Wales Bill

Lord Rowlands Excerpts

Report: 2nd sitting (Hansard): House of Lords
Tuesday 10th January 2017 Lords Chamber

[Lord Crickhowell (Con)]

My Lords, I had not intended to intervene but I am prompted to do so by one or two things that have said. I particularly want to have a word about the much tighter amendment on Cardiff Airport, which shifts my position.

First, I congratulate the Government on the way they have dealt with the fiscal framework. Acknowledgment has been given from around the House to the real progress that was made in reaching what inevitably is a compromise deal but one which represents a very considerable step forward. Yes, things do change with time. When I was Secretary of State of State, long ago, it just happened that the Barnett formula was rather favourable to Wales, so I avoided criticising it. But of course it has changed—and we have heard how things change over time—and the Government, and the Welsh Government as well, deserve some credit for the deal that has been done.

I turn to this more restricted amendment about Cardiff Airport. I suppose that I should declare two matters. Long ago, at Second Reading, I supported the Government and declared an interest as a frequent flyer from Bristol. I did not declare another, even more remote interest—that long ago I was part of a consortium that bid for the management of Cardiff Airport. We did not bid enough, but I like to think that, if we had won, we would never have allowed that airport to be pushed downhill as rapidly as its subsequent managers did. That is the past history, which is very regrettable. I am sad that my noble friend—I always regard him as my noble friend, because he is a very good friend of mine—Lord Rowe-Beddoe, is not here, because he did great work in trying to rebuild the airport from the state in which it has been.

The new amendment would change things. Long haul is a very different matter, and the airport is not in my view a competitor with Bristol, as I feared that it would be in the past. So I hope that the Government will be sympathetic to this much narrower amendment. I withdraw the hostility that I previously expressed for the wider amendment and the wider campaign that was originally fought.

[Lord Rowlands (Lab)]

I shall speak to Amendment 74, proposed by the noble Lord, Lord Wigley, to continue to clarify the issue of the apprenticeship levy. I express my gratitude to the Minister for his letter on this issue in November, which was extremely informative and helpful. It spelt out how the Treasury was going to Barnettise the levy, which was very helpful, but I would like to press him a little more on the mechanics of this arrangement. I put this in the form of a question, because it has been hard to get anything factual. Under the Barnett formula before the levy, am I right in thinking that it was the budget of the department for business that was responsible for expenditure on apprenticeships? Are we now going to see an exchange—a replacement of BIS with Revenue and Customs—which is not an addition but just a transfer of responsibility for organising the Barnett formula in relation to apprenticeships? Am I right in thinking that that is the mechanics of this case?

Of course, the apprenticeship levy came out of the blue and without consultation—a point that we made very forcefully in an earlier debate—when the Assembly had already devised a very positive and constructive apprenticeship policy, envisaging no fewer than 100,000 places over the Assembly period and a budget of some £110 million. Now I understand that—and I am grateful if this is the case—as a result of the announcements and the fact that the Assembly knows that some of the apprenticeship levy money is going to be Barnettised, it has increased the present budget from £110 million to £125 million. That is a significant and important additional contribution to the Welsh economy. So on that side, I can welcome what has happened. But alongside that, we still do not know what the cost of the levy will be to the companies, public bodies and major utilities operating in Wales and how much of it they will be able to recover, one way or another. Yet again, I put the point in the form of a question because I have heard of some of these figures only at second hand. I hope the Minister, when he comes to reply, will be able to give us a much more authoritative account.

As I understand it, one assessment has been that the apprentice levy is going to cost the public sector in Wales some £30 million. In fact many organisations, public utilities, public bodies and companies, frankly, are treating the levy as an employment tax. They cannot see how they can retrieve the sorts of sums they are going to be levied with in any form of apprenticeship scheme that is going to be available. For example, what is the cost of this levy going to be to our 22 local authorities? Am I right in thinking that a county such as Pembrokeshire is going to pay some £750,000 a year as a result of the levy, and Powys about £600,000 a year? Multiply that by the 22 local authorities and you wonder how those authorities can possibly reclaim, through the levy, anything like the amounts of money they will pay. Can the Minister clarify and identify for us what the cost will be to a whole range of public bodies, utilities—I am going to refer to utilities in a minute—local authorities, the National Health Service and the Welsh Government themselves, which are all going to pay this levy? I fail to see how, somehow or other, we are going to be a beneficiary of this arrangement.

I raise one other major anomaly. We have very large national utilities that stretch across Scotland, Wales and England. According to one figure I have seen, some 75% of the employees of these major utilities—the energy companies, et cetera—are in the devolved Administrations. That means they can claim only 25% of the apprenticeship levy that they are going to pay through the English voucher system. Again, I would like to know how this is going to be sorted out. The situation is muddled and lacks the transparency the noble Lord, Lord Wigley, spoke about. We are flushing out greater transparency but it is still not sufficient, and I hope that we can use the opportunity of debating this amendment to seek much greater clarification.

[Lord Kinnock (Lab)]

My Lords, I shall follow on from my noble friend Lord Rowlands on the issue of the apprenticeship levy and very briefly and simply make the case for reconsideration of the policy being implemented now by the Government in both the public and private sectors.

I believe that within the formulas currently being employed—and this applies very particularly to Wales because of our substantial local government and public sector, for various historic and structural reasons—there should be better treatment for both private and public employers who are already proven good trainers. There is insufficient discrimination in the way the system is intended to operate now to give higher rebates or greater inducements to improve apprenticeship training, numerically and in qualitative terms, because those who are already good trainers, who have the custom and habit of making substantial provision for the training of new generations of skilled personnel, are simply not getting rewarded as they should for good performance, and for their strong intention to continue with that good performance, by comparison with employers who are and will be levy payers who have a much weaker record of the employment and development of apprenticeship skills. I make that plea in the context of this Bill because it has direct relevance.

There was a time, a very long time ago, in the early 1990s, when I had various obligations in my mid-life crisis of being leader of the Labour Party. We developed an apprenticeship levy scheme that was deliberately constructed in order to reward public and private sector companies and institutions with good records of apprenticeship performance and to finance their bonus, as it were, out of the levy on those with weaker performances. So there was a dual spur of inducement to improve apprenticeship performance in rewarding those who had good records—and intended to improve upon them—and in the minor penalty, but nevertheless a penalty, on those who had no such record of good performance. There was an inducement for them to reduce their levy obligations by improving their performance.

--- Later in debate ---

Noble Lords have perhaps gained the impression that officials are not speaking to each other and that there is no discussion on this. This is not the case. Discussions are certainly going on, for example in relation to cross-border arrangements where there will be employees in Wales benefiting from apprenticeships in England and vice versa. Discussion is happening because there clearly needs to be some dovetailing of arrangements. I am sure that things could have been done better—that is nearly always the case—but I certainly do not want noble Lords to think that nothing is happening in a cross-governnment way, because it is.

[Lord Rowlands]

I apologise for interrupting the Minister but can he publish exactly which public bodies, which local authorities and which companies are going to pay this levy and what amounts they will pay?

[Lord Bourne of Aberystwyth]

I am sure I can and I will make endeavours to do so. Clearly, this is related to the way in which the levy operates. This is a matter being conducted from Westminster, so I will endeavour to get this information for noble Lords. What I cannot do is indicate how it will be spent. This is a matter for the Welsh Government and the National Assembly for Wales.

I turn now to Amendment 80 on air passenger duty. In doing so, I wish to say how sorry I am that the noble Lord, Lord Rowe-Beddoe, is not in his place because of indisposition. I am sure we all wish him a speedy recovery. I know that he has very strong views on this issue; I have discussed it with him on many occasions. The amendment was spoken to formidably by the noble Baroness, Lady Finlay, with other noble Lords speaking in support.

The Government have considered the case and options for devolving APD to the Assembly, as we committed to do in the 2015 St David’s Day agreement. From extensive debates in Committee, noble Lords will be aware that there is an issue about state aid, particularly in relation to but not limited to Bristol. The noble Lord, Lord Kinnock, correctly indicated a competitive element with Birmingham. There is a competitive element with airports in the United Kingdom which is obviously accentuated with those that are geographically proximate. While we remain members of the European Union there is clearly an issue with regard to state aid rules that cannot be lightly ignored. I assume that that will not be the position once we complete the Brexit discussions and implement it, but that is some way into the future. I put that important issue on one side.

