Wales Bill

Hywel Williams Excerpts

Monday 12th September 2016 Commons Chamber

[Hywel Williams (Arfon) (PC)]

Another significant aspect of Glas Cymru is that it has been able to reduce its gearing and is now paying off its debts, whereas the debts of water companies elsewhere are geared to between 85% and 95% of their value. Glas Cymru’s debt is now down to about 65%. That is another dividend for the Welsh people.

[Paul Flynn]

The hon. Gentleman makes a valuable point. This is a huge success story. Why are we not shouting this from the rooftops and trying to emulate it? We could do that in the very similar situation of the rail franchise. Members might recall the distinguished Member of Parliament, Robert Adley, who produced what was, to my mind, one of the best Select Committee reports in my time on railway privatisation. It was published in 1993 on a Wednesday but, sadly, he died on the preceding Sunday. He forecast all the weaknesses of the privatised system. That report, from a Conservative-dominated Committee, was approved unanimously by the Committee but not accepted by the then Government.

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[Paul Flynn]

That is for the Government to say, but my understanding is that they will be devolved and that is the basis of new clause 3. Such a change took place in Scotland, where it was recommended by the Smith commission. It was agreed by the UK Government and legislated for in section 57 of the Scotland Act 2016, so if we look forward with optimism, the change will come about. The new clause would make equivalent provision for Wales. In short, there is no reason why the Railways Act’s prohibition on public sector operators should apply to Welsh Ministers.

Looking at the reality of what is happening in Wales, over the last 12 years for which financial information is available, Arriva Trains Wales accumulated profits after taxation of £149 million and paid out dividends of £134 million. An average of 91.7% of profits were paid out in dividends each year, with over 100% being paid out in three of those years. Dividends accounted for a total of 11.9% of passenger income over the 12-year period, meaning that a not-for-dividend alternative to the current fiasco could result in a similar decrease in fares.

Furthermore, public funding through franchise payments from the Welsh Assembly Government far outstripped the passenger income of Arriva Trains Wales, amounting to 160% of the passenger income figure. Alternatively, it could be said that 8% of the huge taxpayer subsidy is paid out as dividends. That makes no sense. We are subsidising dividends and not lowering fares. In summary, a saving of 8% to the taxpayer or a fare reduction of almost 12% could be delivered by adopting a public ownership or not-for-dividend model. I hope that the Government will seize hold of that bold venture

The separation of jurisdictions has been a matter of great discussion and I will not spend too much time on it as I think we are under time pressure. We have been grateful for the authoritative comments and deliberations. We are currently disinclined to support amendment 60, although we are sympathetic towards it. We were told that the Lord Chancellor and Welsh Ministers should keep the justice system under review with input from the UK Government’s proposed official working group, so we proposed the appointment of an expert panel to advise them on practical legal issues. This should be a transparent and sustained road to a solution and is also the desire of the Welsh Government. We would like to maintain the suggestions made by my hon. Friend the Member for Llanelli (Nia Griffith) in the Bill’s earlier stages, but there is so much going on at the moment with Brexit and so on that it would not be sensible to make such changes. It would be rather like trying to change a car’s pistons while the engine is running, so we will not support the amendment but we understand the need for change.

[Hywel Williams]

I am genuinely curious. Is the position just outlined by the hon. Gentleman also the position of the Government in Cardiff?

[Paul Flynn]

Yes. We are working in close harmony with the Welsh Government on most of the recommendations. There is a sensible consensus between the Welsh Government, the UK Government and most parties. That is the only way forward if we are to build trust in devolution.

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[Hywel Williams]

I agree entirely with what the hon. Gentleman is saying. Is he, as I am, intrigued by the Government’s opposition, because it is clearly not ideological? They are happy for a state-owned company from Germany to run railways in Wales, but not for a state-owned company, or a co-op, from Wales to run them in Wales. It feels a bit like—malice, possibly?

[Albert Owen]

I did not understand the rationale of the Government when the Secretary of State tried to explain that earlier. Not only are German national companies operating, but UK publicly owned companies have been running the east coast line through the Department for Transport. It is a logical step to allow the Welsh Government to follow the same principle in offering this opportunity to publicly owned companies for the benefit of customers.

