Wales Bill

Lord Thomas of Gresford Excerpts

Tuesday 11th November 2014 Lords Chamber

[Lord Crickhowell]

But the fact of the matter is that this is a requirement, as the amendment is now drafted. It would be necessary to find some way, perhaps at Third Reading or in some suitable way, to give the flexibility that he is prepared to allow.

[Lord Thomas of Gresford (LD)]

My Lords, I, too, was very much interested in the historical statement that we had from the noble and learned Lord, Lord Morris of Aberavon. His was a very important speech, which I am sure will find its way into the history books of the time.

I indicated in Committee that, in the Bill that I drafted in 1967, we had a reserved powers model which was presented by Lord Hooson in the Commons and by Lord Ogmore in this House. Shortly after that, I gave evidence to the Kilbrandon commission and called for a reserved powers model. When the Government of Wales Act was going through in 1998, I was calling for a reserved powers model. If this amendment today were for a reserved powers model, I would be in very considerable difficulty. However, the amendment tabled by the noble Lord, Lord Elystan-Morgan, is one of timing and, as he has just indicated, he is prepared to be flexible about that timing. In such circumstances, I am prepared to defer to the views of my noble friend the Minister, who I know shares my views on this issue.

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[Lord Deben]

Well, it would seem the obvious answer, but the real question is that the United Kingdom matters too much for it to be the result of a series of random decisions about each bit of it. We ought to start the other way round.

[Lord Thomas of Gresford]

Does the noble Lord not agree that if it were not for the pressure for change in Scotland and Wales in particular, and perhaps in Northern Ireland, England would do nothing? Therefore, if we do not have that pressure, there is no incentive. Rationality is all very well, but you need to do something.

[Lord Deben]

I quite agree with my noble friend, but that pressure is there. It has been there, and it has meant that we have had to do things. I have always believed that we should have worked this out rationally before we were pressurised into it, but pressurised we have been. It is not going to stop now. Let us make the answer rational. Let us not just say that we will add another bit here and another bit there and hope that the result is something sensible. I believe the moment has come to grasp this nettle, not to say that it is too difficult. Let us do it as well as we can. It will not be perfect, but I suggest to the noble Lord that it is more likely to be closer to perfect if it has been thought through rather than if it happens accidentally.

Wales Bill

Lord Thomas of Gresford Excerpts

Wednesday 15th October 2014 Lords Chamber

[Lord Thomas of Gresford (LD)]

The noble Baroness said that a future Labour Government would address the Barnett formula. Well, they addressed it in the last Labour Government; they appointed the noble Lord, Lord Richard, and his commission to produce a report and then ignored his findings.

[Lord Richard]

That is not right. I was appointed by this House, in accordance with the usual rules for the appointment of chairmen of committees.

[Lord Thomas of Gresford]

I withdraw the term “appointed” but I am sure that the idea was generated by the Labour Government of the day. It was not something that this House thought up of its own accord.

[Lord Richard]

I am sorry but it was an ad hoc committee, which was set up after the Liaison Committee decided that that was one of the subjects on which the House should have an ad hoc committee. That is how the committee came into existence and I was then asked to chair it.

[Lord Thomas of Gresford]

I had misunderstood the basis of that committee, so I withdraw what I said first of all—that the last Labour Government addressed the Barnett formula. They clearly did not and it was a committee of this House, chaired by the noble Lord, Lord Richard, which did address it. The Government then ignored its findings. That is what I am told. I am told that there was a second committee but I am not particularly aware of it.

Where the problem really arises is that the Barnett formula is used as an excuse for the failures of the Welsh Labour Government in the fields of education and other devolved areas. They say, “We don’t get enough money”. As soon as I read of the vows given to the Scottish people by the three leaders, it seemed to me that at that moment the concept of having a formula that could apply equally in Scotland and Wales was dead because one surely has to decouple whatever funding formula eventually applies in Scotland when it exercises its powers from whatever formula happens in Wales when it exercises different and more limited powers. Accordingly, we need something specific to Wales through looking at the needs of its people as opposed simply to dividing money on a population basis.

The whole point of the social contract is that taxes are paid—not to be divided equally per head of population but so that services according to need can be paid for by the government of the day. That is the principle that must be the basis of the way in which Wales is funded in the future.

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

My Lords, as ever, a debate on the Barnett formula is interesting but I am afraid that from my perspective it is rather too well worn territory.

I start by responding to the comments of the noble Lord, Lord Wigley, in relation to the £300 million to which he referred as the funding gap identified in the Holtham report. The gap has indeed come down in size and it would be very useful to determine the current shortfall. It is particularly important to point out that when the agreement was made between Jane Hutt and the Chief Secretary to the Treasury in an exchange of letters in October 2012, it acknowledged that convergence had ceased to take place, that there was, in fact, divergence and that Welsh funding was within the region of what the Holtham report regarded as fair funding. Therefore, at the moment, there is not a major issue of unfair funding. There may be issues at the edge, but it is not a big problem at the moment, as was acknowledged by the Welsh Government. Of course, that does not solve the problem, because convergence is predicted to start again around 2018. That issue has to be addressed if the gap is not going to widen again. I agree that there is a need to deal with this in the scope of the devolution discussions because it distorts the political debate in Wales. Funding is quite simply blamed for every policy failure. Even if we take the figure of £300 million, in a budget of £15 billion, £300 million is a significant amount of money, but it is not something that could possibly be blamed for every health failure, every education failure and every social problem within Wales. It is not so massive that it is fundamental to the problems that we all acknowledge are faced in Welsh society.

The noble Lord, Lord Anderson, is absolutely right in saying that it is the funding issue that the public are interested in. They do not worry too much in general about devolution, but they are interested in fair funding. The noble Lord, Lord Anderson, referred to the Severn tolls. I look forward to our debates on that in the next Government. Whoever wins the election, there will be debates on the Severn tolls because, of course, the end of that franchise is due in the mid-years of the next Government.

I strongly welcome the acknowledgment by the noble Lord, Lord Richard, that the Labour Party did not deal with the problems of Barnett. Indeed, the Labour Party refused for 13 years to agree publicly that there was any problem with the Barnett formula and it was in those years that convergence was taking place and the funding gap was really growing. It would certainly be the case that Wales would have fewer problems now if that had not been neglected. It is my view, and the Secretary of State certainly agrees, that it is time to look at the funding formula for Wales, and it is my view that one could do this even with the constraints of the agreement that Scotland will retain its current funding. One can look at Wales on a unilateral basis.

The noble Baroness, Lady Morgan, asked me to clarify the Prime Minister’s statement. He simply restated the oft-stated government position on funding in Wales, which is that because the problem of the deficit is our priority, no additional funding can be provided within this Government. That is in no way at odds with the Secretary of State saying that the long-term funding position of Wales needs to be looked at. There is an immediate situation and a long-term situation. The noble Baroness also asked for clarification on the impact of having income tax powers on the block grant and so on and referred to the index deduction method. The purpose of the index deduction method was to protect Wales from big swings in the economy as a whole and the sort of big swings that are due to UK government policy. However, I point out yet again that the Welsh Government have acknowledged that funding is fair at this point, within the region of fairness. Given that the Welsh Government acknowledged that we were in that sort of territory two years ago, it would be a good idea to go for a referendum on income tax powers as soon as possible to give the Welsh Government the maximum opportunities to use the taxation system to increase prosperity in Wales.

I shall very briefly look at the technical details of the amendments. Amendment 56 would require the Secretary of State to lay an independent report on options to replace the Barnett formula. Amendments 59 and 60 would seek to make the devolution of an element of income tax conditional on dealing with the funding formula. They specifically say that income tax can devolve only when the Welsh Government confirm that they are content with how funds are allocated. The progress that this Government have made on working towards fair funding, with the significant exchange of letters in 2012 between the Ministers in the two Governments, can be built on. I urge the noble Lord to withdraw his amendment.

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[Lord Anderson of Swansea]

My Lords, the last two amendments—and I hope I will not detain your Lordships too long—are in my name. They refer to the constitutional convention and the relevance of the Williams report: a report which is not mainly about the structure of local government but which contains important clauses on that. My contention would be that, just as we have looked at the relationship between the component parts of the United Kingdom, we should look also at the relationship between the Welsh Government and local government in Wales.

On the constitutional convention, there seems to be an increasing consensus that we need to look at the British constitution in the round. I fear that the response of the Minister would be: if you are so keen on your constitutional convention, why not put it in the manifesto for the next election when it can be debated? But that was Monday’s argument—since when, as we say, an amendment has been moved.

As an assiduous reader of the Western Mail I notice that, on the front page of yesterday’s paper, the Secretary of State, no less, is quoted as saying:

“Up to now, we’ve been saying, ‘Well, these are just matters for the individual parties and their manifestos at the next election’, but actually I think we can do better than that”.

Clearly, the noble Baroness appeared not to be on message on Monday; perhaps she will be a bit more on message today when she comes to respond.

So there is an increasing consensus. I hear the argument from time to time that to suggest a constitutional convention is no more than a device for delay and for kicking the matter into the long grass. The answer is that promises were made to Scotland—and some might argue that never has so much response been made by parties in the United Kingdom to one maverick opinion poll. When the Sunday Times YouGov poll suggested that there was a majority for independence, there was a certain panic among all parties, resulting in a response that may now be regretted at leisure.

The promises made to Scotland are clear and should be honoured, but they can be implemented on their own grounds. However, there are implications for the rest of the United Kingdom and, in my judgment, for the constitution—and I think that the Liberal Democrats have broadly been the leaders in this field. Clearly, the quasi-federal constitution needs to be viewed with all the difficulties that may arise. We need to have concern across the board, including in relation to your Lordships’ House. If there is to be a new regionalism, it should be reflected in the way that this House is elected, directly or indirectly—possibly, as in France, using the notables from local authorities. I think that the electorate of the French Senate is roughly 80,000. These are the people who are in the localities, the regional assemblies and the local authorities, and they come together having been elected indirectly to work together in the Senate. Your Lordships’ House should not be excluded from this consideration.

I think it was Alastair Campbell who said, “We don’t do religion”. That may or may not be the case but in the United Kingdom we don’t do constitutions—except for other people. We are pretty keen on delivering constitutions to colonial powers from high to low but we are not so good at doing it for ourselves. I have spoken to many groups from the Commonwealth Parliamentary Association and have been tempted to use the phrase “the Mother of Parliaments”, but clearly things are creaking in our own constitutional structures at the moment. Perhaps the 45% vote for independence in Scotland is a means of alerting us to the fact that the status quo cannot continue.

I recall Lord Weatherill, who was both a distinguished Speaker of the other place and the Convenor of the Cross-Bench Peers in this House, telling me a little story. He worked in the family firm of tailors and on his first day there was an old Jewish tailor to monitor him. One of the senior people came to the old Jewish tailor and said they wanted a suit made. He said, “Do you want it quick or do you want it good?”. There is an element of that in terms of constitutions. After all, we have agonised over changes for so long, going from precedent to precedent with a little tweak here and a little tweak there.

Now there must surely be a case for a group to make an initial analysis by looking at foreign examples and then for the elected representatives, so far as they are able, to take a considered view. It may be a federal system. Even within a federal system or a quasi-federal system one can have a range of very different powers. We know that in the different autonomía of Spain, for example, it is federalism à la carte. An autonomía such as Valencia has relatively limited powers, whereas Galicia and Catalonia have far more extensive powers—all within the same system. There is no reason why, according to demand, there should not be asymmetric devolution.

