Wales: Silk Report

Lord Anderson of Swansea Excerpts

Tuesday 21st January 2014 Grand Committee

[Lord Anderson of Swansea (Lab)]

My Lords, I congratulate the noble Lord, Lord Bourne, on his initiative and on spelling out the details of the settlement on the basis of Northern Ireland, where there is an air passenger duty. I am not sure why in Wales we are likely to have problems with Europe in a way that Northern Ireland does not, but perhaps the Minister can ultimately spell that out.

As we welcome the noble Lord, Lord Bourne, to this House, we mourn the loss of Wyn Roberts, our very distinguished and beloved colleague Lord Roberts of Conwy. I am personally grateful to the noble Lord, Lord Bourne, for having given me a lot of help as vice-principal of what is now one of my local universities when I was a mere constituency MP. I was musing that I have known Members of the Committee—the noble Lords, Lord Wigley and Lord Elystan-Morgan—for almost 50 years. Certainly I have known the noble Baroness, Lady Randerson, for 30 years, and I knew the father of my noble friend Lady Morgan. One could go on detailing the incestuous nature of Welsh politics.

If we are an overgrown village, that perhaps brings with it difficulties and temptations. If we have this capital-raising power around expenditure, there is a danger within the village of not looking strategically but of looking at penny packets in which everyone has a share. I am pleased that at least we all agree that the big priority now should be Brynglas in Newport and the M4, even though it is still some distance from Swansea.

Samuel Gompers, the great trade union leader in the United States, was once asked, “What does American labour want?”. He answered, “More”. I suppose that if we were to ask the Welsh people what they want, they would say, “More”. Of course, if there is also greater responsibility and accountability, that is a bonus, but what we in Wales really want is more as we are at the bottom of most of the indices of poverty and deprivation, and there are wide regional differences even within Wales. Scotland benefits most from the Barnett formula—and it is unrealistic to expect any change before the referendum—and we in Wales appear to benefit least. I guess that we could lose out on capital expenditure depending on how the block grant is adjusted.

It is worth recalling that Wales has suffered losses in terms of major capital expenditure projects. That would have happened even if the Silk commission recommendations had been put fully into effect. To give brief examples of that, there was expenditure of £9 billion on the Olympic legacy, including a diversion of the National Lottery fund, part of which would have come to Wales. However, in spite of the claims of the noble Lord, Lord Coe, and the delivery committee that the benefits would be spread throughout the UK, 83% of the value of the contracts went to London, the south-east and the east of England, while Wales was at the bottom of the table with 0.01% of the value of the contracts. Has the Wales Office asked for compensation for what we did not receive when it had been promised to us? There will be massive expenditure on HS2. Of course, we welcome the electrification of the rail line to Swansea by 2017, but can we plausibly claim that Wales is benefiting from this vast public expenditure? Finally, I mention the Severn Bridge toll, which now costs £6.40 for cars. As I was driving over on Friday, it occurred to me that this is really a major tax on Wales and a disincentive to investment, and it is far more relevant to us than many of these proposals. Obviously the toll cannot be abolished overnight but, in my judgment, it should be reduced in a staged process.

That said, Silk makes a serious effort to tackle the major deficiency in the devolution settlement—that is, the lack of responsibility and accountability at Cardiff Bay. That will of course have major repercussions for the Welsh Government, and there should be a serious effort to ensure that we have the expertise in finance at Cardiff which is presumably now lacking.

I have already mentioned the linkage between the borrowing and tax powers. The latter depends on the referendum and, if the referendum is unsuccessful, we are left with only the minimal changes—the small beer—which has been mentioned by the noble Lord. Perhaps we need a cross-party consensus and agreement to avoid the referendum, otherwise there could be a major obstacle.

On taxation, clearly we have noted the evidence of Gerald Holtham to the Welsh Affairs Committee last week. In his view, devolving part of income tax, subject to the referendum trigger, is likely to remain a dead letter. The only people likely to vote for higher taxes are those who pay no taxes at all. That was in the ICM poll for Silk. Perhaps the most important finding of the poll was that:

“The Welsh public would prefer fiscal transfers from the rest of the UK than higher taxes in Wales”.

The First Minister has stressed also the point about fairness in Wales.

Nevertheless, perhaps like Gerald Holtham I have been too pessimistic. If the tax-raising and borrowing powers are agreed, that will raise opportunities for a new approach and go some way towards resolving the dilemma of accountability. This is an important new phase—a stage in the devolution process.