Wales: Devolution

Baroness Gale Excerpts

Thursday 19th July 2012 Lords Chamber

[Baroness Gale]

My Lords, I thank the noble Baroness, Lady Randerson, for bringing this debate before us today. It gives us the opportunity to debate the important topic of the Silk commission’s remit while we await the report on part 1, which I understand will be published in late autumn. I thank all noble Lords for their contributions. It has been a typical Welsh debate, but I welcome the contribution of the noble Lord, Lord Maclennan, who is a non-Welsh Peer but all the more welcome. I thank him for his contribution.

Many contributors have said that we are on a journey of devolution—it is an evolution, not a big bang. We have had to take this step by step and, as my noble friend Lord Rowlands said, it is about building consensus on the way. I was there on the night we awaited the Carmarthen result, holding our breath. We certainly got that result and it was, for most of us, a great cause for celebration. Today’s debate gives me the opportunity of laying out Labour’s comments on the progress that has been made by the Silk commission, as well as our priorities regarding the two parts of the commission’s remit: on the devolution of fiscal powers, which would improve financial accountability and the powers of the National Assembly for Wales; and to recommend modifications to improve current arrangements.

The commission is due to report on part 1 in the autumn and, so far, it seems that the commission has been very well received across Wales. Individuals and organisations across the country have engaged constructively via written or oral evidence, or through attending one of the commission’s meetings—although, as my noble friend Lord Anderson said, they have not all been very well attended. On part 1 of the commission’s remit, we are clear that the Welsh Government should have borrowing powers so that they are able to invest in infrastructure. This is especially important given the 41% real-term cuts that the coalition Government in Westminster have inflicted on the Welsh Government in Cardiff Bay.

Many noble Lords have talked about the poll conducted by ICM recently, in which eight out of 10 people supported the idea of granting the Welsh Government borrowing powers. I think that all noble Lords have said that that is where we should be going. The poll suggests that this proposal is likely to have the wide support in Wales that, as I am sure all noble Lords will agree, is essential for any change. The Welsh Government are the only elected institution in the UK, at any level, that do not have borrowing powers. As other noble Lords have said, even community councils in Wales have that power.

One striking result of the poll was the level of support for giving the Welsh Government the power to borrow, especially for capital projects such as schools, roads and hospitals. It seems that the Welsh people are happy with the nudge taxes we have been talking about, such as the carrier bag levy, which has proved such a success and has altered people’s behaviour, with an up to 90% fall in the usage of carrier bags. This was not a tax—the Welsh Assembly does not benefit financially from it, as the money goes to charity—but we have benefitted environmentally.

In a statement on 17 July, in reference to the opinion poll, Paul Silk, the chair of the commission, said:

“A majority of people believed that if the Welsh Government is given responsibility for taxation and spending it would be more accountable, the economy in Wales would be stronger, and public service would improve”.

It was also clear that people wanted to be consulted on the devolution of taxes such as income tax through a referendum. I think we would all agree that in those circumstances a referendum would be essential—many noble Lords have spoken about the difficulties of having an income tax in Wales.

In a Statement to the Welsh Assembly in June, the First Minister, Carwyn Jones, set out the Welsh Government’s position on financial reform and called for a comprehensive reform of Wales’s financial powers. He said that landfill tax, stamp duty, the aggregates levy and air passenger duty could be devolved to Wales as part of a new package of fiscal measures, but that the priority remains the reform of the Barnett formula, and that the Welsh Government should have the same borrowing powers as the other devolved nations. As the First Minister said in an earlier statement:

“We can’t go ahead with fiscal devolution without the funding being addressed otherwise we risk locking ourselves into the current Barnett formula which is to our detriment”.

This is the key question that needs to be addressed. In the mean time, we support the immediate introduction of a Barnett floor, as the Holtham commission recommended, while we await a long-term solution. This would stop any further escalation of Wales’s underfunding problem in future years. I understand that there are ongoing intergovernmental talks with the Chief Secretary to the Treasury, Danny Alexander, and the Welsh Finance Minister, Jane Hutt, with the aim of finding a fair funding settlement for Wales which includes discussion on the Barnett floor. Can the Minister say how these talks are progressing?

On the devolution of tax-varying powers, we believe that there may be some value in devolving some of the taxes under consideration. As I said earlier, the First Minister gave us the examples of air passenger duty, stamp duty, landfill tax and the aggregates levy.

As for phase 2 of the commission, it is regrettable that one of the key issues that the Silk commission might have considered—the electoral arrangements for the Welsh Assembly—was considered not by the commission but rather in the Green Paper on electoral reform which the Secretary of State for Wales published recently and was debated in Grand Committee on June 18. In fact, the issue that we are debating today is notable for being the one constitutional issue where the Government have adopted a broadly consensual approach. On other constitutional matters there has not been such a consensus—such as the review of parliamentary boundaries which, if the proposals go ahead, will see a 25% reduction in Welsh representation, 10 fewer MPs, a weakening of the Welsh voice in the other place and, of course, the proposed changes on how the Welsh people elect their Assembly Members. Far greater dialogue should have been taking place with the Welsh Government and the Secretary of State on this matter, rather than the “top down” approach.

Its seems that the coalition Government are far more interested in these constitutional matters than they are in addressing the real issues facing families in Wales, such as the high cost of living, an economy in recession and high unemployment. So while we note the good progress that the commission is making and that its voice is important, it is not our top priority. Jobs and growth are our priority. Today’s unemployment figures for Wales stand at 9%, and an increase of 2,000 more people without jobs means more heartache for Welsh families. Commenting on these figures, the Secretary of State for Wales said that she was “disappointed but not surprised”, and urged firms to seize the opportunity offered by rail electrification. While we welcome these announcements, it will take time for jobs to materialise. In the mean time, what seems to concern the Secretary of State is the consultation on the electoral arrangements for the Welsh Assembly, and the Commission on Devolution in Wales, neither of which will provide jobs for Welsh people now.

The Secretary of State for Wales met with the Silk commission this week to receive a report on what progress is being made. Can the Minister tell your Lordships’ House the results of that meeting? I hope that there will be an opportunity to have a fuller debate when the commission completes its work. We can then see what the recommendations are, what the Government’s response will be and, more importantly, what the Welsh Assembly and Welsh Government’s views are. I suggest to the Minister that if we do have a debate on the recommendations—as we have had a two and a half hour debate today, and I think that we could have gone on longer, perhaps a lot longer—perhaps we could have a five-hour debate next time so that we can explore everything and have the time to put our views on what we think of it. In the mean time, I look forward to the Minister’s response to our debate today.