle. If the Welsh Assembly Government say that they will not do that because they have another priority, which they might have, as is their right, we will have a bit in the middle that is not electrified, and that is not electrification through to Swansea, so the Government have broken their word.
Albert Owen
I am a little confused by my hon. Friend’s terminology, because he talks about small print. I do not see any small print. The Prime Minister made a statement to the BBC in which he said that he would pay for electrification to Swansea and the valleys. That was in his statement, not in any small print.
Geraint Davies
Perhaps I have been misinterpreted. There was no small print. There was a big announcement, as my hon. Friend has just said, by the Prime Minister, the Secretary of State and others. The small print I was referring to was the weasel words in the long-winded document that was exchanged between Ministers, which presumably changed the headline proposition. It had been, “We will provide this,” and then the Minister argued, “When we went through it all I found here on page 23 that it says that actually it is interpreted in this way, so according to our lawyers the Welsh Government will have to do that.” That is not what we heard on the radio.
Mr David Jones
The hon. Gentleman will know that there was a letter, signed by Carl Sargeant, the relevant Welsh Minister, confirming that there was an agreement. Is that small print?
Geraint Davies
The Prime Minister said that the UK Government would pay for the electrification of the railway lines, which are essentially UK infrastructure. I think that it is disgraceful, frankly, that while £52 billion is to be spent on HS2, the Secretary of State will not even fight for that extra bit of money for Wales. We desperately need it. He should resign.
Owen Smith
I just want to clarify for the House that the Prime Minister said:
“It’s this government”—
I presume he means Her Majesty’s Government—
“that’s putting the money into the electrification of the railway line all the way up to Swansea and, of course, the valley lines.”
Geraint Davies
Which valleys was he talking about?
The Secretary of State, in concluding his lamentable speech, said that this bit of legislation would make Wales more competitive, fairer and more accountable and that it would deliver economic growth. If I believed that, I would support the Bill wholeheartedly, rather than in a lukewarm fashion. What is really involved is a “Wonga economics” trick—“You can borrow all this money. Don’t worry, it’ll be all right. You can spend it on the railways and roads. Spend some more and we’ll give you some more and if you tax more you can have more,” and all that. Globally, however, there will not be any more; the money has to be paid back. There will be less overall revenue for core services such as health and education.
Members will be glad to hear that I will not speak for much longer, as people want to wind up the debate, but I want to say that the whole essence of devolving income tax is about competition and confusion. Labour Front Benchers have said that we do not want a competition, and I think it intrinsically wrong to generate more and more different sorts of tax competition across the United Kingdom. It is not healthy and it generates confusion for inward investors. It is not something that we want.
I mentioned the smaller taxes such as stamp duty, which are seen as peripheral and unimportant. However, Boris Johnson has jumped on his hind legs and started squawking that he now wants stamp duty on the back of what we are having in Wales. He wants £1.3 billion. The issue is undermining the national accounts of the United Kingdom. It is no longer about small fry and throwing crumbs to Wales; it is distorting the stability of public economics in Britain, and we need to think about that carefully.
One problem has been that the Silk commission was made up of people who know about the Welsh Assembly and have been inside the system; they were talking to each other and to small groups of people in cold church halls. Questions that were not asked or answered include, “What will happen in a few years’ time if London or Yorkshire wants this? What will it look like?” Some people mentioned cross-border health and education; we can add cross-border tax differences to that. Will such things be a help or hindrance to the people of Wales? There is by no means a clear answer.
The Tories are not generating a regionally balanced economic growth perspective; the majority of economic growth is funded by mortgages and consumer debt in London and we are again seeing the emergence of a twin-track economy. Where will the devolution of different taxes at different rates to different parts of the UK end up, when greedy London wants more than its fair share, gobbling up the core of the resources for Britain as a whole?
Wales is increasingly being pushed into being decoupled from the speed boat of London, which will zoom away. We need to have our fair share of economic stimulus and investment and to a large extent what I have been discussing is a decoy from the real matter at hand, which is to get the right money for Wales now before we talk about the intricacies of tax devolution.
Stephen Crabb
That is not what I am saying. A key principle of the mechanism is creating the incentive for the Welsh Government to create the conditions for the economy in Wales to grow, so that they can reap the fruits and benefits of a growing Welsh economy. The protection kicks in when there are shocks and changes that affect the overall UK tax base. When changes would otherwise have a detrimental impact on Welsh Government revenues, Welsh Government revenues are protected because of the indexation. I shall circulate further information to right hon. and hon. Members.
Geraint Davies
Is the Minister saying that there are only upsides? Is he saying that, if the Welsh Government do well and grow the Welsh economy, they get a greater share of overall UK revenue, and if things go the wrong way from their point of view or the UK point of view, they still get that share or more and it never goes down? I cannot believe that.
Stephen Crabb
There is a lot of upside in the proposals, which I hope Opposition Members have the intelligence and foresight to recognise. In fact, the Silk commission calculated that Wales would have been better off under the system we are proposing had it been in place in the past decade. That answers the question asked by the right hon. Member for Neath—he asked whether Wales will be better off. The Silk commission estimated that, had the system been in place in the past 10 years, the people of Wales would have been better off. I hope that that also provides assurance to the hon. Member for Swansea West (Geraint Davies), who sees the Bill as a nasty plot and conspiracy.