Let us be honest about our railways: this was a privatisation too far in the 1990s. It was rushed and it has not been working. We do not have privately run companies; we have an awful lot of public money subsidising private companies from across the globe, not just from this country. The new clause asks that the Welsh Government take responsibility and that moneys—profits—that are made are not paid in dividends to large shareholders but reinvested for the good of the customers in Wales. Let us give the Welsh Government the opportunity to be bold and radical, as they have been with water, and to put passengers first.

[Hywel Williams]

I rise to speak to amendments 61 and 66.

Amendment 61 seeks to devolve Welsh language broadcasting and Welsh language media to Wales. There is currently a discrepancy in that the Welsh Government have powers over the Welsh language but no powers over S4C—Sianel Pedwar Cymru—or Welsh language media, including radio and some print media. The Welsh language media are of great cultural, economic and linguistic importance to Wales. In his report on the creative industries in Wales, Professor Ian Hargreaves argued that the level of public debate about S4C was not in line with its importance, both culturally and economically, and asked whether this was

“a consequence of the fact that S4C is funded…largely…from London”.

It is all very quiet, possibly because the money is coming from London—or was at that time, at least. Further, he said:

“The UK authorities involved (Ofcom and DCMS) lack the instinct and self-confidence to animate this uniquely Welsh debate and the Assembly Government lacks the formal mandate.”

This is the basis of my argument.

S4C and its service have endured a difficult period of financial instability following last year’s autumn statement, when the then Chancellor announced cuts to the S4C grant from £6.7 million to £5 million by 2020. The first year of those cuts has been reversed, but only the first year. Last week we were told that the BBC Trust intends to freeze S4C’s funding from now until the end of the current licence fee agreement in 2022. This was portrayed in the media as a victory for the industry, with stability achieved, but it is a cut in real terms. With the proposed review of the funding and governance of S4C, and the BBC charter up for renewal in 2017, the future of the Welsh language channel still remains mired in uncertainty. The UK Government may have an agenda to cut funding for broadcasters in the long term. That is indeed a matter for the UK Government, but why should people in Wales be bound by decisions in London regarding media platforms that, by definition, operate through the medium of one of Wales’s official languages? Of all matters, this is surely one that most clearly pertains to Wales.

[Guto Bebb]

The hon. Gentleman represents a constituency with a number of television producers who produce television programmes for S4C. Can he name a single one who has asked for S4C to be devolved to the competency of the Welsh Assembly?

[Hywel Williams]

No, of course not. This is Plaid Cymru’s policy and this is the argument that has been made by various highly respected academic commentators, and others for that matter. [Interruption.] The Minister starts from the business end; I start from the governance end. The governance of S4C and how it should be regulated should be a matter for the Welsh Government. The argument is in the nature of the beast. It is S4C—Sianel Pedwar Cymru. It is broadcasting in Welsh in Wales: why should not the Welsh Government have responsibility? The case is unanswerable.

[Paul Flynn]

The hon. Gentleman is surely aware of the extraordinary genesis of S4C. If not, I would like to spend an evening with him going over the convoluted actions that took place. We have S4C because Mrs Thatcher was reading Irish history at the time when Gwynfor Evans was promising to fast to death. There was a long and honourable battle, with the sacrifices of young people in Wales, to gain S4C. We cannot complain, as a nation, about the way it has been funded since its genesis.

[Hywel Williams]

I agree entirely that it has been very generously funded, and funded without very much review for 25-odd years until fairly recently. [Interruption.] Indeed—and then what happened? The hon. Gentleman asks whether I am aware of the genesis of S4C. Let me say clearly that I have the conviction to prove that I am very well aware of what happened during that period. I think I had better leave it at that.

[Liz Saville Roberts]

I am sure that my hon. Friend agrees that S4C’s funding has resulted in it currently running more than 50% repeats, which is not satisfactory.

[Hywel Williams]

The television landscape has certainly changed enormously. Many broadcasters are now running a great number of repeats. The point about Welsh language television is that it has a purpose beyond just providing entertainment, or even informing or educating: it is there as part of the national project to sustain, speaking in dramatic terms, the rescue of the language.

