Wales Bill

Baroness Randerson Excerpts

Committee: 2nd sitting (Hansard): House of Lords
Monday 7th November 2016 Lords Chamber

[Lord Crickhowell]

My Lords, I find myself agreeing with the noble Lord, Lord Morgan, on the subject of referendums and, indeed, with the noble Lord, Lord Wigley. I hope Clause 17 will stay part of the Bill. It would be particularly unfortunate to remove it when, as I pointed out at earlier stages, we still do not know what the financial arrangements will be. My noble friend has helpfully pointed out that we hope to know more about that before Report. In all the circumstances, it seems an extraordinary proposal that we should remove Clause 17. I hope very much, for the reasons given by the noble Lords, Lord Wigley and Lord Morgan, that it stays as it is.

[Baroness Randerson (LD)]

My Lords, the powers on income tax are one of the most important aspects of the Bill. As the Minister knows better than I, the Silk report recommended a referendum as a compromise on income tax. There were those members of the commission who were very keen for the Welsh Government to have those powers and those who were not keen at all. The compromise position was that they should have the powers, but only after a referendum. I am sure the Minister will correct me if I am wrong—otherwise, I am equally sure, he will remain discreetly silent on the issue.

However, the devolution story has moved on a very long way since that recommendation. We have had the Scottish referendum, the St David’s Day agreement, and, as the noble Lord, Lord Murphy, reminded us, the previous Wales Act, which I took through this place. So a referendum requirement is well out of kilter with the times. Forgive me: along with several other noble Lords who have already expressed their views, I am a little out of love with referenda. They do not always answer the question on the ballot paper.

I also remind the noble Lord, Lord Murphy, that powers over income tax could possibly mean that income tax could go down as well as up, or that the Welsh Government could choose to do as the Scottish Government have done for nearly 20 years: to have that power but not to vary the rate of income tax. But there are many reasons associated with the principle of powers over income tax that make it essential that the Welsh Government are given those powers.

There are reasons associated with certainty and transparency. The Welsh Government have evolved from being a purely executive body within the Assembly to being a full legislative body. As those powers have developed, they have lacked the right to levy taxes generally. Gradually, in the previous Wales Act, they were given some of those powers. Clause 17 would increase them.

--- Later in debate ---

[Lord Crickhowell]

My Lords, I am not sure that I know what the upper limit should be. However, I sympathise with the view of the noble Baroness who moved the amendment that the present limit seems on the low side. The Treasury has published a very useful paper setting out the allocations in England, Wales and Scotland. The noble Baroness referred to the comparison with Scotland. I would like to know the logic behind the Government’s views in setting this limit and the differences that appear in that Treasury paper. I will withhold my judgment until I have heard the case advanced by the Government.

[Baroness Randerson]

My Lords, undoubtedly £500 million is an anachronistic figure. As has been said several times this afternoon, devolution has moved on, and time has moved on. However, I draw noble Lords’ attention to another aspect of the Silk recommendations—namely, the fact that the report said that the borrowing limit should be subject to review at each spending review. Therefore, it is my view that, rather than putting a bald figure in the legislation, we need not just a figure but a mechanism in law which requires the regular review of that figure. Further, the Explanatory Notes should at the very least give some kind of rationale for how the figure was arrived at as the appropriate figure. I ask the Minister to address that issue in his reply.

Having said that, the key point is that borrowed money has to be paid back out of future spending—so the more the Welsh Government borrow, the more they eat into their spending capability in future years. I am rather cautious about this figure of £2 billion, because the Scottish Government have a right to borrow £2.2 billion. Therefore, to balance this properly, we need to look in great detail at other borrowing obligations that the Welsh and Scottish Governments have.

Given that the Bill clears the way for income tax powers, it is obvious to me that the £500 million figure needs to be looked at—but we need more clarity on the figure that is there and a proper mechanism for future revision.

[Lord Howarth of Newport]

My Lords, the figure of £500 million, set as the limit for borrowing by the Welsh Government, is so small as to be well inside the margin of error in any computation of UK Government borrowing. Will the Minister say what £500 million is as a percentage of the UK Government’s present borrowing requirement? To set the figure so low is contemptuous of Wales. With the powers to vary income tax devolved, the Welsh Government will have the capacity to service a higher level of borrowing, even if interest rates rise. I agree with those who have said that it seems very odd to fix a figure in legislation. Will the Minister also explain why that fixed figure of £500 million is in the Bill? I think that the Government should be more generous towards the people of Wales and allow them the opportunity to invest as they need for the future of the economy of Wales.