Some Opposition Members have sought to link the devolution of income tax to so-called fair funding. That is another diversion they are throwing up, and another barrier they are erecting, so that they do not have to contemplate greater and truer accountability for the Government in Cardiff Bay, which they would prefer not to contemplate. The joint statement from the UK and Welsh Governments in October 2012 established a clear process to review relative levels of funding for Wales and England in advance of each spending review. The announcement recognised that levels of funding for Wales relative to England were not currently converging, but that, if convergence in funding is forecast to resume during the period, both Governments are committed to discussing a sustainable and fair solution. The fair funding mechanism agreed with the Welsh Government in 2012 worked very well in practice ahead of the last spending review. I hope that that, too, reassures hon. Members.
Current funding levels are well within the parameters recommended as fair by the Holtham commission. Safeguards are in place to address convergence if and when it resumes. Therefore, the funding regime for Wales should not be seen as a barrier to income tax devolution. That is one more smokescreen the Opposition are throwing up to disguise their basic opposition to, and dislike of, fiscal devolution.
A number of hon. Members mentioned borrowing powers for capital investment. There is clearly a broad consensus on all sides in favour of giving the Welsh Government the ability to borrow to invest in Wales’s infrastructure. Some Opposition Members want the Welsh Government to be able to borrow more than the £500 million permitted under the Bill—some suggested they should be able to borrow a virtually unlimited amount. The UK Government have set the limit considerably higher than we would have if we had used the tax and borrowing ratios we used in the Scotland Act 2012. Had we done that, the borrowing limit would be closer to £100 million, based on the taxes devolved in the Bill. We have set a higher capital borrowing limit of £500 million initially, but with flexibility for that limit to be increased if the Welsh Government gain access to further independent streams of funding, such as an element of income tax. If Opposition Members want to see the Welsh Government have a greater borrowing capacity, they should join us in campaigning for a yes vote in an income tax referendum.
What we are not prepared to accept is reckless borrowing without the means of paying that money back. Borrowing must be commensurate with the independent revenue streams. The Government have not worked hard over the last four years to build a reputation for financial prudence and competence, and tackling Britain’s deficit effectively, only to throw away that hard-earned reputation by allowing the Welsh Government to borrow beyond their means.
The hon. Member for Swansea East (Mrs James) said that she would welcome sight of the “workings-out”—I think that was the phrase she used—to help her to understand how we arrived at the £500 million borrowing limit. I suggest that she looks at pages 26 and 27 of the Command Paper that was published alongside the Bill, which is clear on the rationale and the basis for deciding on the £500 million figure. It is higher than would have applied if we had stuck closely to the Scottish ratios, and that is because we want the Welsh Government to crack on with the job of improving the M4. That was agreed with Welsh Ministers, and it gives them the tools to make progress quickly and to tackle that major infrastructure problem.
The hon. Lady also asked why Northern Ireland’s position was different. Northern Ireland is not a good benchmark for hon. Members to use in comparing borrowing regimes. The Northern Ireland Executive exercise many of the powers and responsibilities that are exercised by local authorities in other parts of the UK. In particular, they collect the equivalent of council tax and business rates and have borrowing powers similar to those held by local authorities.
Opposition Members did not talk much about borrowing, which will have a huge, transformational impact in allowing the Welsh Government to invest in new infrastructure in Wales, and nor did they talk much about the impact of lowering taxes in Wales, creating a low-tax economy and creating new jobs. They saved most of their energy and time for discussing the ending of the ban on dual candidacy. In fact, the right hon. Member for Neath used large chunks of a speech he made in 2006, if my memory serves me right. It has been like “Groundhog Day” as Opposition Members—although I am sure they were reflecting the concerns they have heard in their constituencies—manned the barricades to oppose a sensible measure—
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Geraint Davies Excerpts(12 years, 9 months ago)
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Mrs Gillan
Yes. We are aiming to be the most business-friendly Government in history. By scrapping new regulations and with the red tape challenge, we have thrown down the gauntlet to all those organisations that put barriers in the way of business. I wrote to the First Minister about that some time ago—I am still waiting for his response, but I am sure he would share my sentiments that we need to encourage and not stifle business.
Geraint Davies (Swansea West) (Lab/Co-op)
At a time when unemployment is at a 17-year high and more people than ever are forced into short-term work, is the Government’s decision to withdraw working tax benefits from low-paid, part-time workers an example of reducing administrative burdens, or is it simply an example of the Government kicking someone after they have thrown them on the ground?
Mrs Gillan
I hope the hon. Gentleman has noticed that in creating the most competitive tax regime in the G20, which is the aim of the Treasury and this Government, we have also taken the lowest-paid out of tax. That will make a great difference to families and individuals across the UK, including in Wales.
Oral Answers to Questions
Geraint Davies Excerpts(13 years ago)
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Mrs Gillan
It is increasingly difficult when relying on another Government to implement a policy, but I remain optimistic because I want the message to go out that Wales is open for business. Enterprise zones will give an advantage to businesses going into these areas and create jobs, and there are good forecasts for the number of private sector jobs to be created by 2015, so I walk in hope. I encourage the Welsh Government to do everything that they can, and I stand ready to help them.
Geraint Davies (Swansea West) (Lab/Co-op)
The funding available for the Bristol enterprise zone is nearly as much as the entire amount for enterprise zones for the whole of Wales. How can the Secretary of State justify supporting that alongside the tax on trade and investment in Wales that the Severn bridge toll represents? Will she resist this massive investment at the doorway of Wales that would stop inward investment into Wales?