[Guto Bebb]

I cannot allow the slur from the hon. Member for Dwyfor Meirionnydd (Liz Saville Roberts) to go unresponded to. A significant proportion of the repeats on S4C are children’s programmes. As the father of five children, I am aware that the more repeats there are, the more they enjoy them.

[Hywel Williams]

Responding also as the father of five children, I would say that repeats of “Cyw” are very popular in my house.

The report of the Institute of Welsh Affairs, “The UK’s Changing Union”, called for full responsibility for S4C to be transferred to the National Assembly and thus to the Welsh Government. Plaid Cymru Members are of the firm belief that Wales should have full control over a channel that belongs to and serves the Welsh people. We should determine its future. The Secretary of State said last week that he will continue to do everything he can to ensure the channel’s continued success, and I take him at his word—I am sure that he meant it very sincerely. Conservative Members claim to have devolution at the core of their world view. “Cut out the mandarins!”, they cry. “The user”, or the customer even, “is king—take it as low as it can go—and not those dratted men in Whitehall.” If so, is not the control of a medium that serves Wales and Wales alone best placed in the hands of the people that it serves? I look forward with interest to hearing the Secretary of State justify this peculiar inconsistency on the issue.

Amendment 66 was tabled following concerns expressed to us by the Welsh Language Commissioner regarding the Bill’s potential effect on the National Assembly’s powers to legislate on matters pertaining to the Welsh language. A possible effect of schedule 2 is that should the National Assembly wish to legislate for the Welsh language, it would require the consent of the relevant UK Minister to confer, impose, modify or remove within that legislation the Welsh language functions of Ministers of the Crown, Government Departments, and other reserved authorities.

Under the current settlement, ministerial consent is required only when legislating to impose Welsh language functions on Ministers of the Crown. The ministerial consent provisions of the Wales Bill in relation to the Welsh language appear to apply to a wider range of persons than is currently the case, which would be more restrictive. I would be interested to hear the Secretary of State’s explanation or justification for that.

Let us consider a practical example. The Welsh Language Commissioner has already engaged in the statutory processes that would result in placing a duty on bodies such as Her Majesty’s Revenue and Customs, the Crown Prosecution Service, Ofcom and the BBC to adopt Welsh language standards. Our amendment would remove the requirement for ministerial consent for Acts of the Assembly affecting functions of reserved authorities, public authorities and Ministers where the Act of the Assembly relates to a Welsh language function. I am sure that the House will agree that that provision is fair and reasonable, given that the Welsh language is, quintessentially, a devolved issue.

[Guto Bebb]

I suspect that I can offer clarity and reassurance on this issue. There is nothing in the Bill that will affect the Welsh language retrospectively. For example, any standards imposed on a public body as a result of the Welsh Language (Wales) Measure 2011 will still be imposed by the Welsh Language Commissioner, with no effect as a result of changes in this Bill. If a future Welsh Language Measure were to be proposed, then it would have an effect, but that takes us back to the issue of democratic accountability. After all, the Welsh language is not only the language of Wales; it should also be the responsibility of this House. On the hon. Gentleman’s concerns, there is nothing in the Bill that will affect the 2011 Measure and the way in which standards are imposed under it.

[Hywel Williams]

I accept that the Minister sincerely holds that view. I am reflecting on the arguments put forward by the Welsh Language Commissioner.

[Guto Bebb]

I met the Welsh Language Commissioner in August. We have subsequently written to her, highlighting the fact that the concerns raised in relation to the operation of the 2011 Measure have no grounds. In other words, the 2011 Measure is not affected by the Bill. There will be an impact if a subsequent Welsh Language Measure is passed by the Welsh Assembly, but it does not affect the way in which the legislation—

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. In fairness, I let the first one go on far too long. If you do not want to sum up at the end, do not try to sum up halfway through. Interventions have to be short. There are still another three speakers to come. I am very tolerant, but I am being tested.

[Hywel Williams]

Thank you, Mr Deputy Speaker. This matter will probably be addressed again when the Bill goes to another place. Perhaps we could have some discussions with the Welsh Language Commissioner in the meantime, to see whether her concerns are still justified.

[Albert Owen]

The Under-Secretary has said that the Welsh language belongs to this House as well as to the Assembly, so is the hon. Gentleman as concerned as I am that we are unable to conduct debates through the medium of Welsh?

