Wales Bill

Lord Wigley Excerpts

Tuesday 22nd July 2014 Lords Chamber

[Lord Wigley (PC)]

My Lords, this is the third Wales Bill since the 1997 referendum. The second Silk report will no doubt require a fourth Bill and developments in Scotland, as we have just heard, may well trigger even further legislation. Indeed, I feel that the issues in the Bill are ones that I have lived with for most of my life. I was involved in the legislative processes in another place on the ill-fated Wales Bill 1977-78, as were a number of colleagues here today, on which the noble and learned Lord, Lord Morris of Aberavon, and my noble friend Lord Elystan-Morgan worked so very hard. Indeed, I was involved in the Wales Bill 1998, which became the basis of the National Assembly in the present settlement. Back in 1970, I also gave evidence to the Crowther commission, as it then was, which became the basis of the Kilbrandon report of 1973. I gave further evidence, as an elected Member of the National Assembly, to the Richard commission of 2003. That, of course, led to the 2006 Act, which will be amended by the Bill and was the basis of the 2011 referendum and the advanced settlement that we got subsequently. The issues and I go back a long way, and I have the scars to show for it.

I first want to thank, as an individual and on behalf of my party, Plaid Cymru, Paul Silk and his fellow commissioners for their hard work. I pay particular tribute not only to my colleague, Dr Eurfyl ap Gwilym, the Plaid Cymru representative on the Silk commission, but to the noble Lord, Lord Bourne, who, as the Conservative voice both on the commission and previously in the National Assembly, managed to bring his party to play a positive role in the new post-devolution Welsh politics.

The Silk commission’s efforts in coming to grips with an immensely complex subject—particularly in its first report, which is the basis for the Bill—deserve to be rewarded by the way we enact consequential legislation. Indeed, I believe that our starting point today should be to accept that the Silk commission worked very hard to reach a consensus involving much give and take, and that, as such, it presented a balanced report that should be accepted and taken forward as a package and not cherry-picked. I say that because all political parties had to compromise on their party programmes and a united, unanimous report was secured only on that basis. Naturally, my party, Plaid Cymru, would have liked to have gone very much further. We aspire to the maximum possible degree of independence for Wales within a framework of a united Europe with its free movement of people, goods and capital, which inevitably imposes some constraints on the degree of independence that any country has.

Unlike the Calman commission in Scotland, our Silk commission succeeded in getting all-party acceptance that there would have to be some compromise so as to get implemented at an early stage those changes that all parties saw as necessary in order to make the Assembly a more effective body and the Government of Wales more transparent and democratically answerable for their actions. That is why, even at this late stage in the Bill’s parliamentary journey, I urge that we look at whether we can implement the entirety of the Silk package. In that regard, I noted the point made by the noble Baroness, Lady Randerson.

Since the publication of the Bill, the Silk commission has brought forward its second report on the legislative powers to strengthen Wales, and in some ways it is difficult to differentiate between the two. Indeed, some have suggested that the reports are in the wrong order. An old saying that I found very apposite in the world of industry as much as in the world of government is that “form follows function”. The function of the National Assembly is dependent on the model of devolution—it would be somewhat different if Wales had a reserve-powers model such as that of Scotland and Northern Ireland—and inevitably that impacts on the transparency and accountability of the Assembly. The range of devolved portfolios will dictate the size of the budget, and the nature of those portfolios and the extent to which they lend themselves to policy variation in Wales compared with England will dictate the degree of budget flexibility that is needed. In addition, the degree of responsibility deemed appropriate for a Welsh Executive in largely non-legislative matters, such as economic stimulus management, will determine the balance between capital and revenue responsibilities.

I have deliberately tried to set my remarks in the context that I have for the very reason that we must formulate the financial powers needed to strengthen Wales with regard to the responsibilities of providing adequate enabling resources and ensuring proper answerability. In order to deliver the legislative, executive and administrative agenda that the Welsh Government will have as their responsibility, they need to be clear about the powers that they have. That of course is the agenda that the Welsh people expect to be arranged for their needs and expectations to be answered.

