Wales Bill

Lord Rowe-Beddoe Excerpts

Committee: 3rd sitting (Hansard - continued): House of Lords
Tuesday 15th November 2016 Lords Chamber

Moved by

[Lord Rowe-Beddoe]

96: After Clause 36, insert the following new Clause—
“Tax on carriage of passengers by air
In Part 4A of the Government of Wales Act 2006, after Chapter 4 insert—“CHAPTER 5TAX ON CARRIAGE OF PASSENGERS BY AIR116O Tax on carriage of passengers by air(1) A tax charged on the carriage of passengers by air from airports in Wales is a devolved tax.(2) Tax may not be charged on the carriage of passengers boarding aircraft before the date appointed under subsection (6). (3) Chapter 4 of Part 1 of The Finance Act 1994 (air passenger duty) is amended as follows.(4) In section 28(4) (a chargeable passenger is a passenger whose journey begins at an airport in the United Kingdom), for “England, Wales or Northern Ireland” substitute “England or Northern Ireland”. (5) In section 31(4B) (exception for passengers departing from airports in designated region of the United Kingdom) for “England, Wales or Northern Ireland” substitute “England or Northern Ireland”.(6) Subsections (3) to (5) have effect in relation to flights beginning on or after such date as the Treasury appoint by regulations made by statutory instrument.””

[Lord Rowe-Beddoe (CB)]

Amendment 96 stands in my name and those of the noble Baronesses, Lady Morgan of Ely and Lady Randerson, and the noble Lord, Lord Wigley. I refer noble Lords to my register of interests, specifically as past chair of Cardiff Wales Airport. Your Lordships will be pleased to know that I do not intend to repeat what I have said in the past on this vexed issue. The Minister is well versed on the subject as a result of his previous membership of the Silk commission, before his ennoblement, on which he sat with distinction—and which recommended that this particular tax be devolved.

As a brief background, the tax was introduced in 1994 at a rate of £5 per passenger for travel within the United Kingdom and the European Union and £10 per passenger for travel elsewhere. Over the past 22 years, there have been several increases and changes in the structure. Since April this year, band A is levied at £13 per passenger at the reduced rate and £26 per passenger at the standard rate. For journeys of more than 2,000 miles—band B—the reduced rate is £73 and the standard rate is currently £146. These are significant amounts, I am sure your Lordships will agree.

Despite some small changes in structure, these taxes continue to be the highest in the world and represent a growing barrier to tourism, trade and investment in our country. Internationally, the tax is currently either being frozen or, in many cases, abolished. It is worth noting that, for domestic flights within the United Kingdom, air passenger duty is twice the amount of that paid for travel to and within Europe. This has a significant impact on domestic air services and, of course, regional connectivity—something which we hear a lot about on the development on new runways in the south-east. One must never forget the congestion on the roads or the slowness of our rail building. Air connectivity in the regions is very important and becoming increasingly so.

However, this tax—it is my favourite subject, really—is another example of the asymmetrical devolution of powers that has been thrust upon Wales continuously. In January 2013, the Government devolved APD to the Northern Ireland Executive on all direct long-haul flights there, which set the tax at £0. That still pertains. In January 2015, as part of the Scotland Bill, air passenger duty was devolved and the Scottish Government have since announced that they will reduce the level of APD by 50% between 2018 and 2021 and abolish the tax completely when public finances allow. In February 2015, in line with the St David’s Day agreement, the Government announced that they were considering the case—or recommendation, call it what you will—and the options for devolving this tax to Wales. Is the deliberate omission of this provision from the Bill therefore the result of the Government’s consideration?

It is clearly recognised that the devolution of APD could provide a much-needed boost to the Welsh economy through the growth of inbound tourism, additional trade links and a much-needed increase in destinations from Cardiff Airport, particularly for long haul. Abolishing this tax in Wales on long haul alone could bring an increase of 27% in jobs within aviation-related employment at Cardiff and indirect support employment in the greater area. This would give rise to a 28% increase in the GVA impact for the Welsh economy, which would clearly include the anticipated 41% increase in inbound tourism. I am sorry that it is so late an hour to give the Committee these numbers and percentages, but the abolition of this tax could be significant for the economy of our country.

In the other place, the honourable Member for Carmarthen East and Dinefwr posed this question on Report, which I repeat:

“Why would the Wales Office seek to deny Wales the same powers as Scotland and Northern Ireland?”.

Again, he asked a little later,

“why would it deny the ability of the Welsh economy to grow?”.—[Official Report, Commons, 12/9/16; col. 701.]

Wales needs parity with Scotland and Northern Ireland. It is in the interests of the development of our economy and therefore clearly in the interests of the people of our country. I beg to move.

[Baroness Randerson]

My Lords, I was very pleased to put my name to this amendment. This is a tale of two airports—the rivalry between Bristol and Cardiff airports—but someone listening to this debate who is not familiar with the geography that lies behind the arguments within it could be forgiven for thinking that these two airports are near neighbours. The argument is always put forward that, if you devolve responsibility for APD to the Welsh Assembly, it will cut the level of the duty and that will put Bristol Airport at a disadvantage. However, these airports are 102 kilometres apart, and they are not easy kilometres. They include driving along the M4, with its congestion, over the Severn bridge with its tolls and over very poor road links around Bristol to the airport, so it frequently takes in excess of two hours to go between the two airports. If you try going by public transport, you have an extremely complex journey involving trains and buses.

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[Lord Bourne of Aberystwyth]

My Lords, I think the last time I made that journey was with the noble Lord, Lord German, who was driving, but we will gloss over that.

As noble Lords will be aware, those airports are close together, although I accept that it is not always an easy journey, because of the build-up of traffic. However, the nature of the England-Wales border has led to a number of English regional airports raising serious and legitimate concerns about lower APD rates in Wales. As my noble friend Lord Hunt suggested, the rates could go up as well as down; we need to realise that they would not necessarily go down, at least not all the while.

The Government must ensure that devolution does not lead to undue market distortion. Currently we are bound by the state aid rules of the European Union, in any event, which was something that the Silk commission considered long and hard in looking at this issue. I do not have the Silk report in front of me, but I seem to remember that we recommended the devolution of tax on long-haul routes, not overall. It is true that we looked at the analogy of Northern Ireland—which is different because people there have the option of going to Dublin which, being in a different member state, could vary the rates anyway—and we were persuaded just in relation to long haul. I think I am right in saying that no long-haul flights currently take place from Cardiff; I appreciate that that that could make a difference. I am looking at the noble Lord, Lord Rowe-Beddoe.

[Lord Rowe-Beddoe]

There are long-distance flights and they are being negotiated all the time. They go on as charter flights right through the year, so there are long-distance flights. While I am on my feet, may I say that your commission recommended that long haul be devolved? I apologise to the noble Lord, but that was your position.

[Lord Bourne of Aberystwyth]

I am grateful for the clarification on the existing charter flights. I am aware of our recommendation for long haul, although the scope of the amendment is probably broader.

As I said, the position in Scotland is very different because the airports are a long way from the next international airports, so the competition and fairness argument cannot apply. The United Kingdom Government have to look at these things in the context of fairness, and it would genuinely not be fair to an airport in England, which is unable to vary the rates, to compete with an airport that could. Noble Lords must surely see that point.

