(7 years, 10 months ago)
Lords ChamberMy Lords, I listened with great interest to the rationale given by the Minister. I will need to read it again in Hansard to comprehend it fully, but I am sure that it does what he hopes it does.
My Amendment 108 was tabled following concerns expressed to us by the Welsh Language Commissioner, Meri Huws, regarding the Bill’s potential effect on the National Assembly’s power to legislate on matters pertaining to the Welsh language. It was raised in Committee, but I am concerned that there appears to be a lack of appreciation of the points put to us by the commissioner, and which have been addressed by the amendments put forward by my colleagues in Plaid Cymru. The commissioner herself is frustrated that the Government do not seem to have engaged with the substance of the case, which she has made to them as well as to us.
The possible effect of Schedule 2 to the Bill is that, when the National Assembly wishes to legislate for the Welsh language, it will require the consent of the relevant UK Minister to confer, impose, modify or remove within that legislation the Welsh language functions of Ministers of the Crown, government departments and other reserved authorities. Under the current settlement, ministerial consent is required only when legislating to impose Welsh language functions on Ministers of the Crown. The ministerial consent provisions of the Wales Bill in relation to the Welsh language apply to a wider range of persons than is currently the case. The new legislation is therefore more restrictive on the Assembly’s powers than is the status quo and this represents a retrograde step.
Let us consider a practical example. The Welsh Language Commissioner is already engaged in the statutory processes that would result in placing a duty on bodies such as Her Majesty’s Revenue & Customs, the Crown Prosecution Service, Ofcom and the BBC to adopt Welsh language standards. This amendment removes the requirement for ministerial consent for Acts of the Assembly affecting functions of reserved authorities, public authorities and Ministers in circumstances where the Act of the Assembly relates to a Welsh language function. I am sure that the House will agree that such a provision is fair and reasonable, given that the Welsh language is quintessentially a devolved issue. Allowing Ministers and public authorities based outside Wales to second-guess National Assembly policy on the Welsh language in Wales, a policy area on which they have little if any informed opinion, is a formula for acrimony and dispute and would reopen language tensions which have abated to a significant extent over recent years.
In the House of Commons debate on the Bill, the Government claimed to offer some clarity and reassurance on the issue by saying that there is nothing in the Bill which affects the Welsh language retrospectively, and that of course is true. However, the Minister went on to confirm that if a future Welsh language measure were to be proposed, it would have the effect which we have pinpointed. Consent would be required to add new public authorities other than Wales public authorities. It would therefore affect any future Welsh language legislation applicable to those areas. The Minister’s words offered no reassurance or indeed any justification as to why this Bill should include such a retrograde step.
A briefing paper produced by the National Assembly for Wales research service confirms our fears and outlines that, under the Bill as it currently stands, there will be a loss of legislative power relating to the Welsh Language (Wales) Measure 2011. My colleagues in the National Assembly are furious about this, and it is not only Plaid Cymru AMs who feel strongly about the matter. I shall quote from that briefing paper: “Part 4 of the Welsh language measure allows Welsh language standards to be imposed upon public bodies. Some of the bodies captured by Part 4 would be reserved authorities under the Wales Bill. This means that UK Government consent would be needed before Welsh language standards could be imposed upon them”. There is a consensus that this is yet another blatant rollback and a significant reduction in the ability of the National Assembly for Wales to be able to legislate on its own language—a subject matter that is, for very obvious reasons, devolved.
Perhaps I may say in conclusion that on item after item that we have raised today, including the industrial relations amendment moved earlier by the noble Lord, Lord Hain, and lost in a tied vote, the Government have not been willing to move one inch to reduce the powers rollback being instituted by this Bill. The Bill started its passage with a lot of good will, in the belief that the Government would seek to find common ground. Failure to do so has led to a growing bitterness across the parties, which I greatly regret. I urge the Minister to reconsider the Government’s position even at this late stage and to rid the Bill of this devolution rollback and to accept our amendment today, even if they need to amend it themselves when the Bill returns to the Commons.
My Lords, my Amendment 109 provides for the transfer of all functions currently exercisable by Ministers of the Crown—UK Government Ministers—in relation to areas which are within the devolved legislative competence of the Welsh Government to be transferred to Welsh Government Ministers. Let me start by saying that, given the Government’s intention of producing a Bill that will provide clarity and coherence to the Welsh devolution settlement, it is difficult to understand why such a simple provision as the alignment of executive and legislative competence has not been included.
In providing evidence to the Silk commission, the Welsh Government made clear that a move to a reserved powers model should be accompanied by a blanket transfer of all executive functions within the devolved areas. The Silk commission agreed and recommended:
“In order to reduce complexity and increase clarity, we believe that a future Government of Wales Act should include a general transfer to the Welsh Ministers of Minister of Crown functions in devolved … areas”.
I thank the Minister for writing to me and setting out his understanding of the situation and for clarifying the three categories of executive functions. I will start with the area about which I am most concerned: the pre-commencement functions.
