European Union Referendum Bill
Hywel Williams Excerpts(8 years, 11 months ago)
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Mr Clarke
Precisely. If I were the Governor of the Bank of England—some might say thank the Lord I am not, though it is quite an interesting job—I would not feel I wanted to publish such a document because I would suddenly find myself in the middle of the most emotional political debate going on in the country, and that is not where the Bank of England should be. On that serious ground, I think the amendments are interesting and I hope I discover what the views of the Bank of England are. They will probably be leaked, although central banks should not leak. I do not think we should enjoin the Bank to produce what would inevitably be ferociously controversial documents.
I conclude as I began. I find all these debates a little bewildering. I have not the slightest doubt that the British public will not allow this referendum to be run on any basis other than that of reasonably fair objectivity on both sides, and we should beware of making the mistake of slipping into the Bill rigidities which, if we are not careful, will start causing totally undesirable results when the reality of the referendum takes place.
Hywel Williams (Arfon) (PC)
I support amendment 16 and new clauses 3 and 4 in the name of my right hon. Friend the Member for Gordon (Alex Salmond) and other hon. Members.
I hope I can welcome some clarification from the Government later on the question of holding the referendum on the same day as the elections in Scotland and the elections for the Assemblies in Northern Ireland and Wales. An aspect that has not received much attention is that of the effects of the franchise. EU citizens have the right to vote in our general elections in Wales and in Scotland. The Government here in London propose to exclude them from the referendum. If the referendum and the election were held at the same time, one can picture the spectacle in Northern Ireland, Scotland and Wales when EU citizens turn up to vote, cast a vote and then are cast out. They are being prevented from voting on our future in the EU. That spectacle would cheer the hearts of despots throughout the world, from Moscow to Damascus to Pyongyang.
On the declaration of the results and the so-called quad lock, there are particular EU issues pertaining to Wales. I would say that these are national issues. On Second Reading I referred to the value that we as a multilingual society derive from membership of a multilingual and multicultural European Union. This may not figure as largely elsewhere in the UK as it does in Wales—it is a particular Welsh issue.
Wales is one of the poorest parts of Europe—it is at the same level as some former Soviet bloc countries—and we have derived much benefit from EU regional policy. Again, that is of national significance to Wales. We are also very dependent on EU agricultural support. There are other issues relating to manufacturing and demography, but I will not go into those now. All those factors might or might not decide the result in Wales—I cannot say whether they will—but they are legitimate national interests and should be respected as such.
We have a particular national interest. It might be different from the national interest of our neighbours. As the Government intend, their national interest will trump ours. I think that there are only two ways to go on the respect issue: either to respect or not to respect. The current proposals potentially will not respect, which is why we will support amendment 16.
Mr Jenkin
I will endeavour to be as brief as possible in order to allow other Members to speak. I will speak primarily to amendments (a) and (b) to amendment 11, which stand in my name, but also in support of amendment 11, which stands in the name of my hon. Friend the Member for Stone (Sir William Cash). I thank my right hon. Friends the Minister and the Foreign Secretary for the positive way in which they have engaged with the entire party on these questions. We are grateful for that dialogue. I think that absolutely proves that we are not in some re-run of previous grief. This debate is not even about Europe; it is, in fact, about how to conduct a fair referendum.
I have some experience of referendums, because I set up the “North East Says No” referendum campaign in 2004, which turned around a two-thirds majority in favour of a north-east Assembly into a 4:1 defeat. We operated under the provisions laid down by the Political Parties, Elections and Referendums Act 2000, which worked pretty well. The purdah provisions restricted what the Government did, although they are probably not tough enough. They did not prevent the then Deputy Prime Minister, John Prescott, changing the Government’s policy on what powers that putative Assembly would have only a few days before the postal votes went out. When we rang up the Cabinet Secretary to complain that the Deputy Prime Minister had breached the purdah rules, we were told, “That’s a matter for the Minister, not for me.”
That underlines the argument that the purdah rules are not tough enough, rather than that we should not have them at all, because they prevented civil servants from becoming embroiled in referendum questions, or being used by Ministers to promulgate the case that the Government wanted them to promulgate, and that is the vital protection. It is principally towards the impartiality of civil servants that I want to address my remarks, particularly given that, I am proud to say, I have been elected unopposed to the Chair of the Public Administration and Constitutional Affairs Committee. I very much hope to persuade my fellow members of the Committee to address some of these issues during this Parliament.
I am disappointed that the Labour party has abandoned the principled position it adopted on purdah when it implemented the 2000 Act, which is quite extraordinary. I ran into Jack Straw, the former Foreign Secretary, this morning, and he was thoroughly disappointed to hear that the Labour party was backing off from supporting the constitutional legislation that it had implemented. Those ideas did not just come out of nowhere; they were ideas for a fair referendum that arose from the unfairness of the conduct of the first Welsh referendum, which were addressed by the Neil committee, which became the Committee on Standards in Public Life—the key is in the name. It was regarded as essential to have a period when the machinery of government cannot be involved in supporting one side or the other in a referendum campaign. The Electoral Commission would like 10 weeks, rather than just four weeks.
There are certain myths about purdah. The Government do not grind to a halt during a general election. Ministers even attend meetings of the Council of Ministers during general elections. However, during a general election a Minister cannot use their Department to promulgate information or to brief the press in a manner that is intended to affect the outcome. We want the same to apply in the referendum.
The letter from my right hon. Friend the Minister for Europe, which the right hon. Member for Gordon (Alex Salmond) has now seen, does not actually provide the reassurance that is required. In fact, by explaining what is contemplated, it confirms precisely the opposite. For example, it states that the Government,
“having taken a position on the outcome of our negotiations with the rest of the EU, will naturally be obliged to account to Parliament and the British people.”
There is absolutely no problem about accounting to Parliament in any purdah period about any matter at all, because it is privileged. There are no purdah rules that apply to anything that any Minister would say on the Floor of the House of Commons.
But are we seriously to believe, as my right hon. and learned Friend the Member for Rushcliffe (Mr Clarke) indicated, that civil servants should be used to put out press releases on matters that are being addressed by the referendum question, because that is what he is saying? That is precisely what should not be allowed. The idea that this will prevent Ministers from saying anything, and that somehow Ministers will not be able to take part in the referendum campaign, is clearly tosh. I seem to recall the Prime Minister being very vociferous in the run-up to the Scottish independence referendum, right to the last day of the campaign. However, he was unable to use his ministerial car, fly at ministerial expense or use the machinery of government to promulgate the messages he wanted to get across. There might have been a rather frustrating moment when he said, “I want to put out a statement”, and the Cabinet Secretary would have had to tell him, “I’m sorry, Prime Minister, but you can’t do that now that we are in purdah. You will have to do that through the no campaign or through your party.” That is exactly right. What is the point of the expenditure limits for the yes and no campaigns if the Government have 80 special advisers and thousands of press officers able to issue press releases, brief the media and organise media tours for Ministers? That is precisely what should not be available to Ministers during the closing stages of a referendum campaign.
Taxation of Pensions Bill
Hywel Williams Excerpts(9 years, 5 months ago)
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Cathy Jamieson
The purpose of the monitoring is to determine whether the Bill has unintended consequences. We would want the process to deal with our concerns of whether the market responds to the changes and if the products that people have envisaged will be available. There is the oft-quoted example of what happened in Australia: people drew down money, but many found that they had not properly planned for the future.
The hon. Gentleman asks what the Government would do, but I think that the Government have a responsibility to keep all legislation under review by looking at its effects and examining whether measures are fit for purpose and if they do what they say on the tin. If changes need to be made, the Government of the day will bring forward appropriate provisions. They have a responsibility to make themselves aware of any unintended consequences that might arise from the Bill and they should tell us how they will close any loopholes.
Hywel Williams (Arfon) (PC)
I am sure that the hon. Lady agrees with the TUC when it says that it believes that
“greater emphasis should be placed on developing strong default options at retirement. These may include a combination of drawdown and annuitisation.”
Cathy Jamieson
The hon. Gentleman makes a valuable point. The Public Bill Committee examined what options will be available to people and how we can ensure that the balance is right so that they are encouraged not only to take up pensions at the earliest possible stage, such as through auto-enrolment, but to think about planning for their long-term future. The aim was to ensure that people would not think that there was a windfall at age 55, perhaps make wrong decisions about it, and find by their 75th birthday that they had not done the correct planning. The new clause is very much about trying to see how the provisions will impact on real people when the time comes for them to make these decisions. That is why we were talking about behavioural analysis; we want to ensure that lessons are learned from it.
Cathy Jamieson
It is a bit chicken-and-egg: until we do the analysis, we do not really know the extent of the problem. The solution would come once the problems were identified. The hon. Gentleman makes an important point about annuities; that takes me back to the issue that I raised about the opportunity for new products. There is a relatively short period of time in which to develop them. The industry, of course, says that it will try to meet the “challenges”—it consistently uses that word—and ensure that there are options and products. None the less, I find it difficult to understand why the Government seem resistant to the new clauses.
I think it was Ernest Hemingway who said that his novels were like icebergs:
“There is seven-eighths of it under water for every part that shows.”
Sometimes the same can be said of legislation, because the devil is in the detail. One has to see the detail, and be on top of it over a period, to find out what the ongoing impact is. That is why, throughout the passage of the Bill, we have tried to identify and probe any fault-lines on the surface of the legislation.
The guidance guarantee has been the subject of considerable debate, although it essentially formed part of the Pension Schemes Bill. Although we have now seen information on the overarching standards and the apportioning of the levy, published on Friday by the Financial Conduct Authority, we have yet to see all the content of that guarantee. Of course, that is the responsibility of the Government, in tandem with delivery partners. It is vital that the guidance is up and running, and is equal to consumer needs, come April next year. The FCA policy statement published on Friday confirmed that, at least initially, there will be no “second line of defence”, as it was described, which makes it even more important that the guidance is fit for purpose.
In the Public Bill Committee, I talked about the potential impact of the reforms on eligibility for social care. We identified two separate but related points on social care that we believe the Government have not yet adequately addressed. The first is the impact that drawing down money under flexi-access may have on an individual’s entitlement to means-tested benefits and eligibility for social care. The second is a point that I raised earlier: the danger that too much emphasis has been placed on early access to funds. That may result in people taking too much, too quickly, and being left with insufficient funds to cover the cost of care later in life. That is why our review calls for a distributional impact of the reforms by income decile. That is also why we need behavioural analysis. Signs may emerge that consumers are accessing their pensions earlier, which increases the chance that they may be left short of money in later life.
As we heard in Committee, many individuals who access their pension flexibly risk being hit with an unexpected tax bill—a point that the Association of British Insurers highlighted:
“Many people will struggle to understand the tax consequences of these reforms. Apart from tax free lump sums, withdrawals from pension pots are taxable pension income…Not only may people find themselves unexpectedly paying higher rate tax, it is possible that some will be unaware that their tax may not be settled for a year after they have accessed their funds through a self-assessment process that they may be unfamiliar with.”
These risks have to be monitored and reviewed, so that any unintended consequences can be picked up and dealt with.
We also need to see—this comes back to the point raised earlier—whether the Bill results in a proliferation of new products. The impact of such products on consumer behaviour should be monitored. In its 2014 risk outlook the Financial Conduct Authority expressed concern that
“retirement income products and distribution may deliver poor customer outcomes”.
It said:
“While recent proposals for pension reform plan to allow consumers to access any amount of their pension pot at age 55, the need for consumers to understand the options available to them at retirement is still paramount. Any future innovation in decumulation products will compound these risks.”
The FCA was, again, trying to look to the future. We share those concerns. We do not want poor outcomes for consumers, and I am sure the Minister does not want that either.
A further issue is that new products may carry additional charges that eat away at an individual’s pension. Research from the House of Commons Library found that current income drawdown products could see 27% of an average pension pot of £30,000 eaten up in fees and charges. If the reforms lead to continued abuse of charges, the Government may have to consider the introduction of a charge cap.
The changes made in schedule 2 abolish the 55% tax on pension funds on the death of the member. We can see the Government’s reasons for doing this, but it would be worth monitoring the impact on consumer behaviour and Government revenue.
I said that I wanted to ask the Minister some particular questions in relation to the autumn statement and the figures that had been published. Throughout the Committee stage, when we were pressing for information and numbers, the Minister said that those would be published in due course. True to his word, that information is now available to us. What effect will the revisions have on the initial costings of the impact of these reforms? Has he had cause to reconsider the impact of the reforms? Can he explain why the tax take increases because of the annual allowance in 2015-16, but falls in subsequent years? What is the basis for those figures?
Can the Minister give us any more detail about the costing of the salary sacrifice and welfare forecast provisions? The numbers are there, but we do not have further information in the autumn statement policy costing document. In comparison to some of the figures provided in Committee, the estimates still seem low. Given that the Minister has revised his forecast to take into account salary sacrifice and welfare at such short notice that it is not included in the autumn statement documents, had the Government fully considered those factors when they initially drew up these reforms, or did they only later recognise the significance of those factors?
We have asked for a review, as set out in new clause 1, to show whether the Bill increases the scope for tax avoidance and the avoidance of national insurance contributions. In the light of the figures that have been published, is the Minister confident that all his projections will prove to be accurate?
I have had a fair opportunity to set out the case for new clauses 1 and 2, which will allow the Minister to keep his word and monitor, review and report information as appropriate. It is important that the clauses are added to the Bill to ensure that that happens. We need to keep a close watch on the progress of the reforms to make sure that they do not lead to adverse outcomes for consumers or place increased costs on the state. The Government have consistently assured us that they will closely monitor the impact of the Bill, so we see no reason why, even at this late stage, they cannot commit to make good on that assurance and accept the new clauses.
Hywel Williams
I rise to speak on behalf of Plaid Cymru and in support of amendment (a), which stands in my name, to Labour’s new clause 2. I agree with much of that new clause, but I wish to add that the Government should bring forward a report on the impact of the changes introduced by the Bill specifically on the housing market and introduce measures to rectify any problems, should it become apparent that there are negative consequences. I sincerely hope that my concerns are entirely unfounded.
Although we welcome the Government’s desire to reform the private pensions system, we in Plaid Cymru have concerns about the consequences of behavioural changes in the pensions industry, particularly in relation to individual pensioners taking large draw-downs of money. We are not against pension savers being able to access their pension pots as a lump sum. If that is how people wish to access their money, it is up to them to do as they see fit. Given the rates of return achieved these days, it is not surprising that many people will wish to take that route.
Our concern is that the effect might not be quite what the Government intend. Aside from consumer protection issues and stopping people being targeted by sharks and cowboys seeking to exploit those who are newly able to access comparatively large amounts of money, attention needs to be given to the longer-term possibility that those who draw down large amounts and whose subsequent investments fail, for whatever reason, will be left with little or no money on which to see out their final years, despite having contributed to a pension scheme for most of their lives, and that they will then become a burden on the public purse. It is fair enough to say that the buyer should beware, but we are not talking about purchasing a new television; a wrong decision in this case might have grave, long-term effects on people’s basic incomes.
As has already been mentioned, in Australia, where the Government have introduced changes similar to those intended here, many people took large draw-downs and invested the money in buy-to-let properties. As the TUC has noted, much evidence indicates that the same will happen here, despite Ministers’ talk of people making home improvements, buying new kitchens or going out and buying cars and other consumer goods that will boost the productive economy.
Research by the Australian investment management firm Challenger has found that one third of savers used their pension cash to buy a home, pay off an outstanding mortgage or make home improvements; one in five splashed out on a new car; and one in seven spent at least some of their pension on a holiday. The evidence from Australia is that, when given the choice, only one in 25 Australians now buy an annuity. In the US, another country where annuities are not mandatory, most people take their pension money as cash, rather than buying an annuity. Indeed, a buy-to-let property might appear to be one of the better options for many people, rather than keeping their money in their pension scheme or making other, more conservative investments.
Some large accountancy firms, such as PricewaterhouseCoopers, have said that the changes to the annuities system will be a net positive for the Treasury. They perhaps foresee the revenue raised through stamp duty and other associated taxes. But it is not the Treasury’s coffers that will suffer, at least not in the short term. It is the potential bubble in house prices that concerns me, particularly at a local level, and the potentially growing number of people who would then be unable to buy their own home, the strengthening of the historical over-reliance of the British economy on a buoyant housing market, and the potential effects on investors’ incomes should, or rather when, the bubble bursts.
I need hardly remind the House of the dangers of an over-inflated property market, of which buy-to-let is a significant factor, and indeed one of the significant causes of the financial crash in 2008. Even prior to the crash, in August 2007, Oxford Economics noted that buy to let
“is undoubtedly contributing to the overvaluation of housing.”
Were I cynical, I might even characterise inflation of the housing market as some sort of giant Ponzi scheme, helping to keep the economy afloat while doing little to contribute to productive capital, the epitome of the rentier society—if I were cynical.
Of more significance to my constituents, and to people throughout Wales and the more picturesque areas of the UK, is the potential that those taking large draw-downs would decide to buy holiday homes. I need not rehearse in any detail the arguments about the problems associated with an over-preponderance of holiday homes. Hon. Members who represent constituencies where that is a problem will be only too aware of the negative effects. Anyone who really wants to know about it might read my maiden speech from 2001, which addressed housing matters and this problem, in particular. To put it briefly, having too many holiday homes in an area has a negative, deadweight effect on the local economy. Local people, especially young people, are unable to afford homes because of price inflation and are forced to leave. In my constituency, and in much of rural Wales, there is the added dimension of the damaging effect that has on the Welsh language. We have been largely spared some of those effects over the years of economic difficulty, but now, if the Chancellor is to be believed, we are moving towards a new golden age of plenty, possibly financed in part by pension lump sums, with a consequent revival of these risks.