[Hywel Williams]

That is a very interesting and pertinent point. Welsh, of course, is a British language. I will regale the House, if I may, with a point that surprised the predecessor of the hon. Member for Torfaen (Nick Thomas-Symonds) when I made it in the House some years ago when he was having a go at me about my Welsh language enthusiasms. I told him that English is also a Welsh language, which promptly shut him up.

I will turn briefly to Government amendment 13, which removes the requirement for a statement by the Presiding Officer to be made in both Welsh and English. As has already been said, the Assembly’s legal requirements and Standing Orders already require statements to be bilingual, so the amendment removes duplication and I am glad to welcome it.

On amendments 63 to 67, amendment 1 and new clause 2, we would welcome the devolution of gambling, betting, lotteries and the associated licensing. The hon. Member for Swansea East (Carolyn Harris) has done a great deal of work on the issue and I commend her for it. By devolving responsibility for those issues, I am sure we will be able to create solutions that really fit the needs of the people of Wales.

I hope, of course, for a complete capitulation on all those matters by the Secretary of State, but if, unaccountably, he is not that way inclined, I look forward to his comments later this evening or to whatever he would care to correspond with me about by letter. I will not, therefore, seek to divide the House.

[Gerald Jones (Merthyr Tydfil and Rhymney) (Lab)]

I am pleased that this Bill has come to the House; I, too, sat through many Welsh Affairs Committee sittings. I support new clause 2 because, if agreed, it would allow the Welsh Assembly to take action on fixed odds betting terminals. I want to place on the record my membership of the newly established all-party parliamentary group on FOBTs, and my support for the comments of its chair, my hon. Friend the Member for Swansea East (Carolyn Harris).

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[Jonathan Edwards]

I am grateful for that clarification.

Plaid Cymru tried to include APD devolution in the Finance Bills of 2013 and 2014, I recall, but we did fall to some very England-centric comments by the Treasury officials at the time. These arguments have not yet satisfied us, or I imagine the 70% of the people of Wales who support the devolution of APD, as reported in recent opinion polls—as I said in Committee, that is an extremely impressive opinion poll rating.

On Second Reading of the Bill, the Minister said it was right and proper for Wales not to have the same rights regarding APD as the other devolved nations, and he has reiterated that this evening. Why would the Wales Office seek to deny Wales the same powers as Scotland and Northern Ireland? Why would it deny our only international airport in Wales the potential to use those fiscal levers to expand and develop, and why would it deny the ability of the Welsh economy to grow?

Clearly, increasing footfall at the airport would generate substantial revenues elsewhere in Wales, primarily by boosting economic performance across the whole of the economy, not least of course in the Secretary of State’s constituency, Vale of Glamorgan. Let us remember also that, as Members have said, Cardiff airport is owned by the people of Wales. The Welsh Government effectively nationalised the airport and this additional lever would further enable them to utilise a huge asset in the direct ownership of the people of Wales. It is highly regrettable that we have an airport in England, Bristol airport, effectively deciding UK policy, to the detriment of Wales.

While on the subject of Bristol airport, perhaps I should correct a statement I made in Committee, and I am happy to do so. I said Bristol airport could not accommodate long-haul flights and therefore there was no reason not to devolve long-haul APD. I received a strongly worded letter from Bristol airport—as we can imagine—a few days after the debate; it can accommodate long-haul flights. I am happy to correct the record, therefore, but what it cannot accommodate is the world’s largest aircraft, which Cardiff airport can, given the length of its runway. With the prospect of Wales being dragged out of the biggest and most successful trading bloc in the world, now, more than ever, it is important that we connect Wales to the world, and clearly devolving APD to Wales would enable the Welsh Government to do that more effectively.

New clause 7, in the names of my parliamentary colleagues and myself, seeks to equalise the situation between Wales and Scotland on VAT revenues. I will not be pressing it to a vote, due to the time left this evening. However, I remind the House that there is a consensus that devolution of public spending responsibilities should be accompanied by the assignment of significant own sources of revenue. That principle has now been accepted as this Bill progresses, and therefore the debate in Wales between the political parties is about what that fiscal package of tax powers should consistent of.