(7 years, 11 months ago)
Lords ChamberMy Lords, I have tabled Amendment 2 relating to the establishment of a justice in Wales commission. I am very pleased to hear that there has been a degree of movement by the Government on this matter. We emphasised in Committee that we were largely dissatisfied, as I think are the Welsh Government, with attempts by the UK Government to address the fact that over time there will be this increasing disparity between English and Welsh laws, albeit they will both still be dealt with under the single England and Wales jurisdiction.
We have heard about this working group and I am glad that we have had a letter to inform us of the Government’s suggestions. We have not had as much time as we would have liked to deliberate on those, but I am pleased that the Government have recognised the need for some kind of ongoing committee or representation to make sure that they are constantly taking the temperature of the changes that will be happening. We made it clear that we were unhappy with this working group; we did not think it had been thought through in agreement with the Welsh Government but had been imposed on the Welsh Government, who certainly did not feel that they necessarily needed to respect any outcomes of it. That is why we are pleased to see the move to a more equitable system in which the Welsh Government will be respected.
Whether the committee outlined by the Minister goes far enough is questionable. We wanted a commission rather than a committee, but I am not going to nit-pick on that point; it is more important to look at the purpose of this group. I am glad that the Minister recognises that there will be, and is already, a distinct legal identity to Welsh laws but a number of points need to be addressed in relation to this committee. The noble Lord, Lord Elis-Thomas, just made the point that it needs to be seen to be more independent—equidistant from the UK and Welsh Governments. We have moved from the Ministry of Justice having the chairmanship to the idea that it might be somebody from the Cabinet Office but, given that it could be chaired by a representative from the UK Government, we wonder whether it would be better to have a more independent representative chairing the committee.
However, what is more important to me is the need to be clear that the people on the committee should be senior individuals, with the independence and expertise required to carry weight with both Governments. In that sense, it is crucial that both Governments are involved in making sure that they can agree on its membership. Can the Minister give us a commitment today that that will be respected—that there will be a joint agreement on who those experts will be? I should like it to be absolutely clear that this will be an ongoing group, because the body of Welsh law is likely to grow over time. It should not be a task-and-finish group; it needs to be ongoing. I am anxious to hear the terms of reference for this group. Can the Minister give us some indication of them? Would they also be agreed with the Government of Wales? If we are not to get an independent chair, those terms of reference need to be agreed by both Governments.
I hope the Minister will listen to those few requests on this issue. I am very pleased to see that he has come a long way towards us on it. A few tiny paces further would be very welcome but there have been a number of changes, as he suggested in his opening statement. On the new definition of Welsh law and in other areas, the Government have once again kindly listened to the changes that need to be made to the Bill. I thank the Minister for that.
My Lords, I had intended to speak in support of the noble Baroness, Lady Morgan of Ely, on her Amendment 2, but I am not sure whether she will now pursue Amendment 2 or seek to find a common way forward with the Minister. I will therefore truncate some of my comments on Amendment 2, but I also have Amendment 3 standing in my name in this group.
None the less, will the Minister confirm the permanent nature of the committee he has in mind? The noble Baroness raised that point herself. The difference between a statutory provision and an ad hoc provision is that the latter can easily run like water into the sand and disappear over time. A statutory commission not only would have the permanence that statute gives it but is also likely to have its terms of reference fairly clearly defined in an open way that people can respond to. A far greater degree of attention would also be given to drawing up the body’s terms of reference when it is set up. There is therefore a strong case for it to be a statutory body. But if it is not to be, I would certainly be interested in knowing what safeguards the Minister proposes to ensure that this is not something that is granted now but then disappears. As we know, and as I think the Minister accepts, there will be an evolving context for Welsh law and there will occasionally need to be adjustments to respond to it.
My Lords, I shall speak briefly to Amendment 14 and the other amendments in the group which have been tabled by the noble Baroness, Lady Morgan of Ely, seeking to devolve the trust ports to the National Assembly for Wales. I have added my name to Amendments 14 to 22.
The noble Baroness’s amendments were debated at the previous stage of the Bill, and I would like to remind the House of a point on which we were all agreed: the fact that Milford Haven is of strategic significance. It is unique in that it has a deep-water facility and handles 62% of all our liquefied natural gas, and as such it is of economic importance to Pembrokeshire. It was included in the Silk report and the St David’s Day agreement. To my mind, the reasoning behind this reservation is totally unclear. On the previous occasion, the Minister implied that the Government were unwilling to compromise on this matter, stating that reserving Milford Haven was an essential part of the Bill. He went on to assure noble Lords that he would take another look at the arguments set out and report back on his conclusions. I look forward to hearing them.
I want to reiterate that I am in full agreement that Milford Haven should be devolved. There is, however, one deeply troubling comment that I wish to raise again, and that is that Milford Haven trust port was at one stage being suggested by the current First Minister of Wales as a base for the UK nuclear fleet. He went on to say that the Government are not considering that option, but using the hosting of Trident as a way to emphasise the strategic significance of the port immediately rang alarm bells. Devolved or reserved, Trident is not welcome in Wales, and I urge both the Government and the Opposition to put on the record today that they do not intend to acquire powers in order to justify locating it there. However, I am very much in agreement with the main points made by the noble Baroness, Lady Morgan, in Committee. I beg to move.
