Wales Bill

Baroness Morgan of Ely Excerpts

Committee: 3rd sitting (Hansard): House of Lords
Tuesday 15th November 2016 Lords Chamber

[Baroness Morgan of Ely (Lab)]

My Lords, I thank my noble friend Lord Griffiths for introducing this very important amendment. As he outlined, fixed-odds betting terminals are devices normally found across the country in betting shops that allow players to bet on the outcome of various games and events with fixed odds. I must admit that I am not much of an expert in this field. In fact, the nearest I have come to some serious betting is the odd game of bingo and the 2p slot machines on Barry Island. While we have to recognise that betting probably goes back to the age of the ark, we should be aware that the scale—the ability to lose serious money very quickly—has changed exponentially in recent years.

I make it quite clear that we are under no circumstances here advocating the wholesale devolution of gambling regulation to Wales. With the advent of internet gambling, it is extremely difficult to regulate gambling even at the UK level, let alone at the Welsh level. However, a particular aspect of gambling is causing social havoc in families and leading to ill health. Fixed-odds betting terminals allow players to stake up to £100 every 20 seconds on touch-screen machines—a significantly higher stake than the £2 maximum bet on a fruit machine. Many, often vulnerable, people are attracted by the prospect of high payouts of up to £500. Evidence suggests that these machines are highly addictive, causing real and lasting damage to gamblers. They have become a huge problem in communities that are often struggling to cope with underinvestment and high unemployment, exacerbating problem gambling more than any other form of betting. There are more than 1,500 fixed-odds betting terminals in Wales today, and more than £1.6 billion is staked annually. That is £1.6 billion in Wales alone.

I am ashamed to say that I believe that deregulating this industry was one of the worst things that Labour did while in government. Betting is creating vast social problems and health problems in our communities, but it is not the UK Government who are having to wipe up the mess; it is the Welsh Government. This amendment would confer legislative competence over fixed-odds betting terminals on the Welsh Assembly—a matter which is already devolved to Scotland. Therefore, once again, I ask the Minister: if it is good enough for Scotland, why is it not good enough for Wales? Devolving the regulations would allow the Welsh Government to introduce appropriate restrictions on content and operation and would shape responsible gambling initiatives.

In 2014, the Assembly adopted a Back-Bench Motion drawing attention to the social problems arising from the growth of gambling in Wales. It is important to note that this was supported by all four political parties then represented in the Assembly. By ensuring that betting shops remain the safest place to gamble and that people enjoy their leisure experience without betting more than they can afford to lose, the Welsh Government could take action to alleviate the negative consequences of gambling addiction, such as insurmountable debt and poor health, which at present have a detrimental knock-on effect on the Welsh budget. I ask the Minister to consider very seriously this extremely grave problem in some of our most deprived communities.

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Moved by

[Baroness Morgan of Ely]

53: Schedule 1, page 56, line 16, at end insert—
“Section C5AC5A Sea fishing69A_ Regulation of sea fishing outside the Welsh zone (except in relation to Welsh fishing boats).Interpretation“Welsh fishing boat” means a fishing vessel which is registered in the register maintained under section 8 of the Merchant Shipping Act 1995 and whose entry in the register specifies a port in Wales as the port to which the vessel is to be treated as belonging.”

[Baroness Morgan of Ely]

My Lords, this amendment, which concerns sea fishing, is a little bit complicated, so I hope that noble Lords will bear with me.

The Welsh Government already have executive competence for fisheries functions in the Welsh zone. In other words, it is now up to Welsh Ministers to determine what happens in relation to fishing anywhere within the 12-mile zone of Wales. This power is now extended to allow Welsh Government Ministers to have executive powers over Welsh fishing boats, whether they are in Welsh waters or UK waters. Take a Welsh fishing boat that is fishing off the Norfolk coast, which is within British fishery limits and would currently be subject to the licensing rules set out by UK Ministers. In future, when this power is transferred, it will be up to Welsh Ministers, by their rules, to license those Welsh fishing boats, whether they are in Welsh waters or in UK waters—obviously excluding Scottish waters.

That is all very nice and dandy for Welsh Government Ministers. However, there will be no oversight of Welsh Ministers because the Assembly—not the Government but the Assembly Members, like me—would not have any say on or sight of what is happening because the Assembly lacks the legislative competence to regulate fishing activities beyond the area of the Welsh zone. These are currently UK Minister powers, and so we come back to the issue of the alignment between legislative and executive functions.

This will become increasingly more important with Brexit on the horizon, because fishing is, of course, an area of devolved competence. The executive powers that are being transferred are the powers to require Welsh fishing boats to have a licence before they can fish outside the Welsh zone. For example, the licence could specify that you cannot fish for certain types of fish or that you must use approved fishing methods. At the moment, these fall under the EU common fisheries policy. Scotland currently has the legislative competence in relation to both the Scottish zone and Scottish fishing boats outside that area. The proposed amendment seeks simply to bring the Welsh Assembly’s legislative competence in line with the Scottish legislative competence and help align the Assembly’s legislative competence with Welsh Ministers’ executive fisheries functions. I hope that that is clear. I beg to move.

[Lord Elis-Thomas (Non-Afl)]

My Lords, I support this amendment from my noble friend Lady Morgan. It is in line with a more general issue that I raised earlier about the relationship between the executive competence of Welsh Ministers and the parallel competence, where it currently applies, of UK Ministers, and the competence of the Assembly itself and its ability to legislate and scrutinise. This is a fundamental issue and flaw in the Bill that we are now discussing. It is particularly reprehensible in the case of fishing.