The point made by my noble friend Lord Hunt, speaking with a north Walian voice, was that this tax, if we were to adopt it, would not help the people of north Wales, for whom the nearest international airport would be Manchester or Liverpool; or, indeed, the people of mid-Wales, for whom it would be Birmingham —I am not sure that this is a plea for Birmingham, but I thought I would get in before it.

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[Lord Bourne of Aberystwyth]

My Lords, that is an unfair suggestion. I am certainly not playing north Wales against south Wales—I am informing noble Lords of what happened when we were out on the road. There is only one international airport in Wales. If we are talking about APD in relation to long-haul flights, that means only Cardiff in relation to Wales, as things stand; that is undoubtedly the case. I am the first person to stand up for Wales, as I hope that the noble Lord will accept, but we cannot do that in isolation from what is happening in the rest of the country. If the measure being talked about is unfair, I am afraid that it will not see the light of day in the context of looking at what is fair for the United Kingdom. Yes, we must stick up for Wales, but it has to be done in the context of fairness.

I shall progress the argument a little to see if there are other things that we can be doing. As I have said, we do not want to look at the position of market distortions, but we want to help Cardiff Airport if we can. We looked at a review of this to see whether it would be possible to devolve APD to Wales while supporting English regional airports against the impacts of reduced APD. However, there are no obvious options that could mitigate against the impacts on regional airports elsewhere, if devolving the tax to the Assembly meant that Bristol could face 25% fewer passengers. That is significant. I shall ensure that I circulate full details of our review into these options to noble Lords so they can see it.

I hope that noble Lords will accept that this is not a desire not to do what is best for Wales, but a desire to do what is best for Wales while recognising that we cannot fail to be fair to the rest of the country. If that happens in this case to be England, I make no apologies for that. Bristol Airport does not have the ability to vary APD, and we cannot do that in the context of the Bill.

I have listened carefully to the debate, and I shall circulate the details of the review, when we had a look to see if there was anything that we could do. There was a long debate in the Silk commission, and it was not along party-political lines; it was generally divided on the issue of what we could do for Wales, partly because of fairness and partly because of the issue that still exists about state aid and the fear of action in relation to that—valid action. On that basis, I ask the noble Lord to withdraw his amendment. As I say, I shall circulate details of the review that we had to see whether there was anything that we could realistically do to help Wales—and, in this context, that means Cardiff Airport.

[Lord Rowe-Beddoe]

I thank the Minister for his response and thank all noble Lords and noble Baronesses who have participated in this short debate. I thank the noble Baroness, Lady Randerson, who mentioned 102 kilometres. It is an important number because under current EU regulations 100 kilometres has associations with state aid, which the Minister brought up. In Cardiff we have been fighting allegations about state aid—successfully, I am happy to say. I am also very pleased that the elephant in the room was mentioned, not by me but by everybody else. Yes, of course it is Bristol—and this is a pure political gesture. We know it and feel it in ourselves. If we look at the constituency make-up around the city of Bristol and in the south-west, we will understand why. However, I am sorry that the noble Lord, Lord Hunt, disagrees with me for the first time—or I disagree with him.

I will come back on just two points. Cardiff is our international airport, whether it is situated in Ceredigion or in south Wales. We cannot have them all over Wales. We can put up little airports and support ones like Valley and Broughton so we can use them, but Cardiff is our international airport. The status of long-haul flights is under heavy negotiation at the moment and regular routes will be announced soon.

I say to my noble friend Lord Hunt that there is a little group called the Regional and Business Airports Group which represents 32 regional airports in the United Kingdom. In September 2015, it wrote a discussion paper, in which it advocated on behalf of the regional airports in the United Kingdom the devolution of this,

“market distorting tax which impacts far more heavily on smaller airports than larger ones”.

That is quite an interesting document—it was addressed to the energy and transport tax team—and perhaps the Minister could take a look at it.

I thank all noble Lords. It is late at night and I will withdraw the amendment, but I will have to come back at some stage.

Amendment 96 withdrawn.

Draft Wales Bill: Silk Commission

Lord Rowe-Beddoe Excerpts

Monday 30th November 2015 Lords Chamber

[Lord Bourne of Aberystwyth]

My Lords, I understand my noble friend’s views on this matter but I repeat that issues relating to election to the National Assembly for Wales are to be devolved in totality. It is a significant move to Wales, just as it is to Scotland, and it is for Wales to determine that issue.

[Lord Rowe-Beddoe (CB)]

My Lords, will the Minister clarify a point that he made in an earlier answer—namely, what is the state aid problem with the devolution of air passenger duty to Cardiff and not to Scotland?

Wales Bill

Lord Rowe-Beddoe Excerpts

Tuesday 11th November 2014 Lords Chamber

I do not know whether the Minister can go this far. I suspect that her sympathies may be at least broadly in line with the amendment in the name of the noble Lord, Lord Elystan-Morgan, but I would not expect her to say that she was prepared to accept it. On the other hand, if the Government are to have a great look at what is to happen by 1 March, particularly on whether or not we should move to reserved powers, could she go so far as to say that, in the course of that review, one of the matters to which the Government will give urgent consideration is the size of the Assembly and whether it should increase from 60 to 80? I am not going to enter into a bidding war as to the precise number of Assembly Members there should be. In 2004 our figure was 80; I think that 80 is probably my figure now. Having a somewhat incremental view of these matters, I would be reasonably satisfied if we got 80 in this bite.

[Lord Rowe-Beddoe (CB)]

My Lords, I support the amendment most warmly. I do not wish to rehearse the Committee stage of the Bill, but I moved a very similar amendment at that time, supported by the noble Lords, Lord Elystan-Morgan and Lord Richard. I now have a mnemonic for the situation, PRAT. It works something like this: increased powers—which is what I focused on in Committee—brings increased accountability; increased accountability produces a necessity for greater transparency. I think those are totally linked. It is therefore important that we put a marker in the Bill. I agree with the noble Lord, Lord Elystan-Morgan, that this may well be determined in future by the National Assembly for Wales. In the mean time, a marker should be put down to recognise that we all feel—I think there is consensus in the House at this moment—that there are not enough Assembly Members to do the work that will be put on them by the powers they will be given by the Bill. I strongly support the amendment.

[Lord Norton of Louth]

My Lords, I, too, have sympathy with the amendment. I was recently in Cardiff Bay, speaking at a conference organised by the Welsh Government centre looking at the challenges facing the National Assembly. I focused on the challenges that derive from the fact that it is devolved, relatively new and small. Size does matter; it is especially important in a parliamentary system. As we have already heard, it affects the committees that are operating, not least because, with the small number of Members, there are problems setting up a comprehensive series of investigative committees where Members are not stretched by having to serve on several. That limits the capacity of the legislature to effectively scrutinise the Executive.

The other point about size is that the proportion of the Assembly that forms the Executive tends to be somewhat greater than with larger assemblies. The National Assembly is nowhere near the position in Gibraltar, where there are actually no Back-Benchers at all. However, the proportion of Ministers in the National Assembly is greater than it is in the House of Commons. In order for it to fulfil its functions effectively, you need members who can do that and to ensure that the Executive are not too prominent as a proportion of the Chamber itself. For these reasons, I have considerable sympathy with this amendment.