Toby Perkins
I do not intend to detain the House unduly, but I want to speak briefly in support of new clause 1, tabled by my hon. Friend the Member for Kilmarnock and Loudoun (Cathy Jamieson). I also do not intend to give too much advance notice of my Adjournment debate, which I will have the pleasure of holding later and to which I know that the House is looking forward with considerable interest.
My hon. Friend made an important point about the haste with which some of the changes have been introduced and the impact that that can have. The Government may be entirely well meaning, but such changes can have unintended consequences, and I shall refer to some of them in more detail later.
If I had been contacted by my constituents and had a response from the Minister a few weeks or months earlier, there might have been an appropriate opportunity to propose that the issue was looked into in relation to the Bill, but perhaps there will be an opportunity to consider such issues in the other place.
It is a great pleasure to follow my hon. Friend the Member for Coventry North West (Mr Robinson), who speaks with tremendous knowledge on these issues. He was absolutely right to focus on the way in which some industries operated in the past, and the extent to which the financial services industry had some very negative selling practices back in the deregulatory period of the 1980s. I am pleased that the industry, with Government assistance, has very much got its house in order.
We would be well advised to think about the impact of the changes on the professionalism of very important industries such as financial services. If decisions are not taken in professional enough a way, they can have massive effects on people at the time in their life when they take their pension. Back in the 1980s, there was a huge explosion of private pensions, with people—mineworkers or teachers—advised to give up their pensions. They were told, “No, if you give up your pension, you can opt in to one of these private schemes, with 15% growth every year.” There was a huge mis-selling scandal.
I previously worked—briefly, and largely unheralded—in the financial services industry. I was not necessarily particularly suited for the job, which highlights a point about people being invited into the industry. They were dragged into it on the basis of knowing friends that they could go and sell pensions to. People with very little knowledge came into the industry. Their business plan was based on phoning all their friends and relatives to encourage them to give up their pensions in reliable public sector or other schemes and to go in to private schemes. There was of course a huge explosion, and many of the people in the schemes were seen to have been given very poor advice.
We recognise what the Government are attempting to achieve, and we support their aims of having greater flexibility for the industry, allowing people to be put back in charge of their investment and ensuring that they have the freedom to decide what to do with the money that they have saved. However, we are also aware of why the annuities method of accessing pensions that people had invested in was introduced. We as a society decided that, in an age when people were living longer and longer, we wanted people to make provision for themselves and, having done so, to buy something that provided a regular income that they could rely on.
If we have a scheme in which people decide what to invest their pension funds in, but, with the best of intentions, those investments go wrong, the people who we thought had provided for themselves in later life will come back to the state and say, “Unfortunately, the investments that I made with my pension pot have gone wrong and I have run out of money.” That will have an impact on the Government. We recognise what the Government are attempting to achieve, but it would be sensible to have a review of how it is working, the impact of the changes on the behaviour of investors, the impact on Government revenues, the impact on the broader economy, and what behaviours are being encouraged and introduced by the changes.
Hywel Williams
I am sure that the hon. Gentleman will accept that there is also a reputational danger for the industry in general and for the entire system of retirement pensions if people who make honest and sincere investments find that the returns are non-existent or that the investment itself disappears, and find themselves not being at leisure in their 70s, but working, like people I know.
Toby Perkins
Absolutely; the hon. Gentleman is right. There was a huge rush of those issues coming to light at the back end of the last century, when people who believed that they had saved into corporate pensions found that the company had disappeared and so had their pension.
When we are debating these issues and supporting the Government in this important initiative, we must be conscious that it must not end up with people effectively gambling with the income that they will rely on, without being aware of the risks. It is important that protections are in place to ensure that when people make such decisions, they have the information and know what they are letting themselves in for. It must be clear not only what impact it will have on them and their future, but what impact it will have on Government resources and revenues.
The FCA risk outlook of 2014 stated:
“Retirement income products and distribution may deliver poor consumer outcomes”.
That means that the Government recognise the dangers that we are highlighting, which adds more weight to the call of my hon. Friend the Member for Kilmarnock and Loudoun for a review of the impact on Government revenue and a review of who is affected, with a
“distributional impact, by income decile of the population”.
The other thing that we must all be conscious of is that this change must not result in an industry that services only the very rich. Financial advice is important. If it becomes the preserve of the very rich, many people will be left out of the market, especially the self-employed, who often see their business as their pension and so never go down the route of choosing financial services products.
In supporting my hon. Friend’s call for a review of the impact of the changes, I wanted to flag up the debate that we will be having later and to put it in the context of the taxation of pensions. I have secured today’s Adjournment debate on the impact of such measures on public sector workers who transferred to the private sector when their public sector job was transferred. They are protected under transfer of undertakings protocols. However, as many staff at CSC in Chesterfield who previously worked for Royal Mail discovered, when they were made redundant, the changes hastily introduced by the Government in 2012-13 meant that although they left their pension with Royal Mail when they were transferred and opened a new pension with CSC, that new pension was treated as a second pension. As far as they were concerned, they sat in the same desks and did the same job. The name above the door may have changed from Royal Mail to CSC—although in this case it did not in practical terms—but those staff were classed as having two different jobs and therefore two different pensions.
Childcare Payments Bill
Hywel Williams Excerpts(9 years, 5 months ago)
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Hywel Williams (Arfon) (PC)
Does the hon. Lady accept that there are particular stresses on parents in rural areas, as the cost of travel has to be added to the cost of child care itself? The money could be better deployed in such areas in increasing the provision rather than the amount that child care providers get.
Alison McGovern
It is important for all of us to recognise the extra pressures on families in rural areas. People’s circumstances are different. We want to increase employment in rural areas as well as in suburban and urban areas. The hon. Gentleman makes an important point.
Hywel Williams
I very much agree with the thrust of the hon. Gentleman’s argument. His point applies particularly to people in seasonal industries such as agriculture or, as in my constituency, tourism. I am sure that he agrees that there is a particular problem for those sorts of workers.
Alex Cunningham
Yes. I am grateful to the hon. Gentleman for that intervention. I most certainly do agree with him. Pieceworkers and others can have hours and wages that fluctuate over a long period; they will most certainly be affected. I feel that the
“easy-to-use online tool”––[Official Report, Childcare Payments Public Bill Committee, 23 October 2014; c. 222.]
promised by the Minister in Committee will prove elusive.
On top of the sizeable potential for confusion, the different mechanisms by which child care costs are to be paid under the tax-free child care scheme and universal credit are also worrying. As we are aware, under the tax-free scheme, payments will be made through child care accounts. That will provide families who are in receipt of tax-free child care with an important budgeting tool to help them manage their finances; that is particularly important as payments will be made through child care account top-ups before costs are paid by the parent. However, child care support received through tax credits and universal credit cannot be provided through child care accounts. That means that child care payments are not aligned, which gives rise to the potential for further confusion and complexity for parents, and it means that an important budgeting tool for households in receipt of tax-free child care is not available to those receiving child care support through universal credit.
It is worth highlighting that the Children’s Society report “The Debt Trap” found households in poverty containing dependent children to be twice as likely to be in some form of arrears as families on higher incomes. It is precisely these families who are most likely to need help with budgeting, but who will be given the least support. Moreover, universal credit payments of child care costs will be made in arrears. As Members will be aware, parents are usually required to pay child care providers one month in advance, but families on low incomes claiming universal credit are likely to have the lowest savings, if any at all; this will inevitably result in many being forced to borrow money to pay for their child care up front. We should be under no illusion: that could be a hefty sum, and if child care costs are higher during school holidays, further loans may be required to meet those costs. This runs the obvious risk of forging a cycle of dependence. Reporting requirements for universal credit are significantly greater than those for either tax credits or tax-free child care, and any failure to report in time will lead to the loss of all payments for that assessment period.
Childcare Payments Bill
Hywel Williams Excerpts(9 years, 10 months ago)
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The Financial Secretary to the Treasury (Nicky Morgan)
I beg to move, That the Bill be now read a Second time.
Hon. Members will be aware that, as we sit in the Chamber this afternoon, not only is overall employment in the United Kingdom at record levels, but female participation in the work force is at an all-time high. That means that across the country more people than ever before have jobs to wake up for at the start of the day, and pay cheques to take home at the end of the month. That is something that this Government can be proud of having helped to achieve.
However, we are by no means complacent, and we know that we can do more to remove the barriers that still prevent people who want to go to work from being able to do so. That is where the Bill comes in. Tax-free child care will be a simple scheme that is responsive to the needs of working families, whatever their work arrangements. The Bill will provide greater support to parents and, in turn, open up greater opportunities for them.
I would like to use my time at the Dispatch Box this afternoon, first, to remind Members why we are introducing these changes; secondly, to talk through exactly what form these changes will take; and finally, to explain how the changes will differ from, and improve on, the employer-supported child care scheme currently in place.
Hywel Williams (Arfon) (PC)
I am grateful to the Minister for giving way so early in her speech. I am concerned that the Bill does nothing about the supply of child care, particularly in rural and disadvantaged areas. How confident is she that the measures she proposes will indirectly stimulate greater provision?
Nicky Morgan
I thank the hon. Gentleman for that point. As I am sure he will be aware, my colleagues in the Department for Education, and particularly the Under-Secretary of State, my hon. Friend the Member for South West Norfolk (Elizabeth Truss), have been working to encourage the provision of more places, including by providing £500 to enable child minders to set up new businesses, and through schools and a wide variety of places. He is absolutely right that in order to tackle the issues of child care, we need to think about not only the costs but the supply side. We are confident that there will be places available for all the families who want them.
Let me turn first to the “why”. As hon. Members will know very well—many from their own experiences—every year millions of families across the country are faced with a difficult decision: whether it makes greater financial sense to stay at home and manage child care themselves or to go to work and arrange for someone else to do it.
Nicky Morgan
I am not going to give way again. The point is that, under universal credit, families will get support for 85% of their child care costs. In short, this is a system that recognises and adapts to the complexities of modern working patterns. It also goes a long way towards providing the simplicity sought by many parents.
Someone with a screaming child in one arm and a BlackBerry with a screaming boss on the end of it in the other hand does not want to spend their time negotiating a complex and rigid child care scheme. We have therefore been working incredibly hard to ensure that the scheme will be simple, responsive and flexible. It will be easy for parents to register and open a child care account and to access the scheme through online portals. It will be flexible to the changing demands of child care they face. It will allow them to pay in money when they want to, and it will also allow other people to pay in, such as grandparents or an employer. In many cases, it may well be a family member who is keen to support the child’s upbringing. The scheme will also allow parents to spend money on qualifying child care at a time of their choosing, by allowing them to use their vouchers on, for example, summer holiday clubs, not just during the school term.
Hywel Williams
The service will be provided online. How confident is the Minister that parents in rural areas such as mine, where broadband is either very slow or non-existent, will not be disadvantaged?
Nicky Morgan
That is why this Government are providing a huge amount of money—more was announced last week—to enable communities to get online, including broadband. Many families are already able to access services online and via broadband. Rather than look for problems, it would be helpful if everyone in this House went out and sold the scheme to families, so as to enable them to register and make it a reality.
Nicky Morgan
I want to make some progress.
On flexibility, parents and families will be able to build up balances in their accounts, to meet the cost pressures of expensive times of the year. The scheme will also provide rigidity where parents need it. Once eligible for the scheme, parents can rest assured that they will continue to be entitled to support for three months, regardless of any changes in circumstances they may experience.
Hon. Members with further questions about the scheme’s practicalities may wish to note that we have today published the draft regulations for consultation. They contain the detailed rules concerning eligibility for the scheme—for example, what qualifying paid work means—and its operation, such as how and when a declaration of eligibility might be made.
Catherine McKinnell
I genuinely do not understand the hon. Lady’s intervention. Obviously, we recognise that there are measurements of child poverty. The point I was making was—[Interruption.] No, I did not say that I did not recognise measurements of child poverty; we introduced them. What I find unacceptable is that the Government quibble and argue about how to measure child poverty rather than taking the necessary action to deal with a problem that is staring them in the face—namely, an increasing number of children in poverty. As the IFS concluded in 2011, the reduction in child poverty during the first two terms of the Labour Government was
“by far the largest and most sustained since”
figures began in 1961. As UNICEF pointed out when it compared child poverty levels internationally in 2010,
“without UK Government intervention in the form of cash transfers, tax credits and services for children and families, the UK would see a child poverty rate three times higher than its current levels.”
Government Members seem to be quite vexed about this issue, but I think that that is because they have a shameful record. Unfortunately, the story under this Government has been very different from that under the Labour Government. That is the case despite the promise in the Conservative manifesto in 2010 to
“make Britain the most family-friendly country in Europe”.
It added:
“We will help families with all the pressures they face: the lack of time, money worries, the impact of work, concerns about schools and crime, preventing unhealthy influences, poor housing.”
Let us not forget the Liberal Democrats—I am pleased that one of them is here today. Their 2010 manifesto claimed:
“Liberal Democrats believe every family should get the support it needs to thrive, from help with childcare through to better support for carers and elderly parents. Liberal Democrats will improve life for your family.”
Have those promises been translated into reality? We know that parents are facing a child care crunch because child care costs have spiralled, the number of places has fallen and the support that families receive from the Government has been slashed. One consequence is that progress on reducing child poverty has stalled.
Hywel Williams
Does the hon. Lady agree with Plaid Cymru that the answer to the child care problem, particularly in areas where there is little or no provision, is a child care guarantee for all, based on the Nordic model that has operated very successfully in Sweden for a long time? Does she agree that she has a role in persuading her Labour friends in the Welsh Government to adopt that model?
Catherine McKinnell
We all want to see more child care places. We recognise not only that there is a challenge in meeting the costs of child care, but that we need to do something on the supply side if we are to see the costs come under control. That is why I will set out exactly how Labour has proposed to deal with that issue. Although we support the measures that are being proposed, despite having quite a number of questions to raise about them, we suggest that there are actions that the Government could take today on the supply side to increase the number of child care places that are available, which has been falling.
Catherine McKinnell
I thank the hon. Lady for her clarification, but we know that over the course of this Parliament we have seen a reduction in the number of child care places and an increase in the price of child care. Part-time nursery prices have risen five times faster than pay, and in the past four years alone in my region in the north-east prices have risen by a staggering 50% for households that are already struggling to make ends meet. The average bill for a part-time nursery place of 25 hours a week has gone up to £107, and the average weekly cost of a full-time place has risen to £200 or more. It is hardly surprising that the Family and Childcare Trust has calculated that families are paying more on average for part-time child care than they spend on their mortgage, with some handing over a staggering £7,500 a year more for child care for two children—around 4.7% more than the average mortgage bill.
Hywel Williams
What does the hon. Lady make of the argument put forward by the Institute for Public Policy Research that a similar scheme introduced in Australia led to the doubling of child care costs in 10 years, and that the basic flaw of the scheme is that it is regressive?
Catherine McKinnell
The hon. Gentleman raises a very important point. We need reassurance from the Government that they have considered the data from experiences in other parts of the globe. Examples show that dealing only with the demand side, supporting parents with child care costs, simply increases the price of child care for families rather than bringing it down. Ultimately, that costs parents and the Government more, because they end up forking out more for a smaller number of child care places.
There seems to be a huge debate about the figures, but official figures show 35,000 fewer child care places across the country. In my region of the north-east alone, we have lost more than 5,000 places. Even the coalition’s flagship offer for two-year-olds, which is due to be extended in October, has floundered, with the child care Minister, the hon. Member for South West Norfolk (Elizabeth Truss), admitting last November that 38,000 of the 20% most disadvantaged two-year-olds—38,000 out of 130,000—did not have the places to which they were entitled. In May 2014, she updated the House on progress, with 10% of the most disadvantaged two-year-olds still without places. Perhaps most worrying of all is that there are 536 fewer Sure Start children’s centres than there were in 2010—an average loss of three a week. That is the figure we have, but the Minister removed the online database last autumn. Perhaps she will comment on this. I would have thought that, given her professed interest in supporting families and dealing with these issues, there would be a desire to continue to monitor the number of child care and Sure Start places available. It is alarming that we can no longer keep track of the figures on the Government website.
In addition to all that, parents have seen the Conservative Government give a £3 billion tax cut to the top 1% of earners, more than three quarters of whom are men. At the same time, parents have seen cuts of £15 billion. Support to families to balance their work and family life, such as tax credits, child benefit, maternity grant allowances and statutory maternity pay, has been reduced. The reductions to tax credits alone have meant that some families have lost up to £1,560 a year, while the House of Commons Library estimates that families with newborn children could be up to £1,725 worse off over the initial two years.
New analysis of the households below average income statistics published earlier this month shows that under this Government it is families with children who have seen the biggest falls in their income, relative to those without children. Since 2009-10, a couple with two children aged five and 14 are on average £2,132 a year worse off in real terms. In contrast, a couple with no children are £1,404 a year worse off. A single person with two children aged five and 14 is on average £1,664 worse off, compared with a single person with no children, who is £936 a year worse off. We know that everybody is worse off, but families with children in particular are bearing the brunt. These figures only reflect tax and benefit changes, and the impact of wages falling relative to prices has left working people on average £600 a year worse off since 2010.
Even more worrying is that new research published last week by the Resolution Foundation suggests that the official statistics may well have underestimated the fall in living standards, because they take no account of the wages of the self-employed. The fall in wages could be between 20% and 30% greater than originally thought. As we know, this could prove particularly relevant to women’s experiences, because according to the Office for National Statistics, women have made up more than half of the growth in the number of self-employed since 2008.