I had the proud duty of trying to represent the northern part of Cardigan Bay. This will be well known to the Minister because he was based in the middle of Cardigan Bay for a very long time and, as far as I know, may still have a bolthole somewhere in the region—I will not pursue that in this debate. He also had a role further south-west in Milford Haven and so will know well the nature of the Welsh fishing industry and how it has been denuded over the years as a result of the reduction in the number of vessels and, more recently, the activity undertaken by the Welsh fisheries association with strong support from the Welsh Government in restoring and developing inshore fishing in order to ensure that we have product to promote Welsh fisheries as part of the Welsh food and drink initiative, which is currently the flagship policy of the Welsh Government. Therefore, I ask the Minister to take a further look at this.

It is essential, in my view, that we should be able to have direct oversight of our natural resources and not be in a situation where the oversight of the natural resources of Wales—in this case, the increasingly important marine resources—is located elsewhere.

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[Lord Bourne of Aberystwyth]

My Lords, I am going on to tackle the point made by the noble Lord. The Assembly has no legislative competence as things stand although Welsh Ministers can exercise executive functions in that part of the Welsh zone beyond 12 nautical miles in so far as these have been conferred by United Kingdom enactments.

I take the points that have been made in relation to fishing, but as drafted we would need to look at the amendment. It proposes something fairly fundamental to the extent that it would vary the geographic extent of the Assembly’s competence. I would want to go away and have a look at that to see how it could be refined, if that is possible. This is not something that was considered by Silk or by the St David’s Day agreement and, as drafted, the amendment goes well beyond the issue of fishing licences.

My noble friend Lord Deben referred to some of the ramifications in relation to fishing policy as it exists at the moment through Europe and as it will exist in the future outside of Europe, but that is obviously still something to be refined. I want to reflect on that as well.

My noble friend Lord Crickhowell asked about the licensing of fishing vessels and the position in his former constituency of Pembroke—Preseli Pembrokeshire as it now is. I can well remember as an elected representative in the Assembly for that area going at about four o’clock in the morning to the fish market at Milford Haven to speak to electors. All the electors there were Spanish electors, although they did have vehicles that were licensed in Wales as part of the United Kingdom. I think that that remains the position at the moment, but how it will pan out post-Brexit I do not know.

If I may I will take the amendment away and look at it, but based on the fact that there are far more ramifications to this than just fishing, and even in relation to fishing there are of course considerable ramifications—beyond 12 miles it is an economic zone for the state of the United Kingdom and we would exercise powers in relation to that for the whole country. On the points made by the noble Lord, Lord Elystan-Morgan, I thank him for his always gentle and complimentary approach which has me doing things I would probably not normally agree to; I recognise the dangers. I hope that we have looked at things in relation to this legislation on a pragmatic basis because that is the way to approach it. Any general rule is going to have to give way to exceptions because as we can see there are always difficulties in these things. Sometimes they look much more straightforward than they are. My door is always open and we have set up meetings with many noble Lords. I am happy to do that, but as I say our approach to the legislation is a good British pragmatic one. I will look without prejudice at what I think is a much more difficult area than perhaps it looks on the face of it. With that, I hope that the noble Baroness will feel able to withdraw her amendment.

[Baroness Morgan of Ely]

I thank the Minister. His reply reminded me of the time when I was an MEP and I went to meet the head of the sea fishermen’s association of Wales, Mr Gonzalez. Times have changed; we will see what happens.

I am delighted that the Minister is happy to look at this again. We would be happy to redraft the amendment. I do not quite understand why, if Welsh Government Ministers have this competence, the Welsh Assembly cannot be allowed it. Perhaps I need to go away and think about it. We come back to the issue of aligning legislative and Executive competence. If the noble Lord could look at that, I will of course withdraw my amendment.

Amendment 53 withdrawn.

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[Lord Hain (Lab)]

My Lords, in supporting the persuasive case made by the noble Baroness, Lady Randerson, I want to press the Minister on the question of job searches, which are automatically part of the careers service—careers being devolved, as has been mentioned. Has the Bill been drafted with a view to DWP questions, which of course are reserved? Jobcentres, in managing benefits, are also concerned with getting people into work and therefore job searching and providing skills and so on. Are the Government looking at this matter from a DWP and therefore a reserved perspective, but not taking account of the fact that careers are devolved and job searches are by definition part of a supportive, active, flexible careers service?

Perhaps the Minister could clarify this when he responds. If the DWP dimension is the reason that this is not being devolved in the way that the noble Baroness, Lady Randerson, has argued should be the case, will he look at it again to see whether it is possible to reconfigure this part of the Bill?

[Baroness Morgan of Ely]

My Lords, I will follow up on my noble friend Lord Howarth’s point on the principles that guided the determination of what should be reserved. To be fair to the Minister, we asked this question before but it was past 10.30 pm so I will give him another opportunity to state on what basis those principles were set—why have they been determined in this way? I underline the point made by many other noble Lords: we know the Minister to be a friend of Wales and that he is doing his very best for Wales. However, it would be interesting to understand why and on what grounds the other departments are making their case on the basis of reserving quite so many powers.

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[Baroness Morgan of Ely]

My Lords, we have heard some very passionate speeches and we are all very aware of how emotional the issue of water can become in Wales. The Minister is aware of how sensitive this issue is, especially following the travesty of the development at Tryweryn, which the noble Lord, Lord Wigley, mentioned. In fact, the Secretary of State, who is present —we welcome him to this Chamber—was clear in his public announcement yesterday that a second Tryweryn could never happen. The events at Tryweryn occurred in 1965, before I was born, but the fact that it has left an impression even on my generation says something about the powerful message that was sent at that time. I do not want to be churlish but I was fairly confident about this issue, having sought assurances from Welsh Government officials, who suggested that current planning laws already devolved to Wales could probably have stopped that scandal being repeated. I hope the Minister will confirm whether that is the case. As I say, I do not want to be churlish, so I cautiously welcome the announcement made yesterday by the Secretary of State for Wales in relation to water. However, I will reserve my judgment until we have seen the detail. On the face of it, the announcement should be a positive move but, as always, the devil is in the detail. Until we have had a chance to scrutinise that proposal, I intend to press ahead with our amendments.