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[Lord Wigley]

My Lords, I have listened to the noble Baroness, Lady Morgan of Ely, with interest. There are certainly arguments in support of symmetry in constitutional terms; they usually lead to various forms of federalism. If the Labour Party is indeed moving towards a federal approach, that is certainly an important development.

I wish to address Amendment 20 in my name, which would provide that, if corporation tax were devolved to Scotland it should certainly be devolved to Wales or be available. Noble Lords may recall that I tabled an amendment in Committee proposing that if corporation tax were devolved to either Scotland or Northern Ireland, it should also be devolved to Wales. I based that on the fact that all four parties in the Assembly had agreed that this was needed, and that the Silk commission said that corporation tax should be devolved to Wales if it was devolved to Northern Ireland. The response that I elicited from the Minister, Lord Newby, on that occasion, was entirely centred on the comparison with Northern Ireland, not with Scotland. He based his argument on two factors: first, that Northern Ireland has to compete with the lower corporation tax in the Irish Republic. Wales also has to compete with Ireland for footloose inward investment projects, tourism businesses that cross the sea, and in the agricultural food sector, for example, in cheese manufacture. We share a maritime border with Ireland so I refute his argument on that count.

Secondly, the Minister argued on the basis that the tax devolution to Northern Ireland is in order to help it to rebalance its economy, with the implication that Wales does not need to rebalance its economy. That is absolute poppycock. Wales has the lowest GVA per head of any nation or region in the UK, following the rundown of coal, steel and slate. We desperately need to rebalance our economy. I am seriously concerned that a Treasury Minister, for whom I have very great respect, should have been advised by Treasury officials that Wales does not need economic rebalancing.

The Government do not recognise Wales’s needs vis-à-vis Northern Ireland. Be that as it may, the Minister did not try to defend not devolving corporation tax to Wales if it was, indeed, devolved to Scotland. I understand that this has been raised in the context of the Smith commission that corporation tax should be devolved to Scotland. Certainly, in the pre-referendum pledge the impression was given that the devo-max model being touted would include fiscal autonomy, and that certainly includes corporation tax.

In tabling the amendment I am seeking an assurance that if Scotland gets control over corporation tax the question should be firmly on the agenda of similar provision for Wales. I hope that on this occasion I get a more conciliatory response from the Minister, not just for me but for all four parties of the National Assembly that seek such powers.

[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.

Wales Bill

Lord Rowe-Beddoe Excerpts

Wednesday 15th October 2014 Lords Chamber

[Lord Rowe-Beddoe (CB)]

My Lords, I wish to speak to my Amendment 51A, which relates to air passenger duty devolution. I draw the attention of the Committee to the register of interests, in particular the reference to my chairmanship of Cardiff Wales Airport.

The UK Government’s stance on APD remains bafflingly inconsistent with the devo-zeitgeist, if I may call it that, that has so enraptured everyone over recent months. The decision to cherry pick parts of the Silk recommendations is a sad example of the short-sightedness that seems continually to put Wales behind. The Bill provides an opportunity to redress this state of affairs. I shall quote the relevant passage from Silk 1, so that I can put it on record. It states:

“We have also recommended the devolution of long haul rates of Air Passenger Duty, and consideration of full devolution in the future. We do this in the context of the wider consideration of regional airport developments across the United Kingdom associated with the independent commission on airport capacity, chaired by Sir Howard Davies”.

The UK Government position currently is that:

“APD devolution will distort competition”,

when applied to Cardiff and Bristol. This is unsound and I put it to your Lordships that that position is not supported by the European Commission guidance that defines the laws on support of regional airports. The European Commission in its latest guidelines on state aid to airports and airlines made it clear that airports with more than 5 million passengers per annum can and should run on their own steam, without any government support. Bristol has more than 6 million passengers. The Commission recognises that there is a case for government state aid being offered to smaller regional airports, and defines them as those that have between 1 million and 3 million passengers per annum. Cardiff currently handles just over 1 million. The Commission also states that if airports are more than 100 kilometres apart, then they have, by definition, different core catchments, and aid to one will not affect aid to the other. I can assure noble Lords that Cardiff Airport is more than 100 kilometres from Bristol Airport—I have actually used my tape measure—and each certainly has different core catchments. It is my contention that aid to one will not affect the other. It is therefore my contention that the UK Government’s current position is flawed because they could not make a legitimate case, underpinned by EC guidance, that aid to Cardiff distorted competition with Bristol.

The Welsh Government have a long-standing policy of lobbying for full devolution of air passenger duty, with a view to abolishing it. I was informed this afternoon that all four party leaders have agreed to propose again the abolition of long-haul air passenger duty. The Commission on Devolution in Wales, Silk 1, recommended that long-haul air passenger duty should be fully devolved. So where are we? This is a very important factor regarding competition. Belfast was given such devolution on the basis that it is near to Dublin. I do not think that it is 100 kilometres distant but Belfast was given it anyway by the UK Government. I bet my bottom dollar, if I may use such vulgarity in your Lordships’ House, that Edinburgh will be after this in a flash when it gets whatever it is going to get in the future.

I put it to noble Lords and the Government Front Bench that this situation is very serious for us in Wales. The Howard commission recognised the importance of regional airports. This is the one regional airport of our capital city in Wales, and has to be provided for and helped. That is the point of my amendment and I ask the Government to consider it.

[Lord Anderson of Swansea]

My Lords, I have two brief comments—one on the varying of fuel duty and the other on air passenger duty.

I hear what the noble Lord, Lord Wigley, says and the assumption is that we as a people are relatively poor in Wales in terms of prosperity when compared with much of the rest of the UK. That is certainly true and, therefore, the assumption is that he would wish to reduce fuel duty rather than increase it. If that duty were to decrease, I can imagine the Luxembourg precedent happening. Those of your Lordships who know that country will know that fuel duty is lower there than in the adjoining countries, so there are large queues at all the filling stations in Luxembourg of people who come across the border. One can imagine similar occurrences over the border in Cheshire, Herefordshire and elsewhere, the sorts of problems that would arise as a result, and the complaints that would be made if there were to be a reduction in fuel duty.

I hear what the noble Lord, Lord Rowe-Beddoe, said about air passenger duty and different core catchment areas. I come from Swansea and I should have thought that Bristol and Cardiff are, frankly, within the core catchment areas. I can see nodding from the direction of Newport. This is not like the precedent in Northern Ireland, where there is no immediate competitor. Bristol and Cardiff are very close and, in my judgment, the passenger catchment areas are similar. There is therefore a substantial difference in this situation and there could be real problems in seeking to provide greater competitiveness for Cardiff, which could only be at the expense of Bristol.

[Lord Rowe-Beddoe]

It is not my idea of a catchment area but the European Commission’s, and the figure of 100 kilometres between two regional airports is in the Commission’s guidance. I again submit that Cardiff and certainly Swansea are not within the Bristol catchment area, as defined by the European Commission.