My Lords, I shall speak to Amendments 14 to 22 in my name and that of the noble Lord, Lord Wigley, and to Amendments 23 to 26 in my name, on the devolution of ports to Wales. The difference between my amendments and the Government’s position is that I believe that all ports in Wales should be devolved. The Bill as currently drafted does not conform with the recommendation of the Silk commission on the devolution of ports to Wales, as the noble Lord, Lord Wigley, has just emphasised.
To be fair, the Bill allows the Assembly to legislate on ports and harbours, which is a welcome move, but there remains this category of reserved trust ports on which the Assembly cannot legislate and over which Welsh Ministers cannot exercise any powers. That category seems to be arbitrarily defined by a certain turnover in relation to ports. In fact, only one port in Wales falls within the category, and that is Milford Haven in Pembrokeshire. It strikes me as very odd that the UK Government are seeking to control this one particular port.
So far, the justification given is that Milford Haven is a strategic energy port because it handles 63% of all the liquefied natural gas that comes through UK ports. As I mentioned in Committee, this justification is particularly odd as the UK Government made no attempt to cite energy security as a policy driver for investment in Milford Haven to support the sale of the Murco refinery in 2014. Equally strange is the fact that the UK Government did not seek to control the trust port of Aberdeen, which has significant strategic energy value due to the importance of North Sea oil to the United Kingdom. There are definite double standards in this. In Scotland, all ports and harbours are devolved, while Wales is once again being treated as a second-class country.
I would also argue that devolving powers over the trust port at Milford Haven is incredibly important for the economic development of the area, and it should be within the power of the Assembly to help promote growth in Pembrokeshire. It is the Assembly which has responsibility for economic development.
Some powerful points were made in Committee by noble Lords, including one by the noble Lord, Lord Crickhowell, on the issue of safety at the port. Indeed, the very fact that so much fuel comes through the port makes safeguarding an essential issue. The emergency services, both ambulance and fire, are already devolved. I want noble Lords to recall the “Sea Empress” oil tanker, which in 1996 ran aground just outside the port of Milford Haven. Protecting our environment is equally as important as the safety issues, as is the policing of the legislation for both safety and the environment at the port. In order to have a truly holistic response to accidents, whether on safety or environmental grounds, it should be acknowledged that one umbrella of responsibility makes more sense.
Noble Lords can imagine that, if an accident such as that involving the “Sea Empress” happened today, there would be a great deal of passing the buck between the UK Government and their accountable body, the port authority, and the Welsh Government, who are responsible for environment and safety. This was not an issue in 1996 because the Assembly did not exist. I am always concerned that, when there is not an absolutely clear line of responsibility, where does the buck stop? In a case like that of the “Sea Empress”, noble Lords can imagine how the bodies would pass the responsibility for it between each other for years.
The interrelated issues of the economy, the environment and safety, together with the interaction of local communities and the local authority, all need to be co-ordinated. Surely it would be easier and more effective to co-ordinate them at the Wales level. I hope that the Minister will reconsider this point and allow the port at Milford Haven to come under the control of the Welsh Assembly, as recommended by the Silk commission.
(8 years ago)
Lords ChamberMy Lords, to me this is one of the key clauses in the whole Bill. I have made no secret of my lack of enthusiasm for the way the Bill has been written, but we are now living in very difficult financial times. The IFS has claimed that there will be a 3.2% cut, in real terms, in the Welsh budget over the next three years. We have little confidence that the UK Government are going to make up the losses that Wales will face as a result of Brexit. The IFS has said that if they do not make up the losses, that will lead to a doubling of those cuts if EU aid is not replaced after Brexit. I am aware that there has been a promise until 2020, but nothing beyond that.
The devolution of tax powers through the Wales Act 2014 will also enable the Welsh Government to borrow in order to invest in capital infrastructure. That will benefit the economy and communities across Wales. The current level of capital borrowing permitted to the Welsh Government is £500 million. That is based on the devolution of two fairly minor taxes: stamp duty land tax and landfill tax. In the Command Paper published alongside the Wales Bill in March 2014, the UK Government committed to reviewing the level of capital borrowing available to Wales if income tax is partially devolved. This Wales Bill will result in the transfer of an additional £2 billion in tax revenue to the Welsh Government, and so will significantly increase the size of the independent revenue stream available to the Welsh Government. In line with the commitment given in 2014, the Bill provides an opportunity to give Welsh Ministers a more meaningful degree of borrowing power to reflect the significant increase in devolved tax revenues under their control.
The Silk commission, of which the noble Lord, Lord Bourne, was a member, recommended that the Welsh Government’s capital borrowing limit should be at least proportionate to the limit agreed for Scotland, taking into consideration the relative lack of exposure to PFI in Wales. With comparable devolved tax powers, the UK Government agreed a capital borrowing limit of £2.2 billion in the Scotland Act 2012. In line with the recommendation from the Silk commission, a capital borrowing limit of £2 billion would therefore be proportionate to that agreed for the Scottish Government, after taking into account the Welsh Government’s lower exposure to PFI. The UK Government’s position that a limit of £500 million is appropriate, as set out in the Government of Wales Act, is contradictory to the approach taken for the Scottish Government in the Scotland Act. At a time when there are significant economic uncertainties, the ability to bring forward additional capital investment would provide a much needed economic stimulus to Wales. With a capital borrowing limit of £2 billion, the Welsh Government would have the fiscal tools available to support the level of investment needed in Wales.