The Bill amends Section 114 of the 2006 Act by limiting the grounds on which the Secretary of State can intervene to prevent the Presiding Officer submitting an Assembly Bill for Royal Assent. That section currently allows an intervention, so I look forward to the government amendment to remove it. The Minister should be aware that anything other than a complete deletion of this section will be looked on unfavourably.

Notwithstanding the points made by the noble Lord, Lord Crickhowell, I stand by Amendment 54, which would require the full devolution of water and sewerage to be aligned with the geographical boundary with England, as set out in the Silk report and the St David’s Day Command Paper. The work of the joint Governments’ water and sewerage devolution programme board, which was established following the St David’s Day paper to consider the alignment competence, found that changes can be achieved with minimal impact on consumers of water and sewerage services. I was delighted to see that in the letter to Peers that the Minister sent last week, he suggested that he was looking at this issue. Therefore, we hope that he will look favourably on this amendment.

The third amendment relates to the regulator. Ofwat, the regulator for water and sewerage providers in England and Wales, should be fully accountable to the National Assembly for Wales in respect of the functions it exercises in relation to Wales to better reflect the current devolution settlement on water matters. The amendment would make it a requirement for Ofwat to produce a report to Welsh Ministers and for that report to be laid before the National Assembly in respect of the functions it exercises in relation to Wales. The amendment would require the nomination of a board member as a joint appointment between the Secretary of State and Welsh Ministers to reflect a new arrangement which the Welsh Government consider necessary consequent to full legislative competence for water and sewerage.

Amendment 104 is proposed to amend Section 27 of the Water Industry Act to require the Secretary of State to seek the consent of Welsh Ministers before issuing general directions to Ofwat in respect of matters where functions are exercised by water and sewerage undertakers in Wales, or where licensed activities are carried out using the system of a water or sewerage undertaker wholly or mainly in Wales.

These changes are necessary so that Ofwat is fully accountable to the National Assembly for Wales and Welsh Ministers for those functions to be exercisable in relation to Wales. It is therefore important that we apply appropriate Assembly procedures to regulations which make provision within the Assembly’s competence. Scotland has great scope on environmental powers, including the regulation of water. It is only right that Wales is awarded equal authority in this respect.

[Lord Bourne of Aberystwyth]

My Lords, I thank the noble Lords who have participated in the debate on these amendments, which relate to water. I particularly welcome the contribution of the noble Lord, Lord Wigley, who moved his amendment with sensitivity and fairness on an issue which I know is very close to his heart. The Government are determined that never again should there be a Tryweryn. That is at the back of all our thinking on this issue.

I welcome the contributions from around the Committee. My noble friend Lord Hunt of Wirral spoke with passion of his time in north Wales, and the noble Lord, Lord Morgan, talked of his home county of Meirionnydd. I also welcome the contribution of the noble Lord, Lord Elystan-Morgan. I could not agree more with the sentiments that they expressed. I also thank my noble friend Lord Crickhowell—with his background and experience as chairman of the National Rivers Authority—for bringing his authority to this issue: aligning the border is not necessarily straightforward.

Water is of symbolic importance as well as practical significance to Wales. It evokes more passion and debate than probably any other issue relating to Welsh devolution. It is not just about Tryweryn; as the noble Lord, Lord Thomas of Gresford, reminded us, it is about the Dulas Valley as well, and there have been other issues. I thank noble Lords for contributing to the debate from the viewpoint of their own experiences. The strength of feeling has been amply demonstrated in their speeches.

In announcing the Government’s intention to devolve pay, my right honourable friend the Secretary of State for Wales signalled that the Government were exploring other aspects of the settlement to ensure that it is as clear and fair as possible. Yesterday, my right honourable friend Alun Cairns announced the Government’s intention to remove the Secretary of State’s powers to intervene on water and to replace them with a statutory protocol on water between the United Kingdom Government and the Welsh Government. Work will be done on that, and we hope to have the detail ready for Report.

That is a highly significant announcement. Water has been a challenging issue, as anyone familiar with recent Welsh history will know. The replacement of the intervention powers with a formal protocol marks a step change in the history of Welsh devolution—one that resolves past differences and provides clarity for the future. The move also removes any last impediment that there may be—at least in terms of this Bill; I hope the noble Baroness will be able to clarify this—to the Assembly giving its approval to the Wales Bill, subject of course to agreement on the fiscal arrangements.

The existing intervention powers were put in place in the Government of Wales Act 2006, when Peter Hain—now the noble Lord, Lord Hain—was Secretary of State. Since then, there has been a great deal of development in relation to devolution. This Bill marks a move to a new, durable and lasting devolution settlement, underpinned by a recognition of the maturity of the Assembly and the Welsh Government. In keeping with this, it is time to replace the Secretary of State’s powers to intervene on the Assembly and Welsh Ministers in relation to water with a statutory protocol between the United Kingdom Government and the Welsh Government which defines how the two Governments will work together on water-related issues—in particular, cross-border issues.

I confirm that the Government intend to bring forward amendments on Report to put in place the requirement for a formal agreement and to remove the intervention powers. In doing so, it will be important to respect the interests of water users in both Wales and England. As my noble friend Lord Crickhowell exemplified, this is not necessarily straightforward in every respect.

