Baroness Morgan of Ely
Main Page: Baroness Morgan of Ely (Labour - Life peer)Department Debates - View all Baroness Morgan of Ely's debates with the Wales Office
(9 years, 7 months ago)
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Lord Howarth of Newport
The Electoral Commission has certain duties that are defined under statute and it offers authoritative advice. However, ultimately, these matters remain to be determined by the elective bodies in question, and that is how it should be.
I want to say a word about Amendment 5, proposed by the noble Lord, Lord Elis-Thomas, which seems to ask no more than that the National Assembly of Wales should take responsibility for its own standing orders. How could we possibly deny it that?
Baroness Morgan of Ely (Lab)
My Lords, I add my appreciation of the fact that we have seen some significant movement during this debate, and I hope that we can continue in that vein for the rest of the day. I want to talk specifically about the agreement or necessity for the Assembly to agree to electoral arrangements. That is very much where the Labour amendment comes from. We have a proposition in this Bill, and we think it would be incorrect for the Assembly not to have a say.
In Committee, the Minister underlined the fact that the majority of the electoral proposals contained in this Bill had been discussed and agreed by the Welsh Government. That is important; there is an important principle here that should be respected. But the principle of devolution also means that it should be a formal process; the Assembly needs to agree to these measures formally and legally rather than have them handed down, even if it is through an agreement that is not as formal as we would like. It is important for us to move to a more legislative approach, and that is what we seek to do with our amendment.
It is also important to note that the Scottish Parliament has the power to make arrangements about Scottish parliamentary elections. That is a divided power between Scottish Ministers and the Secretary of State. So we are simply asking for a degree of consistency. This is a discussion that will go further when we come to Silk 2 and other arrangements. In the context of what we are talking about here the electoral arrangements being proposed should formally and legally be approved by the Assembly.
The Minister spoke in Committee about the danger of a piecemeal approach to devolution and said specifically in relation to elections that there was a need for a “comprehensive approach” across the UK for powers and conduct of elections. That is precisely what we are asking for here—a similar system to that which already exists in Scotland. We do not quite understand why there is a reluctance on this. Could the Minister specify whether there is a principled objection to this or whether this is a question of timing?
Baroness Randerson
My Lords, I fear that I might be about to disappoint one or two noble Lords by not being able to make the leap in one bound to the position that they would like us to be in—but I am pointing roughly in the right direction.
Amendment 4 would prevent electoral provisions in this Bill being implemented until they were agreed by the Assembly, and Amendment 5 would devolve to the Assembly powers over its constitution, structure, membership and elections. As the noble Baroness has just said, the electoral provisions in the Bill arise from consultation undertaken by the Government on the Green Paper that they published in May 2012, and it is fair to say that a lot of devolution debate has flowed under the bridge in the past couple of years. That consultation sought views on, among other things, permanently extending the term of the Assembly to five years; preventing Assembly Members from sitting simultaneously as MPs; and overturning the ban on dual candidacy. In response to that consultation, all parties in the Assembly, including the Welsh Government, supported the permanent move to five-year fixed terms. There was also general agreement that AMs should not be able to sit simultaneously as MPs. The one area of disagreement was on the area of dual candidacy, to which we will undoubtedly return later this afternoon.
There is widespread support in the Assembly for the majority of the electoral provisions in this Bill. It would be wrong to delay the commencement of these provisions as Amendment 4 seeks to do purely because of the desire in the long term apparently to hand over a power.
Amendment 5 would put electoral arrangements among other things more generally in the hands of the Assembly by devolving competence over these issues to the Assembly itself. I am more sympathetic to the intention underlying that amendment. It is a characteristic of most mature legislatures, as the noble Lord said, that their composition and electoral arrangements and the conduct of their Members are issues that are decided on and legislated on by the legislature itself. The Presiding Officer of the Assembly has made similar arguments on a number of occasions, and the Silk commission made a number of recommendations about the Assembly and the statutory restrictions that currently apply to it.
The constitutional debate in the UK at the moment presents an historic opportunity to achieve a clear, stable and lasting devolution settlement for Wales by moving forward together on the basis of consensus. The proposals in Amendment 5 should therefore be considered as part of the cross-party process that I have already mentioned. One or two noble Lords anticipated that point. I ask noble Lords to forgive me for saying once again that this Bill is not the appropriate vehicle for taking them forward. They can be taken forward at this very time in the cross-party discussions that will take place over the next few months and should reach a consensus and agreement, because it is obvious that there is a lot of cross-party agreement that the Assembly should ultimately be responsible for the conduct of its own internal affairs and for issues such as elections.
