Geraint Davies
Main Page: Geraint Davies (Independent - Swansea West)Department Debates - View all Geraint Davies's debates with the Wales Office
(9 years, 11 months ago)
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Jonathan Edwards
The commission’s remit is not one of its own choosing, but the SNP decided to act in the best interests of the country and move the process forward. Making out that the Smith commission proposals are what were included in the vow is not right. It was essentially home rule or devolution max, and on any definition of devo max, it means the full devolution of all powers apart from defence, foreign affairs, the monarchy and military policy. That is not included in the Smith commission proposals, which were less significant than what was promised to the people of Scotland on the eve of the referendum.
As I was saying, the Smith commission is vastly more progressive in its trajectory of travel, offering 100% of income tax in comparison with the Wales Bill offer of only a paltry income tax sharing arrangement—and even then, only following a referendum many years down the line.
Geraint Davies
(Swansea West) (Lab/Co-op): Does the hon. Gentleman accept that if Wales has its own powers to set both a higher and a lower rate of tax and it chooses to reduce the higher rate so that a lot of millionaires move to Monmouthshire, the overall tax take to the United Kingdom would be dramatically reduced because those people would all evade tax by moving to Wales? Does he think that is a good thing to set in motion, and does he have any idea whether the Government have calculated the cost of that possibility?
Jonathan Edwards
I am interested in this line of tax harmony across the UK being put forward by the Labour party. In Wales, of course, we had at the last count 22 local authorities all setting different rates of council tax, and we are a key part of a single market across the European Union with its different members setting different tax rates. If Labour Members’ arguments were to hold water, surely they would argue for tax harmonisation across the whole of local government in Wales and across all member states of the European Union. It does not make much sense to me.
Jonathan Edwards
I think I have answered the hon. Gentleman’s point.
In conclusion, the general election is fast approaching, and I can assure this House and the people of Wales that Plaid Cymru will fight that election on the basis that we will not allow our country to be treated as a second-class nation by the Westminster establishment.
Geraint Davies
I come here with an open mind about these tax issues, but I must confess that I have major concerns because I fear that the incentive for the Government to devolve tax powers is not one of freeing the nation of Wales to make its own decisions, but one of distracting attention from the fact that Wales is grossly underfunded both in revenue under the Barnett formula by some £300 million and in capital receipts. If we had our fair share of HS2, for instance, we would have an extra £2 billion.
Jonathan Edwards
The hon. Gentleman and I are both Swansea city supporters and I am grateful that he has been kind enough to allow me to intervene.
Jonathan Edwards
This is my wedding suit, or rather the suit I had with my wedding suit. It has led to much comment. [Interruption.]
Jonathan Edwards
I am grateful to you, Madam Deputy Speaker, for saving me because my good friend was distracting me on the basis of some spurious points. Is it the position of the Labour party, should it form the next UK Government, that HS2 will be seen as an England-only project and not a UK-wide project, thus giving Wales its rightful consequentials of £2 billion, which the hon. Gentleman mentioned?
Madam Deputy Speaker
Order. The hon. Member for Carmarthen East and Dinefwr is now trying to tempt his friend—having claimed that his friend was tempting him—to go down a route that we are not discussing today. We are debating Lords amendments on the tax-raising powers in the Wales Bill. Geraint Davies now has the Floor.
Geraint Davies
Let me publicly assure Mrs Edwards that the wedding was not spurious. I congratulate the hon. Gentleman on both his point and his suit. It is a very nice suit, in black and white.
As I mentioned earlier, the differential rates pose a real problem. There is a presumption that Wales will not lower the higher rate, but a very small number of people in Wales earn more than £150,000 a year. They currently pay 45%, and will pay 50% under a new Labour Government. In theory, if a new Labour Government in Cardiff or Westminster—or any other Government, for that matter—reduced the top rate and a large number of people simply slipped across the border, they would be evading large amounts of tax. Obviously Wales would benefit, because more money would be coming in, but for the overall tax-paying community, the amount would go down, and that is of legitimate concern.
I should like to hear from Ministers what evaluation the Office for Budget Responsibility has made, producing different forecasts with different scenarios. My guess is that it has made none, and that this legislation is being rushed through in the hurried aftermath of what happened in Scotland, so that Wales can be given something comparable to the quick settlement that was made following electoral concerns in Scotland as we move towards a general election. That is not the way in which to establish a new constitutional settlement and a settled financial regime. It is all very well the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards) saying “You want harmony, we have difference, so it does not matter what happens.” Such changes and differences bring pressures that are not settled, and which will be replicated in the future.
