Wales Bill

Alun Cairns Excerpts

Monday 31st March 2014 Commons Chamber

[Mr Jones]

Yes, I have heard that, certainly from those on the Plaid Cymru Benches. I would simply repeat that it is appropriate that the people of Wales have their voices heard on such an important matter.

The Bill also provides a mechanism for additional taxes to be devolved in future, with the approval of both Houses of Parliament and the Assembly. I am pleased that the Bill delivers new borrowing powers to the Welsh Government—again, as recommended by the commission. As for capital borrowing, we are providing the Welsh Government with the ability to borrow up to £500 million to invest in capital infrastructure in Wales. That is a generous limit, allowing the Welsh Government to get going on the much needed upgrade of the M4 around Newport. It also reflects the independent funding streams for which the Welsh Government will assume responsibility through the two devolved taxes and is a limit that can be increased in future if the Welsh Government become responsible for additional taxation, including income tax.

[Alun Cairns (Vale of Glamorgan) (Con)]

Does my right hon. Friend not agree that the project for a new motorway around Newport is essential? There has been far too much delay—it was cancelled by the Labour Administration back in 1997, despite the previous commitment. Today’s announcement is basically the green light for the project to go ahead.

[Mr Jones]

Indeed. I think that everyone in the south Wales business community recognises that the M4 is indeed a foot on the windpipe of the economy and we are anxious to see it upgraded. The competence that we shall be giving the Assembly Government—in fact, we have already extended it to them—will enable them to proceed as quickly as possible with that essential upgrade.

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[Owen Smith]

We want fair and equitable tax rates across Britain. That is why we propose to amend the Bill so that, if a Tory Government in Westminster continue to increase the injustice and unfairness of our tax system by making further cuts to taxes on the wealthiest, Welsh values and Welsh beliefs about social justice can implement a decent and equitable rate of taxation.

[Alun Cairns]

rose—

[Owen Smith]

No, I am going to move on. If the hon. Gentleman holds his water, I shall come back to income tax later.

Landfill tax is relatively uncontroversial save for the link to borrowing, to which I shall come later. There is also the link to the landfill communities fund. We heard nothing from the Secretary of State about that, but it is paid to communities with landfill sites within their boundaries. Has the Secretary of State done any analysis about the value of that fund to Wales? How much is collected and how much has been spent in Wales? How many landfill sites are there in Wales in comparison with England?

The Secretary of State is proposing that the landfill tax community fund also be devolved to Wales and that Wales should become responsible for meeting the costs of implementing a revised Welsh landfill scheme. Given that elsewhere in the Bill, the Secretary of State proposes that HMRC duties should not be replicated in Wales, why does he think the implementation of the landfill communities fund should be devolved? Is that yet another example of his wishing to pass responsibilities to Wales without there being the requisite resources?

We absolutely support the extension of borrowing powers to Wales. They are vital to make up for the £1.7 billion cut in funding for Wales—an almost 40% cut in capital funds—that the Government have implemented since 2010.

It is crucial that the Welsh Government be given the ability to borrow in order to try to back-fill the enormous holes in their budget left by the Secretary of State and his colleagues.

There are two measures relating to borrowing in the Bill, both with limits of £500 million—one to cover volatility in tax receipts and the other to cover capital. I wish to talk about the latter. The Silk commission, whose recommendations the Secretary of State keeps telling us he has largely stuck to, said that £1.3 billion should be devolved to Wales for capital borrowing, but the Bill limits it to £500 million. The Secretary of State says, as he repeated earlier, that the rationale for that is to draw a connection between the amount of money devolved to Wales—the volume of taxes—and the volume of money that might be borrowed. The Secretary of State says, as does the Command Paper on the Bill, that that is just like the position of Scotland. In fact, the Command Paper goes further than he did in saying that the Bill is generous given that in Scotland over £5 billion of taxes are devolved and £2.2 billion of borrowing is allowed—£220 million each year—and that if a similar ratio were applied to Wales, then Wales would get not £500 million but £100 million.