We must not forget that the true impact of this coalition Government’s failure is felt not just by parents, but by their children. The latest HBAI figures show that the progress Labour made in lifting more than 1 million children out of poverty has ground to a halt. Equally worrying, the number of children living in what is deemed to be material deprivation is on the rise, with 300,000 more children living in families that cannot afford to keep their house warm, 400,000 more children living in families that cannot afford to make savings of £10 a month, and half a million or more families unable to afford to replace broken electrical goods. Worst of all, a forecast by the Institute for Fiscal Studies indicates that while Ministers and, clearly, their Back Benchers squabble over how to adequately define child poverty, which seems to be a distraction from their failure to deal with it, almost 1 million more children will be living in poverty in 2020.
Catherine McKinnell
Thank you, Madam Deputy Speaker. I am grateful for your guidance.
The final point I want to make concerns the delivery of this scheme. We are now some 14 to 16 months away from when the scheme should be up and running, according to the Government’s revised timetable, yet the Government still have not made a decision—at least publicly—about who will deliver the child care accounts through which parents will access Government top-ups and pay for child care. They originally announced in their consultation response that National Savings & Investments would be their delivery partner, but after ditching that decision and the preceding consultation process, they have backtracked and reopened the consultation process.
Will the Minister tell us why the Government commissioned a £38,000 cost-benefit analysis report by Economic Insight, which recommended an open, competitive market model for delivering child care accounts, and then simply ignored the report’s recommendations and chose an in-house provider, NS&I, instead? Will she clarify who will be delivering the child care accounts under this in-house option, as it is my understanding that the former Economic Secretary to the Treasury, now Secretary of State for Culture, Media and Sport, awarded a seven-year outsourcing contract to Atos in May 2013 to deliver all customer-facing and back-office services to about 25 million NS&I customers? If the Government continue with the previous plan to have NS&I deliver child care accounts, will the Minister clarify whether it will in fact be Atos delivering them? If that decision is taken, does the Minister plan to renegotiate, or at least revisit, NS&I’s contract with Atos to ascertain whether the company is up to delivering and maintaining accounts to potentially 2 million parents, considering that this would be significantly different from NS&I’s current activities?
Hywel Williams
Does the hon. Lady share my concern that National Savings & Investments was only recently held to be in breach of its responsibilities to provide services in Welsh and had to change its services very quickly to conform to its legal requirements? Does that dent her confidence that NS&I might not be able to deliver services to everyone in Wales?
Catherine McKinnell
The Government need to reassure us over NS&I’s ability to provide this contract and to tell us whether services will be provided by Atos, especially as Atos’s delivery of universal credit and personal independence payments has been such a shambles. With just a year to go, it is important that Ministers get a grip and make some decisions. As with universal credit, any further delays in implementation will only hurt hard-pressed families who are already struggling with the cost of child care bills.
Let me turn briefly to our proposals for investing in child care which, on top of what the Government are providing today, would deliver a real difference to hard-pressed families who are struggling with the child care crunch. We have said that we will build on previous efforts and extend free child care for three and four-year-olds from 15 to 25 hours a week for working parents. We will give parents peace of mind by setting down in law a guarantee that they can access wrap-around child care—from 8 am to 6 pm— through their local school, if and when they want it.
As with the 15-hour early years entitlement, introduced under the previous Labour Government, the new 25-hour offer would be for 38 weeks of the year, which would mean more than £1,500 of extra support per child per year. It would not demand that working parents spend more and more of their own money on child care in order to receive some cash back from the Government, as this Bill will demand of them. Regardless of what working parents of three and four-years-olds choose to spend on child care, they will be entitled to 25 hours a week for 38 weeks of the year.
We know that having school-age children can be a logistical nightmare for many parents, and that too many of them find it increasingly difficult to find after-school and before-school child care. According to a Department for Education survey last year, 62% of parents of school-age children said that they needed some form of before-and-after school care or holiday care to combine family and work, but of these, nearly three out of 10 of them were unable to find it. That is why Labour will introduce a primary child care guarantee to benefit parents of primary age children, because that is when families most require child care support.
Dr Thérèse Coffey (Suffolk Coastal) (Con)
I had assumed that my hon. Friend the Member for Norwich North (Chloe Smith) would speak ahead of me, but it is a great pleasure to be called today. You are right to looked puzzled, Madam Deputy Speaker. Why is there nobody on the Opposition Benches? We all know that the hon. Member for Newcastle upon Tyne North (Catherine McKinnell) spoke for 52 minutes to mask the fact that no one else on the Opposition Benches would be speaking. That contrasts with 19 and 20 November 2013, when we debated child care in the Chamber. I am slightly disappointed, because I had a good exchange with the hon. Member for Houghton and Sunderland South (Bridget Phillipson) and I am sure that we could have had a similar debate about statistics and measures. Nevertheless, it is great news that we are finally getting to the Childcare Payments Bill and I am pleased to support it today.
One of the big things about the Bill is that it puts matters into the hands of parents. Instead of having to rely on employers setting up schemes, which I believe only 5% of employers actually set up, we will have a system that is effectively direct. Families with two working parents who earn at least £50 a week will benefit in one way or another from Government help towards child care, recognising that we will not double-subsidise those who receive tax credits or universal credit.
On that note, it is my understanding that we will provide an extra £200 million to support those families claiming universal credit, so instead of having 70% of their child care costs paid, as they do today, they will receive 85%. I am sure that will be very welcome to all working families.
Of course, the very richest in our society—those who earn more than £150,000—will not benefit, but I am sure that they will recognise that we must target a welfare system at the broadest number of people.
Hywel Williams
Is the hon. Lady confident that when parents in deprived and rural areas are enabled as proposed, the market will deliver the places?
Dr Coffey
I do not pretend to know much about Welsh schools, although my cousin goes to school in Wales and I have many relatives there. I am not necessarily aware of the provision that exists, but I know that this Government are keen to work with schools in England to increase the number of schools choosing to make provision for young children. I do not know what the Welsh Assembly Government are considering, but the Under-Secretary of State for Education, my hon. Friend the Member for South West Norfolk (Elizabeth Truss), has consistently tried to introduce reforms that will make child care provision an attractive career. We are right to press ahead with some of the childminder agencies we are introducing, not through this Bill but separately, to remove some of the administrative burdens that might be deterring people from entering that career. I hope that the hon. Gentleman will encourage such agencies to set up in his area of Arfon, bringing new employment opportunities for both men and women and making provision for working parents.
It is great news that under this Government more women are working than ever before, yet we would like to see even more women—and even more parents—going into work. This scheme is part of our long-term economic plan. We recognise that the cost of our child care is the second highest in the OECD as a percentage of family income; only Switzerland’s is higher. I think that it is fair to say that under Labour the number of childminders decreased significantly and costs went up. Before the hon. Member for Newcastle upon Tyne North springs to her feet—if she is not following the latest reshuffle news on Twitter—let me say that I recognise that that trend has continued, but it is not going on at the same level. [Interruption.] I thank the hon. Member for Manchester Central (Lucy Powell) for referring to my haircut. It was nothing to do with the events that seem to be unfolding on Twitter. I merely got a phone call from my own mother complaining that my hair was too long and, as we know, in these situations mothers know best. I am not a mother, so I have to stick with what my mother tells me.
Let me give a few of the reasons why these things matter. A couple of years ago, the Conservative Women’s Forum undertook an inquiry, in which I think you might have participated, Madam Deputy Speaker, into the executive pipeline of talent. It focused not only on the number of women on boards, but on how we encourage women to get up the executive ladder and, more importantly, on what women can do for themselves, what Government can do and what companies can do. The issue of child care was a running theme throughout the inquiry, particularly for those in junior management. Once people are at a certain level, they probably receive a salary that means they do not have to think about the issue; they can pay for a nanny and even though it might be painful, the costs are not quite so prohibitive. We consistently received evidence that the voucher system was inadequate. It did not cover enough of the cost, it was very limited or, as my hon. Friend the Member for Tiverton and Honiton (Neil Parish) mentioned earlier, it did not help people such as the self-employed. I am pleased that the Bill extends the provision to almost anyone in work and it is right that we should do that.
It is also fair to say that no one magic bullet emerged as a result of the inquiry to solve some of the challenges in the pipeline of talent or in how we tackle child care, but nevertheless the discussions before the Budget announcements on how to help with tax relief were exactly the issues being brought up by senior executives. I was glad that the subsequent announcement was made in Budget 2013.
The proposals in Budget 2013 were limited to £6,000 of child care costs, which would have meant a maximum benefit of £1,200. I was pleased that after the consultation, to which significant contributions were made, we were able to change the age limit to 12 and, as my hon. Friend the Member for South Swindon (Mr Buckland) has pointed out, to change the age limit for children with disabilities. We also increased the limit to £10,000, with a maximum of £2,000 support. That was the right thing to do, because it recognised the costs of child care. Nevertheless, it is important that we have retained the choice for parents who are in employer-supported child care schemes to stay in that system while recognising that we will close it to new entrants, so to speak. I support that because, understandably, companies have gone to some expense to set up these schemes and they are popular. We should not withdraw one thing simply for the sake of simplicity for the Government.
The hon. Lady from Northern Ireland—I have forgotten her constituency—
Dr Coffey
Thank you. The hon. Member for South Down (Ms Ritchie) referred to the situation in which one parent was not working and asked why they would not get support with child care costs. As my hon. Friend the Member for Truro and Falmouth (Sarah Newton) has accurately pointed out, the consultation raised those points and we have extended the provision when there is a working person and somebody on carer’s allowance or employment and support allowance. When people are enjoying parental leave after having children, they should not be penalised if they have children in child care. We do not want any unintended consequences.
I am a strong supporter of the traditional family. I am sure that I am not the only person whose mother did not work initially after having me, although she did start to go back to work as a supply teacher. It is fair to say that although the Government have scarce resources, they are offering both parents the choice to get back into the workplace, as opposed to one person having to choose, for perfectly good reasons, not to return to the workplace. I therefore support the gist of what the Government are saying about restricting support to cases in which both parents are working or the other cases that have been alluded to.
I am surprised that there are no Members in the Chamber from the Scottish constituencies, because, of course, this is a United Kingdom measure, although I am delighted that we have had contributions and interventions from Members from Wales and Northern Ireland. Much has been made of the fact that National Savings & Investments will initially be providing the child care account. You may have read in the weekend press, Madam Deputy Speaker, that if the people of Scotland choose to go ahead with separation, NS&I will not be able to provide accounts to people living in Scotland, as they will effectively become foreign nationals. They might wish to consider that as another element of the question. I am sure that if somebody from the Scottish National party were here, they would leap up and say, “We will have an even better scheme and it will cost less than yours.” Nevertheless, I am sure that the good people of Scotland recognise that that is unlikely to be the case. The Minister might want to consider the issue in her regulations for this provision, but let us not prejudge the outcome of the referendum. I strongly believe that the people of Scotland will recognise that staying together is better for us all.
Hywel Williams
Shall I indulge in some karaoke and repeat the words that the hon. Lady used herself? I am sure that Scotland will provide a much better scheme when it is independent.
Dr Coffey
The hon. Gentleman would say that, and he has been very loyal to his nationalist friends. I recognise that.
On the timing, I am sure that my hon. Friend the Minister agrees that if we could bring in the scheme tomorrow, we would do so. However, we do not want to repeat—[Interruption.] Does the hon. Member for Manchester Central want to intervene? I think she said that we have been in power for four years, and I recognise that we are bringing this into play rather late in our parliamentary term, but she will know some of the challenges of government from her previous experience. Nevertheless, I would rather we got this right than end up with the fiasco we had over tax credits, which were brought in in quite a rush, with all the accompanying problems. The hon. Member for Manchester Central might be slightly bemused by that, but overpayment of tax credits and trying to reconcile figures and help people out with that is one of the biggest issues in my constituency casework. She will, I think, recognise some of the challenges of bringing in a new system.
The Bill rightly provides that the connections between the different agencies will be updated quarterly. We are not going to get into penalties and going back and forth, but provision is made for recovery. It is important that parents recognise that they should anticipate the potential impact if their conditions change. To be frank, I think the biggest change will occur when people move from one salary bracket to another, or decide to stop claiming universal credit and simply to claim this instead. At least the hurdle or cliff edge when people have to change is fairly black and white.
Dr Coffey
My expectation is that that would happen naturally. I do not want to overplay it, but I think it would be a natural consequence when people say, “I’m coming off universal credit to get this.” It will be a straightforward calculation, which should be readily understandable.
Hywel Williams
I wish I could share the hon. Lady’s confidence. I remember when the tax credit was brought in warning the Government at the time that it was complicated. It was to be administered by HMRC, which was not good at giving people money instead of taking money off them. Despite the confidence displayed at the time, HMRC included in its letters such sentences as, “Even though we told you your assessment was correct, it was not reasonable for you to believe this.” That is a direct quote from a tax credit letter. I am afraid I do not share her confidence that HMRC or any agency of Government is completely competent to administer this scheme.
Dr Coffey
I understand what the hon. Gentleman is saying, based on the experience of tax credits. That is why I think the Bill deals with it rather well: the period of entitlement is three months. As it is split up quite well into quarters, it should be quite straightforward for parents to make that assessment of what is better for them to get support. Of course, I am sure we all share the aspiration of reaching a stage where everybody is earning over a certain threshold and does not need to make those calculations.
I will not repeat everything my hon. Friends have said about the excellent work being done through nurseries for three and four-year-olds. I will simply reiterate my view that the Bill brings the balance back into the hands of parents and recognises that child care is normally needed all year round. Something that will need to be tackled with child care provided through primary schools by extending their playgroup is how to ensure that continues through the school holidays, but instead of trying to devise a perfect scheme that meets the demands of every single scenario, which is rather difficult when dealing with millions of children and parents, the Bill simplifies and gives people, through the child care account, the ability to build up balances and use the money as and when they need it. What is important is that parents will not pay fees for the accounts. I heard what the hon. Member for Arfon (Hywel Williams) said about online access, but there will be assisted approaches available for those who cannot access the internet. Internet access is the general default in our efforts to get people on to digital services.
I have not been able to speak for quite as long as the hon. Member for Newcastle upon Tyne North (Catherine McKinnell), but I am delighted to say that there are other Conservative Members here, and I did not spend 27 minutes talking about stuff that is not connected to the Bill. It gives me great pleasure to support the Bill. Today is an historic day in Parliament, as we embark upon a piece of legislation that will affect many working families. I hope the Bill has the unanimous support of the House.
Lucy Powell (Manchester Central) (Lab/Co-op)
I am pleased to speak in the debate. The contrasting numbers of Members on the Government and Opposition Benches may reflect our relative ambitions in this place, with those on the Government Benches sporting their new haircuts and trying to get the party strapline in at every opportunity, while my hon. Friends are enjoying drinks with the Leader of the Opposition this evening. Although we have made much progress in this place towards being more family-friendly, perhaps a Monday evening late night debate on child care is not the best timing.
As my hon. Friend the Member for Newcastle upon Tyne North (Catherine McKinnell) said earlier, we welcome any investment in child care. Families up and down the country are crying out for better access to child care and more affordable child care. For these reasons it is good that Ministers have finally realised, even if it is a little late in the day, the impact that child care affordability has on family lives. We on the Labour Benches believe that high-quality flexible child care is part of the solution to some of the key challenges facing our country. On the economy, our maternal employment rates, particularly for mothers with children aged between one and four, are poor compared with other OECD countries. Child care is a barrier to growing the economy and boosting maternal employment rates. It is unacceptable that in 2014 women still have to choose between looking after their children and having a career.
Over a third of mothers want to work but are unable to do so as a result of high child care costs. Two thirds of mothers would like to work more hours but are unable to do so because taking on more hours would mean higher child care bills. Improving child care will break down barriers for women and help our economy to grow. For families, this is not just about the number of women in work, as some Government Members have said. Child care can help us tackle gender inequality and the motherhood pay penalty. Although the gender pay gap is negligible for young professional women, for mothers the gap is stark.
Mums not only increasingly want to work, but they have to work. As we know, to lift families out of poverty, two incomes are often needed. The killer point for Members who have talked about more women in work under this Government is that figures show that the pay gap between what men earn and what women earn has increased in the past five years for the first time, and that, by contrast, over the 13 years of the Labour Government, the gender pay gap decreased significantly. This is the measure by which we should work out whether policy is effective.
We know that good quality child care is good for society as well. We know that the most disadvantaged children can start school 18 months behind their peers. Good quality child care can close the developmental gap and equip children with the skills and experiences they need to be successful at school. Quality child care can lay the foundations for our country’s future. It can be a key tool in our early intervention armoury and, as my hon. Friend the Member for Newcastle upon Tyne North said, in tackling child poverty. Although we welcome any investment in child care, I believe that in many ways the Bill is a missed opportunity and that it will do little to meet those big policy objectives.
Why is our child care system not working? The price paid by parents is high, yet for too many the quality of child care is patchy. The Government came to office believing that they could solve the problem simply by loosening ratios. That policy failed, and it would not have worked in any case. The Government have failed to address the fundamental problem with supply. We have seen a reduction of over 35,000 in early-years places since they took office. Government Members talk about the increase in reception places at school as though that somehow fills the gap, but they fail to recognise that at the same time the birth rate has increased dramatically, and we are now seeing huge pressure on school and early-years places as a result. The two-year-old offer shows that the system is not working, because a third of local authorities do not have enough places to meet the Government’s own offers.