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[Baroness Morgan of Ely]

I am pleased that there will be movement on the intervention powers of the Secretary of State. That is a very positive move. I am also very pleased the Minister has clarified the fact that we could have stopped what happened at Tryweryn with the current powers—that has come across clearly. But he did not say, in relation to Ofwat, whether he is minded to move on that issue. The impression I got was that he was not, but perhaps he will clarify that.

[Lord Bourne of Aberystwyth]

My Lords, I am happy to clarify that point. I believe that the existing powers in relation to the Welsh Government and Welsh Ministers are sufficient, but I am very happy to look at that issue and cover it in the protocol, which could extend to that if it is something that we should be doing. I will happily discuss that with the noble Baroness.

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Moved by

[Baroness Morgan of Ely]

55A: Schedule 1, page 60, line 4, at end insert —
“ExceptionConsent for—(a) the construction, extension or operation of devolved generating stations, and(b) the installation of devolved associated lines, or keeping such lines installed.Interpretation“Devolved generating station” means an electricity generating station that is or (when constructed or extended) is expected to be—(a) in Wales and—(i) generates or is to generate electricity from wind, or(ii) has or is to have a maximum capacity of 350 megawatts or less; or(b) in Welsh waters and has or is to have a maximum capacity of 350 megawatts or less.“Welsh waters” means so much of the internal waters and territorial sea of the United Kingdom as are adjacent to Wales, and the Welsh zone.“Devolved associated line” means an overhead electric line that—(a) is associated with a devolved generating station, and(b) has or is (when installed) to have a nominal voltage no greater than 132 kilovolts.”

[Baroness Morgan of Ely]

My Lords, this Bill proposes that the Assembly will gain competence over all renewable energy generating projects of up to 350 megawatts in Wales and in Welsh territorial waters. Amendment 55A suggests that the UK Government have gone too far in their intention to reserve their power to legislate over electricity, including the generation, transmission, distribution and supply of electricity. Although of course we recognise that it is important to have a single market in energy, ideally not just in the UK but across the EU as a whole, we contend that under the system proposed by the UK Government opportunities for the development of energy production in Wales will be stifled.

Here, I should probably declare an interest. It is not a current interest but an interest that I had in the past while I was working for an energy company in Wales. Part of my remit was to help develop a significant wind farm in mid-Wales. Let me tell you that the legislative process was chaos. The Welsh Government had more or less invited wind farm companies to develop wind farms in specific areas in Wales, but the decision as to whether permission could be given to develop a large wind farm was the responsibility not of the Welsh Government but of the UK Government.

On top of that, the wind farm needed to be connected to the grid. A 132 kV line—that is, a small electricity line on a pole—from the wind farm to the main national grid needed to be approved, not by the national Government but by the local authority. This could be called in by the National Assembly. These little electricity lines then needed to be connected to a large electricity substation—the places where you see the twirly bits in areas where the electricity goes in. That would convert the voltage from 132 kV to 400 kV, which is for the national grid. The responsibility to allow the building of the substation lay with local government, which again could be called in by the Welsh Government. Responsibility for the national grid and the decision as to whether to build the large power lines on pylons rested with the UK Government.

The whole system was chaos. It was no wonder that, in the end, the company threw up its arms in horror and walked away from the project, having already invested a not insignificant amount of money. Unless the associated consents for devolved electricity generation rest in Wales, the chaos is likely to continue.

I will touch briefly now on the limitation of the level at which Welsh Government approval in relation to electricity is set. The Bill proposes that the Assembly will gain competence over all renewable energy generating projects of up to 350 megawatts in Wales and in Welsh territorial waters. Our concern is that this figure is arbitrary. The Silk commission attempted to provide justification for this limit, but the situation in Wales has moved on considerably since those days. Since the Silk commission looked at the issue, we have seen ambitious projects such as the tidal lagoons progress and proposals for huge tidal lagoons introduced. I know that we are still waiting for the green light—and I will be extremely interested to hear what the strike price will be eventually on this project—but, whether you are a supporter or not, these plans are very far advanced.

In this amendment we suggest that the limit should be increased to 2,000 megawatts. I accept that that is just as arbitrary a figure. Therefore, will the Minister confirm why a level of 350 megawatts was suggested and why we cannot increase it? What is the rationale behind that? If we do not change it now, would there be any scope for us to change it in the future? What would the process for that be? I beg to move.

[Lord Elis-Thomas]

I am grateful to the noble Baroness, Lady Morgan, for moving this amendment. Her description of what happened with the history of substantial onshore wind projects in Wales was absolutely correct. For much of that period I had responsibility as chair of the environment committee of the National Assembly, which produced a substantial report on energy and planning. My difficulty is the difficulty to which she alluded; yet again we are placing a cap on the potential development of natural resources in Wales that does not make sense in terms of energy policy or indeed in terms of the potential for development of natural resources for the future.

There is a separation of generation capacity at different levels. There is the grid, as we have already heard, for the over 400 kilovolt—but there is also the separation of powers in relation to the internal grids provided by the electricity distribution companies. This affects potential smaller generation projects with individuals and small communities whether of hydro power, wind power, turbines, solar power or any other developing form of renewable energy. It means that the potential for development is being stifled because no one is taking a clear view of how these projects could be developed.

Unfortunately for the whole project, the Welsh Government intervention seeking to identify areas for development—mainly on land in public ownership—was not helpful. So for 10 years at least we lost potential capacity for energy generation and also capacity for having a proper grid connection throughout Wales. That is something that we shall have to revisit. I look enviously to Scotland, which has clear guidelines and clear demarcation in terms of the devolution of energy.

