Wales Bill

Lord Howarth of Newport Excerpts

2nd reading (Hansard - continued): House of Lords
Monday 10th October 2016 Lords Chamber

[Lord Howarth of Newport (Lab)]

My Lords, this Bill should not have been placed before Parliament in the state it is in. For all the work of the Silk commission, of which the noble Lord, Lord Bourne, was a distinguished member, three successive Secretaries of State, pre-legislative scrutiny of a draft Bill and then scrutiny of this Bill by the House of Commons, it is a mess. It is confused and opaque. The opacity is not just because this legislation is not consolidated, although it is very unhelpful that that is the case. The Bill is based on no discernible constitutional principles. It expresses no clear or convinced vision for Wales or for the United Kingdom or for the relationship between the two. With the fractures exposed by the EU referendum, such a vision has never been more needed.

The Bill is not the product of a concordat between the Governments of Wales and of the United Kingdom. It will not fulfil the aspirations of the people of Wales for full law-making powers vested in the National Assembly as expressed in the referendum of 2011. It will not,

“put Welsh devolution on a stable footing for the long term”,—[Official Report, Commons, 14/6/16; col. 1644.]

which at Second Reading the Secretary of State described as the ambition of Ministers. There is a lack of ambition here for Wales. Rather than seeking to provide for Wales devolutionary parity, or near-parity, with Scotland and Northern Ireland, Ministers have tried to get away with the minimum they can. Power, instead of being shared generously between England and Wales, is being grudgingly contested in a zero-sum game.

My noble friend Lord Hain famously said that devolution is a process, not an event. The process to which this Bill will consign us will be one of frustration for Wales, legal uncertainty and continuing friction. Yet another round of legislation—a fifth go—will soon be needed. That phrase, “a new constitutional settlement”, which the noble Lord, Lord Bourne, used in his peroration—is peculiarly inapplicable to this measure.

The Secretary of State insists that his underpinning principles in preparing the Bill have been clarity and accountability. Whatever accountability there may be for the Welsh Government if they should avail themselves of the new power to vary rates of income tax, there will be no clarity in the absence of a commitment by the Government of the United Kingdom to extend the minimum funding pledge beyond this Parliament and to compensate for the loss of European payments to Wales following Brexit. Without that commitment the Government of Wales are being offered a pig in a poke. Why would they impose an income tax increase on the hard-pressed people of Wales when the Chancellor’s response may be to cut the grant to Wales? I think we should reflect very carefully on the thoughtful speech in this regard about the fiscal framework by the noble Lord, Lord Crickhowell. This Government, like their predecessors, are too scared of Scottish voters to reform the Barnett formula, so they are leaving Wales disadvantaged while giving a meaningless new power to the Welsh Government. They are also scared of Welsh voters and are reneging on their manifesto promise of a referendum in Wales on devolution of powers to raise income tax.

While providing extensions to the legislative powers of the National Assembly, the Bill does not concede a distinct legal jurisdiction for Wales. The noble Lord, Lord Bourne, set his face emphatically against that in his speech. Here I part company with the noble Baroness, Lady Bloomfield, whose maiden speech I enormously enjoyed and admired. After more than 15 years of devolution there is now, as the Bill recognises, a substantial body of Welsh law that has been created within Wales. That body of Welsh law will grow with use of the powers to be newly devolved. Already there are practical problems, with English counsel and judges being insufficiently versed in the parallel corpus of Welsh law. The Ministry of Justice and the courts in England are more than hard pressed to deal with the challenges they face in England alone. It is not sustainable to have two legislatures making law in one jurisdiction. The time has come at least to legislate to provide the ability to accord to Wales the respect and dignity of having its own jurisdiction.

My noble friend Lady Morgan of Ely was generous in her assessment of important aspects of the Bill. She described it as a considerable improvement on the provision for devolution that has so far been in place. Of course we should be grateful for the small mercies that the Bill does provide: powers to develop small ports and small energy projects, and control over aspects of transport and environmental policy as well as over equalities policy and arrangements for elections. While I welcome the Government’s conversion to the reserved powers model of devolution, the version offered in this Bill is, frankly, absurd and insulting to Wales. A studied vagueness in the drafting makes it impossible to be sure of the precise number, but the new Schedule 7A contains 190 or 200 reserved powers—different noble Lords have totted up different totals. Whatever the total may be, it is vastly more than the powers reserved in relation to Scotland. The imprecision of the schedule makes it inevitable that the two Governments will again have to resort to the courts to rule on what precisely is devolved. After the agricultural wages saga, that is what sensible people want to avoid.

It appears that the Wales Office ignored the advice of the Welsh Affairs Committee that it should issue guidance to other Whitehall departments as to the principles and considerations that they should apply in deciding what powers they wished to reserve, and instead has accommodated a dog-in-the-manger stance department by department. The Secretary of State claims that there is a clear rationale for each of the reservations, but what constitutional principle causes the Government to refuse to devolve to an experienced and—as the noble Lord, Lord Bourne, acknowledged—mature Welsh Assembly powers over crime, public order and policing, including specifically such matters as anti-social behaviour, knives, drugs and prostitution? If the Home Office thinks it has a monopoly of wisdom, nobody else does. These are responsibilities devolved to Scotland and to be devolved to city regions in England. Why not to Wales? There is no principled basis for this reservation; it is simply a case of the Home Office saying, “What we have, we hold”.

If the Welsh Government should wish to improve access to justice—fundamental to a liberal society—by reversing some of the UK Government’s disgraceful cuts to legal aid, why are they forbidden to do so? On what principle is Wales not to be allowed competence in the licensing of entertainment or the sale and supply of alcohol, or for betting and gaming? Why should Wales not take responsibility for its own sins? If Wales wishes to be virtuous, why is it not entitled to take that decision? What about advertising, charities or adoption services? Do we need uniform policies on such matters across England and Wales? Are Welsh legislators unfit to determine them for Wales? If Wales can take charge of its planning policy, for what good reason will it not be allowed to determine its own policy on the community infrastructure levy? How can it make sense to separate competence for the two? Why on earth is policy on industrial development in Wales reserved to Whitehall and Westminster? The noble Lord, Lord Bourne, spoke of the responsibility of the Government of Wales to ensure that the Welsh economy performs well.

If the National Assembly is to determine electoral law for Welsh elections, why is it to be precluded from exercising powers in relation to the funding of political parties—an issue which, lamentably, for many years politicians at Westminster have failed to grasp? Since, pace the Secretary of State, the rationale for these and large numbers of other reservations is not clear, we may have to table amendments to delete each reservation individually, so that in the debate on each one the Minister can explain the reason. My noble friend Lady Morgan may or may not seek to strong-arm me to prevent me doing that, but she will have a good wrestle.

It is not just that Whitehall begrudges reasonable freedoms for Wales. Even as the Government are slashing parliamentary representation of Wales at Westminster, they are taking powers from the Welsh Assembly. Bizarrely, in a measure paraded as taking devolution a stage further, Whitehall is actually retracting devolved powers. This is partly because so-called silent areas, where hitherto powers were not specified or were specified ambiguously, and Wales exercised them de facto, are now included in reservations. Of course what the noble Lord, Lord Elystan-Morgan, had to say about the judgment in the Supreme Court in 2014 is highly pertinent here. It is also partly because the vague drafting of reservations, by reference for example to the “subject matter” of large amounts of preceding legislation, enlarges the scope for reservation. With better, more precise drafting, the reserved powers model could have been introduced with no diminution of Assembly competence. As it is, Assembly competence is reduced in regard to, for example, aspects of employment rights and criminal offences against young people, as well as through the tests of competence in new Schedule 7B on modifying the law on reserved matters and Minister of the Crown consents. All this is helpfully discussed in the excellent report of the Constitutional and Legislative Affairs Committee of the Assembly, on which the noble Lord, Lord Elis-Thomas, served. The Bill gives with one hand while it takes away with the other. It gives new meaning to the phrase “take back control”. The Minister should at least tell the House which powers the Government are deliberately removing from Wales and why, and which powers they are removing inadvertently.

Brexit is a new ghost at this devolutionary feast. We now have before us a huge agenda of repatriation of European Union law to the United Kingdom, and then of examination and modification of its components. It will not be enough for the Government and Parliament in London to handle all this on behalf of Wales. The Government of Wales must be a champion for Wales, and the Assembly must play its part in legislation for Wales. The Bill began its passage through Parliament before 23 June, and Clause 19 on implementation of EU law does not appear to meet the point. How will the Government reframe their devolution policy to take account of Brexit?

I have been severe about the Bill because bad law will make good government in Wales more difficult. We must seek, in consultation with the Assembly, and as far as possible consensually in this House, to improve the Bill.

Wales Bill

Lord Howarth of Newport Excerpts

Tuesday 11th November 2014 Lords Chamber

[Lord Crickhowell (Con)]

My Lords, the noble Lord spoke with great passion but he is not right that all political parties are committing to going down this particular road. As far as I know, my own party has made no such commitment. I am still quite open-minded about the basic question. I have not made up my mind and am not necessarily hostile to it. I will listen with great care as the merits of the case are debated over the wider field. I may well finish agreeing with him that votes should go to 16 year-olds, although I have not got there yet.

I am brought to a halt, so to speak, for the same reasons that my noble friend Lord Deben referred to in his speech earlier—as did the noble Lord, Lord Empey. They spoke about devolution bit by bit and a series of random decisions. My problem is that, although I understand of course that these particular proposals are to apply only to votes in the Welsh Assembly or Welsh referendums, once you put 16 year-olds on the register and raise their expectation that they will have a vote it is very difficult to see how you can then say to them, “Oh, but you are not going to have a vote in general elections”. It also seems essential in a sensible democracy that if we are to move to a franchise at 16 for elections to the Westminster Parliament, that should be on the basis of all-party agreement and after proper consultation and consideration, not just because we have to keep up with Scotland or Wales.

I find myself contemplating the possibility that it is somehow not possible to take the 16 year-olds off the register when we come to general elections. I, in the Monmouth constituency, would find myself elected by an electorate that includes 16 year-olds, while in Herefordshire, across the border but 500 yards from where I currently live, the Member of Parliament would be elected without 16 year-olds voting. That would be an intolerable situation and totally unacceptable. Once again, we come back to all those who argued for some kind of proper consultation, whether it be a royal commission or whatever form it takes, in which we can reach a consensus and an all-party way forward rather than saying, “Oh, well, the Scots have done it and therefore the Welsh have to do it”. They can do it in their own Assembly, and that is fine by them, but we are not really saying—or are we?—that it is going to happen in general elections in Scotland and Wales, too. We are on a very dangerous path. I am perfectly happy to go down that path on the basis of proper deliberation and consultation, and agreement by the political parties. I am not prepared to go down it on the basis of ad hocery and “Gosh, we must keep up with the other chaps”.

[Lord Howarth of Newport (Lab)]

My Lords, I am a little less worried than the noble Lord, Lord Crickhowell, about the prospect of different rules applying for certain elections between Monmouthshire and Herefordshire. I tend to be of the view that a constitution breathes through its anomalies. Anomalies can give a kind of flexibility and help us cope with day-to-day developments in politics. Of course, I am not at all against the search for a wider coherence but it is very hard to find that ideal coherence. In the mean time, it is right to be responsive to the democratic aspirations of people, differ as they may in different parts of the country.

I am much in sympathy with the purport of this group of amendments. I recall that sixth-formers in my constituency of Newport in south-east Wales were curiously diffident about voting at 16. I used to ask them whether they thought it would be appropriate and there was a good deal of hesitation. However, if all the parties in Wales think that introducing this is the right thing to do, it is not for us to stand in their way. Wales should have the power to set its own electoral arrangements for elections that are strictly Welsh elections. We can look again at the wider issue of arrangements for general elections across the United Kingdom. I take the point made by the noble Lord, Lord Tyler, that the principle of no taxation without representation implies that the voting age should be reduced to 16 for elections to the Welsh Assembly. After all, we are contemplating in this legislation the possibility of income tax raising powers being devolved to Wales. It seems to me that that should probably follow.

[Lord Crickhowell]

The difficulty about that proposition is that the bulk of the money is still going to come to Wales from grants voted for in the Parliament at Westminster. Indeed, every change in that alters the position of grants going to Scotland. It is very difficult. If you want to start with the argument that you must have votes at 16 for everyone voting for the money, then you have decided that it has to go to the Westminster Parliament as well. Until that happens, you really cannot carry that argument too far.

[Lord Howarth of Newport]

The noble Lord is absolutely right about the significance of grants that I hope would continue to be made from the Government in London—the Government of the United Kingdom. I have some anxieties that the conferral of tax-raising powers on Wales may be the prelude to a rather drastic withdrawal of redistributive taxation and grant giving across the United Kingdom as a whole. The noble Lord is quite right that these are very difficult issues. I acknowledge the force of what he said on that particular point.

Where I have a reservation about this group of amendments is that they seem to envisage perpetual referendums. There is a reference in all of them to referendums. Personally, I very much hope that the people of Wales will not reach a point in their politics when they conduct a referendum on independence for Wales. I do not want to contemplate that. Nor would it be a good idea if the people of Wales developed the habit of conducting a series of referendums on ad hoc issues. To the extent that we resort to referendums to solve tricky issues in our domestic politics, we tend to undermine representative government and the Parliament of Westminster. I will just finish the point and then give way to the noble Lord, Lord Tyler. We would equally undermine the authority of the Welsh Assembly if it became a habit or reflex to have referendums, however populist that might be.

[Lord Tyler]

I just wanted to draw the attention of the noble Lord to the fact that there is of course a very considerable section of the Bill dealing precisely with referendums—or referenda, as I prefer to describe them. The noble Lord will have to accept that these are entirely relevant to the Bill and therefore a very likely prospect in Wales at some point.

[Lord Howarth of Newport]

They are relevant to the Bill but the fact that the Bill deals with referendums does not make referendums any more desirable. On the question of gerunds and gerundives, I hope that there is perhaps a noble Lord in the House who can resolve this issue between the noble Lord, Lord Tyler, and myself, and tell us whether they should be referred to as referenda or referendums.

[Lord Cormack]

My Lords, I am not rising to resolve that particular problem. Though I am by nature and inclination a referenda man, do not let us go too far down that line. I frequently agree with the noble Lord, Lord Howarth, who is a friend of long standing, but I cannot go along with him on much of what he said, although I agree with him emphatically that—I hope—the Welsh people will not wish to vote on independence. At the moment, the polls indicate that only 4% of them are inclined to move that way. Somebody interjects to say it is 3%; the proportion is going down by the minute.