The key question is: are we happy to continue with constitutional tinkering or do we feel that we have reached the point where we need to look at the whole constitution from this place and the other place. I recall that one of the major cogent arguments used when we were discussing the future of this House was that there was no attempt to place it in the context of the relationship between this House and the House of Commons. We need to look at the devolved assemblies, and we also need to look at local authorities.

If we are not happy to continue tinkering, it is clearly right that we should now recognise that after the Scottish referendum we are in a new context, and that the status quo has proved insufficient. I recall that when the three party leaders made a vow, they came together quite properly. If they accept the case for a constitutional convention that is good although perhaps not quick, what is now stopping them? Is there not a reason for them to now make a similar vow on a consensual basis that this country deserves a constitutional convention?

I turn now to my second point, on which I shall be quite brief, which is the question of the Williams report. I submit that it would be wrong to ignore the position within Wales: that is, the relationship between the Assembly and the local authority. I recall that during the initial debates on devolution in the 1970s the Welsh Office, as it was then called, totally ignored local government. It was only at a fairly late stage of the debate that it was recognised and brought within the discussion that there were substantial implications for local government.

There is clearly a temptation for Cardiff Bay to hold on to what it has. However, I am encouraged by the response of the leader and, indeed, all the parties in the Assembly. Although the Williams commission hoped that there would be action by Easter of this year, we know that on 1 July the overview on broad public service recommendations was addressed, and on 8 July the local government reorganisation was addressed with a general White Paper. Now we are promised that on 28 November there will be a voluntary merger of local authorities. On 28 February there will be a White Paper setting out the process for merging councils that do not want to merge. There is already a timetable in process.

I will not labour the point that there is no ideal local government structure in Wales. I recall that many years ago when I was the Member for Monmouth there were certainly at least a dozen local authorities: rural district councils, urban district councils and town councils. That was done away with in the Walker reforms, with counties and districts. Clearly, it was right that the counties had responsibility for education and social services, but the divisions were not easily made.

We have now had further elements of reform. City regions are being considered. However, perhaps the failures over food safety are very good examples of the fact that, for certain areas of expertise, local authorities need to be able to employ experts in the field. I end on the plea that we do not forget local government. There appears to be a consensus within the Assembly on implementing the recommendations of the Williams commission, and the timetable is such that these could well be implemented before the provisions of the Wales Bill become law. I beg to move.

[Lord Thomas of Gresford (LD)]

My Lords, it is such a delight to hear from the noble Lord, Lord Anderson, who had a somewhat feckless youth when he was passionately anti-devolution. Clearly, somewhere between Monmouth and Swansea he was struck with the true light of liberal principle. As I understand his speech, he now supports not merely Liberal Democrat policy but also what was, in his feckless youth, Liberal policy.

[Lord Anderson of Swansea]

My position then was as it is now. Devolution within a unitary system is flawed in many respects, including the fact that there is no end position, whereas a federal or quasi-federal system with a constitutional court to adjudicate on the differences between the component parts is logical. We were embarking in the 1970s on a strange new journey and perhaps it was Mrs Thatcher, with her own form of centralisation, who was the major recruiting sergeant for me on that.

[Lord Thomas of Gresford]

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

[Lord Howarth of Newport]

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

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

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

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

Wales Bill

Lord Thomas of Gresford Excerpts

Wednesday 15th October 2014 Lords Chamber

[Lord Wigley]

I want to join briefly with colleagues who have raised these points. Over many years I have often heard the argument made that matters of substance are passed through Parliament by order—by secondary legislation and so on. Here we have the reverse position, where there are matters that should surely be set out in orders. Ministers should be empowered to introduce orders to deal with a variety of circumstances that certainly do not warrant taking up the face of the Bill. If that were the case, there would be flexibility within the orders to deal with other cases which possibly have not been thought of. Putting this in the Bill in this way is surely a nonsense.

[Lord Thomas of Gresford]

My Lords, I am most grateful to the noble Lord, Lord Rowlands, for drawing my attention to these new sections, in particular new Sections 116G and 116H. I spend around 140 days of the year here, about 60 days in my family home in Scotland and the rest of the time in Wales. On these formulae, I am not liable to pay income tax in Wales, certainly not in Scotland, and possibly not in England, if we have similar provisions. Thank you very much. Devolve away.

[Baroness Randerson]

My Lords, I understand that this new chapter is not the easiest read. In fact, I found it quite good for getting to sleep on one occasion. However, it is important to recognise that this is a complex issue and has a direct relationship with things such as tax law, and when you get an indirect relationship with tax law. When you get into these things, the more you think about it, the more exceptions that occur to you to be considered.

The clauses in this Bill are very closely based on those in the Scotland Act and have been subject to the whole scrutiny process in that respect. I suggest that noble Lords think about how to deal with somebody who is a lorry driver or a shift worker. Every time you set a test, you can think of exceptions. Before the noble Lord, Lord Rowlands, thinks that being a Scottish parliamentarian and a Welsh parliamentarian in the same year is unusual, may I remind him that I call this the “Keith Raffan clause”? Keith Raffan was an MP in north Wales and then almost immediately an MSP in Scotland. He moved from Wales to Scotland.

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[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.

[Baroness Morgan of Ely]

It is worth putting on record the Labour position on some of these points. First, in relation to fuel duty, we think it will be impossible to organise separate fuel duties within the United Kingdom and probably very difficult to comply with European Union rules within countries. Those cross-border issues we have just heard about could be quite complex and difficult to police. That would be a problem for us. Of course we have genuine sympathy for the problems relating to the cost of fuel in rural areas, but we do not think that this is the mechanism by which we should be addressing it.

On natural resources tax-sharing arrangements, we do not agree that this is a good idea. Wales is not sitting on vast quantities of oil like Scotland’s and a key point to remember is that we do not tax energy production from wind, wave and water in the same way as we do barrels of oil, so there would probably not be much in terms of tax return anyway—we would probably have to invent new taxes. On the issue of corporation tax, one of the most disappointing aspects of the Scottish referendum campaign was to see Plaid Cymru members actively supporting independence for Scotland. It was not surprising but was a little disappointing, because we know that one key thing Alex Salmond wanted to do was to reduce corporation tax 3% below that of the rest of the UK. That would have done untold damage to Welsh companies. It would have adversely affected Welsh companies, so we did not understand why Plaid Cymru was quite so enthusiastically supporting independence.

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[Lord Thomas of Gresford]

Does the noble Baroness agree that all the things we have been discussing tonight are levers—things such as airport taxes—that we can use to increase prosperity in Wales to an equality with the rest of the United Kingdom? These are levers that would achieve a balance between the various nations in the United Kingdom. That is what it is all about. If you have a power to vary corporation tax, for example, it may be something that you exercise for a certain period in order to pull in industry, and then you may feel that you face competition from elsewhere and you should drop it. These things are all economic levers to achieve equality of prosperity in the United Kingdom.

[Baroness Morgan of Ely]

I understand that, but I also think that we should be aware of the dangers of a race to the bottom. That is my real concern. We have already seen that it is hard enough to get many of these corporations to pay their taxes at all, so for us to encourage corporation tax competition within the UK would be very problematic. The problem is that if you reduce the tax take, you start to have to cut services, and that becomes a problem. It means that our schools and hospitals have to be reduced.

On the issue of air passenger duty, it is worth noting that this is another issue where there has been cross-party agreement on devolution, on the basis that if this is provided to Scotland and Northern Ireland in the same way as corporation tax is, then we should be allowed to review it in Wales as well. The point is that if they are going to do it, of course we want to be part of that game. What we cannot have is them going off by themselves. That would be problematic. It is why Scottish independence was a problem for us.

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[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 Thomas of Gresford]

If I may interrupt, the noble Lord, Lord Rowe-Beddoe, does not want to do something to the detriment of Bristol—he wants to do something for the people of south Wales so that they have easy access to an airport and do not have to go more than 60 miles down the road to Bristol. I really do not see why it is not possible for the Assembly to have this power of setting a lower airport tax so that it attracts people in. It might then be possible to balance, with the use of that lever, the number of passengers going to Bristol or Cardiff; those coming from Swansea or further west may think, “Well, I’d rather go to Cardiff than to Bristol”. Eventually, you could start equalising the airport tax again, if the economics are correct. I am sorry to repeat myself, but we are talking about putting levers into the hands of the Welsh Government. I should have thought that the Government of the noble Baroness, Lady Morgan, in Wales would welcome levers of that sort to try to do something about the Welsh economy—otherwise we are just stuck with what we have got.

[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.

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[Lord Wigley]

I am grateful to noble Lords who have taken part in this short debate. On the amendment proposed by the noble Lord, Lord Rowe-Beddoe, on Cardiff Airport, of course we need intervention—that is the whole point of government. If we just leave it to free market forces, those areas that have difficulties with the economy will get worse and worse. I am amazed that the Government look at devolution and powers of the Assembly only in terms of answerability and do not see the central need to have intervention in the economy to build it up. In Wales, the GDP per head is 25% below the UK average, so something is going wrong. If London is not capable of sorting that out, and Westminster is not capable of sorting it out, we have to do the job ourselves. But we need the tools to do that job and to intervene, as the noble Lord, Lord Thomas of Gresford, said. Some tools may be more appropriate than others, but in the case of Cardiff Airport, when all the effort that is being made to rebuild it at the moment is in question, I find it staggering that they want just to turn it down on that basis.

On the other amendments and the reasons given against them, with regard to petrol charges we already have a massive differential. We do not see people queuing from north Wales to Chester to find cheaper fuel because there is a cost involved in travelling. The need to get fair play in rural areas should be recognised by the Government. Goodness only knows that life is difficult enough as it is without the very high petrol taxes that we have.

On the natural resources of Wales, we hear so much about fracking coming along, and we know it is a matter of considerable concern. That is a new source of energy, and it may be something that comes into the purview of government in those terms. We need those powers to be there.

On corporation tax, I again underline that there is unanimity within the Assembly to have those powers, if they are going to Scotland and Northern Ireland, and the Government in fairness should allow it for Wales, which is in competition for inward investment against the Irish Republic. The Irish Republic has this advantage, so why do we not? We need that in order to rebuild our economy. It is something that the First Minister of Wales has very reasonably asked for and I hope that the Opposition Front Bench will support the First Minister in those representations.

I was heartened by the comments made by the Minister that there are provisions for other taxes to be devolved by order. We shall have to look to the order-making system to try to ensure that we have the tools necessary to do the job.

[Lord Thomas of Gresford]

Does the noble Lord not agree that, if the Welsh Labour Government are not prepared to use the tools, there is no point in having these powers?

[Lord Wigley]

That is true of all the powers, and we have to look to the Assembly to take a responsible attitude. Obviously there are questions to consider—cross-border questions and all the rest—and the Assembly needs to make these powers work, so it is not going to do stupid things. It will take up the powers and use them in a way that moves our economy forward. I am quite happy to trust that people who give priority to the needs of Wales will do this, from whichever party they come. All I want them to have is the tools to do the job. I beg leave to withdraw the amendment.

Wales Bill

Lord Thomas of Gresford Excerpts

Monday 13th October 2014 Lords Chamber

[Lord Thomas of Gresford (LD)]

My Lords, I strongly support my noble friend Lord German and will speak to Amendments 15 and 16. Before I do so, I share a reflection. The noble Lord, Lord Elis-Thomas, was talking about his six year-old granddaughter, and I was reminded that when my granddaughter, Pip, was elected to a school council, my wife, my noble friend Lady Walmsley, commented—rather caustically, I thought—that she was the first member of the Thomas family ever to win an election. That was unfair.