I have a particular interest in other forms of low-carbon energy, notably the potential development of small modular nuclear power that could replace the decommissioned nuclear power station at Trawsfynydd in my own part of the world. Currently nuclear power is with the UK Government in totality. But the actual capacity in terms of generation of a single modular power station is probably less than 350 megawatts. Obviously one would look for more than one unit at such a development where you have, as at Trawsfynydd, a full grid connection, land and water availability for coolant and of course a very skilled labour force that has worked in the energy industry. So the Minster needs to look again at the way in which these aspects of the Bill have been set out. In areas of natural resource, it is essential that we look to future capacity and not settle for arbitrary figures on present capacity.

I shall not ask whether the Minister is interested in introducing a protocol for energy policy, but if a protocol for natural resource in relation to water makes sense, it makes even more sense in relation to energy. I have not even mentioned the energy arriving increasingly now in Wales and as part of the Welsh grid from Ireland, where I am assured that the future development of renewable energy both onshore and offshore is likely to continue. That capacity can join the mainland European grid effectively only through Wales. All these aspects need to be considered. I hope that the Minister will be able to give the noble Baroness, Lady Morgan, me and others some optimism as to the potential for future development of this natural resource.

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[Lord Bourne of Aberystwyth]

My Lords, I say two things to that. First, I am certainly not going to get into a Dutch auction as to what should come within on that basis. Of course I understand the point he makes, but my second point takes me back to one I have already made: we need a ready and willing dialogue between the Welsh Government and the National Assembly, as I think is happening, and between BEIS and Parliament. There is no reason to suppose that there is a malign intent regarding these projects. I know the noble Lord is not suggesting that.

Government Amendment 119G is a minor and technical change to Schedule 5. Under Clause 37, Welsh Ministers will have the ability to consent to electricity generating stations of up to 350 megawatts in waters adjacent to Wales. The vehicle for doing so will be Section 36 of the Electricity Act 1989, and Schedule 5 to the Bill gives Welsh Ministers the ability, by regulation, to amend the Section 36 application processes to suit their purposes. The Bill currently also extends that regulation-making power to Section 37 of the Electricity Act, which relates to the consenting of overhead power lines. However, as Section 37 consenting powers are not being devolved in the Bill, the power is ineffective and it makes sense to remove it.

Government Amendment 121 amends Clause 55. Further to the one-stop-shop philosophy for energy consenting advocated by the Silk commission, Clause 41 provides the Secretary of State with the ability to consent associated developments along with the principal consent for nationally significant infrastructure projects in the field of electricity generation and transmission. This will deliver significant streamlining improvements to a system which, at present, can require developers to assemble consents from a plethora of different authorities. It is wholly consistent with the Government’s policy of encouraging infrastructure development for these changes to be introduced as soon as it is practical. The amendment will achieve that by commencing the relevant provisions two months after the Bill’s Royal Assent.

On that basis, I urge the noble Baroness to withdraw the amendment, and for her and the noble Lord not to press the other amendments in the group. I intend to move the government amendments.

[Baroness Morgan of Ely]

My Lords, I thank those who have participated in this debate. I recognise that my amendment on electricity generation, distribution and supply was imperfect; it was meant to generate a debate of this kind. I understand that there are no limits in terms of power over onshore wind and certainly do not want to imply any malign intent on the part of the UK Government, but the complexity of the current model means that it is extremely difficult for Wales to compete in a global investment energy market. If it is much easier to go through a planning process in Denmark than in Wales, why would you not go to Denmark? It is a shame that we have not come to any conclusion on this, but it is an issue that we need to look at. We may need to look at how we streamline the process. It may be another issue where we could put a protocol in place, because we like protocols as a way of moving things forward.

On the cap beneath which we should be allowed to determine energy consents in Wales, I am not sure how much further we have gone. Dialogue is good, as the Minister suggested, but I am not sure what kind of commitment that represents. I hope to retain our ability to come back to discuss both amendments on Report, but for now I beg leave to withdraw Amendment 55A.

Amendment 55A withdrawn.

Moved by

[Baroness Morgan of Ely]

56: Schedule 1, page 61, leave out lines 7 to 21

[Baroness Morgan of Ely]

My Lords, Amendment 56 relates to the proposal by the Government to reserve provision relating to heating and cooling energy systems at the UK level. I shall speak also to Amendment 57, on retaining energy conservation at a UK level.

The reservation in respect of heating and cooling is broad in its scope and risks impinging on existing legislative competence in the fields of planning, economy, environment and, crucially, energy efficiency, all of which are already devolved and under the control of the Welsh Government. Not devolving heating and cooling has the potential to prevent delivery of climate change targets across a number of devolved sectors. Heating networks are inherently local—there is no national heat network—so it seems clear that this is better delivered at a local or regional level. The case for retaining the power at a UK level has not been made.

Let me give you an example. Cardiff Council has helped to facilitate the development at Trident Park which converts residual waste into renewable energy. The project also has the potential of supporting a city-centre district heating scheme. Why do the UK Government need to be involved in what is essentially a local initiative? The Government of Wales Act is silent on heating and cooling, while the Scotland Act has no such reservation. I hope that the Minister can enlighten us on why this issue has been retained at a UK level.

The current Bill also reserves energy conservation at the UK level but accepts that energy efficiency other than by prohibition and regulation is devolved. The Explanatory Notes refer to the Energy Act 1976, which relates to energy security and the conservation of fuel stocks. That was drafted in a different era when we had little awareness of climate change, an era of miners’ strikes—it was just after the three-day week. At that time, energy conservation meant a very different thing.

Furthermore, the Bill refers to both “energy conservation” in a reservation and “energy efficiency” in an exception. Are these synonymous? If not, can the Minister explain the difference? The drafting of the reservation could lead to confusion and disputes between Administrations. Let us remember that the cheapest and most efficient way of tackling climate change and fuel poverty is not to use energy in the first place.