Wales Bill

Lord Rowlands Excerpts

Report stage (Hansard - continued): House of Lords
Wednesday 14th December 2016 Lords Chamber

As I have said, the Delegated Powers and Regulatory Reform Committee is faced with this problem all the time; we were faced with it this morning in relation to the Higher Education and Research Bill that was debated in your Lordships’ House last week. As I say, we make recommendations on this issue. The Government used to comply with the committee’s observations but for the past two or three years they have ceased to do so. Your Lordships are dealing with something that is very serious—Henry VIII powers that are being exercised by negative resolution. Noble Lords will know that for the negative resolution to be introduced into the House requires a Member actually to raise the issue of his own volition and make the Government respond, as opposed to the Government coming here and asking for permission to amend the Act of Parliament. This is an important constitutional issue that this Government should take on board. For that reason, I support the amendments that have been tabled.

[Lord Rowlands (Lab)]

My Lords, I support the amendments, which are similar to those that I had the pleasure of moving in Committee. Since then, we have had a most interesting and informative letter— yet another Bourne letter, I may say; the collected correspondence of the noble Lord, Lord Bourne, is becoming voluminous—that is extraordinarily revealing. It appears that if we have bad habits, other Assemblies, including the Welsh Assembly, are now catching them. The letter tells us:

“In 2015 and 2016, eight out of the twelve Acts passed by the Assembly included a power for Welsh Ministers to make consequential amendments to Acts of Parliament”—

that is, our Parliament—

“without any role for Parliament to scrutinise such secondary legislation”.

It turns out that the Assembly is doing exactly what we are threatening to do. It is bringing in legislation, including Henry VIII powers, that will then be used to amend legislation, primary and secondary, that this House has passed. That is a constitutional absurdity and we have to put a stop to it at both ends.

In fact, not only has the Welsh Assembly taken these Henry VIII powers in eight of its 12 Acts, it has exercised them already. In three cases it has amended our primary legislation without our knowing or being consulted. I do not know who was asked. I ask the Minister to elaborate on this, because it is all in his letter. Another four pieces of secondary legislation have been made by the Assembly that amend SIs made by the UK Parliament. So there are three pieces of primary legislation and four secondary that have been amended by the Welsh Assembly, using their Henry VIII powers, without either this House or the other House knowing.

I have the privilege of serving on two committees of this House that spend a lot of time on secondary legislation, as well as the Joint Committee with the Commons. They are most impressive committees. An enormous amount of effort is taken and thorough, diligent work is done by the legal advisers and the members of the Committees. We pore over our draft statutory instruments and report if there is any special reason—if we need to draw attention to defective drafting, in the case of the Joint Committee on Statutory Instruments, or to vires issues or broader issues in the case of the Secondary Legislation Scrutiny Committee.

I am astonished that we spend all this time making sure that we bring to this House statutory instruments that are fit for purpose, yet I now find that another Assembly—the Welsh Assembly—has amended the statutory instruments that we have so carefully prepared. I do not know how it has amended them; I do not know the nature of the amendment—I will press the Minister to explain in a minute—but this is the sort of situation that we get into. It is a sort of inter-ministerial legislative stitch-up: “You can amend it in your legislation —it is sufficient, it saves time and it is convenient”. Neither House should be interested in ministerial convenience. It is our job to be inconvenient at times, and I believe we should be in this case.

Will the Minister now tell us, based on the letter he has sent us, which sections of which Acts of Parliament—primary legislation—the Assembly has amended? I do not have a clue; none of our committees seems to have found out about it. Secondly, which statutory instruments have been amended by the National Assembly and which paragraphs of our statutory instruments have been changed? We have to put a stop to this; we have to put our foot down. I will read the last paragraph of the letter:

“There was no requirement for Parliament to scrutinise any of this legislation”.

It appears that Parliament was not party to any of this legislation, only Ministers. That is not true. Acts of Parliament and statutory instruments belong to this Parliament as much as they belong to Ministers; they are as much our constitutional property as they are that of Ministers. We need to put our foot down and find ways and means to ensure that this will not happen again. It is now happening to us, as we threatened to do it to National Assembly legislation. Let us put a stop to it, please.

[Lord Elystan-Morgan (CB)]

My Lords, I wholeheartedly agree with the submissions made by everyone who has spoken on this matter. If I may say so, my heart swelled with pride at the wholly magisterial and superb condemnation of the situation by my noble and learned friend Lord Judge.

This provision has no place in the mores or principles of the 21st century. It is a remnant of a monarchical diktat. Although it does not seem to have been abused by government at all in recent years, but used only for something utterly mechanical, it is still the letter of the law—a law that, I submit, is indefensible. I hope the Minister will not seek to defend the indefensible when he replies.

In Committee, I cited a book written by a former Attorney-General, Sir Gordon Hewart, in the late 1930s, entitled The New Despotism. He was worried about the powers being exercised daily by Ministers in such a way as to circumvent Parliament. He was not dealing with this problem but with positive powers allowing Ministers to make regulations in a wide field. What he would have said of this, I just do not know. It is an anachronism that we must get rid of, because it has no place whatever in the fundamental basis of our parliamentary system in the 21st century.

My name is down to Amendment 68, which covers this situation and goes a little further. It deals not just with the Cardiff Assembly but Westminster. I appreciate there is a distinction between them, as my noble and learned friend pointed out, but I thought it proper to include both for this reason. Most of the legislation that affects Wales and creates devolutionary powers for Wales does not come from Cardiff—it comes from here. For that reason, I should have thought it entirely proper to include it in the condemnation, which should be regarded as utter and absolute, of these Henry VIII powers.

I therefore ask the Minister to say yes. It may well be that there is no abuse of these powers and that no modern Government would dream of abusing them, but that is the letter of the law. It is a dangerous law and one that has no place in our day. Let us get rid of it as soon as possible.

--- Later in debate ---

[Lord Bourne of Aberystwyth]

My Lords, I thank noble Lords who participated in the debate on the amendments in this group relating to Clause 60. First, I understand the points made on the powers that are being brought in, specifically in relation to legislation that is having an effect beyond the particular legislature. Secondly, as a general point, I am grateful for the acknowledgement of the reams of letters that noble Lords are receiving, but I fear that probably more attention is being paid to the letters than to the debates, because the situation as regards the Assembly’s power was something that I made great play of in Committee. So the letter was not saying anything new—I mentioned this issue in Committee, so that particular point should not have taken noble Lords by surprise, as it appears to have done.

[Lord Rowlands]

But the Minister was not capable of telling us that, in fact, the Assembly had actually exercised these powers and actually had amended primary legislation and statutory instruments. He was not able to tell us that in Committee.

[Lord Bourne of Aberystwyth]

I am grateful to the noble Lord—indeed, I did go further in the letter, that is true. There would have been little point in sending it otherwise. But I was underlining the point that I thought that noble Lords were saying that I had not mentioned this in Committee, which I had.

On the situation, I can say this—and I hope that it will meet with general approval—and pick up particularly the points made by the noble Lord, Lord Murphy. I am very grateful for his wise words in developing some way forward in relation to this matter. I have spoken to my right honourable friend the Secretary of State for Wales, who has written to the First Minister and the Presiding Officer—I think significantly—in the National Assembly, to give two assurances. First, any intention to exercise the power in Clause 60 in respect of legislation made by either the Assembly or Welsh Ministers would be discussed between officials well in advance of regulations being laid. I think that this is common practice in any respect and, in relation to the particular point made about elections, this is something that is already happening. I think that sometimes noble Lords do not realise the good will that exists between officials, and indeed between the Administrations, in taking things forward.

Secondly, the Secretary of State will write to the First Minister and Presiding Officer, informing them of any intention to make regulations which affect legislation made by the Assembly or Welsh Ministers and to do so at the earliest stage before regulations are laid. It will then be for the National Assembly to act as it considers appropriate in relation to that information. I will be urging my right honourable friend the Secretary of State to seek some assurance that the Welsh Government will act in the same way in relation to matters that are decided at the Assembly which affect our legislation. It seems to me that this is only fair and deals with the issue that the noble and learned Lord, Lord Judge, was referring to in reverse. I do not think that, in essence, there is any difference between the two practices.

I hope that this will give the reassurance that is being sought in relation to the practice. I recognise the points that are being made and I think that this deals with them in that it alerts people at the earliest reasonable opportunity. I thank noble Lords for contributing to the debate. I understand the points that are being made but, in relation to that undertaking of some institutional underpinning at National Assembly level, I hope that noble Lords would accept these assurances and not press their amendments.