I turn to Amendments 15 and 16. The system of election aimed at proportionality throws up a number of difficulties. In particular, it makes the election of a regional list candidate almost capricious. An example is the noble Lord, Lord Bourne, who served with distinction as a regional list Member as leader of his party—and I see that he has almost left the Chamber at the thought. He lost his seat not because his party did badly but because they did far too well and won a Montgomeryshire seat from us. Consequently, he ceased to be a regional list Member. It is clearly unfair that a person should be required to give up a public position, or even employment, simply to stand as a candidate in an election. There is not only the individual to consider; the pool of those willing and able to undertake public duties is not so large in Wales as to make it in the public interest to impose such a restriction.

The legal position is further complicated by an apparent conflict between the provisions of the Government of Wales Act 2006, which deals with disqualification, and the National Assembly for Wales (Representation of the People) Order 2007, which deals with aspects of electoral law. According to the 2007 order, a candidate should not be part of, or a member of, any organisations included on long lists set out in the 2006 Act and the relevant disqualification order made under it. The Act, however, refers to the disqualification as relating to “being an Assembly Member”, and not to being a candidate. These provisions are subject to the power of the Assembly under Sections 17(3) and (4) of the Government of Wales Act to resolve to disregard the disqualification of any person,

“if it appears to the Assembly … that the ground has been removed, and … that it is proper so to resolve”.

Further, if it is alleged that an Assembly Member is disqualified, costly High Court proceedings can be involved. It is well known that two regional list Lib Dem Members fell foul of these provisions in the 2011 election. One was a member of the Care Council for Wales, and he admitted that he had not read the 2010 order that contained a long list of public bodies. After anxious consideration, the Welsh Liberal Democrats decided to withdraw the motion that they had lodged with the Assembly to lift his disqualification, and the number two on the list took his place. The other was a member of the Valuation Tribunal for Wales. The Assembly Standards Commissioner, Gerard Elias QC, said that that Member had done,

“everything that he could have reasonably been expected to do in ensuring that he was not a disqualified person for the purpose of nomination or election”.

He had followed the Welsh language advice from the Electoral Commission, which had referred him to regulations on proscribed bodies from the 2006 order, which had been replaced by a new order in 2010. It was correct in English but wrong in Welsh. The Electoral Commission apologised for its error. The motion that was filed to disregard the disqualification was passed with some Labour opposition, which will not be forgotten because anecdotal evidence suggests that a number of non-elected Labour candidates would have failed the test themselves. The noble Lord, Lord Wigley, at the time wrote in the Daily Post very wise words, as usual:

“There is a saying that ‘Rules are for the guidance of wise people and the obedience of fools’ … The fiasco of blocking two Liberal Democrats … surely falls into this category”.

He said that the principle of disqualification should be reviewed by the Electoral Commission and added that it,

“should only apply for deliberate conflicts of interest”.

At the same time, a UKIP MEP put a complaint into the police about corrupt practices against that sitting Member. The complaint was duly investigated by the police and no further proceedings ensued.

Arising out of this controversy, the Constitutional and Legislative Affairs Committee, at the invitation of the First Minister, considered the issue under the chairmanship of David Melding the Deputy Presiding Officer, took evidence and obtained the legal opinion of the Counsel General. The Welsh Government’s attitude, as filed with the committee, was summarised in a memorandum attached to the report. In particular, it stated:

“The disqualifications are long and complex, and individuals may inadvertently fall foul (as two did in 2011) of apparently unjustified disqualifications … The complex nature of some of the disqualifications may require prospective candidates to seek legal advice in order to determine whether they are caught by the particular disqualification”.

The Welsh Government also said:

“However, we see the current requirements as a clear disincentive to candidates because a person must resign their post or employment in order to stand as a candidate and, if unsuccessful in that election, reinstatement would depend on the terms and conditions of employment that apply ... It is our view that the current structures for excluding persons from Assembly membership do not properly reflect their raison d’être. The disqualifications purport to prevent AMs from holding offices or employments deemed to interfere with the proper fulfilment with their duties. But it is our view that the rules pertaining to disqualifications are increasingly unfit for purpose to the point that, in some instances, they pose a disincentive to potential candidates and thus fall foul of the logic of empowering democratic participation”.

I may have said rude things about the Welsh Government in the past but I agree with every sentence that is expressed there.

The committee’s report, published in the middle of July 2014, made a number of recommendations which these amendments are designed to reflect. In particular, the committee felt that the disqualifications should be spelt out without reference to the legislation dealing with Westminster elections, hence the drafting of proposed new subsection (2) in Amendment 15. Since I have been asked why the various judicial offices are named, it is because as currently drafted the Government of Wales Act 2006 refers to disqualifications of the judicial officers mentioned in the schedule to the House of Commons Disqualification Act 1975, which cover, for example, the judges of the Court of Session in Scotland and judges of Northern Ireland. One would not expect them to be applying to be candidates to the Welsh Assembly in any event. As the committee recommended, I have spelt out those judicial offices in the amendment.

[Lord Elystan-Morgan (CB)]

May I make a very small, pettifogging legal point? As I understand it, there is no such judicial animal as a county court judge, and there has not been one since 1971. A circuit judge has practically all the powers of a High Court judge as the noble Lord knows, and those apply both to civil and to criminal matters. I think that I am right in saying that there has been no county court judge since that time.

[Lord Thomas of Gresford]

I am very grateful for that assistance from the noble Lord, because I wondered why it would be in the 1975 Act as a disqualification for standing for Parliament. Since this is Committee stage, amendments can always be made on Report to correct that. The nub of the matter is in proposed new subsection (5) in Amendment 15. This adds two additional subsections to Section 16 of the Government of Wales Act 2006. The committee put forward two ways of dealing with the issue: by requiring Assembly Members to resign a disqualifying office before taking the oath or affirmation of allegiance; or by deeming that an Assembly Member had resigned a disqualifying post at the moment that he was elected. It recommended the former course. It also suggested that the Law Commission might consider these issues as part of a wider review across all UK legislatures.

Kicking the issue into the long grass of the Law Commission is unnecessary. Devolution, as we have heard today, has not and almost certainly will not follow precisely the same pattern across the UK, and any short-term attempt to reach conformity is otiose. Such a course might delay changes welcomed by all sides beyond the 2016 election. The parliamentary processes here are surely robust enough to choose the proper mechanism. Amendment 15 suggests neither of the two methods proposed by the committee but follows the drafting of Clause 3 of this Bill, which deals with disqualification of persons elected to the House of Commons. It introduces an eight-day period following the election within which the Assembly Member can resign the post that would otherwise disqualify him.

The committee also accepted the advice of the Counsel General in relation to the power of the Assembly to disregard the disqualification. Your Lordships will recall that that was the process followed in relation to the Liberal Democrat Members. Paragraph 89 of the committee’s report states that Mr Bush thought that the ability of Assembly Members to relieve somebody of a disqualification was a “very unsound procedure”. Mr Bush added that,

“looking at it from general principles, if you have a clear and understandable list of disqualifications that are well publicised in advance and give people the opportunity to think carefully about them before they take the oath of allegiance, the rationale and the practical reason for having that power to disapply the disqualification seems to me to cease. Then, all of the arguments are in favour of getting rid of it, because, undoubtedly, it is constitutionally a very strange procedure indeed”.

I agree. Consequently, my second amendment would remove the power of the Assembly to lift the disqualification if it exists.

I appreciate that further amendments to the Bill and to the relevant order may be necessary if my amendment is successful, but I think that at Committee stage that suffices.

[Baroness Morgan of Ely]

Perhaps I may make a couple of quick points but, first, I think it is appropriate for us to raise spirits this evening by mentioning that Wales is in the lead by two goals to one against Cyprus in the European qualifiers.

Returning to the amendment, it is important for us to look at the pros and cons of politically restricted positions. I thank the noble Lord, Lord Thomas of Gresford, for drawing our attention to this issue, which is worthy of consideration. It is worth asking whether we should distinguish between people who stand for election and people who win a position. That is something that we should consider. I shall give an example. Somebody from a ministerial advisory group would have to stand down from their position on the advisory group, effectively losing a job, but that is the kind of person whom we should be encouraging to go into the Assembly—people with real expertise and special knowledge in certain areas.

I want to touch on a couple of little points. On the list of people ineligible to stand, there was mention of the Regular Forces. I presume that that excludes members of the Territorial Army. The noble Lord, Lord Elystan-Morgan, was being picky, so I shall also be picky. Regarding members of “any police force”, I wonder whether special constables are considered to be part of the police force. If so, someone such as David Davies MP, who is a special constable, would not be allowed to stand. Some of us might think that that was quite a good idea but the principle is worth looking at.

[Lord Thomas of Gresford]

I believe that the territorials and special police are not disqualified.

[Baroness Randerson]

My Lords, I have been very interested in the debate on these amendments. Amendment 13 in the name of my noble friend Lord German would reduce to six the number of candidates on the regional list at an Assembly election and ensure that the names appeared on the ballot paper. The Government of Wales Act 2006 provides that a political party may put up no more than 12 candidates. As my noble friend explained, until the 2011 Assembly election the names of all regional candidates appeared. However, in its report on the 2007 Assembly election, the Electoral Commission noted that returning officers were becoming increasingly concerned with the size of ballot papers due to having to list up to 12 candidates. As a result, no names of regional candidates were displayed in 2011.

I sympathise with the noble Lord’s concerns, which were widely shared across parties at the time. Because of this, following the election, the Electoral Commission committed to consulting on the issue of including names on regional ballot papers once more with a view to providing a recommendation to the Secretary of State for Wales. This consultation is currently under way and is due to report before the end of the year. I concur with my noble friend that it is perhaps surprising that it has slipped so late in this electoral cycle. Once the commission has reported, however, the Wales Office will, together with the Welsh Government, political parties and electoral administrators in Wales, consider the recommendations for inclusion in the conduct order for the next Assembly elections in 2016. That order will, of course, be subject to the approval of both Houses of Parliament.

--- Later in debate ---

Tabled by

[Lord Thomas of Gresford]

15: After Clause 3, insert the following new Clause—
“Other disqualifications from membership of Assembly
(1) Section 16 of GOWA 2006 (disqualification from being an Assembly member) is amended as follows.
(2) In subsection (1), for paragraphs (a) to (e), substitute—
“(a) holds any of the following judicial offices—Judge of the Supreme Court;Judge of the High Court or the Court of Appeal;Judge of the Court Martial Appeal Court;Circuit Judge;County Court Judge;District Judge (Magistrates’ Court);Chief or other Social Security Commissioner;Adjudicator to Her Majesty’s Land Registry;(b) is employed by the civil service of the Crown, whether in an established capacity or not, and whether for the whole or part of his time;(c) is a member of any of the regular armed forces of the Crown;(d) is a member of any police force;(e) is a member of the legislature of any country or territory outside the Commonwealth (other than Ireland);(f) holds any of the offices for the time being designated by Order in Council as offices disqualifying persons from being Assembly members; or(g) is employed as a member of the staff of the Assembly.”(3) Omit subsections (2) and (3).
(4) In subsection (4), after “member”, omit from “for” to the end.
(5) After subsection (6) insert—
“( ) A person shall not be disqualified from standing as a candidate for the position of Assembly member by reason of his holding any office designated by an Order in Council under subsection (1)(f).
( ) A person returned at an election as an Assembly member is not disqualified under subsection (1)(f) at any time in the period of 8 days beginning with the day the person is so returned.””