[Lord Anderson of Swansea]

That may be the definition of the European Commission but I speak on a matter of reality and look at it from the perspective of those who travel from those airports.

[Lord Rowe-Beddoe]

With respect, the journey from Swansea to Bristol is considerably longer than the journey from Swansea to Cardiff.

[Lord Thomas of Gresford]

Surely the distance between Bristol and Cardiff and the services provided from Bristol are such that Bristol sucks people out of south Wales to use the additional services that fly there. That is why it seems to be in competition. What we are after is the development, the building-up, of Cardiff. If it comes within the European definition, that must be good enough.

On the issue of fuel duty, I understand that provisions have been made in Scotland to reduce fuel duty—I stand to be corrected—if you are more than 100 miles away from an oil refinery. In Wales, we have rural areas and people who are very much dependent on the use of motor vehicles—almost exclusively so in parts of Wales. However, Milford Haven, which is not built to supply Wales, happens to be within that 100-mile area in the south; and, of course, we have Ellesmere Port in the north. Consequently, the reduction of fuel duty, as happens in Scotland, does not happen in Wales. However, that ignores reality. It ignores the fact that the needs of the rural population of Wales are just as great as those in the highlands of Scotland. They suffer the same impoverishment as they do in the highlands of Scotland, perhaps even more, and accordingly there is a case for taking fuel duty under the wing of the Welsh Assembly. That does not necessarily mean applying it to the whole of Wales, so that we have queues of English people in Gresford from across the border, which is not something that I would wish to see. That is not the idea at all. It would enable the Welsh Assembly to vary fuel duty with regard to the needs of the people of Wales, which I think is very sensible.

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[Lord Newby]

I shall take the amendments in turn. Amendments 49 and 51A seek to include explicit provision in the Bill for fuel duty and air passenger duty to be devolved to the Welsh Assembly. First, I remind noble Lords that Clause 6 of the Bill already contains the power for further taxes to be devolved to the Assembly by Order in Council and therefore the Bill does not rule out in perpetuity any tax being devolved at a future point if there is agreement to do so. I shall explain why we are not devolving these powers in the Bill, starting with air passenger duty. As has been pointed out, the Silk commission recommended that long-haul rates should initially be devolved with devolution of all rates considered subsequently. In the Government’s response to the Silk commission we highlighted HMRC research which suggested that differential rates of APD could end up redistributing passengers rather than creating additional growth. This potential distortion, despite what the noble Lord has said, is particularly acute in relation to Wales, given the short distance between Cardiff and Bristol airports. As the noble Lord, Lord Anderson, pointed out, for many people who fly from south Wales and just across the Severn there is a real and immediate choice between those airports, which they see as close competitors.

[Lord Rowe-Beddoe]

Let me just point out that Cardiff—perhaps noble Lords do not know—has lost more than 1 million passengers to Bristol in the past five years. This happened because of the management of the airport at the time and the company that owned it, but there was a bleeding of that number of people. We have got to get the passengers back. It is not a distortion of competition; it is to restore the services. You require two things for an airport: good customer experience and a plane that goes where the passenger wants to go. We are desperately trying to bring people back; this is a levelling to help that situation. It is not a question of distortion. We have heard about the 100 kilometres, or whatever. Forgive me—go around the Midlands and see where the airports are. It is not a question of distortion in that sense.

[Lord Newby]

The noble Lord has just made my point that they are part of a single market for passengers in south Wales, or there would not have been that bleeding away. Passengers are not bleeding away from south Wales to Manchester airport because it is just too far. The point is that Bristol is within a relatively easy ambit and people are going there. The noble Lord discussed the question of distortion in respect of strict EU law, but the kind of competition we have been debating—and, indeed, his description of what has happened and how he wishes to reverse it—suggests that if we were to devolve this power and APD was reduced it could and probably would contravene the third principle of devolution, which we discussed earlier, that any change in one part of the UK should not be to the detriment of another part of the UK. The noble Lord wants it to be to the detriment of Bristol, so that there will be a balancing away from Bristol towards Cardiff.

[Lord Newby]

Noble Lords are, as ever, extremely eloquently making a case for preferential treatment for Wales, which would benefit Wales. I am just making the point that it might well benefit Cardiff Airport but that would be to the detriment of Bristol Airport. That only stands to reason. There is not going to be a sudden explosion of long-haul traffic because of a tax change.

[Lord Rowe-Beddoe]

In my definition of a regional airport, I made it very clear that it had between 1 million and 3 million passengers. We want to develop regional airports. Howard Davies’s commission refers to this. That is what we are talking about. Of course it would benefit Wales, if it were ever to happen. Cardiff Airport falls exactly within the categorisation made by Howard Davies and the EU.

[Lord Newby]

My Lords, I am sure that the Welsh Assembly, which I believe—including the Labour element of it—is in favour of devolution of air passenger duty to Wales, will continue to make the case. However, I am afraid that the Government are not at this point persuaded of it. The situation in Northern Ireland is completely different, in that it shares a land border with the Republic, which has a significantly lower rate of air passenger duty. That is its competitor.

The Silk commission recommended against devolution of fuel duty largely on the basis that member states must set a single rate for each fuel under the EU energy products directive. It also highlighted that fuel duty is a highly mobile tax base—no pun intended. As noble Lords have made clear, we could very easily see queues of motorists across the border if there was a significant disparity, which in itself makes it an unlikely candidate for devolution. So the Government accepted the Silk commission conclusion on that.

The noble Lord, Lord Thomas of Gresford, referred to the issue of whether the rural fuel scheme in Scotland might be extended to Wales. The Silk commission recommended that the Government assess whether the rural fuels scheme should be extended to remote and rural areas of Wales. It now operates in the Scottish islands and the Isles of Scilly. The Government have applied to the European Commission to extend the current scheme to areas on the UK mainland that meet strict criteria around pump price, population density and cost of fuel transportation. However, no areas in Wales were included, because they were not felt to meet the objective criteria. The Government believe that areas should experience similar characteristics to the islands in the current scheme to make the strongest possible case to the European Commission. The Government have yet to receive a response from the Commission to their existing proposal.

Amendment 51 would devolve corporation tax to the Welsh Assembly if it is devolved to either Scotland or Northern Ireland. The Government have been consistently clear that the devolved countries are different and that it is therefore right that decisions on devolution are treated on their own merits. In relation to corporation tax, the Government are committed to making a decision on devolving rate-setting powers to Northern Ireland by the time of the Autumn Statement. However, similar to the position on long-haul rates of air passenger duty, the potential devolution of corporation tax to Northern Ireland is being considered in the light of two unique features. First, Northern Ireland is competing against the Republic, which has a much lower headline rate of corporation tax. Secondly, the stated purpose of tax devolution in Northern Ireland is to help to rebalance the Northern Ireland economy. In Wales, as noble Lords will be aware, the principal aim of devolution is to increase the accountability of the Welsh Assembly and Welsh Government. Different objectives potentially require different decisions on devolution; it is therefore right that the UK Government retain the flexibility to take the right decisions for each part of the UK.

