Wales Bill

Glyn Davies Excerpts

Monday 31st March 2014 Commons Chamber

[Owen Smith]

I am just getting over the fact that the Secretary of State referred to what we thought was a fairly simple safeguarding of democracy as an “atrocity”. I am pleased that I let him intervene, because he chose to read out a piece of evidence given to the consultation on the measure. I note, however, that the Secretary of State failed to inform the House that the overwhelming majority of respondents to the consultation were opposed to the measure. Clearly, this is a nakedly partisan reversal by the current Government. Let me be clear with the House: if we get the opportunity to win back power in this place, we will reverse the measure.

[Glyn Davies (Montgomeryshire) (Con)]

The hon. Gentleman is making the point forcefully against the proposed change. Can he put to us any independent evidence—there is Labour party evidence, yes, but any authoritative independent evidence—that supports what he is saying?

[Owen Smith]

I put to the hon. Gentleman the impact assessment and the explanatory notes from his own Government. They make it clear that this is a partisan measure that will only benefit the minority parties in Wales, among which we count the Conservative party. That is what this is about.

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[Wayne David]

That is a fair point that is worthy of debate.

Another significant constitutional measure is the electoral mechanism by which Assembly Members are elected. A number of Members have already referred to that.

[Glyn Davies]

Will the hon. Gentleman give way?

[Wayne David]

I have not made a point yet. Hang on a second—I will make a few points and then I will give way.

[Glyn Davies]

It is on the Barnett formula.

[Wayne David]

I have moved on from that. The hon. Gentleman has to learn to pay attention. But, I will be generous.

[Glyn Davies]

I was waiting until the hon. Gentleman finished his point before intervening. It was only when he moved on to the next point that I realised he had finished. Is he telling us today that a Labour Government would actually reform the Barnett formula and would then support putting the proposition for income tax powers for the Assembly to a referendum?

[Wayne David]

I do not think I said that. The hon. Gentleman has put forward an interesting hypothesis and I am sure we will consider it at the appropriate time, but it is not relevant to the discussion we are having here.

As I was saying before I was interrupted, one of the most significant constitutional changes in the Bill is the proposition that we should change the method of election for the Welsh Assembly—that there should be a revision of what was agreed in the Government of Wales Act 2006. Like other Members, I have been travelling around Wales listening to what members of the public have to say. Reference has been made to a report from the Bevan Foundation. I remember that report well, as I was one of the Members who commissioned it. It came to the objective conclusion on the basis of a representative cross-section that, as the right hon. Member for Chesham and Amersham (Mrs Gillan) said, most people in Wales did not understand the system. They also thought it was intrinsically unfair that individuals who put their names forward for election but lose the election should suddenly appear in the Welsh Assembly—most people would assume that, as those people had lost, they would not be elected.

It is fundamentally impossible to explain the rationale behind that or to argue that it is fair. Whatever special pleading we make for small parties because of how difficult it is for them to get together a sufficient number of candidates, it is an unfair proposition.

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[Hywel Williams]

I take the hon. Gentleman’s point entirely. However, the commission was set up by the Government to look very closely at the question and it came to a unanimous judgment, but they then decided to adopt only some parts of its report. My point is that I wanted them to adopt the entire recommendations of part I of the Silk report. It is disappointing that they did not, because we can see the package of reforms that the commission came to as its conclusion.

It is also massively disappointing that the Government waited so long to respond to the report. We were told that they would respond in the spring of 2013. Then it was pushed to the summer. I remember making the point in the Welsh Grand Committee, when the Secretary of State said that spring officially ends in June, that July in Welsh is Gorffennaf—gorffen haf—which means the end of summer. We waited, and autumn came. The nights were drawing in, the countdown to Christmas began and, eventually, a full year after the commission produced its report, the Government responded.

[Glyn Davies]

I am listening to the hon. Gentleman’s speech with great interest, but does he accept that moving forward with a Bill to recommend tax-raising powers for the National Assembly for Wales is a huge advance in devolution that will, if such powers are granted, transform the Assembly’s authority? Does he agree that introducing those powers in a Bill as quickly as the Government have done—we are debating it today with a view to taking it through in this Parliament—is quite a creditable performance?