The problem with that rationale is that it is not true. The Scotland Act does not draw a connection, as the Secretary of State suggests, between the amount of taxes devolved to Scotland and the amount of borrowing. The Command Paper associated with the Scotland Bill said:

“Scottish Ministers will be allowed to borrow up to 10% of the Scottish capital budget any year to fund capital expenditure”—

that is, £230 million of an overall stock of £2.2 billion. The Scotland Act drew a clear correlation between the size of the capital budget and the amount that could be borrowed. The Command Paper for the Wales Bill, which the Secretary of State said was just like that for the Scotland Bill, reads:

“Specifically, the Scottish Government’s capital borrowing limit is £2.2 billion while it is taking on responsibility for tax revenues that are currently worth around £5 billion. Hence the ratio between the two is slightly less than 1:2. Applying the same tax/borrowing ratio in Wales would have given the Welsh Government a limit of around £100 million.”

The crucial question is why the Government have moved the goalposts for Wales. Why cannot Wales have the same rationale for its volume of borrowing as the Scots? That would give us about £1 billion-worth of borrowing—between £1 billion and £1.5 billion—rather than the paltry £500 million on offer.

Moreover, given the volatility of all tax returns, how sensible is it for the Government to draw a direct line between the receipts that Wales receives and the amount it can borrow? What if those receipts declined? What if we were in another recession? We would therefore see, I presume, a reduction in the amount of borrowing that Wales could undertake, which would frankly be economic stupidity.

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[Owen Smith]

No, I would label it as a progressive change and I will explain why we feel the need to introduce such a change.

The second way in which we would change the question relates to our concerns about the fact that this Tory Government and an increasingly right-wing nationalist party in Wales are proposing to cut the top rate of tax. [Laughter.] Nationalist party Members laugh, but the economic adviser to their leader says he wants to cut only the top rate of tax. I do not know what we are meant to conclude from that, but it sounds pretty right wing to me. An alliance between the nats and the Tories in Wales seeks to reduce taxes just for the wealthiest, but we feel that that would be entirely out of step with the progressive values of Wales. That is why we will give the Welsh Government the ability to set a progressive rate for Wales, to guard against further Tory tax cuts for the wealthiest and to ensure that those Welsh values of social justice and fairness in taxation can be preserved by the Welsh people in the event of the Tories wishing to increase the injustice and unfairness of the tax system in Wales and across Britain.

[Alun Cairns]

The shadow Welsh Secretary is giving out so many conflicting messages that I am finding it difficult to follow him. He says that he wants to extend the tax-varying powers by 15%, but he also says that he is against tax competition, and then he says that he only wants to put taxes up. We can have lots of debates about those inconsistencies, but there is one very serious point: every nation and region of the UK is seeking to attract investment. What sort of message is being sent when the shadow Chancellor—[Interruption.] What sort of message is being sent when the shadow Welsh Secretary, who presumably hopes to be a future Welsh Secretary, says that he wants to increase taxes on higher earners?

[Owen Smith]

It is not too hard to confuse the hon. Gentleman sometimes, either, but I thank him for the promotion. Our position is very clear: we are not in favour of tax competition; we are in favour of increased borrowing powers. The way in which the Government have framed the Bill to draw a connection between borrowing powers and the devolved amount of money paid in tax means that we favour increasing that amount so as to increase borrowing powers for Wales. However, the progressive rate is only to be put up in the event of a Tory Government choosing to deepen the unfairness by making further cuts to the top rate. We should worry about that because the Tory party has form on it. It has already cut taxes for the wealthiest, and we know that it will continue to do so.

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[Alun Cairns]

Will the hon. Gentleman give way on that point?

[Owen Smith]

No, I will not.