Lord Howarth of Newport (Lab)
My Lords, we should be grateful to the noble Lord, Lord Norton of Louth, for inviting us to reflect on the principle involved here. When he comes to respond to the debate, perhaps he would give us the benefit of his thoughts on how his principle would apply if, as has been proposed, there should be a senate of the nations and regions of the United Kingdom. Admittedly, I understand that the proposition is that members of the senate should be indirectly elected: they should be sent from the Assemblies and Parliaments of the nations and regions of the United Kingdom. However, I should be grateful for the noble Lord’s guidance as to what principle ought to apply there: whether he considers that a dual mandate in those circumstances should be permitted by law, discouraged or something that the rules of the political parties should embrace—or would he advise a degree of caution in the matter?
Baroness Morgan of Ely
Briefly, it is a good idea in principle for there to be a cross-fertilisation of people from Westminster to the Assembly. That principle was particularly important when the Assembly was set up. However, there is a recognition that there is a time commitment to both the institutions. We now have a situation where the people in the Assembly already do not have the time. We will be talking later about possibly needing more Assembly Members. We do not have the people to do the job at the moment. My point back to the noble Lord is that, although I understand that there should be a principle that the electors can choose who they want, there are other principles that need to be considered. There are the practicalities of how that would work but also the needs of the institutions themselves. Those points should also be taken into account.
“(10) In the event that the power to add new devolved taxes under section 116C of GOWA 2006, or the power to add new devolved taxes under section 80B of the Scotland Act 1998, is used, the Chancellor of the Exchequer must undertake a review of the benefits of symmetry in the devolution of taxes between Wales and Scotland.”
Baroness Morgan of Ely
My 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.
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.
Baroness Morgan of Ely
I thank the noble Baroness but we must consider and understand that whatever we would like for Wales, it may be influenced by what is happening elsewhere. What the amendment was asking for was simply a report to be written on the benefits of symmetry; we were not necessarily asking for it to happen. We were saying, “Please look at it; would it be an advantage to us?”. I am therefore disappointed that the noble Baroness cannot accept that position but I beg leave to withdraw the amendment.
“Review of Welsh funding
Sections 8 and 9 shall not come into force until a Welsh Government Minister has laid a report before the National Assembly for Wales containing a statement to the effect that the Welsh Government, with regard to the Statement of Funding policy, is content with the fairness of the arrangements for allocating funding from the UK Government to Wales.”
Baroness Morgan of Ely
My Lords, I turn now to the issue of fair funding for Wales. The Labour Party is keen for this Bill to pass because, for the first time, the Welsh Government will be allowed to borrow money. That is essential to help kick-start the economy, following years of government cuts, which have impacted in particular on the infrastructure budget—essential for investment and driving the economy of Wales.
We agree that in order to help leverage this funding, Wales should have landfill tax and stamp duty tax devolved to it. As we suggested in Committee, the Labour Party does not object in principle to income tax devolution to Wales but we have a key concern. Before embarking down this route, which must have the support of the people of Wales—demonstrated in a referendum—we need to be sure that Wales will not be left worse off than it is now.
We have real concerns that the funding issue in Wales has still not been comprehensively addressed. We now know that the Barnett formula will remain in place, but there is widespread acknowledgement that it has done no favours to Wales. It does not reflect the needs of a nation that has an older, sicker population and a more rural make-up, thereby adding to the costs of providing essential services. We accept that negotiations on this issue have been taking place between the UK Government and the Welsh Government and that there is recognition that a floor should be put in place to ensure that Wales does not lose out. That process was started through a statement in 2012, which acknowledged the problem, but we are looking for a more definitive agreement.
The four-party, cross-party agreement that came from the Assembly in the past month asked for,
“an updated assessment of the current level and likely future direction of Welsh relative funding”.
The Assembly asked for those talks to be completed by January 2015, and this seems to be realistic in terms of a timetable, as the Secretary of State for Wales suggested. He wants a devolution settlement by St David’s Day, 1 March. We are therefore happy that we know that something will happen, at least by 1 March, in terms of reserved powers. We are looking ideally for another little present for us for St David’s Day.
The Minister suggested in a recent answer to a question on the Barnett formula in your Lordships’ House that, in terms of funding, Wales now receives 114% of the UK average. This is welcome information but it would be useful for us to have sight of this evidence. Would the noble Baroness or the noble Lord be willing to share the data that demonstrates that 114% has been reached? It is worth noting that the figure quoted by the Minister was at the very bottom of the range that Gerry Holtham, in his report, indicated was an acceptable and fair level of funding, which ran from 114% to 117%.