Mrs Gillan
The amount given to the Welsh Government as a consequence of what is being spent on enterprise zones in England is calculated in exactly the same way under our Government as under the previous Government. The Minister in Wales has received £10 million towards enterprise zones, but she also has a budget of nearly £15 billion at her disposal, and she can decide how she spends that. I encourage the hon. Gentleman to encourage her to look at what she can do in those enterprise zones to encourage businesses.
Commission on Devolution in Wales
Geraint Davies Excerpts(13 years ago)
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Mrs Gillan
The hon. Gentleman suggests that not all Members are less fearful. That is fair and, in the spirit of the debate, I want to hear from Members who do not share the views that he and I hold. My fears about separatism, which have diminished, might be reflected in some Members’ contributions. I am more hopeful that there will be a mature debate and reasoned solutions, delivering a degree of self-determination without threatening the strength of the Union. With the advent of the commission, we are getting time to contribute and reflect.
Geraint Davies (Swansea West) (Lab/Co-op)
Is not the real Conservative agenda to offer tax-raising powers in order to freeze the block grant and end up with a semi-detached Wales, with less representation, thereby securing a permanent Tory-run Westminster, fracturing or destabilising the Union?
Mrs Gillan
I do not know what tortuous mental processes the hon. Gentleman goes through, but I assure him that I have no ambitions in that direction whatsoever. He has been spending too much time with the right hon. Member for Neath, who sees conspiracy theories in every quarter. This is a genuine open consultation, and the hon. Gentleman will hear as I develop my speech that the Silk commission is giving us an opportunity to reflect and try to shape the architecture of devolution in Wales.
The commission provides a coherent opportunity to review the working of devolution in Wales and the financial accountability of the devolved institution. Assembly Members are accountable to the people of Wales at the ballot box. They are judged on their record, on the decisions they make and on the outcomes of their policy decisions. We all know that government is a difficult business that involves administering complex issues and looking after the totality of the system for the people of Wales. We therefore need the commission to examine how the devolution system is working, and whether changes might improve its performance.
Mr Hain
Indeed, Mr Deputy Speaker, I am happy to, and I will not be led astray any more by interventions from the Conservative Benches.
The Labour Government, recognising the call from the majority within the Scottish Parliament, commissioned the Calman report, to instigate a serious and thorough analysis of how a new settlement in Scotland might be achieved. Crucially, it was based upon cross-party consensus, expert analysis and real engagement with the Scottish public. It is fundamentally important that this Government adopt a similar approach to Wales. I am encouraged by what the Secretary of State said in that respect, but in truth I am deeply suspicious of the real Tory agenda that lies behind the Silk commission.
The commission’s terms of reference state that any devolution of powers must be
“consistent with the United Kingdom’s fiscal objectives”.
Can the Secretary of State explain what is meant by that? I wonder whether, in drawing up the terms of reference, the Chancellor, the Secretary of State and others were thinking of Switzerland, which has a highly federalised and separate tax system in its various cantons, and which demonstrates how such a system can lead to lower public expenditure—not a model that we desire or will accept for Wales. Silk must not become an excuse for this right-wing Government to offload their financial obligations to lower-income parts of the UK, such as Wales.
Geraint Davies
Does my right hon. Friend accept that given that gross value added in Wales is 74% of the UK average, and that we therefore have a lower tax base to tax from, if an equivalent to the Scotland Bill passed 10 points of marginal taxation over to Wales, we would end up raising only 74% of the money possible? We could end up with 20p taxpayers contributing only 17.5p in the pound. That may be one of many methods used to reduce the amount of public expenditure in Wales, but the Government could say, “Oh, don’t worry, you’ve got tax-raising powers. You’ll be all right.”
Mr Hain
I will make a bit of progress, then I will happily take interventions.
Holtham calculated that approximately £17.1 billion of tax revenue is raised in Wales every year. Total public spending in Wales is about £33.5 billion—almost twice the amount raised. We should not be ashamed or embarrassed by that. Wales’s needs are greater than those of other parts of the UK. We have a history of relatively high levels of ill health, caused by our industrial legacy of mining and heavy industry. Also, we suffered the cataclysmic shock of sudden and mass unemployment, with the wholesale pit and traditional industry closures in the 1980s, which left high levels of economic inactivity and, because the then Tory Government did not drive investment to create new industrial sectors, relatively lower levels of business activity. That is why we should look before we leap. The so-called devolution-max or independence-light settlement advocated by the nationalists —and, I suspect, tempting to the Tories—could be disastrous for Wales.
Mr Hain
I am astonished that a Member of Parliament for a Welsh seat is trying to defend the Government’s impact on Wales in the 1980s. As a result of Tory policies, there was mass unemployment and people were smuggled on to incapacity benefit to disguise the unemployment figures and left there—a whole generation of young people—never to work again. I am astonished that he is trying to defend that.
Geraint Davies
I have figures from the House of Commons Library on the difference between expenditure and revenue showing net contributions of £14.6 billion in Wales and £14.3 billion in Scotland. Does that not demonstrate that independence for Scotland and Wales would only result in an impoverished Scotland and Wales? We need a fair system based on needs.
Mr Hain
That is exactly what I have been arguing.
Under devolution-max, as we understand it from the Scottish model, Wales would be responsible for raising all its own revenue, but we simply could not do it. It would be impossible suddenly to halve public spending in Wales. With devo-max, income tax and other taxes would literally have to double overnight just to maintain current spending levels, which is clearly a preposterous scenario—if ever implemented, it would have a devastating impact upon the Welsh economy and people’s way of life. However, I can see how it would be an attractive solution to some Tory stockbrokers in the south-east—people in Chesham and Amersham, for example—because it could mean massive tax cuts for them. Devo-max is yet another example of shared interests by the Conservatives and nationalists. It is no wonder that Plaid Cymru is so reluctant to criticise the Government, preferring to focus all its fire on Labour, as has happened in the past few minutes. They have much in common, which explains why they have consistently refused to rule out a coalition in Wales.