Our proposal to allow the Welsh Government to set a progressive rate of taxation in Wales would allow power to be transferred to Welsh people to guard Wales against the damage to social justice done in Britain by a Tory Government who propose to cut taxes further. The motivation is similar to that for devolution in its first inception: a Tory Government in Wales exercising—in the miner’s strike, the poll tax and other measures—a political strategy that reveals how they turn their face against social justice in Britain and use Wales as a means to exercise such injustice. We have recently seen that in the war on Wales, and the way in which Grant Shapps, the chairman of the Tory party, and the Secretary of State—

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[Mr Hain]

In that case, I think the hon. Gentleman will find that the same applies for Welsh citizens on the Welsh side of the border. All I am saying is: let us have an intelligent debate about this, rather than rantings based on a misrepresentation of the facts on the ground.

Let me get down to my speech. In focusing on clause 2 of the Bill, I wish to record my pride at taking the Government of Wales Act 2006 through Parliament as the then Secretary of State, not least because it provided for the full law-making powers the Welsh Government are now using to protect the people of Wales from this Government’s disastrous policies, including on tuition fees and on the creeping privatisation of the national health service, which is not being applied by the Welsh Government. The fact that the Conservative party, the only party in this House to vote against the 2006 Act, now seems to have accepted that devolution is a sign of progress—I welcome that—but on the question of dual candidature it has sadly regressed. In section 7 of the 2006 Act, I amended one clause from the Government of Wales Act 1998 in order to prevent candidates from simultaneously standing both in a constituency and for a region, whether as a list candidate or as an individual—this Bill will disgracefully reverse that reform.

[Alun Cairns]

On that point—

[Mr Hain]

I am going to develop the point and then I will take an intervention. I want to remind colleagues of the reasons for the 2006 change. I did not act for politically partisan reasons, as was alleged by opponents of the change; I acted for democratic reasons. As one of the Ministers who also took the original 1998 Bill through the Commons permitting dual candidature, I never imagined for a moment then the abuses it would produce and the antipathy it would create among voters in Wales. Voters have never understood the widespread practice that has occurred since the Assembly was established in 1999, whereby candidates rejected by a particular constituency then secured back-door election as Assembly Members through the regional list and were even able to claim to represent the very constituency that had rejected them. Three of the four defeated candidates in Clwyd West in 2003 were subsequently elected to the Assembly through the regional list. Those very three people in Clwyd West—in the Secretary of State’s constituency—who were booted out by the electorate ended up as Assembly Members, competing against winning Assembly Member Alun Pugh.

[Alun Cairns]

The right hon. Gentleman talked about the Welsh electorate’s antipathy to the arrangements. Will he remind us what the Electoral Commission’s view was, following its long consultation on whether or not there was a need to change policy? What advice did it give him as the then Secretary of State for Wales?

[Mr Hain]

The Electoral Commission disagreed with me, and, not for the first time from my personal experience, it was wrong.

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[Mr Hain]

I am not sure about that, but what I can say is that we should look at the experience in Wales. If there is no such bar in other countries, then perhaps there was no such abuse there. There was widespread abuse in Wales, practised by 15 of the 20 list Assembly Members who used taxpayers’ money to open constituency offices in the very seats in which they were defeated. They then used those resources to try to win at the following election by cherry-picking local issues against the constituency AMs who had beaten them.

[Alun Cairns]

rose—

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[Mr Hain]

I think I shall move on from that point, despite the great respect I have for my hon. Friend.

All the arguments and evidence I have cited demonstrate conclusively that the ban was not partisan but enhanced democratic standards among Welsh Assembly Members. Indeed, I reminded the House that six Labour Assembly Members, including three Ministers, could have been defeated in the 2007 Assembly elections by a swing of 3% against them—a very small swing. They would no longer enjoy the safety net of the regional list and two subsequently lost. The reform affected Labour candidates, just as it applied to candidates from other parties.

[Alun Cairns]

rose—

[Susan Elan Jones]

rose—

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[Alun Cairns]

My hon. Friend refers to his question on mortality rates in Wales and the criticism from the Opposition. May I specifically state that this was a letter—

[Hon. Members]

It’s not in the Bill.