These reservations could place restrictions on the ability of the National Assembly to meet its climate change targets and deliver on its priorities across a number of devolved areas. It makes no sense to have a UK reservation for something that is inherently local in its delivery. I am of course willing to be enlightened by the Minister on the justification for retaining the power at the UK level.

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[Lord Bourne of Aberystwyth]

My Lords, I thank noble Lords who participated in the debates on heat and cooling and on energy conservation. Amendment 56 seeks to remove the reservation that deals with the supply of heat and cooling. It is important to be clear that the reservation is concerned with policy on heat supply, which is analogous to the supply of every other type of energy. Heat is strategically significant and represents almost half of our energy use and around one-third of carbon emissions. I can tell the noble Lord, Lord Howarth, that the Government have a very definitive energy policy—not just when I was Minister, I hasten to add—very much signing up to the climate change targets internationally, along with many other countries, as he will know; a commitment to nuclear, which I do not think is shared, certainly, by his party leader; and a commitment to diverse sources of energy. Let us put that canard to rest: there is a very definitive energy policy.

The policy in relation to heat is significant. Heat represents, as I say, almost half our energy use and around one-third of carbon emissions. The reason that we are seeking to reserve this is because it is a relatively new technology; it is about supplying heat, through policies such as the renewable heat incentive, the heat networks investment project, the combined heat and power quality assurance scheme and innovation support, and through initiatives such as the smart systems and heat programme, all of which are part of the United Kingdom’s energy policy. I accept that rollout and delivery will always be at a local authority level, but it is question of how the framework is set. These policies already exist and benefit the people of both Wales and England. It seems clear that devolving this area would increase costs, due to a loss of economies of scale, and would add complexity and confusion for businesses and householders and add to bills. The noble Lord, Lord Howarth, touched on affordability, which is certainly a prime concern of the Government, along with security of supply and ensuring that energy is green.

Heat is not simply a local issue. There are strategic decisions to be taken over the coming years, including options that would require action at a national level, such as decarbonisation, possibly even decommissioning, of the existing gas grid. These emerging national-level heat issues mean that it would be far more effective to maintain consistency between England and Wales, and it is why grid and infrastructure issues relating to oil, gas and electricity are also reserved in Scotland as well as in Wales. I hope I have explained the Government’s reasons for this reservation and why I am not able to accept the amendment.

Amendment 57 seeks to remove the reservation that deals with energy-efficiency requirements. The reservation uses the term “energy conservation” to reflect the language in the existing devolution settlement. It is our contention that energy efficiency is a subset of energy conservation. I will write to the noble Baroness, Lady Morgan of Ely, with some of the technical detail on that, if it would be helpful. The settlement provides for the Assembly and Welsh Government to have powers on energy efficiency, except via the use of regulation or prohibition. It is not as if there is no power in relation to energy-efficiency; it is just in relation to regulation or prohibition. For example, it would allow schemes to advertise energy-efficiency measures—I think that is probably something the Welsh Government already do, although I stand to be corrected on this.

The reservation in this amendment, however, covers home and business energy-efficiency measures that are imposed by regulation, and so have been implemented by, or under, legislation or equivalents, such as licence conditions imposed on gas and electricity suppliers. Having separate energy-efficiency obligations for England and Wales would be likely to increase the complexity and costs for organisations involved in delivering the obligations, with an impact on consumer bills. That is something the Government cannot sanction and, on that basis, I urge the noble Baroness to withdraw her amendment.

[Baroness Morgan of Ely]

I thank the Minister. I find it quite odd when, in one breath, there is a suggestion that we need to meet decarbonisation targets and yet there is an understanding that climate change targets also have to be met at local levels. I think the Welsh Government have targets on that. I do not think you can have it both ways. On grid and infrastructure, of course there is a recognition that there needs to be a UK grid and infrastructure, but I contend that that does not make sense in terms of local heat networks. I would be very interested to see a little more detail on what the Minister suggests in relation to energy conservation, but the fact that energy efficiency is already largely devolved is perhaps something that has not been recognised in the way we had hoped. With that, I beg leave to withdraw the amendment.

Amendment 56 withdrawn.

--- Later in debate ---

[Lord Hain]

I was going to say that I strongly support Amendments 58 and 97, in the absence of an assurance from the Minister to the contrary, because there is a strong case—following the St David’s Day agreement, the work of the Silk commission and, indeed, the logic of the case—that responsibility for this franchise should lie with the Welsh Government. To avoid taking up any more time, I hope the Minister will confirm that it will be devolved and the Government will bring forward an amendment to that effect at some point, presumably on Report.

[Baroness Morgan of Ely]

My Lords, as currently drafted, reservation 183(c) removes the ability of the National Assembly to introduce town and country planning legislation relating to the development of railways. This aspect of the Bill clearly rows back on the existing devolution settlement, as the National Assembly currently has the ability to legislate on town and country planning matters, which can include the construction of railways.

The Welsh Government are clear that the development and use of land for such infrastructure falls within the current devolved planning system. This is supported by the fact that, since devolution, subordinate legislation has been made by the Welsh Government under the Town and Country Planning Act 1990 to make provision for railway development, and that such development can be, and has been, given consent under the planning system.

More recently, the Welsh Government made regulations under the Town and Country Planning Act 1990, as amended by the Planning (Wales) Act 2015, to make provision for railway development to constitute development of national significance in Wales. At no point during the scrutiny of the Planning (Wales) Act was the issue of legislative competence raised in the context of railways by stakeholders, which included the UK Government. The inclusion of railways in the reservation would restrict the National Assembly’s ability to legislate further for railway development in the context of developments of national significance. There is a clear need to preserve the existing devolution settlement, which Amendment 70, in deleting reservation 183(c), achieves. I urge the Committee and especially the Minister to support this amendment.