I come at this from a slightly different angle: I believe that among the things that should be common to the United Kingdom as a whole is the franchise. That is why I was critical of the Prime Minister and others, who conceded to Mr Salmond votes at 16 for the referendum in Scotland. I have mentioned my highly articulate and intelligent 16 year-old granddaughter in this Chamber before. Of course, because 16 year-olds were going to have the vote, I engaged with her, and through her with others, on the subject, because it was of such significance. That was far more important than any single vote I have cast in over 50 years of having the franchise; when I was able to vote for the first time it was at the age of 21.

We did concede to Mr Salmond that 16 year-olds should have the vote—and I entered into the spirit of it within family and so on—but I regretted that we had done so. We must consider carefully the wisdom of giving the vote to 16 year-olds. After all, there are so many other areas of life we could talk about in terms of what people can do at 16; some will work and pay taxes and some will not.

Only yesterday in this House the noble Earl, Lord Listowel, introduced an amendment that the Government accepted. He made an exceptionally moving speech, and the Minister gave an extraordinarily generous reply. The substance of that amendment was that 17 year-olds apprehended by the police should be treated in a similar way to 16 year-olds. He advanced an extremely convincing argument, which the Minister accepted.

A 16 year-old cannot drive a car, and is not legally allowed to take a drink. There are, and I think there should be, rites of passage. I believe that there is a danger in giving votes to those who are in full-time school education—I distinguish clearly between school education, and university and further education. We ought to treat this matter extremely carefully. My noble friend Lord Crickhowell made a generous speech in which he said that he was not necessarily against the idea, but that it should not be dealt with as yet another piecemeal reform. We heard quite a lot about those in our earlier debate on this Bill today.

There I entirely agree with my noble friend. This issue has not been dealt with on a UK-wide basis; it has just grown, like Topsy. If we are to move in this direction, with all the implications for the age of majority and everything else involved with it, we should do so only as a result of comprehensive debate and discussion within both Houses of this Parliament. It should also be part of the remit of the constitutional convention or royal commission. A royal commission is the option that I personally would favour, and the noble Lord, Lord Richard, who is not now in his place, also came down on that side. Any such move should be part of the remit of any such convention or commission. We would not be serving the people of Wales, or any other part of the United Kingdom, well if we continued with this piecemeal approach.

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[Baroness Randerson]

My Lords, the amendment we are in the process of drafting specifically relates to this referendum on tax-raising powers because there are discussions still to be had across all parties—I suspect there will be lively discussions during the coming general election campaign—on whether votes at 16 should be adopted on a much wider basis.

[Lord Howarth of Newport]

Will the Minister also explain the difference of principle which makes it appropriate for people to vote in this particular referendum at 16 but not to vote in other elections in Wales at 16?

[Baroness Randerson]

There are various strands to that question. One point is that there must be a consistency in franchise across the United Kingdom in ordinary elections. It is also important to bear in mind that a referendum is in many ways a useful way for young people to be able to express their point of view in a very clear-cut manner. A referendum campaign is a very tight and straightforward campaign.

In the light of the Government’s commitment to bring forward amendments at Third Reading enabling the Assembly to decide whether 16 and 17 year-olds can vote in the income tax referendum, I urge the noble Lord to withdraw his amendment.

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[Lord Elis-Thomas]

Yes, agreement with the Assembly on the outcome—a need to negotiate an agreement. So there are two principles there. Indeed, the noble Baroness is right that this has been overtaken by the undertaking given earlier, but I did not even dream that we would have so many undertakings, so I tabled the amendment in expectation rather than in hope—and now my hope is about to be fulfilled.

[Lord Howarth of Newport]

My Lords, I would be disappointed if the more radical interpretation of Amendment 4 that the noble Baroness, Lady O’Neill of Bengarve, has adumbrated were not to be the case. The National Assembly for Wales should have power to determine the electoral arrangements for the people of Wales whom it represents, in exactly the same way as the Parliament of the United Kingdom, subject to experts and objective advice, determines electoral arrangements for the United Kingdom.

I do not understand this paranoid insistence on standardisation in electoral arrangements. It could be that using the Scottish Parliament, the National Assembly for Wales and the electoral body in Northern Ireland as laboratory experiments would enable us to learn how better to conduct our electoral affairs and democracy. After all, this Parliament has foisted, or intends to foist on the people of Wales, the most absurd reorganisation of constituency boundaries. It would be much better for the people of Wales as far as possible to be able to determine their own electoral arrangements.

[Lord Crickhowell]

The noble Lord’s remarks have prompted a question in my mind. What is the role of the Electoral Commission in this connection? When we are dealing with constitutional affairs here, the Electoral Commission has a very important role. If this matter is being handed over in this way, is it going to have a role in relation to the Welsh Assembly?

[Lord Howarth of Newport]

The Electoral Commission has certain duties that are defined under statute and it offers authoritative advice. However, ultimately, these matters remain to be determined by the elective bodies in question, and that is how it should be.

I want to say a word about Amendment 5, proposed by the noble Lord, Lord Elis-Thomas, which seems to ask no more than that the National Assembly of Wales should take responsibility for its own standing orders. How could we possibly deny it that?

[Baroness Morgan of Ely (Lab)]

My Lords, I add my appreciation of the fact that we have seen some significant movement during this debate, and I hope that we can continue in that vein for the rest of the day. I want to talk specifically about the agreement or necessity for the Assembly to agree to electoral arrangements. That is very much where the Labour amendment comes from. We have a proposition in this Bill, and we think it would be incorrect for the Assembly not to have a say.

In Committee, the Minister underlined the fact that the majority of the electoral proposals contained in this Bill had been discussed and agreed by the Welsh Government. That is important; there is an important principle here that should be respected. But the principle of devolution also means that it should be a formal process; the Assembly needs to agree to these measures formally and legally rather than have them handed down, even if it is through an agreement that is not as formal as we would like. It is important for us to move to a more legislative approach, and that is what we seek to do with our amendment.

It is also important to note that the Scottish Parliament has the power to make arrangements about Scottish parliamentary elections. That is a divided power between Scottish Ministers and the Secretary of State. So we are simply asking for a degree of consistency. This is a discussion that will go further when we come to Silk 2 and other arrangements. In the context of what we are talking about here the electoral arrangements being proposed should formally and legally be approved by the Assembly.

The Minister spoke in Committee about the danger of a piecemeal approach to devolution and said specifically in relation to elections that there was a need for a “comprehensive approach” across the UK for powers and conduct of elections. That is precisely what we are asking for here—a similar system to that which already exists in Scotland. We do not quite understand why there is a reluctance on this. Could the Minister specify whether there is a principled objection to this or whether this is a question of timing?

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[Lord Anderson of Swansea]

Amendment 7 stands in my name and in the name of my noble friend Lady Morgan. My initial submission is that the area covered by the amendment should be a matter for the National Assembly and that it should not be for us to intervene. I note the two-thirds, super-majority suggestion. Given that the current membership of the Assembly is 40 directly-elected Members and 20 elected on the list system, that proposal would mean that the list system—even if it were deemed to be inappropriate—could not be judge because, on the “turkeys not voting for Christmas principle, those on the list system would be unlikely to vote for it to end.

The Government saw in the Bill, quite properly, a way in which to implement Silk 1. Clause 2 stands as an eccentric—something outside Silk 1. These are the only matters that deviate from the Silk recommendations, and one is constrained to ask why this is used as a vehicle for this important change. I shall not cover the same ground that we covered at Second Reading, although we did not consider this matter in Committee. However, I wish to counter the charge of naked partisanship that was used. Your Lordships may recall that I mentioned the significant comments of leading Conservative and Liberal Democrat spokesmen. It is significant that their comments were made freshly after the actual experience of dual candidacy. Perhaps memories are now fading; for example, regarding the experience of the Clwyd West constituency election in 2003. It was won by Labour’s Alun Pugh. However, three of the other candidates—Brynle Williams, Conservative; Janet Ryder, Plaid Cymru; and Eleanor Burnham, Lib Dem—all became Assembly Members as a result of the regional list. It was a certain Alice in Wonderland world in which everyone was a winner; everyone had a prize.

To the suggestion that this is new and that the only country in the world to have had a similar ban on dual candidacy is Ukraine, Professor Roger Scully said in his evidence that a number of Asian countries have a similar ban. I cite Taiwan and South Korea. New Zealand, New Brunswick and Prince Edward Island in Canada have in recent years considered bans on dual candidacy. It is not, as has been suggested, confined to Ukraine. It is best surely that the normal rules should apply. If someone is rejected by the electorate in an election, that same person should remain rejected by the electorate and not come in by the side door and be on a par with other candidates.

The implication in suggesting that there should be dual candidacy is that we have a dearth of suitable candidates in Wales. That is not my experience. I recently watched a selection in my former constituency as an interested observer. I have seen many other candidate selections and there is a very good list of quality candidates who are ready and available for selection. We demean Welsh politics by suggesting that we do not have sufficiently able, competent people available.

I note the submission of the Electoral Reform Society Cymru, which is, if I have interpreted it correctly, that it wishes to rescind the ban on dual candidacy but impose a supermajority. Obviously we must respect its view, but equally recognise that this is not an ex cathedra statement. Yes, we respect it, but we in this case are the cathedra: it is we who dispose. The arguments against dual candidacy arising from the experience prior to 2003—I cited in the past not just Clwyd West, but the position of Llanelli—are sufficiently cogent for us to say that this matter should remain as it is. We should continue the ban on dual candidacy. It is, after all, in the interests of democracy that if someone is rejected by the electorate they should remain rejected by the electorate.

[Lord Howarth of Newport]

My Lords, I want to say a word or two in support of my noble friend Lord Anderson. The principle that party-political candidates stand as individuals should not be ignored. People are not simply representatives of their parties: they are individuals and characters. Electors form judgments about their individual suitability to represent them in the Assembly. That is why I think that the permission to offer dual candidacy is wrong in principle.

Happily, the National Assembly for Wales has not been subject to the same pressure of scandal and disgrace as the House of Commons in respect of expenses, but there can be no doubt at all that when electors voted in the 2010 general election they formed their judgment, in the case of certain candidates, on the basis of those candidates’ personal records. That is the background to the introduction of the recall legislation. It is against that spirit to say that a candidate is no more than the representative of a party and that if that candidate does not win the first past the post part of the election that same individual candidate can acceptably come back on the list.

Even if it was not for that consideration, voters feel that it offends against an instinctive sense of political propriety that people should run as candidates under first past the post, lose the election and then turn up an hour or two later elected on the list system. That was offensive, and it was absolutely right that the previous Labour Government remedied the error that they had made in the original devolution legislation. The Government of Wales Act 2006 removed the possibility of people standing as candidates twice in the same election. It is regrettable that the coalition—here it is a coalition not just of Conservatives and Liberal Democrats, but also of Plaid Cymru—is seeking to restore a system that is designed by them to be advantageous to minority parties. It is entirely acceptable that under the electoral system we have for elections to the National Assembly for Wales extra provision is made to ensure that minority parties are represented there. However, we must avoid what was generally taken in Wales to be an abuse, whereby defeated candidates come back and reappear, contrary to the clearly expressed wishes of electors.

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[Lord Anderson of Swansea]

My Lords, I hear what the noble Lord, Lord Norton, says. He argues on a point of principle that the choice of the electorate should not be channelled in any way in respect of dual candidacy. He mentioned the position on the continent. He will know that the stream is moving strongly against an accumulation of mandates on the continent—certainly in France, which I know reasonably well. When I represented Swansea, I would have loved to be the Mayor of Swansea at the same time and, perhaps, to have had another mandate. That would have been very useful in cross-fertilisation and no doubt added to my local standing. I work on the simple principle of practicality. People tend to vote for the party, which stands against the principled point which the noble Lord enunciated. Also, no person can serve two masters. My experience in the other place was that, if done properly, it was a full-time job. Equally, as we add to the responsibilities of the Assembly, if an Assembly Member is to do the job properly, that is also a full-time job, and the electorate should not be short-changed by allowing a person to do the two jobs. They will do one well and the other not.

[Lord Howarth of Newport (Lab)]

My Lords, we should be grateful to the noble Lord, Lord Norton of Louth, for inviting us to reflect on the principle involved here. When he comes to respond to the debate, perhaps he would give us the benefit of his thoughts on how his principle would apply if, as has been proposed, there should be a senate of the nations and regions of the United Kingdom. Admittedly, I understand that the proposition is that members of the senate should be indirectly elected: they should be sent from the Assemblies and Parliaments of the nations and regions of the United Kingdom. However, I should be grateful for the noble Lord’s guidance as to what principle ought to apply there: whether he considers that a dual mandate in those circumstances should be permitted by law, discouraged or something that the rules of the political parties should embrace—or would he advise a degree of caution in the matter?

[Baroness Morgan of Ely]

Briefly, it is a good idea in principle for there to be a cross-fertilisation of people from Westminster to the Assembly. That principle was particularly important when the Assembly was set up. However, there is a recognition that there is a time commitment to both the institutions. We now have a situation where the people in the Assembly already do not have the time. We will be talking later about possibly needing more Assembly Members. We do not have the people to do the job at the moment. My point back to the noble Lord is that, although I understand that there should be a principle that the electors can choose who they want, there are other principles that need to be considered. There are the practicalities of how that would work but also the needs of the institutions themselves. Those points should also be taken into account.

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[Lord Wigley]

My Lords, I am delighted to have added my name to this amendment and very much support what the noble Lord, Lord Elystan-Morgan, said. At an earlier stage of the Bill, we had an opportunity to go into this issue in some detail. I will not repeat that or repeat the arguments that he has put forward. I will just underline that, ideally, I would like to see the control of the number of seats, as with other aspects of the Assembly, in the hands of the Assembly itself. However, an amendment on that will not be forthcoming now, which is why I am very glad to support this amendment.

Although noble Lords made persuasive cases at an earlier stage for the membership of the Assembly to be more than 80—to be 100 or even 120, as the noble Lord, Lord Elystan-Morgan, said—I accept that 80 is a logical number to go up to now. As my noble friend can confirm, the design of the building is such that it can expand to accommodate 80 Members without too great difficulty, so that at least avoids any additional cost in that regard.

As an elected Member of the Assembly in the first four years, I found the work pressure enormous. I accept that the nature of the work was a little different then. There were probably more committee meetings and they have been rationalised, possibly because of the pressure on Members’ time. I was on five committees and I was finding that very difficult indeed. Sometimes people say, “Ah, well, you should be there from nine o’clock on a Monday morning onwards”, but that does not overcome the problem of a shortage of Members to sit on all the committees.