We should celebrate both the successes of devolution and the economic, social, cultural and political ties that bind us together—they are probably stronger now than ever before—but devo-max, or independence-light, is not the answer to the economic problems that Wales still confronts. Labour’s vision is of a Britain in which the stronger, richer parts support the weaker, poorer parts—a Britain fairer, more just and more equal, not an unfair, unjust, unequal Britain where the weakest go to the wall. I hope that the Silk commission will take close account of that important principle.
Mr Hain
I completely agree; I could not have put it better myself. I hope that the Silk commission will consider the context in which it is operating, and that, if it does advocate some tax devolution, which I think would be sensible in some respects, it will consider the wider picture and the impact of the lost revenue, indirectly, to the Welsh budget.
Mr Hain
I want to make some progress, if my hon. Friend does not mind. If there is time at the end, I will certainly give way to him.
Labour has set out a clear five-point plan to create jobs, to help struggling families and to support small businesses in Wales. Our jobs plan includes tax breaks for small businesses taking on extra workers, a temporary VAT cut that would give families a boost of around £450 a year, and a tax on bank bonuses to fund jobs and training for young people. I urge the right hon. Lady’s Government to implement it, alongside the work of the Silk commission. If the Chancellor were to come to the House with such a plan for growth, we would support him.
Thanks to devolution, Wales is showing that there is an alternative. The Welsh jobs fund will provide 4,000 job and training opportunities for 16 to 25-year-olds each year, along with an extra 500 police community support officers for safer communities, and support for Welsh students so that they do not have to pay higher tuition fees. Labour First Minister, Carwyn Jones, is proving that, although cuts are unavoidable, they do not have to be allied to the chaos of a privatisation plan for the NHS, or to a plan to close down opportunities in our universities, or, with the greatest hypocrisy of all, to the simultaneous devaluation of vocational education while making it even harder for young people leaving school to get a job.
David T. C. Davies
They can only do so under fairly strict terms of engagement. There is no major difference, but what I am saying is that I do not want any more bodies to be able to do that. I certainly would not welcome the idea of the Assembly doing what Westminster Governments have done before—let us be honest about it—which is wait until a general election is coming along and then suddenly borrow billions of pounds on the international markets knowing that not many people understand the difference between debt and deficit, and are therefore unlikely to be able to work out the probable consequences of what is happening. Governments buy themselves elections in that way. I do not want to put that temptation in front of Members of the Welsh Assembly.
Finally, I am even more concerned about the idea of a separate judicial system for Wales. That would be costly and complex.
Geraint Davies
Before the hon. Gentleman leaves the subject of taxation, on the important issue of inward investment and growth, which various speakers have focused on, does he agree that what business needs to provide inward investment is certainty? If there can be changes in corporation tax, income tax and all sorts of other tax, that will put companies off investing in Wales. The only tax that people want to get rid of is the tax that everybody is charged when they cross the Severn bridge—the Severn bridge toll. That is a real barrier to inward investment and trade. We should get rid of that and forget the rest.
David T. C. Davies
The hon. Gentleman knows perfectly well that getting rid of the Severn bridge toll is impossible, because he and I helped to write the report. It is not a matter of law, but a matter of a commercial contract between four companies that came together to build the bridge under certain agreements. There is nothing that we can do about it. Of course the Welsh Assembly, or even the UK Government, could decide to take on the costs of the Severn bridge if they wanted to. However, the hon. Gentleman knows very well that the Government do not have any money at the moment. We have a £1 trillion debt, most of which we inherited from his colleagues in the previous Government, and we are overspending by £168 billion every year. We are not really in a position suddenly to take on the burden of the Severn crossing.
I do praise the hon. Gentleman, however, because he has said something with which I entirely agree: business needs certainty. Businesses are already annoyed that they have to pay the cost of coming over the Severn bridge. The last thing they want is the potential for a load of extra taxes when they come into Wales, and a lack of certainty over whether those taxes may be applied at a later date if they decide to relocate there. To my mind, that is a very good argument for not devolving the power over such taxes to the Welsh Assembly.
I will finish on my point about the judicial system. The last person to toy around with the judicial arrangements in Wales was Henry VIII. He formed a judicial area for Wales, but people in Monmouthshire were so incensed that they decided to opt out of it and in to the Oxford assizes. That caused confusion all the way through to the local government reorganisation of 1974. Various people passed legislation, and some of it applied to Wales, some to Monmouthshire and some did not apply anywhere. Nobody knew what they were doing. People were driving to Chepstow to get a drink in the pub because the chapels had banned it, or something. It was absolute chaos. The last thing we want is a repeat of that. I say to all Members of the House that Monmouth is an integral part of Wales, Wales is an integral part of the United Kingdom, and for as long as I represent this constituency, long may that remain the case.
Oral Answers to Questions
Geraint Davies Excerpts(13 years, 4 months ago)
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Mr Jones
May I remind the right hon. Gentleman that the reforms that we have in hand are caused in large measure by the fact that his Government completely destroyed the economy of this country and ensured that it did not pay to work? Our reforms will ensure that those in receipt of DLA will be properly taken care of, but we will also make certain that those who can work will work, and that work will pay.