The Welsh Government and Assembly are anxious to grow up, but it is as if the UK Government still want to treat them like children, telling them how much money they can spend and that they are allowed to borrow only if they tell “daddy” what they are going to spend the money on. An increase in the Welsh Government’s borrowing capacity is absolutely critical, and I for one would find it very difficult to support the Bill without that increase. We understand that this will form part of the discussions on the financial framework, but we strongly recommend that both the Welsh Government and the UK Government come to an agreement on this critical area. I ask the Minister to give a commitment that there will be a revision of the amount that is currently in the Government of Wales Act.
My Lords, I will speak briefly to Amendment 24 moved by the noble Baroness, Lady Morgan of Ely, which seeks to raise the limit on capital expenditure lending from £500 million to £2 billion. We touched on this issue in our debate on the previous group of amendments.
In the economic climate we find ourselves today, with further uncertainties ahead of us, it is more necessary than ever to have available to the Welsh Government a facility to boost jobs and stimulate growth by way of capital investment—in particular, in capital expenditure on infrastructure projects. Many expect the Chancellor to reflect that sentiment in his Autumn Statement later this month. The Bill imposes on capital borrowing the disappointing limit of only £500 million, which is not enough even to pay for the Welsh Government’s M4 relief road scheme—unless they were to adopt a more sensible route than that currently being advocated.
(8 years ago)
Lords ChamberMy Lords, the amendment stands in my name and that of the noble Lord, Lord Elis-Thomas. As your Lordships can well imagine, it is a probing amendment which, depending on the response that we receive in this short debate, may escalate into something more substantial. The Bill reads:
“But it is recognised that the Parliament of the United Kingdom will not normally legislate with regard to devolved matters without the consent of the Assembly”.
So what does “normally” really mean?
I have searched through the Bill and have failed to find any definition. I am not aware that the term is so commonly used in other legislation that there is a generally accepted meaning as far as use in legislation is concerned. In an attempt to seek clarification, my colleagues in the other place contacted the House of Commons Library, which confirmed that there is no legal status for “normally”. In this instance, it is inherently vague and asking for trouble, because it leaves every interpretation open to the courts—at least potentially so.
I am aware that questions on this matter arose also in the Commons and that the only response which Ministers were able to give was:
“The ‘not normally’ element of both the convention and clause”—
in relation to legislative consent—
“is essential as it acknowledges parliamentary sovereignty”.—[Official Report, Commons, 5/7/16; col. 784.]
Following a further check with the Library, it confirmed that every Act which requires the assent of the Assembly already contains a clause that confirms parliamentary sovereignty. Including “normally” here achieves nothing but confusion. That is simply unsatisfactory. We cannot make a law on such a basis. “Normal” is an immensely subjective term. What is deemed normal by one person may be regarded as highly abnormal by another.
Noble Lords may be aware of my work in the field of learning disabilities. At one time, people with such disabilities were referred to as “mentally abnormal” or “educationally abnormal”. That carried a huge stigma and was rightly consigned to the dustbin of history. The concept of normality is loaded with preconceptions and it should never be enshrined in law, certainly not without a very tight definition.
The word “normally” is a Trojan horse at the heart of this legislation. It is totally at the whim of Ministers at Westminster as to what it means. It enables them to use this loophole exactly as they might wish. It would have been more honest to write into the Bill that a Westminster Minister may intervene just when and how he or she wishes on matters falling into this category of Assembly powers.
This is just not good enough. I ask for the support of the House in removing the term if the Government cannot bring forward an acceptable term or some believable explanation for its existence in the Bill. I beg to move.
My Lords, I shall speak to Amendments 7 and 8. These amendments are designed to clarify the circumstances in which the National Assembly’s legislative consent is required for parliamentary Bills. As drafted—as the noble Lord, Lord Wigley, has suggested—the Bill provides that Parliament will not “normally” legislate with regard to devolved matters without the Assembly’s consent. He has just pointed out the difficulties in the definition of “normally”, but neither is there any definition of “devolved matters”. Indeed, elsewhere, the Bill speaks of “reserved matters” or matters that are “not reserved”. It does not use the language of “devolved matters” at all.
This provision closely follows an equivalent in the Scotland Act 2016. Your Lordships might recall that the equivalent provision in the Bill leading to that Act was the subject of rather anxious debate. The concern was that the provision was incomplete in specifying when the Scottish Parliament’s consent was required for UK parliamentary legislation. The provision had been included, following a recommendation from the Smith commission that the Sewel convention be given statutory underpinning. Unfortunately, the Government, in implementing that recommendation, gave the narrowest possible interpretation of the convention in writing it into the Bill.