I have had a number of exchanges in recent months with the hon. Member for Dover (Charlie Elphicke) on childminder numbers. We have seen a dramatic fall of 11% in childminder numbers since this Government took office. There are now 6,000 fewer childminders. It is wrong to say that Labour oversaw a big reduction in childminder numbers as a result of changes in regulation, because Ofsted registration meant that many providers fell out of the system. We heard earlier about comments made by Liz Bayram, who backs up that claim. The Government have done little to increase supply for working parents or parents of disabled children, as the hon. Member for South Swindon (Mr Buckland) mentioned. They have watered down the duty on local government to provide sufficient child care places, and they have also axed the duty on Sure Start centres to provide child care.
All that, taken together, has had a chronic impact on prices. That is why we have seen costs rocketing by 30% since 2010. The Family and Childcare Trust has shown that even part-time child care costs now outstrip the cost of the average mortgage. On top of that, Government policy has had a direct impact on the market. The no-notice changes to tax credits, for example, led to many parents immediately withdrawing their children from day care provision, which had an immediate effect on providers.
The Bill does nothing to address those fundamental issues in our child care market and, in some cases, it makes it worse. That is why Anand Shukla, chief executive of the Family and Childcare Trust, has said:
“Our childcare market is not fit for purpose. It is failing to fill gaps in provision, particularly for those parents who most need childcare; it is failing to drive up quality; and it is becoming more unaffordable for parents despite increased government funding.”
Hywel Williams
I am intrigued by what the hon. Lady is saying, because the Childcare Act 2006 obliged all Welsh and English local authorities to ensure that sufficient child care for working parents and those undertaking training or education with the intention of returning to work is available. What happened?
Lucy Powell
That is exactly part of the problem here: local authorities no longer have many of those duties, and they do not have the staff or resources to ensure that good local child care markets are acting in that way.
Let me turn to some of the specific measures set out in the Bill. The Government have no plan to control prices. This scheme, on its own, will do nothing to reduce costs, and it could even increase them. It poses a greater risk of price inflation, which is not a good or efficient use of public funding. The Institute for Public Policy Research has show that by 2018 parents will be spending more of their disposable income on child care, even with the tax-free scheme in place. Therefore, although we do not oppose the idea of tax relief for child care, we are critical that the Government have no plans to control costs and use the extra funding to lever in greater quality. Policy evidence is moving much more towards supply-side solutions, such as Labour’s proposals to extend free child care places. Indeed, under previous demand-side schemes there has been price inflation. Have Ministers assessed how the scheme will impact on the child care market and what impact it will have on price inflation?
There will be no help until after the election. The Bill does nothing for families struggling with the costs of child care now. Ministers have cut support for families in this Parliament as child care costs have risen and wages have stagnated. When the policy is introduced, the child care subsidy—that is what it is—will not make up for how much more families are having to pay for child care under this Government, or how much they have lost, as my hon. Friend the Member for Newcastle upon Tyne North so clearly set out.
For clarification, the offer for 15 hours of free child care was actually a Labour Government policy, and the idea of the two-year-old offer, which many Government Members mentioned—it is a good policy that I agree with—was actually put forward by the Deputy Prime Minister. He implemented it in the face of opposition from his colleague who claims to be the Minister for child care in the Department for Education.
Also, the numbers simply do not add up. The Government’s presentation of the scheme suggests that families are going to receive £2,000 per child. That is untrue, and only 100,000 of the 1.9 million families eligible for the scheme—one in 20—will receive the full amount. The Government’s own impact assessment shows that most families will gain by £600 a year, which is well below the £2,000 per child that Ministers have been promising.
Many of the scheme’s benefits will go to the very highest earners—those earning up to £150,000 a year—rather than middle and lower-income families, who have been hit hardest. Only 100,000 of the richest families will benefit from the increase from £1,200 to £2,000 a year per child, which is around 5% of eligible families. The extra money for universal credit, although welcome, has to be found within the existing budget, so where will Ministers find it, and will they clarify today when families receiving universal credit will get the extra support for child care? The Minister said earlier that it will be in 2016. Is that a cast-iron guarantee to which we can hold the Government?
The complex relationship between the scheme and universal credit could leave many families far more confused about whether they are better off in work or out of work and on the borderline between moving to and from each scheme. Will the Minister tell us today how parents will know whether they are better off on universal credit or under tax-free child care? How will the Government support parents moving in and out of both schemes.
The scheme is also quite bureaucratic, with heavy running costs, and a number of questions remain about that. Further clarification from the Government about some of the IT that will underpin the scheme would be welcome. Serious questions remain about deliverability. The Minister said earlier that the scheme is on time, but according to the Government’s own timetable, published last autumn, they are now six months behind because they have had to re-consult on some of the scheme’s specifics. That is because Ministers failed to include key details in the first consultation. Can parents be assured that the scheme will be introduced on time?
As I have said, the Government have no bigger vision for child care. The Bill alone, although welcome, does nothing to address some of the fundamental problems in our country’s child care system. I suggest that the Government develop a much bigger vision for child care, as we did when we were in government—we had the child care plan in 1998, the 10-year child care strategy in 2004 and then the Childcare Bill in 2006—and as we are doing now.
I also suggest that, in order to address the supply-side issue, the Government consider enhancing the role of local authorities in provision; ensuring that Sure Start centres expand to include child care provision, rather than being closed; taking action to ensure that prices do not simply increase and that there is more supply-side support; recognising that deregulation is simply not the answer, because we cannot pretend that we can solve the problem on the cheap; making improvements in quality; taking action on supply and on quality staffing and teachers; adopting Labour’s plans to extend free child care from 15 to 25 hours a week; and giving parents a guarantee of wrap-around care before and after school.
Wales Bill
Hywel Williams Excerpts(9 years, 10 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Owen Smith
It is a pleasure to serve under your chairmanship, Mr Deputy Speaker, and to do battle once more with the Exchequer Secretary, who seems to have been permanently seconded to the Wales Office—he is like a ringer, to use football parlance. We welcome him and the opportunity he now has to clarify some of the things that he was unable to clarify when we last debated the Bill.
On income tax, the Opposition’s priority is very clear: we believe that we ought to have a fair and progressive tax system across the whole UK. For us that means reinstating the 50p rate and having a starting rate of 10p. That will be far fairer for the people of Wales, and indeed the people of every other part of the UK, than the tax cuts for millionaires that the Exchequer Secretary has overseen at the Treasury.
In the context of the Bill, we have three further priorities. Our first priority—this is why we will support the Bill this evening—is to ensure that Wales has access to borrowing powers in order to offset the £1.6 billion that the Conservatives have cut from the budget for Wales. That is linked to the taxation powers set out in the Bill.
Our second priority is to ensure that Wales is not further disadvantaged by potential additional cuts to the block grant that might be associated with the transfer of tax powers, as we heard a moment ago from the Exchequer Secretary, and as I will test in a moment.
Our third priority is to test properly the costs and benefits to Wales of the transfer of additional powers, particularly in respect of tax, because one of the truths about the Bill thus far is that the Government cannot really be taking this seriously. If they took it seriously and thought that it would really benefit Wales, they would have done a bit of the work to determine what the net costs and benefits would be for Wales. They have undertaken no such analysis, which I think calls into question the seriousness with which they address it.
Hywel Williams (Arfon) (PC)
The hon. Gentleman has outlined three priorities. May I ask him, perhaps a little cheekily, which of those priorities is his priority?
Owen Smith
If I understand the hon. Gentleman’s question correctly, the answer is borrowing powers for Wales, because we have seen £1.6 billion cut from the budget for Wales, which is money that could usefully be made up by borrowing. Of course, all the tax powers set out in the Bill—income tax and, more immediately, stamp duty and landfill tax and other minor taxes—are directly associated with those borrowing powers. We are keen to see those borrowing powers afforded to Wales, and therefore to see the Bill passed.
However, we have never said that income tax-varying powers are a Labour priority for Wales. We remain sceptical about the benefits they would afford to Wales. Our scepticism is entirely factually based. The Silk commission’s report looks extensively at the revenues Wales receives from taxes and compares them with expenditure in Wales. It determines, to put it in blunt terms, that Wales currently spends around £35 billion in public moneys and nets in revenues from tax receipts of around £17 billion. That leaves a significant deficit that would need to be made up by a Welsh Government, were they to be reliant to a greater extent on their own tax receipts.
The Minister explained a moment ago that, under the terms of the formula outlined in the Bill and in some of the explanatory material, Wales would of course benefit if the growth of GDP in Wales outstripped that of England, but he also said that it
“would be adversely affected if growth in Wales was slower.”
Although in recent years the rate of GDP growth has been faster in Wales than in England, he will know that historically—if we look at the past 20 years, for example, and certainly over any longer period—the rate has been lower in Wales than in England, for all the obvious demographic and industrial reasons. We need to be certain that Wales would not be worse off, in both the short and the long term. We remain suspicious that tax competition, which seems to be the Government’s driving ideological imperative on the matter, will not benefit Wales, for the reasons I have given.
Jonathan Edwards
The point I am making is that all the investment seems to be on an east-west basis, rather than on a north-south basis.
Hywel Williams
Apropos of that intervention, I would have thought that the hon. Member for Alyn and Deeside (Mark Tami) was rather more interested in developing the A55 than the M4.
Jonathan Edwards
I am sure that that very useful intervention will be noted by the constituents of the hon. Member for Alyn and Deeside (Mark Tami).
Plaid Cymru recognises the issue of congestion on the M4 corridor around Newport and wants investment to take place. However, the current Labour Welsh Government’s preference for a new M4 to the south of Newport at a cost of £1 billion is a disproportionate solution to the amount of congestion. According to Friends of the Earth and Professor Stuart Cole, the Welsh Government consultation documentation overestimated traffic growth in 2012 and 2013. The flows were lower than the Welsh Government predicted, so they do not have a strong enough statistical base on which to justify such a huge financial and environmental cost. As the Federation of Small Businesses has pointed out, committing the vast majority of Welsh borrowing capacity and money from outside the borrowing limit in the Bill to one single project is misguided and does not serve the whole of Wales or the whole of the Welsh economy.
Paul Murphy
I hope that my hon. Friends on the Front Bench will elaborate a bit more on the matter, but my guess is that they discussed the issue of reserved powers at earlier stages and a new clause is necessary to revive the debate on that on Report. I agree that this measure is relatively modest in asking that a report be laid, but I am sure that my hon. Friend the Member for Llanelli (Nia Griffith) will clarify that we are in favour of reserved powers, as described by the Leader of the Opposition in north Wales. There is no equivocation at all about whether we want reserved powers. We do. The new clause is framed in this way so that the House can debate what is an important issue.
Hywel Williams
From my reading of new clause 4, it does propose a reserved powers model, but that is contingent on a report not on the reserved powers model, but on borrowing by Welsh Ministers. The Opposition seem to be yoking two different things together. I suspect that it is a delaying, or even a wrecking tactic.
Paul Murphy
It certainly is not a wrecking tactic. I have made the position clear. I am just a Back Bencher, but Labour Front Benchers will also make it clear that the Labour party is committed to reserved powers for Wales. In the light of what is likely to happen in Scotland, that becomes much more important.
Hywel Williams
With all due respect to right hon. and hon. Members who have spoken today, I would like to begin with a quote that, for me, exceeds anything that has been heard today for eloquence:
“The will of the people is the only legitimate foundation of any government, and to protect its free expression should be our first object.”
I quote that in support of our new clause 3, which stands in the name of my hon. Friend the Member for Carmarthen East and Dinefwr (Jonathan Edwards) and my right hon. Friend the Member for Dwyfor Meirionnydd (Mr Llwyd). The quote comes from Thomas Jefferson, third President of the United States, primary author of the declaration of independence and, as I am sure the Western Mail would remind us, one of 16 of the 56 signatories to the declaration who were of Welsh extraction. Jefferson’s argument is that the validity of any Government is bound up with their purpose of representing the will of the people. That could also claim to be the primary motive behind our new clause 3.
In Committee, we in Plaid Cymru tabled amendments, as my hon. Friend the Member for Carmarthen East and Dinefwr said earlier, that would grant further powers to the National Assembly, including the power for it to decide on the number of Assembly Members, change its name should it wish to do so, and make amendments to secure further financial powers. We were disappointed that more Members from other parties did not support those amendments, but this new clause encompasses them all.
We believe that decisions of this nature are better made when elected representatives have the backing of the people, and the most straightforward means of determining the will of the people on any particular subject is, of course, a referendum. New clause 3 would therefore give the National Assembly the power to hold binding referendums on issues already in its competence, and on questions relating to further transfers of constitutional or financial powers, such as those that have been proposed in respect of changes to income tax.
The National Assembly could ask the people of Wales questions such as how many Assembly Members they believe should sit in the Assembly, what the voting system should be, and whether new fields should be devolved if we do not get to the reserved powers model. That would give our people a clearer say in the Assembly’s decision-making process.
The Wales Bill allows for a referendum on the question of transferring to the Welsh Government power over 10% of income tax receipts, but the notion that there should be a new Bill in this place each time a referendum is needed on a reserved matter is convoluted, to say the least, and convoluted is not good: witness the wretched legislative competence order process. Plaid Cymru is not in favour of holding a referendum for the sake of it. For example, the transfer of minor taxes to Wales—as recommended by the Silk commission—without recourse to a referendum has set a precedent. We have argued that the planned referendum on income tax powers is not necessary, but circumstances will certainly arise in the future when holding a referendum will be the proper and practical way forward.
Unlike in other countries with written, codified constitutions, the transfer of such a power to Wales would require no official constitutional change; it could be done by an Order in Council. A recent precedent for that was signed into being by the Edinburgh agreement in 2012:
“The United Kingdom Government and the Scottish Government have agreed to work together to ensure that a referendum on Scottish independence can take place…the referendum should: have a clear legal base, be legislated for by the Scottish Parliament, be conducted so as to command the confidence of parliaments, governments and people, deliver a fair test and a decisive expression of the views of people in Scotland and a result that everyone will respect”—
an excellent set of principles. The agreement goes on:
“The governments have agreed to promote an Order in Council under Section 30 of the Scotland Act 1998 in the United Kingdom and Scottish Parliaments to allow a single-question referendum on Scottish independence to be held before the end of 2014.”
There we have the basis for a referendum for Scotland and, I would argue, the basis for a power of referendum for the Assembly. That Scottish agreement is valid for that one referendum, and no other referendum can be held under those specific terms unless they are renewed. Our new clause, however, would confer a continuing power to the Assembly.
According to a recent study published by the Political Studies Association, there have been 49 independence referendums worldwide, both official and unofficial, with an average turnout of 79%—far higher than the average turnout in UK general elections over past years. I point out that in democratic countries after 1945, the average yes vote in such referendums has been 62%. Not all those referendums have been recognised by national or state Governments; for example, in 1946 the Danish Government refused to recognise the result of an independence referendum in the Faroe Islands. After negotiation, however, the islands were granted what we would now call devo-max: all powers except foreign affairs and defence were devolved.
The independence referendum due to be held in Catalonia on 9 November this year is highly likely to produce a yes vote. I suspect, however, that it will be ignored by the Spanish Government on their current form, as that has been Madrid’s response to the rolling programme of non-binding local community referendums on that subject, which have been held in hundreds of towns and villages across Catalonia from September 2009, and in which a large majority voted for independence. Madrid has ignored those developments to its cost: witness the enormous pro-independence demonstration by 1.5 million people out of a population of 7.5 million in Barcelona in September 2012. That was a huge show of public opinion, interest and support—we are talking about 20% of the entire population—and it perhaps would not have been quite so huge but for Madrid’s intransigence. That is why the Edinburgh agreement is so significant, and why I believe that, precedents having been set, Wales should have that same power. My discussions with Catalonian friends, and the attitude of the Spanish Government, bear out the superiority of the situation in the UK and the Edinburgh agreement. At least it is clear, and all sides are to be congratulated on that.
Guto Bebb (Aberconwy) (Con)
I am slightly confused about the argument. As the hon. Gentleman rightly points out, the situation in Madrid is one of Madrid refusing to recognise the right of the Catalonian Government to hold a referendum. The situation in Edinburgh is of an agreement between the UK and Scottish Governments, which showed that the two Governments could work positively together. The argument in favour of the new clause seems to be based on the failure of another Government in another country.
Hywel Williams
My remarks, which will appear in print tomorrow, will repay close reading, as that was precisely the argument I made. The position in Catalonia and the rest of Spain is far inferior to that in the UK, and I am pointing out the superiority of that Edinburgh agreement as the basis of my arguments for a legally binding system of referendums to be established for Wales.
In the UK, the important referendums and constitutional changes have occurred over the last 10 to 20 years, including the devolution referendum in 1979, the one in 1997, and the more recent referendum on our electoral system. In 2011, the people of Wales were asked in a referendum whether they wanted the Welsh Assembly to be given full and primary law-making powers; 63.5% of those polled voted yes. That stood in stark contrast to the results of earlier referendums that right hon. and hon. Members will remember. In 1979, for example, 79.7% voted against devolution; in 1999, there was a narrow majority of 50.3%, secured on a small turnout of 50.1%. That is how it was, but since then, I would argue that the people of Wales have grown to favour devolution, as have some right hon. and hon. Members in this place. The Assembly has grown in confidence, and as it gains further powers, it should surely have the power to ask the people of Wales what they think. That would be in the interest of legitimacy and accountability.
