Barnett Floor (Wales)

Jonathan Lord Excerpts

Tuesday 10th November 2015 Westminster Hall

[Nick Thomas-Symonds]

My hon. Friend makes a good point. In 2015, we also had a manifesto commitment on the Barnett floor; but unfortunately, we were again not in government after the election.

In 2012, consideration was given to how Wales’s share of future funding would not fall again when public expenditure started to rise—the so-called “Barnett squeeze”. In the autumn of that year, the UK Government formally agreed that there was a squeeze and that such convergence had taken place. They said that they would review the position at each spending review, to assess whether it would recur, and address the issue. Alas, I am afraid that they did not.

On 8 July, the Government’s lack of interest in Wales was perhaps summed up in the Chancellor’s Budget speech. In one short reference, he said:

“In Wales, we are honouring our commitments to a funding floor and to more devolution there, and investing in important new infrastructure such as the M4 and the Great Western line.”—[Official Report, 8 July 2015; Vol. 598, c. 329.]

That promise came five years after the Assembly had voted unanimously on the matter—five years later. Put simply, the people of Wales have waited long enough for the UK Government to deliver.

[Jonathan Lord (Woking) (Con)]

I congratulate the hon. Gentleman warmly on his first Westminster Hall debate. I am sympathetic to fairer funding for Wales in a needs-based system, but should not any adjustment or floor to make things fair come from the financial settlement of any country that has gained under the current, outdated Barnett formula?

[Nick Thomas-Symonds]

I agree with the hon. Gentleman that, during this Parliament, we have an opportunity to debate all such matters. The Scotland Bill continued its passage through the House only yesterday. This is the time to look at fair funding throughout the United Kingdom.

I ask the Minister to answer some specific questions. First, the Secretary of State for Wales said in the spring that the Government would deliver on a Barnett floor by the autumn. I would be grateful if the Minister gave us a more exact timescale, given that we are already into November.

Will the Minister confirm whether the proposals on the Barnett floor will be as proposed by the Holtham commission? Will he update us on what the indexation figure is likely to be? I hope that he will give us a cast-iron guarantee that the Holtham recommendation on a Barnett floor will be implemented in full before any further debate on fair funding for Wales. In this Parliament, as I said a moment ago, the Scotland Bill and the Wales Bill provide an ideal opportunity for such a debate to take place.

On Second Reading of the Scotland Bill on 8 June, I said that the Government must not see the different nations of the United Kingdom entirely in isolation; they must look at changes across the board and how they impact on each other. That said, the devolution settlement has become a central part of our constitution and we should not forget the positive benefits that devolution has brought since Labour introduced it in 1999.

The great socialist thinker, R. H. Tawney, thought that dispersal of power was best because

“It makes people more accessible to each other than a system where power is highly centralised and society is a tapestry of authoritarian links”.

That notion of accessibility, with decisions being made closest to the people they affect, has a modern resonance. He also said:

“The only sound test, in the first place, of a political system, is its practical effect on the lives of human beings”.

That is absolutely right and that is why today’s debate is so important.

The idea of a Barnett floor is not an abstract notion; it is a practical step that could make a difference to people’s lives and the services that they rely on. It has a short and medium-term aspect. I accept that it has less impact in a declining budget, but the principle should be implemented as soon as possible for its impact on positive increments. Put simply, the Government should act, and act now.

--- Later in debate ---

[Alun Cairns]

My hon. Friend makes an important point. I can hardly speak to business people or people who travel the border regularly without their complaining about the delays around Newport. We urge the Welsh Government to take the strongest action possible to complete the job of bridging the M4 around the south of Newport.

A new prison is being built in Wrexham, in a £212 million project supporting over 1,000 jobs. Through tax devolution we are empowering the Welsh Government with further levers to support and encourage the growth of the Welsh economy. Business rates have now been fully devolved, something I hope Opposition Members will acknowledge. Stamp duty and landfill tax will be devolved in 2018, as has already been committed to.

We would like progress on the devolution of a portion of income tax, as specified in the Wales Act 2014. Tax devolution will make the Welsh Government responsible for raising more of the money that they spend. Excluding Welsh rates of income tax, the Assembly will be responsible for approximately 10% of all taxes collected in Wales. The introduction of the Welsh rate of income tax would make the Assembly responsible for twice as much, or approximately another £2 billion in revenue. The Government will implement the commitments of the St David’s day Command Paper to build a stronger, clearer and fairer devolution settlement for Wales.

[Jonathan Lord]

I welcome everything the Minister is saying, but, to return to the Barnett floor, may I ask for an assurance that English taxpayers will not be disadvantaged by any adjustments or Barnett floor, and that any money to accommodate a Barnett floor will come from countries that get more than their fair share on a needs basis?

[Alun Cairns]

The specifics on that point will be outlined in the comprehensive spending review by my right hon. Friend the Chancellor.