While it is true that, as originally formulated, the convention proposed that a devolved legislature’s consent was required only in respect of a provision within its devolved legislative competence, it soon came to be accepted that consent should also be required if a parliamentary Bill proposed a modification of that very competence. I will simplify this: if the UK Government wanted to bring in a law on an issue where the Assembly already had the power to legislate—so on agriculture or education—the understanding is that that would not be possible without the Assembly’s agreement. However, if the UK Government proposed to change the Assembly’s powers to legislate, it is not clear that that Assembly agreement would be necessary.
Demonstrating that this was not a matter of controversy, the Government have repeatedly said—and the Minister himself has said on this Bill—that a Bill that radically modified the National Assembly’s legislative competence could not be passed without the Assembly’s formal consent, even though that might not appear obvious from the language of devolved matters. This issue is highlighted in the report on this Bill by the Constitution Committee of this House:
“There were important differences between the Sewel Convention as referred to in the Bill and the Sewel Convention as understood in practice. The Bill framed the Convention in terms narrower than those in which it is usually understood, by failing to refer to that limb of the Convention that is concerned with UK legislation that adjusts the scope of devolved competence”.
It should not be a matter of dispute between the UK and Welsh Governments. The difficulty is that, although the two Governments agree on the circumstances in which the Assembly’s consent is required for parliamentary Bills, the Bill does not reflect that common understanding. The purpose of the amendment, therefore, is simply to define what is meant by “devolved matters”. In so doing, it sets out the agreed circumstances in which the Assembly’s legislative consent is required for parliamentary Bills. Those circumstances importantly include the situation of the present Bill, which modifies the Assembly’s legislative competence.
This is quite a useful clarification that could be achieved without raising any new issues of principle that might be of concern to the Government. I hope at least that the Minister will be able to reaffirm that when a parliamentary Bill comes forward with proposals for modifying a devolved legislative competence, such a Bill—as he has promised with this Bill—can proceed only with the relevant legislature’s formal consent.
(8 years, 7 months ago)
Lords ChamberMy Lords, to many, it may seem that we do not need to debate the issue of the disapplication of this Bill to public services in Wales because we have gained those valuable concessions from the Government, particularly on facility time and check-off. I thank the Minster very much for listening to us and heeding our warnings and advice on that very important issue. However, it is important to stress a principle here, and that is what I want to discuss. We think that the Government have overstepped the mark on a matter of principle in that they should respect the devolution settlement of the UK. They tried to impose these measures on Wales without having the right or the powers to do so. We would just like to give a warning today not to try to overstep that mark again. We think that they were wrong to do it; it was a power grab and a mistake.
The Welsh Government, supported by a massive majority in the Senedd, have argued that public services are devolved and that their organisation should therefore be managed by Wales. By contrast, the UK Tory Government argued that employment is a reserved matter and is therefore their call. The situation in Scotland is different as it does not have a reserved model of government but a conferred one and the lines are more blurred in terms of who has the powers.
Today, the Labour Party launched its manifesto for the Assembly elections in Wales. It clearly states that,
“we will repeal sections of the UK Government’s regressive Trade Union legislation in devolved areas”.
It is there in black and white. Had these issues been pursued, the Welsh Government would have taken steps to overturn a measure which they believe is in their remit.
I am sure that noble Lords noted that I was very restrained in Committee and did not—for fear of further embarrassing the Government—refer to the leaked letter which came into our hands. In that letter—I was quite good then but the game is over now, so I can refer to it—the matter of whether the UK Government had the ability to legislate in this area in relation to Wales was discussed. I remind the Minister that the letter said that, according to advice from First Treasury Counsel, the Government have a,
“weak case in relation to Wales”.
The Government had a weak case and it is still a weak case. I hope they will respect their own policies in relation to devolution. In the draft Wales Bill, written by this Government, it is stated that,
“it is recognised that the Parliament of the United Kingdom will not normally legislate with regard to devolved matters without the consent of the Assembly”.
I hope they will heed their own words and respect the devolution settlement for Wales.
My Lords, I added my name to this amendment and I am glad to associate myself with almost everything the noble Baroness, Lady Morgan, said. I shall make an exception for the Labour manifesto, which has at long last appeared, and I contrast its rather thin guise with the 190 pages that Plaid Cymru has put forward—be that as it may. However, I welcome the progress that has been made in recent days, and particularly this afternoon, with regard to the Government’s movement on these important matters. I hope it is an indication of a more positive approach to these issues and an avoidance of the unnecessary involvement of legislation in matters that should not have legislation.
Turning to the amendment, clearly the Government of Wales have relationships with employees in Wales directly, through their own responsibilities, and indirectly, with regard to such bodies as the health authorities and the local authorities in Wales. We have a saying in Wales: you can lead the workforce through hell and high water but once you start driving them, woe betide. There is a different industrial climate and it is a climate that begs a co-operative approach, as opposed to a top-down approach. Because of that difference, it is very important that the legislature at Westminster does not involve itself unless it is really necessary—and I cannot see why it would be necessary in such matters.
It would be good if the Minister could indicate from the Dispatch Box today that the Government take this on board and are particularly sensitive to the questions that have arisen from the disputes between Westminster and the National Assembly—between the Government of Wales and the Government at Westminster—over the interpretation of legislation. The last thing we want is for that sort of dispute to lead to difficulties in working between the workforces and the Government.