I referred to the Edinburgh agreement, and I suggest that a similar agreement in Wales should be called not “the Cardiff agreement” but “the Celyn clause”. This refers to Capel Celyn, which, Members will recall, was the village drowned in 1965 against the express wishes of elected and representative bodies throughout Wales—and, I understand, the wishes of every Welsh MP bar one. That was a transformational event in Welsh politics, and we have seen the effect of it over many decades. That effect is clear and provides a firm reminder of what can happen when the will of the people is so resolutely ignored. That is why we tabled new clause 3, giving the Assembly the right to hold legally binding referendums. I certainly commend it, but I assume that the matter will be discussed, possibly in greater detail, at some point in the future.
Let me make a few brief points about new clause 4. My Plaid Cymru colleagues and I have supported the reserved powers model for the National Assembly for a very long time. We are glad to see the Damascene conversion of the Labour Front-Bench team—better late than never! We certainly believe that this is the next step for our country; it would certainly clear up much of the confusion, not least in the minds of the public and others, as to the split of powers between the National Assembly and Westminster. I say to the Welsh public and others that I too often see people from the media refer to Assembly matters as if they were Westminster responsibilities, and vice-versa.
We in Plaid Cymru were, as I mentioned, against the LCO—legislative competence order—model, which so blighted the lives of those on the Welsh Affairs Committee and held up the pragmatic and practical transfer of the most innocuous of powers to the Welsh Government, as well as some rather more controversial powers. We wanted the boldest arrangements, but that was not forthcoming under the Government of Wales Act 2006—until the referendum. Circumstances have changed again, and the need for a move to a reserved powers model is even more pressing than before.
No one in this place or in the Assembly can be sanguine, given a recent survey showing how far we have failed as politicians to inform our constituents of the reality of the split in power. As I said, the media are far from blameless. Having said all that, it is disappointing that in the second part of their new clause 4, the hon. Members for Pontypridd (Owen Smith) and for Llanelli (Nia Griffith) have chosen to predicate any developments in relation to this matter on delaying the minor taxes. I must therefore view the new clause, I am afraid, as a delaying tactic at best, and as aimed at wrecking this part of the Bill at worst.
Wayne David
I support granting and extending borrowing powers to the Welsh Government. It is important that the Welsh Assembly has at least some facility to borrow what it deems necessary, as local government does. I also share the concerns expressed about the possibility of eventual tax competition, and I deeply regret that the Government have proposed no modification of the Barnett formula to address the shortfall in what Wales receives.
It also causes me concern that the Government do not appear to accept the need to address what we consider to be a fundamental shortcoming in the current devolution settlement. I believe that we need to move from a conferred powers to a reserved powers model, which would allow the Welsh Government to make law in any area unless it was clearly stated that they were unable to do so. That is why I support new clause 4.
Wales Bill
Hywel Williams Excerpts(10 years ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Hywel Williams (Arfon) (PC)
I beg to move amendment 32, in page 6, line 20, after ‘description’, insert ‘, a tax credit of any description’.
This amendment would allow the Welsh Government, by resolution of the National Assembly for Wales, to introduce new tax credits.
The Chairman of Ways and Means (Mr Lindsay Hoyle)
With this it will be convenient to discuss the following:
Amendment 33, in line 32, leave out ‘, each House of Parliament and’.
This amendment would enable the Welsh Government, by resolution of the National Assembly for Wales, to introduce a new tax without the need for approval by resolution of both Houses of Parliament.
Amendment 40, in page 7, line 13, at end insert—
‘(10) In the event that the power to add new devolved taxes under Section 116C, or the power to add new devolved taxes under Section 80B of the Scotland Act 1998 is used, the Chancellor of the Exchequer must undertake a review of the benefits of symmetry in the devolution of taxes between Wales and Scotland.’.
Clause 6 stand part.
Government amendment 20.
Clause 7 stand part.
Amendment 7, in clause 14, page 19, line 5, at end add—
‘(3) The Secretary of State shall review the historical volatility of stamp duty land tax revenues in Wales, and place a copy of the review in the Library of the House of Commons.’.
Clause 14 stand part.
Clause 15 stand part.
That schedule 2 be the Second schedule to the Bill.
Clause 16 stand part.
Amendment 8, in clause 17, page 20, line 29, at end add—
‘(3) The Secretary of State shall review the historical volatility of landfill tax revenues in Wales, and place a copy of the review in the Library of the House of Commons.’.
Clause 17 stand part.
Clause 18 stand part.
Amendment 42, in clause 28, page 29, line 34, leave out paragraph (2)(b).
Amendment 43, in line 36, at end insert—
‘( ) Part 2, except the referendum-related provisions and sections 19 and 20, will come into force the day after the Secretary of State has laid a report before each House of Parliament on the further legislative steps needed to move to a model of reserved powers for the National Assembly for Wales; the report must be laid within six months of this Act receiving Royal Assent.’.
Hywel Williams
Recommendation 11 of the cross-party commission on devolution in Wales states that the National Assembly should be given a power to introduce specified taxes and any associated tax credits in Wales. This recommendation was not included in the Bill. That might have been merely an oversight by the Government, although those of us who are a little more sceptical suspect that they deliberately omitted it from the Bill. Whatever may be the case, amendment 32 seeks to align the Wales Bill more closely with the Silk commission recommendations.
We in Plaid Cymru welcome the inclusion of an ability to introduce specified new taxes. We note that the Silk commission recommendation 11 states that the Welsh Government should retain the revenue from these new taxes without a deduction from the block grant. I hope the Government will ensure that that is indeed the case. Perhaps the Minister will confirm that when replying to the debates.
Although the issue of Barnett was not within the remit of the Silk commission or this Bill, it is a closely related issue and I hope we will be able to debate at least some of it when we look at new clauses. It is important not least because Labour, if I correctly understand its position, has said that Barnett reform is a necessary condition before it will support greater financial powers for Wales. That is a significant statement on its part, I think.
The ability to vary income tax and access to potential borrowing for investments that can boost the economy and create jobs in Wales are the central tenets of this Bill, but there are several areas within the Bill that, if fully developed, could bring real benefits to the Welsh economy. That is why, in addition to the ability to introduce new specified taxes, the ability to introduce associated tax credits is so important. Although much careful research and preparation would be needed before introducing a new tax and associated tax credits, and it would be unwise to pre-judge where and when that might be done, at least giving the Welsh Government the ability to do this would give them much more freedom to act and take greater responsibility for developing our economy, which hon. Members on both sides of the House wish to see. We could raise the revenue, where necessary, and provide tax credits in order to stimulate activity or to provide assistance wherever it was felt necessary, be it for individuals, businesses or areas of industry.
The amendment aims to preserve the integrity of the original cross-party Silk recommendations. For Plaid Cymru it makes perfect sense, and I urge hon. Members on both sides of the House to support it. Should we not press the amendment to a vote, or were we to do so and it were to fall, Government Members might consider tabling their own similar amendments on Report. Given that the principle of new taxes has been conceded in the Bill and that tax credits could be introduced, we would wish that to be the case.
Mr Mark Harper (Forest of Dean) (Con)
I will speak in more detail in my speech about why I do not agree with the hon. Gentleman’s amendment 33, but may I ask him to clarify whether he envisages the definition of a “Welsh taxpayer” for any of these new taxes being the one set out in clause 8, proposed section 116E? That is relevant to my constituents, who might inadvertently be caught by any of these new taxes.
Hywel Williams
The hon. Gentleman raises a point that was made at an earlier time. He has outlined particular difficulties faced by his constituents, with which I have a great deal of sympathy. I might as well concede that this is a probing amendment and I would be interested to hear what he has to say later in the debate. We have a great deal of sympathy with hon. Members across the House who point to the border as a particular problem area; as has been said in the earlier debate, so many of our population live just over the border and vice versa, so I entirely concede that we need to take this issue seriously.
Paragraph 4.6.8 of the Silk commission’s first report states:
“In addition to the use of taxes to achieve policy outcomes in devolved areas, credits can also be applied so that activities are effectively subsidised. While existing tax credits such as the working tax credits (and in future the Universal Tax Credit) should remain UK wide, the Welsh Government should be able to introduce its own credits in relation to devolved taxes and through use of devolved grants and subsidies to promote investment and getting people into work.”
That is a laudable aim and I urge hon. Members on both sides of the House to support us in order to fulfil it.
Amendment 33 would enable the Welsh Government, by a resolution of the National Assembly for Wales, to introduce a new tax without the need for approval by a resolution of both Houses of Parliament. Obviously, Plaid Cymru’s starting position is that Wales should be an independent country and that it should be for the people of Wales, through our own democratic institutions, to decide how its taxes are structured. However, the amendment would simply tidy the process of bringing in the new tax credits should the Welsh Government, through the National Assembly, decide to do so. I need not remind Members who represent Welsh constituencies or who are interested in the smooth functioning of democracy of the disastrous bureaucratic and constitutional nightmare that was the legislative competence order system. I was involved in that as a member of the Welsh Affairs Committee. Before the successful 2011 referendum on full primary law-making powers, the Government of Wales Act 2006 provided for further devolution, on paper. The reality, I am afraid, was that it came to resemble a Kafkaesque constitutional quagmire when the powers were to be devolved. The Welsh Affairs Committee, reporting in 2010, stated that requests for extra powers from the Welsh Assembly Government, as it was named then, too often disappeared into the black hole of Whitehall.
Mr Mark Williams (Ceredigion) (LD)
We agree that we have, on the one hand, the extreme of the LCO system and, on the other, the reserved powers model, which we will come to later in this group. The hon. Gentleman would, I think, subscribe to the reserved powers model.
Hywel Williams
The hon. Gentleman surmises correctly. The model is clearer, more elegant and more easily understandable, and we will be able to debate it later.
Going back to the LCO process, the hon. Gentleman will recall, as he participated in those long debates on LCOs—
Wayne David (Caerphilly) (Lab)
As the world expert on LCOs, I certainly concur with the hon. Gentleman about the cumbersome system. It is far better that legislative powers are solely with the National Assembly for Wales. Does he agree that despite the faults of the legislative competence order, the House succeeded in improving substantially the suggestions that came from the Welsh Government regarding LCOs and what happened to the legislative process afterwards?
Hywel Williams
I certainly do not want to rehearse the discussions and arguments we had on LCOs. LCOs were a curate’s egg—occasionally they went through without touching the sides. I remember chairing the LCO on mental health, which lasted for two sessions. The LCO on the Welsh language took rather longer.
Mr Mark Williams
Will the hon. Gentleman remind the House—I think he did some specialised work on this—of the number of hoops we had to go through to achieve legislative competence orders and of the fact that that did nothing to enhance democracy, which, mercifully, this Bill is seeking to remedy?
Hywel Williams
I thank the hon. Gentleman for that point. The contrast between what I propose now and the LCO system is extreme. I think I counted 27 individual stages, but it might have been 28 or 26—the figure is lost in the mists of time. It was an extremely complicated business. To be fair, Members on both sides of the House made positive contributions. I pay tribute to the hon. Member for Aberavon (Dr Francis), who is not in his place, for his skilled chairmanship. We got a lot through, but it was against the odds.
There is a danger that matters get lost in process, are ignored by the government machinery and do not progress at good speed. If we repeated the LCO process, we would be repeating a mistake and would unnecessarily create a drag on the smooth functioning of democracy. Surely the Members of the Assembly, through scrutiny, have, in partnership with the Treasury, the ability to carry out the requisite research, impact assessments and consultation. I hope that that ability is there. The need for a lengthy process of resolution in each of the Houses of Parliament when there is so often a strain on time—perhaps not at the moment, but often there is a strain on time—is surely a bar to the swift adoption of the system once the requisite preparatory work has been carried out in Wales. Surely if a matter is devolved, it should be devolved, and devolved fully and without the Government in Westminster seeking to keep their oar stuck in. As with many of our amendments that were considered in Committee last week, we say that it should be for the people of Wales, through their democratically elected institutions and representatives, to decide on the matters that have been devolved without being harried back and forth. The Government have conceded that Wales should have the power to introduce new taxes, and we are arguing for tax credits as well, as did Silk. That should be done without strings being attached that could prove a restriction and impediment.
Finally, let me return to the LCO process, which operated in much the same way as the new tax process is designed to operate. The Assembly used to submit a request for more powers, which was then scrutinised by the Select Committee on Welsh Affairs before its final approval by MPs and peers. There is no proposal in this case of scrutiny by the Welsh Affairs Committee, and one does not have to be a constitutional expert and/or an accountant to see what a tremendous drag and immensely time-consuming process that might be. At the time, the critics of the LCO procedure maintained that it was cumbersome and opaque, and they were proved right. Sir Jon Shortridge, the former head of the civil service in Wales, said that Wales was often seen as “a complication too far” by London. The Welsh Affairs Committee also said that there was “an unacceptable lack of transparency” in the Whitehall clearance process.
All this talk of the Government of Wales Act 2006 and the 2011 referendum reminds me that Westminster always relinquishes its grip on power with a clenched fist. Where it can, it will inevitably introduce roadblocks or constitutional caveats that mean that the power on offer is never fully recognised at first despite the overwhelming majority of people in Wales being in favour of devolving more powers.
For the smooth functioning of democracy and to save Members’ time in this place in the future, I strongly urge hon. Members to support our amendment should it come to a vote and impress on the Government the need to learn from the mistakes of the past and streamline the process of introducing new taxes and tax credits in Wales.
Mr Harper
It is a pleasure to serve with you in the Chair, Ms Primarolo. After the earlier exchange, I feel left out by not having experienced the pleasures of legislative consent orders. They sound absolutely fascinating and were clearly invented by the hon. Member for Caerphilly (Wayne David) so that he could be the self-proclaimed world’s greatest expert in them. I am feeling very left out indeed, but let us return to the matter in hand.
I want to say a little about this group of amendments and new clauses. The hon. Member for Arfon (Hywel Williams) reassured me on one point by saying that he shared my concerns, but I shall talk about that in a moment.
When I read amendment 32, which would allow the Welsh Government to introduce tax credits by resolution of the National Assembly, I wondered whether, as tax credits are an instrument of welfare policy, it would effectively amount to the devolution of that policy. That was perhaps a little unfair, but the hon. Gentleman did go on to talk about universal credit and other areas of welfare policy, suggesting that he would like to see them devolved to the Welsh Government. I do not think I would.
I understand the hon. Gentleman’s view, as he wants an independent Wales and to devolve absolutely everything, but if we devolved every area of tax and spending—welfare spending is, of course, the single largest area of Government expenditure—that would in effect create an independent country. I accept that that is the hon. Gentleman’s ultimate goal, but I suspect that in this Chamber today it is a goal that is not shared by anyone other than his right hon. Friend the Member for Dwyfor Meirionnydd (Mr Llwyd). It certainly is not shared more widely. I would not support it and the hon. Gentleman set out clearly in his opening remarks why this measure on tax credits is a Trojan horse to smuggle through the changes to welfare policy more generally that I, for one, would not want to see introduced.
Amendment 33, also tabled by the hon. Member for Arfon and his colleagues—I am glad to see the right hon. Member for Dwyfor Meirionnydd in his place—concerns a new tax. I asked the hon. Gentleman a question about a matter of concern to me. I said on Second Reading and on the first day in Committee that I was content with the definition of a Welsh taxpayer as set out in the Bill, but this proposal fills me with concern for two reasons. First, it does not say anything about whether the definition of a Welsh taxpayer would remain the same, and I set out in earlier debates my concerns about companies in my constituency employing residents of both England and Wales and the increased complexity. I raised that with the Exchequer Secretary to the Treasury, who was able to reassure me that Her Majesty’s Revenue and Customs would be able to look at such things when it reports both to this House and to the Assembly.
Hywel Williams
I will seek leave to withdraw the amendment standing in my name and those of my party colleagues, but I would like to make a few brief points.
In response to the hon. Member for Forest of Dean (Mr Harper), who suggested our views on tax credits and devolution might be the thin end of the wedge in devolving universal tax credits, I should say that I was quoting from the Silk report that while existing tax credits, such as working tax credits and, in future, universal tax credits, should remain UK-wide, the Welsh Government should be able to introduce their own credits in relation to devolved taxes. That was the point I was making.
The other point I would make is this: the hon. Member for Pontypridd (Owen Smith) said Barnett would not be discussed. There will, I hope, be a debate on new clause 1, which is specifically about that issue.
Finally, we in Plaid Cymru see amendment 40 for what it is, which is an attempt to delay, and we will be voting against it. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Amendment proposed: 40, page 7, line 13, at end insert—
‘(10) In the event that the power to add new devolved taxes under Section 116C, or the power to add new devolved taxes under Section 80B of the Scotland Act 1998 is used, the Chancellor of the Exchequer must undertake a review of the benefits of symmetry in the devolution of taxes between Wales and Scotland.’.—(Owen Smith.)
Question put, That the amendment be made.
The Committee divided: Ayes 216, Noes 280.
Hywel Williams
I beg to move amendment 36, page 21, line 18, leave out ‘, with the approval of the Treasury,’.
The Temporary Chair (Sir Roger Gale)
With this it will be convenient to discuss the following:
Amendment 37, page 21, leave out lines 26 to 31 and insert—
‘(1) On receipt of notice of an appropriate resolution of the Assembly, the Secretary of State shall by order amend subsection (1A) so as to vary, in the manner indicated by the terms of such resolution, the means by which Welsh Ministers may borrow money.”.’.
These amendments would enable the National Assembly to change the way money for capital expenditure is borrowed, including the issuance of bonds, without the need for consent by the Treasury or Resolution of the House of Commons.
Amendment 35, page 21, line 31, at end insert—
‘(6) The Secretary of State shall make arrangements for an independent report to be compiled on the issuance of bonds by Welsh Ministers.
(7) The Secretary of State shall lay a copy of the report specified in subsection (6) before each House of Parliament within three months of this Act being passed.’.
