Wales Bill

Lord Wigley Excerpts

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

I do not buy the argument that this would impact adversely on Bristol Airport. Currently there are no long-haul flights from Bristol. Bigger planes, such as Boeing 747s, are not able to use the runway. The last direct flights across the Atlantic from Bristol to New York were scrapped six years ago. So a reduction in air passenger duty would help air passengers, support growth and jobs, and cut costs for business. I ask the Minister to consider these points when he makes his response.

[Lord Wigley (PC)]

My Lords, I am glad to follow the noble Baroness in addressing these questions. First, let me say how glad I was to see the Minister arriving in the Chamber. I was fearful that we might be losing all the last few months’ work if we stumbled at this last stage.

Before I address the amendment in my name, I would like to comment that everyone must be glad that progress is being made on the fiscal framework and that there has been some agreement, but only time will tell whether that agreement is adequate. One problem is that, over the past 17 or 18 years since the establishment of the National Assembly, there has been a shortfall of more than £5 billion due to the effect of the Barnett formula on the Assembly’s funding, and therefore we are starting from a position where we will have to work very hard indeed to make up that loss. Clearly, the formula now forthcoming may or may not work in the future, but it does nothing to recoup that loss. Also, a central question in relation to the capital programme, which I will talk about in a moment, is the availability of a revenue stream to fund the interest on capital borrowing, and I suspect that that has not been adequately dealt with within the framework.

Amendment 73, which was spoken to by the noble Baroness, Lady Morgan of Ely, seeks to raise the Welsh Government’s capital expenditure limits to £2 billion, in line with other devolved settlements. The arguments on this issue are well rehearsed. We know that, as in many other areas, the UK Government have failed to honour the wording of the Silk commission and have given Wales a settlement that is less than adequate when compared with those of the other devolved nations. Therefore, perhaps I may once again outline precisely what we seek in these amendments.

The independent Silk commission, on which the Minister sat, agreed that the Welsh Government should have borrowing powers comparable to those of their Scottish counterparts. As outlined by the noble Baroness, Lady Morgan, taking into account considerations relating to PFI, this would take us to around £2 billion. As noble Lords will know, the recently agreed fiscal framework, which sits alongside the Bill, is seen by some as making progress on this issue, but under the framework £1 billion will be the Welsh Government’s capital expenditure upper limit. The lead amendment in this group—government Amendment 72A—incorporates this figure into the Bill. However, it is difficult to see how that represents anything like adequate progress. The Welsh Government will be short-changed by £1 billion compared with what they should have, and Plaid Cymru Members, both in another place and in the Assembly—regard this as totally unacceptable.

Although the parsimony of the UK Government on this matter is staggering, I am afraid that some of the blame must be laid at the door of the Government of Wales. If the noble Baroness, Lady Morgan of Ely, who spoke to the amendment, really believes in what it says—that the limit should be £2 billion—why did her Labour colleagues in the Assembly settle on the figure in the fiscal framework? Surely we should be fighting for £2 billion from the Assembly end as well.

That said, I shall conclude my remarks on this amendment by highlighting some rather remarkable comments made by the Minister on Report. He urged us not to push an identical amendment to a vote on the basis that,

“we do not want to constrain the figure in case the discussions lead to it going higher than that”.—[Official Report, 7/11/16; col. 927.]

Was the Minister deliberately leading us down the garden path, or had he himself been led down that path by Treasury officials promising to write cheques which they knew they would never cash? Perhaps he knew that a higher figure was never going to be delivered as part of the fiscal framework—a carrot that in his heart he knew could not be delivered. If that was the case, it was somewhat reprehensible, although I might say out of character. If he himself had been misled into believing that the money was there, he has surely been put into a totally impossible position. Some explanation is needed and some Treasury heads should roll. However, if he was indeed right that such money was available but the Welsh Government made an inadequate case to secure it, then Wales needs to know. Whichever it was, it seems that Wales will not get the resources it needs to stimulate investment-led economic growth and, compared with Scotland, it is getting second-class treatment.

I now turn to Amendment 74, which stands in my name and concerns the apprenticeship levy. The amendment relates to the devolution of the funds generated through the apprenticeship levy and the way in which it will be implemented. It seeks complete transparency surrounding the levy and how it is rolled out in Wales by making separate provision for the levy in Wales in consultation with the Assembly. We debated this issue in Committee and, although I got the impression that the Minister recognised that there were some problems, particularly in cross-border circumstances, he does not appear to have brought forward any proposals to tackle the issue. The amendment seeks greater clarity regarding the implementation of the levy in Wales and how the Government intend to work with the Assembly to ensure that this tax, which straddles not only national boundaries, but also both devolved and non-devolved areas of policy, works in practice. Greater clarity is essential so that the levy works effectively in both countries to provide high-quality, effective apprenticeships.

I am grateful to the noble Lord, Lord Bourne, for his letter, which he sent to all noble Lords on 14 November, attempting to shed some light on the Treasury’s intentions. This confirmed that the agreement would,

“provide the devolved Administrations with a population share of the Office for Budget Responsibility’s latest apprenticeship levy forecast”,

meaning that the Welsh Government will receive £128 million in 2017-18, £133 million in 2018-19 and £138 million in 2019-20.

“Beyond 2019-20, once the levy is embedded, the normal operation of the Barnett Formula should provide a similar outcome”.

It went on to say that the Welsh Government would then,

“decide how to allocate this funding to their devolved responsibilities”.