In concluding, I draw the Minister’s attention to the fact that we do not have a strike by junior doctors in Wales because there is an understanding between the employer and the doctors. It is an approach that I commend to Westminster and I urge the Minister to take note of this amendment and its implications.
(10 years ago)
Lords ChamberMy Lords, it is getting late, but I want to move this amendment, in which we seek to future-proof the legislation before us. It is clear that constitutional reform north of the border will move forward apace now that commitments have been made in the referendum—and, of course, these commitments must be respected. However, we need to understand that reforms of Scotland are likely to have an impact on Wales. In this amendment, we are asking the Government to undertake a commitment promising that if new taxes are introduced in Scotland we will need a review of the impacts on Wales and to probe whether there will be any benefits from introducing such measures in Wales.
I will give noble Lords the example of corporation tax, to which I am sure the noble Lord, Lord Wigley, will refer. If corporation tax were to be introduced in Scotland, there would undoubtedly be an impact on Wales. Let me be clear—the Labour Party does not want to see devolution of corporation tax to Scotland. It is hard enough to get large corporations to pay the tax that is owed already and the last thing that we want to see is a race to the bottom in terms of taxation across the UK with the consequent knock-on effect on the limited pot available for public expenditure. But the reality is that Labour is not currently in the driving seat in Scotland, and we are not sure what is going to come out of the Smith commission, so if corporation tax is introduced in Scotland and if it were to undercut corporation tax in Wales, or if we were to see a similar kind of thing being introduced on air passenger duty in Scotland, and being introduced and then reduced in Wales, it would be more difficult to attract inward investment into Wales.
We are asking for a degree of flexibility to be able to respond to whatever is introduced in Scotland. If we do not write that into the Bill, we could be waiting for a wholesale constitutional reform debate to be settled but, in the intervening period, Scotland may have started off that process of undercutting us on corporation tax, for example. Scotland may have whipped in and claimed advantage over other parts of the UK, and I do not think that we should allow that to happen.
We do not know where we are heading in terms of direction of travel on devolution. We do not know what the timetable is for constitutional reform, and we need this amendment as a belt and braces approach to protect Wales from the possible introduction of taxes that could be damaging. If the Minister is not going to accept this amendment, I would like to know how she proposes to protect Wales if the situation were to arise.
My Lords, I have listened to the noble Baroness, Lady Morgan of Ely, with interest. There are certainly arguments in support of symmetry in constitutional terms; they usually lead to various forms of federalism. If the Labour Party is indeed moving towards a federal approach, that is certainly an important development.
I wish to address Amendment 20 in my name, which would provide that, if corporation tax were devolved to Scotland it should certainly be devolved to Wales or be available. Noble Lords may recall that I tabled an amendment in Committee proposing that if corporation tax were devolved to either Scotland or Northern Ireland, it should also be devolved to Wales. I based that on the fact that all four parties in the Assembly had agreed that this was needed, and that the Silk commission said that corporation tax should be devolved to Wales if it was devolved to Northern Ireland. The response that I elicited from the Minister, Lord Newby, on that occasion, was entirely centred on the comparison with Northern Ireland, not with Scotland. He based his argument on two factors: first, that Northern Ireland has to compete with the lower corporation tax in the Irish Republic. Wales also has to compete with Ireland for footloose inward investment projects, tourism businesses that cross the sea, and in the agricultural food sector, for example, in cheese manufacture. We share a maritime border with Ireland so I refute his argument on that count.
Secondly, the Minister argued on the basis that the tax devolution to Northern Ireland is in order to help it to rebalance its economy, with the implication that Wales does not need to rebalance its economy. That is absolute poppycock. Wales has the lowest GVA per head of any nation or region in the UK, following the rundown of coal, steel and slate. We desperately need to rebalance our economy. I am seriously concerned that a Treasury Minister, for whom I have very great respect, should have been advised by Treasury officials that Wales does not need economic rebalancing.
The Government do not recognise Wales’s needs vis-à-vis Northern Ireland. Be that as it may, the Minister did not try to defend not devolving corporation tax to Wales if it was, indeed, devolved to Scotland. I understand that this has been raised in the context of the Smith commission that corporation tax should be devolved to Scotland. Certainly, in the pre-referendum pledge the impression was given that the devo-max model being touted would include fiscal autonomy, and that certainly includes corporation tax.
In tabling the amendment I am seeking an assurance that if Scotland gets control over corporation tax the question should be firmly on the agenda of similar provision for Wales. I hope that on this occasion I get a more conciliatory response from the Minister, not just for me but for all four parties of the National Assembly that seek such powers.
(10 years, 1 month ago)
Lords ChamberMy Lords, as well as Amendment 21, I will also speak to Amendments 22 and 23, all standing in the name of my noble friend Lord Elis-Thomas and myself. Amendments 21 and 22 are aimed at allowing the Welsh Government to introduce new tax credits as well as devolved taxes. That would mean that Wales was able to help target areas that require economic stimulation in one form or another.