[Madam Deputy Speaker]

Order. Hon. Gentlemen must not shout from a sedentary position. If the hon. Member for Vale of Glamorgan (Alun Cairns) is not in order, I will tell him that he is not in order. I am sure that he will remain in order.

[Alun Cairns]

Thank you, Madam Deputy Speaker. I will do everything I can to remain in order. I want to refer briefly to a point made by my hon. Friend, who was criticised by Opposition Members. It related to a letter from the chief medical officer in England to her counterpart in Wales on the powers of devolution in Wales, seeking an investigation. How could that ever be interpreted as an attack on Wales, when it was from one clinician to another?

[Mr Harper]

I agree. All I did at Wales questions last week was raise a perfectly reasonable point on behalf of my constituents. I quoted something that the right hon. Member for Cynon Valley, a valued Opposition Member, had said—it is in Hansard—and then the shadow Secretary of State suggests that I asked something I did not, and pretends that it is all a smear. That is simply not the case; I am a Member of Parliament raising concerns on behalf of my constituents. The previous devolution settlement was not well thought through and I want to ensure that this one is. I am grateful to my right hon. Friend the Secretary of State for taking a great deal of care with the Bill.

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[Wayne David (Caerphilly) (Lab)]

I will support this Bill, although I have to say that it is very disappointing because it is, I am afraid, a bit of a shoddy compromise. Everyone realises that the Secretary of State for Wales is no enthusiast for devolution—indeed, some people might go further than that—and we know that the Liberal Democrats are quite enthusiastic, so we have a cobbling together of two different opinions, and the Bill suffers as a consequence. Its main proposals, which are modest and relate to the tax-raising capacity of the Welsh Assembly, are very limited. It also has strangely attached to it some new arrangements with regard to the electoral politics of the Welsh Assembly.

Although the first part of the Silk report has been quoted in support of the Bill, there is a great deal of difference between what Silk proposed and what the Government have put before us. For example, Silk states very clearly and boldly that

“for the financial accountability and empowerment of the National Assembly for Wales to be improved sufficiently, it should be responsible for raising a more substantial proportion of its spending.”

That is the core of its proposal. What the Government have given us on income tax-raising powers is a long way from the aspiration articulated by Silk. It is important to recognise, too, that a genuine and fundamental concern has been expressed by many people, including those in the Welsh Assembly, that there is no significant movement on Barnett. This proposal is a real runner only if there is a cast-iron commitment to, and a firm set of proposals on, modifying the Barnett formula as it applies to Wales. Under Barnett, as we all know, Wales is short-changed to the tune of £300 million per year, and that situation will not be addressed by this Bill.

[Alun Cairns]

I am interested in the sum of £300 million because it was presumably derived from the Holtham report, which is now some years old. Gerry Holtham also pointed out that as public spending contracts proportionately, the Barnett formula will protect Wales and the £300 million will decrease. Does the hon. Gentleman agree?

[Wayne David]

The £300 million figure, which is quoted widely and not just by me, is the most accurate figure that we have to go on at the moment. It is widely used by a number of academics as the main basis for the calculation.

[Alun Cairns]

My point is that the figure is several years old. There has been a change in the scale of public expenditure since then, and it is therefore nowhere near £300 million any more. Does the hon. Gentleman accept that, given that Holtham said it in the report?

[Wayne David]

Not necessarily, because an added scenario that Gerry Holtham did not take into account is the austerity package that has been put together by this Government, which has led to huge cuts in the Welsh Assembly Government’s budget. To begin with, those cuts have not kept up with inflation, but all the indications are that they will be significantly deeper. That is an important backdrop to the whole matter that we are tackling.

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[Wayne David]

I do not think I said that. The hon. Gentleman has put forward an interesting hypothesis and I am sure we will consider it at the appropriate time, but it is not relevant to the discussion we are having here.