[Lord Thomas of Gresford]

I endorse everything that my noble friend Lord German said in relation to his amendment. I hope that the same speed would attach to the proposals that I have made.

Amendment 15 not moved.

--- Later in debate ---

The man in the street appreciates the term “senedd parliament”. “Parliament” means something that is suggestive of home rule and of a body that operates within a certain set of well established rules. With the new concept of home rule engendered within the turmoil of the past few weeks in Scotland, this may well be the appropriate time to raise the issue, whether the Government agree or not, and for the matter to be debated maturely and fully. I beg to move.

[Lord Thomas of Gresford]

My Lords, I support the noble Lord, Lord Elystan-Morgan, on this. Clearly the sons of Denbighshire had it right in that the forgotten ironmaster, possibly Wilkinson, was responsible for “Senedd”. Certainly, I used the phrase and Lord Hooson used the phrase. It is the appropriate title for a Welsh Assembly/Parliament—but I prefer to call it the Senedd.

[Lord Wigley]

My Lords, many of us campaigned for a Parliament for Wales for many years and in that context, obviously, the ambitions for a legislative body that has full competence, including tax raising and tax varying, fits with the concept of a Parliament.

The one point that I would make—and undoubtedly the noble Lord, Lord Elystan-Morgan, has thought about it—is that the building in Cardiff is now known as a Senedd, which makes it even more complex, with the differential between the Senedd building and the Cynulliad Cenedlaethol or National Assembly that is within it. We are of course aware that in France the National Assembly is the primary body. Therefore, my feeling is that whereas I have total sympathy with what my noble friend is aiming at, perhaps this, like so many other issues, is one that in the first place the National Assembly itself and its Members should decide on.

Changes have been made, as has been referred to earlier today, with regard to moving from the First Secretary to the First Minister and from secretaries to Ministers; something that was picked up by custom and practice in the first place and then became accepted. I hope that if there is to be a move in this direction it is by the initiative of the Members of the National Assembly itself. What is most important—I am sure that the noble Lord would agree—is the powers and functions that that body has to serve the people of Wales.

Wales Bill

Lord Thomas of Gresford Excerpts

Monday 13th October 2014 Lords Chamber

[Lord Anderson of Swansea]

That sounds a bit like double the number you first thought of. It is always good to follow the noble Lord. Certainly he cannot be accused of populism—perhaps courage, perhaps recklessness, but not populism.

I was tempted to go down his path of a second Chamber for Wales. There may, ultimately, further down the path, be a case for a second-opinion Chamber composed of some of the notables from the local authorities and elsewhere in Wales, but that is not a debate for today.

The noble Baroness, Lady Humphreys, quoted, I think, the Electoral Reform Society, saying that these matters were too important to be left to politicians. That is a little patronising. The Electoral Reform Society consists no doubt of very worthy people who can help us by doing their analysis, but ultimately these decisions will be made by politicians, who have the experience and do not live in ivory towers. However, I agree with her that the whole matter—the matter of numbers—should be seen in the round and that one should look at the numbers in the Assembly and whether those numbers are capable of doing the job. One cannot exclude the number of those in local authorities. On that subject, I hope to move an amendment in respect of the recommendations of the Williams commission on amalgamations of local authorities in Wales, because I detect among the people of Wales a distaste for the number of people currently in the various authorities. Looking at it in the round, including local authorities and the Assembly, and not excluding the House of Commons, I am not convinced of her case for this House, because on the whole we have far fewer Members of this House than Wales warrants. That is, however, another matter.

The noble Lord, Lord Rowe-Beddoe, spoke simply and put forward a simple proposition. There is a consensus around his suggested figure of 80. The starting point is that, after a somewhat bumpy start, the National Assembly has now bedded down, is accepted as a proper part of the Welsh political landscape and has been a pioneer for the United Kingdom in several aspects of policy, as I find when I go into my local supermarkets and am charged for bags, a matter that will come to England somewhat later.

The amendment that I am speaking to will not, as politicians often boast, kill two birds with one stone; it will kill three birds with one stone. In respect of the equality of men and women, it is clear that although the position in the Assembly in Wales is better than in most other legislatures, certainly better than in the House of Commons, there is still a disparity. Many parties and many parliaments have struggled with this problem. Selectorates, often with a majority of women, are frequently reluctant to select women for various levels of representation. My own party tried women-only shortlists in both the 2005 and 2010 elections; in the 2015 election, my own Swansea East constituency will have a women-only shortlist.

However, that is not without problems, as one sees in Cynon Valley, and it can be a matter of considerable controversy. It can be a problem when men find it difficult to find a place in the areas where they were born, brought up and worked for a long time. They are demotivated when there is no chance, because of women-only shortlists, of standing in their own constituencies. I put forward this proposal as a serious option for solving the problem. It is a far more acceptable device for ensuring equality and would make Wales a world leader, consistent with our normal radical policies and progressive traditions.

The advantages do not stop there. My proposal would also abolish the list system. The list system has not been a success. I am reminded that “hiraeth” in Welsh is not a longing for one’s own region within Wales but a longing for one’s own valley, constituency, city or village. It is difficult to work up loyalty or attachment to a region in Wales. “My region, right or wrong”: I cannot see anyone in Wales going to the barricades to fight for their region. It is more consistent with our Welsh tradition not to have regional lists.

Thirdly and finally, I come to the increase in numbers. It goes logically with what I am saying that as the powers of the Assembly increase—and one does not know how far that will go, and here perhaps the consensus ends, because some will want a great leap forward while others will want a more incremental approach—there should at the same time be an increase in numbers. It is also clear, as the noble Lord, Lord Rowe-Beddoe, said with great clarity and power, that the number in the Assembly, the 60, may have been an appropriate starting point—the 40 and the 20. Indeed, there would have been difficulties had the number of 40 constituencies been reduced to 30—it would have been perhaps 30 and 30 at that point.

However, the numbers are clearly insufficient for the job of scrutiny. At the moment, particularly when there is a coalition, as often happens in the Assembly, everyone appears to have a job. It is rather like the jibes at the old Mexican army—everyone was a general, everyone had a job. We want to get away from that. We want people in the Assembly who are able to do a job of scrutiny and we should agree to have 80 of them.

There are three good reasons for the amendment. We should not be afraid of change. In terms of gender equality, the smaller units in Wales and the increase in the powers of the Assembly, which would be matched with a commensurate increase in numbers, this amendment is proper and consistent with our radical, trailblazing tradition in Wales.

[Lord Thomas of Gresford (LD)]

My Lords, that was an extraordinary speech, if I may say so. We Gogs certainly have an identity, and we have an identity when we know that the south-east of Wales is spending the borrowing powers that it is acquiring on two tunnels on the M4 and putting a great deal of development into south Wales that we do not see in the north, where we have our own communication problems. To talk in terms of everyone being concerned about their little valley may do very well in south Wales, but I can tell you that in north Wales we feel very differently about it and we welcome the fact that we have regional AMs in the Welsh Assembly who can express a wider view than that of the little valley that they come from.

Although I am not overly enthusiastic about the list system, I will not see it dismissed in the way that the noble Lord, Lord Anderson, has done. Nor am I convinced by his idea that we should have proportionality of gender but not of political viewpoint. That would mean that the possibility of a dominant party would swiftly arise. My noble friend said that it would be the Labour Party. I would not go that far, because there are forces at work in some of the Welsh valleys today that are not essentially socialist in their approach. I am against the idea of having first past the post in Wales when it does not exist in Scotland or in Northern Ireland and when we have been fighting hard for it not to exist in England as well.

The noble Lord, Lord Elystan-Morgan, made the important point that the increasing amount of legislation coming to the Welsh Assembly means that we must have more Members to deal with it. I think that the consensus in Wales at the moment is that there are not enough people to scrutinise the legislation that is going through.

The noble Lord talked about scrutiny. The fact is that this is about not just primary legislation going through but primary legislation without the advantage of a second Chamber. Your Lordships will recall that I suggested earlier that we should surely be working towards a federal, single-tier Parliament for the whole of the United Kingdom, with committees for Wales, Scotland, England and Northern Ireland that could scrutinise the legislation that comes through. As I said, if we have English votes for English laws that have to go through the scrutiny of this House, that will be a considerable advantage compared to single parties putting through legislation without adequate scrutiny. On primary legislation in Wales, there is a lot to be done, but what is not to be done is what the noble Lord, Lord Anderson, suggests in his amendment. I wholly support everything that my noble friend Lady Humphreys so ably said.

[Lord Roberts of Llandudno (LD)]

My Lords, I would welcome further explanation from the noble Lord, Lord Anderson, regarding his amendment. When he suggests that two Members should be elected from 40 constituencies, should the elector have one vote or two in that election?

--- Later in debate ---

[Baroness Randerson]

Thank you, my Lords, for that interesting debate. I have grasped the picture. There is a cross-party and no-party agreement here today. Noble Lords want the Assembly to have more Members but also have very different views on how many more Members there should be, how that process of enlargement should happen and how they should be elected.

I welcome again the conversion of the Labour Party to the cause of having more Members. If we go back to the days—10 years ago—when the noble Lord, Lord Richard, suggested having 80 Members, that was not acceptable to the Labour Government then, so I am delighted that we are now reaching agreement on this. However, I have to point out that, although we as politicians here think that what is needed is more Members for the Assembly, I fear that if we asked the general public they would not produce the same answer. Asking for more politicians is not going to be an easy thing, particularly when the public view of politics and politicians is at a pretty low ebb across all parties.

[Lord Thomas of Gresford]

The deal in Scotland was that it had primary legislative powers and therefore the number of Members was reduced from 72 to 59. The people of Wales have spoken. They have had a referendum in which they have provided that Wales should have primary legislative powers and those have been given. Why should the people of Wales object to a reduction in numbers of MPs and an increase in numbers of Members of the Assembly?

[Baroness Randerson]

The noble Lord makes an excellent point and anticipates part of my speech. There is an issue of ensuring that if the Assembly is to have more Members, and that is to have broad public support, it needs to be done either when there is a reduction in the number of Welsh MPs, as was referred to earlier, or there is a reorganisation of local government in Wales, when I anticipate that there would be a reduction in the number of councillors.

In the mean time, there is an important public debate to be had and an argument to be made by civil society. I am aware that a large number of organisations within civil society in Wales share the views that noble Lords have expressed today. There is an engagement with politics that these things should be done by civil society in order to ensure that any arguments on them are put forward with force and relevance for the people of Wales.

I am grateful to the noble Lords whose amendments have enabled this debate. Amendments 6, 9 and 11, and Amendment 14 in the name of the noble Lord, Lord Anderson, have formed a useful group and theme. Amendments 6 and 9 require the Secretary of State to introduce a Bill to increase the size of the Assembly to at least 80 Members—in the case of Amendment 6, from 2016. Amendment 9 provides that responsibility for deciding the number of Assembly Members should be devolved to the Assembly. Any subsequent change to the number of Members must be approved by a two-thirds majority.