Paragraph 4.6.8 of the Silk commission’s first report stated:
“In addition to the use of taxes to achieve policy outcomes in devolved areas, credits can also be applied so that activities are effectively subsidised. While existing tax credits such as the working tax credits (and in future the Universal Tax Credit) should remain UK wide, the Welsh Government should be able to introduce its own credits in relation to devolved taxes and through use of devolved grants and subsidies to promote investment and getting people into work”.
I hope that the Government will therefore either accept these amendments or bring forward their own amendments on Report to achieve that end—unless of course the Minister can persuade me that some other power exists or is in the pipeline that will achieve that.
I turn to Amendment 23. At present, any devolved tax to be implemented in Wales must be agreed by each House of Parliament as well as the National Assembly. We feel that it is wrong that a party in the Welsh Government implementing a manifesto pledge should be prevented from doing so by Governments in London. If the objective of this Government is to get the devolved Government to accept full responsibility for their actions then surely they should be given full and undivided authority in such matters. Manifestos and devolved taxes are matters for Wales, and the UK Government should not interfere in them. This amendment therefore removes the requirement for each House of Parliament to agree to the devolved tax so that it is in the hands of the National Assembly. It would mean that the people of Wales were absolutely clear as to where responsibility lies. I beg to move.
My Lords, the tax credits that currently exist are closely associated with welfare payments. The whole issue is integrated into the wider debate about welfare support which provides a basic living standard for people who are working and yet need state help. Introducing any amendment that would erode the provision of welfare in Wales would be a mistake—in particular, without that very comprehensive and structured debate about the implications in Wales. The Minister suggested that the noble Lord is talking about a new kind of tax credit. Could the noble Lord elaborate on what kind of thing he had in mind, beyond what currently exists?
If the noble Baroness refers to the Silk report, she will see the arguments made there. The whole point and ethos of the Silk report is to open out as much freedom as possible for the devolved authorities to develop ideas and even experiment with this area to reach the objectives that both she and I would wish they did. It is giving them more tools. I hope that those tools help them do the job.
My Lords, I am very glad to have the opportunity to speak in this debate and to welcome the step taken by the Government in moving their ground with regard to lock-step. The noble Baroness, Lady Randerson, will well remember that I expressed some fairly strong feelings at an earlier stage with regard to lock-step. We felt that it was an inappropriate restriction and I am delighted that the Government have seen fit to move on it.
Amendment 37, standing in my name and that of my noble friend Lord Elis-Thomas, is included in this bank of amendments. We had a very useful debate on Monday in relation to constitutional principles on which there was a lot of consensus. Although the Government could not necessarily immediately accept the points that we made, they undertook to look at some of them. I hope that the same spirit will be adopted in their approach to other financial matters as has been shown with regard to the lock-step.
Amendment 37 seeks to ensure that the Assembly will be able to levy the three Welsh rates of income tax as it sees fit. The amendment is drafted to ensure that the Assembly will get full responsibility for raising and spending one of the three largest sources of government income alongside national insurance and VAT. If we give the Assembly the power to control these rates, it will enable Welsh Ministers to create additional jobs, which we hope will lead to an increase in the Welsh tax base. That would be an incentive for investment in the Welsh economy—which it certainly needs. As I say, we welcome the fact that the lock-step has been removed, which will give the Welsh Government greater freedom.
Amendment 38 stands in the name of the noble Baroness, Lady Morgan, who will no doubt speak on it in a moment. I will listen carefully to the arguments that she will put forward but I have some sympathy with what appears to be the intention of that amendment. However, I will listen carefully to what she has to say, and will listen to the Minister’s response to Amendment 37 to hear how the Government intend to build on their intention to give maximum flexibility to the Welsh Government.
My Lords, the Labour Party understands the principle of the need for accountability and the need for the Welsh Assembly politicians to have responsibility not just for spending money but also for raising it. Devolving an element of income tax will undoubtedly increase the financial accountability of the Assembly. It will enable the Assembly to fund more of the spending for which it is responsible and will allow the Welsh Government to vary the levels of tax and spending in Wales and, crucially, it will allow Wales to borrow against tax.
We focus in these amendments on issues of income tax. However, it is worth pointing out that this is just one tax. In context, in 2013 income tax was 26% of the total tax take in the United Kingdom. It is significant, visible and understandable, but it is worth remembering that it is only one tax.
Devolving income tax powers to Wales has never been a priority for the Labour Party and the Welsh Government. However, it is important in terms of positioning the Assembly in the right place in the long term. We should remember that it was the Labour Party which devolved income tax powers to Scotland, but only after asking the Scottish people in a referendum whether they wanted that power. We would have to undertake a similar referendum if Wales were to follow suit. I will elaborate on this further when we discuss that group of amendments.
We will not always be in this situation. We are future-proofing here. I am confident that one day the Welsh economy will grow. There are clear signs that the Welsh Government’s efforts in this area are already bearing fruit. However, we must be aware that the whole principle behind the concept of the UK as a political entity is that we are supported by a social system that is available to all. We must be careful not to erode that basic philosophy and so provide fuel to the nationalist fire. There is a £16 billion annual gap between what Wales raises and what it spends. We must not lose focus on this issue. This is the economic foundation stone of the UK.