Amendment 109 deals with railway franchising. At present, the majority of rail services in Wales are provided under the Wales and Borders franchise operated by Arriva Trains Wales. This was concluded following the joint parties’ agreement in 2006, which set out the division of responsibility for the management of the Wales and Borders franchise between the two Governments. From early 2017, the Welsh Government will become a franchising authority in their own right, with responsibility for awarding the next Welsh rail franchise, due to start in October 2018.

The current Railways Act does not allow the Welsh Government to permit public sector organisations to bid for rail franchises—a matter which was conceded for Scotland following Smith commission recommendations. We on this side of the House do not have ideological objections to the nationalisation of railways, unlike the UK Government. In fact we think that the German nationalisation model, which has been allowed to run franchises in the UK, has simply stuffed UK taxpayers’ money into the pockets of German taxpayers. The French nationalised railways run a much cheaper and more efficient system than any of our current players in the UK. We would like to see flexibility so that if the Welsh Government wished to bid for that franchise, they could do the same for Welsh people. The Welsh Government have stipulated time and again that they may be interested in applying for such a franchise or allowing a not-for-profit organisation to bid. Again, we would like the UK Government to explain on what grounds they justify this discriminatory action.

[Lord Hain]

I strongly support my noble friend’s case. Would she also say that the model of Welsh Water could be a very good one for the Wales and Borders franchise? That is not least because, being a not-for-dividend company, Welsh Water is able to raise capital at a far cheaper rate than on the open markets in the City, as other water companies are required to do. It is therefore a better model and that option should be available to the Welsh Government, should they choose to pursue the franchise in the future on that basis. I do not think that the existing Bill allows for that.

[Baroness Morgan of Ely]

The noble Lord is quite correct in his assessment. One of the problems is that the Welsh Government have indicated that they would be interested in looking at some kind of not-for-profit model, such as that of Dwr Cymru. But one of the real problems here—the real shame—is that the timing on this issue is very bad because while we hope that the Government will accede to our request on this matter, if they agree to do so it will come too late for the current procurement round. That round has already opened, so the earliest that we could see a Welsh public sector bid or a not-for-profit franchise bid on this matter would be 2028. I suppose that would be better late than never; at least we will be ready for the next time. I hope that the Minister will be able to give us some comfort on this issue.

I support the views of the noble Baroness, Lady Randerson, in relation to devolving the training, testing and certification of driver licensing to Wales.

Finally, I ask the Minister for clarification on a point regarding the regulation of bus services in Wales. Traffic management is already devolved, in addition to the regulation of transport facilities. These will continue to be devolved, thankfully, under the Bill by virtue of the fact that they are not reserved. Under the new settlement, there is new scope for the Assembly to legislate concerning local bus registration. Ministers currently have limited executive powers in respect of local authorities co-ordinating bus operations, as set out in the Local Transport Act 2008, including voluntary and statutory quality contracts.

I believe that there should be scope in the Bill to allow for the regulation of buses in Wales. I hope that the Minister can confirm that this is indeed the case. Can he confirm whether the associated benefits of regulation, include the possibility of capping and regulating fares and integrated ticketing, will also be possible? It is unclear to me whether reservations concerning competition and consumer protection could prevent these important issues being pursued. Some assurance on that would be helpful. Can he also confirm that the Bill in its current form does not prevent the Assembly legislating in relation to the registration of bus services and franchising, or indeed other areas covered by traffic management and regulation in addition to other transport facilities and services, such as parking, street works and the blue badge parking scheme?

[Lord Bourne of Aberystwyth]

My Lords, I thank noble Lords who have participated in the debate on these issues relating to transport. I turn first to Amendment 57A, moved by the noble Baroness, Lady Randerson. Section E1 of new Schedule 7A lists the road transport powers that are reserved. Amendment 57A would give the Welsh Government responsibility over driver training, testing and certification. The words “including training, testing and certification” are intended to clarify further what is meant by driver licensing, which is an exception to the Assembly’s competence under the current devolution settlement. It is not intended to modify the Assembly’s current competence; I can confirm that and it will of course appear on the record. It is important for business and road safety for there to be a consistent approach across Great Britain. It would be impractical and costly for the transport industry to follow different rules on how drivers should learn to drive and have a different driving test from the rest of the country. I do not think the noble Baroness was suggesting that. Moreover, road safety is reinforced by all road users having to observe the same rules so that everyone is able to fully understand the consequences of not observing those rules.

Amendment 57B, as tabled by the noble Baroness, Lady Morgan, would except the registration and regulation of bus services from the road transport reservation. The Welsh Government already have the ability to determine a number of aspects of bus policy including concessionary fares, smart ticketing and the provision of subsidies. The devolution of the registration of local bus services—a St David’s Day commitment—is already provided for in the Bill and will complement the Assembly’s existing powers. Welsh Ministers will have the power to legislate in respect of bus franchising, quality contracts and quality partnerships. I will write to the noble Baroness more specifically on some of the exceptions and issues that she raised. I am sure she realises that one or two of those were fairly technical. I do not have the information to hand.

Amendment 97 will not be moved, as I understand it, but I will refer to it briefly— notwithstanding that I think the noble Lord, Lord Wigley, said that to confirm his understanding. Perhaps I could turn first to Amendment 58, which was spoken to by the noble Lord, and seeks to extend the legislative competence of the Assembly in relation to railway services to include the Wales and Borders rail franchise. It is not clear what the intended geographical scope of these powers would be, nor what particular functions potentially relevant to the procurement and operation of the franchise the Assembly would have competence over. This is somewhat like the issue relating to water; at issue is that the railway line is partly in England and partly in Wales. On railway services, the Assembly currently has legislative competence only in respect of financial assistance relating to railway services, subject to limited exceptions in relation to the carriage of goods, railway administration orders and compensation of passenger service operators for public service obligations, under EU Regulation 1370/2007.

