Wales Bill

Chris Evans Excerpts

Monday 31st March 2014 Commons Chamber

[Chris Evans (Islwyn) (Lab/Co-op)]

It is always a pleasure to follow the hon. Member for Carmarthen West and South Pembrokeshire (Simon Hart). He is always badgering us—ha, ha, ha!—about the Welsh Assembly.

This Bill is a missed opportunity. It is a Bill of nothing but smoke and mirrors. For too long—since 1999—we have been running around having no satisfaction with the Assembly. We had the Government of Wales Act 2006, which did not settle the constitutional argument. We have had Assembly after Assembly and Welsh Members of Parliament wasting their time talking about constitutional matters. Constitutional navel gazing is okay in the ivory towers of academia, but when the cost of the Silk commission is £1 million, the cost of the Williams report is £155,000 and the cost of the 2011 referendum was £5.89 million, it is time to draw a line. This Bill was our opportunity to do that, but we have had a timid response from a Government who have never, ever secured support in Wales.

[Hywel Williams]

I am slightly surprised that the hon. Gentleman is talking about constitutional navel gazing when all I have heard from Labour Members is speech after speech about the complexities and even the theology of list membership and constituency membership.

[Chris Evans]

I can only speak from my own experience. I use the Blackwood high street test when I go to Islwyn. If I walked down that street now and asked people what they thought of the Assembly, unfortunately I would be met with disinterest from most of them. If I talked about the constitutional arguments we have had today or to anybody tuning in today, they would wonder why we were talking about the Wales Bill. They would be more concerned about health, education and transport than debating giving further powers to the Assembly. That is the simple fact.

What we see in this Bill is an anomaly. On the one hand, we see the Government lifting the ban on dual candidacy, yet they are also banning double-jobbing. It seems to me that there is something fundamentally undemocratic about the way the Welsh Assembly operates. If there is a vacancy or a resignation under the first-past-the-post system, there is a by-election. That is correct; that is the model we follow in this place. However, as the Secretary of State for Wales will know, if there is a vacancy or a resignation from the list, people move up one. That is not democratic; there is no looking for a further mandate.

There are serious problems with our electoral system. First, it is difficult to understand. People in Gwent will say to me, “Why are thousands of Labour votes thrown away and I have a Tory”—or someone from the nationalist party—“representing me, but I’ve not voted for them? What is the point in voting Labour in the first-past-the-post system, yet voting Labour in the top-up system but getting no Labour AMs?” That is the situation we have to face and we are not talking about it. When we talk about dual candidacy, I think basic fairness says that in a race of four people, somebody has got to win and somebody has got to lose. Nobody gets the consolation prize of going to the Assembly.

The most damning case against dual candidacy appears in the impact assessment, which says:

“The Government of Wales Act 2006 modified the original devolution settlement to ban candidates at an Assembly election standing simultaneously in both a constituency and on a regional list. This provision has been considered unfair on smaller parties in Wales who may have a smaller pool of high quality candidates to represent them in elections.”

What the impact assessment is saying is that smaller parties in Wales, such as the Liberal Democrats or the nationalists, might not have enough high-quality candidates to stand; therefore, we should relax the rules on dual candidacy.

I do believe it is right to end double-jobbing. It makes no sense and it does not allow MPs or AMs to represent their constituents effectively. That part of the Bill is right, but the worst thing about the Bill is that we will have to come here again in a couple of years’ time and debate the constitutional settlement. That is turning people off not only the Assembly, but politics in Wales, because all that Wales is dominated by at the moment is constitutional arguments.

And so we come to the great part of the Bill: the devolution of income tax. The Government accepted the Silk commission recommendation that Wales should have the power to vary income tax, subject to a referendum. However, they did not accept the model presented by the Silk commission, which would allow bands to be varied independently. Instead, they would need to be changed in lockstep. If the Government want to commission a report at a cost of £1 million in these economic circumstances, surely they should have included all the Silk recommendations and we could have debated them on the Floor of the House. The devolution of tax-raising powers is not a priority—we can see that in our constituency postbags every week. We need a triple test. We need to talk about the issue of fair funding and a period of assignment to see whether it is in the interests of Wales and the UK to devolve income tax.