Wales’s funding framework has been highly unusual from an international perspective: there are not many Governments in the world with significant legislative and spending powers who do not also have a correspondingly important responsibility for raising tax revenues. If the UK Government are serious about securing a lasting devolution settlement for Wales, VAT should be seriously considered as part of the package of devolved fiscal powers.

The Scotland Act 2016 stated that revenues from the first 10 percentage points of the standard VAT rate would be devolved by the 2019-20 financial year. The current UK VAT rate is 20%, and half of all the VAT raised in Scotland will be kept in Scotland. A recent article published by the Wales Governance Centre confirms what I said in Committee, stating that Welsh VAT revenues have

“been far more buoyant than other major taxes, such that VAT has become the largest source of revenue in Wales.”

This is in contrast to the rest of the UK and Scotland, where income tax remains the largest source. The Government Expenditure and Revenue Wales report concluded that around £5.2 billion was raised in VAT revenue in Wales in 2014-15. A similar deal to that of Scotland would mean around £2.6 billion being assigned to the Welsh Government. This would mean that more than a third of total devolved expenditure would be financed by devolved and assigned taxes. By my calculation, that would represent an increase of about 13% compared with the amount to be raised under the current proposals.

I presume that as long as we have a Conservative Government in charge of the Treasury here, economic growth will continue to be driven by consumer spending. If that is the case, it is all the more important that the people of Wales benefit directly from that growth and from their own spending power. By devolving proportionately low revenue yielding taxes compared with the UK average, such as income tax, without devolving proportionately high revenue yielding taxes compared with the UK average, such as VAT, the UK Government are setting the tone in the Bill for an unfair and unstable fiscal position for Wales.

The devolution of VAT rates has been dismissed in the UK in the past on the ground that European Union rules prohibit the variation of VAT rates within a member state. Although we are calling only for parity with Scotland in this instance, the UK’s exit from the EU could open a debate on devolving rate-setting powers to Wales. If, as the International Trade Secretary and the Brexit Secretary seem to want, the UK does not remain part of the single market, that could open up a world of possibilities for fiscal policy. Setting VAT rates could give Welsh Ministers a powerful macroeconomic lever, and could perhaps be used in conjunction with other tax powers in considering the overall progressivity of the tax system in Wales.

[Hywel Williams]

I agree entirely with my hon. Friend. Does he agree that the record of Governments in London, both Labour and Conservative, is not encouraging? Under an agreement made in Helsinki in 2008, states are allowed to vary VAT down to 5% in labour-intensive industries. Were that to happen in respect of, say, tourism and construction in Wales, a huge amount of new business would be generated and the lost tax would be made up very quickly, but this Government and their predecessor did not take advantage of that dispensation. We do not need to wait for Brexit. We could make this change now, but the Government refuse to do so.

[Jonathan Edwards]

I am grateful to my parliamentary leader for that intervention. Plaid Cymru has a long-standing policy to make the case at Budgets and autumn statements in this House for the lowering of the VAT level for the tourism industry in Wales. The all-party parliamentary group on the tourism and hospitality industry in Wales, chaired by the hon. Member for Ceredigion (Mr Williams), has also called for that reduction, which would be of huge benefit to the industry.

The Under-Secretary of State for Wales, the hon. Member for Aberconwy (Guto Bebb), has said tonight that he will not support the new clause because the proposal was not part of the Silk commission’s recommendations. This is a classic case of the UK Government cherry-picking powers as it suits them and using the Silk commission as a justification for omission—in this case in relation to VAT—while dismissing its recommendations for the inclusion of measures on, for example, APD.

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[Hywel Williams]

Let me begin by thanking our Bill team and our support staff for their excellent help in formulating our position. I thank Heledd Brooks-Jones, Ben O’Keefe, Rhian Medi Roberts and Osian Lewis. I also thank the large number of people in Wales, and not only Plaid members but people who are entirely impartial, who have been very generous with their advice and time. I also thank the Clerks, who have been unfailing in their courtesy and expert advice, and right hon. and hon. Member on both sides of the House. We have had a good debate and most of the time it has been extremely courteous and respectful, not least from myself of course. Lastly, I thank you, Mr Speaker, and your colleagues for expertly steering us through our discussions.