Geraint Davies (Swansea West) (Lab/Co-op)
5. What recent discussions she has had with the Secretary of State for Transport on the electrification of the Great Western main line to Swansea; and if she will make a statement.
The Parliamentary Under-Secretary of State for Wales (Mr David Jones)
My right hon. Friend continues to have discussions with our right hon. Friend the Secretary of State for Transport about this matter. The announcement of electrification made on 1 March is excellent news for all parts of south and south-west Wales, as I am sure that the hon. Gentleman will agree.
Geraint Davies
The Minister will know how disappointed businesses and people in west Wales and Swansea are about the lack of electrification to Swansea. Will he and the Secretary of State ensure in their discussions with the Secretary of State for Transport that there is every prospect that costs may be reduced by European funding—either convergence, or transnational transport funding—and that benefits may be increased by greater frequency on the back of Premier League status for Swansea City? Will he make every effort to get electrification to Swansea?
Mr Jones
I commend the efforts that the hon. Gentleman is making on behalf of his constituents. Of course, as he knows, and as the Secretary of State made clear when she addressed the Swansea Business Club, the issue of electrification to Swansea is not closed. It is a matter for local government, this Government and, indeed, the EU to consider what options can be pursued to ensure, if possible, the electrification of the line to Swansea.
Constitutional Reform (Wales)
Geraint Davies Excerpts(13 years, 6 months ago)
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Westminster Hall is an alternative Chamber for MPs to hold debates, named after the adjoining Westminster Hall.
Each debate is chaired by an MP from the Panel of Chairs, rather than the Speaker or Deputy Speaker. A Government Minister will give the final speech, and no votes may be called on the debate topic.
This information is provided by Parallel Parliament and does not comprise part of the offical record
David T. C. Davies (Monmouth) (Con)
This is the first time that I have served under your chairmanship, Mr Davies, and it is a great pleasure to do so. We have sat on the Back Benches for many years and have been impressed by the loquaciousness of Front-Bench Members from both sides of the House; sometimes, they have entertained us for so long that we have not had a chance to speak. Time is short today, and because I believe it important that all hon. Members should have the opportunity to contribute, I will limit my speech to 10 minutes. [Interruption.] Other hon. Members are entering the Chamber as I speak.
The issue of constitutional change and the Parliamentary Voting System and Constituencies Bill was the first subject considered by the Welsh Affairs Committee. It has been a great pleasure to work with all members of that Committee. The Select Committee system is one of the great unsung success stories of Parliament, and I wish that those members of the public who think that we spend all our time arguing with each other could see what goes on in a Select Committee. Despite the range of views, there is always room for compromise and agreement on certain issues.
Unanimously, members of the Welsh Affairs Committee had concerns about the changes to the constitution. The first issue that we looked at was the idea of holding a referendum on the same day as the Welsh Assembly elections. We expressed our concerns about that, and made clear our opinion that the Government needed to take measures to ensure that the referendum ran smoothly—which, to be fair, it did. There were concerns about timing and the counting of the vote, but there were not many spoilt ballot papers and I am glad that the two elections went smoothly.
Many concerns remain, however, over proposals to reorder the boundaries in Wales and reduce the number of Welsh MPs by a significant number, probably about a quarter. There are concerns about the impact that such a change will have on the ability of Wales and the Welsh people to ensure that their voice is heard in Parliament. I accept the point, made on a previous occasion by the right hon. Member for Torfaen (Paul Murphy), that the reforms will be one of the greatest changes since the Great Reform Act. Ever since that Act, Wales has been strongly represented to reflect the fact that it is a small nation that needs to get its voice across. I must add—this would not have been in the report—that that argument is somewhat weakened by the establishment of a Welsh Assembly. Hon. Members must take account of that.
Geraint Davies (Swansea West) (Lab/Co-op)
As the hon. Gentleman will know, the Government continue to talk about greater democratic accountability and the reform of the House of Lords. Current plans are to get rid of 50 elected representatives from the House of Commons, including a quarter of Welsh MPs, and at the same time to introduce an extra 150 unelected Lords. There is no real chance of those reforms to the House of Lords going forward. Is the hon. Gentleman worried about having a greater proportion of unelected representatives and fewer elected representatives, and will he vote against that?
David T. C. Davies
The hon. Gentleman wisely anticipates a point that I am about to come to. I will return to that subject; he may hold me to that.
Let me make an obvious point that the Minister may wish to deal with. Wales is geographically challenging when it comes to offering representation. By that I mean that many of its communities are cohesive because of the topography of the area, and certain valleys make obvious constituencies. They may never contain the requisite number of people, but it is not terribly wise simply to say, “That can constitute a constituency, and we’ll add a bit of the valley next door to get the numbers absolutely right.”
A place that may look nearby on a map will not necessarily be easy to access. We already have areas in which it is challenging to be a good constituency MP. Constituencies such as Montgomeryshire and Brecon and Radnorshire are very large—I see my hon. Friend the Member for Montgomeryshire (Glyn Davies) is in the Chamber—and presumably they will get even larger. That will pose challenges for the MP who represents such a constituency.
To some extent, we are allowing a bandwagon to roll that suggests that all Members of Parliament are lazy and do not have enough to do, and that we should get rid of a few of them, and give others an extra 10,000 constituents because that will produce a good headline in the newspaper. I hope that that is not the case, but I fear that as a profession, MPs do not stand up for themselves and nor does anyone else stand up for them.