Finally, I turn to Amendment 50, which would require the publication of an independent report on options for the UK and Welsh Governments to share tax revenues from natural resources in Wales. The noble Lord in moving the amendment spoke about the resources available potentially to the Crown Estate and referred to energy. With regard to the Crown Estate, there are no provisions in the Bill to change its status, and I find it difficult to envisage circumstances in which that would happen. Therefore, I am not sure how relevant that is. On energy, I can only agree with the comments of the noble Baroness, Lady Morgan, about the fact that one does not tax wind power in the same way as one taxes a barrel of oil, and it is very difficult to envisage that we ever would do so. So I do not think that an independent report as proposed by the noble Lord would be of any real value.

In the light of my remarks, I hope that all noble Lords who have proposed amendments in this group will feel able not to press them.

Wales Bill

Lord Rowe-Beddoe Excerpts

Monday 13th October 2014 Lords Chamber

Moved by

[Lord Rowe-Beddoe]

6: After Clause 1, insert the following new Clause—
“Size of Assembly
The Secretary of State must introduce a bill to provide that the Assembly shall constitute at least 80 Assembly Members with effect from the 2016 elections.”

[Lord Rowe-Beddoe (CB)]

My Lords, Amendment 6 is in my name and those of the noble Lords, Lord Richard and Lord Elystan-Morgan. It is rather coincidental that we are debating the Bill on the first day back from the recess, and that it has been sandwiched between a referendum on Scotland and the Scottish Statement.

Many noble Lords will recall that, about two years ago, when the House was debating the referendum and further devolution for Scotland, many noble Lords remarked that, whatever the outcome, the United Kingdom would never be the same. I think that already we have seen that start, and it is not just a start—it is a wave of movement.

This is a simple amendment. Whether it is deferred or whether it is delegated, if it has more power then it is proposed that it must have more people. It may not go down very well with parts of the constituencies in Wales but, for the sake of good governance on behalf of the electorate, to hold accountable those elected into the Assembly, we must have further numbers. I have seen and been told that there are insufficient Assembly Members properly to staff the committees that already exist. We have former Assembly Members here; no doubt they will either agree with me or challenge me on that.

The proposal in this amendment is very simple. The current composition is 60, which is considered insufficient to do the business that needs to be done when the Bill, in this form or its increased form, goes to Cardiff. With increased powers comes increased responsibility, and increased responsibility means a decreased accountability. As we can all see from the paper, there are four or five following amendments which sound very complicated as to how these extra Members should be elected. That is a separate issue. The principle here is that there are not sufficient Members to handle further responsibility. I beg to move.

--- Later in debate ---

[Baroness Randerson]

The noble Lord is possibly being a little on the cautious side in his estimate of how fast a future Government could produce a further devolution settlement. I cannot give any guarantees about anything that a future Government might do, but if this debate is taken forward and undertaken rigorously within Wales within the next few months, and if parties put something in their manifesto on the increase in the size of the Assembly that they believe is required, we can have a debate on the future shape of devolution during the general election that would enable a future Government to take this forward with considerable speed. I regret that there are a number of “ifs” in that answer, but there is no need for the noble Lord to despair of the outcome.

This debate must continue. It must include civil society and seek to engage the general public if the Assembly is to change as a result of the further devolution of powers so that there can be more Assembly Members. I hope the noble Lord will withdraw his amendment.

[Lord Rowe-Beddoe]

I thank the Minister for her reply and her summing up of a very interesting debate. I am still most concerned that devolved power as contained in this Bill will become law and more money will be devolved, more capital will go down, more tax-raising powers will come along and there will still not be a resolution for scrutiny. I listened very carefully to what the Minister said in her concluding remarks. I hope the Government understand that it is inextricably linked. I beg leave to withdraw the amendment.

Amendment 6 withdrawn.

House resumed. Committee to begin again not before 8.25 pm.

Wales Bill

Lord Rowe-Beddoe Excerpts

Tuesday 22nd July 2014 Lords Chamber

[Lord Rowe-Beddoe (CB)]

My Lords, I broadly welcome the Bill as a major step in the slow yet maturing process of devolution. The words of the noble and learned Lord, Lord Morris of Aberavon, are most wise in his assessment of the whole process, particularly on reserved powers. A number of noble Lords have referred to that feeling this afternoon.

However, when it comes to the elephant, as it has been described, I think that there is actually an entire zoo in the Chamber. The elephant in this room is of course the Scottish referendum. Whatever the outcome of that referendum, life will certainly never be the same in the United Kingdom. I am of the firm opinion that there will be major constitutional change over the next few years. A noble Lord, whose name I did not get, said, “What about England?”. Indeed. That is a whole new issue, which I am sure will be addressed at another time. I certainly do not wish to rehearse any further argument in that regard, but it is somewhat overhanging and must overshadow our attitude towards the Bill over the next few months.

I declare an interest as chairman of Cardiff Airport, which was acquired by the Welsh Government in March 2013. In that context, we are particularly concerned about the asymmetric impact of airline passenger duty on both domestic and international connectivity. I fully endorse the Silk recommendation in that regard and fully support the case for this fiscal power to be devolved. I intend to return to this subject in greater detail in Committee.

The noble and learned Lord, Lord Morris, is no longer in his place, but he tested my memory of 14 years ago, which I think will fail, in so far as if I were to dig into the back of my mind and take account of inflation, I do not think that the Welsh Development Agency’s powers were much less than what is proposed today, if at all. I will be a little more precise in Committee.

However, and it is a big “however”, the increased powers envisaged in the Bill, the other powers discussed in the Chamber today and, indeed, each step of devolution of power place greater responsibility on the Welsh Government. These steps must therefore be accompanied by greater accountability, scrutiny and transparency. These essentials cannot be undertaken with the rigour demanded by the present 42 Assembly Members who are not in the Government.

Already the strain imposed is creaking. Dame Rosemary Butler, the Presiding Officer of the Welsh Assembly, said less than a year ago:

“There are only 42 Members to scrutinise £15 billion of taxpayers’ money, and to scrutinise the government on the big issues of the day—the future of our health service, our education system and the economy. On top of that they have to make sound, thoroughly scrutinized laws for our nation. A quarter of those 42 members sit on three committees, half sit on two. One would simply not find the same level of workload on Members in Westminster, Holyrood or Stormont”.

I therefore conclude that the logic is correct and Wales will need more Assembly Members in order to perform scrutiny effectively and to be seen to be effective, and to provide the necessary assurance to the people of Wales. I realise that my firm support for increasing the number of Assembly Members in my homeland will not necessarily lead to unparalleled joy by certain of our fellow countrymen. However, let us please remember: more responsibility, more accountability and more scrutiny. How the additional Members are elected is clearly an issue for the future.

I turn to a point made by the shadow Welsh Secretary in the other place, in his Third Reading speech:

“We still do not know whether the block grant will be eroded over time. Initially, it will be protected, but the Exchequer Secretary told us again here today that if Welsh gross domestic product and revenues grew more slowly than those of England, Wales would have less money over time to spend on vital public services”.—[Official Report, Commons, 24/6/14; col. 281.]

Chapter 16 of the report of the Silk commission states that,

“transfers of powers should be accompanied by (and be conditional on) transfers of funding being fully agreed between the two Governments in each case, and by agreed changes to the Barnett formula comparability factors”.