I believe that we shall have to make certain assumptions with regard to those non-financial matters as a basis on which we can reach meaningful conclusions regarding finance and the adequacy of the Bill. For example, the linkage between the budget and expenditure, and hence the resources needed, and the democratic need for the Government’s performance to be judged by the electorate requires both financial transparency and resource flexibility. I shall give a concrete example. If the NHS in England were privatised, as some politicians on the right advocate, and if the Welsh Government, having full legislative responsibility for the NHS in Wales, wanted to follow a different path, they would have to have a significantly different financial and fiscal freedom from the one they have at present for that to be a meaningful policy option.

I turn to some specific aspects of the Bill that will no doubt warrant our attention in Committee. In Part 1, I certainly welcome the removal of the restriction on dual candidacy and a return to the original settlement of the 1998 Act. It was, quite frankly, a piece of naked party-political jiggery-pokery by the Labour Government to have removed it, and they should be ashamed of themselves for having tinkered with the constitution for party-political advantage. I hope that we can have an assurance from the Labour Front Bench that never again will they resort to such unworthy action. If that assurance is not forthcoming, we should build into this Act a provision that any further change to the electoral system of the Assembly should be implemented at Westminster, if indeed it has to be done at Westminster, only if it carries a two-thirds endorsement by Assembly Members.

With regard to the Assembly’s election and membership, I am totally convinced that the Assembly cannot do an effective job with its new, enhanced powers since the 2011 referendum without a larger membership. That becomes an even greater requirement with the additional financial scrutiny that will emanate from the Bill. I believe that there need to be at least 100 Members to do an adequate job. Might I suggest that if we are not to have an STV model of election, which I favour, we should consider each of the current 40 Assembly constituencies having two Members for each seat, with one man and one woman elected in each, thereby largely overcoming the question of gender balance that has been a problem for some parties over the last few years? Primarily I believe that this is something that the Assembly itself might consider as any such initiative should come from Wales and not be imposed by Westminster. I hope that the Government might be amenable to giving the Assembly full powers over the electoral system.

I am, incidentally, aware that in the Commons Report stage, Labour proposed taking steps towards a reserve powers model, to which the noble Baroness, Lady Morgan, referred earlier, and I heartily endorse that. But inexplicably, it linked this to a delay in implementing Part 2 taxation powers, which I could not understand. I hope that when this matter comes to Committee we shall be able to consider the pressing need for Wales to have a Parliament based on the same reserve powers as underpins the Scottish Parliament and the Northern Ireland Assembly, without unnecessarily linking it to delaying the taxation powers.

With regard to the taxation powers in Part 2 of the Bill, they are very modest indeed—so much so that I personally had some doubt about whether they warranted a referendum. However, I accept that that was part of the Silk recommendation. In the spirit of accepting Silk as a package, and not cherry picking, I accept that that referendum may be necessary. But, for every small change in relation to the government of Wales, we cannot have referendum after referendum. The House of Commons is elected and this Chamber is appointed to do a job of work, and we have to take that responsibility. In that spirit I urge the Government to reconsider their rejection of the Silk proposal on tax rates being varied in each band, to which reference has already been made and signals given that we are moving in the right direction.

The Government’s insistence on having a straitjacket of lock-step provision in the Bill undermines, at a stroke, the flexibility of the Welsh Government to use the new tax-varying powers in a radical fashion. They could not, for example, reduce the top rate by 5p, say, to make Wales a more entrepreneurial-friendly place, at a modest cost in terms of forgone income without reducing the standard rate proportionately—a totally impossible and unsustainable action. The irony, as I have no doubt the government Front Bench are very much aware, is that in Scotland, where the Calman commission insisted, I believe, in having a lock-step model, the Government in their move towards a devo-max situation as part of buying off the yes vote in the Scottish referendum are now talking about scrapping the lock-step, as recommended by the Strathclyde commission, and indeed personally endorsed by the Prime Minister. I am grateful to the Minister for indicating that the Government will indeed look again at this, and there may be a possibility of doing something about it in Committee or on Report.