An increase to a membership of 80 would also allow for the possibility of having a greater range of expertise in the Assembly cohort. I know from my time there of the benefits of having Members with first-hand medical experience; I think of Dr Dai Lloyd. All parties have people with various types of expertise. Clearly, the more Members you have, the better chance you have of getting a full balance of expertise.

I felt the pressure when there was no more than a secondary legislative role for the Assembly. To do justice to the increased workload of a full legislative role, and not having a second Chamber to go through the detail—I am not arguing for there to be one—much more attention needs to be given to scrutiny of legislation on a line-by-line basis. That requires people with the time, commitment and ability to do the job.

I very much hope that the Minister, if the proposed new clause is not accepted, can indicate that this question will be taken on board between now and St David’s Day.

[Lord Howarth of Newport]

My Lords, the noble Lord, Lord Elystan-Morgan, made his case in masterful fashion and has given a political explanation of why he confines his proposal for an increase in the size of the Assembly simply to 80, not a higher number.

As the noble Lord, Lord Cormack, said in the debate on an earlier amendment, in constitutional change form should follow function. A rigorous analysis is needed of the functions that the National Assembly for Wales already has to perform and the functions that are increasingly to be devolved to it. This legislation provides that the Assembly should take control to a significant degree of income tax and borrowing. The obligations that will fall upon the Members of the Assembly are not therefore solely in terms of additional legislative scrutiny but invigilation of public expenditure, authorising expenditure, and controlling and examining its quality. Whether the National Assembly for Wales would wish to replicate the sort of committee structure that we have in this Parliament, such as the Public Accounts Committee in the House of Commons, I do not know. That should rightly be a matter for the Assembly. However, what is beyond doubt is that the scale, range, complexity, difficulty and importance of the tasks that the Assembly has to undertake have been growing, are growing and will continue to grow.

Therefore, following the example already given by the Electoral Commission in Wales in certain respects, further analysis should be made of the membership required in order for the Assembly to manage to perform the tasks that the people of Wales, and indeed the United Kingdom, will expect it to carry out. For that reason, I very much welcome the spirit of the amendment. I would be happy if it were to be accepted but it would be seen only as a provisional step. It might be preferable that further work be carried out on this proposition, so that we can see exactly where, in practice, it should take the National Assembly for Wales.

The noble Lord, Lord Wigley, wisely and realistically observed that there is a constraint on physical space in the Assembly building. However, we should not be unnecessarily deterred by that factor. After all, when the House of Commons was reconstructed after the war, Winston Churchill, as Prime Minister, thought it appropriate deliberately to recreate a Chamber that would be a pretty tight squeeze for all its Members. That works rather well so we should not be worried.

[Lord Elystan-Morgan]

The words Churchill used were, “a sense of crowd and urgency”.

[Lord Howarth of Newport]

The noble Lord always has a sense of historical drama. He imports that even to these very proceedings. We are grateful to him.

[Lord Richard (Lab)]

My Lords, I support the noble Lord, Lord Elystan-Morgan. As long ago as 2004, when the commission that I had the honour of chairing looked at this issue, we came to the conclusion that there was a need—not just a desirability but a need—for the number of Members of the Assembly to be increased. We based that conclusion on the fact that not enough Members were untouched by government—if I may use that phrase—to man the committees in a neutral and oppositional way. If that was true then—and I firmly believe that it was—it is even truer now, and will increasingly be in the future.

The first debate we had today was on whether the Assembly should move to a constitution based on reserved, rather than devolved, powers. Remarkably, the House agreed that we should move to a reserved powers model. Not only that, the Minister gave some pretty strong undertakings that she and the Secretary of State for Wales also took that view and were holding talks to achieve it. If the Assembly moves to that model then the need for an increase in the number of Members of the Assembly is increased. I hesitate to use lawyers’ phrases, but, a fortiori, the argument is underlined and indeed is strengthened.

--- Later in debate ---

[Lord Tyler]

My Lords, I am delighted to be a cosignatory of Amendment 15 in the name of my noble friend and others. I want to take issue to a very limited extent with both my noble friend and the noble Baroness, Lady Grey-Thompson, who I think are being slightly too pessimistic about the level of interest of young people in registration. The Scottish example is wonderful in that respect, but it is also true that Bite the Ballot, to which reference has been made, has made some real progress this year. It has been by making sure that it there is peer-to-peer encouragement—I do not mean Peer in the sense of Members in this House, I mean the real reference of young people to young people of the issues that are at stake. I have today had an Answer to a Question from the Minister for the Cabinet Office. My Question was:

“To ask Her Majesty’s Government what action they are taking to improve electoral registration rates among those attaining the age of 18”.

I will not read the whole Answer because it is substantial, but just two important paragraphs:

“To support the transition to Individual Electoral Registration, the Government has invested £4.2 million in 2013/14 shared across every ERO in Great Britain and 5 national organisations to support the costs of activities aimed at increasing the rate of voter registration.

The Government has also introduced online registration in Great Britain. As of midnight 28 October, 478,177 16-24 year olds had registered online”.—[Official Report, 10/11/14; col. WA 4.]

In a relatively short period this is a success story. I do not think that we should be too depressed or pessimistic about this problem.

As the Minister will know, I have sat for some time on a small cross-party informal group advising the Electoral Commission. Therefore I take very seriously indeed the guidance it gives us. In its note on this part of the Bill and the amendments to the Bill, it says:

“We strongly support the principle of EROs—

that is obviously electoral registration officers—

“visiting schools and talking to young people about democratic participation. This should form part of their local strategies to promote electoral registration generally and to target those groups who are least likely to be registered to vote … All 22 EROs in Wales have specific plans in place highlighting how they will work with schools and the further education sector in order to engage with attainers and young people”.

I think there is a consensus across the House—certainly among all those who have already spoken—that this is an important issue. Maybe, however, the concern some of us have is whether it is appropriate for statute. Is it appropriate to be in the Bill to this extent and in this detail? Hence the very brief amendment that I endorse.

I accept, however, that my noble friend the Minister may well feel that the Government are already committed —in supporting the Electoral Commission financially, and in terms of guidance and instruction where that is appropriate—to make sure that what we are seeking will happen with or without this amendment. I therefore look forward with interest to hearing how the Minister feels that we can best achieve the objectives which I think we share throughout the House.

[Lord Howarth of Newport]

My Lords, is it not a principal purpose of education to enable young people to think for themselves, to form views on informed and discerning bases and to take good decisions? In no sphere of life is this more important than democracy. Education should be a preparation for democracy. That is why I support these amendments, and very particularly Amendment 14.

[Lord Bew]

My Lords, I support Amendment 13 very much in the spirit of the noble Lord, Lord Lexden, who has already explained the successes in electoral registration which have characterised the situation in Northern Ireland. I add one word of caution: in the last general election, 14 of the 20 constituencies with the lowest turnout were in Northern Ireland. There is still plenty of work to be done. The Assembly, I am glad to say, now has a good outreach programme. Only yesterday my colleague at Queen’s University, Belfast, Professor Rick Wilford, spoke to representatives of 50 schools in Stormont itself. The Electoral Commission is attempting to engage radically with young people.

The noble Lord, Lord Tyler, will not be surprised to learn that there was a great spike in the interest of young people in response to the Electoral Commission’s efforts after the decision was announced that votes would be available to those aged 16 in Scotland—a very obvious and clear spike of interest.

Broadly speaking, the noble Lord, Lord Lexden, is correct. There have been successes in the registration programme in Northern Ireland which are quite remarkable. I can see no reason why similar methods cannot work in Wales. I simply add that in struggling against the alienation of young people, a number of approaches will be necessary.

--- Later in debate ---

[Lord Rowe-Beddoe]

My Lords, I support Amendment 16, standing in the name of the noble Baroness, Lady Morgan of Ely. It is very clear what it says, and without trying to rehearse arguments previously made, I want to discuss the devolution of air passenger duty. I refer your Lordships to my register of interests with regard to Cardiff Wales Airport. The Silk 2 implementation stated that long-haul air passenger duty should be devolved. The arguments put forward in Committee have been considerably amplified—perhaps extended—recently by an unlikely ally in Mr Willie Walsh, the chief executive officer of International Airlines Group, which as noble Lords know, incorporates British Airways and Iberia.

In an article in the Times on 30 October—it was after our Committee meeting; it would be flattering to consider that Mr Walsh was actually watching our proceedings—he takes it much further and calls for a total abolition of this tax across the whole of the United Kingdom. It was a stunning headline but when analysing what he said, and doing a little more research, it is worth making a mark as to what was behind his statement. He said that this tax, permissions, or whatever it may be,

“should be consigned to the annals of history”.

The argument put forward is that the estimated £3.5 billion that the Treasury receives would be more than offset by a boost of some 0.5% to our GDP and the creation of some 60,000 jobs.

The interesting thing is that it is possible to avoid this tax, and people do. For example, a family of four flying economy to the United States pays £276. A Japanese visitor flying back home from London to Tokyo pays £81. This may well have a connection with the flattening level of Japanese visitors to this country, both business people and tourists, over the last 10 years. This tax is a disincentive. Holland got rid of it after 12 months and has never looked back, so there is something to be said for replacing this tax.

I may be proved wrong but I believe that Scotland could well be getting something out of this. We all know what happened in the Republic of Ireland but what we do not know and do not realise is the damage that is done to Northern Ireland because of the hundreds of thousands of people who start their long-distance flights south of the border as £276 is a lot of money for a family of four flying economy. I support the amendment. I am sorry to bring up air passenger duty again but at present it is, I am afraid, a rather hot subject.

[Lord Howarth of Newport]

My Lords, these amendments utter an important warning. It is one thing to devolve minor taxes, such as development land tax and landfill tax, it is another to devolve more significant taxes such as air passenger duty, of which the noble Lord, Lord Rowe-Beddoe, has just spoken. But when it comes to the major taxes such as income tax and corporation tax, very deep thought needs to be given to the viability of such devolution if the United Kingdom is still to hang together. It worries me very much that we can toy with such propositions without them having been thought through. My noble friend is absolutely right to insist that, in the event of further proposals for tax devolution being made, deep thought needs to be given to them, led by the Treasury, and there needs to be a responsible debate across the United Kingdom because we risk unravelling if we continue to play these games.

[Baroness Randerson]

My Lords, the issue underpinning Amendments 16 and 20 is symmetry between devolution settlements. Noble Lords have set out three guiding principles to support tax devolution. We believe that it should have cross-party support, be based on evidence and not be to the detriment of other parts of the UK. Based on the second of these principles, the Government have been consistently clear that decisions on devolution must be treated on their own merits using all the available evidence. This reflects the fact that what is right for one country is not necessarily right for another. The devolved countries are different and so, rather than seeking to achieve symmetry, it is more important that the three devolution settlements work in the best interests of the people of Wales, Northern Ireland and Scotland.

I point out to noble Lords that there are obvious differences. Reference has been made to the land border between Northern Ireland and the Republic of Ireland. The nature of the border between England and Wales is very different from the nature of the border between Scotland and England. Differences of that nature do affect decisions on devolution. Above all, we are determined to work in the best interests of each of the individual countries. Most recently, for example, we have removed the income tax lockstep from this Bill.

In response to the questions asked by noble Lords, I refer them to the Silk 2 report. Corporation tax was part of those recommendations, so it will be a natural part of those four-party discussions. I stress that both the Prime Minister and the Deputy Prime Minister have pledged to put Welsh devolution at the heart of the debate, and that is what the Secretary of State and I are seeking to do in discussions with the four party leaders. I hope that noble Lords will believe that our timetable for those discussions proves that we are determined to press ahead. I therefore ask the noble Baroness to withdraw the amendment.

--- Later in debate ---

[Baroness Morgan of Ely]

My Lords, I turn now to the issue of fair funding for Wales. The Labour Party is keen for this Bill to pass because, for the first time, the Welsh Government will be allowed to borrow money. That is essential to help kick-start the economy, following years of government cuts, which have impacted in particular on the infrastructure budget—essential for investment and driving the economy of Wales.

We agree that in order to help leverage this funding, Wales should have landfill tax and stamp duty tax devolved to it. As we suggested in Committee, the Labour Party does not object in principle to income tax devolution to Wales but we have a key concern. Before embarking down this route, which must have the support of the people of Wales—demonstrated in a referendum—we need to be sure that Wales will not be left worse off than it is now.

We have real concerns that the funding issue in Wales has still not been comprehensively addressed. We now know that the Barnett formula will remain in place, but there is widespread acknowledgement that it has done no favours to Wales. It does not reflect the needs of a nation that has an older, sicker population and a more rural make-up, thereby adding to the costs of providing essential services. We accept that negotiations on this issue have been taking place between the UK Government and the Welsh Government and that there is recognition that a floor should be put in place to ensure that Wales does not lose out. That process was started through a statement in 2012, which acknowledged the problem, but we are looking for a more definitive agreement.

The four-party, cross-party agreement that came from the Assembly in the past month asked for,

“an updated assessment of the current level and likely future direction of Welsh relative funding”.

The Assembly asked for those talks to be completed by January 2015, and this seems to be realistic in terms of a timetable, as the Secretary of State for Wales suggested. He wants a devolution settlement by St David’s Day, 1 March. We are therefore happy that we know that something will happen, at least by 1 March, in terms of reserved powers. We are looking ideally for another little present for us for St David’s Day.

The Minister suggested in a recent answer to a question on the Barnett formula in your Lordships’ House that, in terms of funding, Wales now receives 114% of the UK average. This is welcome information but it would be useful for us to have sight of this evidence. Would the noble Baroness or the noble Lord be willing to share the data that demonstrates that 114% has been reached? It is worth noting that the figure quoted by the Minister was at the very bottom of the range that Gerry Holtham, in his report, indicated was an acceptable and fair level of funding, which ran from 114% to 117%.

There were a few factors that determined the lower levels of funding that arose as a result of the funding formula. The 114% could be considered fair only if we did not undertake to include Welsh-language education provision in Wales, for example. They do not do that in England, so it is not included in the Welsh figures. Also, Wales has already made an upwards adjustment on council tax receipts. If England applied the same formula, Wales would be eligible for more money in the block grant. Those two examples alone mean that fair funding should probably be more like 116%, rather than 114%.

We also know that Wales will lose out once public expenditure starts to rise again, which is why we need this sorted once and for all with a long-term commitment. If we can secure a commitment to the floor being in place—even if that does not happen in practice until Wales holds a referendum on income tax powers, alongside the outcome of the continuing discussions on the off-set required in Barnett—I believe we will then be well on our way to securing a decent and fair funding outcome. However, we are not there yet, which is why, central to the introduction of income tax powers for Wales, we need to be assured that the Welsh Government are happy with the outcomes of those negotiations. That is why we have tabled the amendment.