What drives us in the Labour Party is not some ideological zeal to create an independent utopia in Wales, but a practical, hard-headed approach to what is best, in particular for those who are struggling on low incomes, are desperate to make ends meet and are often dependent on the state to keep them afloat. We must remember that Wales has a weaker tax base than the UK as a whole. We must be careful when devolving tax powers that we do not lose out. HMRC estimated that in 2010 there were 89,000 higher rate taxpayers in Wales. They represented 7% of all taxpayers and were responsible for 33% of all the income tax revenues raised in Wales. There were only 4,000 additional rate taxpayers paying 45p in Wales. I could practically name them—they were mostly Tories, I will let you know. On the whole, we must understand that our tax base is very weak and we must be careful when we go down this route.
It is also worth noting that a very small proportion of revenues are raised by local taxation and the consequent tendency of Whitehall to wish to dictate how funds from the centre are used has seriously eroded local democracy and accountability. We must be very cautious and note that local revenue-raising should not go too far, since that tends to reinforce the regional disparities of income and wealth.
Tax differentiation can also lead to tax competition. In principle, this is not something that we encourage. We must be clear that we do not want to embark on a race to the bottom in relation to taxation. We are fearful that there is a hidden agenda on the part of the Conservative Party, which is for ever anxious to reduce the role of the state. The Conservative Party is committed to cutting taxes for the wealthiest people. Let us be clear: tax competition will lead to less money in the state pot, which means less money for our schools and hospitals.
The Conservative Leader of the Assembly, Andrew RT Davies, has said that he would like to make Wales into a “low tax economy”. He has pronounced proudly that he wants to cut just the top rate of tax. We must be aware that every time there is a tax cut, it is accompanied by a cut in services. It seems odd to consider this, at this moment in particular, in isolation from the discussions in the rest of the United Kingdom, and we need to consider what is happening in relation to the Smith commission in Scotland. That is why Labour would like to see this discussion occurring in the context of a broader constitutional convention involving the public and representatives of civil society. We must acknowledge that there is a disconnect between politicians and the public, and it is critical that we do not have a conversation about how money is collected and distributed from the distance of an ivory tower. However, the genie is out of the bottle and we need to respond.
Let us be clear that devolving income tax powers will not be a panacea for the economy of Wales. The chances are that income tax variations will not be significant. The previous Secretary of State suggested that he would like to see a 1p cut in income tax rates across the board. Research has suggested that that would cost £200 million. That would mean £200 million in terms of cuts to services—the equivalent of 7,700 nurses losing their jobs—in the hope that the economy would grow. That could happen but in the context of a Welsh Government budget of £15 billion it is hardly going to make a massive impact.
Of course, differential taxation of income would involve the need for a separate Welsh revenue collection mechanism that must be neither inefficient nor costly. The Government do not seem to be clear about the costs involved in establishing this mechanism. In Scotland, it is estimated that differential taxation would cost between £40 million and £42 million to set up. Can the Minister give some indication of how much it would cost to set up in Wales?
In anticipation of the Bill receiving Royal Assent, the Welsh Government have already set out in a White Paper how that mechanism would work. The Welsh Government and the National Assembly will have the ability to develop certain taxes shaped to the needs, circumstances and priorities of Wales. This is the first Welsh tax legislation in modern times. It is both historic and significant for Wales but we need to consider border issues, and I therefore turn to our Amendment 36.
We need to be aware of the complexity of border issues in relation to Wales, compared to Scotland. The Scotland-England border is not nearly as densely populated as the Wales-England border. Only 3.7% of the population of Scotland and 0.5% of the population of England live within 25 miles of the English-Scottish border. In Wales, the situation is totally different, with 48% of the population of Wales and 10% of the population of England living within 25 miles of the Wales-England border. There are more than 130,000 daily commuters. The fact is that introducing a variation in income tax could give rise to the possibility of higher taxpayers moving across the border in one direction or another. My understanding is that no Treasury impact assessment has been undertaken on this matter, although I understand that the previous Secretary of State said that a consultation has happened. Can the Minister confirm whether that is the case and will she commit to a Treasury impact assessment on that border issue?
I turn now to the lock-step issue. The Government have put down an amendment to remove the lock-step, thereby allowing the Welsh Government to vary increases or decreases to individual tax bands independently of one another. Again we would argue that this discussion ideally needs to be set in the context of a UK debate over the organisation of tax across the whole UK. To deal with this in isolation is inviting trouble, and that is why we need urgently to establish the constitutional convention. The public should have a greater say on where power should lie across the UK, including on the nature of tax devolution. Further devolution should not be piecemeal. The Minister referred to that in her comments on Monday. The notion of breaking lock-step is something that needs to be discussed in that broader context
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.
I am grateful to the noble Baroness for giving way. She has warned about a race to the bottom as a reason to avoid this, but she then says that Scotland might do it, that that is the first step in a race to the bottom and that we should then do it. Is she not embarrassed by the fact that her party leader signed up to this in the Assembly and she has difficulty in selling it to her group here?