The Scotland Act 2012 enables the Secretary of State, by order and consent of HM Treasury, to change how Scottish Ministers can borrow money for capital purposes, for example, allowing the issue of bonds. Clause 19(5) of the Wales Bill contains the same provisions. This amendment seeks clarification on the power to issue bonds.
Amendment 34, page 21, line 38, at end insert—
‘and if that amount is more than the amount for which it is substituted it shall not thereafter be reduced below that higher amount’.
This amendment would ensure that when the Secretary of State raises the borrowing for investment limit, it cannot subsequently be reduced.
Amendment 5, page 21, line 38, at end insert—
‘(3B) The figure mentioned in inserted subsection (3A) shall be recalculated on an annual basis to maintain its value in real terms against inflation.’.
Clause 19 stand part.
Clause 20 stand part.
Hywel Williams
Amendments 36 and 37 would enable the National Assembly to change the way that money for capital expenditure is borrowed, including the issuing of bonds, without the need for the consent of the Treasury or a resolution of the House of Commons. Amendment 35 seeks clarification on the power to issue bonds. Amendment 34 would ensure that when the Secretary of State raises the borrowing for investment limit, it cannot subsequently be reduced.
First, on the issuance of bonds, subsection 32(5) of the Scotland Act 2012 enables the Secretary of State, by order, to change the manner in which Scottish Ministers can borrow money for capital purposes—for example, to permit borrowing by the issue of bonds. Subsection (5) of the Wales Bill contains the same provisions. This amendment seeks clarification on the power to issue bonds.
Following the Scotland Act 2012, the legislation left the door open for the Secretary of State to enable the Scottish Government to issue bonds in future. The UK Government later launched a consultation on bond issuance and announced in February of this year that Scotland is to get the power to issue bonds. There is only one problem: it will have that power only in 2015. In the meantime, the small matter of the independence referendum in September might intrude.
Scotland aside, I refer Members to the cross-party Commission on Devolution in Wales. Recommendation 19 ends with the words:
“We also believe that the Welsh Government should be able to issue its own bonds.”
Given that local government throughout the British Isles can issue bonds, it is an anomaly that the devolved nation Governments cannot also do so.
The Silk Commission’s first report stated that
“while bonds may be more expensive at present, a possible future scenario where they may be cheaper or more attractive to the Welsh Government cannot be ruled out. We therefore see no reason in principle for preventing the Welsh Government from being able to issue its own bonds in addition to borrowing from the National Loans Fund and other sources such as commercial banks.”
Our amendment calls for greater clarification and seeks to expedite the ability of the Welsh Government to issue bonds. We need movement on this issue to enable the Government of Wales, should they choose to do so, to drive investment in infrastructure, and so improve our economy.
Hywel Williams
My understanding is that the Treasury would be expected to stand behind those bonds. I readily admit that I am not an expert on this matter, but I understand that that is the case for local government as well.
As I have said, we need movement on this matter to enable the Government of Wales to drive investment in infrastructure, and so improve the economy. Wales should have the same powers as Scotland. The Government parties should be held to their word: they agreed, through their representatives on the Commission on Devolution in Wales, that the Welsh Government should be able to issue bonds.
Amendment 5 is both simple and highly effective and would inflation-proof the borrowing limit in the Bill. We are unsure whether the Government have considered this matter, or whether they intend to put in place any safeguards to protect the amount of borrowing written into the Bill. The £500 million borrowing for investment limit is of course welcome. If the money is used wisely and for targeted investment in infrastructure throughout Wales, it would enable job creation, provide a welcome boost to the Welsh economy and drive up Welsh gross value added so that the economy no longer sits at the bottom of the economic league table of UK nations and regions. However, we are concerned that the value of the £500 million limit, written as it is in the Bill, might be substantially reduced in a relatively short time by inflation. We have tabled amendment 5 to inflation-proof the value of that amount. I hope that this was a simple oversight by the Government, rather than any calculated move to undermine over time the Welsh Government’s ability to make full use of the powers proposed.
Inflation at present is fairly low by recent standards, but in the space of a few short months it could jump. Some of us here can recall the ferocious problems faced by ordinary people when mortgage rates rose to 15%. As a dire warning, I have safeguarded my own copy of the Mansion House speech by the former Chancellor and Prime Minister when he praised the banking industry to the heavens—just before the heavens fell in. Inflation could jump as a result of international problems and recessions elsewhere in the world, and the value of the amount available through this Bill should not be diminished as a result of such inflation.
The powers available to the Welsh Government as a result of this Bill will not come on stream until 2017 and 2018—after the 2016 Welsh general election. If the past five years have taught us anything, it is that it is foolhardy to predict how the economy will look at the end of that time.
The borrowing for investment limit available in this Bill is the amount recommended by the Silk Commission. It is the integrity of the cross-party commission’s recommendation that this amendment seeks to preserve and safeguard, as well as to ensure that Wales has the full resources available to it to maximise the number of jobs and the prosperity created.
Hywel Williams
I am grateful to the Minister for his response on amendment 5 and the point about inflation. However, I think that amendment 35 makes a very reasonable call for an independent report to be compiled on the issuance of bonds and laid before Parliament within three months of the Bill being passed, which would be an aid to all concerned. Therefore, I beg to ask leave to withdraw amendment 36, but I will press amendment 35 to a vote.
Amendment, by leave, withdrawn.
Amendment proposed: 35, page 21, line 31, at end insert—
‘(6) The Secretary of State shall make arrangements for an independent report to be compiled on the issuance of bonds by Welsh Ministers.
(7) The Secretary of State shall lay a copy of the report specified in subsection (6) before each House of Parliament within three months of this Act being passed.’.—(Hywel Williams.)
The Scotland Act 2012 enables the Secretary of State, by order and consent of HM Treasury, to change how Scottish Ministers can borrow money for capital purposes, for example, allowing the issue of bonds. Clause 19(5) of the Wales Bill contains the same provisions. This amendment seeks clarification on the power to issue bonds.
Question put, That the amendment be made.
Mr Jones
That, of course, is entirely a matter for the Welsh Government, but, in practice, that is what they are calling it at the moment.
I thank my hon. Friends the Members for Monmouth (David T. C. Davies) and for Aberconwy (Guto Bebb) for their amendments 12, 13 and 14, and my hon. Friend the Member for Forest of Dean (Mr Harper) for his amendments 17 and 18 and new clause 3. They raise important issues about the provision of cross-border health services in Wales and England, issues which are, of course, vitally important to anyone who lives close to the border—or even not so close, as was pointed out by my hon. Friend the Member for Ceredigion (Mr Williams). Indeed, they are important to anyone who wants world-class health services to be delivered throughout the United Kingdom.
Health is one of the most important services—arguably, the most important service—to be delivered by any Government. We all know that people value the delivery of good health care more than almost every other public service. This is, after all, a service on which we are all likely to call at some stage in our lives. It is therefore essential for any Government to deliver health services which are effective and efficient, and which provide good value for money. In England, the Government will have increased spending on health by about £12.7 billion in cash terms over the lifetime of the current Parliament, delivering an NHS that continues to improve and the health care that people want and deserve. However, none of that would be possible without our front-line NHS teams: the doctors, nurses, and other health care professionals.
As we have heard from Members this evening, the sad fact is that the Labour Government in Cardiff are presiding over a health service in Wales which is declining. My hon. Friend the Member for Monmouth gave some illustrations of that decline. In Wales, Labour has cut the health budget by 8%, despite having been given an extra £1.6 billion in the block grant. The result has been a decline in health services in Wales which is evident for all to see, with unacceptably long waiting times.
Hywel Williams
Whether or not one agrees with the policies of the Labour Government in Cardiff, surely devolution means that it is a matter for them and not for the Secretary of State.
Mr Jones
Actually, it is for every elected representative to express concern when a service as important as health is affected. When the devolved Administration are not delivering an adequate standard of health care, it is entirely appropriate for every elected representative to draw attention to that.
Wales Bill
Hywel Williams Excerpts(10 years ago)
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Owen Smith
The hon. Gentleman claims that I implied that, but I do not think I have been explicit on the matter, either then or now. When we last debated the issue, we were clear that the majority opinion is that four years is better than five. Another orthodox opinion in Britain and elsewhere is that too many changes to constitutional matters are bad for the electorate and that constantly chopping and changing for partisan reasons—as the hon. Gentleman did when introducing the 2011 Act—is bad for democracy in Britain. In the light of that, and in a period in which people are disengaged from politics, we may choose not to be partisan and not to pursue that sort of strategy when we win the next election.
Hywel Williams (Arfon) (PC)
I want to refer to the point made by the hon. Member for Cardiff North (Jonathan Evans). There is a great deal of virtue in considering holding elections on days other than a Thursday. That is the practice in other countries. Perhaps the hon. Member for Pontypridd (Owen Smith) can help the Committee with his historical knowledge: have elections in the UK always been held on Thursdays? I seem to remember that at some point in our history they were not.
Owen Smith
I believe that the hon. Gentleman is right. Elections have not always been held on a Thursday. However, in recent memory and certainly in the last century, elections have mainly been held on a Thursday, which is why we are sticking to it in amendment 9. That is not the substantive point that we are trying to make; it is an interesting debating point, but not one that we need to bother the Committee with any longer.
With that, I conclude my remarks on our amendments to clause 1. We do not intend to put them to the vote, but we want to hear the Government’s views on the need for them to engage properly with, seek proper consent from and pay proper respect to the devolved Administration in Cardiff.
Hywel Williams
This is a genuine inquiry. Does the hon. Gentleman recall the election day in Scotland when there were elections for various public offices using different electoral systems? I seem to remember that it was disastrous.
Mr Harper
The hon. Gentleman makes a good point. If we have elections on the same day, we certainly need to ensure that there is clarity about the electoral systems and in the design and printing of the ballot papers, so that it is clear for people not just which parties they might want to vote for, which is a decision for them, but the mechanism by which they can do so. A lot of lessons were learned from that process. We had that in mind when we held the referendum on the parliamentary voting system and we tried to ensure that there was not the level of confusion that there had been in the past.
Amendments 30 and 31 are hopeful amendments. Having considered all the evidence, I think that it makes sense to separate the big elections. I am not sure whether six months is long enough. We decided to shift the elections by an entire year to separate the media coverage and the debates so that people could focus on the important issues. The amendments raise some sensible issues. It makes sense to keep the elections to the primary legislative assemblies in the UK—the Scottish Parliament, the Welsh Assembly, the Northern Ireland Assembly and this Parliament—apart. That was the provision that we made in the Fixed-term Parliaments Act 2011.
I am therefore pleased that the Bill presented by my right hon. Friend the Secretary of State permanently makes the terms of the Assembly the same length as those of this House, but offset by a year to keep the elections separate. That will enable a proper debate to take place before elections to this place and will enable Welsh voters to have a proper debate about the issues that the Welsh Assembly and Welsh Assembly Government will focus on.
Finally, if people’s decisions in Welsh elections are indeed made on issues for which the Welsh Assembly and the Welsh Assembly Government are responsible, my reading of the situation, based on how the Welsh Assembly Government are handling the national health service in Wales, which I will not talk about today, but which we will return to on the second day of Committee, is that the Welsh public might reach a different conclusion from that put forward by the hon. Member for Pontypridd. I look forward to their having the opportunity to do so and to the result, because I think that it might shock the hon. Gentleman. He should not be so complacent.
Mr Harper
The hon. Gentleman is putting words into my mouth, because I made it clear, in response to my hon. Friend the Member for Cardiff North (Jonathan Evans), that my amendment’s position on the regions is balanced. It asks us to look at the “advantages and disadvantages”. I will set out my view on the number of constituency Members and the direction of travel. I was saying that if there are a different number, that presents issues as to how we divide up the regions. It raises questions about whether all the regions can remain equal in size and whether, if we try to continue with the current number, some regions may end up being too small to deliver a proportional result. That is why the issue should be looked at. However, I also acknowledged in my response to him that there is an opposite pressure in respect of making sure that elected Members and their constituents feel close enough to each other. That pushes in the opposite direction and we need to look at all the issues so we can properly weigh them up.
Hywel Williams
I am sure the hon. Gentleman would also concede that we must consider the geographical problem of representing Wales from Llanfairynghornwy down to Llanelli or to Caldicot. Unfortunately, I have to do that journey fairly frequently and it is a nightmare just for the ordinary traveller, so trying to represent that entire geographical area is not something to be taken lightly.
Jonathan Edwards
The Minister made that point to me before the debate, but this legislation provides an opportunity now. Rather than making the case either for more Assembly Members or for fewer, the new clause essentially states that when the time comes to make that decision, it should be made by the National Assembly, not the House of Commons. It is a point of principle about where power lies in these matters. Given the shadow Secretary of State’s comments when he intervened on me earlier, I look forward to the Labour party’s support when we vote later—[Interruption.] Well, that is exactly the point.
Hywel Williams
I am disappointed by that sedentary intervention from the Opposition Front Bench. In our view it is the Assembly that should decide, because we see the people of Wales as sovereign, not this place.
Jonathan Edwards
I am grateful to my hon. Friend for that intervention, which highlights the key political difference between Plaid Cymru and our Unionist opponents.
Assembly Members are expected to be members of more than one Select Committee. Indeed, the Committees have a dual role, as they perform scrutiny and legislative functions. That means Members are under tremendous pressure, especially if they serve on more than one Committee, as many do. If more AMs were elected, some would be able to specialise in certain areas, and the burgeoning expertise would ensure that democracy in Wales is better informed. In any case, surely it should be for the National Assembly to determine its membership, not the House of Commons. We will therefore be pushing new clause 4 to a vote. We look forward to the support of like-minded individuals, even those on the Government Benches.
The motivation behind new clause 6 is straightforward. As we have been instructed to draft it by the Clerks, it proposes that the Welsh Government, rather than the UK Government, should have responsibility for determining the system used for elections to the National Assembly. Transferring this responsibility would streamline the election process and bring decisions relating to the democratic make-up of the National Assembly closer to the people it serves. It could also, I hope, lead to a more proportional system being used by that institution. Plaid Cymru’s preference would be for a move towards a more proportional system that reflected the wishes of voters more fairly.
Even with the top-up, the current system is extremely biased towards the Labour party. In the last election, Labour polled 40% yet got 50% of the seats. In elections before then, it has had 50% of the seats, and more, on 30% of the vote. We therefore argue that proportional representation would provide a better reflection of how people vote in National Assembly elections.
Owen Smith
I am grateful to the hon. Gentleman for his intervention, but I think it was made in the same spirit as that with which he has repeatedly made other arguments, which is to cloak his party’s partisan intent in the Parliamentary Voting System and Constituencies Act, the Fixed-term Parliaments Act and, indeed, clause 2 of this Bill with the veneer of a principled objective. That is not true: the rationale for all of those measures was to benefit his party, which is a smaller party—a minority party—in Wales. I intend to demonstrate why that is the case.
Hywel Williams
The hon. Gentleman has used the magic word, “minority”. In what way is a party with 30 out of 60 seats and that does not command the support of more than 50% of the Welsh electorate who actually vote a majority?
Owen Smith
The point I was making is very simple and I do not need to embellish it, because I can rely on the evidence provided by the Government’s own impact assessment, which states extremely clearly that the proposal’s objective is to benefit the
“smaller parties in Wales who may have a smaller pool of high quality candidates to represent them in elections.”
Labour Members certainly would not for one moment contest the argument that the smaller parties in Wales—among which I would, unfortunately, count the Conservative party—may have a smaller pool of high-quality candidates to represent them in elections, but I do not believe that that is an adequate reason for seeking to amend legislation with regard to this country’s constitution and elections.
Albert Owen
There is a serious point to make about manifestos. In 1999, we introduced a scheme that has seen some abuse by candidates who, when they faced the electorate, were rejected—comprehensively in many cases, coming third or fourth for the seat—but got in on the list. That is why we put the measure in our 2005 manifesto and implemented it. It was this Parliament—the hon. Gentleman might mock manifestos, but I am sure he does he does not mock the will of this Parliament—that said we should bring in the restriction, and there is no mandate to reverse that. That is my point: none of the parties put it in its manifesto, and when the Government went out to consultation on the question, the majority of those who bothered to respond wanted the ban to remain. There is absolutely no mandate for the clause at this time. The Committee should consider that point.
Hywel Williams
I think we were talking about evidence to the Welsh Affairs Committee. Professor Roger Scully told the Committee:
“It is impossible to take seriously the idea, suggested…by some…that dual candidacy in Wales is in any sense”
unusual. He is one of the pre-eminent political analysts in Wales.
Hywel Williams
Does my hon. Friend find it peculiar that Labour’s position is to allow an increase in taxes in Wales, thereby handing a tax advantage to England? Its only policy on tax competition is to move it in favour of our friends in England.
Jonathan Edwards
That is an important intervention. The Labour party’s position is that it is worried about tax competition, yet, based on its tax policy, the only tax competition that could happen would favour England and other parts of the British state.
Finance (No. 2) Bill
Hywel Williams Excerpts(10 years, 1 month ago)
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Jonathan Edwards
Diolch yn fawr iawn, Mr Bone. It is an honour to serve under the chairmanship of the best slow left-arm bowler in the Westminster cricket team.
It is with pleasure that I rise to support new clause 2 and new schedule 1, and I will be pushing for a vote at the appropriate time. The UK Government commission on devolution in Wales, headed by Paul Silk, published the first phase of its report in November 2012, which concentrated solely on fiscal powers. Some 18 months later we are still waiting for an essential part of the cross-party Silk commission recommendations to come to fruition: the devolution of responsibility for long-haul air passenger duty. The original cross-party report recommended that responsibility for APD be transferred to Wales at the earliest opportunity and that the Finance Bill was the appropriate vehicle for doing that. The commission had the 2013 Finance Bill in mind, following the precedent set during the 2012 Finance Bill when APD was devolved to Northern Ireland.