As I was saying before I was interrupted, one of the most significant constitutional changes in the Bill is the proposition that we should change the method of election for the Welsh Assembly—that there should be a revision of what was agreed in the Government of Wales Act 2006. Like other Members, I have been travelling around Wales listening to what members of the public have to say. Reference has been made to a report from the Bevan Foundation. I remember that report well, as I was one of the Members who commissioned it. It came to the objective conclusion on the basis of a representative cross-section that, as the right hon. Member for Chesham and Amersham (Mrs Gillan) said, most people in Wales did not understand the system. They also thought it was intrinsically unfair that individuals who put their names forward for election but lose the election should suddenly appear in the Welsh Assembly—most people would assume that, as those people had lost, they would not be elected.

It is fundamentally impossible to explain the rationale behind that or to argue that it is fair. Whatever special pleading we make for small parties because of how difficult it is for them to get together a sufficient number of candidates, it is an unfair proposition.

[Alun Cairns]

Will the hon. Gentleman give way?

[Wayne David]

Yes—do your best to explain it.

[Alun Cairns]

Will the hon. Gentleman inform the House why he thinks that either his anecdotal evidence or his summary of the Bevan Foundation’s reasons for its recommendations are more independent or fair than the work of the Electoral Commission, which was challenged legally to come up with a full consultation, based on evidence, and ultimately to give the Secretary of State a recommendation? The commission did so, and found in favour of the measures in the Bill.

[Wayne David]

It is basic common sense. If someone loses an election, they do not get elected—it is as simple as that. I challenge the hon. Gentleman to explain to anybody in the street why that is not fair. I guarantee that he will fail. Go on—have a go.

[Alun Cairns]

I do not want to labour the point too much, but I remind the hon. Gentleman that in the 2003 election every Labour Assembly Member topped the regional list. That suggests that there is yet another inconsistency. Even the then First Minister, Rhodri Morgan, who I suspect was highly unlikely to lose, topped the list. The Opposition used the system in their interests, in spite of what has been stated now.

[Wayne David]

I am at a loss to understand the rationale behind that. We live in a democracy and have to accept the system that Parliament agrees. That does not mean that we think it is right, because it is not—it is fundamentally wrong. What is being suggested in the Bill amounts to gerrymandering.

I will give a couple of examples of how the regional list system as it stands at the moment is being abused in an immoral way. There is the case of Mohammed Asghar. He was elected to the Welsh Assembly as one of Plaid Cymru’s regional list Assembly Members, but having been elected as such, then decided to cross the House and join the Conservatives. Why did he join them? Was it a great matter of political principle? No. It is said that there was a disagreement about the employment of his daughter, so he decided to cross the House and use the system.

Another, more relevant and contemporary example is that of an Assembly Member called Lindsay Whittle. Lindsay Whittle was elected to the Welsh Assembly as a Plaid Cymru list Member for South Wales East. However, Mr Whittle is also a member of Caerphilly county borough council. He lives in Caerphilly and appears to spend a disproportionately large amount of time in Caerphilly. [Hon. Members: “He lives there.”] He does live there, but he works there as well, irrespective of the rest of his constituency. I put this to the House: can it be that Mr Lindsay Whittle is so interested in the council and in his own particular locality because he wants to stand in the Caerphilly constituency at the next Welsh Assembly elections in 2016? I think that is quite likely. The point I am making is that democracy in this country is based on representation. If someone does not represent people properly, but instead represents their constituents selectively and picks out who they are going to focus on, it is undemocratic and unfair. It is reprehensible for the individual to behave in that way, but it is also reprehensible that they are able to do that under the political system.

If Mr Whittle does indeed stand for re-election in 2016, his calculation will be, “Yes, I’ll have a go at Caerphilly but I don’t need to worry if I lose because I still have the old regional list system to fall back on.” That is a practical example of this unfairness. I challenge any Member to explain to the people of south-east Wales how that can be justified and how it is an example of democracy as we understand it—it clearly is not.