I welcome the provisions of new Section 116C to be inserted in the Wales Act, allowing new devolved taxes. Some work needs to be done in the Assembly to see how that can best be used. I shall now say a word about the workings of the borrowing powers, which appear in Clauses 20 and 21 of the Bill. I understand that until a further referendum is held the Assembly’s borrowing powers will be capped at £500 million, which frankly is chickenfeed, and totally inadequate to deal with Wales’s economic problems. This is insufficient even to fund the M4 improvements around Newport, which will cost more than £900 million.

Will the remainder of that capital have to be funded from the already truncated capital budget of the National Assembly, leaving virtually nothing for any other capital projects—hospitals, schools, roads, sea defences—needed around the rest of Wales? It seems, quite frankly, as if the Welsh Government’s hands are being tied by Westminster in order to deliver London’s objectives and priorities, not the balanced capital programme needed by Wales. The Assembly should have an accumulated borrowing capacity of £2 billion over and above the M4 costs and we should address that question in Committee.

I have dealt with what is included in the Bill but I cannot let it pass without noting what is not included. In its introduction, on page 3, the Silk report comments that:

“Consideration of the Holtham Commission’s proposals for funding reform in Wales … was excluded from our terms of reference. These issues are being taken forward through a separate bilateral process between the UK and Welsh Governments”.

That is the elephant which cannot speak its name in today’s debate but whose shadow makes a sham of pretending that this Bill deals with the central financial question facing the Welsh Government—that is, the persistent, chronic underfunding as a result of the mindless, myopic adherence to an outdated and discredited Barnett formula, which has left Wales, since 1999, with a cumulative shortfall of £6 billion in its finances. This has led to the underfunding of the NHS, schools and local government in Wales, and neither party of government has had the courage to put that right.

In recommendation 12, Silk stated that if the UK Government were to agree to devolve corporation tax to both Scotland and Northern Ireland, the same powers should be given to Wales. Will the Minister confirm that if corporation tax is indeed devolved to Scotland, it will also be devolved to Wales? If so, why is there no order-making mechanism within the Bill to avoid having to get yet further primary legislation to handle the matter?

The real inadequacy of the Bill will become glaringly obvious after Scotland’s independence referendum in September. If Scotland votes yes—as I and my party hope—the relationships of the residual United Kingdom will have to be fundamentally reassessed. Even if Scotland votes no, partly as a result of the blandishments offered by the parties in Scotland to head off a potential yes vote, those commitments will need to be incorporated into the election manifestos of the UK parties, otherwise we could well see a bitter backlash in Scotland, with perhaps 20 or 30 SNP MPs holding the balance in the new Parliament.

That has a significant implication for Wales and for the adequacy of this Bill. The Bill we are debating today may well be seen, by the time we get to Committee, as a vehicle that must grow into an enabling Act relevant to the post-referendum world we shall then inhabit. It is in that context that I support a Second Reading.

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[Lord Roberts of Llandudno (LD)]

My Lords, it is quite thrilling to hear the unanimity of those who have spoken, and our support for the Bill. We should show our appreciation of those who went before us and who fought on these issues, such as the noble Lord, Lord Prys-Davies, and the late Lord Richard Livsey, who were here for the last major debate on Welsh government. Perhaps we can send Gwilym Prys-Davies—he is still alive, you know—our regards at this time. There are others one cannot name.

