Wales Bill

Ian C. Lucas Excerpts

Wednesday 10th December 2014 Commons Chamber

[Owen Smith]

The Secretary of State makes my point for me because I do not for a minute subscribe to the notion that Wales has money handed down to it from Westminster. That money reflects the taxes paid by Welsh people, and more importantly, in a Union that is meant to be about our ability to share resources, pool risk and redistribute from wealthier to less wealthy parts, it reflects the morality and values of our country. Unfortunately, that morality and that set of values are being undermined by the Secretary of State’s description of the Union as one in which one part is a supplicant and another is handing down money.

[Ian Lucas (Wrexham) (Lab)]

Does my hon. Friend agree that we need to be wary of the politics of the hospital pass in Wales? I am always suspicious of Tories bearing gifts, to mix my metaphors, and I do not trust the Conservative party to defend the interests of my constituents.

[Owen Smith]

Nor do I and, more importantly, nor do the people of Wales—that is why they do not elect Tories in Wales. The very least we owe the Welsh people is that we consider extremely carefully the likely impact of these radical changes to such a cornerstone of the redistributive Union as taxation. They will have an impact on the potential prosperity and well-being of the Welsh people, which is why, although Labour will not oppose the Lords amendments, as we have not opposed the Bill at other stages, we will continue to be clear that we want far more explanation from the Government about how and why they think the powers in question might be deployed in Wales, and what the benefits will be for the Welsh people.

--- Later in debate ---

[Owen Smith]

No, it is project reasoned analysis of the numbers, and that project shows clearly a £66 billion shortfall over the past five years and a projected further shortfall across the UK over the next five years. We will see a worse performance in terms of corporate and income tax receipts across the UK as a result of the low- wage, deeply insecure, second-rate economy that the Tory Government are building. Wales has been particularly ill served by what has happened because of the additional fragilities of our economy due to our industrial heritage and the preponderance of low-wage jobs in Wales.

The reality is that—[Interruption.] The Secretary of State shakes his head, but he should think about this. He said earlier that the indexed method cited in Holtham means that Wales would effectively be incentivised to grow its tax base at a faster rate than England’s to enjoy uplifts under these powers. The truth is that over the past five years the Welsh tax base has declined at a faster rate than that of England, as the figure is 4.8% in Wales whereas the UK average is 4.2%. That means that Wales would have been worse off under the indexation had the provisions applied in the last five years, which is a further illustration of the need for the Government to undertake some proper, detailed analysis to let the Welsh people know whether we would be better or worse off.

[Ian Lucas]

In support of that point, is my hon. Friend aware that in Wrexham median wages fell by 7.4% in the last year under this Government? What encouragement does that give for increasing the tax base?

[Owen Smith]

My hon. Friend reinforces my point. We know that the Welsh economy has historic weaknesses because of the decline in heavy industry, and its distance from London and the powerhouse of the south-east. Those are well understood, but they are not reflected in the debate that we are having, which is largely politically motivated.

Some in Wales argue that we do not need a referendum to decide this matter, but we think that the Welsh people should have a debate and ultimately take the decision on what would be a radical change. The debate cannot be driven by the Tory party’s desire to insulate itself against the charge that it has reduced Welsh budgets by 10%, which it has; or by the need to support the Tory objective of reducing public spending to levels we have not seen since the 1930s, as was manifest last week; or even by the wish to sustain a partisan argument of English votes for English laws. All three of those rationales feature as part of the Government’s motivation for this debate, and we are disappointed that they have not provided any real response to these questions throughout the passage of the Bill.

It will now be for the Welsh Labour Government to consider what is best for the Welsh people. I have no doubt that they will do so using Welsh Labour values and thinking about the benefits for the Welsh people, as well as about how we deliver equality and improvements to the lot of working people across the UK.

--- Later in debate ---

[Jonathan Edwards]

I stand corrected. To be fair to the hon. Gentleman, he has voted with us several times and broken his party Whip.

The lockstep, of course, was a handcuff measure that would have made the powers in the Bill unusable—the only plus side was the extra borrowing capacity it would have given to the Welsh Government—and removing it creates greater flexibility, which is obviously to be welcomed. When we were debating the Bill in the Commons, however, I warned the Government that events in Scotland would supersede it, and that has indeed been the case. The Union survived by a thread, and even then only following the famous vow promising home rule, devolution max or something as close to federalism as possible. In that regard, the Smith commission was extremely disappointing.

Westminster has one chance left to save the Union, or the British state as it is currently constituted, but the Smith commission is playing into the hands of pro-independence campaigners in Scotland. It nowhere near delivers the powers promised in the vow, but it is far in advance of what the UK Government are offering to Wales in the Bill. The signature policy of the Smith commission is 100% income tax devolution and the ability of the Scottish Executive to set as many bands as they want at whatever level they want. Indeed, my party put forward such an amendment during proceedings on the Wales Bill in the spring.

[Ian Lucas]

If the Smith commission is not in accordance with the vow that was given, why did the Scottish National party agree to it?

[Jonathan Edwards]

The commission’s remit is not one of its own choosing, but the SNP decided to act in the best interests of the country and move the process forward. Making out that the Smith commission proposals are what were included in the vow is not right. It was essentially home rule or devolution max, and on any definition of devo max, it means the full devolution of all powers apart from defence, foreign affairs, the monarchy and military policy. That is not included in the Smith commission proposals, which were less significant than what was promised to the people of Scotland on the eve of the referendum.

As I was saying, the Smith commission is vastly more progressive in its trajectory of travel, offering 100% of income tax in comparison with the Wales Bill offer of only a paltry income tax sharing arrangement—and even then, only following a referendum many years down the line.

--- Later in debate ---

[Stephen Crabb]

The right hon. Gentleman is absolutely right. We end the parliamentary passage of the Bill exactly as we began it, with Labour trying to place even more hurdles in the way of devolving a portion of income tax. You would have to be Colin Jackson to clear all the hurdles that the Opposition are trying to set up.

[Ian Lucas]

Will the Minister give way?

[Stephen Crabb]

I will not, because there is another group of Lords amendments to discuss.

I should like to finish by paying particular tribute to the contribution made by my hon. Friend the Member for Montgomeryshire (Glyn Davies). He set out some powerful arguments, and has done so from a position of real credibility, having been an Assembly Member. He has been ahead of the curve on many occasions in recognising the strategic direction that Welsh devolution needs to go in and the benefits that can be accrued to Wales by taking sensible, moderate and pragmatic steps forward. On that note, I shall bring my remarks to a close.

Lords amendment 1 agreed to, with Commons financial privilege waived.

Lords amendments 2 to 13 and 17 agreed to, with Commons financial privilege waived.



Clause 13

Proposal for referendum by Assembly