Comparability is neither the issue nor the answer.

I return for a moment to your Lordships’ Select Committee on the Barnett Formula, chaired by the noble Lord, Lord Richard, who is unfortunately no longer in his place, on which I had the privilege to serve in 2008. Our findings were published more than five years ago. The attitude of successive Governments—and I look to both sides of the House, including the elephant in the middle—has been to shirk their responsibility. There has not been a single serious debate. Wales has been grossly underfunded over the last 10 years, if not more. Until that is confronted by a Government with the guts, if I may use that unpleasant word, to face it in this Chamber and do something about it, that will obtain. It is ridiculous. We know why Wales is underfunded, of course. I shall not mention the unmentionable. It is because a large part of the United Kingdom has been grossly overfunded for the same period of time.

This formula has been in existence for the past 35 years. There has been no real engagement by political parties in this Chamber or in the other place with discussing the detailed analysis that your Lordships’ Select Committee undertook or the recommendations that we provided. It is deplorable. There has been no review or revision of this formula for 35 years because it is political dynamite. That is the answer—or is it because of political cowardice?

Wales is, and has been, underfunded. The all-party committee of your Lordships’ House unanimously determined that central funding should be based on an explicit assessment of relative needs. Administrations with great need therefore receive more money; Administrations with lesser need will obviously receive less. Your Lordships’ committee recommended, for example, that an expert body be formed—perhaps called the UK funding commission—to determine relative needs by using a small number of need indicators, which the committee identified. That is not unusual; it is in fact similar in principle to the Commonwealth Grants Commission of Australia, which performs this function of the distribution of central federal funding annually.

The formula is inequitable. We can talk around it, we can talk about this and we can devolve this, but there is a central grant and it is inequitable as far as Wales is concerned. It should and must be changed. Where are we? I am still waiting for a political party to grasp the nettle, as are, I am sure, many other noble Lords.

I conclude by quoting our chairman, the noble Lord, Lord Richard, and the noble Lord, Lord Barnett, after whom the formula was named, much, I think, to his embarrassment, as he would say if he were in his place today. The last five lines of his oral evidence to the committee are very moving and I would like to share them with you. Our chairman, the noble Lord, Lord Richard, said:

“You devised a mechanism which you hoped would last for a few years. You did not expect it to last for as long as it has lasted. You are not sure now whether it is based on the right criteria and you lean towards having, among other things, a needs based assessment. Is that fair?”.

The noble Lord, Lord Barnett, said: “That is fair”. I think that we need to address that, sooner rather than later.

--- Later in debate ---

[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.

[Lord Rowe-Beddoe]

Is the Minister saying that the Barnett formula has been revised in the last 12 months?

[Baroness Randerson]

No I am not, but the natural process of the way in which the formula works means that in times of spending restraint, where we have been for the last four years, the convergence process, which worked over many years and made the formula more, shall I say, sparing in relation to Wales, ceased to operate and we have had divergence which has brought Wales to a position of greater fairness now than in the past. That means, however, that if we go back to times of financial plenty, there would be an issue once again. That has been recognised in the exchange of correspondence between the Chief Secretary to the Treasury and the Finance Minister in Wales.

In response to the general point made by noble Lords from the Labour Party about dual candidacy, as I predicted, when we read Hansard tomorrow it will appear as the most important matter in the Bill to members of the Labour Party. It is significant to remember that the purpose of doing this is to widen the pool of good candidates. Time and again people have raised the issue of how important it is to have scrutiny of the highest nature in the Welsh Assembly. It is not only a case of ensuring that there are more Assembly Members—whether you agree with that or not—but of ensuring that the best candidates can stand and get elected.

Many noble Lords on the Benches opposite referred to the Clwyd West situation. I refer to the Nick Bourne situation, if my noble friend will forgive me, where, as the leader of a party in the 2011 Assembly elections, he failed to gain a seat because his party had done so well. That is an anomaly, and it is important to bear in mind that within this system you will get that kind of anomaly. I say to the noble Lord, Lord Rowlands, who raised the issue of people who lose still getting into the Assembly, that that applies only if you think that elections should be on a winner takes all strategy. However, if you believe that elections are a way of ensuring that different strands of opinion are represented in our legislatures and Parliaments, you look at ways of ensuring that significant minority opinions are represented as well as majority opinions.

Wales: Economy

Lord Rowe-Beddoe Excerpts

Monday 7th April 2014 Grand Committee

[Lord Rowe-Beddoe (CB)]

My Lords, I, too, thank the noble Baroness, Lady Morgan, for this debate. I wish to place on record my regret that at times it lapsed into political partisanship. In my opinion, the topic that we are debating is far too important to have snide political fights about. I declare three interests that have significant economic impact. One is the Welsh Millennium Centre, the second is the Royal Welsh College of Music and Drama and the third is Cardiff Airport.

In Wales, as we have heard, unemployment is lower than the UK average, at 6.7% versus the UK average of 7.2%. The private sector is growing, youth unemployment is falling and the Welsh economy as a whole is growing. However, there is still much ground to make up because, as has been mentioned today, what we are seeing is all coming off an unacceptably low base. Wales is still bottom of the UK GVA table and, given my passion and commitment to our country—and the same goes for all noble Lords in this Room today—I say that we have to climb that table, and fast. Let us not forget that we have done so in the past.

In many ways, the opportunity and challenge at the macro level is mirrored at Cardiff Airport, which will be the focus of my contribution today. In my current role there, I have witnessed over the past 12 months the enormous potential that exists at the airport as part of a strong and vibrant aerospace enterprise zone, and it will play a significant role in the economic recovery in Wales. We have seen growth in passenger numbers—a mere 9% in the first 12 months but, like the Welsh economy, that started from a low base.

The impact of the airport on the regional economy is multifaceted and complex. First, the airport is a major employer in its own right. Taking into account the world-class British Airways maintenance, repair and overhaul facility, the airport supports over 1,600 full-time equivalent posts. Incidentally, that decision by British Airways to locate in Cardiff was taken in the early 1990s by the late Lord Marshall of Knightsbridge, and British Airways has never regretted it. Yet this direct employment is just the first part of the story. The second is that with the indirect and induced employment across a range of sectors, when combined with the direct employment, evidence now suggests that the airport has a total operational impact of 2,600 jobs. This equates to an overall GVA impact in excess of £90 million.

There is a third part of the story. When we look beyond the perimeter of the airport fence, we can see that it has a wider, catalytic effect on the regional economy. While this is much harder to quantify, the evidence suggests that inbound tourism alone adds a further £50 million to the Welsh economy when its own indirect and induced factors are taken into account. All this from an airport that carries only 1.1 million passengers—fewer than 10 years ago, when it carried over 2 million.

The final part of the story is where there is potential for the airport, as it grows, to contribute significantly more: the enterprise zone. We have already seen examples across the UK, such as in Manchester and Newcastle, of airports now serving as mini-cities and economic hubs in their own right. This potential exists in Wales. We are fortunate to have the St Athan-Cardiff Airport Enterprise Zone, which is already attracting investment and new jobs. The zone has a vision for Wales to truly establish itself as a global leader in the aviation and aerospace sectors. This is no pipe dream. Many noble Lords know about BAE, GE engine maintenance, BA avionics and so on. We have a vital supply chain in the aerospace industry but I never hear anyone talk about it. It is a very strong part of Wales, and these are not low-paid jobs. In the north and the south, this industry is operating and growing effectively and there is much more to be done.