I was going to spend a long time arguing that we should increase the number of Assembly Members from 60 to 80. I do not need to do that; the case has already been made. What we have to do now—and here I shall come into conflict with one of my colleagues—is to decide how we are going to reach that figure of 80. In Scotland, of course, we have the single transferable vote for local government. I have fought for this all my life. I do not know whether I would win the argument in this House, but certainly I might try it. At the moment, we have 40 constituencies, each electing one Member by first past the post. The remaining 20 are in five regions and, in order to get some proportionality, we have the sharing of the vote there, which seems to work quite fairly—as fairly as anything we could devise at present. One suggestion was that there should be two-Member constituencies. Let me give one or two examples.

The noble Lord, Lord Rowlands, of course, represented Merthyr Tydfil, which used to be a two-Member constituency. The Tories never stood a chance there. It was always Liberal, and elected Keir Hardie. It never gave the minor party any chance at all. It had gone, of course, by 1929. The only one I can cite at the moment is Blackburn. In 1929 Blackburn was a two-Member constituency. Both socialists were elected and they polled 37,000 and 35,000 votes, but the Liberal and the Conservative polled 35,000 and 34,500 votes. It was winner takes all. To have that sort of arrangement would not be democratic or representative at all. We get it in local government sometimes. We get two-member wards and three-member wards and it is usually the same party that takes all the seats. I do not think that that is going to be acceptable to this House or to the people of Wales.

[Lord Wigley]

When I spoke earlier noble Lords may recall that I, too, had a preference for STV as a system, but I put forward the idea of two Members to each constituency—in the context not of an 80-Member Assembly but of a larger Assembly where there would still be a list, a presence that would bring proportionality or at least something approaching it.

[Lord Roberts of Llandudno]

I very much look forward to having the debate when we come to that amendment in Committee. I am sure that noble Lords see the argument that simply having two-member wards or two-Member constituencies would deny us fair representation.

We come then to the question which has been debated here, which says that a candidate cannot stand for a constituency seat as well as for a list seat. Delighted I am—that is a good Welsh way of saying it—that we are going to make it legal for a Member to stand for a regional seat, a list seat, as well as for a constituency seat. I do not quite agree with what the noble Lord, Lord Rowlands, said, that we simply do that so that those who are defeated at one level are successful at another level. Candidates are generally chosen for their profile and how they are able to contribute to the work of the Assembly if elected. What is wrong with trying to enable your most outstanding candidates to be elected on a first past the post system or a regional list system? We want the best people in the Assembly, and that is made easier by this recognition of dual candidacy.

In Wales, most of us vote for five different authorities: Europe, Westminster, Cardiff, the unitary authority and our community council. Are we voting too often? I am not going to deny anybody, but could we not merge the votes for, say, the community council and Europe, so that we do not go to the polls five times when we could have just the same democratic influence by going less often? I would even approve of elected local health authorities. I do not suggest that they be elected on another day, but that they could be linked so that we can make the most of these election days.

I now turn to finance and how the funding of elections and of constituency campaigns needs to be looked at in Wales. On the membership of parties, I do not have figures for Wales alone, but only those for the United Kingdom. In 1990 the Conservative Party claimed a million members. In 2011 it had 130,000 members. Membership has crashed, and not only there. In 1990 Labour claimed 311,000 members and this year it claimed 193,000 members. The Liberal Democrats had 77,000 members and now we have 49,000 members.

Diminishing membership means that fewer people are able to have more influence than before. The mass membership has gone. I remember being invited to speak to a women’s afternoon meeting—it was not Liberal, it was Conservative—and 300 people were going to be there. We do not have that now. You would have had fundraising with Christmas fairs, whist drives and regular party branch meetings, which brought in the money. Who pays now for the expenses of our candidates at elections? Where does their party funding come from?

The coalition agreement has a statement in it which refers to,

“reforming party funding in order to remove big money from politics”.

We need a thorough review of party funds. I have here the names of the top donors for one quarter of 2014. I will not read those names but one contributed £1.5 million to the Conservative Party—in one quarter. Two others contributed £500,000 each to the Scottish National Party while the unions, of course, contributed very generously to the Labour Party. Now, he who pays the piper pipes the tune, so we should look at this. Especially in a Welsh Assembly, who pays and where is the influence?