[Lord Howarth of Newport]

My Lords, I support the amendment that my noble friend has just moved. It is as important as any other that we have debated today. I cannot see a satisfactory future for devolution in Wales until the Barnett nettle has been grasped. It is scandalous that no Government have dealt with this problem since the mid-1970s when the formula was introduced. Cumulatively, since devolution was introduced, Wales has lost out on some £5 billion of funding that it ought to have had, had there been a fair funding formula based on needs rather than on population.

It is true that the gap between what Wales ought to receive and what it does receive has narrowed somewhat in recent years, but we have to anticipate that, as economic growth continues to recover, so the gap in funding and the unfairness of funding will be exacerbated again. It is therefore imperative that there is no further procrastination on this and that the Government agree, with real urgency, to act to secure a just settlement for Wales. The Government were quick to respond to political pressures in Scotland. Political pressures in Wales have been expressed in gentler terms so far, but there will be a continuing sense of injustice that will undermine all the other efforts that we make to establish harmonious and satisfactory political arrangements on devolution for Wales. There are, of course, wider issues affecting the relationships between the nations and regions of the United Kingdom as a whole. I look forward to the Minister giving us a very positive response to the amendment.

[Baroness Randerson]

My Lords, I always enjoy the conversion of the Labour Party to the idea that the Barnett formula is unfair. The noble Lord, Lord Howarth, made a very important point, which is that it is scandalous that this formula has lasted for so long without anyone inquiring into it. I can assure noble Lords that the Government are aware of the issues and have taken measures to ensure that they are addressed.

This amendment would make the devolution of an element of income tax conditional on changes in funding arrangements. Specifically, the First Minister has raised this issue on numerous occasions, saying that he would not be prepared to recommend devolution of income tax unless fair funding were obtained. The amendment suggests that the Welsh Government have to confirm that they are content with the way in which funds are allocated to Wales from the UK Government before the element of income tax can be devolved.

This Government have already recognised that there has been convergence between the levels of funding in England and Wales since devolution. We took steps in the matter just two years after taking office. In October 2012, we set up a joint process with the Welsh Government to review the levels of funding in Wales and England in advance of each spending review. If convergence is forecast to occur over the spending review period, there will be a joint discussion of options to address the issue in a fair and affordable manner. That system worked well in advance of the 2013 spending round and confirmed that spending is not forecast to converge during the period up to 2015-16. It also established that relative funding levels in Wales were within the range that the Welsh Government’s own Holtham commission regarded as fair. In that context, the noble Baroness, Lady Morgan, quoted the 114% figure that my noble friend Lord Newby referred to last week. I am happy to write to her, and to set out further detail on that figure.

In relation to ongoing discussions about the funding situation, following the first meeting of the Joint Exchequer Committee between the UK and the Welsh Governments last month, we have now further committed to revisit jointly the review process in the light of the powers in the Bill. In other words, we have agreed to find a way of facilitating fair funding. The Government therefore believe that there is a sound basis for an early referendum to be called and I urge the Welsh Government and the Assembly to do so as quickly as possible.

I hope that I have assured noble Lords that the Government are aware of the issues on funding and are addressing them in discussions with the Welsh Government, who are fully conversant with our plans. I urge the noble Baroness to withdraw her amendment.

Wales Bill

Lord Howarth of Newport Excerpts

Tuesday 11th November 2014 Lords Chamber

[Lord Howarth of Newport (Lab)]

My Lords, I thank the noble Lord, Lord Elystan-Morgan, for his amendment and for the flexibility that he has just expressed. As he says, we have now achieved critical consensus in support of a reserved powers model, which is a result of the growing esteem in which the reputation of the Welsh Assembly is held and the maturing of time.

I think that it now strikes almost everybody—I hope that it strikes the coalition Front Bench—that it is a matter of simple equity between Wales and Northern Ireland and Scotland that devolution should be reconfigured for Wales so that it is on a reserved powers basis. That must make pragmatic sense because it is highly undesirable that questions of policy jurisdiction should have to be resolved in the courts. This is a policy for which the time is ripe. Whether it will be precisely ripe in six or nine months’ time is something that we can consider, but the noble Lord is drawing attention to a matter upon which we should now seek to precipitate universal agreement.

I was fascinated by the historical excursion of my noble and learned friend Lord Morris of Aberavon and I would demur in only one respect. It is presumptuous for me to do so, given his vast experience of these matters, but I am apprehensive about his proposal for the scope and make-up of a constitutional convention. It has suddenly become very fashionable to favour a constitutional convention, since the dramatic and very difficult events that occurred in Scotland—indeed, in the United Kingdom—only a few weeks ago.

I am not against a constitutional convention, and I think it would be a good idea to have senior politicians as members of such a convention along with academics who are deeply expert in these matters, constitutional lawyers, appropriate representatives of civil society and so forth. However, I think it would be a very bad idea for party leaders to be members of such a convention. They would be prudent to keep their distance from the convention, because the problem for a convention is that, toil as it will and wise as its members may be, almost certainly they will get it wrong. As my noble friend acknowledged, the Kilbrandon royal commission was inconclusive. I think he even said of himself and his colleagues and partisans in that Labour Cabinet, “In the event we were proved wrong”.

The complexity and scale of potential constitutional change is such that even the wisest are most unlikely to hit upon a blueprint for the future of our constitution that will prove as universally beneficial as they hope and stand the test of time. Even the preternatural wisdom of those who met at Philadelphia seems now to be tested by events. Many people consider that the constitution of the United States of America has become pretty dysfunctional. Well, it has served its purpose very well for a very long time. But there are many other instances of constitutional conventions that have started off in a blaze of optimism and ended in a blaze of political destruction, so we should be very cautious about this. Constitutional change occurs most benignly when it is incremental and incrementalism has been the approach for constitutional change in Wales.

The amendment of the noble Lord, Lord Elystan-Morgan, proposes one more phase of incrementalism. It invites us all to acknowledge that the moment has come for devolution to be reconstituted on a reserved powers model. Let us be content with that as we think further and feel our way forward on some of the more difficult aspects of all of this.

[Lord Deben (Con)]

My Lords, I rise because I feel that there ought to be an examination of what the noble Lord has just said. I am very unhappy about this amendment although I agree with it in terms of the next increment. I just think that we are fumbling around in constitutional discussions without taking things in the round. It is all right talking about increments but there has been no constitutional incrementalism as far as England is concerned. That is our problem and we ought not to allow ourselves to continue with these bits—a bit here, a bit there—with no real consideration of the totality of the United Kingdom.

We are fumbling in the dark and I very much hope that my noble friend will not accept this amendment, not just because of the time but because I hope she will go back to the coalition Government and say that, although it may be tough, there comes a moment in a nation’s life when it has to consider what its constitution ought to be as a whole, not just in bits, and what happens to the other bits when you change some of them. We must face up to it. I know it is not going to be perfect and I know it is going to be very difficult but if the choice is between randomness and trying to work something out, I am in favour of rationality. I want people to think this through and try to discover what the balance ought to be.

As the son of a Welsh-speaking father I have some reason to congratulate the Welsh people on the way in which devolution has worked in the Principality. I am not speaking against this because I do not think that it should continue; I am merely saying that the United Kingdom matters too much for it to be left—

Wales Bill

Lord Howarth of Newport Excerpts

Wednesday 15th October 2014 Lords Chamber

[Lord Wigley (PC)]

My Lords, I will also speak to Amendments 53 to 55. This group seeks to bolster the Assembly’s economic accountability and resources. We in Plaid Cymru believe that the Welsh Government should be able to issue bonds, just as the Scottish Government can. Amendment 52 would hence provide for a review into whether this could in fact take place. It is a very modest amendment giving the opportunity for this to be further investigated. I should point out that this was a recommendation of the Silk commission and is supported by the Welsh Government as well as by my own party.

Having this power would allow the Welsh Government to use innovative, less volatile ways of borrowing such as the Build for Wales scheme that we have championed. Such a project would create a new entity to invest in public infrastructure. At present, if the Welsh Government want to undertake large amounts of capital expenditure to invest in building schools, hospitals, roads and so on, they are unable to borrow and cannot raise enough by way of tax to provide the necessary resources. If they save the funds, the Treasury may claw the money back if it is not spent within a certain period—as was so disgracefully done in 2011 when savings prudently accumulated by the Welsh Government were ruthlessly purloined by Her Majesty’s Treasury. It is surely against common sense that the Welsh Government are unable to borrow funds long term to fund capital assets.

Amendments 53 to 55 would ensure that the threshold for the Assembly’s capital borrowing powers is raised from the £500 million in the Bill to £1,500 million—that is, £1.5 billion—which would make the Welsh Assembly more closely aligned to the £2.2 billion threshold afforded to the Scottish Parliament. We would feel very unhappy if the Scottish Parliament were able to borrow four times the sum that we can in Wales. We arrived at our figure by taking into consideration Wales’s population base as well as the fact that we have fewer PFI commitments than Scotland, hence giving us greater flexibility over repayments. I beg to move.

[Lord Howarth of Newport (Lab)]

My Lords, it is absurd that there should be a need for a review of such a matter. It is absurd that there should be limits on the ability of the Welsh Government to borrow. We all remember—I think we are all old enough—that in the 1960s and 1970s local authorities issued bonds, as did utilities. Much more recently, universities have issued bonds, notwithstanding that to a significant extent they are publicly funded. This is an elementary tool of financial management which, if the Assembly is to take serious responsibility for its own affairs, of course it ought to have.

My only complaint about Amendment 55, proposed by the noble Lord, Lord Wigley, is that he has been so modest. He wants to limit the amount that the Assembly is permitted to borrow to £1,500 million. There is a constraint on the amount of borrowing that rests in the ability of the Welsh Government to service the interest. That should be a sufficient discipline.

--- Later in debate ---

[Lord Richard (Lab)]

My Lords, I start by declaring an interest. Some years ago, I had the privilege and honour of chairing the committee of your Lordships’ House that looked into the operation of the Barnett formula. It was an extraordinary committee. On it, among other people, we had a former Chancellor of the Exchequer, two former Secretaries of State for Scotland, assorted junior Ministers, and other Members of your Lordships’ House. The committee came to the unanimous conclusion, set out in a report, that the Barnett formula was out of date, inefficient, basically unfair and ought to be replaced. One of the most substantial parts of evidence we had was from my noble friend Lord Barnett himself. He said that he thought it was out of date and inefficient and was never intended to last this long—that it was introduced as a temporary measure in about 1977 or 1978 and not designed to be semi-permanent. It was meant to last a year or so and then expire. I put it to him whether it was fair to say that it ought to be replaced. He said, “Yes, perfectly fair.” He has persisted in that view.

Where are we on this issue? Here we have a formula, introduced nigh on 40 years ago, which still determines the basis of the block grants for Scotland, Wales and Northern Ireland. It is based on evidence garnered in the 1970s, and is not based on needs but rather on population. You hear the argument frequently that you cannot have a formula based on needs because it is too imprecise and difficult to do. I would commend that the people who veer in that direction of the argument read the evidence that we produced in that report about six years ago. There was a detailed examination of a needs-based formula and the evidence then seemed quite conclusive, as it does now. The Barnett formula is unjust and unfair. Wales is unfairly discriminated against as a result of the operation of the Barnett formula.

No Government in recent years have been prepared to take this issue on. In terms of the Labour Government which left office in 2010, the then Chief Secretary to the Treasury appeared before our committee and said that he thought the operation of the Barnett formula was broadly sort of fair. Indeed, the then Secretary of State for Wales even came in front of the committee and said he thought it was sort of fair. Of course, the Secretary of State for Scotland thought it was extremely fair. The Secretary of State for Northern Ireland also did not dissent from that general proposition. I was appalled, frankly, at the evidence that we got from the Chief Secretary to the Treasury and the Secretary of State for Wales. Nothing has changed. Things have not got better as far as the Barnett formula in Wales is concerned: on the contrary, they have got worse. Something has to be done about it. We really cannot go on with this.

Although I have held the view for some time that the formula’s time has come and that it should be quietly expunged from the public record, I was surprised and, indeed, somewhat appalled to see the three party leaders re-emphasise in the Scottish referendum campaign that it should continue to apply to Scotland. If it is said that it should continue to apply to Scotland, on what basis should it do so? Does that mean that it should continue to apply to Wales? If so, will Wales be asked to put up with what is, by almost everybody’s admission now, a basically unfair system of allocation of resources from central Government to Cardiff? Are we really going to be asked to put up with this because the party leaders went up to Scotland at the end of the referendum campaign and made what is, on the face of it, an extraordinary offer to the Scots? If the party leaders want to keep the Barnett formula for Scotland, so be it, but they should not be prepared to inflict it upon the Principality in perpetuity. It is basically unfair, unjust and out of date, and something should be done about it.

[Lord Howarth of Newport]

My Lords, it is enough to make one weep that, in the run-up to the Scottish referendum, political leaders felt themselves driven by expediency to pledge to retain the Barnett formula. As my noble friend Lord Richard explained to the Committee, it is one of the great injustices and malfunctions of government in this country over the past 40 years and a lamentable lack of statesmanship has prevented it being reformed. There was a great opportunity in 2010. The Conservatives had nothing to lose in Scotland. With universal recognition of the need for austerity, there was a political opportunity to deal with it then. That has been made infinitely harder now by the rash and unprincipled pledges that have recently been made.

The report of the committee of my noble friend Lord Richard is unanswerable. We debated it in your Lordships’ House and there was not a scintilla of a persuasive argument to defend the status quo. Indeed, I do not recollect anybody even trying to defend it. The pledges that have been made will come back to bite their authors because I cannot foresee how we can make progress towards new constitutional arrangements in this country following the referendum in Scotland and following the pledges that have been made in respect of devolution so long as there is such a fundamental inequity in public financing. I cannot see how there can be a fair and acceptable new set of arrangements while the Barnett formula is retained.

The noble Lord, Lord Wigley, spoke extremely well and constructively with his practical suggestions as to how we might try to develop a sort of fallback position. My noble friend Lord Richard suggested that if the Scots are to retain their advantage, it may none the less be possible to find ways at least to reduce the inequity for Wales. However, it seems to me that that path also bristles with political difficulties because, if public spending is a zero-sum game, if there is to be more for Wales, then it has to come from somewhere and if the Scots are allowed to retain their present advantages, then it will come from Northern Ireland or, more likely, from England. However, there is, rather belatedly, a growing recognition in the regions of England that the Barnett formula is a lousy deal for the English. I cannot see that there is a path towards remedying at least a part of the injustice from which the people of Wales suffer if it is to be done directly at the expense of the people of England. Hasty pledges have placed us all in immense difficulty but I look forward to hearing from the Minister or the noble Lord, Lord Bourne, who may be able to pluck a solution out of the hat, although I somehow doubt it.