We already know that Wales is underfunded to the tune of £300 million, but varying income tax powers will not address the issue of fair funding. Once the power to partially set income tax rates is devolved, the block grant will be reduced by an amount equivalent to the Welsh share of current tax receipts. To accept this power while the block grant underfunds Wales would be irresponsible and lock in underfunding for ever. The Wales Bill does not commit to reform of the Barnett formula either, even though the Secretary of State himself has said that the formula is coming towards the end of its life. Again, that proves that this is only a piecemeal Bill and that we will unfortunately be back here on the Floor of the House, however boring and irritating we find these constitutional debates.

If we are to devolve tax powers, there needs to be further examination by the Treasury and Her Majesty’s Revenue and Customs to see how that will affect tax rates on both sides of the border. When we talk about jobs and the economy, it is also important to note that they are being created only by private sector businesses. We should therefore be speaking to those businesses and asking how their PAYE and payroll systems would be affected by the devolution of tax, but we are not. When we are varying tax powers, we also have to bear in mind that many more people live close to the Wales-England border and have to cross that border than live close to the Scotland-England border. Nearly half the Welsh population lives within 25 miles of the English border, while 10% of the English population live within 25 miles of the other side. That is 6.3 million in total. In contrast, just 4% of the Scottish population live within 25 miles of the English border.

[Jonathan Edwards]

The hon. Gentleman is quoted in the Daily Post today as saying that Wales should have the same fiscal package as Scotland. Is that his position or is it not?

[Chris Evans]

Yes, it is.

The fact that the Welsh border is significantly more densely populated than that of Scotland means that the complexity associated with different tax rates is much greater in Wales, for both employers and employees. Again, however, very little Treasury analysis has been conducted. Members may talk of a Scottish model, as the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards) did, but I think that more work must be done. We must have a report. We must know the facts and figures before we proceed further. We must seek a fair system for the whole of the United Kingdom. We cannot allow tax powers in Wales to be different from those in Scotland and England. The one thing that we have to realise is that, for all our constitutional debates, there is not an economic border on the Bristol channel, or to the north-west on Offa’s dyke. Business does not operate in that way. Business will go where business costs are lower.

[Glyn Davies]

The hon. Gentleman is making a very interesting speech. However, I should like him to clarify one point. On the one hand he tells us that he supports the Labour proposition that the Welsh Assembly should be given the same fiscal powers as Scotland and, on the other, he seems to be arguing the complete opposite. Which is it to be?

[Chris Evans]

Perhaps, when I was in full flow, the hon. Gentleman missed the point that I was making. I believe that, before we proceed, there must be a report—an impact assessment, giving facts and figures—on what will happen if we devolve tax-raising powers. That is the way in which business works. An impact assessment is the most effective and efficient way of putting the facts across.

I have spoken for a long time, but let me finally say something about borrowing powers and the devolution of minor taxes. Like many members of my party, including the First Minister, I have called for more borrowing powers. The Welsh budget has been cut by 10% during the current Parliament, and the Welsh Assembly’s capital budget has been reduced by nearly a third. I therefore welcome the borrowing powers in the Bill. As was agreed in intergovernmental talks last year, initial borrowing will be available before the devolution of minor taxes in order to finance improvements to the M4, and those of us who have to travel up the M4 every week will welcome those improvements. The amount must be agreed between the Welsh Assembly and the United Kingdom Government.

Borrowing powers linked to the minor taxes when they are devolved will be limited to £500 million for current spending and £500 million for capital projects. I hope that that will be looked at. If, or when, income tax is devolved, the borrowing limit will increase to £1 billion. If the Government underwrite that, it can be arranged now. The devolution of stamp duty and landfill tax will give the Assembly an independent revenue stream worth about £200 million a year, and it will be interesting to see how that money is spent. However, those taxes will not be devolved until April 2018, three years into the next Parliament.

I believe that we could have had a wide-ranging debate about the devolution settlement, not only in Wales but in this country, but the Government have been timid in their response to the Silk commission, and we are now faced with the inconvenience of having to revisit the Bill. I fear that, instead of talking about the bread-and-butter issues that affect my constituents, we are once more boring them silly with talk of constitutional matters and constitutional reform, which simply switches people off. I support the Bill, but I believe that there is more work to be done on it, and I hope that it will be improved by amendments tabled in Committee.