MPs have a right to be treated in the same way as any one else in the country; when I read in the press that MPs should be treated like anyone else, I say that I could not agree more and that it is about time that we were treated the same in every respect. That means, however, that if someone changes our terms and conditions of work with the stroke of a pen, we should be entitled to a certain amount of notice. If we are to be given a lot of extra work—I take my role very seriously, as do hon. Members from all parties—it is only right that we should be given time to prepare for that.
I promised that I would return to the good point raised by the hon. Member for Swansea West (Geraint Davies) and the proposals to reform the House of Lords. I could understand some of the desire to reduce the number of MPs from 650 to 600 were it not for the fact that at the same time we are increasing the number of Members of the House of Lords and are possibly about to elect them on an 80:20 basis—we will see whether that comes to pass.
It certainly looks as though it will be more expensive to manage the House of Lords. If we wish to act in a cohesive fashion, surely we should have considered the possibility of maintaining the number of MPs at 650. We could have reordered the constituencies so that they contained the same numbers of constituents, but we could also have ensured that they remained closer to their current state, without necessarily expecting MPs to do all sorts of extra work. I have no problem with working hard, but adding an extra 10,000 people to a constituency will present certain challenges. We should not jump to do that simply because it is demanded by the tabloids.
David T. C. Davies
In all truth, hardly any constituents have written to me about this matter. A few have written to me to say that they are shocked and horrified by the fact that one in four Welsh MPs are going to disappear. I had to write back and say that I am also surprised and concerned, and that unfortunately they will have to fly the flag for me on the issue as I dread to think what the Daily Mail would say if it thought that I was simply trying to protect my job.
Members of Parliament work extremely hard at the moment, and I have no problem with them working harder in the future if that is possible. I do, however, have a problem with the timing of the legislation and the way that it has been introduced very quickly. I was surprised that there were not more opportunities to debate the matter, although I do not entirely blame the Government for that.
At least one Welsh MP, who is not present today, seemed able, at the drop of a hat, to deliver speeches that lasted more than an hour and covered different clauses of the Bill. That prevented us from reaching those amendments that applied to Wales. I listen to “Just a Minute” on Radio 4; he could easily have done “Just an Hour”. To pay him a small compliment, I should say that he was quite entertaining and not many people can speak for an hour and be entertaining—at this rate, I will struggle to make 10 minutes.
David T. C. Davies
I am not going to name the hon. Gentleman concerned and I shall let that comment stay on the record.
Another issue that concerned us when we conducted the report was the evidence that we received to suggest that much of the information that the Boundary Commission will work on is out of date or inaccurate. Too many people who should be on the electoral role have not registered for one reason or another.
The Parliamentary Secretary, Cabinet Office, my hon. Friend the Member for Forest of Dean(Mr Harper), assured us that a great deal of work would be done to ensure that accurate numbers of people were recorded and that the information used to redraw the boundaries was accurate. I look forward to hearing from this Minister what work has been undertaken to ensure that everyone who should be on the electoral roll is on it.
David T. C. Davies
I do agree, but the evidence that we had suggested that voter registration is an issue in all parts of Wales and perhaps particularly in some of the more urban areas. However, even if it is an issue in just one part of one constituency, it is a big issue, because this is about democracy and ensuring that everyone can exercise their right to vote. How big the issue is I cannot say, but I look forward to an explanation from the Minister.
Geraint Davies
Will the hon. Gentleman not accept that a disproportionate—[Interruption.] I can’t speak. I have lost my—[Interruption.]
David T. C. Davies
I will be happy to give way to the hon. Gentleman again if he wants. I apologise, but I did not quite hear what he said. [Laughter.] He is more than welcome to intervene on me again.
Geraint Davies
Will the hon. Gentleman accept that there is a disproportionate tendency for poorer communities not to register? The boundaries should really be based on the best estimate of the number of people eligible to vote, as opposed to those who are registered, given that young people, ethnic communities, people in private rented accommodation and so on are under-represented.
David T. C. Davies
I will not accept that. The evidence that we had was that significant numbers of people are not registered to vote. It was right that we asked the Parliamentary Secretary, Cabinet Office, who is responsible for the matter, to come back to us with further information about how that would be rectified, and he promised us announcements and assured us that action would be taken.
I do not think that we had enough evidence to say where the problem is most widespread. I certainly do not personally think that we should start redrawing the boundaries based on what is at best an educated guess as to what the problem might be—that is, having a look at constituencies and saying, “Well, that is not very affluent, and urban, so we think that X% are not registered. We’ll just redraw the boundary on that basis.”
Chris Evans
Sorry, Isle of Wight is a Tory seat.
I was working with my predecessor when the Government of Wales Act 2006 was debated. The 2006 Act stated that Assembly seats must be co-terminous with Westminster seats, but that has suddenly been thrown out of the window. It is as if the Government are saying, “Okay, we will just decouple.” Where we have an Assembly Member, the imperative is to build a close relationship with them and to work on issues such as health and education, but that will go completely out of the window. We will have a situation in which people will say, “Who is my Assembly Member? Who do I pass this on to?” This seems to be—for want of a better term—absolutely crackers.
We have already talked about the democratic deficit. Despite the fact that Wales represents 5% of the UK population, its constituencies will be reduced by 20%. Wales will send 25 fewer MPs here. Northern Ireland will lose some 17%; Scotland will lose 9%; and England, which is Tory dominated, will lose 5.5%. We have to ask ourselves why Wales has been disproportionately targeted. I wonder whether it is because we have a history of sending back Labour Members of Parliament. Will Swindon, which has two Tory MPs, be reduced to just one seat? Will other places, such as Cheltenham and Gloucester—I know Cheltenham quite well—be reduced to one seat? Will Tewkesbury, the Cotswolds and Cheltenham, which have three Tory MPs, be one seat? I wonder. We wait and see.