Extending the Assembly’s legislative competence in relation to the provision of railway services was not recommended by the Silk commission and so was not considered in the St David’s Day process. The Bill therefore seeks to preserve the existing devolution settlement in relation to legislative competence for railway services. It may also be helpful if I confirm that an amendment to the Assembly’s legislative competence is not necessary to give effect to our agreement with the Welsh Government to take forward the devolution of executive franchising functions for Welsh services to Welsh Ministers.

Amendments 59 and 60, tabled by the noble Lord, Lord Wigley, seek to extend the Welsh Assembly’s legislative competence in relation to rail infrastructure in Wales and the specification and funding of Network Rail’s operations in Wales. As he will no doubt be aware, the Silk commission recommended the transfer of executive functions in relation to the specification and funding of Network Rail’s operations in Wales. This recommendation was considered as part of the St David’s Day process but there was no political consensus to take it forward. The Government do not intend to revisit this issue, given those discussions. I can however assure the Committee that the Department for Transport continues to liaise closely with the Welsh Government on the specification and funding of Network Rail’s operations in England and Wales for each five-year railway control period, to ensure that requirements in Wales for increased capacity on the network are reflected. The Government also welcome the significant investments made by the Welsh Government in the rail network in Wales to support the Welsh economy. These complement the significant investments in the strategic capacity of the England and Wales rail network that have been, and will continue to be, made by the UK Government that benefit Wales.

Amendment 70, which was tabled by the noble Baroness, Lady Morgan of Ely, and the noble Lord, Lord Wigley, seeks to remove planning in relation to railways in Wales from the list of reservations. The underlying issue is the interpretation of the current devolution settlement set out in the Government of Wales Act 2006. The UK Government and the Welsh Government interpret the extent of current devolved competence in relation to this issue differently. This again emphasises the lack of clarity that exists under the current devolution settlement. It also points to the need to ensure that the Bill removes any uncertainty and provides clarity going forward. Establishing a clear boundary between what is devolved and what is reserved is, of course, a key objective of this Bill. However, Amendment 70, without further clarification, has the potential to introduce further uncertainty to the devolution boundary by creating a conflict with the “railway services” reservation in Section E2 of new Schedule 7A. As such, we need to be able fully to consider the issue and the most appropriate approach to adopt.

However, I am aware that the Assembly has already exercised competence in this area, as referred to by the noble Baroness, Lady Morgan, under the Planning (Wales) Act 2015. In the circumstances, I therefore propose to take this issue away for detailed consideration and to return to the House and set out the Government’s position on Report. With that assurance, I hope the noble Baroness will not press the amendment.

Amendment 109, in the name of the noble Baroness, Lady Morgan of Ely, seeks to press the UK Government to a decision on a matter they committed to consider in the St David’s Day Command Paper. That matter is whether to legislate for Wales in a manner similar to provision in the Scotland Act 2016 regarding the powers of Scottish Ministers, as committed to in the Smith commission agreement, to enable Welsh Ministers to invite United Kingdom public sector operators to bid for rail franchises for which they are the responsible franchising authority. I say in parenthesis that, as my right honourable friend the Secretary of State set out in other place, the Railways Act does not prevent not-for-profit bidding for franchises but prevents public sector bidders.

I recognise that the Welsh Government are keen to have such flexibility, in addition to that available under current legislation, to encourage bids from other sector organisations. The Government consider it would be premature to reach a decision on this matter in advance of final agreement with the Welsh Government on the terms for future devolution of executive franchising functions. At present, Welsh Ministers do not have any statutory powers to procure rail franchises. The effect of the proposed amendment would be to confer discretion to allow public sector bidders for franchises consisting of, or containing, Wales-only services on the Secretary of State. This would be inconsistent with the United Kingdom Government’s policy not to allow UK public sector operators to bid for rail franchises.

As the noble Lord, Lord Wigley, indicated, I am committing to the progress made between the United Kingdom Government and the Welsh Government in preparing for the transfer of franchising functions to Welsh Ministers. That is something we are seeking to do and are committed to do. As part of reaching final agreement, we will be able to reach a decision on the issue raised by this amendment regarding Welsh Ministers’ ability to invite bids from public sector operators in future procurements.

[Baroness Morgan of Ely]

Can the Minister give us a timetable for when those decisions will be made? Will it be before Report or is it an issue that will be resolved after the Bill has left this House?

[Lord Bourne of Aberystwyth]

My Lords, to some extent I am in the hands of noble Lords as to when we complete Committee stage—a subtle hint if ever there were one. I hope and intend that we should be in a position to bring this forward on Report, but certainly during the passage of the Bill. I hope it will be before Report.

Amendments 83A, 83B, 119C, 119D, 119E and 119F amend Clause 27 and Schedule 5 so that all the Minister of the Crown powers in Sections 6, 6A and 6B of the Transport Act 1985 are transferred to Welsh Ministers by the Bill, which I am sure noble Lords will welcome.

As a result of the complexities involved in the traffic commissioner being a reserved body but exercising some devolved functions, the original clause transferred the regulation-making powers in Sections 6 and 7 of the Transport Act 1985 that related to the traffic commissioner. This was to provide clarity in the Bill, with the remaining powers to be transferred via a subsequent transfer of functions order. Following discussions with the Welsh Government, we have agreed to transfer all the regulation-making powers relating to the registration of local bus services in Section 6, 6A and 6B of the Transport Act 1985 in the Bill.

On the basis of that information and the assurances and responses I have given, I urge the noble Baroness to withdraw her amendment.