It therefore comes as no surprise that I am here yet again attempting to transfer APD to Wales, as was agreed by all the parties in the commission. I will seek to divide the House and to hold other parties to what their representatives on the commission said and, perhaps more importantly, what their representatives in the National Assembly say back in Wales. I would of course be ecstatic if by some divine intervention their masters here in London listened to them for once and voted in favour of the policies they advocate—I do not hold my breath in much hope.
I will go on to speak about the discrepancies between what the Unionist parties say in Wales and how they vote here on devolving APD. First, let me inform the House a little about the background to the UK Government commission’s recommendation to devolve APD as part of a comprehensive package of financial powers and about the stage we are at now. In short, the cross-party Silk commission recommended that powers over stamp duty land tax, the aggregates levy, long-haul APD, landfill tax and business rates be devolved in their entirety. It also advocated a sharing arrangement for income tax, with Wales having the ability to vary each individual income tax band and rate.
After having been made to wait for more than a year by the London Government to grace us with a response to the commission which they themselves set up, we find ourselves already having debated the Second Reading of the Wales Bill in this Chamber. We expect it to be confirmed tomorrow morning that the whole House will return to consider the Committee stage of that Bill after the Easter recess. Yet the Wales Bill has some glaring omissions. It seems like a long time ago now when, last autumn, the Prime Minister and Deputy Prime Minister swept into the Senedd building in Cardiff, to flashing camera lights and an adoring paparazzi, in order to announce new financial powers for Wales. Very few questioned what exactly was being proposed. Only later did it emerge that the Westminster Government were prepared to accept the cross-party commission recommendations only in part and that they would be ignoring some. That is despite the fact that they had representation on the commission in the form of a commissioner representing the Conservative party and a commissioner representing the Liberal Democrats.
In essence, the Government have cherry-picked the commission’s recommendations, even though they were agreed on as a comprehensive package of reforms. It is therefore greatly disappointing that the Westminster Government have decided to ignore the will of the people of Wales, who believe that Wales should have greater power over its own affairs, according to successive polls, not least the ones conducted by the commission while it gathered evidence as part of its reports. Those polls represent some of the most detailed research undertaken on attitudes towards devolution since we first had our own devolved legislature in 1999.
Hywel Williams (Arfon) (PC)
Is all that not doubly disappointing given that our representative on the Silk commission was prepared to compromise in order to get a unanimous report? We gave ground and support to the recommendations of the Silk commission, but the Government are cherry-picking.
Jonathan Edwards
My hon. Friend makes a very important point and of course he is right. As I will go on to say, the Silk commission was a huge compromise for Plaid Cymru, yet we find ourselves the only party represented here in Westminster, and the only party represented in the National Assembly in Cardiff, trying to preserve the integrity of the Silk commission. That is a vital point which the people of Wales will realise in good time.
The devolution of air passenger duty was an important element of the package recommended by the Silk commission. It was therefore a slap in the face for Wales when it was omitted from the Wales Bill, which is currently progressing through this House. Both my colleagues and I have spoken several times about that Bill so I will not go into it too much further, save to say that my party and I have been dismayed by the attempts of both the Government and the Labour party to put narrow party self interest ahead of the Welsh national interest and to lay down road blocks in terms of the Silk commission.
The Government have sought to water down the financial powers recommended by the commission by constraining them through a lockstep.
Jonathan Edwards
The key point is that if the First Minister cannot persuade his own MPs and those on his own Front Bench in Westminster to propose policies that he is promising to the people of Wales, why should the people of Wales listen to a single word he says to them in the media? It is a test of his credibility and authority and, based on tonight’s and last year’s evidence, I would argue that the First Minister has no credibility or authority whatsoever.
Hywel Williams
Does my hon. Friend agree that the First Minister has form on this matter? He will recall that we proposed a new clause to the Water Bill to implement the Labour Administration in Cardiff’s policy on borders and the control of water. Of course, the Labour Benches were entirely empty and, as he has mentioned, Labour failed to vote on that matter, too. Labour is entirely bogus.
Jonathan Edwards
Once again, I am grateful for that intervention. That is one in a long list of political issues on which the First Minister and his Cabinet members say one thing in Cardiff while Welsh Labour MPs operate completely differently down here. The proof of the pudding will, of course, be the Westminster Labour party manifesto. We will see what influence the First Minister has over that, but the manner in which he has been completely bullied by the shadow Secretary of State, who now supports a lockstep on income tax powers, seems to show that the balance of power is quite firmly here in London.
Catherine McKinnell
It is a pleasure to serve under your chairmanship, Mr Bone. It is clear from the contributions and amendments tabled by the hon. Members for Carmarthen East and Dinefwr (Jonathan Edwards) and for Na h-Eileanan an Iar (Mr MacNeil) that APD remains an important issue for many hon. and right hon. Members. Indeed, we have debated APD on the Floor of the House on many occasions, so it is worth briefly reflecting on the coalition Government’s record on APD since they came to power in 2010— a record, as I am sure many hon. Members will agree, of prevarication, indecision and lack of direction.
Before the election, the Conservatives made a commitment to look at a per-plane duty. The report that resulted almost a year later, contrary to the manifesto commitments of the Conservatives and the Liberal Democrats and the coalition agreement, was not taken forward, and for very good reasons. The industry certainly did not support it. Although right hon. and hon. Members on both sides of the Committee will be all too conscious of the need not to take a Liberal Democrat promise at face value, we had certain expectations concerning the coalition agreement.
The Government promised a further review of APD. The consultation covered several areas including private jets, different tax bands, premium economy flights, flights from regional airports and the possible devolution of APD. The consultation paper raised the concern that the existing four-band structure was damaging the UK’s competitiveness and contained several anomalies, such as a higher rate for Caribbean flights than for other destinations in the USA. That was a source of concern for many hon. Members, which, given the announcement in this year’s Budget, the Government seem to have taken on board. The consultation lasted the best part of a year and numerous interested parties took considerable time and effort to respond constructively and in good faith.
What was the result of that long and arduous process, which, including the first consultation, spanned the best part of two years? It was next to nothing. Aside from the extension of APD to cover business flights, we have seen no changes to APD across the UK. That period of time has been described by industry players as
“a sham and a waste of taxpayers’ money.”
There were three full years of promises, yet the Government delivered next to nothing. Three wasted years—a phrase that is synonymous with the coalition Government, whether in respect of APD or, more broadly, the flatlining economy that we have seen for most of the Chancellor’s time in office.
In this year’s Budget, choices were made that, notwithstanding the years of delay and the further year of delay ahead, have been cautiously welcomed by much of the industry. The third coalition U-turn in this area in as many years means that there will be some relief for long-haul flights in the form of lower rates of APD. Let us not forget that APD on all flights of more than 2,000 miles will be uprated by RPI this month. That comes on top of the large increases over the past few years, including the 8% rise that the Chancellor announced in Budget 2012, which was double the rate of inflation.
Budget 2014 saw the announcement or re-announcement—I am not entirely sure which, as Ministers will not give me a straight answer—that the Government will provide funding to aid start-up routes at smaller airports. The regional air connectivity fund, as it will be known, will help new routes from regional airports according to the Red Book, but Ministers do not seem to know which airports or new routes will be eligible or what the fund may be spent on. Although any new support for new air routes is clearly welcome, the proposal seems to bring yet more uncertainty for the aviation industry, the like of which it has already endured for years.
Clearly, that support could be of most value to the constituents of the Members who have tabled the new clauses and the new schedule. Perhaps the Minister will enlighten the Committee and reassure hon. Members about what support their regional airports can expect to receive from the fund.
Hywel Williams
While the hon. Lady is talking about enlightening the Committee, will she enlighten us as to where her Welsh Labour colleagues are? There is a Welsh Whip lurking at the far end of the Front Bench. Perhaps he will give us a clue.
Catherine McKinnell
We have been very clear on numerous occasions that Labour remains to be convinced of the merits of devolving APD. We do not believe that it is necessarily the correct way forward at this stage.
We acknowledge that the Government have made some notable changes to APD in Northern Ireland. The Chancellor announced in September 2011 that APD rates on long-haul flights using airports in Northern Ireland would be cut because of the threat of competing routes from the Republic of Ireland to the transatlantic route from Belfast to Newark airport in New York, which is critical to the Northern Irish economy. Continental Airlines had been paying APD, unsustainably, at a cost of £3.2 million a year. Following the Finance Act 2012, APD on long-haul flights departing from Northern Ireland was devolved to the Northern Ireland Assembly, which abolished it on 1 January 2013.
I know that right hon. and hon. Members, and anyone who has engaged in this debate over the past few years, will be all too aware of those facts. However, it is important to remind the House of them, so that it can better understand the new clauses and new schedule. Flights in Northern Ireland clearly face specific challenges. As I and other Labour Members have noted before, it is the only part of the UK that shares a land border with another EU member state. George Best Belfast City airport and Belfast International airport compete directly with Dublin in attracting airlines, routes and passengers. The Opposition supported the Government’s move on APD on long-haul flights from Northern Ireland, given its unique international land border and the fact that Northern Ireland largely relies on air transport for its link to the rest of the UK.
Hywel Williams
I am intrigued. The hon. Lady says that Labour remains to be convinced about devolving APD. Has she told Carwyn Jones?
Catherine McKinnell
As I said, the Wales Bill, which is currently going through Parliament, contains a number of devolved tax powers for Wales and is the appropriate place to debate these issues. That is why Labour will abstain on the issue of APD devolution tonight, but we look forward to the Exchequer Secretary providing clarity on the various queries that have been raised today, particularly about the regional air connectivity fund, which is clearly linked to the issues of certainty for investment, growth, which all Members are focused on, and the role that aviation plays in our economy.
Finance (No.2) Bill
Hywel Williams Excerpts(10 years, 1 month ago)
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Jonathan Edwards
I can certainly assure the hon. Lady that not many people in Carmarthen East and Dinefwr are enjoying that tax cut. That is why I am speaking in such fervent opposition to it.
Hywel Williams (Arfon) (PC)
It is not only the fact that income tax has been cut but that further cuts to social provision are envisaged. So into the future, people at the bottom of the pile and who face disability and sickness will be seeing cuts to their benefits while the very rich will be seeing cuts to their tax.
Jonathan Edwards
I am sure that my hon. Friend’s surgeries, like mine, are filled weekly with individuals who face problems with reductions in the support that they receive. With all that in mind, it is difficult to look them in the eye and support a tax cut for those on the highest incomes. It undermines the case for the moral crusade I alluded to earlier and public support for the fiscal policy of the current UK Government.
Jonathan Edwards
Unfortunately, I cannot enlighten my hon. Friend, other than to say that the Western Mail informed me that senior Labour staff described it as a “balls-up”.
To be slightly more serious, I was happy that, in response to an intervention from me last week on Second Reading, the shadow Chief Secretary, who is in his place, said that should Labour form the next UK Government, it would restore the 50p top rate for the duration of the next Parliament. I would certainly support that, and I look forward to doing so if there is a Labour Government. My understanding before his answer was that Labour was proposing a temporary increase in the top rate, so I welcome that development. I hope that during today’s debate, the Labour Front-Bench spokesman will confirm that that will be its policy at the next election and beyond.
Owing to the manner in which Finance Bills are processed, it is impossible to press to a vote amendments to alter tax band rates, which is why both new clause 4 and Labour’s amendment 4 call for a review from the Treasury of the impact of re-introducing the 50p rate. The 2011 Budget included the provision of a review to reduce the 50p rate. As I said, nobody foresaw the Treasury introducing such a policy within a year. In other words, the 2011 Budget provisions were a sop to Tory donors that their party was minded to reduce the top rate at some point in the future. The following Budget then introduced the policy.
Proponents argue that the reduction in the additional rate to 45p has led to a windfall for the Treasury because of reduced avoidance and evasion. I noticed in the lead-up to the Budget last month that some Tory Back Benchers were making the case for a reduction to 40p for this Budget based on higher than expected tax receipts—some £9 billion—following the top rate changes. In the newspapers this morning the hon. Member for Taunton Deane (Mr Browne) was making a similar call for his party to adopt the 40p top rate come the general election. He is not in his seat, so perhaps he has been told to go somewhere else. I find that argument difficult to swallow as individuals seeking to avoid tax at a 50p rate would surely be minded to do so with a 45p rate. The higher than forecasted tax receipts used to justify a further cut in the top rate was surely as a result of higher than projected economic performance, and therefore a 50p rate would have brought in even more receipts for the Treasury.
Hywel Williams
What credence does my hon. Friend give to the analysis that some high earners deferred declaring their income with a view to declaring it once the 45p rate was introduced, and that that led to higher receipts?
Jonathan Edwards
That is an important point about forestalling, which I will talk about in more detail later.
I note that the Office for Budget Responsibility’s March 2012 “Economic and fiscal outlook” states on page 110 that
“the revenue-maximising additional tax rate is around 48%.”
Again, that blows a hole in the Government’s argument that their reduction of the additional rate was based on sound economic and revenue-raising evidence. That is why they should now commit to carrying out a full report, as the new clause would compel them to do. I would argue that 48 is slightly closer to 50 than to 45.
The Chancellor told the House in 2012:
“The increase from 40p to 50p raised just a third of the £3 billion that we were told it would raise.”—[Official Report, 21 March 2012; Vol. 542, c. 805.]
I know my A-level maths is a little shaky, but that still makes £1 billion, a significant sum to the good people of Carmarthenshire and the good people of Wales and the rest of the UK. The Chancellor’s justification for the tax cut for the super-wealthy was that they would avoid the tax, they might leave the UK, it raised only £1 billion, and the reduction would lose the Government only £100 million. Having brought forward their income to avoid the 50p rate in the first year, the rich delayed it in the final year to benefit from the reduction to 45p. That forestalling and deferment will have cost the Treasury billions that could have been used to avoid some of the worst cuts to those on low incomes, such as those resulting from the bedroom tax.
Recent claims by some on the Government Benches that the tax cut for the richest has yielded more revenue conveniently gloss over the increased likelihood of those with an accountant being able to move their income into the following year, given the Government’s indication a year ahead of time that they were enacting the tax cut. My advice to the Government would be to enact the proper closing of loopholes to ensure that the super-wealthy pay their fair share, instead of the fig leaves of action that the Government have offered previously. They have still not introduced proper measures to make up the HMRC estimate of £35 billion lost each year through avoidance and evasion. Other estimates put the figure much higher. Claims that the rich were fleeing because of the 50% rate are also not very well grounded. Research by the TUC, using HMRC figures, indicated that 59% of those paying the 50% additional rate were employees, most working in banking and therefore unable to leave.
Transport Infrastructure (North Wales)
Hywel Williams Excerpts(10 years, 5 months ago)
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Mark Tami
I thank my hon. Friend. I agree there are lots of small changes that could be made. Someone came to see me who was blind. He said that few announcements are made on trains, so he feels unsure whether he is getting off at the right station. There are small things we can do to improve the situation, and they do not involve a big cost.
Hywel Williams (Arfon) (PC)
The hon. Gentleman has listed a large number of possible road improvements, and he is now talking about rail improvements. However, I was under the impression that transport is a devolved matter. I am not springing to the Minister’s defence, but would the hon. Gentleman’s comments not be better directed at his Labour colleagues in Cardiff?
Mark Tami
I would say that I thanked the hon. Gentleman for that intervention, but that would not be true, would it? He has made his point, but I was talking about joined-up government, which would make sense. The hon. Gentleman might realise that there is no Hadrian’s wall at the border; in fact, there is no border at all as far as most people are concerned. As I have tried to illustrate, people work on both sides of the border, and we do not want to be turning away jobs, although perhaps that is what the hon. Gentleman wants.
Mark Tami
I think the hon. Gentleman has made his point.
The Wrexham-Bidston line does not work well, particularly for shift workers, for whom it does not start early enough or end late enough. We really need to modernise the service. In the first instance, we need to introduce a half-hourly service. In the longer term, we need electrification, although we must take on board any concerns among people living along the route.
We have to look at a cross-border service. In the past, when we thought we had made progress on the Wrexham-Bidston line, it came to nothing, partly because costs suddenly spiralled—I never quite understood why—but also, if we are honest, because the Administrations failed to work together for the benefit of those on both sides of the border.
I certainly support upgrading the service. As my hon. Friend the Member for Vale of Clwyd mentioned, we need a dedicated station on the route to serve the Deeside industrial park. The Hawarden Bridge station offers an opportunity, although we might want to build a different station. However, we need something on the site. To be frank, it is incredible that the industrial park was built without a dedicated station in the first place—that seems crazy to me. For those who do not have a car, the only way to get there is to use the shuttle bus. For a park with 7,000 or 8,000 jobs, that is completely ridiculous. We can look to the past, but we really have to learn the lessons of the past and not make the same mistakes again.
I welcome the improvements at Saltney junction, where line speed and capacity will be increased. I would also welcome the reinstatement of the Halton curve, which links the Chester-Manchester line at Frodsham with the west coast main line at Runcorn. That would allow the reintroduction of a direct rail service between north Wales and Chester, and on to Liverpool Lime Street and, importantly, to John Lennon airport. A study is looking at the viability of that, and I hope it reaches a positive outcome.