Chris Evans
The point that I was coming to is that we have local links in Wales—communities are linked to each other and have common bonds. The hon. Gentleman represents an English constituency, but if he wanted to discuss the point, he should have made a speech.
Geraint Davies
Does my hon. Friend agree that Wales is, in essence, a small country next to a very large country that is 15 times its size? If we want a sustainable Union and a respect agenda, we should remember that Wales has always had slightly more MPs than England. That is the fundamental point: tearing up the Union is the cost of gerrymandering a sustainable Conservative Government. Wales is a small country sitting next to a big one, so we should have a few more MPs. That is all this is about.
Chris Evans
That leads on to my final point about the policy overall. Perhaps I can look at the issue from a wider angle and step outside Wales for a moment, if you will allow me, Mr Davies. We are a nation state, and what seriously worries me about this exercise is that it is based on figures rather than communities. In that respect, I am glad that I followed my right hon. Friend the Member for Torfaen, because he knows about the situation in Northern Ireland, where wards and constituencies must strike a fine balance and could cause major problems. However, we have had no scrutiny of any kind, so these issues have not come out.
The coalition has hung on to its belief that people distrust politicians, but when people voted no for AV, they dispelled the myth that it was constitutional reform that we needed; we actually need to reconnect with people. Forcing through the proposed changes will mean more disconnect and people being more removed from politics, and that is a dangerous game. I therefore finish by paying tribute, as I did at the beginning, to the Welsh Affairs Committee, which is the only Committee to have looked at this issue properly.
Owen Smith (Pontypridd) (Lab)
Thank you, Mr Davies, for calling me. It is a pleasure to serve under your chairmanship for the first time.
I will start by saying that it is slightly unusual for me to speak on the Front Bench today, as I am following the precedent of the Minister when he was in my shoes, as it were, in Opposition. Like me, he was a member of the Welsh Affairs Committee in Opposition. It is the Committee’s report that we are debating today and therefore I can say to the hon. Member for Monmouth (David T. C. Davies), who is the Chairman of the Welsh Affairs Committee, that I add my support for the way that he chairs the Committee generally and particularly for the way that he chaired it while this report was being produced. He brought us to a point of considerable agreement across all parties and today he elucidated very well the arguments that we had during the weeks that we debated the Bill. I was less certain about the transformation that he underwent during his speech into a shop steward for MPs from all parties. I certainly will not go so far as the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards) in putting the hon. Gentleman’s commendations on my election literature. Nevertheless, the way in which he spoke up for MPs today is very welcome.
The Bill represents what the Committee referred to as a “profound change” to the constitution of the UK Parliament and particularly in respect of Wales, and we have heard that spelled out in different ways by different Members today. Reasonable Members of Parliament cannot argue with that conclusion, because any change that diminishes by fully 25% at a stroke the political representation of a country is a profound change. Any change that breaks a parliamentary protocol in respect of the representation of one country in a Parliament that has been established for almost 200 years—as we heard from my right hon. Friend the Member for Torfaen (Paul Murphy), that protocol was established in the Great Reform Act of 1832—is a profound change. That protocol established an over-representation, if you like, for Wales, but it is an over-representation that is designed to reflect the asymmetrical nature of the Union that we have between Wales, Scotland and England, and to offer some protection and insurance that the junior partner in that Union—that is, Wales—does not have its voice drowned out by the leviathan—that is, England —on its border. I believe that the changes that we are discussing potentially threaten the Union, and any such change is absolutely a profound change.
One of the great disappointments for the Opposition during the all-too-hasty passage of the Bill was the seeming inability of the Government to acknowledge the arguments that many people from across the House—on the Tory side as well as on the Opposition side—were making. For the Opposition’s part, I feel that we acknowledged that there is an important argument to be made about equality and fairness in representation being observed and implemented, to the extent that that is possible in representation between different constituencies. We acknowledged that that is an important and long-standing priority.
However, that is not the only consideration or priority that ought to have been considered by the House. It was profoundly disappointing that the Government singularly refused to acknowledge that there might be other considerations, and I suspect that we will hear something similar in a moment from the Minister. The principal one among those other considerations is the importance of giving insulation and protection to the junior partner in this asymmetrical union that we have, and the corresponding danger of changing that balance and the voice of Wales being singularly diminished in Westminster.
The Committee’s report was quite prescient in giving warnings about those dangers. We have heard today from my hon. Friend the Member for Islwyn (Chris Evans) that it was prescient in its warning that the changes being proposed could lead to a diminution of trust in politics. The Government told us that the rationale for pursuing the Bill was, in many respects, to try to rebuild trust in politics, which we all accept has been damaged in recent years. However, the Opposition fail to see how removing politicians further from the electorate and increasing the gap between electors and elected will help to rebuild trust. If anything, a rational observation is that it is likely to do the reverse and increase people’s mistrust in politics, especially when people look at these changes and understand—as we in the Opposition understand—that they are motivated by a partisan rationale.
The hon. Member for Carmarthen East and Dinefwr and my right hon. Friends the Members for Cardiff South and Penarth (Alun Michael) and for Torfaen, who are both former Secretaries of State for Wales, and indeed other Members have already discussed the next point that I want to make; in particular, my right hon. Friend the Member for Torfaen spoke with great power about it. It is that we are deeply concerned about the impact that this change will have on the Union.