--- Later in debate ---

[Lord Bourne of Aberystwyth]

Again, the noble Baroness is a Member of the National Assembly; I am not. I would expect her to have a better idea of that than I do.

[Lord Rowlands]

Could they possibly be subject to legislative consent Motions, for example?

[Lord Bourne of Aberystwyth]

My Lords, I appreciate the point that the noble Lord is making, and indeed the point that the noble Baroness is making, but I suspect that this would be part of the response of the Presiding Officer to the Secretary of State now that she has the letter—or hopefully has the letter, because it has only just been sent. That would be a matter for dialogue between the Presiding Officer, First Minister and Secretary of State.

Wales Bill

Lord Rowlands Excerpts

Committee: 4th sitting (Hansard): House of Lords
Wednesday 23rd November 2016 Lords Chamber

Moved by

[Lord Rowlands]

111: Clause 53, page 42, line 38, at end insert—
“( ) If a statutory instrument containing regulations under subsection (2) includes provision within devolved competence or provision modifying a devolution enactment, the Secretary of State must send a copy of the instrument or, if subsection (7B) applies, a draft of the instrument to the First Minister for Wales and the First Minister must lay it before the Assembly.”

[Lord Rowlands (Lab)]

My Lords, this amendment is in my name and those of my noble friend Lady Morgan and the noble Lord, Lord Wigley. It is the first of a group of nine amendments dealing with the issues that arise from Clause 53. I also acknowledge that in this group are amendments in the name of the noble Lord, Lord Elis-Thomas.

Before I turn my attention to the substance of the amendments, I remind the Committee that their established provenance, as it were, comes from amendments drafted and promoted, in some cases, by the Welsh Government and, in other cases, by the National Assembly. Given that, I hope that due weight will be attached to the amendments because of where they have come from and what they propose. I also draw attention to the fact that concerns about this clause have been brought to our attention not only by the National Assembly and the Welsh Government but by two reports from this House—one by the Delegated Powers Committee and a further one by the Constitution Committee. I shall draw to the attention of the Committee what those two reports say in their concerns about this clause.

It is not surprising, mind you, that this clause has attracted such attention. As we have just been reminded, yet again here is a clause that introduces a Henry VIII power. We have been seeing an increasing tendency to use Henry VIII powers. The phrase “Henry VIII power” harks back to the fact that similar provisions can be found in early Tudor statutes—for example, a Statute of Sewers in 1531 and, more interestingly, the statute of Wales of 1542-43, have such powers in them. I need not tell anyone in this Committee what a Henry VIII power is, but we might as well remind ourselves: it is a power that allows the Secretary of State to modify, amend, repeal or revoke any piece of primary legislation through a statutory instrument.

I suggest that the power in Clause 53 is a Henry VIII power-plus because of the way in which, in subsection (8), the clause defines primary legislation:

“In this section ‘primary legislation’ means … an Act of Parliament”,

or,

“a Measure or Act of the National Assembly for Wales”.

In other words, the clause will allow the Secretary of State to modify, repeal or amend any Measure or Act of the National Assembly for Wales. As the clause stands, the Secretary of State can do so unilaterally. There is no provision in the clause to involve, in any meaningful way, either the Welsh Government or the National Assembly, whose Measures and Acts are their property. I strongly believe we should look at a process by which the National Assembly could scrutinise and approve any such proposed statutory instrument.

I therefore turn to the first of the reports from this House and the comments of the Delegated Powers Committee on this clause. I have a feeling that the Delegated Powers Committee is getting increasingly exasperated by the way in which these Henry VIII powers are being introduced and, for that very reason, by Clause 53 in particular. I remind the Committee what the Delegated Powers Committee said about Clause 53:

“a Bill should not as a matter of routine confer a Henry VIII power such as that in clause 53”.

That is the first of its exasperated comments. The second is, as that committee has repeatedly said on other Bills that have included Henry VIII powers, that,

“where a Henry VIII power is included in a Bill, it must be fully explained and justified in the delegated powers memorandum”.

No such full explanation or justification has been included in the memorandums on this clause.

--- Later in debate ---

[Lord Bourne of Aberystwyth]

I am most grateful to the noble Lord, who I know sits on that committee and plays a leading part in it. I assure the noble Lord that if I can help and be forthcoming with any information, it will be made available.

On the other issue raised by the noble Lord, Lord Hain—the fiscal framework and the discussions on it—first, it is not for me to enter into these negotiations. They are going on between the Treasury and Welsh Government Ministers, and whatever my political differences with Carwyn Jones, Mark Drakeford and others, I have no doubt about and in fact have the highest opinion of their abilities and insight. This is a consensual arrangement. If they do not want an agreement on proposed terms, they have the option of not saying so—and if there is no legislative consent Motion, there is no Bill. So there is no question of a pistol being applied to anybody’s head; the issue is for the National Assembly to determine.

Having been there, I have the greatest respect for the Ministers and officials. That is being hammered out, I gather that robust discussions are taking place and I am sure, and hope, that they are considering the best interests of Wales. But any representations by noble Lords opposite should be made to the First Minister, the Finance Minister and others in those discussions. It is not for me or for us to shadow manage what they are doing—and, I am sure, doing very effectively.

That probably summarises the Government’s position. I have given the undertaking sought; I will do my best to make information available on the fiscal discussions as they become available. I understand what noble Lords say about protecting Welsh interests, but under these devolved Administrations and in these devolved days, it is for the Welsh Ministers and the National Assembly for Wales to bring forward the legislative consent Motion. With that, and with those undertakings, I urge the noble Lord to withdraw his amendment and other noble Lords not to press their amendments.

[Lord Rowlands]

My Lords, I listened carefully to the Minister, as always, and I am fascinated by this concept of “reciprocal” and the promise of a letter that will describe to us how this will work or has worked. Does the Welsh Assembly exercise such power to intervene to change English legislation?

[Lord Bourne of Aberystwyth]

My Lords, I am not sure whether it has, but I will try to give the noble Lord that information. The material point is that it can, just as we can. I am not sure how many times that has been exercised, but I will endeavour to cover that in the letter.

[Lord Rowlands]

Again, I shall look forward to that letter. I do not know how other noble Lords feel but I just find it very difficult to believe that there should not be a provision of the kind we have been trying to introduce. If the United Kingdom Parliament chooses, unilaterally, to seek to amend legislation that belongs to the National Assembly, it has to have some form of consent or approval. That is a fundamental principle of constitutional propriety and property.

[Lord Bourne of Aberystwyth]

Another point that I had meant to mention—again, I will cover it in the letter; I appreciate that it does not fully answer the point but I shall try to give examples—is that the identical power exists in relation to Scotland.

[Lord Rowlands]

I am looking forward to this collection of letters—a few have already been mentioned. I am happy to beg leave to withdraw the amendment but I warn the Minister that we will come back to this issue on Report.

Amendment 111 withdrawn.

Wales Bill

Lord Rowlands Excerpts

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

[Lord Hain]

The noble Lord may have a point in the sense that more VAT proportionately is paid by people on low incomes, and there are relatively low incomes in Wales, but I would want to see the figures. I would want to have the drains up on this proposal before I went anywhere near it, because I would not want Wales to be short-changed by such a reform. On that basis, I oppose the amendment.

[Lord Rowlands (Lab)]

I support my noble friend because I worry about taxation. It can be very regressive in an individual context. There is a history of it, and it could be not only in income tax but in VAT. We should be very careful before we proceed down that road.

[Baroness Morgan of Ely]

I endorse the views of my two colleagues on the Labour Benches. I think it would increase budget volatility for the Welsh Government without enhancing their powers in any meaningful way. I underline one other point, and that is that we would, potentially, have different rates in England and Wales. Imagine the chaos that that could cause communities and businesses on both sides of the border. The economies of England and Wales are closely integrated and I am mindful that having varying rates applied on opposing sides of the border could pose significant issues in the long run, so I am really sorry—it always pains me not to agree with my noble friend Lord Wigley—but I cannot support this amendment.