I thank the noble Lord for this note confirming the Treasury’s intentions, although this has left it rather late for the Assembly to consult widely and to formulate an apprenticeship policy in tandem with the commencement of the charges being imposed on organisations when it comes into force in April.

However, in the previous debate, the noble Lord, Lord Bourne, when questioned regarding the Barnettisation of the levy to Wales, conceded that he was,

“not sure that Barnett would present the right answer”.—[Official Report, 7/11/16; col. 904.]

If the intention of the levy is for companies to be able to “get out” what they “put in”, then this should have been communicated from the start. Now we are left in a position where organisations in Wales are waiting for the Welsh Government to play catch-up and announce how they intend to allocate their revenue in a race against time before April. Due to this lack of communication, several organisations in Wales which will be eligible to pay the levy are still in doubt as to whether or how they will benefit from the levy. There is a danger that some organisations may wish to relocate their training operations over the border to England, where they may have greater certainty and where they will be more certain of securing direct benefit from the levy that they pay.

I acknowledge that some of the blame lies at the other end of the M4, with Ministers in the Welsh Government dragging their feet as to how they intend to use the funds. In a letter to the Assembly’s chair of the Economy, Infrastructure and Skills Committee in November 2016, the Welsh Retail Consortium expressed concern that,

“Levy-payers in Wales will not have any opportunity to see a direct return from their contribution to the Apprenticeship Levy”.

The consortium contrasts the situation in Wales with that in Scotland, where the Scottish Government have consulted extensively with stakeholders, whereas the Welsh Government have given very few assurances. It is clear that the UK Government are introducing legislation that has been England-centric in its planning and implementation and as the noble Lord, Lord Rowlands, eloquently put it during the last debate,

“This levy has added confusion and uncertainty, and sadly is a terrible example of a non-consultation with devolved Administrations on issues that are fundamental to such Administrations”.—[Official Report, 7/11/16; col. 903.]

I hope that our experience with this levy will serve as a salutary lesson about the need to formulate clear and distinct devolution, where it is transparently clear as to where responsibility lies and not to be fudged, as in this instance. This half-devolved, half-reserved policy is an example of how the UK Government should not conduct their business in future.

Finally, I turn briefly to Amendment 80 on air passenger duty. I support Amendment 80, which is tabled in my name and the names of the noble Baroness, Lady Randerson—I am not sure whether she will be moving it—the noble Lord, Lord Rowe-Beddoe, who as I understand is indisposed and unable to take part in this debate which is so close to his heart, and the noble Baroness, Lady Finlay, who I am glad is here with me to support it. On the third day in Committee, we had a vigorous debate on this issue, in which an amendment previously tabled by my party colleagues in the other place was moved by the noble Lord, Lord Rowe-Beddoe. I am glad to see that he has put his name to this slightly narrower amendment. I say narrower because, whereas the previously tabled amendment on APD sought to devolve the whole tax, this amendment, as the noble Baroness, Lady Morgan, stated, would devolve powers over air passenger duty only for long-haul flights. Although I would like to see power over the whole tax devolved, as is the case in Scotland, I can appreciate that this narrower form of devolution for APD was the recommendation of the Silk commission.

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If we do not receive assurances on this issue from the Minister, I advise him that we will be moving that amendment to a vote. I respectfully ask him to reconsider his attitude towards all the amendments that we are proposing but towards this one in particular to avoid a constitutional punch-up—something that we are all anxious to avoid.

[Lord Wigley]

My Lords, we are again dealing with a very disparate group of amendments. Amendments 76 and 77, which stand in my name, seek to ensure that the National Assembly can continue to legislate on ancillary matters. My amendments have a similar objective to that of the amendments tabled by the noble Baroness, Lady Morgan of Ely, about which she has just spoken and which I certainly support. They are based on amendments recommended by the National Assembly Llywydd, or Presiding Officer, Elin Jones. In Committee similar amendments were tabled and forcefully supported by the former Assembly Llywydd, my noble friend Lord Elis-Thomas.

This is undoubtedly a hugely complex, intricate and fundamentally confusing area of legislation. It is so confusing that, as was outlined earlier, we have seen a whole range of answers from a variety of Government Ministers on the issue. In the Commons, my colleagues were initially told that including a provision to legislate in an ancillary fashion would,

“drive a coach and horses through the key principle underpinning the new model”.—[Official Report, Commons, Wales Bill Committee, 11/7/16; col. 87.]

Later they were told that their amendments were simply not needed as they were already provided for.

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[Lord Bourne of Aberystwyth]

My Lords, I thank all noble Lords who participated in the discussion on these amendments. I will begin with Amendments 75 to 77 and 79, which seek to broaden the circumstances in which the Assembly could legislate in relation to reserved matters. I will first deal with an issue that was raised by the noble Lord, Lord Wigley, concerning the phrase,

“ancillary to a provision of any Act”.

I took him to mean that this was not provided for in the Bill. It is in fact expressly provided for in Clause 3, in subsections (3)(a) and (b) of new Section 108A. It says,

“subsection (2)(b) does not apply to a provision that —

(a) is ancillary to a provision of any Act of the Assembly or Assembly Measure or to a devolved provision of an Act of Parliament, and

(b) has no greater effect otherwise than in relation to Wales, or in relation to functions exercisable otherwise than in relation to Wales, than is necessary to give effect to the purpose of that provision”.

So there is express provision in relation to “ancillary to” and how that would operate, and I hope he finds that of some comfort.

[Lord Wigley]

I am grateful to the Minister. He will see that my amendment in fact applies to subsection (2)(c) of new Section 108A, in Clause 3, and therefore extends the provision.