Devolution: Wales and Scotland

Baroness Randerson Excerpts

Thursday 18th June 2015 Grand Committee

[Baroness Randerson (LD)]

My Lords, I thank the noble Lord for providing us with the opportunity to debate this important topic. I find myself in agreement with a number of the points that he made, although our political philosophies are very different.

Those of us who are campaigners for constitutional reform have experienced a lifetime of frustration at the glacial pace of change and the fact that it seems to come only grudgingly, with the offer of only the minimum of what is acceptable, and that all too often it is a response to a crisis rather than a logical, well-thought-out programme of reform. This principle has applied to our devolution efforts as well as to cross-constitutional reform in general.

The Labour Party—not the most devolutionary of parties—was brought back to devolution in 1997 by the determination not to be shut out of government again throughout the whole of the UK for another 18 years. Even if the Tories won at Westminster—so the thinking went—the Labour Party was at least assured of Labour Governments in Scotland and Wales. That did not quite work to plan, but the rise of the SNP is one of a series of political changes that was not then foreseen. However, the model of devolution designed for Wales was at that time underpowered and unworkable. It was quite literally the minimum—a minnow—and was designed to leave as much power as possible with Westminster and Whitehall. Of course, as soon as AMs got their feet under the table in Cardiff Bay, they realised this and started asking for more and, grudgingly, more was given. Some noble Lords may remember legislative competence orders, where MPs sort of double-checked the homework of Assembly Members and decided whether it was good enough to go forward as legislation.

We are in a very different world now. The pace of change has quickened considerably. Thanks to the coalition Government, who enabled the referendum in 2011, the Assembly now has primary legislative powers. It has more and wider powers. In fact, the pace of change has become so brisk that Wales Bills have been effectively queueing up on the runway. The Silk 1 report was not finally embedded in legislation before the Silk 2 recommendations were drafted into a new Bill, which, crucially, will deal with the uncertainties of the conferred powers model as well as giving the Assembly more powers, some of which were not even within the remit of the Silk commission to consider when it was established. I was delighted to see that the Wales Bill was mentioned in the gracious Speech. Will the Minister confirm that the scope of the Bill remains much as was envisaged in the St David’s Day agreement, in which I know he was very much involved?

The coalition Government were admirably responsive to pressure for more devolution in both Wales and Scotland, but—this is where I differ from the noble Lord, Lord Wigley—sometimes responsiveness is not enough and rapid responses can be contradictory and inconsistent. There were many differences between the devolution settlements of Wales, Scotland and Northern Ireland, and many of these exist for good reasons of history and geography, although there needs to be consistency. However, other differences were included by chance or for reasons of political pragmatism, neither of which is a good basis for constitutional development.

My party has long argued that we need a constitutional convention to take a comprehensive look at the constitution throughout the UK. That does not mean that in the mean time all change must stop and that we should be frozen in time until the constitutional convention reports. However, it does mean that the constitutional convention should look thoroughly at the situation from all angles. The title of the noble Lord’s debate suggests that there needs to be balance in this area, not slavish duplication. One devolved body should not simply be the clone of others. I and my party believe that the sensible answer lies in federalism, which would allow for balanced differences between the constitutional settlements in each country. The noble Lord quoted from a speech made in May by the leader of Plaid Cymru. I will forbear to quote from a speech made by Lloyd George on much the same lines.

Any convention must reflect well beyond the narrow interests of the political classes. It must be a people’s convention, not a politician’s convention. It was suggested in the news today that the Welsh First Minister would be an ideal chair of that convention. That suggestion illustrates that the Labour Party has failed to grasp even the shadow of the dangerous and unstable constitutional position that we are in as a United Kingdom. Any leader of a convention must command confidence across Britain and across political parties.

Our dangerous position is made worse by the highly divisive EU referendum now appearing over the horizon and by the distortions of our electoral system, which have magnified the political differences between the four nations to the point where the political balance is dramatically different from one nation to another. The noble Lord cited the SNP’s success in the election. It is important to remember that the SNP got 95% of the seats on just over 50% of the vote. That is one of the problems with our electoral system.

I now want to return to the title of the noble Lord’s debate and the issue of balance. A crucial factor in that balance is the funding formula—the Barnett formula. Of course, it is not a proper formula; it simply takes what Ministers decide to spend in England and applies it to the other three nations in percentage terms, based on historical spending decisions made way back in the 1970s. I recognise the pledge made to Scotland in the referendum campaign, which means that whatever its limitations the Barnett formula will stay for some time. However, the situation in relation to Wales is quite simply unsustainable. In the early years of devolution—Labour’s high spending years—the formula led to a massive gap developing between funding for Wales and funding for Scotland. The Holtham commission calculated that Wales was underfunded by £300 million a year. Wales was, and remains, the poorest part of the UK. Indeed, figures out today show that 15 years of devolution have not made even a dent on poverty levels in Wales.

One of the foibles of the Barnett formula has been that, as the coalition Government cut back on public spending, the relative underfunding in Wales became much smaller. Indeed, it seems likely that Wales is not actually underfunded relative to the rest of the UK at this time. However, when and if public spending rises again, the problem will return and we need to prepare for it now. I am pleased that the Government have agreed to introduce a funding floor, but we need more than that and we need it very soon. I am disappointed that the Government do not agree to an update to Holtham’s calculations. I refer here to an Answer given by the Secretary of State for Wales yesterday in Welsh Questions, in which he said in relation to the Holtham calculations:

“The work has been done and we need to crack on with introducing the fair funding floor”.—[Official Report, Commons, 17/6/15; col. 303.]

I should like some clarity on what the Secretary of State was referring to. Has Holtham updated his work? If not, how can the funding floor be embedded at a fair level without further calculations? Does the Minister accept that the perceived funding unfairness, which may or may not exist, simply magnifies a sense of grievance? Does he agree that the issue should be prioritised? He will be aware of Plaid Cymru’s call for Wales to be funded at the same level as Scotland. We all know why Scotland’s funding will remain; we are also aware that it is extremely generous. Maybe the Minister would like to comment on the realities of this situation. Is this fantasy economics? If so, I suggest to him that the Government need to get a grip on the funding issue before the sense of grievance in Wales escalates further.

Finally, I recommend to noble Lords an excellent book written about a decade ago by a Conservative Assembly Member, David Melding, now the Deputy Presiding Officer of the Assembly. It posed the question: will Britain survive beyond 2020? It seemed an astonishing question then. Now, it is not astonishing at all. Funding powers, voting patterns and political power—all these are pulling our union apart. England has at last found its voice in this debate and the fear is that it will simply be the loudest. I am sorry to use another metaphor—the noble Lord talked about the last chance saloon, whereas mine concerns a ship. The ship is being steered by a motley crew and if the Government are sensible they will take the helm before it hits the rocks. The Government should establish a convention that will bring order, restore confidence and, I hope, encourage further change.