[Baroness Morgan of Ely]

Today, the First Minister called again for a new funding system that meets the public service requirements in Wales. He likened the Barnett formula to,

“fixing a hole in the roof with Blu Tack and cardboard”.

It is no secret that Wales does not do well out of the Barnett formula. However, we know, following the Scottish referendum, that that formula is not in danger of dying any time soon. Indeed, the Prime Minister made his sentiments on the issue quite clear last week, when he reiterated that he had no intention of reopening the debate on providing a fair funding mechanism for Wales. That seems very different from the position of the Secretary of State for Wales, who said yesterday that he is prepared to address the issue. It would be nice to hear which one of those statements is correct.

At present, the block grant provides 113% of the English level of spending on devolved services, while the Holtham report found that Wales’s relative needs were between 114% and 117%. The noble Lord, Lord Newby, has asked me to be more positive, so I will give it a good go. The good news is that an arrangement was put in place in October 2012 that established a process to review the relative funding of Wales to England in advance of every spending review. If it looked like convergence were happening—for example, if the level of funding between England and Wales looked like it was becoming more equal, despite Wales’s needs being greater, due to things such as ageing population and rurality—then the Government would discuss options to address the issue in a fair and affordable manner. That is the good news.

The problem is that there is no guarantee. It is purely up to the good will and subjective decision-making of the respective Ministers in Cardiff Bay and Westminster. The Labour Party has acknowledged that there is a specific funding problem in Wales and that we will address the issue when we are in office.

I am sorry, but I am afraid that I must return to my negatives. One of the problems with the income tax recommendations is that this issue is compounded by the problem of the devolution of income tax in Wales. It is clear from David Cameron’s insistence that Wales should just pick up that offer of income tax powers that he has not understood the link between underfunding in Wales and the method through which the block grant will be reduced in future, should Wales pick up the option of introducing the Welsh income tax. While it is worth re-emphasising that we agree with the principle of income tax devolution, it is also worth underlining the risks that Wales would be undertaking if we were to devolve income tax powers without changing the Barnett formula.

The idea is that, if the Government suggest that in the first year of operation 10 points of personal income tax receipts are yielded to Wales, then the equivalent amount will be deducted from the Welsh block grant. That cut is then adjusted proportionately in subsequent years. The Government have suggested that the indexed deduction method, as recommended by Gerry Holtham, is used as a method to determine what that proportional cut would be. The problem is that if the block grant fails to produce a fair level of funding relative to need at the outset, as every subsequent change will be based on that initial level of funding, any cut in grant in future, however it will be adjusted, will probably make matters worse as convergence happens.

On the one hand, we are saying that we need fiscal accountability in Wales. On the other hand, we need to ensure that before we set out on this path we start from a fair position. It is critical that a fair funding mechanism is established from the outset, otherwise that unfairness will be locked into the system for the long term.

I know that the Minister is intensely aware of this issue. She has her fingers all over it and has been discussing it for years. However, I ask her to reiterate what the Secretary of State said this week: that he is prepared to look at this issue.

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[Lord Thomas of Gresford]

The noble Lord, Lord Anderson, has disappointed me slightly with this recantation of what he said earlier, but never mind. I am entirely with him that we need a constitutional convention and that we should be looking for the abolition of the House of Lords and some form of federal, directly elected or proportionately elected Chamber that could consider the situation as a whole, perhaps with a Supreme Court charged with the sort of duties that attach to the Supreme Court in the United States. That is not, however, any reason for holding up the provisions of this Bill, which are urgent. The Bill needs to go through because Wales cannot wait for a future nirvana when we have got it all together, it is all very logical and all the problems are at an end. We cannot keep the Bill waiting for that moment.

[Lord Howarth of Newport]

If my noble friend Lord Anderson’s Amendment 57 is passed it will be a very long time before the provisions of this Bill are brought into force. I am against that delay because I want the Welsh Government and the people of Wales represented by them to have the new borrowing powers that are built into the Bill. However, if there is to be a constitutional convention, I am in favour of it taking its time. In the field of constitutional reform, more haste means less speed, as we saw rather painfully in the attempt at reform of your Lordships’ House in this Parliament.

I also think that the constitutional commission, if there is to be one, should be very much at arm’s length from the political parties and the Westminster and Whitehall establishment. It will be important that the public should not suppose that this is any kind of stitch-up or a device for the existing establishment to protect its own interests. The public would want to see that members of the commission were deeply versed in constitutional theory and constitutional law, and that while they may have close affiliations and loyalties to the different nations and regions of this country, they were prepared to take, as far as they could, an objective view of the long-term interests of the United Kingdom.

It would also be essential that they should receive submissions from the public. Those submissions would be numerous and would take a very long time to consider. I am sure that if a committee of wise people formed on these principles were to set to work, they would perform a valuable task in clarifying the issues, educating us all and pointing the way forward. They would probably succeed in coming up with a blueprint for a new federal model of the United Kingdom. However, it is one thing to come up with a blueprint; it is quite another to implement it, and then politics would re-enter. I anticipate that the processes of constitutional change would then be, as has always been the case in this country, incremental, and they would be the better for that.

I cannot support my noble friend’s amendment, but as we reflect on what we might be seeking in a constitutional commission we should disentangle it from our continuing day-to-day requirements of legislation and politics. We should get on with enacting this Bill. We should get on with implementing it and think generously, spaciously and patiently about how to develop a future framework for the government of the United Kingdom.

[Baroness Morgan of Ely]

My Lords, we have to understand what the Scotland referendum was really about. It was a cry from the people of Scotland who feel cut out of the political process. Of course, that has had an impact not just in Scotland because of the commitments that were made in the last days of the referendum, but it is having and will have an impact across the whole of the United Kingdom. It makes sense for us to place the discussion within a broader context.

We are not in favour of stopping this Bill in its tracks. A lot is in the Bill and there is a lot more to come with Silk 2. It is important that the Welsh devolution process does not stop because of a huge transformation in Scotland. However, it is worth saying that we have to think in a broader way about the constitutional arrangements of our country. What happens in Scotland is having an impact in Wales. Those commitments on Barnett are already having an impact in Wales and there is a problem if they continue to do so. We need to get the balance right and we need to have a broader discussion.

For two years the First Minister of Wales has been calling for a constitutional convention to be established where a discussion about the power relationship between Wales and the rest of the United Kingdom would be undertaken. Who would be on such a constitutional convention? Obviously there would have to be representatives from the devolved Administrations and local government representatives from England. But, crucially, we would also want to see representatives of civil society and the general public. The disconnection between politicians and the public absolutely has to be halted. We would need to work to a clear timetable. The last thing we want is a discussion that goes on for years and years without end. We would also need to think clearly about what the convention would do. We would have to define the core elements of a new constitution that would enshrine a programme of fundamental reform for the UK. The new settlement, while recognising the different circumstances of the four nations, must be based on common principles that reflect the multinational and multi-union character of our United Kingdom.

The referendum in Scotland was a wake-up call for all members of the political class. We must acknowledge the depth of disillusionment in this country and the distance that people feel from the political process. Through establishing a convention, we would have a one-off opportunity fundamentally to reform the system of governance of this country. A constitutional convention is needed and it is well overdue. We recognise, however, that the Wales Bill is not the ideal mechanism for introducing the idea of a constitutional convention, but it seems rather odd for us to be ploughing on with constitutional changes as if nothing has happened. As Carwyn Jones, the First Minister of Wales, has said, the current constitutional settlement is dead. We recognise the need and the demand for more devolution in Wales, but we need to set the whole within the broader UK framework. To proceed in isolation from the wider discussion would be to miss the opportunity to elaborate on a new vision and a constitution for this country, a constitution that would involve, include and invigorate the population so that people would feel as if they had ownership of their own country.

Wales Bill

Lord Howarth of Newport Excerpts

Wednesday 15th October 2014 Lords Chamber

[Lord Tyler (LD)]

My Lords, I am delighted to add my signature to this group of amendments. Although I am very proud of my Celtic ancestry in a different part of the United Kingdom, I am not Welsh, not a lawyer and not even a Methodist local preacher. So I can be incredibly succinct in saying that what is so important about this group of amendments is that it is based not on any theory but on practical experience both in Northern Ireland and now in Scotland, as my noble friend Lord Roberts has said. I hope that, in that spirit, the Minister will be able to accept these amendments in toto because they do not in any way extend into a new area. They simply take advantage of the practical experience we have had in other parts of the United Kingdom.

[Lord Howarth of Newport (Lab)]

My Lords, given the very disappointing levels of registration and turnout among young people to which both the noble Lord, Lord Roberts, and my noble friend have referred, we clearly need to be a lot more energetic and imaginative in the ways in which we seek to engage young people in our democratic processes. I find the proposals in these amendments very attractive, but I wonder whether the Minister, or the noble Lord who moved these amendments, would offer any thoughts on two issues.

The first is that it is going to cost money. The noble Lord, Lord Roberts, suggested that these processes could be carried out even, perhaps, at a profit. I would be grateful if he could clarify how this might occur because, if we ask electoral registration officers to take on additional responsibilities and to become busier, it is likely to cost money. In this time of austerity, when local authorities are operating within such extremely stringent financial limits, there are questions about priorities. When local authorities are finding it extremely difficult to carry out the responsibilities that they wish to do in relation to education, social services, housing and so forth, where would the pursuit of improved levels of electoral registration best lie within their scale of priorities?

The other issue on which I would be interested to hear the views of the Minister and of the noble Lord is whether we should move to giving the vote to young people at the age of 16. Of course we want to encourage young people to participate in our democracy. Many young people would wish to do so and feel ready to do so at 16. When I was the Member of Parliament for Newport East and used to hold meetings with sixth-formers in my constituency, I was quite surprised to find how many young people had their doubts as to whether it was appropriate to lower the voting age to 16. I would be interested to hear the thoughts of noble Lords opposite as to whether that sentiment has changed in the 10 years since I ceased to be a Member of Parliament for a Welsh constituency and whether, if we enfranchise people at 16, we will see them positively engaging in democracy with that new opportunity.

[Lord Lexden (Con)]

My Lords, I am glad to follow the noble Lord, Lord Howarth of Newport, whom I have known personally and respected for many years. I strongly support Amendment 20 which provides the key to securing a marked and rapid increase in the number of young people registered to vote. Time and again, the need for effective action to tackle the acute problem of underrepresentation among the young has been highlighted, not least in the reports of the Hansard Society of which I have the privilege to be a trustee.

Across the House we support the marvellous organisation Bite the Ballot, which is bringing determination and dedication to the task of getting many more young people on to the register, as we have heard. Surely we must give the organisers of Bite the Ballot the tools they need for this vital job. Nothing, it tells us, is more important than the creation of a sustained and lasting partnership between electoral registration officers and schools based on the model developed in Northern Ireland. We have heard today from my noble friend Lord Roberts and others that this is the wish of the Welsh Assembly, too.

The case for such a partnership is surely overwhelming—it has been proved beyond all doubt in Northern Ireland. The Province has pointed the way. As a staunch unionist, I say: let Wales, and indeed the rest of the country, follow where Northern Ireland has led. It would be a tragedy if the United Kingdom as a whole failed to reap the benefits of what has been pioneered in Northern Ireland—a point that I hope my noble friend on the Front Bench would be particularly sympathetic towards, given her dual responsibilities in Wales and Northern Ireland, and I am quite convinced that St Edward the Confessor would be on our side.

--- Later in debate ---

[Lord Wigley]

If the noble Baroness refers to the Silk report, she will see the arguments made there. The whole point and ethos of the Silk report is to open out as much freedom as possible for the devolved authorities to develop ideas and even experiment with this area to reach the objectives that both she and I would wish they did. It is giving them more tools. I hope that those tools help them do the job.

[Lord Howarth of Newport]

My Lords, whatever the future structure of the United Kingdom, the union is surely to be based upon twin principles of solidarity and diversity. Tax credits are a principal structure of the welfare state. As my noble friend just now suggested, the welfare state is a fundamental underpinning of that solidarity. Given that in the last figures I saw only about 2% of the people of Wales do not wish to maintain the union, I very strongly suspect that noble Lords are a little bit ahead of themselves—not for the first time—and that the people of Wales would wish nothing to be done that would weaken the welfare state and undermine that principle of social solidarity that ought to underpin the union. I make this point particularly because great figures in Welsh political history were among the leading architects of the welfare state. Whether by accident or design, we should not do anything to undermine the welfare state and the solidarity that binds the people of Wales together with the rest of the United Kingdom through the welfare state and associated principles of fiscal redistribution.

[Lord Newby (LD)]

My Lords, Amendments 21 and 22 seek to include a reference to “associated tax credits” as part of the power to add further devolved taxes. I thought that the noble Lord was going to discuss tax credits associated with devolved taxes. In respect of landfill tax, at the moment, existing site operators can contribute a percentage of their tax liability to environmental benefits and get a 90% tax credit. As far as devolved taxes are concerned, that ability will still exist. For that type of tax credit, the power is there.

I think that the noble Lord, Lord Howarth of Newport, was talking about welfare benefit payments. Welfare benefits are not covered by the Bill. There has been no proposal to devolve power over welfare benefits to the Welsh Assembly. I thought that the noble Lord made strong arguments about why that might be opposed. The Bill makes no provision for devolving discretion over welfare benefits to Wales for good reason, and the Government are not minded to change their view on that.

Amendment 23 would remove the UK Parliament from the process of creating further devolved taxes. The Bill enables the Government to devolve further existing taxes as well as enabling the Welsh Government to create new devolved taxes. Clause 6 requires that if either of these powers is used the order would need to be approved by this House and the other place as well as by the Assembly.

--- Later in debate ---

Plaid suggested that the matter should be entirely determined by the Assembly, but we are still part of the UK and our tax powers will have an impact on the UK. Therefore, it is correct that the UK has a say in to what extent income tax powers should be devolved. Income tax and other direct taxes per head in Wales raised £5,500, considerably less than the UK average of £7,300, and nowhere near enough to cover our public service expenditure. I warn the Government to be very careful about how we proceed down the slippery slope on taxation. If we are going to go down this route, let us do it with our eyes wide open and be aware of any unintended consequences of what may happen if we devolve income tax powers to Wales.