Wales Bill

Lord Rowlands Excerpts

Committee: 2nd sitting (Hansard): House of Lords
Monday 7th November 2016 Lords Chamber

[Lord Wigley (PC)]

My Lords, after that rush of enthusiasm for the Wales Bill, I rise to move Amendment 23, which stands in my name and the name of the noble Lord, Lord Rowlands. It relates to the devolution of the funds generated through the apprenticeship levy. The issue has been raised with me because of the uncertainty experienced by employers based in Wales regarding this matter. The Government’s rather chaotic and haphazard approach to the apprenticeship levy has left all the devolved Administrations scratching their heads. Although the specifics are clear for businesses in England, the way in which businesses and organisations in Wales will be able to access and benefit from the money generated by the levy remains completely opaque.

Of the projected £3 billion in the 2015 Autumn Statement, the Treasury specified that £2.5 billion would be spent exclusively on England while the remaining £500 million would be divided among Wales, Scotland and Northern Ireland. We were told we would have our fair share. Despite the fact that this levy is due to be introduced in April, just five months away, we are left facing more questions than answers on the matter. What is our fair share? Are the receipts going to be Barnettised? What happens if the levy yields less money than projected? Will England’s funding be prioritised at the expense of that which is promised for Wales? The lack of transparency in the Treasury’s funding formula for Wales, Northern Ireland and Scotland is creating practical hurdles for those Governments as they prepare for their own apprenticeship schemes.

Apprenticeships are a devolved matter. So are education and training. Operating at a UK level a levy that is meant to directly fund the devolved function has every potential to cause confusion. I am told that an employer-led institute of apprenticeships is to be set up in April 2017 to advise the Department for Business, Energy and Industrial Strategy on the administration of funding and apprenticeship standards in England. Is this institute specifically for England? If so, where does that leave Wales? Surely a similar institution for each of the devolved areas should have a parallel role in advising the Secretary of State. Are the devolved Governments expected to set up their own bodies analogous to the institute or are they expected to relate directly to an institute whose remit extends only to England?

Online services will apparently be provided to employers in England but will not be available to Welsh employers. Another issue that remains unclear is how the levy will work in relation to companies that have headquarters situated in one country but employ people across the border in the territory of a devolved Administration. Plaid Cymru MPs were given assurances in the other place that the Treasury is working in co-operation with the Welsh Government to determine the implementation of the levy. We are yet to see any development on that front.

The apprenticeship levy status in Wales is reduced to a mere link on the UK Government website directing readers to a nondescript Welsh Government webpage that provides no clarity to those in Wales seeking information. What discussions took place between the UK Government and the Government of Wales before that link was advertised? With apprenticeships and businesses keen to take advantage of the levy in Wales in the immediate future, it is not right that they are left guessing while their English counterparts are able to plan in advance.

The UK Government are introducing legislation that pays no regard to the specific needs of the corresponding system in the devolved Governments. They are England-centric in their planning and implementation and appear to be progressing the matter without any co-ordination with the devolved Governments. More broadly, the patchwork devolution settlement being offered to Wales in the Bill will result in confusion and mismanagement. One solution to this problem, as my amendment today sets out, would be to devolve the apprenticeships levy in its entirety to Wales. This would allow the Welsh Government to administer and control the money raised and to align it with apprenticeship policies. Put simply, it would clarify any doubts over Wales’s fair share of the money raised, and would enable employers and apprenticeships to plan their programmes in a co-ordinated fashion. This is a constructive proposal to address a very real problem. I appeal to noble Lords on all sides to indicate their support for the amendment and I appeal to the Government either to accept it today or to undertake to return on Report with their own amendment to answer these very real difficulties. I beg to move.

[Lord Rowlands (Lab)]

My Lords, I declare an interest as honorary president of the National Training Federation for Wales, and in its early years I was one of its advisers. The federation brings together many or most of the training providers that deliver the apprenticeship and skills policies and funding from the Welsh Assembly Government. I am grateful to the noble Lord, Lord Wigley, for tabling this amendment and bringing to our attention the peculiar and now very difficult situation that has arisen as a result of the introduction of the levy.

I say nothing about the merits of the levy. Frankly, it is a fascinating piece of interventionist politics in the labour and employment market. In fact, it reminded me—although I make no direct comparison—of when I was first in the other place in 1966 and a Chancellor of the Exchequer introduced something called the selective employment tax. I am not sure how many Members still remember that or it its fate. It was a novel tax which did not last; I wonder how long this novel levy will last.

--- Later in debate ---

[Lord Rowlands]

My understanding is that the way it is going to be delivered in England is through this so-called digital voucher. First, can the Minister confirm that that is the case? Secondly, is it also the case that Wales and other Administrations have all rejected that process? If it is not going to be that, what will the process be by which Welsh companies can claim on the levy?

[Lord Bourne of Aberystwyth]

The noble Lord is right in the sense that the essence of devolution is that if the policy is devolved to Scotland, Northern Ireland and Wales it is a matter for those Administrations as to how the apprenticeship policy is rolled out. The apprenticeship levy discussion will be happening between the Treasury and the devolved Administrations. I will get noble Lords an update on how that is progressing. It will then be for them to decide how the money is spent. The discussion on how the cake is being divided up will be led by the Treasury with the devolved Administrations. That is my understanding of how it will operate.

Government of Wales Act 2006 (Amendment) Order 2015

Lord Rowlands Excerpts

Tuesday 13th January 2015 Grand Committee

[Lord Wigley (PC)]

My Lords, I rise to ask for clarification from the Minister. I do not think that many people would want to block the order, because it seems a patently sensible thing to do—but if the House did not pass this order, it would be a case of the unelected Peers blocking the wishes of both the elected House of Commons and the elected National Assembly for Wales. That strikes me as a rather unsatisfactory position to be in—albeit that the powers are being used in this instance with a recommendation and to move forward.

Secondly, the Minister said that the Assembly is “currently considering legislation”. I assume that those words were carefully used. Does that mean that the Assembly is currently considering legislation outside its powers? Are there issues that arise from that possibility? Is it outside its competence? If that is the case, are we asking for powers for retrospective action in order to put right something that has already been carried or debated, possibly outwith the Assembly’s powers? All these areas need clarification to avoid any instance arising, perhaps in circumstances more contentious than this. The objective of this order is probably acceptable to everyone, but one can imagine circumstances where that might not be the case and where there could be great difficulties.

[Lord Rowlands (Lab)]

I rise briefly to support this order. I followed the question asked by the noble Lord, Lord Wigley, with some interest. As I understand it—I hope the Minister will confirm this, and I think she did so in her opening speech—the order confers further legislative power on the Assembly to promote the Bill that is before it. If it is that, I fully support it. It is part and parcel of the staged process of the evolution of legislative competence contained in the 2006 Act. I know that there are many critics of that process, but it has served the Assembly and the Welsh Government well over the years, prior to the referendum and the Assembly’s full legislative competence. Will the Minister confirm that this is a process of conferring further legislative power on the Assembly to fulfil its wishes to introduce this Bill and carry it through?

If it is, we should hope it is the last such order, because there is unanimity across all parties that for legislation we should move from a conferred powers model to a reserved powers model. That was what the Minister assured us when she was taking the last Bill through the House. The process she described is now in full swing, and I hope that in the near future the proposed reserved powers arrangements will see the light of day. If, as I suspect, this will be the last such order, we should recognise that. I think I am in a minority, but I believe the process that was created to introduce legislative competence was sensible. It was part of a sensible staged process to transfer legislative power, but it is now redundant. I hope that this is the last order of this kind and that we will go over to a reserved powers model.

The title of the Bill that is the driving force behind this order is the most ambitious and courageous title I have ever seen. Over many years, I have heard Ministers making the case that their Bills will improve people’s well-being, but I have never seen the words “well-being” in the title of a Bill. The Well-being of Future Generations (Wales) Bill is an amazingly ambitious and courageous title. I sincerely hope that the performance that flows from the Bill will match it.

I realise that it is not within our competence to discuss the Bill, but considering that we are enabling it to go ahead and are supporting it, I hope it is within the bounds to ask the Minister to give us some idea about the costs that the Bill might incur. The Bill will place a duty on local authorities and a series of public bodies to promote and develop sustainability. At this stage, particularly in local government, there are horrendous problems of finance. I hope that the Bill will not create costs for local government that it cannot sustain.

The Bill that will eventually come forward is about the public sector. As I understand it, the private sector and the third sector will be covered by something called a sustainable development charter. I have not had sight of this charter. If the Minister is in a position to clarify what the charter might be, it would be helpful as a piece of background to an order which I and, I am sure, everybody else will support.