Air passenger duty has been mentioned. Other things being equal, if someone says, “Can I set my own air passenger duty?”, the response might be, “That’s brilliant: we can raise some money.” But what if Boris Johnson in London says, “Hold on, there is a precedent here, I want the money for Heathrow, and I am going to lower air passenger duty”, which is what he has said about stamp duty? We are talking about major shifts in the financial powers across the Union, which will unsettle the Union itself. Obviously we want a devolved settlement that is stable rather than ever-changing, rather than the setting in motion—by means of a quickstep to avoid short-term political advantage—of a system that will unravel into chaos.
I know that there seems to be consensus across the Floor of the House today. It is a case of “Don’t worry; we will have a referendum, and hopefully it will be all right on the night.” What I have just described will probably not happen in Wales, because what prospect is there of our suddenly having five UKIP Assembly Members and a regional list? Oh, there is such a prospect; well there we are. What prospect is there of a newly emerging rainbow alliance—perhaps a very unfortunate rainbow with not a crock of gold but a crock of something much more unpleasant at the bottom of it, which will generate a cynical, unfair tax proposition that will lead us back into the dark ages? That is possible. [Interruption.] Obviously there is agreement, as laughter leads the room.
Sammy Wilson
I am glad to learn that the hon. Gentleman has now joined the Unionists in his heart, but does he accept that once we start to disaggregate the fiscal arrangements for the United Kingdom, real constitutional issues become involved? The danger is that the more fiscal powers are devolved to regional administrations, the looser the Union will become. [Interruption.]
Geraint Davies
Thank you for that clarification, Madam Deputy Speaker.
The focus of this debate is the differential between the lower and the higher rates—how that moves up and down and squeezes in and out, and what the implications of it are. In terms of the last intervention, the implications are that if that gives rise to great differences between the two rates across the border—or, indeed, across the Scottish or Northern Ireland border—it will generate distortions, not just on the border itself, but in terms of investment decisions, where people choose to live and work, and social security arrangements, whether they are devolved or not. It will extend beyond personal taxation because corporations coming in will bear in mind what they think their workers are going to be paying. As has been mentioned, therefore, corporation tax is part of that broader conversation.
The Government are looking to give corporation tax flexibility for Northern Ireland because Ireland has got it. We could then follow through and say that perhaps Scotland should have it or perhaps somewhere else, and we would end up again with a bidding war downwards where—as I have just mentioned for income tax—the overall corporation tax-take for the UK would go down. At a time when corporations are migrating based on research and development and access to Europe as opposed to corporation tax rates, maybe this is the wrong route to follow, when taken together with income tax.
Geraint Davies
That is an interesting point, but it does intrinsically depend on the elasticity of demand. At a time when corporation tax is already the lowest in the G8, I suggest that inward investors are not looking to Britain to lower its corporation tax and making a marginal decision to invest. They are looking at the level of research and development and the prospects of being part of Europe. One issue for inward investors is the uncertainty of a referendum ending up with us as a sort of chip shop England floating out into obscurity with UKIP and the Tories.
In my view, if we cut corporation tax again there will be a net reduction in corporation tax revenues. On the income tax issue, I have an open mind. I am just throwing forward some of the scenarios whereby we can lose out in England and in Wales and making a point, which I ask the Minister to respond to in his summing up. I want to know what analysis has been done of the potential downside to the Exchequer of Wales reducing the top rate of tax and people migrating to Monmouth? What are those numbers and what consideration has he made? My guess is that he has made no consideration, and if so we should not be hurtling ahead in this way.
Stephen Crabb
I will be very brief as there is another set of Lords amendments that we need to debate.
We spent most of this debate not debating the specifics of the Lords amendments about the removal of the lockstep. Most of the time has been spent listening to the weight of arguments, largely from Labour Members, against fiscal devolution full-stop. So we end the parliamentary passage of the Wales Bill exactly where we started: with three parties in this Chamber recognising the potential benefits to Wales of devolving a portion of fiscal powers—we are not talking about a full step down the road of full fiscal devolution, but a strong step forward —and one party resolutely digging in, trying to pretend that there is some kind of plot or conspiracy; we have had all those words and that language used before.
