Wales Bill

Lord Davies of Gower Excerpts

Tuesday 5th July 2016 Commons Chamber

[Byron Davies (Gower) (Con)]

Thank you, Mr Gray, for giving me the opportunity to speak about the Bill today. I am delighted to see my neighbour, the hon. Member for Swansea East (Carolyn Harris), on the Opposition Front Bench.

By and large, I am happy with the measures and the devolution of some further powers to the Welsh Assembly. To be perfectly frank, I have never been a devolutionist, but I accept where we are and we must make it work. I know that the Secretary of State for Wales, my right hon. Friend the Member for Vale of Glamorgan (Alun Cairns), and the Under-Secretary of State for Wales, my hon. Friend the Member for Aberconwy (Guto Bebb), will be doing everything that they can in the Wales Office to ensure that these further provisions are a success and contribute in a positive and constructive way to the Welsh economy and Welsh national life.

However, my concern about tax-raising powers is long standing, and it would be remiss of me if I did not raise on behalf of the people whom I represent in Gower the issue of a referendum on tax-raising powers. I am well aware and have no doubt that we have all seen enough of referendums to last a lifetime, but one on tax-raising powers for Wales would be slightly less contentious and would take place in a slightly better spirit.

The National Assembly for Wales, and devolution in Wales, has been on something of a journey over the past two decades. There have been mistakes, many potholes in the road and things that could have been done differently, but we have taken this course together and I am sure that everyone is committed to working to ensure that devolution works for the people of Wales. There is no doubt that Welsh national life has benefited from devolution, and it is important that people feel that our institutions are close to the decision-making process. There is still work to do on such issues, but things do not happen overnight at such a young institution. Speaking as a recent former Assembly Member, it is promising to have seen some progress and maturity in the Assembly as an institution since the last election.

I want to make it clear that when there has been a major decision that would greatly affect the devolution process, the people of Wales have been consulted every time. There have been close votes. Indeed, the one that created the National Assembly was on a knife edge, but the Assembly was created. The Welsh people then voted to give the Welsh Government law making powers. Now, the next stage of that process, and perhaps one of the most important, is to give the Welsh Government the power to levy taxes. It is argued that such powers are vital to economic growth, families’ security and the future prospects of the Welsh nation. If used well, tax-raising powers could create huge economic opportunities that drive our economy forward and increase the fortunes of our people, their children and things that they consider important to them. If they are used poorly, however, that could place a burden on family budgets, put encumbrances on small and medium-sized business, which are the lifeblood of the Welsh economy, and drive key companies and economic figures away from the burdens of a tax-laden Wales to Scotland, Ireland or England.

These powers are as crucial as any that have gone before, and if we are to be true to the Welsh people and to the devolutionary process that we have undertaken over the past two decades, it is only right and correct that we allow the Welsh people a voice on these powers. It is their democracy, their devolutionary process and their futures that are being decided, and some might quite rightly say that if they were worthy of being given the choice then, why not now?

The Under-Secretary has previously said that a referendum was not an absolute manifesto promise, but I contend that it was implied to the people of Wales and to my constituents that a referendum would be offered. I must admit that I am disappointed that it will not be on offer as I campaigned fiercely on the issue. However, after a great deal of soul searching, I will not vote against the Government on this. I hope that we can continue a dialogue on this issue and others to ensure that this Bill provides the very best outcome for our people in Wales.

[Albert Owen]

It is a pleasure to serve under your chairmanship once again, Mr Gray. Many points that I was going to make have already been raised by other Labour Members, especially by my hon. Friend the Member for Llanelli (Nia Griffith). None the less, I wish to discuss the idea of a referendum on income tax that was raised by my hon. Friend the Member for Cardiff South and Penarth (Stephen Doughty), who is no longer in his place. The hon. Member for Gower (Byron Davies) talked about the Conservative manifesto, but I am more concerned with the fact that, under the Wales Act 2014, it is clear that if there were to be a referendum on the devolution of powers to raise income tax, it would be held before the powers could be transferred to the Assembly.

I said on Second Reading that I am a devolutionist. I have long argued that major constitutional changes should be made by referendums, and I supported that in 1997 and 2011. However, in recent weeks I have been persuaded by some of the arguments on whether we should hold referendums on this specific issue and a range of others, including on having a go at the Government of the day. I make that point seriously, because I am not convinced that this is the major constitutional change that it once was. The Assembly already has tax-raising powers, but we do need some safeguards, which is why I will support amendment 11.

I know that you will not allow me to digress too much, Mr Gray, but let me say that I used to support the single transferable vote for elections. In theory, it is great textbook stuff, but as someone who has campaigned regularly in the Republic of Ireland, I can say that the practical implication of that has put me off. I have also been put off referendums over the past few weeks. None the less, we do need to move forward on income tax, and amendment 11 is the right vehicle to help us do that. What it suggests is that both Houses of Parliament in London and the National Assembly for Wales in Cardiff Bay would make that decision. They would have a mature debate on income tax, in which we would look at the whole fiscal framework and the settlement that we have at present.

Like my hon. Friend the Member for Llanelli, I am worried that if we were to give the Assembly the power to raise income tax, this Government would say, “There you are. You now have the tools to do the job. Get on with it and start raising your own taxes”, while they cut the block grant and other fiscal measures. Our Welsh constituencies would end up poorer, which worries me considerably.

It would be fair and right to have safeguards, and it is what the people of Wales want. This Chamber of elected Members and the second Chamber should look at the matter in greater detail along with the National Assembly for Wales. It is right to have that consensus and some safeguards to ensure that the people of Wales are not worse off as a consequence of the measure.

We all know that the Barnett formula has a flaw, and we all argued that in the 2015 election—it was in all our manifestos. I have concerns because for every pound that is spent in the UK, Wales gets £1.15 in return. It gets more than England, but not as much as Northern Ireland or Scotland. In the future, if these income tax measures were given to the Welsh Assembly by a Government who were keen to get rid of them without having that proper debate in both Houses of Parliament and the Welsh Assembly, I would worry that the people whom we are here to represent would be in a worse position. I understand the theory, but it is the practice that worries me, and for that reason, I will support amendment 11.