I will say two more things before I sit down. I am sick to death of the Barnett formula. I sat on your Lordships’ Select Committee under the previous Government. We have underfunded Wales for 30 years. The noble Lord, Lord Barnett, if he came into this Room, would say exactly the same, but it is always kicked off into the long grass. Now we wait for something else. Whichever Government are in power, we never get our fair share.

Finally, war has a few outcomes: victory or defeat. Do we want to have war? Would it not be better to have a truce and move towards real partnership—partnership between Cardiff and London?

Wales: Devolution

Lord Rowe-Beddoe Excerpts

Thursday 19th July 2012 Lords Chamber

[Lord Rowe-Beddoe]

My Lords, I also thank the noble Baroness, Lady Randerson, for securing this debate—a debate on a highly pertinent and relevant matter.

The Silk commission appears to be on track to complete and publish part 1 of its work in the autumn of this year. I tend to agree with the noble Lord, Lord Elystan-Morgan, that parts 1 and 2 are the wrong way round, but so be it. If the commission does reach the conclusion of part 1 by the autumn, it will then have to be prepared to offer recommendations on a package of powers to improve the financial accountability of the Welsh Assembly. I can well imagine that whatever those recommendations are, they will receive considerable support. However, part 2 of the commission’s work, reviewing the powers of the Assembly, is likely to be much more contentious, and the linkage between part 1 and part 2 is inseparable. Businesses of all sizes and shapes can be severely hampered by uncertainty, which is disliked, and any question of tax-varying powers is also disturbing. The Holtham commission, which has already been quoted today, recommended measures in regard to income, property, land and minor taxes, but it also proposed exploratory discussions with the United Kingdom Government in regard to corporation tax.

I shall briefly highlight two or three submissions to the Silk commission which are at variance with the poll—which has been quoted on all sides of your Lordships’ House this morning—showing that 64% are in favour of tax-raising powers. I say that these submissions are at variance, but they represent quite a body of opinion. The Institute of Directors in Wales, for example, said in its written evidence that its members feared that,

“business could be seen as an easy source of cash for social or environmental policy areas that the WG has traditionally favoured”.

CBI Wales said that,

“the retention of the unitary tax system for corporation tax”,

is necessary to retain “the status quo”. The National Farmers Union Cymru said that its members had,

“a wide range of views”—

as can be expected—

“on what, if any, fiscal powers the NAfW should have”.

The NFU also said that it felt that the Barnett formula did,

“not serve Wales … well”.

Noble Lords have talked about the Barnett formula and I am going to say a little more about it. If we do not address the Barnett formula, we will simply be playing round with the deck chairs. If we do not know the baseline, what is the point of talking about anything else? We have no national accounts, and the tax take in Wales is not published at the moment. That has got to be done. If we do not have a satisfactory baseline, we will only be playing about with those deck chairs, as long as they exist.

The Barnett formula is the elephant in your Lordships’ Chamber, in the Welsh Assembly Government, in Wales and in Scotland. All your Lordships would agree that Wales has suffered, as was amply illustrated by your Lordships’ Select Committee in its report published in July 2009, which has been referred to. I was privileged to serve on that committee, which the noble Lord, Lord Richard, so ably chaired. Its first witness when we were taking evidence was none other than the noble Lord, Lord Barnett. I will quote from the noble Lord’s opening statement:

“The system I decided to use at that time to change was that any increase or decrease in the overall budget for public expenditure for the whole of the UK should be divided amongst the regions on a population basis which was roughly 85 per cent England, 10 per cent Scotland and 5 per cent Wales. Northern Ireland was taken as the same at 5 per cent but of course in Northern Ireland's case they got a lot more than that for a variety of reasons which will be fairly obvious”.

A few minutes later he said:

“I thought it might last a year or two before a government would decide to change it. It never occurred to me for one moment that it would last this long”.

It is now 35 years later and it has lasted this long. It is a totally inadequate way in which to block-fund the constituent nations of this Union. If we do not, as I said earlier, address the inequalities quickly and expeditiously, I cannot see how any meaningful changes can be agreed and implemented to a baseline which is demonstrably not fit for purpose.

It is my belief that both the previous Government and the current Government recognise—of course they do—the grave seriousness of the problem, but there seems to be no political will to address and resolve it. There are reasons why the previous Government backed away and reasons why the current Government back away. I am sure they do not have very much thought to agree with what may happen in Scotland in 2014, with the referendum. However, they are just putting off the inevitable. It has to be done.

All my life, throughout my education, I had impressed upon me—and I firmly believe and have upheld it—the great virtues of an unwritten constitution. I have in these past few years come to realise that the virtues seem to be rather less than the obvious problems and faults that now emerge in the continuous way in which the constitution is added to, bolted on to and changed in this piecemeal way. It has been mentioned already, but these continuing piecemeal changes are such that we are in urgent need of a national United Kingdom convention to consider the governance of England, Scotland, Wales and Northern Ireland in the 21st century and where we have got to. Asymmetric devolution: so crazy when you think about it. Then we have the problems of the north-east of England, which I was well aware of when I was on the Barnett Formula Select Committee. The rest of England increasingly feels that it is somehow missing out. It is not quite sure what it is missing out on, but it is missing out. Federalism, in some shape or form, is becoming increasingly attractive to me. It could address what I believe are the well-founded concerns of the inhabitants of this United Kingdom.

Parliamentary Voting System and Constituencies Bill

Lord Rowe-Beddoe Excerpts

Wednesday 26th January 2011 Lords Chamber

[Lord Crickhowell]

I do not really wish to add to the strength of the argument that I have already put. I am talking about the quality not just of the Members of Parliament but of all the other advocates who speak for Wales. They are not all in the House of Commons; indeed, some of the most effective ones are outside it.

I was going on to the question of the pace of change. I might be rather tempted on that, but I do not see how you seriously undertake the process gradually if you are to set about change. It is difficult. I cannot think of anything much worse than having a series of reductions taking place in successive elections. The noble and learned Lord, Lord Morris of Aberavon, said that the relationship that the individual Member of Parliament has with his constituency should as far as possible be stable and long-lasting. I therefore doubt whether a step-by-step change is feasible.

The other argument to which I have given thought was raised by the noble Lord, Lord Touhig, in moving his amendment. Indeed, he brought me up short and made me think again. He suggested that somehow this would increase the threat of separatism and would threaten the union. I am doubtful about that proposition. It may be right, and I will listen to the argument, but I suspect that those who are so deeply moved by the question of whether there should be 35 or 30 Members of Parliament that it affects their view of the union are mostly politicians—Members of Parliament and perhaps Assembly Members—rather than members of the great Welsh public. I may be wrong, but I do not think that Owain Glyndwr is rising from his unknown grave and about to lead the people of Wales into a great campaign because our nation is threatened by this terrible change. I am a bit doubtful about that argument.