Alun Cairns
I suggest that the age of majority is different for different processes across the United Kingdom. It is a major constitutional change to extend the franchise for all elections. The scope of this Bill is specific about extending powers to the Welsh Assembly, and it is for the Assembly to decide. Who knows, the Welsh Assembly may not decide to extend the franchise to younger voters. It is up to it to decide on a referendum for income tax varying powers in Wales. That is the answer that the hon. Gentleman might wish to give to his constituents. This measure is not about extending the franchise to 16-year-olds, but about granting the power and the opportunity for the Assembly to decide on that basis.
Geraint Davies
It is one thing to say that there is a strong case for people of 16 to have a vote as they have a general knowledge of politics in the round and can make an informed decision, but the argument we are trying to make is whether young voters who have never voted can suddenly grasp the technicalities of setting different rates at different levels and what that implies. That is not much of an encouragement to enter the world of democracy. It is a highly technical issue. Will the Minister now at least serve notice on the fact that he will be championing a general franchise for people of 16 to vote in future elections?
Alun Cairns
I think the hon. Gentleman is underestimating the capacity of young people to grasp technicalities. I have far more confidence in younger people to be able to consider such matters. He makes an important point, but it could easily be made in another debate. This is about extending the power to the Assembly to decide, and not about extending the franchise to young people per se. We are simply devolving the power. The Assembly has had a vote on extending the franchise to younger voters, and there was a majority in favour of it, but when it comes to make its own choice specifically on a matter such as this, who knows what will ultimately come forward.
As a result, on Third Reading in the other place we tabled amendments to allow the Assembly to decide whether 16 and 17-year-olds should be able to vote in an income tax referendum. As the volume of interventions we have heard indicates, this is the first opportunity the House has had to consider the matter, and I look forward to hearing the contributions that are to follow. It is the Assembly that will decide when to call a referendum, and it is right that it should decide who can vote in it. The amendment puts that decision in the hands of the Assembly, just as it was put in the hands of the Scottish Parliament for September’s referendum.
These amendments also provide that if the Assembly resolves that the voting age is to be lowered to 16, the resulting order to be laid by the Secretary of State would also provide for the creation of a register of young voters. That register would include those who will have attained the age of 16 on the date of the income tax referendum and those age 17 who are not already listed on the register of local government electors as an attainer—that is, a 17-year-old who will turn 18 before the next electoral register is published. The important point is that those who have attained the age of 16 on the date of the poll will be eligible to vote in an income tax referendum if they appear on either the register of young voters or the register of local government electors.
I should also be clear about what these amendments do not do. They do not devolve competence over the wider franchise to the Assembly, as I have previously stated, and they do not allow the Assembly to decide the voting age for any poll other than that for an income tax referendum. The franchise for elections in Wales remains solely within the power of this Parliament. I know that there are strongly held views on both sides of the House about reducing the voting age—we heard some of them earlier. I want to reassure hon. Members who might be concerned that these amendments set a precedent for future elections that they do not. It is important to underline that they do not set a precedent. They relate specifically to an income tax referendum in Wales, and to no other poll. They give the Assembly a choice for that referendum. If and when a trigger vote is held, it would be for the Assembly to decide whether the voting age will be 16 or 18. I therefore ask the House to support these amendments.
Nia Griffith
Perhaps the Minister will clarify that later.
In my long experience as a teacher, I always found that young people are ready to engage in discussion on a range of issues, and I have every confidence that 16 and 17-year-olds can be as well informed as other adults in respect of voting options. They have access to a far wider range of media and sources of information than back in 1969, when the voting age was last lowered. Indeed, when many of us were at school, our only access to current affairs came through being encouraged to read the daily papers in the school library.
Sixteen-year-olds can join the armed forces and, with parental consent, get married. Many of them are active in the world of work, whether full or part time, and are therefore subject to employment law and health and safety law, or the lack thereof. They are subject to the law on national insurance contributions and income tax. It is wholly appropriate that the Bill should allow the Welsh Government to state in a resolution to cause an income tax referendum whether the age for qualifying to vote in that referendum should be 18 or 16. We support the Lords amendments.