When the Wales Bill was reannounced in the Queen’s Speech, it was described as being intended as a strong and lasting devolution settlement for Wales. As it stands, the settlement presented to the House today in the Wales Bill is neither strong nor, I am afraid, likely to be lasting. My colleagues and I tabled carefully considered amendments in Committee and on Report, which would have substantially strengthened the Bill and have secured a fairer and more robust devolution package. Some of those amendments were compromises on our part for the sake of progressing the devolution agenda. Quite logically, we have always argued that the cross-party Silk recommendations need to be realised as a bare minimum. I am afraid the Government have not succeeded in doing that and have been open to accusations of cherry-picking its recommendations as and when it suits them.

I say “bare minimum” because Silk is rapidly becoming out of date anyway. The powers devolved to Scotland in the Scotland Act 2016 have to a large extent superseded Silk, and while the Government are granting incentivising powers to Holyrood, Wales is left lacking in accountability and without the necessary levers over our economy. The biggest external impact on Wales is the constitutional settlement. However, there will of course be Brexit. I would argue that this Wales Bill was almost redundant from the day the people of the UK were persuaded by the chimera of absolute sovereignty, a massive diversion of Government spending and above all drastic cuts to immigration. When the people decided to leave the EU, they largely voted to gain control. That is what we heard—“Give us our country back. We want control.” It is only logical to demand that this appetite for increased accountability and transparency is replicated in the debates surrounding devolution to Wales.

As the Department for Exiting the European Union struggles and starts to untangle the mountain of legislation tied to EU laws and directives, decisions will have to be made about the repatriation of powers. The Government must not use Brexit as a power-grabbing exercise. Powers repatriated to the UK must be devolved to Wales and the Barnett formula must be revised to reflect adequately the changing nature of devolution. We are in a period of great economic uncertainty and Wales needs to renew its fiscal levers to be able to grasp the problem, to close the prosperity gap which already exists and to ensure that the instability of Brexit does not impact on the jobs and livelihoods of people in Wales.

Announcements on the boundary review are imminent —some of us will have had a sneak preview today—and the number of MPs from Wales is likely to be significantly reduced. This also must surely lead to greater responsibility and power being transferred to the National Assembly. This Wales Bill does not sufficiently address the democratic deficit we are likely to face.

This Bill has been rushed—perhaps “rushed” is too strong a word, but it has been brought through Parliament, in the end, rather quickly. It appears from our side at least to be something of a pig’s ear—unsatisfactory. It has been criticised by others as well. The leading academic Richard Wyn Jones from the Wales Governance Centre used, in that wonderful academic way, the damning word “patronising”, which holds a wealth of meaning.

It seems to have become an established pattern for successive Secretaries of State to claim to be legislating for a generation, only to see their handiwork substantially revised within four or five years. It looks as if this Bill will most definitely be revised, and possibly much sooner than in four or five years. Circumstances have changed. The main Opposition—with concerns of their own internal strife, unfortunately—have at times been absent during the scrutiny of the Bill. The exception of course is the hon. Member for Newport West (Paul Flynn), and I pay warm tribute to his efforts to ensure that the Bill received the proper scrutiny. However, half-hearted and confused calls from the Welsh Labour Government for further powers have fallen largely on deaf ears here in London. It has been Plaid Cymru’s fate to try to defend our best interests and to demand a truly robust devolution settlement that will determine our course for decades to come, but I am afraid that we are still waiting for that final settlement.

The hon. Member for Newport West quoted “Alun Mabon”, the heroic poem by John Ceiriog Hughes, the superstar of Welsh poetry in the Victorian era. It repays close study by those of us who speak Welsh. I am not trying to trump the hon. Gentleman, but I would like to add to the point he was making about the Welsh language by expressing the passionate feelings that I have about it. I thought I would quote the French writer, Alphonse Daudet, who also lived in the 19th century. He wrote a short story not long after the Franco-Prussian war, when Alsace had been invaded and its culture had been changed. The only translation I have is the Welsh one:

“Pan syrth pobl yn gaethion, cyhyd ag y cadwant eu hiaith y mae fel pe dalient allwedd eu carchar.”

This translates as “When the people fall into captivity, so long as they keep their language it is as if they hold the key to their prison.”