Nationalist politicians, with their variable success at the recent election, are undoubtedly emboldened in some respects by the change that is being proposed. For all that we hear the hon. Member for Carmarthen East and Dinefwr talk about the importance of representation in this place, I think that nationalist politicians are emboldened by the extent to which the Bill and some of the other things that we have discussed today are putting the debate about the Union at the top of the agenda. The Bill and the other issues that we have debated are throwing into question the constitutional settlement that we have understood for the last 200 years—indeed 300 years—and challenging us to think about what we mean by the future of devolution, how Wales is to be represented and what balance is to be struck in the light of devolution.
I agreed with the Minister when he said in an intervention that perhaps we had not fully thought through the implications of devolution. We now need to do that and to think holistically about all these issues instead of doing what I fear is precisely the Government’s intention, which is to look at them piecemeal and for party advantage.
I share the concerns of my right hon. Friend the Member for Torfaen that, for all the Prime Minister’s avowed intention to fight with every fibre of his being for the Union, we are hearing far too much from Conservative Back Benchers who are resentful of Wales. They are resentful of the different decisions that are being made in Wales and of what they perceive to be the parts of the UK, including Wales, that are both politically hostile—they do not elect Conservative candidates—and economically dependent, which is the bit that really worries me. There is an ugly spirit at the back of those concerns that Wales is getting more than it is due and that Welsh needs are being over-accommodated, both in terms of political representation and the economy.
Geraint Davies
Does my hon. Friend agree that there is a worrying and increasing number of Conservative MPs who take the view that having separation of both Wales and Scotland from England would be a price worth paying to have a perpetual Conservative Government running England?
Owen Smith
I share some of the concern about that issue. I do not think that my hon. Friend is overstating the case, because we have heard far too many noises off from Conservative MPs that lead us to fear that many of them think that breaking up the Union would be a price worth paying. I certainly do not share that view and I do not think that any Opposition Members do either.
Another area that we have touched on today and that the Committee’s report was again prescient about is the impact on the National Assembly of the changes that are being proposed. During the passage of the Bill, we were repeatedly told that breaking the link between elections in constituencies in Wales for the National Assembly and elections for Westminster effectively meant that the National Assembly would be unaffected by the Bill. However, it is only a couple of short weeks since the Bill’s passage and already we have heard the Secretary of State for Wales, in response to a question put by the hon. Member for Carmarthen East and Dinefwr in Welsh questions last week, entertain the notion that a Calman-style commission in Wales might look beyond financial matters and indeed might look at the nature of the elections to the National Assembly and the make-up of the electoral districts for the National Assembly. That is worrying. It is looking like another broken promise from the Government if we are now going to see the National Assembly being so directly impacted by the Bill.
I ask the Minister to try to clarify today what was implied by the Secretary of State’s response to the hon. Gentleman’s question last week. If the Minister is unable to tell us exactly what that commission is going to look at, can he at least tell us whether it will look at alternatives to the current voting system? The hon. Member for Carmarthen East and Dinefwr slightly misrepresented me when he said that in our discussions last week I said that we had to stick pretty much with what we have got. I did not say that. What I said was that we certainly should not shift instantly if we are to consider these matters through 30 list members and 30 first-past-the-post members. The rejection of the alternative vote last week raises the question of whether we ought to look more seriously at first past the post and I think that there is an opportunity for us to put other alternatives on the table, such as having 60 members, two per constituency, in a first-past-the-post system. There might be a significant amount of agreement across the House for that as an alternative system.
Mr Jones
It is, I am afraid. I think that most of us in this Chamber—with the honourable, or possibly dishonourable, exception of the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards)— are Unionists, and we do not want the Union of this country damaged. Therefore, the West Lothian question must be addressed, and the Government are committed to doing so during this Parliament.
As the hon. Member for Pontypridd said when agreeing with something that I said earlier, perhaps we are doing things the wrong way round—perhaps the exercise should have taken place before devolution was instituted in this country—but the issue must be addressed. I can think of nothing that would do more to endanger the Union than to perpetuate a sense of grievance on the part of certain Members of this Parliament and certain large sections of this community about a perceived lack of fairness in how they are treated.
Oral Answers to Questions
Geraint Davies Excerpts(13 years, 8 months ago)
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Mrs Gillan
I am tired of Members talking Wales down. The message that has just gone out from the hon. Gentleman is not a positive one. The unemployment figures were announced this morning. Although I have given them a cautious welcome because the economic inactivity rate continues to fall, I want people to know that we have a willing and able work force and that Wales is open for business. It is about time the hon. Gentleman joined me in talking Wales up.
Geraint Davies (Swansea West) (Lab/Co-op)
It emerged in the Welsh Affairs Committee’s visit to Germany that vital inward investment opportunities were not being taken up by UK Trade & Investment because of the abolition of regional development agencies in England. Does the Secretary of State accept that this may represent a major opportunity for Wales and if so, what is she doing about it?
Mrs Gillan
I had a particularly good meeting with the First Minister, the Deputy First Minister and the Minister responsible for trade. I am keen that we should have some joined-up government, because we have not been taking advantage of all the opportunities that exist. After the Assembly elections we shall have to take that forward with the new Welsh Assembly Government, and I know the current Welsh Assembly Government have been looking at rationalising their offices abroad and having a more comprehensive programme—one that is engaged with UKTI, the Department for Business, Innovation and Skills, the Foreign Office, and the Wales Office. Together, we will have a stronger presence.