We recognise in government the legitimate concerns about whether the Assembly has sufficient numbers to provide Ministers and the scrutiny that government through the committee system in the Assembly requires. This has been discussed since at least the time of the Richard commission and I pay tribute to the noble Lord, Lord Richard, on this issue. More recently, the Silk commission recommended in its second report increasing the number of Assembly Members, although it did not go into the detail of suggesting a number.

Wales Bill

Lord Thomas of Gresford Excerpts

Monday 13th October 2014 Lords Chamber

[Lord Thomas of Gresford (LD)]

We support Amendment 1. As the leaders of devolution as opposed to independence in Wales, we have always supported reserve powers. The Bill that I drafted in 1966 was for a Parliament for Wales on a reserved powers basis, including provision for criminal justice and the courts. I rather fancied the position of Chief Justice of Wales that I laid out in the drafting of that Bill. I was a lot younger in those days, of course, but not lacking in ambition.

The one part of Amendment 2A that I query, however, is on the Welsh constitution and electoral arrangements going to the Welsh Assembly. It is impossible to have a federal system of government and any form of devolution if the proposal is that those should be left to the Welsh Assembly itself. What has occurred to me over the past few weeks is the anomaly that would arise if there were to be English votes for English laws in the other place. English laws would be subject to the scrutiny of this House, and consideration and amendment in this House; whereas laws passed by the Welsh Assembly, the Scottish Parliament and the Northern Ireland Assembly are not subject to such scrutiny. When one poses or considers that anomaly, it is obvious that there has to be a considerable constitutional discussion as to how the whole settlement eventually evolves.

For example, in my view, this House should be abolished and replaced by an elected—on a proportional basis, of course—federal body that would deal with scrutiny of legislation from all the devolved Governments. A very much more sensible route and settlement lies along those lines, although it would obviously take a considerable amount of time and we are dealing with this Bill at the moment. The reserved powers issue can be settled much more quickly and that is why I support Amendment 1.

[Lord Elystan-Morgan (CB)]

My Lords, there is a great deal of agreement in all parts of the House on many of the matters we are discussing. Although we are speaking on certain, limited planes, we are at the same time looking at the whole question of devolution.

Many people will say that devolution in Wales took off with the referendum of 1997. That is not strictly correct because no transfer of authority from Westminster to Wales was involved in that matter. The transfer proposed was a significant transfer from the executive authority of Welsh Office Ministers—of course democratised by that authority being an elected body, meeting in the name of the Welsh people. It was a great, historic event but not classical devolution as such.

Be that as it may, there have been in this discussion a few cautionary voices, as one would expect. I respect much of what has been said by the noble Baroness, Lady Morgan. In the case of the noble Lord, Lord Crickhowell, one could perhaps say that the voice was rather more than traditionally cautionary, and was somewhat Cassandra-like. However, that is not something that I wish to deal with in detail at the moment.

The thrust of what we are practically all agreed on is that there should be a reserved powers model. There are two excellent reasons for that. One is selfish, if I may say so as someone who has been a solicitor and barrister, and later a circuit judge. It is to avoid a whole generation of Welsh lawyers having constitutional neuroses. It means that if you want to be sure of whether something has been transferred in a particular field, you might have to look at not just a score of different legislative sources but perhaps much more than that. It is like confetti—all over the place—when it could so easily have been done in a different way by a total bulk transfer, subject to exceptions (a), (b), (c) and (d).

It would not be all that difficult if one were to tackle this straightaway on the basis of Part 4 of the Government of Wales Act 2006. Under the provision, the House will recollect that there were 20 areas of devolved authority ranging from agriculture to the Welsh language. What is referred to in each and every one of those paragraphs is just a heading. It might well be argued that although you could easily draft a Bill—you could write it out almost on the back of an envelope, and that seems to me to be the way in which some legislation has been proposed over the past few weeks—you could never be absolutely certain of what you were including if you dealt with it in that bulk umbrella way. However, I doubt whether the difficulties are as great as that, because when the Government of Wales Act was passed there was careful scrutiny as to the content of each and every one of those 20 categories. Thus I should think that successive Governments and those who advise them have a pretty clear idea in each case of exactly what has been devolved and what has not been devolved.

Therefore it seems to me that on a selfish basis, as far those who practise the great vocation of the law is concerned, there is much to be said for cleaning up in this particular way. In so far as constitutional maturity is concerned, there is everything to be said in favour of that model. I hope that the Government will not plead the vehicular defence and say that this is not the vehicle by which to do this, but will say that this is something that can be done quickly. I suspect that some thought has been given to it over the years. I suspect too that the Government may well have anticipated what Silk concluded in this particular context.

Turning to Amendment 2A, I am a great admirer and respecter of both the noble Lords concerned, the noble Lords, Lord Wigley and Lord Elis-Thomas. I have known them almost since boyhood. Both have been committed home rulers since boyhood. Few people now alive in Wales have contributed more to the effort to raise the constitutional level of this land and nation. They have cast a generously broad net. One might well say that if one looks in detail at some of what that net might contain, then clearly there might be certain difficulties. However, I do not think that the situation is as bleak as is suggested.

In fact, many responsible bodies in Wales, whose membership cuts across party loyalties of all sorts, have spoken for many years about the position of the police in relation to the Welsh Assembly. I speak as one with knowledge of the matters that come before the courts from time to time—or used to when I was in practice—and the general case is this. The matters relating to the police, youth justice, drugs and various other agencies—some of which have clearly been devolved and others which have not—make out a case for at least the transfer of certain police functions. I am not arguing for the total transfer of certain police functions that have not already been devolved to be devolved to the Welsh Assembly. Such arguments are found in Silk, and indeed many other responsible bodies have come to much the same conclusion. So it is not chimerical or irresponsible to mention that matter.

Let us take broadcasting again, for example. Paragraph 20 of Schedule 7 to the Government of Wales Act transfers all responsibilities in relation to the Welsh language, save and except the legal position of the Welsh language in the courts—nothing else. An intelligent layman would therefore be well excused if he said that broadcasting in Wales in the Welsh language must have been included within the umbrella of paragraph 20. That is not so, as we found very much to our cost some years ago when the issue of S4C arose. I shall not go into the detail of that now but something that was crucial to the very future and success of the Welsh language had not been devolved in the slightest degree.

I think that the 20 areas of authority included in Schedule 7 to the 2006 Act could easily and safely be transferred, and very little would need to be done in addition to the information that the Government already have in that regard. It would show good will on the part of the Government and responsibility, candour and integrity in relation to the promises made some weeks ago in the heat of the Scottish referendum. If they mean what they say—and I am prepared to accept that they do mean what they say—this could be in earnest of that good will and integrity.

Wales Bill

Lord Thomas of Gresford Excerpts

Tuesday 22nd July 2014 Lords Chamber

[Lord Thomas of Gresford (LD)]

My Lords, this Bill is introduced into the House at a very interesting time, with the Scottish referendum only weeks away. It provides centrally for the introduction of tax powers specifically to permit the Welsh Government to set a rate of income tax, subject to their first obtaining a favourable referendum vote. This is what the First Minister, Carwyn Jones, said about that last November:

“As a Government, we are not pursuing the devolution of income tax, certainly not at this time. The reason for that is we believe that income tax devolution cannot come unless there is reform of the Barnett formula. The funding basis for Wales must be solid first, before we can consider whether income tax devolution will be appropriate and right for the people of Wales”.

I noted that the noble Baroness, Lady Morgan, a moment ago said that she would not lead the campaign for income tax devolution. That continues to be the Welsh Government’s position.

There is a bit of curious thinking in the Labour Party about this, because the Scottish Labour Party’s commission on devolution report explicitly and repeatedly rejects proposals for a needs-based alternative. In an interview on “Newsnight Scotland” on 18 March last, Labour’s Scottish Leader, Johann Lamont, claimed that:

“The Barnett formula works for the United Kingdom”,

which is very different from what was being said a moment ago. She said it works for the United Kingdom, not for Scotland. Well, Labour received its comeuppance in Scotland in the last Scottish Parliament election.

One of the problems—

[Lord Richard (Lab)]

The noble Lord provokes me slightly, since I chaired the commission on the Barnett formula in this House. Is the noble Lord in favour of the Barnett formula remaining in its present form for Wales? Is the Liberal Party in Wales seriously suggesting that the way in which the Barnett formula is calculated at present should remain in that state?

[Lord Thomas of Gresford]

The noble Lord knows perfectly well that the Liberal Democrats are for the reform of the Barnett formula and always have been. I can give that assurance. I am just puzzled to hear what is said by the Scottish Labour Party, which obviously prefers the current arrangements.

[Lord Anderson of Swansea (Lab)]

What about the Scottish Liberal Party?

[Lord Thomas of Gresford]

The Scottish Liberal Party has been merged with the Scottish Liberal Democrats. I am not going to go any further into that.

The problem with devolution in Wales is that a Labour Government continuously in power—either on their own or as the lead party—escape accountability for their failures for a number of reasons. First and fundamentally, the essential link that all democratic Governments should have between raising resources through taxation and spending those resources on policies is missing. This Bill goes some way to dealing with that particular problem.

Labour’s demand for more money from the central government from a reform of the Barnett formula before they dare put these taxing powers to a referendum, is like Oliver Twist’s, “Please sir, can I have some more?”. It is Labour’s excuse for condemning Wales to fall behind in education and health, as it does, not merely judged by UK comparisons but also against international comparisons. Any very proper criticism of those failures is said to be “a war on Wales”—an empty piece of rhetoric first used by Carwyn Jones himself at the Welsh Labour Party conference in Llandudno in March.

Just as Labour seeks to delay the introduction of a Welsh income tax, so in the House of Commons debates on the Bill Labour sought to delay the introduction of the borrowing powers by waiting for a report on the legislative steps necessary to move to a model of reserved powers for the Welsh Assembly. I heard with interest the noble Baroness say that an amendment will be proposed to bring in reserved powers as the model in the Bill, and look forward to seeing how that is expressed.

The second matter that concerns me is that the recommendation of the Richard commission 10 years ago that the number of AMs should be increased to 80 to improve scrutiny within the Assembly was not pursued. The recommendations of the Silk 2 report, as the noble Lord will no doubt have noted, are that:

“A range of options should be considered in the short term for increasing the capacity within the existing National Assembly, including greater flexibility on the number and size of committees, increased numbers of research staff and better use of Assembly Members’ time. … The size of the National Assembly should be increased so that it can perform its scrutiny role better. The practical implications, and those for the electoral system, will need further consideration”.

The third matter that concerns me is that the press and media in Wales allow a dominant Labour Government to get away with it. Take the desire and the ability of the press in Westminster to tear Ministers limb from limb on a daily basis—for example the spat between Theresa May and Michael Gove over extremism in schools—and compare it with the deferential approach of the Welsh media over the very recent abject dismissal of Alun Davies, the former Welsh Government Natural Resources and Food Minister, for gross misconduct. One wonders whether the politicians and the Welsh media are too closely aligned and too ready to exchange roles.

I return to the Bill. I welcome the proposal to remove the current restrictions on individuals standing as a candidate for both a constituency seat and a regional seat. Studies by the Electoral Commission have shown that the current prohibition has a disproportionate impact on smaller parties, because they have a smaller pool of potential candidates from which to draw. The proposal to prohibit MPs from sitting as Assembly Members, and vice versa, is also welcome. It has an interesting history. Back in 1998, as the then Welsh spokesman for the Liberal Democrats I was lobbied from the very steps of the Throne by Mr Ron Davies Member of Parliament, the then Secretary of State for Wales, to give our party’s support to an amendment to the Government of Wales Bill which would permit him and others to have a dual mandate. At the time, it seemed reasonable to have some experienced politicians in the new body we were setting up, and so we agreed. However, I think that with the experience of the years that have passed it is time to end that practice.

