Wales Bill

Debate between Lord Wigley and Lord Rowe-Beddoe

Tuesday 11th November 2014 Lords Chamber

[Lord Wigley]

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.

[Lord Rowe-Beddoe]

My Lords, I support Amendment 16, standing in the name of the noble Baroness, Lady Morgan of Ely. It is very clear what it says, and without trying to rehearse arguments previously made, I want to discuss the devolution of air passenger duty. I refer your Lordships to my register of interests with regard to Cardiff Wales Airport. The Silk 2 implementation stated that long-haul air passenger duty should be devolved. The arguments put forward in Committee have been considerably amplified—perhaps extended—recently by an unlikely ally in Mr Willie Walsh, the chief executive officer of International Airlines Group, which as noble Lords know, incorporates British Airways and Iberia.

In an article in the Times on 30 October—it was after our Committee meeting; it would be flattering to consider that Mr Walsh was actually watching our proceedings—he takes it much further and calls for a total abolition of this tax across the whole of the United Kingdom. It was a stunning headline but when analysing what he said, and doing a little more research, it is worth making a mark as to what was behind his statement. He said that this tax, permissions, or whatever it may be,

“should be consigned to the annals of history”.

The argument put forward is that the estimated £3.5 billion that the Treasury receives would be more than offset by a boost of some 0.5% to our GDP and the creation of some 60,000 jobs.

The interesting thing is that it is possible to avoid this tax, and people do. For example, a family of four flying economy to the United States pays £276. A Japanese visitor flying back home from London to Tokyo pays £81. This may well have a connection with the flattening level of Japanese visitors to this country, both business people and tourists, over the last 10 years. This tax is a disincentive. Holland got rid of it after 12 months and has never looked back, so there is something to be said for replacing this tax.

I may be proved wrong but I believe that Scotland could well be getting something out of this. We all know what happened in the Republic of Ireland but what we do not know and do not realise is the damage that is done to Northern Ireland because of the hundreds of thousands of people who start their long-distance flights south of the border as £276 is a lot of money for a family of four flying economy. I support the amendment. I am sorry to bring up air passenger duty again but at present it is, I am afraid, a rather hot subject.