A service we tend to forget—it is seen just as an add-on—is buses. We need a more co-ordinated approach, and we need to look at the cross-border nature of bus services. As I indicated, even short journeys seem to take a ridiculous time—[Interruption.] My hon. Friend the Member for Vale of Clwyd is indicating that I am doing a similar thing. As I said regarding the Wrexham-Bidston line, the public must have confidence in bus and train services if they are to use them. If they do not, they will see them as unreliable, and they will carry on using cars.
I will make one final point, as I know people are keen that I conclude. There has been some mention of having an airport in north Wales at Hawarden, effectively in Broughton. Broughton is vital for taking wings out of the manufacturing facility there to be assembled in France and Germany, and for a limited number of light aircraft movements. It is in a very built-up area, and we have two perfectly good airports at Manchester and Liverpool. We do not need to expand any service at Broughton; we need to ensure it is easier to get to and from the airports at Manchester and Liverpool. That makes far more sense than expanding capacity at Broughton.
In conclusion, we have a great opportunity in north Wales to grow and to create jobs, and to use the very skilled work force we have there to grow the economy for the future. We are only going to do that if we have the right transport infrastructure in place.
Glyn Davies (Montgomeryshire) (Con)
I want to do exactly as you would prefer me to do, Mr Caton, which is to speak for a very short time, because I intend to make only one point in this debate. My point builds on one made by the hon. Member for Alyn and Deeside (Mark Tami) about the relationship between the Welsh and British Governments and how they work together to recognise cross-border links.
The issue of cross-border links applies to several areas in Wales, but as this debate is about north Wales, I want to speak specifically about Llanymynech. I will not go into the case for a bypass at Llanymynech today, because it has been made elsewhere and would take away from the point that I want to make, which I want to make on the basis of the strong case for that bypass having already been made. Part of that new road would be in Wales and part of it in England, so it would require a commitment from both sides. There is often a strong commitment from Wales in these cases, as there would clearly be access to markets in England—in mid-Wales, near Middletown, there is a very strong case, and only a little bit of the road would be in England. The case from Wales is very strong and the investment would be made, but the case from the English side is very weak, because there is little access to markets. Although the scheme would be hugely important to the benefit of Wales, it cannot go ahead. It has been stopped, by devolution, from even being considered. That is a negative aspect of devolution which will grow over time. As road links elsewhere in Wales improve, we will still find bottlenecks on the border that cannot be dealt with because of devolution.
Hywel Williams
I do not want to disagree with the hon. Gentleman, but he ascribed the difficulties to devolution. Were there any moves to improve the road before devolution? As he identified, the problem comes on the English side, so if devolution is the problem, surely it is not devolution to the Welsh Government; it is something else, which people do not talk about here: devolution in England, possibly.
Glyn Davies
I thank the hon. Gentleman for his intervention. Discussions about that particular road crossing in Llanymynech had been going on for many years, but my understanding is that it is now not being considered at all, because of the difficulty of coping with the constitutional problems. Cross-border links in other parts of Wales have fallen off the radar because of the difficulties of taking them forward. We must address that.
Devolution is not independence. It is not separation, even though some Members might prefer it to be so. We need the Governments in Wales and England to work together on projects in which they both have an interest and accept that sometimes the priority on one side must be considered alongside the priority on the other. With cross-border links—I have used the example of Llanymynech today—that is crucial. The English Government must consider the economic benefits of Wales when looking at the priority they might give to such schemes. I hope the Minister takes that on board and considers it in relation not only to north Wales, but to cross-border links from the north to the south of Wales.
Albert Owen (Ynys Môn) (Lab)
It is a pleasure to follow the hon. Member for Aberconwy (Guto Bebb). He started off by saying that there were no partisan points to be made, but I have to come back on a serious one that he made in trying to rewrite history: the A55 from Chester to Holyhead was not completed and there was a huge gap of 15 or 20 miles across my constituency for 15 years. That allowed the economy of my area to decline significantly, because of the logjam of traffic from Ireland.
It was all a huge mistake, and I was proud that one of the first things that the Labour Government did after coming to power in 1997 was to dual the A55, allowing us to join in the prosperity of the rest of north Wales. It is worth putting that on the record. I have a lot of time for the predecessor of the hon. Member for Aberconwy, an Anglesey man, but that was a failure of his in the Wales Office of the previous Conservative Government.
I want to concentrate on some issues that have not been touched on, and one that affects full integration is the ports. Britain is an island and the island of Ireland lies off Wales, so it is important to get gateways from Ireland to the United Kingdom. One of the best ways of achieving that is to have 21st-century ports.
Holyhead is the major port on the western seaboard; it is one of the busiest ports in the United Kingdom, but I feel that sometimes it has been losing out. I want to make this point again, as I did to the Minister’s predecessor, who is now the Secretary of State for Wales. When the Government put aside £60 million for investment in UK ports, which are a reserved area, they immediately made it for England only. English ports were allowed to share the £60 million, but Welsh ports were not allowed to bid for it—there was just a Barnett consequential and, as a result, ports in Pembrokeshire and west Wales shared only some £3 million. Everyone knows that we cannot get much port development for £3 million.
Meanwhile, because the £60 million was an England-only policy, other ports in England had the lion’s share, which meant that it has become difficult for Welsh ports to compete against English ports. The economies of areas around ports rely heavily on port development. Offshore wind development needs proper infrastructure to get goods to the wind farms. There is a great danger that, without the necessary infrastructure in Welsh ports, the equipment will be assembled in other parts of the United Kingdom—or, indeed, Europe—and be shipped to the wind farm locations.
I make a plea to the Minister. Let us look again at UK port policy and ensure that Welsh ports have an even and level playing field for investment for the future, because a huge number of skilled jobs are involved. People in my constituency are good at maintaining its offshore wind farms, which are some of the best in the world. Turbine Transfers works throughout the world, but it cannot work out of its own port, because of the lack of development.
Rail is also important. I agree that there have been some huge improvements over the past 15 years on the north Wales line. The investment in the west coast line—some £13 billion over that period—has given great benefit to north Wales, with faster and better trains between Holyhead and Euston. That is why I support High Speed 2; the same benefits could be derived from HS2, if we got those fast links to Crewe in the first place and then electrification along the north Wales coast. The issue is hugely important and we should look at it positively. Dublin and London can be linked via north Wales, which can be part of a huge European network between those capitals—with shipments on to Felixstowe, for example.
For ports as well, the carrying of freight by rail and ship is important to alleviate the problems on our roads. We need to invest more in the freight capacity of our railways. If we have faster speeds on the lines, we get more capacity on our railways for carrying freight across the United Kingdom and for the purpose of connecting continental Europe and the Republic of Ireland. We must concentrate on those issues.
Hywel Williams
Is the hon. Gentleman satisfied with the performance of this Government, and of the Welsh Government, on the trans-European transport network, TEN-T? The route to Ireland is designated to go through Liverpool rather than Holyhead in his constituency.
Albert Owen
I know what the hon. Gentleman is referring to—a little scaremongering by Jill Evans, MEP—but the European Commission and the Welsh Government say that that is not the case and that the priority will remain the existing TEN-T route, including from Felixstowe to Holyhead.
Opportunities have, however, been lost; if the hon. Gentleman wants to be partisan about the Tory coalition Government in Westminster and about the Welsh Government, I should say that one such wasted opportunity was between 2007 and 2011, when we had a Minister who was not of those colours, but did not put the case for the electrification of the north Wales line. As a member of the Select Committee on Welsh Affairs, the hon. Gentleman knows that a Plaid Cymru Minister gave evidence at the time; when we were pushing for electrification for south Wales, he said that for north Wales it was only an aspiration. I would expect a Minister from north Wales to have greater priorities for north Wales than merely “aspiration”.
Rather than scaremongering about such routes, we should be dealing with the situation. We should put the case for north Wales—with HS2 and with all the European and British networks—because we want an integrated north-west Wales in an integrated United Kingdom. That is not supported by the hon. Gentleman’s party.
I could go on longer about rail, but I am conscious of time, so I turn to air links, which we have not mentioned in any great detail. My hon. Friend the Member for Alyn and Deeside (Mark Tami), whom I thank for securing the debate, said that we need to get proper air links. We are going to have huge investment in north-west Wales—a proposed £8 billion; among the biggest in the whole United Kingdom—in the development of Wylfa nuclear power station. We need to get people and goods to the area, so we need a proper, fully integrated transport system. I want to see the development of north Wales airports—yes, Hawarden and Anglesey airports—so that people can fly there.
The novelty in this country is that we think we have to go by the slowest and longest routes. In continental Europe and the Americas, people leap from city to city and country to country via air links. They do it to do business fast. Yes, we need broadband, but we also need people to get from A to B as quickly as possible, and air links are good way of doing that.
My constituency is only 40 minutes away from the capital city of Wales, because we have an air link. It is important that we are able to say to the rest of the world that we can get from capital cities to such locations quickly. We need to concentrate and improve on a western corridor that might include Cardiff, Anglesey, Belfast and many other areas. Such a corridor has not been explored, and Belfast is an important and growing city in the United Kingdom, so we need to get such air links to it.
On roads, we have heard about the potential for an extra bridge across the Menai straits, funded by extra borrowing. I do not dismiss that option, but the road infrastructure in Anglesey will take a pounding during the development of Wylfa power station. [Interruption.] My hon. Friend the Member for Vale of Clwyd (Chris Ruane) has been signalling me to get me to halt my speech, but I have a final and important point to make. That Wylfa development is one of the biggest investments—it is not in north-east Wales, but in north-west Wales, which deserves equal weight with the rest of north Wales. The road infrastructure in Anglesey needs huge improvements. I would like to see some focus on that from Government across the United Kingdom.
I make one final point to the Minister. We need to work together on this matter. The UK Government, the Welsh Government and local government need to work together to get the best out of our infrastructure and create the prosperity that we all want. North Wales is a place to do business. We can do business better and faster if we have better and faster infrastructure—sea, air, road and rail.
Hywel Williams (Arfon) (PC)
I certainly will, Mr Caton.
I may surprise everyone in the Chamber by agreeing almost entirely with everything that has been said. It is not the border that worries me, because, as the right hon. Member for Delyn (Mr Hanson) said, what happens in England is important. Anyone who has travelled from Caernarvon to Crewe knows that they get to the border quickly, but then the road between Chester and Crewe is appalling. What happens in England is important for Wales, and I agree with him entirely about that. I also agree entirely with the points about Manchester and Liverpool airports.
Two factors frame this debate. Historically, transport links go through Wales to Ireland rather than to Wales, and transport is largely a devolved matter. In the short time left to me, I will consider matters that are the responsibility of the UK Government rather than the one down in Cardiff. However, I must break that promise almost immediately by agreeing with the hon. Member for Aberconwy (Guto Bebb) that the two roundabouts on the Dublin to Moscow route are both in north-west Wales, which is an anachronism that must be looked at immediately.
The Welsh and UK Governments have spoken about A55 improvements, and I would be very happy indeed if the Minister could tell us what they might entail. I hope that the two Governments have been talking deeply about that, and that we will see a new crossing from my constituency to that of the hon. Member for Ynys Môn (Albert Owen). That is important.
Another point is the one I made earlier about the trans-European transport networks—TEN-T—corridor to Ireland. The hon. Member for Ynys Môn said that I was scaremongering on behalf of my colleague, the MEP Jill Evans, but everyone knows that the quickest and easiest route to Ireland is through north Wales from Holyhead to Dublin, yet the TEN-T route currently goes through Liverpool, which is complete nonsense. I would not mind hearing from the Minister about that. My hon. Friend the Member for Carmarthen East and Dinefwr (Jonathan Edwards) asked the Department for Transport about that, and it gave the game away when it said that the UK Government’s priority was to ensure that member states rather than the European Commission remain responsible for transport planning and investment decisions on national networks. It seems that the Commission wanted the route to go through Ynys Môn—[Interruption.] The hon. Member for Ynys Môn says “no” from a sedentary position, but I did not hear him explain that in detail in his rather longer speech. Perhaps we can debate that in future. It seems to me that the Commission wanted the route to go through Ynys Môn, but the UK Government wanted it to go through Liverpool.
Wales still does not have a single millimetre of electrified rail in Wales, and I am pleased about the possibility of that on the south Wales line, but I must ask about the north Wales line. As other hon. Members have said, it is vital.
Finally—you will be glad to hear that, Mr Caton—there has been some talk about HS2. Yesterday, I came down on the train through Crewe, and I recommend that any hon. Member who is travelling through Crewe station looks, as they go over the bridge from platform 3 to platform 5, at the very large poster extolling HS2. There are several arrows pointing up from London to Runcorn, Liverpool, Leeds and Manchester, and Wales is a very large blank.
Nia Griffith (Llanelli) (Lab)
I congratulate my hon. Friend the Member for Alyn and Deeside (Mark Tami) on securing this important debate. We can tell by the number of Members who are here—a 100% turnout from Labour MPs in north Wales—just how important infrastructure is, and transport infrastructure in particular. As he rightly pointed out, although we have one of the most vibrant economic areas in Europe in north-east Wales, we cannot be complacent. Even big household names can go bust or move elsewhere. If we want to keep investment there, retain existing firms and attract new investment, we need to be continually upgrading our transport infrastructure to compete in the modern world. He highlighted the over-reliance on cars because of the lack of availability of public transport and pointed out that some people face a real dilemma, in that they hesitate to take up low-paid jobs, particularly if they are part-time or split-shift, because of the high cost of transport to get to them.
The hon. Member for Montgomeryshire (Glyn Davies) talked of cross-border bypasses, saying that although there is enthusiasm for road improvements on the Welsh side of the border in order to access markets, there is no real commitment from the UK Government to back up the English side of the project.
The hon. Member for Aberconwy (Guto Bebb) emphasised the need for better services not only to London but to Liverpool. He highlighted the success of the Conwy Valley rail line and pointed out that rail is vital to bringing in tourists, particularly those with mountain bikes. He also stressed the important success of local FE colleges in helping to upskill local people.
The hon. Member for Arfon (Hywel Williams) referred to the status of Holyhead and whether it was the top priority for the TEN-T European scheme. He also mentioned the importance of electrification and the need for better transport links when crossing over from Wales into England.
My right hon. Friend the Member for Delyn (Mr Hanson) held a local summit to bring together partners, showing how infrastructure is part of the business community’s priorities and something that everybody needs to be involved in. He talked of the importance of long-term commitments and projects such as HS2, which will outlive all of us. He also mentioned the growing importance of tourism, such as that brought by the completion of the all-Wales coastal path.
My hon. Friend the Member for Ynys Môn (Albert Owen) stressed the importance of Holyhead as a port, particularly as part of the route from continental Europe through to Ireland. He pointed out that ports are a reserved matter, and that although £60 million of funding was made available for English ports, Welsh ports had to make do with only £3 million. I ask the Minister what he will do to secure a better funding deal for Welsh ports. I am sure that he will be only too aware of the issue, from Milford Haven in his constituency, and I hope that he will be able to respond to my hon. Friend on the subject of Holyhead.
My hon. Friend the Member for Wrexham (Ian Lucas) pointed out that new industrial estates need to be fully integrated and served by public transport. There needs to be proper joined-up thinking, as the phrase goes. He again stressed the need for better connectivity to the international airports in England—obviously, Manchester and Liverpool are absolutely vital to north Wales—and for a link with HS2. He also stressed the need to keep up the pressure for better rail transport in north-east Wales and, like my right hon. Friend the Member for Delyn, stressed the importance of working together with the local business community to keep that pressure up.
My hon. Friend the Member for Vale of Clwyd (Chris Ruane) praised the vision of the A55 science corridor, and he stressed the importance of railways and rolling stock. He talked, again, of the connectivity to Manchester and Liverpool airports and mentioned the importance of infrastructure to tackle unemployment. He would like an answer to his ambitious vision for a hovercraft project from Rhyl to Wallasey and suggested that the Minister might instigate some sort of feasibility study to look at how that might work out in practice. Perhaps we can hear the Minister’s views on that project.
I turn to how we will fund the infrastructure and, in particular, what measures the Government can take to facilitate funding for infrastructure in north Wales. We have heard the Secretary of State for Wales telling us that £2.25 billion of new infrastructure will benefit Wales, but the reality is that we will see little of that—possibly none of it—in this Parliament. Government Ministers have boasted frequently about electrification, but in fact, only 50 miles of rail track will be electrified by the time of the election across the whole of Britain.
When we left office in 2010, we already had plans for the electrification of the Great Western main line to Swansea, but this Government have had a stop-start approach. The project was cancelled, and then there had to be a campaign to reinstate the plans for the line through to Swansea. That electrification project will not start until 2015, so what about north Wales? The Welsh Government have been looking at plans for rail electrification in the north, but when are we likely to see the funding mechanisms for that put in place?
The reality of investment in Wales is very different from the rhetoric. The truth is that the Tory-led Government in Westminster have cut the Welsh capital budget by a third, as part of an overall budget cut of £1.7 billion, hindering the Welsh Government’s ability to invest in transport, housing and other essential infrastructure.
Hywel Williams
I cannot allow the hon. Lady to get away with what she said. Where were the Labour Government for 13 long years, when not a single millimetre of railway in Wales was electrified? Where were they? It is not a stop-start process—it is a stop-stop process.
Nia Griffith
I want to point out, first, that we had all the plans in place for electrification, and the Tory Government wasted time by cancelling them so that we had to campaign to reinstate them. Secondly, as my hon. Friends have already pointed out, there was a certain Minister from Ynys Môn who was the Transport Minister in the Welsh Government from 2007 to 2011, and who seemed to think that electrification in the north was just pie in the sky. Perhaps if he had fought a little harder for it, it would have been higher up the agenda.