There were a few factors that determined the lower levels of funding that arose as a result of the funding formula. The 114% could be considered fair only if we did not undertake to include Welsh-language education provision in Wales, for example. They do not do that in England, so it is not included in the Welsh figures. Also, Wales has already made an upwards adjustment on council tax receipts. If England applied the same formula, Wales would be eligible for more money in the block grant. Those two examples alone mean that fair funding should probably be more like 116%, rather than 114%.
We also know that Wales will lose out once public expenditure starts to rise again, which is why we need this sorted once and for all with a long-term commitment. If we can secure a commitment to the floor being in place—even if that does not happen in practice until Wales holds a referendum on income tax powers, alongside the outcome of the continuing discussions on the off-set required in Barnett—I believe we will then be well on our way to securing a decent and fair funding outcome. However, we are not there yet, which is why, central to the introduction of income tax powers for Wales, we need to be assured that the Welsh Government are happy with the outcomes of those negotiations. That is why we have tabled the amendment.
Lord Howarth of Newport
My Lords, I support the amendment that my noble friend has just moved. It is as important as any other that we have debated today. I cannot see a satisfactory future for devolution in Wales until the Barnett nettle has been grasped. It is scandalous that no Government have dealt with this problem since the mid-1970s when the formula was introduced. Cumulatively, since devolution was introduced, Wales has lost out on some £5 billion of funding that it ought to have had, had there been a fair funding formula based on needs rather than on population.
It is true that the gap between what Wales ought to receive and what it does receive has narrowed somewhat in recent years, but we have to anticipate that, as economic growth continues to recover, so the gap in funding and the unfairness of funding will be exacerbated again. It is therefore imperative that there is no further procrastination on this and that the Government agree, with real urgency, to act to secure a just settlement for Wales. The Government were quick to respond to political pressures in Scotland. Political pressures in Wales have been expressed in gentler terms so far, but there will be a continuing sense of injustice that will undermine all the other efforts that we make to establish harmonious and satisfactory political arrangements on devolution for Wales. There are, of course, wider issues affecting the relationships between the nations and regions of the United Kingdom as a whole. I look forward to the Minister giving us a very positive response to the amendment.
Baroness Randerson
My Lords, I always enjoy the conversion of the Labour Party to the idea that the Barnett formula is unfair. The noble Lord, Lord Howarth, made a very important point, which is that it is scandalous that this formula has lasted for so long without anyone inquiring into it. I can assure noble Lords that the Government are aware of the issues and have taken measures to ensure that they are addressed.
This amendment would make the devolution of an element of income tax conditional on changes in funding arrangements. Specifically, the First Minister has raised this issue on numerous occasions, saying that he would not be prepared to recommend devolution of income tax unless fair funding were obtained. The amendment suggests that the Welsh Government have to confirm that they are content with the way in which funds are allocated to Wales from the UK Government before the element of income tax can be devolved.
This Government have already recognised that there has been convergence between the levels of funding in England and Wales since devolution. We took steps in the matter just two years after taking office. In October 2012, we set up a joint process with the Welsh Government to review the levels of funding in Wales and England in advance of each spending review. If convergence is forecast to occur over the spending review period, there will be a joint discussion of options to address the issue in a fair and affordable manner. That system worked well in advance of the 2013 spending round and confirmed that spending is not forecast to converge during the period up to 2015-16. It also established that relative funding levels in Wales were within the range that the Welsh Government’s own Holtham commission regarded as fair. In that context, the noble Baroness, Lady Morgan, quoted the 114% figure that my noble friend Lord Newby referred to last week. I am happy to write to her, and to set out further detail on that figure.
In relation to ongoing discussions about the funding situation, following the first meeting of the Joint Exchequer Committee between the UK and the Welsh Governments last month, we have now further committed to revisit jointly the review process in the light of the powers in the Bill. In other words, we have agreed to find a way of facilitating fair funding. The Government therefore believe that there is a sound basis for an early referendum to be called and I urge the Welsh Government and the Assembly to do so as quickly as possible.
I hope that I have assured noble Lords that the Government are aware of the issues on funding and are addressing them in discussions with the Welsh Government, who are fully conversant with our plans. I urge the noble Baroness to withdraw her amendment.
Baroness Morgan of Ely
My Lords, we acknowledge that the Government have taken certain steps to improve the scandal of Barnett in relation to Wales and we acknowledge that discussions are ongoing. We want the Assembly to be happy and comfortable with that funding process and to accept that it is a fair system, so I am a little disappointed that it should be so difficult to accept this amendment because that is what is being worked towards. It is simply saying that, before these things kick in, let us make sure that everybody is happy. I beg leave to withdraw the amendment.