[Lord Howarth of Newport]

My Lords, it must be right as a matter of equity that Wales should have the same powers to alter tax rates as does Scotland, but my noble friend is right to remind the House that the exercise of those powers could be a poisoned chalice. In the extremely unfortunate situation in which we find ourselves, in which the Government are pledged to retain the Barnett formula, it is very hard to foresee circumstances in which it would be in the interests of Wales to use such further devolved powers of taxation. So long as Wales gets an unjust and inadequate funding settlement from the Exchequer, not based on needs but based on population, Wales will be at a loss, and it would be very dangerous for the Government of Wales to accept that it is their job to make up the shortfall by raising tax rates in Wales. I think that that would lead to extremely unhappy long-term consequences for the economy and society of Wales.

So, although I support my noble friend in her amendment to create powers that would be comparable to the powers in Scotland, we should keep our eyes wide open as to the realities of this. I cannot foresee that, in the absence of reform of Barnett, there is going to be any possibility of a stable and acceptable new constitutional settlement for the United Kingdom. However, these are larger issues that we shall debate another day.

My noble friend is also right to remind the House that the nature of the border between Wales and England also imposes a very powerful, practical restraint on the scope for differentiating tax rates. If people who are living in Wales near the border feel themselves to be so penalised, so disadvantaged by differential tax rates in Wales as compared with England, a number of them will move their residencies across the border and that would be very detrimental to Wales. As far as I can foresee, the practicalities are pretty unattractive compared with the notional possibilities that we are discussing in this legislation.

[Baroness Randerson]

Noble Lords will have noticed that the pleasant agreement and consensus across the Chamber has disappeared in the last group of amendments. I thank the noble Lord, Lord Wigley, for his speech, bearing in mind that the transfer of powers proposed in his amendments would mean Wales becoming entirely separate in taxation terms. He will not be surprised to hear me say that I am not going to accept these amendments.

However, I wish to spend some time on the speech by the noble Baroness, Lady Morgan, and to express some considerable surprise. I took the trouble to reread what she said at Second Reading. The Labour Party’s views appear—to use a colloquial phrase—to be all over the place because of the considerable gap between what the noble Baroness said at Second Reading, what she is saying now, what the First Minister of Wales has said and what the honourable Owen Smith said in the other place. Name a person, name a debate and you can have a slightly different view. In fact, there is a huge gap between one debate and another.

The principle of accountability lies behind the proposal in the Bill to devolve an element of income tax to the Welsh Assembly. The noble Baroness asked me what the reason was for the Government changing their mind on the lock-step. The reason was quite simple. People such as the First Minister said that this power was no use, therefore they could not use it. They said that the lock-step was not a good idea. We listened to people and it seems that, across parties and across the country, there has been huge support for the removal of the lock-step except now, suddenly, in the Labour Party, which had condemned the lock-step as being fatally flawed. It therefore surprises me that, when the lock-step was proposed, the Labour Party did not make clear that it was totally opposed to the devolution of income tax, rather than simply opposed to the lock-step.

I want to take up a few issues that the noble Baroness, Lady Morgan, raised. She referred to the serious erosion of local accountability. That may be the case in Wales and, if so, it is down to the Welsh Government, because they have devolved responsibility for local government. However, looking at the pattern in England, there has been a big increase in the amount of local power and local discretion for local authorities and councils in England. I agree with the noble Baroness that there has been a contrast between the two countries. In Wales, there has been a process of centralisation; in England, there has been a process of decentralisation.

I regret to say that the views expressed by the noble Baroness and the noble Lord, Lord Howarth, indicate that Labour is still wedded to the idea of being a high-tax party. It still does not take on board the basic economic fact that if you cut taxes, you stimulate the economy. I give the noble Baroness an example of something that I am hugely proud of as a member of the Government—the fact that we have raised the income tax threshold to £10,500. That means that the lowest paid in society are keeping much more of what they earn. It is an issue of social justice of which I am tremendously proud. The sooner the Labour Party accepts that that is of great benefit to the lowest paid, the better it will be for its stewardship of the Welsh Government. I give way to the noble Lord.

[Lord Howarth of Newport]

I am grateful to the Minister but does she recognise that, in the context of an unfair funding formula which simply fails to address the reality of the needs of Wales, Wales has less scope to cut taxes than other parts of the United Kingdom?

[Baroness Randerson]

I recognise that there is an issue with the funding formula but I think it is also possible to overestimate the level of unfairness. I believe that this week the honourable Owen Smith suggested that the gap in funding for Wales was £150 million per annum. That is a significant amount of money but in a budget of more than £15 billion it would not offer a total revolution for Wales. Nevertheless, I recognise that it is an issue that needs to be looked at in the context of other devolution discussions at the moment.

I turn to the questions asked by the noble Baroness. An impact assessment of the costs was published alongside the Wales Bill. It indicated that the estimated cost of setting up the income tax changes in Scotland was £40 million to £45 million. An updated estimate is now available of £35 million to £40 million, which is rather less than we initially thought. There has also been an updated impact assessment. The estimate of the annual running costs is £4.2 million, and that will be updated in due course.

The noble Baroness also asked whether we would agree to a Treasury impact assessment of the taxes on either side of the border. The key thing is that there are provisions in the Bill on the transparency of the whole thing and of the discussions between the parties. A joint Treasury committee has been established between the Welsh Government and the UK Government, and it is already in discussions. Welsh Ministers and UK Ministers are discussing these matters. That is the kind of detail that would flow from those discussions.

I turn now to the Labour amendment. Forgive me, but I find it quite difficult to understand the intellectual inconsistency of arguing against the removal of the lock-step, while at the same time arguing for an increase in the amount of devolved income tax from 10p to 15p. I remind noble Lords that the First Minister said on several occasions that the lock-step was an inappropriate method of dealing with income tax devolution, and that this was unusable and unworkable. He did not say that he was opposed to income tax devolution. Now, apparently, it is dangerous as a mechanism to devolve income tax and, at the same time, it is also all right to devolve 15p but not 10p.

I believe that noble Lords will be surprised that the Labour Party is having so much difficulty in coming to a firm position on this. The noble Lord, Lord Howarth, exposed one interesting piece of inside information with his use of the phrase “poisoned chalice”. He said that the devolution of income tax could be a poisoned chalice for the Labour Party in Wales. It is called “government”. I leave you with that thought.

Wales Bill

Lord Howarth of Newport Excerpts

Tuesday 22nd July 2014 Lords Chamber

[Lord Howarth of Newport (Lab)]

My Lords, in a democracy, decisions ought to be taken at the level closest to the people whose lives they affect. The principle of subsidiarity is right, the moral and emotional case for devolution is powerful, and I support the Bill. But how to design a model of devolution in practice is far from straightforward. Politics is about reconciling and balancing different interests. How much devolution, and what kind of devolution, is in the interests of Wales and is in the interests of the United Kingdom? A wisely designed model of devolution—the holy grail—would strengthen both.

The first requirement is that the model of devolution should be clear, which is why I agree with many noble Lords who have spoken that it is now time for Wales to have devolution on the reserved powers model, not on the conferred powers model which leads to disputes in the courts and creates profound uncertainty. Silk was clear about this but the Bill, disappointingly, fails to address it. In this regard, Wales should be placed on the same footing as Scotland and Northern Ireland.

As my right honourable friend Peter Hain once remarked, devolution is not an event but a process, and the people of Wales have now made up their mind, after much initial hesitation, that they like devolution. They are glad that they have it and, as the noble Lord, Lord Elystan-Morgan, said, they have advanced up the curve of expectation and confidence. Wales is not Scotland, but if the people of Wales want no less devolution than is allowed to the people of Scotland, they should have it. But of course that raises the question: what do the Scots themselves want? And, as we consider these matters, what is in the interests of England, which is a thought all too commonly absent in debates on devolution? How can devolution strengthen the United Kingdom in the interests of all? Vague and open-ended promises of devo-max made by political leaders in the run-up to the Scottish referendum do not seem to be a responsible or satisfactory way to proceed. How is all this going to end?

Most of the wider constitutional issues that were considered in Silk Part II have been deferred to the other side of the Scottish referendum on 18 September. But perhaps after that, people will start to suggest that they ought to be deferred beyond a possible referendum on the United Kingdom’s membership of Europe. The noble Lord, Lord Wigley, stressed the importance to Wales of membership of the European Union. It is never the right moment to decide what the next stage of devolution should be but it is good that the Government are proceeding in the Bill. We should proceed where there is sufficient consensus both within Wales and across the political parties in the United Kingdom.

Although the constitutional issues have been largely deferred, there are provisions in the Bill on elections. The Bill would bring back dual candidacy: the right of a candidate to stand both in the constituency election under first past the post and on the regional list. As my noble friend Lord Rowlands has just recollected, the origin of these mixed elections was the recognition by the Labour Government in 1997 and 1998 that a Welsh Assembly elected solely by first past the post would, given the political patterns of Wales, be Labour-dominated for as far as the eye could see. It was Aneurin Bevan who remarked that “the purpose of getting power is to be able to give it away”, but that magnanimity is all too rare in politicians. It was found, however, in Ron Davies, the Secretary of State for Wales at that time, who believed that it was right to create a Welsh Assembly that would be in some sense ecumenical.

It is of course right that the parties should contest elections under both systems but I strongly believe that it is inappropriate that individual candidates should be able to run simultaneously under both systems. That being permissible, we got the absurd situation in the Clwyd West election in which all four first past the post candidates were elected. That can hardly have encouraged political engagement. Why bother to vote at all if everybody gets in? The noble Lord, Lord Bourne, observed that the people of Wales were not confused about this. No, I do not think that they were confused but simply that they were shocked, and the abuse got worse because those who had been elected on the regional list system then used publicly provided funds to set up constituency offices to establish a power base in the constituencies which they were targeting.

The noble Lord, Lord Wigley, said that the Labour Party’s objection to the restitution of this state of affairs is—and I wrote down what he said—naked party-political jiggery-pokery. I was going to refrain from mentioning in my remarks the scandal of Leanne Wood’s leaked memorandum to Plaid Cymru candidates in 2003 but, provoked by the noble Lord, I think it right to remind the House of it because not all noble Lords may be familiar with what she said in her missive to them. She said:

“We need to be thinking much more creatively as to how we … use staff budgets”—

those are budgets provided by the taxpayer—

“for furthering the aims of the party”.

She went on:

“Regional AMs are in a unique position. They are paid to work full-time in politics and have considerable budgets at their disposal. They need not be constrained by constituency casework and events, and can be more choosy about their engagements, only attending events which further the party’s cause. This can be achieved by following one simple golden rule: On receipt of every invitation, ask ‘How can my attendance at this event further the aims of Plaid Cymru?’ If the answer is ‘very little’ or ‘not at all’, then a pro forma letter of decline should be in order”.

This is a scandal that in the annals of political scandal should be in red letters and I hope that it makes even the noble Lord, Lord Wigley, blush. It is now a further scandal that the political parties which are the minority parties in Wales are using the majority that the coalition provides for them in Parliament at Westminster to take powers to resume these abuses. They are shameless about it and what they are doing will be seen for what it is. I agree with other noble Lords—my noble friend Lord Rowlands among them—that the Welsh Assembly and the people of Wales should decide their own electoral arrangements.

[Lord Wigley]

I noted the way in which the noble Lord nipped out quickly to get a copy, quoting from an earlier debate. The question I want to put is this. Would he apply the same change to Scotland now, given the political arithmetic there?

--- Later in debate ---

[Lord Howarth of Newport]

We are considering the political arrangements that are appropriate for Wales. For all the reasons that I have already indicated, it must be wrong in principle; but here we are focusing on the question of Wales.

The core of the Bill is fiscal devolution. It is anomalous that devolution should have created an Assembly and a Welsh Government that apply policies in Wales but do not raise taxes to pay for them in Wales and do not have the close accountability to the people of Wales that levying taxes creates. The fact that that was part of the initial structure of devolution reflects the early diffidence in Wales about devolution when the referendum was won by only a hair’s breadth in 1997.

The taxes that it is now proposed to devolve will be no cornucopia for Wales. Public expenditure in Wales runs at perhaps twice the level of the net tax receipts that the Welsh Government are able to spend. It is quite right that business rates should be determined by local authorities in a system negotiated with the Assembly and the Welsh Government, but that is not going to be a bonanza for Welsh local government. Stamp duty land tax is highly erratic in its yield. Is it intended that the block grant should rise and fall with the fluctuations in the yield of stamp duty land tax? If it is not, we are going to see some fairly halting progress in the kind of capital programmes that the proceeds of that tax should be able to fund. From the last figures that I saw, the yield of stamp duty land tax in Wales was only some £200 million, in contrast to London, where it is in the order of £2 billion. The Mayor of London is asking that that tax be devolved to himself and the Greater London Assembly. That raises the question of how long we can expect London to be willing to subsidise Wales on the scale that it does at the moment. Londoners may want to see Wales raising some of its own money.

I understand that the landfill tax will be a diminishing source of revenue.

[Lord Thomas of Gresford]

The Barnett formula clearly applies to Scotland and Wales and the reform of it is linked. Does the noble Lord wish to postpone reform of income tax in Wales, or the collection of income tax in Wales, until that whole problem has been resolved?

[Lord Howarth of Newport]

These issues need to be addressed together. I am hoping to say something about the Barnett formula in a moment.

The devolution of tax, as we know, is to be linked to the question of borrowing powers. The ratio of borrowing permitted in Wales will be the same as the ratio of tax devolution. Borrowing is to be heavily circumscribed by the Treasury in the existing situation—up to £500 million to cover volatility in tax receipts and another £500 million for capital expenditure. That will be increased only if Wales assumes further responsibilities for taxation within Wales. Clearly, the Treasury does not believe that the purpose of power is to give it away.

The situation in Scotland is different. The Scottish Government can borrow up to 10% of their capital expenditure. It seems unfair that there should be lower limits on borrowing powers in Wales, created by this link to income tax. The scope to raise income tax is lower in Wales than it is in Scotland. I agree, therefore, with the Labour proposition that, if the people of Wales wish it, they should have the power to vary income tax to 15%. This question of borrowing powers is absolutely crucial.

The consequence of the arrangements proposed in the Bill is that Wales is placed in an unfair bind and faced with a very difficult dilemma. The noble Lord, Lord Thomas of Gresford, has just drawn our attention again to the Barnett formula. These issues need to be resolved together, particularly against the background that the Welsh budget has been heavily cut by £1.6 billion, and in terms of capital resources cut by 31%, as my noble friend Lady Morgan said. The people of Wales, with lower living standards and a lower taxable capacity, are being told to service borrowing in order to pay for projects that previously would have been funded from the Exchequer. The people of Wales are also being asked to pay for projects, such as the improvement of the M4, which are not just infrastructure for Wales; they are infrastructure for the whole of the UK. When it comes to the referendum, the people of Wales will want to think whether they are being asked to buy a pig in a poke.

