Wales: Silk Report

Lord Bourne of Aberystwyth Excerpts

Tuesday 21st January 2014 Grand Committee

Asked by

[Lord Bourne of Aberystwyth]

To ask Her Majesty’s Government what assessment they have made of the opportunities for Wales resulting from the recommendations of Part One of the Silk Report.

[The Deputy Chairman of Committees (Lord Geddes) (Con)]

The Grand Committee is again adjourned for 10 minutes.

--- Later in debate ---

[Lord Bourne of Aberystwyth (Con)]

My Lords, in opening this debate, I declare my interest as a member of the Silk commission, an unremunerated commissioner, as all the commissioners are. The work on Part 2 is soon to end. It is hard to conceive of life without the Silk commission; like taxes and motorway cones, it seems that it has always been there.

I am sure that your Lordships will agree that it is fitting that I say a few words about the late, much-loved and much-lamented Lord Roberts of Conwy. This is the first Welsh debate in your Lordships’ House since his very sad death. For more than 30 years, Wyn gave massive public service to our country—to the United Kingdom and to Wales. He fought hard and successfully for Welsh interests, and he is missed here as he is, of course, massively, in Wales. That is a considerable epitaph. On a personal note, I shall miss his wise advice, encouragement and assistance as well as his impish humour and happy demeanour. His life was a fulfilled one. Our thoughts are very much with Enid and his family.

As we debate the opportunities afforded to Wales by Part 1 of the Silk report and the Government’s response to it in the draft Wales Bill, which encompasses key aspects of the Government’s response as well as other matters, it is being debated in another place. I am pleased at that because I believe that it is important that the current momentum is not lost. It was rightly said in Shakespeare’s “Julius Caesar”:

“There is a tide in the affairs of men

Which, taken at the flood, leads on to fortune;

Omitted, all the voyage of their life

Is bound in shallows and in miseries.

On such a full sea are we now afloat;

And we must take the current when it serves,

Or lose our ventures”.

I believe that that sums up the position that we are in at the moment.

I mentioned at the outside that the Silk commission, which has been on the Silk road, so to speak, for more than two years, under the able chairmanship of Paul Silk, is considering Part 2. I do not propose to say anything about that because it would be premature, but it is now 14 months since we presented the report on Part 1. Each of the four main political parties in Wales—that is, the Welsh Conservatives, Welsh Labour, the Welsh Liberal Democrats and Plaid Cymru—has had representatives on the commission throughout its work and it also has independent members. Agreement on the Part 1 report was unanimous, and I am sure that in all honesty there was no real difficulty in achieving that unanimity. It is important that we keep that very much in mind as we go forward.

I turn to our recommendations. Consistent with the recommendations of Part 1, the Government have come down in favour of devolving landfill tax and stamp duty land tax to Wales. Admittedly, they are not massive taxes in terms of revenue, but it was very much consistent with what we recommended. Those taxes, particular the latter, could be used to make it more attractive to business to be formed in Wales. The Wales-England border, unlike the Scotland-England border, is very porous, and the opportunity to attract business and jobs into Wales should be a priority. Stamp duty land tax could be used to attract business as well as business men and women into Wales, which would provide a much-needed boost for the Welsh economy, which has been slipping in relative terms against England. It is key to raising economic standards in Wales as well as Welsh public services because the revenue that is generated could help with those services as well. I do not believe that there is a serious politician in Wales across all the parties who does not believe that expanding the private sector should be a priority; most would probably agree that it should be the number one priority because it generates the wealth that is needed to improve public services.

We also recommended the transfer of power over the aggregates levy and some limited power over long-haul flights in relation to air passenger duty. In that case, the Government have not taken heed of our recommendations, although we recognised in our report that there were issues of competition law and state aid and that the position in Europe might cause difficulty. Are these matters now under constant review so that if the position in Europe demonstrates that they could be devolved to Wales without any legal difficulty, they would accordingly be devolved?

In addition, the Government have recognised the case for devolution of 25% of the income tax system so that, even if there is no change in the rate from Westminster, the tax rate would have to be set in Wales, consistent with the tax rate from Westminster. Once again, that tax system could and should be used to encourage business and create wealth and jobs in Wales, and funding flowing from that would once again help our public services.

The commission recommended that income tax rates should be capable of variation independently, just as Gerry Holtham recommended in a report to the Welsh Government. We thought that that was the right way forward and would mean that it would be possible to create better economic conditions in Wales because of the possibility of varying the rates independently. That has not happened, and so far I have had no satisfactory explanation of why it has been rejected. There is, of course, a lock-step in Scotland and it may be that the other side of the Scottish referendum—where I hope for a no vote, which I am sure most, but perhaps not quite all, of us fervently hope for and passionately want—that will be revised. Perhaps the Minister will respond on this.

In their response to Silk Part 1, the Government acknowledged borrowing powers for Wales. That is extremely important but, apart from the limited power that has already been conceded in advance of any progress on income tax and other taxation powers, some power has now been given for the much-needed M4 relief road to improve the M4. I am sure that most people here recognise that as a priority. I tuned into Radio Wales this morning to find, as one does nearly every morning, that there was a hold-up in the Brynglas tunnel, which is a priority. However, there are other things that need doing, and they can be done only with the extended borrowing powers consequent upon having income tax as well as the other smaller taxes so that money can be invested in improvements in infrastructure, whether rail or road, in north, mid and south Wales and in things such as dualling the A40, which is certainly much needed.

Some of that borrowing can be consequent on the smaller taxes—landfill tax, stamp duty land tax and air passenger duty, if that does come, and so on—but the great bulk will be dependent on income tax being devolved. We recognise that in the report. It is what we called for, so it is no different from the plea we made to the Government and is consistent with what happens in Scotland. Borrowing is dependent on taxation powers, but it would be a much-needed boost to the Welsh economy and Welsh infrastructure.

I shall take up one issue that we saw as important for Wales: the Barnett formula. We recognised that change in the Barnett formula should go hand-in-hand with progress on taxation and borrowing and that there should be no hold-up on taxation and borrowing. It would be a big mistake for Wales if we parked this until there was a done deal on Barnett. There has clearly been some progress on Barnett. This problem has been with us for a long while and, in all honestly, we have made more progress in the past three years than we did in the previous 20 years on getting the Barnett formula looked at. Is the Minister in a position to tell us where we are on that and what progress is being made on the Barnett formula?

Under this Government and this Prime Minister and with Danny Alexander, Cheryl Gillan and David Jones we have delivered important opportunities for Wales that complete, or go some way to completing, the jigsaw for what is in reality a Parliament. However, a Parliament without taxpayers looks rather a strange sort of Parliament, and I do not think there is anywhere else in the world where that is the case. This is a necessary move, and I hope that we can all move forward together on it. We did not get everything we wanted in Silk Part 1, but we largely did, and now we must move forward.