I will raise another issue during the passage of the Bill. Much was made of the fact that two of the Lib Dem candidates in the last Assembly election were disqualified from being Members because they belonged to various public bodies, one of which was the Care Council for Wales. On the complaint of a Labour Party Member, they were interviewed by the police on an allegation that they had knowingly made a false statement in a document in which they gave their consent to being a regional party list candidate at those elections. That was translated into being disqualified from nomination.

The confusion arises because, under the Local Government Act 1972, a person is disqualified from being elected as a member of a local authority, whereas Sections 16 to 18 of the Government of Wales Act specifically say that:

“A person is disqualified from being an Assembly member”.

Of course, elections to local government are on the first past the post system; elections to the Welsh Assembly are done on both a constituency and regional basis. The regional election is in accordance with a party list. It is ludicrous to require a person on a list, who might not be first with a chance of election but second, third or fourth, to give up public service on a public body, very often unpaid, just to be a candidate. Although Liberal Democrat candidates were highlighted last time, I am aware that members of other parties stood as candidates, but were not elected, who might have been subjected to the same treatment. A successful candidate in an election ought to have a period in which to resign from any body that would disqualify him from being an Assembly Member—maybe eight days. I shall accordingly seek to amend Section 16 of the Government of Wales Act 2006 to make that position absolutely clear.

The aftermath of the Scottish referendum will, in all likelihood, see changes in Scotland. I was delighted to hear from the Minister that the situation in Wales will be revised; in particular, the lock-step will be looked at again. The structure of Welsh devolution is not yet satisfactorily settled. Once the Bill is passed as a further step, the focus in Wales will turn to the recommendations of Silk 2. The Liberal Democrats, who accept all its recommendations, will be here to return to the fray in the next Parliament. For the moment, I look forward to the fray in the Committee stage of the Bill.

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[Lord Elystan-Morgan (CB)]

My Lords, this Bill well deserves the support that is obvious for it in all parts of the House, in the main because it is a Bill that takes Wales further along the road to home rule.

Many Members have meandered down memory lane in connection with the events of past decades. They reminded me of the feelings that I have, and always have had since I was a young boy, about the attainment of a Welsh Parliament. It has been something of an obsession for me, and I make no apology for that. For many years—years of disappointment and frustration—it seemed like a distant dream, which would probably never be achieved.

All that changed in 1964, with the establishment of the office of Secretary of State for Wales. Before then it seemed that nothing in the way of substantial constitutional development was possible: after that, everything has been possible—that is, in so far as it is the will and the determination of the Welsh people to achieve it.

To some extent, the devolution in the 1997 referendum, and in statute thereafter, was not classic devolution at all, because it did not, in the main, entail the transfer of any substantial new powers to Wales. The powers had already been transferred, but they had been transferred to Welsh Ministers. What it did bring about, of course, was a significant transfer of power from Ministers to the people of Wales. It meant that, for the first time, one had a body elected by the people of Wales, meeting on the soil of Wales, and with a moral and legal authority to speak for Wales. Obviously, with the greatest respect, that authority had to be on a broader basis than that which could be enjoyed by any Minister of the Crown as such.

In the referendum of 2011 we had a very considerable devolution. That created, essentially, a Welsh Parliament —a lawmaking Parliament with wide legislative powers, falling into 20 separate broad categories. That presents a massive challenge. This Parliament of Westminster has had many centuries to evolve slowly, deliberately and securely, and to mould its traditions to meet the needs of various ages. We in Wales will be expected to achieve a great deal of that process within a very short compass of time.

That must always be remembered in the context of what is now a new body. It is the Assembly, but it is essentially a Welsh Parliament. I not only recognise, but am charmed by the fact, that it should be called the Senedd. I believe that it was the noble and learned Lord, Lord Morris, who set the precedent with his Bill in the 1970s, in which the name of the body was the Senedd.

[Lord Thomas of Gresford]

My Lords, I know that the Bill presented by Lord Hooson in 1967 contained the name Senedd; I drafted it.

[Lord Elystan-Morgan]

It did indeed. A few weeks ago I had the great honour of contributing a chapter on the political life of the late Emlyn Hooson, in which I made that very point.

There is therefore a respectable precedent for the concept of a Senedd. The word may, of course, have embarrassing connotations. As noble Lords will know, it comes from the Latin word “senex”, meaning an old man. The same stem is in the word “senile”—and also in the word “senior”. But—and I speak with some fervour and commitment in this matter—there is a great deal to be said for old men in politics.

The generality of the Bill is very much in the track of everything that has happened in the past 40 years, and especially in the past 17 years, since the referendum of 1997. I have little doubt that it shows that the curve of expectations and the curve of confidence that the Welsh people have in their own destiny has nobly sharpened during that time. I think that it will continue to do so.

It is in that context, therefore, that we look not only at what the Bill contains, but at what it does not mention. The main part of it, as we all appreciate, deals with the varied rate of tax that will be within the jurisdiction of the Welsh Assembly. I have a canny approach to such a situation, perhaps because I am a Cardiganshire man, and in Cardiganshire we have the tradition of being extremely careful in relation to money—a very laudable trait, if I may say so.

Of course the proposal has its attractions. Of course we will never be a complete and full home rule parliament unless we take up such responsibilities. But after all, we are being asked to invest in a future that is very uncertain. We are being asked to buy stock, as it were, in a new enterprise—but the prospectus is very nebulous. What do I mean by that? I refer, first, to the lock-step. That could dominate the whole situation. With a lock-step imposed on the three bands of taxation, it might be difficult to impose a progressive tax. The Silk commission—I too applaud the efforts of people like the noble Lord, Lord Bourne, in this context—was strongly for that. It argued the case to the point where there was no answer to it. Nevertheless—due, no doubt, to influences from beyond the Tweed, and for reasons connected with Scotland—there is dubiety at this moment. Until that dubiety is resolved, we cannot really begin to think about the question of whether Wales should take up these powers.

There is also the question of Barnett. In passing, may I say that we hope that the noble Lord, Lord Barnett, will soon be restored to full health in this place; he is a gentleman of remarkable qualities, and I have enjoyed his friendship for more than 40 years. However, the losses under the Barnett formula have been enormous, as the noble Lord, Lord Wigley, has already proved. The commission chaired by Gerry Holtham made it abundantly clear that every year, Wales loses—or did lose when the report was published, three years ago—some £300 million. As the economy improves, that loss becomes greater. It is a disgraceful situation, for which Governments of both colours over the past 30 years are responsible, because they have been unwilling to look into the inequity of the arrangement. A small country like Wales simply cannot afford this massive haemorrhaging of assets, which will continue unless something drastic and radical is done about it.

As for the main proposal in the Bill—yes, there are possibilities, but there are also dangers. There are matters that have to be spelt out. I cannot for a moment see the Welsh people accepting it until they have some sort of reasonable guarantee that we will be no worse off if we take up those options. Hazlitt said that there are only two certainties in life: death and taxes. As for death, this House may very well do something about its certainty, but as for taxes, they will remain exactly the same, and for ever.

Of course it will be difficult for a referendum to be carried if there is still a tinge of uncertainty. Gerry Holtham said to the Welsh Affairs Committee that the referendum is very losable unless those guarantees are in place.

I turn to two other matters that are not in the Bill. One is the membership of the Assembly. I do not think that I can overemphasise that feature. The noble Baroness, Lady Humphreys, has already spelt out the case, a case set out excellently in the publication by the Electoral Reform Society Wales. The facts, briefly, are these. In Scotland, there are 128 Members of the Scottish Parliament; in Northern Ireland, there are 108 Members of the Assembly; in Wales, there are 60. Once you take out the Ministers, Deputy Ministers and Officers of those various Houses, you have this result: in the House of Commons, 525 Back-Benchers; in Scotland, 113 Back-Benchers; in Northern Ireland, 92 Back-Benchers; in Wales, 42 Back-Benchers. That is well below the minimum number that can form a reasonable critical mass to carry out that function.

Edmund Burke said that, for evil to triumph, it is necessary only for men of good will to do nothing. If anyone wants to bring about the evil of destroying the very future of the Welsh Assembly, and everything that is possible within its grasp, all you have to do is to do nothing in relation to that membership. It is simply impossible for it to carry on with that small number. The Electoral Reform Society has argued strongly the case for 100 Members. It has carried out surveys in all parts of the world and found that that is about the average for what might be called a sub-parliament of this nature.

For myself, I would ask people to exercise a bit of faith and imagination, to consider how that rising curve of expectation that we have seen in Welsh constitutional development over the past 15 years might continue, and to say that 120 might not be impossible. The beauty of the figure of 120 is that it is very simple: you simply double the number of Members that you have at present.

I turn briefly to the question of reserved powers. It is simply ludicrous that if a person wants to find out whether or not a particular function has been devolved to Wales, he or she might have to look at 600, 700 or 800 little pieces of constitutional confetti just to find out whether that matter has been transferred. That is no way to run a parliament. Indeed, by placing the situation on the basis of reserved powers, we place Wales in exactly the same position as Northern Ireland and Scotland. That would also save a whole generation of Welsh lawyers from acute constitutional neurosis.

Wales stands at a point in time where there are many challenges, many dangers and many possibilities. This House must have heard the quote from the Bard of Avon very often:

“There is a tide in the affairs of men

Which, taken at the flood, leads on to fortune;

Omitted, all the voyage of their life

Is bound in shallows and in miseries”.

There is a tide in the life of a small nation, as well, and we must do all we can to see that we do not miss that fateful opportunity.

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[Lord Howarth of Newport]

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

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

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

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

[Lord Thomas of Gresford]

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

[Lord Howarth of Newport]

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

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

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

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

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

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

Wales: Economy

Lord Thomas of Gresford Excerpts

Monday 7th April 2014 Grand Committee

[Baroness Morgan of Ely (Lab)]

My Lords, historically Wales has languished economically behind the rest of the UK for generations. Following the boom years of the coal era, harsh reality struck in the 1970s and 1980s when communities across the country were devastated by the loss of big industry—coal and steel, in particular. Wales has taken a long time to readjust to the new world, but at last we are seeing really positive signs of growth. That growth is currently outstripping the rest of the UK thanks in large part to a completely different approach in Wales using direct intervention—good, old-fashioned Keynesian economics by the Welsh Government. We moved to plan B rather than sticking to Osborne’s plan A for as long as he did and we are reaping the rewards quicker.

Rather than declaring a war on Wales the Conservatives should be looking to emulate the success of the Welsh Government on the economy. Unemployment rates in Wales have been tumbling, with the unemployment rate in Wales now lower than in England, Scotland and Northern Ireland. Can you believe it?

[Lord Thomas of Gresford (LD)]

What does the noble Baroness mean by a war on Wales? Who is supposed to be waging a war on Wales?

[Baroness Morgan of Ely]

It is pretty clear that there have been attacks and noises coming from Ministers, such as Grant Shapps, for example, who visited Wales and said that the Government are using Wales as a battering ram ready for the next general election.