[Baroness Humphreys (LD)]

I, too, welcome the amendment order. I also welcome the work being carried out by the Welsh Government in their Well-being of Future Generations (Wales) Bill. The order will help the Welsh Government to pass one of what they consider to be the few laws of its kind in the world. It is a Bill which will put sustainable development at the heart of public service governance in Wales. I also recognise that the Welsh Government see it as their commitment to pass on a better quality of life to their and my children and grandchildren.

The Welsh Government have recognised the systemic weaknesses in the present governance structures for sustainable development in Wales. The Bill will, or should, ensure that they set objectives that match the goals set out in it. The Bill allows the Welsh Government to address further the complexity and unintended consequences that arose from partnership working: overlap and duplication, resulting in increased costs in the planning process. Efforts had already been made in Wales to address this problem—but, even as recently as March 2014, Denbighshire Local Service Board identified 84 partners in the county that it was supposed to work with, and that was not a comprehensive list.

I also welcome the new well-being goals listed in the Bill and the common sense of purpose that they set out for public bodies in Wales. These goals and their descriptors should ensure that such bodies share responsibility for achieving the long-term, economic, social and environmental well-being of Wales.

Although I welcome the Bill now going through the Assembly, it smacks slightly of motherhood and apple pie—or perhaps I should refer to it as “ambitious”, as the noble Lord, Lord Rowlands, did. Perhaps I may ask the Minister a couple of questions, echoing the first question asked by the noble Lord, Lord Wigley. At exactly what stage is the Bill in the Assembly and to what extent has it been scrutinised there?

Wales Bill

Lord Rowlands Excerpts

Monday 24th November 2014 Lords Chamber

[Baroness Humphreys (LD)]

My Lords, I add my voice to that of my noble friend Lord Tyler in congratulating my noble friend the Minister on the progress that has been made as the Wales Bill has made its way through your Lordships’ House. There is great satisfaction among her colleagues on these Benches that so many principles that the Liberal Democrats—and, of course, the Welsh Liberal Democrats—have believed in and promoted for so many years are coming to fruition in the Bill.

I also thank and pay tribute to my noble friend Lord Tyler—a fellow Celt from Kernow, or Cornwall—whose diligence and persistence in Committee and on Report have resulted in these amendments today. These Liberal Democrat amendments will see Liberal Democrat policy on votes for 16 and 17 year-olds, if they are agreed by your Lordships’ House, coming to fruition in Wales.

I must admit that these amendments, allowing the Assembly to extend the franchise to 16 and 17 year-olds in a referendum in Wales, have the 16 year-old that still exists somewhere inside me, smiling with quiet satisfaction and with perhaps a little jealousy because I am one of those people who believed that I should have had the right to vote at 16. My first foray into politics was as a 16 year-old within a couple of weeks of my 17th birthday, when I was agent to a candidate in my school’s mock election at the time of the 1964 general election. Noble Lords will recall that it was not until 1969 that the suffrage was extended to 18 year-olds and I am sure the same concerns voiced in the Chamber today were voiced at that time. However, had anyone told us in 1964 that in the future young people would not have to wait until they were 21 years-old to vote, but would be trusted to do so in a referendum in Wales from the age of 16, there would have been joyful celebrations. Perhaps, as there is now, there would be a sense of pride that Wales was following Scotland in forging the way to extend full voting rights to 16 year-olds sometime in the future.

My political inspiration came, in part, from an inspirational history teacher who opened our eyes to the world. Since those days, unfortunately, teachers in schools have become far more wary of political education and the danger of being accused of political indoctrination. However, I see these amendments as presenting opportunities for the Welsh Government to introduce an element of political education for those under 16 in the future. They already have, in the Welsh baccalaureate, a module produced by Aberystwyth University entitled “Wales, Europe and the World”, which presents students with an unbiased overview of political systems and political parties throughout the world and allows students the opportunity to debate issues as they arise. A simplified version of this would be ideal as a short module for those under 16.

However, as I said, that is for the future. In the meantime—and in conclusion—I am very pleased to support the amendment and to put on record my grateful thanks to the Minister for being able to accept and promote issues that have had support from noble Lords on all sides of the House and my hearty congratulations on the masterful way in which she has steered the Bill through your Lordships’ House. I, along with colleagues from across the House I am sure, wish her continued success as she seeks to build on the consensus she has already begun in preparation for the next stages of devolution to Wales.

[Lord Rowlands (Lab)]

My Lords, I rise briefly to ask a simple question. Could the Minister remind us how many 16 and 17 year-olds there are? If they all registered, what would be the increased percentage of the electorate?

[Lord Roberts of Llandudno (LD)]

My Lords, in joining this debate, I congratulate the Minister on how she has handled us and steered us through the discussions. I would like to bring in two slightly different matters. First, in speaking of devolution to Wales, I understand that last week transport became the responsibility of the Welsh Assembly Government. How do we somehow get this movement between Wales and England as the line goes from Newport up to Chester? Who is going to be responsible as we go from England to Wales, Wales to England? That needs to be cleared up. Also, in her statement following last week’s debate, the Minister said that she had promises from the 22 electoral registration officers that each one of them had plans to increase the registration in their areas. It would help us tremendously if somehow or another she could make us aware of what each of these 22 various electoral registration officers intended doing.

Finally—I shall not be long—the anxiety in Wales and other places is that young people, as well as others, are becoming divorced from politics. They leave it to other people. Turnout is down. People do not feel that they have any influence over their lives through the ballot box. The eagerness to get people registered is not just so that they will vote and be on the electoral register but that they will be part of political life and involved in the lives of their communities. The Scottish referendum has been mentioned. There, young people did register and vote. They were an essential part of the debate in Scotland.

More strongly still, I remember 27 April 1994, when the South African franchise was opened and Nelson Mandela’s struggle had been won, how enthusiastic people were about the policies of the parties and how they queued for hours—some of them, for days—to register their vote. We need to do something that will enhance registration. Imagine that we have the European in or out referendum and that less than 50% of young people are registered to vote and that fewer than that actually cast a vote—the whole thing would be a shambles. The same applies to older people. We need the majority view on such an issue to be represented.

On the way here today, I was reading a book by David Tecwyn Evans recalling his memories of his life in Llandecwyn in Merionethshire at the end of the previous century and the beginning of last century. Here, he speaks of the elections of 1886, where the children of the school, although their parents were probably not entitled to vote, knew the name of every MP in Wales. They knew the issues—tithes, education, disestablishment—and they were interested. It is our job now not just to get people to register to vote but to enable them, through the education system and in other ways, to understand and to feel: it is not only a matter for the head but a matter for the heart. The facts are important, but being part of the argument is also important.

I thank the Minister for the work that she has done. I hope that she will be able to answer my two queries and that, somehow, we as representatives at various levels can enthuse people so that young people feel “rydym yn perthyn”, we belong.

--- Later in debate ---

[Baroness Randerson]

The noble Lord brings information from the front line, if I can put it that way, in far more detail than I could have provided to your Lordships. The noble Lords, Lord Rowlands and Lord Richard, asked detailed questions about the numbers of young people who voted in Scotland and the turnout. The turnout of 16 and 17 year-olds was remarkably high. It is my recollection that it was slightly lower than among the older sections of the population but it was remarkably high. I refer noble Lords to the fact that the Electoral Commission is, at this moment, undertaking a detailed study of the impact of the votes of 16 and 17 year-olds in Scotland. That report will be published in the relatively near future and I would recommend it as very important reading for those of us who are interested in these issues.

[Lord Rowlands]

Can the Minister tell us how many 16 and 17 year-olds there are?

Wales Bill

Lord Rowlands Excerpts

Wednesday 15th October 2014 Lords Chamber

Clause 8: Welsh rate of income tax

[Lord Rowlands (Lab)]

My Lords, I wonder if I may briefly intervene before the Minister moves her amendments. I have a very modest amendment, Amendment 31, which has been included in this list. It addresses a completely separate point from the whole swathe of government amendments and I would suggest that we take Amendment 31 separately. I hope that that would be possible.

[Baroness Randerson]

I understand the noble Lord’s point but I am intending to speak to my amendments and then give way to the noble Lord to make his points. I will then respond separately. Although it is in the same group, there will be plenty of time for us to give separate attention to the noble Lord’s amendment.