The turnout in Welsh Assembly elections has never been 50%. In 1999 it was 46.4%, in 2003 38%, in 2007 43%, and in 2011 41%. The decreasing turnout over the past 50 years at all elections is a dangerous signal indeed because it means that with small branch and party memberships, and those people who are generous in their party contributions, an unhealthy influence is possible. I have presented a Voter Registration Bill, which I hope will be debated in the coming Session. In February 1974, 70% of 18 to 24 year-olds voted in the general election but, of the 5.6 million young people in the UK at present, only half are registered to vote and of that number only 24% are certain to vote. Why is that? It is because millions of citizens, especially young people, see politics as boring, out of touch, elitist, corrupt, complicated and unrepresentative. Such a small number of people are holding the reins of power now but it does not have to be that way. Our democracy can, and should, be something that everyone understands and has a stake in.

The Bill which I have presented is aimed especially at teenagers, encouraging them to register to vote and encouraging electoral registration staff to work with schools to ensure that every possible student is registered to vote. Northern Ireland already leads on this, where it is a schools initiative. As I will propose in the Bill, Wales needs this new way of registration to encourage all our young people, as well as everybody else who is eligible to vote, to cast their votes. The Welsh Assembly must belong to the people, not to a small number of them. It must be seen to be responsive to the people, not to small political parties or wealthy individuals. We have an awful lot to discuss on the coming Bill and I look forward very much to bringing these suggestions forward.

[Lord Howarth of Newport (Lab)]

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

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

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

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

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

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

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

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

those are budgets provided by the taxpayer—

“for furthering the aims of the party”.

She went on:

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

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

[Lord Wigley]

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

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[Baroness Randerson]

I am specifically making it clear that the Government do not have a position on the reserved powers model. As the Silk report recommended, this is something for manifesto positions from the different parties. However, my party is in favour of the reserved powers model. That does not make it a government position, and it certainly is not something that can be created now. However much one might wish to do so, we cannot write the kind of complex legislation needed for a reserved powers model of devolution for Wales. If we tried to do so at that speed, we would be in danger of ending up with second-rate legislation, which the people of Wales do not deserve.

I move on to the point made by the noble Lord, Lord Wigley, on corporation tax. I remind the House that the Silk commission said that if corporation tax were devolved to Scotland and Northern Ireland it should also be devolved to Wales. There are no current plans to devolve to Scotland and Northern Ireland. However, the Bill contains the power to devolve further taxes to Wales by order. I would like noble Lords to note that. The noble Lord, Lord Anderson, raised the same issue about the power to devolve further taxes. A good example would be the aggregates levy once the EU Commission has completed its investigations. That provision is in the Bill as it stands.

The noble Lord, Lord Howarth of Newport, and others, raised the issue of borrowing powers and why they are not higher. I should point out that there are two capital borrowing limits: the annual limit and the overall limit. The overall limit in Scotland is £2.2 billion, which is supported by around £5 billion of annual devolved tax revenue. Using the same ratio, the overall limit in Wales would have been only £100 million. I ask noble Lords to bear that in mind when they ask for Wales to be treated like Scotland. We accepted that £100 million was inadequate so we increased it to £500 million specifically to enable M4 improvements to be undertaken, although there are no restrictions in law on how that could be spent. Obviously this is a power in perpetuity which the Welsh Government could exert for other things.

[Lord Wigley]

I asked a specific question on that. If the cost of the M4 relief road around Newport is £930 million, or so, and the limit on the borrowing, prior to having a referendum that would enable more to be levered in, is £500 million, does the balance—the £438 million, or whatever the figure is—have to come out of the capital budget of the National Assembly, and does that mean that all the other projects that are being funded by that are lost?

[Baroness Randerson]

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