[Hywel Williams]

I am indeed very glad that the Bill is before us, as I said at the start of my speech, but I am contrasting the time between the commission reporting and the Government responding. We suddenly have the Bill before us today. I certainly welcome that, but I have no idea why it has appeared so quickly; it is not for me to comment on the lack of other Government business.

I know that the term “a slap in the face for Wales” is very well used, and I hope that it will be reported tomorrow by our friends in the BBC, but I must say that to ignore such a fundamental report—as the hon. Gentleman has just pointed out—for so long is somewhat disrespectful. More importantly for us in Plaid Cymru and for other hon. Members, it is also damaging to the political and economic progress that our country can make. The Welsh Government continue to be denied the powers that they should be able to exercise—they are also denied the funding that they should have—and that were recommended by Gerry Holtham. However, we are where we are—but where are we?

Towards the end of last year, the Prime Minister swept into the Senedd building in Cardiff Bay to a media fanfare and the flashes of cameras, and announced new financial powers for Wales, but the proposals were rather light on detail. Indeed, the Prime Minister had discovered “anti-gravitas”, as I called it at the time, in making a proposal that then seemed to float away. It was not until some weeks later that we learned that all was not as it seemed. The Government had cherry-picked the cross-party Silk commission’s recommendations—accepting some, but only in part, and even omitting others.

The draft Wales Bill was published in January, and the Welsh Affairs Committee, of which I was a member, was tasked with its pre-legislative scrutiny, with a tight turnaround for producing a report. I must say that I enjoyed the process of scrutinising the Bill, and I pay tribute to all Committee members and to the hon. Member for Monmouth (David T. C. Davies), for his chairmanship. Contrary to his rather fierce, if not sometimes eccentric, persona in this Chamber, he was the model of a balanced Chairman, and I was very glad, if slightly surprised, that he acted in that way.

To return to the narrative, the Government then seemed to be in a hurry, and we now have the Bill. The Welsh Affairs Committee sessions took evidence from a variety of independent academics, civil society groups and even elected politicians from both this place and the National Assembly for Wales. Interestingly, even Opposition party leaders from Cardiff graced the Committee’s sittings. That move was not uncontroversial, because the Committee’s purpose is of course to scrutinise the Government at Westminster. Having the party leaders from Cardiff caused a certain amount of head scratching, because it was something of a first. However, it indicated that this was not some humdrum scrutiny exercise of a small Whitehall Department or a minor Bill because, as was pointed out by the hon. Member for Montgomeryshire (Glyn Davies), the Committee was considering part of the blueprint for the next stage in our national political development, and it deserved such a level of scrutiny.

The consensus that began to emerge was that borrowing powers were vital to allowing the Government of Wales, formed of whichever party or parties, to be able to borrow for investment to boost our economy and create jobs. However, the consensus was that the lockstep on income tax rates meant that the provision could not realistically be varied, because the power was unusable. Other than the duo of the Secretary of State for Wales and his Treasury colleague, the Exchequer Secretary—unsurprisingly—all agreed that it would be far better to have the ability to vary each individual income tax band rate.

During sittings of the Welsh Affairs Committee, I pointed out a paradoxical effect of raising or lowering tax rates with a lockstep. If we raise the tax rates with a lockstep, the higher rates are then less progressive than the lower ones: if we raise tax by a penny on the 20p band, we increase it by a twentieth, while if we raise it by a penny in the 40p band, we increase it by a fortieth. We should bear that slightly obscure ratio issue in mind. Equally, a decrease has a similar effect.

The cross-party Silk commission recommended in the first place that we should not have a lockstep. I proposed an amendment in discussions on the Welsh Affairs Committee report—I proposed that the Committee recommended dropping the lockstep. Unsurprisingly, our three friends from the Tories voted against my amendment; the hon. Member for Ceredigion (Mr Williams) and I voted for it; but, unaccountably, Labour members of the Committee managed to abstain. Even though they have publicly declared opposition to the lockstep in the Committee, they did not step up to the plate.

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[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.