[Lord Rowlands]

I appreciate the Minister’s offer but it is a very different point altogether. I think that it would disrupt the flow of the debate on the Government’s amendments if Amendment 31 was included and involved in it.

[Baroness Randerson]

Following the points that the noble Lord has made, we will uncouple his amendment and have a separate debate at that point.

Amendment 24

--- Later in debate ---

Moved by

[Lord Rowlands]

31: Clause 8, page 10, line 20, leave out from beginning to end of line 15 on page 11.

[Lord Rowlands]

My Lords, like many Members of this House, for a number of years I have had to read through Bills. In doing so, I eventually developed a habit that I cannot kick, namely that if I come to a clause or part of a clause that I cannot fully understand or appreciate and translate into the language of a lay man, I table amendments to delete those particular elements in the clause. I do this in the hope and the expectation that when Ministers reply they will tell me what it really means, and it will become crystal clear. I have to say that there have been occasions in the past when that has not happened, but I am sure that it will happen tonight and that we will have a clear view of what some parts of this clause are saying.

I must confess that I struggled with much of Clause 8. It is a very long clause; it rambles on for four and a half pages of the Bill. However, I was okay and I was getting there, until I hit new Section 116F on page 10. I was particularly intrigued by its subtitle, “Welsh taxpayers: Scottish parliamentarians”. I was intrigued to find out how this clause—presumably—seeks to define those Scottish parliamentarians who may end up paying Welsh income tax. I immediately seized the text to find out who these unfortunate—or fortunate—Scottish parliamentarians would be who could become liable to pay a Welsh income tax. I went through the text of new Section 116F from line 20 on page 10. We find in this new section that the Scottish parliamentarian is:

“An individual (T) who is a Scottish parliamentarian for the whole or any part of a tax year is a Welsh taxpayer for that tax year if—

(a) T is resident in the UK for income tax purposes for that year (see Schedule 45 to the Finance Act 2013),

(b) T meets condition C in section 116E for that year, and

(c) T meets either of the following conditions for that year.

(2) T meets the first condition if—

(a) the number of days in that year on which T is a member as described in any of paragraphs (a) to (c) of section 116E(4), exceeds

(b) the number of days in that year on which T is a Scottish parliamentarian.

(3) T meets the second condition if—

(a) the number of days in that year mentioned in paragraphs (a) and (b) of subsection (2) are the same, and

(b) T meets condition A or B in section 116E for that year”.

I am sure now that every Member of the Committee who is here will know exactly who the Scottish parliamentarians are who are liable for tax.

I am quite good at the Times Codeword, but I have not decoded this particular new section at all. I immediately seized the opportunity to read the usually helpful Explanatory Note on this particular new section. It should be illuminating and answer all my queries. It states:

“Section 116F(1) sets out that if an individual has been a Scottish parliamentarian in a tax year, they will be a Welsh taxpayer if they are UK resident for the tax year, have also been a Welsh parliamentarian in that tax year and can meet one of the two conditions set out in the section. Taken with section 116E(5) this means that, if an individual is a Scottish parliamentarian for part of the year, but not a Welsh parliamentarian in that tax year, they will be a Scottish (rather than Welsh) taxpayer, even if, for example, they also have a close connection with Wales”.

Did I read that right? Are we talking about a Scottish parliamentarian who would be liable if he or she was also a Welsh parliamentarian in the same tax year? Who is this amazing creature? Who has this amazing electoral capacity to serve in one tax year both as a Welsh parliamentarian and a Scottish parliamentarian so that he or she would then be liable to pay tax in Wales? I find it difficult to envisage such a person ever existing. Everyone talks about belt-and-braces draftsmanship and this must surely be it. I would be grateful, when the Minister comes to reply, if he or she will tell me whether they know of anyone who is likely ever to be a Welsh parliamentarian and a Scottish parliamentarian in the same tax year so that we might then know which Scottish parliamentarian may be liable for Welsh income tax.

I use this as an illustration because I sometimes find that in this House—and I was a strong campaigner in the other House—I occasionally rebel against parliamentary draftsmanship of this kind. All these cross-references make it almost impossible to read. Even an intelligent person who is used to reading legislation should not be faced with drafting of this kind. It would be a good idea, once in a while, for the House to say to the Government, “Take this back, not because we do not agree with the intent but because it is drafted in such a way that it is almost incomprehensible”. If we started doing that, maybe we would have Bills better drafted than this one is.

[The Deputy Chairman of Committees (Lord Geddes) (Con)]

Having posed such a fascinating question, would the noble Lord like to move his amendment?

[Lord Rowlands]

I beg to move.

--- Later in debate ---

[Baroness Randerson]

We are talking about the situation in the past. Keith Raffan moved from Wales to Scotland; he also moved from the Conservative Party to the Liberal Democrats. The whole thing is a relevant example: the thing you would imagine would never happen has already happened.

[Lord Rowlands]

I am sorry; I do not know Mr Raffan’s parliamentary history? Was Mr Raffan both a European Member and a Member of the Commons in the same tax year?

[Baroness Randerson]

He was an MP and an MSP in the same tax year. I am pretty certain I am right, but the principle is that he moved from Wales to Scotland, straight from one job to the other.

--- Later in debate ---

[Baroness Randerson]

These rules flesh out what the term “residence” means in tax rules in relation to Wales. I hope noble Lords will accept that although the rules may not make pretty reading, they are workmanlike and, despite their complexity, they are clear, unambiguous and easy for people to follow.

[Lord Rowlands]

I find it difficult to believe that they are very easy to follow. I also do not believe that there is clarity here: there is a lot of confusion. I am delighted that the noble Lord, Lord Thomas, will become completely tax-free as a result of the other provisions in the Bill. What we are trying to show and expose is that we are getting fed up with the way in which Bills are drafted in this kind of way. The constant cross-referencing makes it almost impossible for a Member of Parliament or Member of this House to follow the Bill as closely as he or she would want. This amendment was tabled to cause this debate and I have no intention of forcing it to a vote because, of course, in the process I would take out other parts of the Bill that I would support. I hope that, if nothing else, when Ministers go away and talk to parliamentary draftsmen, they will say that there is great and bitter agitation against this type of drafting and legislation. If nothing else, this debate would then have served a purpose. I beg leave to withdraw my amendment.

Amendment 31 withdrawn.

--- Later in debate ---

Debate on whether Clause 15 should stand part of the Bill.

[Lord Rowlands]

My Lords, there is a consensus that both stamp duty and landfill tax should be devolved. I have no intention of questioning that consensus. The purpose of my seeking a debate on these clauses is to ensure that we know the implications of devolving these taxes, particularly on the block grant. To date, I do not think we have concentrated on that issue.

I have some questions, first, about stamp duty. Stamp duty revenues were £115 million in 2010-11, according to the Silk commission. This represents only 2% of the total. The Silk commission makes the obvious point that stamp duty is a very volatile tax. It can vary from year to year depending on the state of the housing market. No form of indexation such as has been developed to deal with income tax devolution was recommended; in fact the recommendation was for a fixed reduction. How is the fixed deduction from the block grant going to be determined? What will be the arrangements and process, and how will it be assessed? What impact will the devolution of stamp duty have on the block grant?

The second tax that we are devolving—the landfill tax—is very different. It is a tax that is not really aimed at raising revenue. It is intended to encourage waste saving and recycling. In fact, the success of this tax would be if the revenue declined. Indeed, the Silk commission points out that that is exactly what is happening: the taxable base—that is, the volume of waste sent to landfill—is declining. Across the UK, the taxable base for landfill has fallen by 33% in the last five years, and so the value of the block grant offset would need to reflect a declining tax base. Again, there is a serious issue about what impact the devolution of this tax would have on the block grant: how it will be assessed and how it will be decided what the deduction will be.

There are a couple of other complications with the landfill tax, as listed in paragraph 24 of the March 2014 White Paper. There is a UK Landfill Communities Fund attached to the landfill tax. This fund is financed by contributions from the landfill site operators, who receive an LfT credit worth 90% of any contribution they make. This is a UK fund and a UK landfill tax credit arrangement. However, once devolved, the operators in Wales will no longer be eligible for UK tax credits. As I understand it—and it is clearly stated in paragraph 24 of the White Paper—once we devolve the landfill tax, the eligibility for the UK-based landfill tax credits will disappear. I am not quite sure but I thought that the Minister implied in an earlier remark that in fact it would not, but according to paragraph 24, that is the case. It says:

“Once LfT is devolved to Wales, operators of landfill sites in Wales will no longer be eligible for a UK LfT credit”.