The power that the Scots have to vary income tax has not been used over 15 years. The difficulty for a devolved assembly or parliament is that they are politically damned if they do and politically damned if they don’t. There are very difficult problems about introducing differentiated tax rates within a country as geographically compact and economically integrated as the United Kingdom. Wales will experience that more intensely than Scotland because of the permeability of the border and the much greater involvement between the people of Wales and those who live across the border in England.

What matters? Is it the specific powers that are devolved, or that there should be policies that on the part of the United Kingdom as a whole will enable Wales to be more prosperous, that will be fair as between Wales and the rest of the United Kingdom, and will enable Wales to play a strong part in the United Kingdom? There is a large gap between revenue and expenditure in Wales. Wales needs the continuing willingness of taxpayers in England to continue to support it. Some 40% of GDP in the UK is generated in London and the south-east. There are very significant risks for Wales if it embraces the opportunity of developing its own policies on income tax. Above all, Wales must not lose the willingness of the United Kingdom, and England in particular, to continue to redistribute. Wales therefore needs a Government with a vision for the United Kingdom as one nation, a nation consisting of proud regions and nations within it, and a Government who do not disparage the achievements of Wales in education, health and housing. Wales needs a Labour Government who will offer devolution that is not meagre and mean and that will enable Wales to thrive within a thriving union.

--- Later in debate ---

[Baroness Randerson]

How the Welsh Government raise the additional money is, of course, entirely at their discretion. It could come directly from their capital budget or they could have a partnership with the private sector to ensure that additional funding is available for them.

[Lord Howarth of Newport]

Given that the M4 relief road around Newport is an infrastructural benefit to the United Kingdom as a whole, how much contribution are the Government of the UK planning to make to that very large cost?

[Baroness Randerson]

I think that the noble Lord raises a fundamental point about devolution. The control of building and road infrastructure in Wales is devolved. With it comes the Barnett consequential of the funding for infrastructure throughout the UK, which is reflected in the proportion of the Department for Transport’s budget that is devolved to the Welsh Government.

To complete the point I was making, we have agreed an annual limit of £125 million relating to borrowing in Wales. That limit was proposed by the Welsh Government. A lot of noble Lords referred to the Barnett formula. I remind them that the Holtham report recommended that Welsh funding should be between 15% and 17% above English funding. Funding in Wales is 15% above the funding for England at this time, so it is within the areas deemed as fair by the Holtham commission. That is not to say that it has been fair in the past; it is at the current point because there has been divergence in recent times rather than convergence. I remind noble Lords that in 2012 the Welsh Finance Minister Jane Hutt agreed with the Chief Secretary to the Treasury in an exchange of letters a system to review the situation in relation to Barnett if convergence was about to begin again. That system worked satisfactorily at the spending review last year and it provides a basis for fairness in the future. I am absolutely sure that noble Lords will return to this in the future and that we will be talking about it in some detail.

Wales: Cost of Living

Lord Howarth of Newport Excerpts

Monday 2nd December 2013 Lords Chamber

[Lord Howarth of Newport (Lab)]

My Lords, I ask the Minister: what responsibility do the Government consider they have to assist the industrial areas of Wales? Wales is experiencing economic change on an unprecedented scale and at an unprecedented pace. Digital technology, globalisation and the rise of new industrial economies have unleashed tsunamis of disruption on the regions that pioneered the first Industrial Revolution, notably south and south-east Wales. The mature industries of Wales are being battered by competition from businesses in newly industrialised economies that enjoy state-of-the-art technology, which Welsh industries certainly ought also to have, and pay very low wages, which could not and should not be paid in Wales.

Where manufacturing continues and prospers—and there are still magnificent manufacturing businesses in Wales, and we are very proud of them—the workforce is being hollowed out by automation and off-shoring. That hollowing out is occurring among the white collar workforce as well as the blue collar workforce. We are seeing the development of the gap between the 1% and the 99%, with fabulous increases in wealth and income for a tiny minority at the top and really significant real-terms falls in income for a great many people lower down the scale. Therefore, the challenge for the Government is to develop policies to overcome the traumatic distributive consequences of contemporary economic growth.

The Government have a duty to help businesses and individuals cope with this whirlwind of economic change, but the coalition’s response to that challenge is to do the very opposite. Instead of an industrial strategy redeploying some of the wealth arising from property values, financial services and exportable services, the Chancellor has engineered an asset bubble, which he calls a recovery. The Governor of the Bank of England clearly has doubts about the validity of this recovery but, from the Chancellor’s point of view, these are policies not in the interests of Wales but to help his party get through the election.

The ethic of the Government is: “To them that have, more shall be given”. Instead of an intelligent welfare state that stays alongside people who are the casualties of economic change, helping them to reconstruct their lives, the Chancellor abuses them as shirkers and people who cannot be bothered to open the curtains in the morning. He cuts their benefits and at the same time he cuts the taxes of the 1%. Instead of a strategy to raise our educational levels and skills to those of our competitors, the Government wage an ideological war against local educational authorities and raise fees for university education to insupportable levels.

For Wales, devolution is a device to absolve the Government of responsibility. They tauntingly propose to people in Wales, whose incomes are on average significantly lower than the incomes of people in England, that they should vote in a referendum so that the Government of Wales should have income tax-raising powers; thus they would be able to borrow to pay for infrastructure and all will be well. Ministers must know that that strategy is disingenuous. The sums cannot possibly add up. Devolution should not be a device to get the Government off the hook. These infrastructure developments would benefit the whole of the United Kingdom and the cost ought to be borne fairly across the United Kingdom.

The cost of living crisis is a crisis of structural change, of growth that benefits only the rich, top managers and shareholders. The creative destruction of capitalism is not going to lead to a free market nirvana in the regions that experience very much more destruction than creation. What responsibility does the Minister consider the coalition has to support people in the crisis of industrial Wales?

Wales: Commission on Devolution in Wales

Lord Howarth of Newport Excerpts

Monday 18th November 2013 Lords Chamber

[Lord Howarth of Newport (Lab)]

In welcoming this enhancement of devolution, I particularly welcome the improved prospect that we now have for the construction of the M4 relief road, which when it is opened will be of great benefit to quality of life and economic development in Newport and south-east Wales.

Perhaps I may press the Minister further on the points rightly raised by my noble and learned friend Lord Morris of Aberavon and my noble friend Lord Touhig on the funding of infrastructure. The Statement seemed to suggest, entirely implausibly, that, as a result of these changes, the land of Wales would flow with milk and honey and that the Welsh economy would be rejuvenated. Surely she recognises that the substantial cost of investment in transport and other infrastructure needed in Wales can be met only in limited part—I would say in small part—by the revenues from the minor taxes that are to be devolved and the limited borrowing powers that are proposed for Wales. Surely devolution should not mean an opportunity for the Treasury to be off the hook and for the important infrastructure needs of Wales to continue to be neglected.

[Baroness Randerson]

I know that the noble Lord is very conversant with the problems of the M4, and in the Newport area in particular. I am glad that he has welcomed the contribution that these changes will make to alleviating them.

The early part of the Statement set out the contribution that the UK Government have made to infrastructure in Wales, in particular railway infrastructure. The noble Lord needs to bear in mind that when an issue has been devolved the funding is devolved as well. If there are flaws in the devolution settlement in Wales, we have to look back to the Government of Wales Act 2006 and the original devolution settlement at the end of the last century. It has possibly been difficult in the past for the Welsh Government to deal with major infrastructure projects, which is exactly why we say that, as well as devolution of minor taxes, there needs to be a referendum to offer the people of Wales the opportunities given by the devolution of a portion of income tax.

Wales: Devolution

Lord Howarth of Newport Excerpts

Thursday 19th July 2012 Lords Chamber

[Lord Howarth of Newport]

My Lords, I welcomed the establishment of the Silk commission, but the terms of reference given to it by the Secretary of State are in some respects ill judged. The commission is tasked to consider issues of accountability but not of fairness. The block grant and the Barnett formula, along with the system and structure of democratic representation in Wales, are off limits. The commission is required to consider fiscal matters before it considers constitutional matters when the nature of political and legislative devolution should, I think, determine the appropriate fiscal devolution.

The Barnett formula provides nearly 50% of public expenditure resources in Wales. It is comprehensively discredited. This was stressed in the Welsh Government’s response to the Silk commission consultation, and a while ago a Select Committee of your Lordships’ House provided a comprehensive and devastating analysis of the inadequacies of the Barnett formula. The funding provided by the Treasury to Wales is computed on the basis of changes to spending in England in policy areas that are devolved to Wales and the extent to which they are devolved to Wales, and on the size of the population relative to that of England. So resources provided to Wales follow political decisions and events that occur in England. Notoriously, the Barnett formula is not a needs-based formula, in contrast to the principles on which resources are allocated to local government, social security spending and health spending. The Barnett formula is bizarre and unjust, and it makes a mockery of the principle of devolution. The effect of per capita funding under the formula has been what the noble Baroness referred to as the Barnett squeeze. Wales receives less than if it were an English region. GDP per capita in Wales in 2007 was 77% of the UK average, but Wales received only 8% above the UK average. Holtham, which examined these matters pretty definitively, found that Wales had relative need of 115 per capita on a scale in which England was 100. Wales is poorer on all the significant indices: unemployment, child poverty, social security claims, disability, housing, education, health and mortality.

Poor people in Wales, including unemployed under-25 year-olds in the Alway and Ringland estates in Newport, whom the Prime Minister thinks ought, in due course, to cease to have housing benefit, are subsiding Scots living in wealthy suburbs. Holtham told us that Wales, which has less than 6% of the population of England, is short-changed by a figure in the order of £300 million. I cannot overstate the importance of this issue to Wales. There is no statutory basis for the Barnett formula, which is opaque in its process and has no independent audit—it is a disgrace.

The Government have hitherto set their face against change to the Barnett formula. Why? For reasons of political cowardice? The Conservative Party had nothing to lose in 2010, when it was set on finding every means possible to reduce the deficit, by tackling the problem of the overpayment of some £4 billion to £5 billion to Scotland under the Barnett formula, but mysteriously it did not do so. Was it because Liberal Democrats representing Scottish constituencies held it to ransom or is it simply a product of intellectual indolence in the Treasury?

[Lord Forsyth of Drumlean]

I agree with almost everything the noble Lord says, but in fairness he ought to deal with the point that the Select Committee report was to the previous Labour Government, who were equally unwilling to address this issue.

[Lord Howarth of Newport]

The noble Lord has, as so often, a telling point. I do not disagree with him at all. I am pleased that discussions are now taking place between the Government of the United Kingdom and the Government of Wales. I hope that they will be fruitful, because for Wales reform of the Barnett formula is more important and urgent than any fiscal devolution. At a very minimum, as the noble Baroness said, there should be a floor in the block grant so that it does not fall below the level that would be provided under the English needs formulae. Of course, we need a properly developed needs-based formula for the block grant.

The coalition is obsessed with cutting public expenditure, deflating an already depressed economy. These issues are hugely important for Wales.

It is right in principle that if legislative powers are devolved, then tax-raising powers ought also to be devolved, including a power to vary levels of taxation. This satisfies the principle of accountability and will make for more responsibility and better value for money. It is appropriate that a Government elected by the people of Wales should have discretion to use resources as they judge appropriate for the benefit of the people of Wales. As the noble Lord, Lord Forsyth, suggested too, these considerations ought to have been brought to bear at the very outset of the process of devolution.

What, however, would happen in practice if tax-raising powers were devolved? Wales needs more public expenditure or, at any rate, a less drastic reduction in public expenditure. It needs that if it is ultimately to be able to reduce the disproportionate size of the public sector in Wales. It needs to be able to invest in education and infrastructure and in a strategy to support the development of new leading private enterprise sectors in Wales. What Wales does not need is more and extra taxes laid upon people and businesses. I do not think anybody in Wales ought to nurse the illusion that the block grant would rise to compensate for tax cuts that might be introduced under fiscal devolution in Wales.

So, which taxes ought to be considered? Income tax is perhaps the prime candidate, but the power to raise or lower income tax by 3p in the pound would be a poisoned chalice. The Government of Wales have not sought that power. No doubt they would not refuse it if it were thrust upon them, but would they use it? I think it no more likely that the Government of Wales would than the Government of Scotland.

Then there is corporation tax, but there are problems defining Welsh companies. Holtham found that the only realistic way in which one might be able to devolve powers in relation to corporation tax in Wales was by reference to the number of people employed by Welsh businesses, but we do not want to create an incentive for Welsh employers to reduce the number of people that they employ. There is a broader principle. Competition between the territories of the United Kingdom to offer a lower rate of corporation tax might well not be in the interests of the United Kingdom as a whole.

I will not run over the whole litany of alternative taxes that noble Lords have already mentioned, but if there is to be fiscal devolution then choices have to be made from among the options of business rates, council tax on second homes, stamp duty land tax, capital gains tax on land and property, landfill, aggregates levy, air passenger duty, and so forth. If we examine the scope to use such devolved powers, we again run up against the problem that tax increases would be damaging to business and prosperity in Wales. The Welsh Local Government Association is right to insist that there needs to be a rigorous examination of the merits of devolving any one of these.

Borrowing powers seems a much simpler issue, whether for capital or to offset the volatility of revenue that would be consequent on Wales setting its own tax levels, but this is also excluded from the terms of reference of Silk. It was not, however, excluded from Silk’s consultation, nor from the responses. It is more attractive, but would Welsh Government bonds be underwritten by the Government of the United Kingdom? Is it realistic to suppose that there can be Keynesianism in one small country called Wales? How can fiscal devolution be a reality within a meaningful macroeconomic strategy for the United Kingdom?

The terms of reference of the Silk commission are very restricted on constitutional matters. I simply say that the constitutional matter that is most pressing and important for the people of Wales is the representation of the people of Wales in the Parliament of the United Kingdom. The coalition has legislated to reduce the number of Westminster constituencies for Wales by 25%. The voice and the votes of the people of Wales are to be very substantially reduced, as is the quality of the representation of the people of Wales because of the absurd exigencies of the redrawing of the boundaries. Therefore, I hope that Welsh Liberal Democrat MPs will not hesitate to vote down the proposals to reduce the number of constituencies.