Plan A by the UK coalition Government in large part has cut and cut public services white crossing their fingers in the hope that the private sector will take up the slack. The Welsh Government have deliberately taken a different approach and intervened in stimulating economic growth through a number of measures, standing by the struggling private sector in maintaining jobs through the tough times of the recession, stimulating economic activity through maintaining Welsh Government investment in infrastructure, and developing an aggressive approach to stimulating inward investment and boosting an export drive.

These measures are now paying off, which is, I suggest, the main reason why Wales is coming out of the recession quicker than other parts of the UK. The unemployment rate in Wales is now 6.7%, lower than the UK average of 7.2%, a 20% reduction in the past year. Despite the fact that there has been a 31% cut in real terms to the Welsh capital budget between 2009 and 2016, the Welsh Government have reserved £1.3 billion of investment in capital funding to improve Welsh infrastructure—more money for transport, housing and flood defences.

Wales will be one of the first countries in the world to ensure superfast broadband for 96% of properties. In England the figure is 90%. Upon completion, Superfast Cymru will make Wales the most connected country in Western Europe. Inward investment in Wales has increased by 200% and produced 7,000 new jobs. Who knows, though, what impact the ambivalent attitude of the Tory Government towards EU membership will have on inward investment in future?

One of the first things that the coalition Government did on coming to power was to scrap the Future Jobs Fund. Wales reacted by creating its own Jobs Growth Wales plan, which has created 11,000 job opportunities for unemployed 16-24 year-olds in Wales. However, while I think it was right for the Welsh Government to concentrate on unemployment because it is the key to better health, better education and better outcomes overall, we are still struggling in terms of wealth. Wales is still poorer relative to the UK as a whole, but the Welsh economy is growing at 1.6%, one of the fastest rates in the UK. The problem is that we are starting from a low base.

We need to continue our focus on driving up GDP levels, a much tougher task. This is about what kind of jobs we have in Wales and encouraging the export of Welsh goods. The Damocles sword hanging over the Murco oil refinery could reduce our export figures significantly. The oil refineries in Milford Haven are critical to the Welsh economy. The Valero refinery alone is responsible for 25% of all Welsh exports. So the closure of any refinery would not just have a devastating impact on employment in the area, but would have a disproportionate impact on Welsh GDP figures. I know that the Welsh Government are doing everything in their power to try to save the refinery. What is the Secretary of State doing to help to find a buyer for the plant? The Welsh Government have developed a programme of support that identifies and helps to build companies’ capacity to export. This is already paying dividends, with an increase of 11% in exports compared with a rise of just 0.4% for the rest of the UK.

Central to improving GDP is the need to build the skills of the Welsh people and to upskill the workforce, ensuring a good stream of graduates. Despite the fact that some Conservative MPs have suggested that applications to universities from people living in Wales are down, the truth is that when the Tory-led Government trebled tuition fees there were 42,000 fewer applications from English students while in Wales there was a fall of just 100. That was because the Welsh Government stood by students from Wales, capping the fees at £3,000. Welsh apprenticeships have seen completion rates rise from 54% in 2006 to 85% in 2012, beating England’s 73% completion rates. Some 90% of these have gone on to find sustained employment or engage in further learning.

There needs to be a particular focus on developing skills in the engineering sector, which will be key to the economic growth prospects of Wales in future. The Royal Academy of Engineering has suggested that there are 95,000 Welsh people who declare themselves as being engineers; 30% of those are over 50 years old and yet only 1,500 applicants were accepted on to engineering courses in 2012-13.

Given the profile of the engineering workforce in Wales, there are not enough young people coming through the system to replace the ageing workforce. That will ultimately result in skills shortages and we will have to recruit from outside Wales. A deliberate focus on that and on driving up the pool of those able to enter the field through better results in maths in school is imperative. Again, the Welsh Government’s focus on numeracy in schools should help with that.

The gap between Wales and London has now become a gulf. Although that has certain advantages in terms of the costs of living in house prices and childcare costs in Wales compared to London and the south-east, the coalition Government need to demonstrate to the country that they are in touch with the pressures that are still being felt outside the M25. We have not seen much evidence of that. The measures that they have taken to stimulate the economy have exacerbated the situation rather than helped it, as evidenced by research by the Centre for Cities, which recently suggested that for every public sector job created—yes, created—in London, two have been lost in other cities. The Help to Buy scheme has undoubtedly helped to cause a housing bubble in London, causing huge resentment outside the capital, where people watch as those who have already bought watch their wealth grow with no effort. That is not help for hard-working people; it is the luck of the draw on where and when you bought a property. It is also unsustainable in the long term.

In December, the UK Government announced their £375 billion infrastructure spending plan for the next two decades. If Wales were to get its 5% share, we should see £18.7 billion of investment coming to Wales. We know that the Wales Office boasts of £2.5 billion of investment that will come to Wales, but I ask the noble Baroness where and when we will see the rest of it and what we can do to speed up spending of the investment already promised. Will we see any of the infrastructure promised by the UK Government delivered during this Parliament?

Wales is absolutely on the right track in terms of the prospects for economic recovery, but more needs to be done to ensure that the two arms of government at UK and Welsh level co-ordinate their efforts to reduce the gap between Wales and London. That means more economic intervention from the UK Government and a more proactive regional approach further to stimulate the Welsh economy and to cool down the overheating that is occurring in London. I ask the Minister to ask her Government to stop the war on Wales and engage in more constructive politics with the Welsh Government. England could learn from Wales on the economy; and, yes, on aspects of education and health, Wales could and should learn from England.

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[Lord Thomas of Gresford]

My Lords, I, too, congratulate the noble Baroness, Lady Morgan, on obtaining this debate. Perhaps it is a good thing that it is limited to the Welsh economy, because it would be dangerous for her to refer, for example, to the National Health Service in Wales. The noble Baroness, Lady Gale, has just referred to the Welsh Labour Party conference in Llandudno. In his speech to that conference the First Minister, Mr Carwyn Jones, said that there were “difficult truths” about the NHS in Wales, and that examples of poor care in Welsh hospitals were unacceptable. He conceded that there was complacency at the top of local health boards, and said that Labour Ministers must “hold up” their,

“hands and say, yes we could have done better”.

We sometimes seem to be living in a different country when I hear the Welsh Government praised. The debate might also have been about the state of Welsh education, on which topic in the same speech Mr Jones had no answers but said that the schools system had “coasted” for too long. We once thought we led Britain in educational attainment, but the reality today is that we have fallen too far behind.

What was the First Minister’s answer to these criticisms? To declare that any criticism of his Government was the work of a Tory elite waging war on Wales. Labour, he said, was on the front line of the war on Wales. How pathetic is that, and how disappointing to hear that empty rhetoric, that newspaper headline, being used in this House? I have to say that it causes me great dismay.

The Welsh economy is in need of serious overhaul. The Welsh Labour and Labour-Plaid Administrations in Cardiff Bay have not placed enough emphasis on equipping Wales with the infrastructure and the skills necessary to compete globally. The economy has serious longstanding structural problems. There was a time when Wales attracted inward investment from foreign countries on the basis of low labour costs and low land costs, but that was not sustainable and it is no longer a unique selling point for Wales, nor should it be.

Transport infrastructure is of course crucial. In government, the Liberal Democrats pressed for the electrification of both the Great Western main line as far as Swansea and the totality of the valley lines. The decision has now been taken with the support of the Prime Minister, as my noble friend said. However, it now appears that the Welsh Labour Government are reneging on their financial undertakings to support that development.

What about the rest of Wales? Money is certainly promised for a new line for the M4 motorway across the Gwent levels and relief for the Newport tunnels, but in north Wales, plans to dual the railway line between the two vital business hubs of Chester and Wrexham and their surrounding industrial areas have been scrapped, while we can whistle for the electrification of the north Wales rail line, which carries freight to Ireland. That line is not part of the strategic freight network at all.

An excellent survey was published last weekend by the Welsh policy unit of the Federation of Small Businesses. It accepts that the British economy is recovering: 14% fewer of its Welsh members identify the economy as a barrier to growth than in its previous survey in 2011. However, the comparison in the survey between the views of their members in Wales and those of their members in the rest of the UK is revealing. Significantly, more businesses in Wales are concerned about the cost of finance, and indeed of obtaining finance at all, to expand and develop their enterprises and create more jobs. We would look for a creative solution to that from the Welsh Labour Government, but there is none. Businesses, it appears, are hit by higher business rates than in England, which, with falling rental values, leads to the dereliction of so many of our towns across Wales, as we know as Welsh people.

There is also great concern in the business community about the provision of fast and reliable broadband access. Our digital infrastructure, which should allow business to grow and compete in a global market, is not developed in Wales. We have languished at the bottom of the UK league tables for broadband speeds for years, and we have suffered with a lower proportion of households able to access broadband than any other part of the UK. I wait to hear what is the new initiative to which the noble Baroness, Lady Morgan, referred, to see what it produces or whether the Welsh Government will be holding their hands up again on that issue.

Many employers are concerned about the low skill levels in Wales, which affect productivity and are a source of competitive disadvantage. Basic skills attainment is lower in Wales than across the United Kingdom as a whole and 4% lower than in Scotland. Higher skills attainment is 3% lower than across the United Kingdom and 7% lower than Scotland. Wales is lagging behind. Where is the wonderful improvement to which the noble Baroness, Lady Morgan, referred?

Taking the point of the noble Baroness, Lady Gale, Labour is allowing Wales to fall behind with regard to childcare. It has been said that 1 million women are missing from the United Kingdom workforce, because it does not make sense financially to go back to work. That is even more so in the case of Wales. The Family and Childcare Trust’s annual childcare survey of 2014 showed that childcare costs in England are falling in real terms for the first time in 12 years, while in Wales the cost of nursery care for under-twos has increased by nearly 12%. So there is a massive agenda—

[Lord Ahmad of Wimbledon (Con)]

The noble Lord’s time is up. This is a time-limited debate to 60 minutes. We can have a brief intervention, but my noble friend needs to conclude his remarks.

[Baroness Morgan of Ely]

Will the noble Lord comment on the fact that average costs of childcare in Wales are 10% lower than in England in every segment of care from under-twos to after-school clubs. So there is propaganda in his comments that is absolutely not true.

[Lord Thomas of Gresford]

I am quoting the Family and Childcare Trust’s 2014 survey. In conclusion, there is a massive agenda for the Welsh Government to tackle, but the truth is that the Labour Administration is failing not just the Welsh people but the whole concept of devolution for which we fought.

Wales: Silk Report

Lord Thomas of Gresford Excerpts

Tuesday 21st January 2014 Grand Committee

[Lord Thomas of Gresford (LD)]

My Lords, I echo what has been said about Wyn Roberts. I spoke for the Liberal Democrats and he for the Conservatives when the devolution Bill went through in 1998 to 1999. He was not a party man, he was a Welshman, and he did much to deal with the choleric contributions of some of his colleagues on that Bill. We travelled down together occasionally from north Wales and shared a taxi. I was pupil to his brother, Eifion Roberts. I have had a close connection with him and I shall miss him. I send our respects to Enid, his wife.

This week, the coroner for north-east Wales, John Gittins, held an inquest into the death of Mr Fred Pring of Mynydd Isa, near Mold. Last March, he was suffering from severe chest pains and feeling ill when his wife telephoned 999 and requested help at one o’clock in the morning. There was no response. She made four phone calls, the last at ten to two to tell them that he had died. The reason, it appears, was that the five ambulances on call were outside the Maelor general hospital in Wrexham waiting to unload patients who were already on board. One had been there for more than five hours and another for an hour and a half. At the weekend, Mr Carwyn Jones, the First Minister, told the BBC that Wales was far behind England in accident and emergency response times because we were more honest about our statistics and that he wanted to change the targets.