So that credit would fall. Are there powers in the Bill to allow a Welsh Government to create an equivalent landfill tax credit scheme of this kind?

In Wales, there are 24 registered landfill site operators, of which 15 were in receipt of tax credits during the financial year 2013-14. HMRC will not disclose information relating to how much the individual operators receive but the landfill communities contributed £4.19 million in 2010-11, £4.3 million in 2011-12 and £4.3 million in 2012-13 towards environmental projects in Wales.

Paragraph 24 on page 11 of the White Paper explains that there is going to be a transitional period. Will the Welsh Government, if they wish to, be able to establish an equivalent landfill tax scheme, of the kind that has been operating and which has successfully ensured that in some areas—where these landfill sites are often very controversial and have impacts upon local communities—they are able to make contributions and maintain some kind of local community fund?

The second problem identified in paragraph 24 is that:

“LfT is a key lever for the UK Government to achieve its 2020 landfill reduction target under the Landfill Directive (relating to the biodegradable municipal waste). Member states may be fined if they fail to achieve their target. In the unlikely event that the UK fails to meet its landfill reduction target solely because of changes to landfill tax policy in Wales, the Government will seek to recover this cost from the Welsh Government”.

There is an uncertainty hanging over this issue and the impact that it will have.

We are advised in paragraphs 31 and 32 of the Government’s White Paper on the question of how we are going to determine the reduction in the block grant. I would be grateful if the Minister could elaborate and explain paragraph 31 in more detail, as I have not fully understood it. It indicates some kind of proposition for the way they will handle the assessment of the reduction in the block grant once these taxes are devolved.

Paragraph 32 says:

“The Government continues to discuss this proposal, and other options, with the Scottish Government and has now opened similar discussions with the Welsh Government”.

Could the Minister update us on these discussions? How close are they to coming to some real understanding and agreement on the basis for reductions in the block grant as a result of devolving these taxes? I hope that the Minister will give an assurance that when we come to Report, these two important implications of how the block grant will be reduced will be much clearer and we will be able to approve these clauses in the full knowledge of the impact they will have on the block grant. I hope that the Minister will be able to reply.

[Lord Anderson of Swansea]

My noble friend as usual asks some very probing and cogent questions. On the face of it, these transfers of tax responsibility are relatively symbolic because, on the “bucket and the well” principle, what is gained on the one hand is lost on the other in terms of the block grant. It would be helpful if that could be elaborated on. Perhaps the best answer is that these transfers give a basis for the borrowing powers, which are very welcome, and which are contained in the Bill. Just a word of caution, however: the idea of a transfer of stamp duty has already been seized upon by other groups, notably by the Mayor of London, Boris Johnson. London, of course, has far greater resources and far more wealthy houses and land than Wales. If this were to move along the spectrum in the UK, it could have substantial implications, not least for Wales. Therefore, I utter a word of caution. However, on the other side of the coin, the borrowing powers, and the use to which they will be put—pace the noble Lord, Lord Thomas of Gresford, who feels that north Wales is likely to lose out in terms of the borrowing powers—are indeed welcome in principle.

--- Later in debate ---

[Lord Newby]

My Lords, I am grateful to the noble Lord, Lord Rowlands, for raising these questions, which are central to how these two devolved taxes are administered. As he said, stamp duty land tax is a somewhat volatile tax and is not as steady as some others. However, there is a borrowing power to deal with any volatility. As with any other body, it will be available to the Assembly to build up cash balances which could be used should it find that in a particular year stamp duty brings in less than it expected. However, the volatility is not all one way. As with the UK Government more generally, in some years the Welsh Assembly will do very well out of stamp duty land tax and may choose in such a year to set aside a certain amount against any potential property downturn.

The noble Lord’s most fundamental question concerned how one decided what the block grant off-set should be for both these taxes. As he pointed out, the Command Paper says that there is a two-part process. First, you make an initial reduction to the block grant which is based on current takings from those two taxes. That is straightforward; it is just a mathematical calculation. Secondly, you have to decide how you amend the block grant in every subsequent year. As we say in the Command Paper, a logical way to do it is by having smaller Barnett consequentials every year. However, that may be an unacceptable way of doing it from a Welsh perspective. There are other ways of doing it. For example, it could in theory be linked to overall changes in public expenditure. However, this is one of the key issues to be discussed by the Joint Exchequer Committee, which will have its first meeting next week. Therefore, I hope that by the time we reach Report there will be something further to report on all this. However, that is the mechanism for deciding exactly how the subsequent year adjustment is calculated. The key point is that it is something that will be agreed with the Welsh Assembly, rather than being imposed by the UK Government.

The noble Lord, Lord Rowlands, asked about the eligibility for UK tax credits, or rather how tax credits will be treated. It will be for the Welsh Assembly to determine what sort of tax credits it wants. If it wants to set up the same operation as we have had with the Landfill Communities Fund, it has the power to do so.

[Lord Rowlands]

Where is the power? Is it in the Bill?

[Lord Newby]

It is in the Bill. I will correct myself if I am wrong but I am sure that this flows from the point I made earlier about the ability for tax credits to be assigned to these taxes in the same way in Wales as they are in the UK.

The noble Lord, Lord Rowlands, asked what would happen in respect of the existing Landfill Communities Fund and possible contributions to Wales. The fund is financed by contributions from landfill site operators. Obviously, once the Welsh landfill tax is in operation, the eligibility under the UK fund will eventually dissipate. However, I understand that this will not happen immediately. I believe that the Joint Exchequer Committee will determine the exact mechanism for dealing with that, bearing in mind that the Welsh tax is not envisaged to be operational until 2018, so there will be a transitional period and projects that are already in the planning process, or where allocations have already been made, will go ahead.

Questions were asked about how you determine whether somebody is an eligible landfill operator. My understanding is that 13 landfill operators have all their landfill sites in Wales and would need to register for the new Welsh tax and deregister from the UK landfill tax, and that another 11 have landfill sites in both Wales and elsewhere in the UK and would need to register for the new Welsh landfill tax in respect of their sites in Wales but would remain registered for the current UK landfill tax.

The noble Lord, Lord Rowlands, asked what would happen if, as a result of Welsh decision-making, the UK failed to meet its landfill reduction targets under the landfill directive. He also asked about the meaning of the statement,

“the Government will seek to recover this cost from the Welsh Government”—

that is, if the UK were fined. Obviously, if the Welsh Government were to say that they were setting the landfill tax rate at or near zero, and as a result all English landfill operators were rushing to landfill in Wales, and we therefore missed our target, it would be reasonable for the UK Government to say, “We are being fined only because of that decision and therefore it is reasonable that the Welsh pay any fine”. We are talking about a very remote possibility, not least because we are making reasonably good progress in reducing landfill across the UK. We do not believe that we are in danger of being fined under that directive in the foreseeable future.

The noble Lord, Lord Anderson, raised a word of caution and talked about borrowing powers and their limits. All I will say is that the sooner the Welsh Assembly agrees to have a referendum, that referendum is won and an element of income tax is devolved to Wales, the greater the borrowing powers for the Welsh Assembly will be.

The noble Baroness, Lady Morgan, raised a couple of problems. I am new to this debate, but I am slightly surprised at the tone of the noble Baroness. She speaks of problems, of everything being difficult and of unforeseen circumstances. It is quite depressing. She asked about what would happen if London asked for control of its own stamp duty land tax. The English regions—not just London but the Core Cities Group, which represents all the northern cities as well as London—have argued that all property taxes should be devolved to them in the same way that stamp duty land tax will be devolved to Wales. I cannot see it being a problem for Wales as, in cash terms, stamp duty land tax is a very small proportion of the total tax take. It will not have a significant impact on the overall level of public expenditure by the UK. Therefore any Barnett consequentials, for example, of London having control of its own stamp duty land tax, would be minimal. I would have thought—and I know that this applies to my colleagues—that Wales would welcome the thought that England would benefit from a degree of devolution in the same way that Wales expects to benefit.

[Lord Newby]

We like to do it in a positive spirit. The truth is that stamp duty land tax is a very small proportion of the overall UK tax take compared to income tax, national insurance and VAT. It is only a couple of per cent of that. It is a small tax. It is important for local areas, and it will be interesting to see what Scotland proposes to do, now that it has powers over its stamp duty land tax, to shift the balance of where that tax is borne. One of the advantages of devolving the tax to Wales is that the Welsh Assembly can choose to do something similar if it wishes.