Geraint Davies
In general, for the reasons that we have just heard, I am in favour of reducing the voting age to 16, both because of the increased awareness of young people and because the focus of budgetary control and discussion in the parliamentary arena will shift more towards education and investment in our future. My concern about this move in isolation, with 16-year-olds being allowed to vote on the highly technical issue of marginal tax rates and thresholds, is that the turnout in the referendum will be low, and the turnout of 16 to 18-year-olds will be extremely low and may discredit some of the excellent arguments that have been made for reducing the voting age to 16. I wonder what efforts the Government will make to educate these prospective voters so that they have an informed view about this technical issue.
I was fortunate enough to study economics at university—obviously I understand all these issues—but a lot of people aged 16 to 18 will not have had that benefit. The issues are difficult. I support the move in general, but I am concerned that the turnout will be low, so I wonder what the Government will do about that.
Chris Ruane
I welcome the Government’s proposals to give 16 to 18-year-olds a vote in a referendum on income tax raising powers. I would also like those young people to have a general right to vote in all elections —general elections, Assembly elections, local elections and other referendums.
I share the concern of the hon. Member for Brecon and Radnorshire (Roger Williams), however, as the move needs to be accompanied by civic education. My hon. Friend the Member for Swansea West (Geraint Davies) has a degree in economics, but even the great Member himself does not quite understand everything about the subject.
Chris Ruane
That is as may be.
It is incumbent on us and the National Assembly for Wales to make sure that, if young people aged 16, 17 or 18 are to have the right to vote in the referendum, they have the relevant education, background and knowledge.
Chris Ruane
My hon. Friend is taking issue with the right hon. Gentleman. There is a place for such terminology in some debates, but perhaps not those with 16-year-olds.
The issue of civics should go beyond finance and how we organise our economy. The finances of a country can impinge on wider issues such as racism, sexism and consumerism. There are threats from parties out there that are against the fabric of our British society. They want to promote the issue of race. It is fine if they want to discuss that, but it has to be done with intelligence, not bigotry.
The introduction of voting rights for young people at the age of 16 for the income tax raising powers referendum is a good idea. We should be very wary of what the Electoral Commission has done—or has not done—in the past if we are to make sure that these young people are registered. The Electoral Commission should be contacting electoral registration officers in the 22 authorities in Wales to make sure that they know how to register these young people. It should be regularly monitoring best practice from around the UK—indeed, around the world—and relaying that information to the Welsh Government in Cardiff to make sure that best practice is pursued in Wales for the purposes of registration for the referendum.
Best practice in registering young people exists in Northern Ireland. The EROs in Northern Ireland are proactive in going out to schools to register young people. We should be doing that, but the Electoral Commission has refused to replicate in the rest of the UK what is now done in Northern Ireland.
The Electoral Commission has failed to ensure that electoral registration officers obey the law. Statutorily, they must knock on the door of non-responders. If a 16-year-old was not registered to vote for the referendum, for example, the local ERO would have to go round, knock on the door and register that 16-year-old. Even though that requirement has been set out in law for many years, there has not been a single prosecution of an ERO who has broken the law. One ERO in Devon has broken the law by not conducting a door-to-door canvass for five years on the trot, but the Electoral Commission has done nothing about it.
We should make sure that the Electoral Commission warns EROs in Wales about that. We do have best practice in Wales. My own electoral registration officer, Gareth Evans, is one of best performing EROs in the whole country, but not all officers are as good as him, and we need to make sure that they all perform at the standards of the best so that young people are registered.
The Electoral Commission has failed miserably to use the most effective and efficient third-party organisations, such as Bite the Ballot, to get young people on to the electoral register. Bite the Ballot can register young people for as little as 25p per registration, but when one compares the cost of the Electoral Commission’s advertising campaign with the number of registration forms downloaded from the internet, it spent £80 per registration in 2005. The commission should therefore work with EROs in Wales, as well as with Bite the Ballot, to encourage them to ensure that 16-year-olds are registered from the outset.
This is a great opportunity, and I congratulate both elements of the coalition, especially the Conservatives. It is not in their nature to extend the vote. They are rightly fearful of young people, which is perhaps why they are not talking much about the lack of registration at national level. Registration rates in some wards in student areas of big university cities such as Manchester and Liverpool are as low as 20% following the move over to IER. I congratulate everyone, including my Front-Bench colleagues, and I hope that we will learn from this opportunity and go on to extend to 16 to 18-year-olds the right to vote in all elections.