Today we hear that all routine planned surgery across north Wales this week has been postponed due to “increased pressure”. Emergency operations are to be carried out at Abergele. This affects Wrexham, Ysbyty Gwynedd and Glan Clwyd. The NHS, said the First Minister on Sunday on the BBC, is open to improvement. We also hear today that the Welsh Health Minister has announced the closure of neonatal services at Withybush hospital.

Six of the 22 local authorities in Wales are under special measures with regard to education. When the PISA results were published last month, they showed Wales the worst country in the United Kingdom. I need not repeat the statistics because your Lordships will be well aware of them.

The Labour Government in Wales are a total disaster, and you wonder how they get away with it. On the economy, we learned last month from the latest figures on GVA, the measure of value of goods and services produced in the nations and regions in the UK, that Wales is the bottom of the pile. This month in my home area of Wrexham, Kellogg’s have announced 140 job losses; last month, Sharp announced that 250 permanent jobs and 365 agency staff were to go; and 230 workers have lost their jobs at the First Milk cheese-packing plant in Marchwiel.

When Wyn Roberts, other noble Lords who are in this Room and I campaigned for devolution in 1979 under the leadership of the noble Lord, Lord Elystan-Morgan, and again in 1998, we expected that a Welsh Government would successfully lead the way. In the major fields which were devolved to the Welsh Assembly, Labour-led Governments for the past 14 years have failed. I will never forget one Labour parliamentary candidate who once said to me that I was too concerned as a Liberal about the voters: “Don’t worry about them”, he said. “We don’t worry about them. They’ll vote for us whatever we do”.

It is not surprising therefore that the Labour Government are seeking to avoid accountability. At the moment, they are refusing to hold a referendum which would implement the proposed income tax changes under Silk. “We must reform the Barnett formula first,” says Mr Carwyn Jones. I have looked up a speech I made in this House in 2001, in which I said that it is essential that a needs-based formula be devised, taking into account factors such as deprivation, population sparsity and the local environment. We campaigned as Liberals, and I know that Plaid Cymru campaigned for changes to the Barnett formula over the same period. While the Labour Government were in the heyday of their power, the noble Lord, Lord Barnett, expressed his embarrassment at having his name linked to the formula. The Labour Government did absolutely nothing. In putting it forward as a precondition, Mr Carwyn Jones can wait for ever before there will be changes.

We Liberal Democrats would have preferred to have had the flexibility of income tax powers without the Scottish lock-step model. Wales is not Scotland. The Silk report pointed out in appendix F that the latest transborder travel-to-work figures are at their highest in north-east Wales, with 34,500 people travelling from Flintshire and Wrexham into England to work and 16,000 travelling in the opposite direction each day. I can appreciate the Government’s view that the temptation to live in the country with the lowest tax rate might cause some upheavals in Wales that it would not cause in Scotland. Nevertheless, I regret that that flexibility has not occurred.

However, sharing the income tax base between Westminster and Cardiff Bay will significantly enhance the accountability of the National Assembly and the Welsh Government. Income tax contributes the greatest proportion of tax revenue in Wales and will provide a relatively stable revenue stream. Stamp duty, if properly used, could help to lower the cost of developing and buying houses, and we would hope that control over business rates would encourage business investment. In our submission to the Silk commission we asked for borrowing powers equivalent to those of the Scottish Parliament, specifically 10% of the capital budget, and we hope that that is what we will ultimately obtain.

These additional funds of capital and revenue must be wisely spent, and the record of Labour Government in Wales is so poor that a further priority must be to make sure—to adopt the analogy used by the noble Lord, Lord Anderson—that the village has a new head man and a governing council as soon as possible. I am sure we can get cross-party consensus on that.

--- Later in debate ---

[Lord Wigley (PC)]

My Lords, I join noble Lords in mourning the loss of the late Wyn, Lord Roberts, of whom I had an earlier opportunity to speak in the Chamber. I very much thank the noble Lord, Lord Bourne, for facilitating this short debate and also pay tribute to his work on the Silk commission and that of other commissioners, including Plaid Cymru’s Dr Eurfyl ap Gwilym and, particularly, Paul Silk himself.

I am sure that the noble Lord, Lord Bourne, would agree that among the most remarkable aspects of the Silk commission was that, first, unlike Scotland, it was drawn up with terms of reference to which all four parties in Wales signed up and, secondly, its first report secured the support of all commission members. I am sure that the noble Lord would confirm that such agreement was achieved by some give and take and that the report was presented as a balanced package, not one to be cherry-picked. I regret very much that the Government, driven as they are by the Scottish agenda, could not accept the package in its entirety.

I regret that for two substantive reasons. First, by insisting on a lock-step on income tax, the Government denied the Assembly the significant degree of policy flexibility it might have otherwise enjoyed, and with it the possibility of creating a far-reaching investment programme that could stimulate the Welsh economy. Goodness knows that we need that. Business rate flexibility and stamp duty land tax are certainly worth having but are not in themselves enough. Secondly, by acting in this way, the UK Government have let the Welsh Prime Minister off the hook. Carwyn Jones has waxed eloquent this week on how the Tories and their Lib Dem backers squandered the opportunity provided by Silk. It has been enough of an excuse for Mr Jones to step away from a referendum, for what is the point of having a referendum on income tax powers that are unusable?

Had the Silk report been adopted in its entirety, with all the parties represented on the commission on board, it would have been impossible for Labour or any other party to wriggle out of having a referendum. A yes vote could have been secured again, as happened in the 2011 referendum when all four parties were united. I pay tribute to the noble Lord, Lord Bourne, in that context. That yes vote would have started making Wales’s Government truly answerable to the people of Wales in having to justify their expenditure and stewardship of Welsh taxpayers’ money. I cannot understand the Government taking this course of action which at one stroke negates everything they purport to advocate in terms of democratic answerability in Wales. Has Alex Salmond’s shadow really got them on the run to that extent?

I also respectfully disagree with the noble Lord, Lord Thomas of Gresford, and do not join him in talking Wales down in terms of the National Health Service. Goodness knows that there are people working hard enough and with great commitment in the health service in Wales, and they deserve our thanks. Of course, some bad decisions have been made by the Welsh Government, as by the Westminster Government. The noble Lord quoted a highly unfortunate situation in the NHS in Wales this week. One of the worst blind alleys that the Assembly pursued with regard to the health service was the creation of 22 local health boards, but I suspect that the noble Lord’s party supported it in doing that. The truth is that Barnett underfunding deprived the Assembly of some £5 billion since its establishment, and health and education in Wales have been underfunded as a result.

[Lord Thomas of Gresford]

I am sorry to take up the noble Lord’s time, but is that not the point? As soon as the NHS and education are under attack, what do they blame? It is the Barnett formula for failing to provide funds. We need accountability in this.

[Lord Wigley]

Of course we need accountability. That is why we do not need the lock-step, so that we get the tax linked in. I agree with the noble Lord on that. The fact is that if there was adequate funding, we would not have had some of the cutbacks that have been necessary in the health service in Wales.

The questions I wish to put to the Minister are these. First, could an income tax-sharing model be adopted before reform of the Barnett formula? Secondly, will the borrowing powers set out in the draft Bill include the old WDA borrowing powers, or is that a separate amount? Thirdly, is the M4 relief road dependent on getting these borrowing powers? Fourthly, how much of the £500 million borrowing limit will be available before a referendum? Fifthly, does the revenue stream from the minor taxes—the land tax and the aggregate levy—constitute enough to support the £500 million borrowing capacity? Lastly, the draft measure says that a yes vote in a referendum would allow the Secretary of State to raise the borrowing limit, but raise it by how much?

If I may put one key question to the Labour Front Bench, as Carwyn Jones has said that he will not hold a referendum until the Barnett formula has been replaced or radically amended, will the Labour Party give a copper-bottomed commitment that if it forms the next Government at Westminster after the 2015 election, it will reform or scrap Barnett as a matter of urgency?

Wales: Cost of Living

Lord Thomas of Gresford Excerpts

Monday 2nd December 2013 Lords Chamber

[Lord Thomas of Gresford (LD)]

My Lords, I congratulate the Baroness, Lady Morgan, on obtaining this debate. I cannot congratulate her on her speech, however, which rather overstates the case. One would have thought, listening to it, that history began in 2010—the year when the Chief Secretary to the Treasury left a note saying that there was no money left. The noble Baroness took some populist swipes and pressed the right buttons about bankers and about a Cabinet full of millionaires who had had private education. I did not know that she was personally opposed to private education. She also talked about the poll tax—she was really going back in history there—being the equivalent of the bedroom tax. That is not, I suggest, the right way to approach the very serious problems that the people of Wales are facing.

A more objective view can be found in the Chief Medical Officer of Wales’s report for 2012-13. It said that there were three major economic issues facing Wales. First, there was long-term structural poverty and deprivation—not structural poverty and deprivation starting in 2010, I point out. Secondly, there was the economic downturn, which happened in 2008, I think, long before the coalition Government came into power. Thirdly, there was the impact of benefit reform, to which I shall refer in a moment.

On escaping poverty and deprivation, we have all been doing that in Wales for centuries. Most of us have benefited from the very good state education that we had in Wales. It is sad to see the state of education today in the hands of the Labour Government in Cardiff. Tomorrow, we will hear from the Programme for International Student Assessment, or PISA, whose report in 2009 about Welsh education was a disaster. It will probably be worse tomorrow and I would like to have had this debate tomorrow evening, when we have heard what it has to say. I have to declare an interest. I have 10 grandchildren who are either going through or about to go through the Welsh system and I have a great deal of interest in the way in which Welsh education performs. It is failed by the current Welsh Labour Government in Cardiff.

On health, equally, the Welsh Labour Government have failed in comparison with what is happening elsewhere in the United Kingdom. According to the Chief Medical Officer, £386 million per year is spent by NHS Wales on smoking. What are the Government in Cardiff doing about that? There is obesity and excessive alcohol, with £140 million going on that and £600 million on physical inactivity. These are problems that have been in the hands of the Welsh Labour Government—occasionally with other partners, I concede, but mainly in their hands—for a period of time and are costing a great deal of money.

As for the impact of benefit reforms, it is true that welfare benefits, according to the Chief Medical Officer, will be cut by 4.1% as opposed to 3.8% across the rest of the United Kingdom. However, she said it was possible that the welfare policies that have been adopted,

“might have positive impacts on health if they lead to more people moving into work”.

She also said:

“Negative impacts on health might … be offset … by the positive effects on health associated with employment”.

The purpose of that legislation—one of the drivers of welfare reform—is to make it profitable for people to go into work and escape welfare dependency, as much in Wales as anywhere else.

What I am concerned about in Cardiff at the moment is that we have given the Government the power to legislate and now they are producing framework Bills, such as a Social Services (Wales) Bill and an Education (Wales) Bill, with the policies not being spelt out. The policy is to come in regulations, which will be subject to a negative vote at a later date. That is not the way to go about legislation. Those policies should be fully discussed and open to amendment in Cardiff itself. I could go on at length. However, when it comes to accountability, how is it that the First Minister of Wales puts off a referendum for introducing tax powers which would make that Government accountable to the people of Wales, who in my view are being seriously let down?