I hope also that people in Wales will consider the issue of an elected second Chamber because if there are to be Senators for one vast Welsh constituency, wandering round undermining the work of Assembly Members and Welsh Members of Parliament without any accountability, and they are to be Members of a second Chamber that is going to be much more assertive in fiscal matters, then they will find that this reform is travelling in the very opposite direction of the devolution that they want.

The proper considerations are how to improve the accountability of the Welsh Government; how to provide funding commensurate with the responsibilities that are devolved, having first defined those; how to ensure a fairness of distribution of money across the United Kingdom; and how to strengthen, not weaken, the coherence of representative government across the United Kingdom. Is there any resting point for devolution? These are issues for everyone, not just for the people of Wales.

Legal Aid, Sentencing and Punishment of Offenders Bill

Lord Howarth of Newport Excerpts

Tuesday 24th January 2012 Lords Chamber

[Baroness Turner of Camden]

My Lords, I, too, support my noble friend’s amendment. The Government have not got their act together on this. We are told that these rights are being taken out of scope because there are other means of dealing with them. Well, the other means of dealing with them, of course, are via the arbitration system, but it is not very long ago since we debated in this House a set of proposals emanating from another wing of government, the Business Secretary, which were designed to weaken employment law on arbitration.

It was proposed that in future a dismissed employee should have to pay a fee before getting a case to an arbitration tribunal. And then, when the employee came before an arbitration tribunal, he would not face the kind of arbitration tribunal that we are used to for dismissal cases, with lay members from both sides of industry sitting on it—oh, no. In future, there would be no relatively friendly environment in which an individual could make a submission, perhaps without being legally represented, but a judge sitting on his own. In other words, it would be a much more legal system, and this legislation makes provision for no legal aid to be provided. That is totally unsatisfactory.

On the one hand, you have a Government saying, “Well, there are other means of dealing with the situation through a non-legal system”; on the other, they are doing everything possible to make it difficult for someone who has been dismissed unfairly, as they feel, to take their case to an arbitration tribunal instead of the law. This is absolutely unsatisfactory and I really do think that the Government have to re-examine their policies in this regard. It is totally unfair to individuals who believe that they are doing a good job of work, who become dismissed and who feel that they have a case, and there is nowhere for them to take it.

[Lord Howarth of Newport]

My Lords, I, too, support the amendment. It must make practical sense to put employment cases back into the scope of legal aid. Worryingly, we face the prospect of rising unemployment. We could see significantly rising unemployment if there were to be a disorderly collapse of the euro. Let us hope that that does not take place, but the interaction of global economic circumstances with the Government’s deliberate policies to reduce employee protection in the interests of liberalising the labour market could result in significant numbers of people becoming casualties. While the Government might argue that the overall economic process will be benign in the interests of this country, it is unquestionable that these circumstances may be malign in the interests of individuals.

In a process of economic adaptation, it is extremely important that, as a society, we take decent and proper care of those who may be the casualties of it. It must be a basic right that people should have legal aid to ensure that they are well advised and that, where necessary, they are represented and their cases can be well made in employment tribunals. What they are personally suffering is a product partly of events and partly of policy, and all of us have a responsibility to ensure that, in times of great economic difficulty, no more people suffer in these processes of change than is truly necessary.

If someone has a genuine right to bring a case against unfair dismissal or some other aspect of their employer’s treatment of them, and they are not supported to make that case, it leads to a sense of injustice. A sense of injustice pervading society in a context of economic stress and social strain cannot be something that the Government want.

If we look at the implications for individuals, again, surely Ministers do not want people to suffer unduly or to incur the costs to the public purse that one can foresee occurring. If someone loses their job, as my noble friend Lord Bach has pointed out, they are liable to become reliant on benefits and could be on the start of a slippery slope that leads to debt, homelessness, the destabilisation of family life, and physical and mental ill health, all of which carry costs to society and to the public purse which surely the Government would wish to avert.

I do not know whether it is the case—it has been suggested to me that it is—that the Government have received advice from those responsible for the conduct of the employment tribunals that it is a mistake to take employment cases out of the scope of legal aid. It would be helpful if the Minister could advise the House whether the Government’s policies have been endorsed or criticised by employment tribunals and whether they have been advised that it would be wiser not to take this course.

For all the reasons that noble Lords have put forward and those that I have suggested, I hope that the Government will accept the amendment. If they are unable to accept it today, I hope they will look carefully again at this area of reduction in legal aid before we come to Report.

--- Later in debate ---

[Lord Wallace of Tankerness]

My Lords, in many cases professional advice by representation is not actually available. I have already said that I do not for a moment deny that the advice that people get in the preparation of a case is valuable—of course it is—but we get back to the issue of looking at the competing priorities for funding from a limited pot. We have said that cases involving life, liberty and homelessness are more important priorities. We are looking, too, at circumstances in which the tribunal is itself intended to be a forum in which people could much more readily access such things informally, without the need for, or recourse to, lawyers. When I was a law student, the idea was still alive and fresh. That difficult choice was made against a background where there are other sources of advice available—I shall not list them again—and in the context of a tribunal that is intended to facilitate those who do not have representation. I do not shy away from it being a difficult choice, but it was made against other competing priorities.

I was about to take the point that the noble Lord, Lord Howarth, and the noble Baroness, Lady Turner, made. We have mentioned other proposals that have been on the airwaves. A different department is responsible, but I will ensure that these concerns are drawn to the attentions of BIS, and will respond to the more specific points when it is possible to draw them to the attention of the department whose responsibility they are. I think that I am right in saying that in some cases the consultation has not been completed.

[Lord Howarth of Newport]

I put another question to the Minister, although I am very grateful for his answer to that one. He himself suggested that we are no longer in a golden age, if ever we were, in which tribunals were easily accessible and user friendly. Will he say whether the department has received representations and advice from the employment tribunals on this matter and, if so, what it was? Did those tribunals endorse the removal of employment cases from the scope of legal aid?

[Lord Wallace of Tankerness]

I think that I asked whether someone could come to my aid and give an answer to that question. Perhaps if I talk slowly, that may be possible. Failing which, I may be able to intervene on the noble Lord, Lord Bach, if he responds to this amendment, or I will have to resort to writing to the noble Lord. Frankly, I do not know the answer, but I shall try to find it out for him.

[Lord Howarth of Newport]

While the Minister awaits advice, will he tell us about the processes that led to the drafting of the impact statement? A number of us have argued that there will be knock-on consequences for the public purse to the budgets of other departments and the wider economy from taking these cases out of scope. What examination have the Government made of the cost implications elsewhere for their own policies, which the Minister keeps telling us he is applying only under duress, to save money on the legal aid budget itself? The justification offered by Ministers for this is that it is essential to contribute to the reduction of the deficit, and this is how they are going to contribute to the reduction of the deficit. Many of us simply do not believe that the net effect of these policies will be to reduce the deficit—it will be to increase it. What calculations have the Government made about that?

[Lord Wallace of Tankerness]

As the noble Lord acknowledged, the question goes wider than this particular case. I remember dealing with or at least considering the matter in relation to an earlier amendment last week. While it is often said, I do not think that any substantive evidence has been given that the cost to the public purse will be greater as a result of these policies. Certainly, if part of the purpose is to ensure that the deficit was addressed, it would not make sense to rob Peter to pay Paul, or whichever way round it is. The Government’s view is that in the totality there is benefit and that this will make a significant contribution to the reduction of the deficit. I apologise to the noble Lord, but despite the extended debate I still do not have the answer to his question.

--- Later in debate ---

[Lord Beecham]

My Lords, this amendment speaks to the question of consumer law and seeks to restore it to the scope from which it is removed by the Bill. Consumer law covers a multitude of cases but in particular contract law, consumer credit and professional negligence proceedings.

In 17th century terms, I view the noble and learned Lord as a Roundhead—or in view of his provenance, perhaps as a Covenanter—rather than as a Cavalier. However, I am afraid that “cavalier” is the only word that I can apply to the Government’s attitude to access to justice in this and other contexts. That attitude is well illustrated by the airy dismissal of the views of those whom they consulted on whether consumer law should be kept within scope. The Government carried out a consultation exercise and reported:

“Of those respondents who commented on this aspect of the proposals, almost all were opposed to removing these cases from scope”.

Two of the grounds that were raised are relevant for today’s purposes. The response stated that,

“some respondents argued that consumer cases should be retained, in particular professional negligence cases where negligence may have resulted in serious consequences for the client … in some professional negligence cases clients would need expert reports to prove negligence and without legal aid individuals would not be able to afford these”.

The Government concluded:

“Having considered the responses … we confirm our intention to remove consumer and general contract cases from the scope of legal aid. Whilst there are some difficult cases, in particular professional negligence cases, these are still essentially claims concerned primarily with recovering damages, and that means that we consider that their relative importance is generally low, compared, for example, with issues of safety and liberty”.

That is a classic case of an argument reductio ad absurdum. To say that life and liberty are more important than contract law or divorce is axiomatic: it does not advance the argument one whit. The Government also said, as we are so used to hearing in debates on this Bill:

“There are other sources of advice available in relation to consumer matters, for example, from Trading Standards and Consumer Direct”.

Here I ought to declare a non-pecuniary interest as an honorary vice-president of the Trading Standards Institute.

The Government continue:

“There may be alternative non court based solutions in some cases, for example, through regulators and ombudsmen”.

I am rather surprised that they did not add Which? and the helpful columns in the Guardian and weekend newspapers while they were at it. However, that is a considerable oversimplification and an underestimate of the problems which people face. Professional negligence is not merely confined to the recognised professions of solicitors or accountants, for example. Even members of the Bar can be sued for professional negligence, and that has been the case for some time. The conduct of financial advisers, like that of some other professions, might result in considerable loss to people. There is also the builder who botches the job or the architect whose design is defective. All these matters can affect many people and involve them in considerable financial loss.

It is certainly possible to obtain some alternative advice. On Monday, my noble friend Lord Stevenson spoke to an amendment about debt. He is the chairman of an organisation called Consumer Credit Counselling Service, which offers advice in the realm of consumer credit. However, that is not face-to-face advice and anything more complex has to be referred on. My noble friend advised me that that organisation tends to refer matters to the citizens advice bureaux. There is an assumption on the part of the Government that the capacity of organisations such as the citizens advice bureaux, law centres and other bodies is capable of infinite expansion. Apparently, they will be able to undertake the very large volume of cases which will henceforth be denied legal aid or legal advice. However, not only will it be impossible to obtain legal advice from solicitors, but when the very funding of those organisations through government grant for legal advice and assistance will also be cut, they will have a massively increased demand and a diminished resource with which to meet that demand, unless they obtain a soupçon from the £20 million which the noble Lord, Lord McNally, has waved about as being available for some indefinite time to assist in dealing with these problems. That is an extremely unsatisfactory solution to the problem because it is no solution. It is interesting that the Government do not specify in any detail their assessment of the availability of these possible alternatives, simply relying on the fact that there may be alternative non-court based solutions.

The really worrying feature, which again underlines the unsatisfactory nature of the Government’s attitude to this and other cases which we will be considering and have already considered, is summed up in their response to the consultation when they say:

“Although there may be exceptions, in our view the individuals bringing these cases are not likely to be particularly vulnerable compared with, for example, those in the mental health category”,

for which, in fairness, provision will be made. But, again, that is a comparison which has no significance at all, and it is not the comparison that the person who is denied access to justice will make. He or she will rightly make the comparison with somebody who has the means to afford that advice and representation. We are creating a two-tier system of justice, one in which you can buy your way in if you have the means and another in which you will effectively be denied it if you do not have the means. In areas such as this where significant harm can be inflicted on individuals—admittedly, that is not physical harm but pecuniary harm, stress and distress—it does not seem appropriate to deny them the access which the very modest funding that is involved currently allows.

The Government should look at this matter again. Over recent years, Governments of both political persuasions—perhaps one should now say of all three—have championed the cause of consumers. We are talking now about predatory capitalism or responsible capitalism and the rest of it. We ought to be looking at the bottom of the scale of providers, if you will, and at how people can be best enabled to pursue remedies against those who inflict harm on them, because this Bill does not assist in that respect. I beg to move.

[Lord Howarth of Newport]

This is another important amendment and I would like to support my noble friend Lord Beecham, who has moved it. If the Government suggest that caveat emptor is a sufficient answer to the case made by my noble friend, they would be wrong. If the Government say that it is simply up to the consumer not to buy shoddy goods or not to avail themselves of shoddy professional services, it will not do—particularly in the provision of services.

Professional self-regulation is not always all that it ought to be. Although we should always guard against the assumption that things are not what they used to be—a view that we are a little bit liable to become attached to in your Lordships' House—none the less, I think it is fair to say that the professional ethic has become somewhat attenuated over recent decades. We see, for example, the advertising of professional services in ways that we did not in the past. We see the marketisation of professional services, arising in part out of contracting out, and the general widespread extension of market values and market practices, which in many cases have led to greater efficiency and greater availability of services. However, they also carry the risk that those who offer these services may become a degree less scrupulous when the ethos is that of the market.

People find themselves beset by parasitic professionals. The purveyors of subprime mortgages may have been the most offensive instance in recent years that one can imagine, but there are many other cases. It will not do to leave the ordinary citizen vulnerable to predatory, grubby and dishonest so-called professionals. The issue of equality of arms that arose in the previous debate on employment law arises here, too, because the ordinary citizen may come up against professionals, or those who represent them, who are highly articulate, able to speak the jargon of a specialised field and can afford expensive advice. It must be an elementary principle that there is access to justice on sufficient equal terms to enable citizens who have been poorly, dishonestly or improperly served by professional advisers to have some remedy.

[Baroness Howe of Idlicote]

My Lords, I have some sympathy in this area. I also have a great deal of sympathy with what has been said on previous amendments, because there is a distinct grouping of those who have the means to cope with their own cases and those who do not. In this particular case, consumer law has been a matter that we have only recently begun to take an interest in—indeed my noble kinsman was the first ever Minister of Consumer Affairs. I remember that I was immediately enthused because I thought that it would make him much more interested in all the goods and facilities that I might be interested in buying. I have to admit that it did not quite work out that way. He was much more interested in the number of ounces and proportions described on the back of a product, and so on.

Nevertheless, on the other point made by the noble Lord who moved the amendment, we have concerns about the organisations that protect the consumer. Which? is obviously an important organisation, as are CABs in other areas also. If their funds are going to be cut in the way proposed, we will have problems. As I said, I have sympathy in these areas. I hope that what has been said will be taken into consideration, because there will be serious consequences in certain cases. In the most serious cases there will be facilities to represent them—or at least I certainly hope so—but people in cases which are not recognised because no legal advice has been available will lose out. As has often been said, that will lead to increased costs to the state.