[Lord Rowlands]

I apologise for interrupting the Minister, but he has mentioned Scotland. Presumably the discussions between the Government and Scotland on how the reductions will take place in the block grant to Scotland are much further down the road. May we assume that our arrangements will be very similar to, if not the same as, what will be agreed in Scotland?

[Lord Newby]

There is a Joint Exchequer Committee in Scotland, as there is in Wales. It will be for the Welsh Assembly representatives to decide whether the approach that is eventually adopted in Scotland makes sense for Wales. I think that there is a presumption that it probably will. The less complexity that there is in how we do these things, the better. Although there may be a presumption in that respect, there is no rule that requires it. It will be for that committee to look at Scotland and other examples in making up their minds.

I hope that I have answered the principal questions that were raised and, on that basis, that the noble Lord will remove his objections to the clauses.

Wales Bill

Lord Rowlands Excerpts

Monday 13th October 2014 Lords Chamber

[Lord Rowlands (Lab)]

My Lords, I understand and appreciate the power of the argument that the noble Lord, Lord Wigley, has just proposed to make sure that elections are not simultaneous. However, there is a case against that. The most worrying aspect in the whole of my parliamentary lifetime is the decline in turnout. In a democracy, turnout is extremely important. In the last Assembly election, the turnout was just over 40%. In the last general election to Westminster, it was 65%. The high point was in 1950 when we had a UK turnout of more than 83%. It never fell below 70% at the United Kingdom level until 2001, when it fell to 59%. But even now, at 65%, it is some 20 percentage points higher than the turnout for the latest Assembly election. I wonder whether we ought to be concerned about that. Although I understand and appreciate completely the argument that UK issues drown out Welsh issues, there is a point to make about turnout. It is extremely important in a democracy that turnout is upheld.

The turnout when I served Merthyr for 30-odd years was 70% to 75%. It fell to 70% in the last election in which I stood and I was mortified. But at the last election it fell to 59%, and that is in a highly political kind of community that appreciates and understands the nature of politics and elections. A case could be made, contrary to the one made by the noble Lord, Lord Wigley, that if you run the elections together you intensify the politics. Parties are more engaged in the streets and you raise the turnout from 40% to 65%.

I am dredging my memory but the last time elections were run concurrently was in, I think, 1979, when local elections and the general election were held on the same date. That raised the turnout in local elections to a dramatically higher level than ever before. Although I understand that there is consensus at the Assembly level on separating the elections, I wanted to register the point about turnout.

[Lord Wigley]

Would the noble Lord, Lord Rowlands, accept that one element of an election is to give a mandate to the Government? If the mandate has been generated on the basis of a different election, how on earth can it be interpreted in the context of the Assembly?

--- Later in debate ---

[Lord Rowlands]

I am not altogether certain that that would happen. There is some indication that if the polls were on the same day, people would vote for the local Assembly Member from one party and for another at United Kingdom level. But if you talk about a mandate, it is always better to have two-thirds of the electorate giving you the mandate than 40%. I am not disputing that it is obviously the wish of everyone in Cardiff to separate the elections, but we should take account of the fact that turnout is important. There is no doubt that there is a big difference at the moment between turnout in National Assembly elections and turnout in UK elections.

[The Parliamentary Under-Secretary of State, Wales Office (Baroness Randerson)]

My Lords, I thank noble Lords for their participation in this section of the debate. Amendment 4, proposed by the noble Baronesses, Lady Morgan and Lady Gale, would give the Assembly the power to decide, by resolution, when Assembly elections are held. It would give the Assembly a wide degree of discretion to determine the date of Assembly elections, which is something that the noble Lord, Lord Richard, raised concerns about. We might all be rather worried about that issue because it has such a wide scope. By a simple majority, the Assembly would be able to vote for a change to the length of its terms. Such a power would go beyond that given to other devolved legislatures, which do not have the freedom to vary the length of their terms.

The Government believe that the devolution of further powers to the Assembly, such as this, cannot be undertaken in a piecemeal fashion. Once again, this is an issue that is better discussed and considered in a wider context of other changes to the Welsh devolution settlement arising from the Silk recommendations. It is a fundamental change, as has been said today, to devolve to the Assembly competence over its elections, and it would undoubtedly have knock-on effects on UK government elections. The noble Lord, Lord Rowlands, made the very good point that you would get a higher turnout by holding those two elections in coincidence. I do not think, however, that that would be desirable because it is undoubtedly true that the media in Wales are not strong enough to lead a debate on Welsh issues that is not overshadowed, at the time of the general election, by UK issues.

Amendment 5 seeks to preclude an ordinary general election to the National Assembly being held within 355 days of the UK general election. As I have said, I fully agree with the sentiment behind this, that these should be distinct and separate events. I share the concerns of the noble Lord and the Assembly that holding those elections on the same day would not give electors a clear view of Welsh issues. The Fixed-term Parliaments Act 2011 changed the length of term of the current Assembly to five years on a one-off basis. Without further provision, the Assembly will return to four-year terms thereafter.

Clause 1, however, already provides for five-year terms in perpetuity for the Assembly’s general elections from 2016 onwards. It already does this without the need for further amendment, making it very unlikely that the Assembly general elections and parliamentary general elections will coincide in future. I am sure that the noble Lord will welcome this, and I thank him for his explanation for including his amendment. I believe, however, that the provisions already included in the Bill will go as far as is necessary to ensure that Assembly elections and parliamentary elections do not coincide.

In response to the noble Baroness, Lady Morgan, I point out that the Assembly agreed to the change of date of the elections. This is not something that has simply been visited upon it: it has agreed to it. I welcome once again the conversion of the Labour Party to the idea that the Assembly should have the freedom to do such things as deciding its own elections. It is important in that context that we note that views on devolution are changing fast in some quarters, and it is important that there is public debate as to what additional powers are devolved to the Assembly.

On that basis, I respectfully request that the noble Baroness withdraws her amendment and that the noble Lord does not press his.

Wales Bill

Lord Rowlands Excerpts

Monday 13th October 2014 Lords Chamber

[Baroness Morgan of Ely]

I understand what the noble Lord is saying. The problem is probably that we need a much more detailed discussion about what those exemptions should be and to what extent they should or should not be duplicated. If this is a probing amendment, that is fine—we understand that that is the case. But taking this big step at the moment would be wrong.

Finally, I ask the Minister why an amendment on reserve powers has not been submitted if the Government have changed their position. Why cannot we now get on with the job? We know that there is cross-party consensus on this; let us not waste any more time.

[Lord Rowlands (Lab)]

I support Amendments 1 and 18A, but I do so from a rather different position. I am not a censorious critic of the conferred powers model. In the early days of the devolution settlement it was a reasonable and sensible way in which to confer powers. Indeed, in paragraph 4.3, even Silk acknowledges that there was value in the conferred powers model. The incremental argument made for additional powers made sense; it helped the Assembly and the Assembly Government to have greater competence and capacity in those fields.

However, I am now overwhelmingly in favour of moving to the reserve powers. The way in which additional powers have been granted, the whole issue of taxation and, down the line, the whole issue of Silk 2, make it imperative that we proceed and create the process to the greater reserve powers model. I do so not as a critic of the conferred powers model but from the realisation that, in fact, dramatic change has taken place and with that there is a need for the change of model that we have imposed. Therefore, I cannot quite understand why the Government, although they are not perhaps dragging their feet, have not been willing from the Dispatch Box to confirm that it is their objective, too, and that they agree with and support the processes described in Amendments 1 and 18A to proceed towards the reserve powers model. I hope that we hear a different tone from the Dispatch Box today.

Having said that, I, too, like the noble Lord, Lord Crickhowell, cannot support Amendment 2A—and nor does Silk. There is a much subtler discussion in Silk of the issues of criminal and civil justice than the rather bald list provided in that amendment. So unless it has been tabled with tongue in cheek, I cannot support that amendment. Silk did a very skilful job in assessing in detail, particularly in Chapter 10, the difficulties of transferring civil and criminal justice issues, even in police areas. In Silk one often reads that we will have to have cross-border co-operation—a real, meaningful co-operation between either side of the border—to make anything work in the criminal justice and civil fields. So I cannot possibly support Amendment 2A, but I certainly support Amendments 1 and 18A.