Then there is the proposition about small nations needing special representation. While pondering these issues over the past few days, I said to myself that it was rather demeaning for the Welsh nation to believe that it has to have a few more Members of Parliament in order to stand up as a nation. Surely that cannot be right. I know that there are examples elsewhere in the world—normally because of the structures of government in other nations, such as federal systems—where more Members are given, but I believe that the Welsh nation can take pride and have confidence in itself because it is the Welsh nation and not because it has 35 rather than 30 Members of Parliament. I do not find that argument wholly convincing.

We come to the final issue of community-based representation, which gives me some concern. I have some sympathy with the argument advanced by my noble friend Lord Strathclyde last night that most people are much more interested in the county or the area in which they live than in the political constituency. Indeed, I confess that I still have some difficulty remembering the new names for the two constituencies that now make up my former constituency. I have a feeling that, if any of my former constituents were asked where they live, almost without exception they would say “Pembrokeshire”. Very few, if any of them, would ever refer to a particular constituency. Yet, of course, community-based representation is extremely important and it is because I believe that it is important that I have consistently supported the proposal that there should be a 20 per cent spread from top to bottom rather than a 10 per cent spread. Indeed, I supported Members on the opposition Front Bench when they put forward that proposal, which deals with many of the community problems that have been identified in the debate today.

I do not see how we can go gradually down this road, although I was glad to have the proposition of the noble Lord, Lord Williamson. I will continue to think about it. I hope also that my colleagues on the Front Bench will continue to think about the genuine issues that have been raised today. In that spirit of consideration, although I would find it rather hard to support a vote if the amendment was pressed by the noble Lord, Lord Touhig, I shall certainly continue to consider very carefully the arguments that have been advanced.

[Lord Rowe-Beddoe]

My Lords, I have listened carefully to the words of the noble Lord, Lord Crickhowell, for whom I have great respect. Yesterday he was courteous enough to mention that he was going to attack certain aspects of the three amendments with which I am proud to be associated. I am sure that your Lordships have had quite enough of special pleading. During the past few days, special pleading has really been the game around in the many hours of debate that I have sat through—although certainly not as many as other noble Lords. Yes, this is special pleading, but with a great difference. Wales is not a region but, as the noble Lord, Lord Touhig, and the noble and learned Lord, Lord Morris, have both mentioned, we are a nation of the United Kingdom.

At the weekend I looked again at my set of Encyclopaedia Britannica from the late 19th century which stands on a shelf in my library. I just wanted to remind myself and perhaps get a little worked up for this moment. There it was: under “Wales” it says, “See England”. We have come, admittedly, a long way since then. Rather perversely I could turn that on its head and say that if we were part of England, we would have a reduction of only 5 per cent. Coming from one section of the encyclopaedia to the “W” section and getting a full explanation of what our nation does appears to have cost us 25 per cent of our parliamentary seats.

So much has been said most eloquently by previous speakers, but I have three problems that I want to address: process, perception and fairness. I shall take process first. Last night, the noble Baroness, Lady Farrington, drew our attention in a different context to the report of your Lordships’ Select Committee on the Constitution. I shall read just two brief excerpts from it. The first relates to a report produced last October by the Welsh Affairs Select Committee of another place which was highly critical of process in the Bill. Paragraph 50 of the Lords committee states:

“We also note their view that ‘the unique position of Wales in terms of its geography, culture and history has long been recognised in its Westminster constituencies’ and their recommendation that the Government amend the Bill ‘to permit the Boundary Commission to give greater weight to these factors when drawing up new constituencies’”.

That is the considered opinion of your Lordships’ Constitution Committee. The report goes on to say in paragraph 51:

“We reiterate that pre-legislative scrutiny and public consultation would have provided an opportunity for these concerns to be properly addressed”.

That, to my mind, puts a question mark against process. When things are done, they have to be seen to be done in an equitable fashion. Equity is quite a distorted word, so let us just call it doing things in a fair way. I can understand, though I disagree with, what the noble Lord, Lord Crickhowell, said about whether we needed so many MPs. I overhead a noble Lord saying, “We could halve the number of MPs to 15 on that basis and we would still be a very proud nation”. The question is not whether Wales is overrepresented; it has been acknowledged for a long time that Wales was overrepresented, but it is overrepresented for a reason. I do not want to rehearse the reasons that have already been mentioned.

My attention was drawn to an exchange of correspondence between the then Prime Minister of the United Kingdom and Speaker Clifton Brown on 24 May 1944. I am not going to quote it to you, though it would actually do us all well to hear the words of one of the more eloquent gentlemen of the last hundred years. In the letter that the Prime Minister wrote to the Speaker, he requested that the Speaker set up a Speaker’s Conference to report within a certain period on—of course—redistribution of seats, reform of the franchise and methods of election. It does not seem to go away, does it? There are two points to make. One is about the process. The Speaker had assembled 22 or 24 Members of both Houses and some outsiders. They came back to the Prime Minister within four months with some very good recommendations which were sent to the Boundary Commission. That was the process: there it was; one could see how the whole thing started. It was a committee of all political parties which wanted to address what was concerning the Prime Minister at the time—that he wanted to take a look at the redistribution of seats in the United Kingdom.

We have heard that the last time there was an Act in which it was clearly stated that Wales should have “no less than 35 seats” was back in 1986. What we are missing in this is some reason why the Government have decided on numbers and then went on to fit parts of the United Kingdom into those numbers. I cannot be convinced. If I feel that way, I am sure that other equally ignorant people in the world will feel it also. The process is really faulty—it is faulty to my satisfaction, and will be faulty to the people of Wales when it is presented to them.

Let me draw the attention of noble Lords to my second point, about fairness and perception. In respect of fairness, I have talked about the reduction of seats—25 per cent, 40 to 30 and so on. I said in a slightly jocular way that if we were still part of England—“For Wales, see England”—or even Monmouthshire, we would only have got a 5 per cent chop. Where is the fairness in that? It just escapes me. Yes, I put my name to 35 MPs—the 1986 Act of Parliament has never been repealed. There are other parts of the Act that have been repealed. Why should it now just be thrown out because somewhere some group of individuals have put themselves together and said, “Wales is overrepresented; take it down by 25 per cent”? Really, the more I think about it, the more I think it is just extraordinary and savage—that was the word used by my noble friend Lord Elystan-Morgan.

I am a great supporter of these amendments. I believe that we really have to ensure that the Government think carefully about their treatment of Wales. I am a unionist, but I am talking about perception. What will the people of Wales think? I can tell you that the 10 MPs who lose their seats are going to make a great noise about it throughout Wales, and only one side of the story will be heard, and the perception will be there. I think it is dangerous.

Before I conclude, I would like to correct something that the noble Lord, Lord Crickhowell, said. He said that the third amendment, Amendment 102AA, was to kick the issue into the long grass. It was no more kicking it into the long grass than the amendment recently tabled by the noble Lord, Lord Williamson. He was actually saying, “Look, hold on a second. If you are going to do something, just wait, because, if in March the people of Wales say, ‘We want to give more powers to our Assembly—to give them some power to make primary legislation’, then there could be a reason to look at representation”. But certainly in my opinion, it should be no less than the 35 seats that sits on the statute book today.