Wales Bill

Debate between Lord Hain and Lord Wigley

3rd reading (Hansard): House of Lords
Wednesday 18th January 2017 Lords Chamber

[Lord Wigley]

My noble friend is of course far better versed than I am in these matters. It may well be, as the noble Baroness suggests, that the parson’s nose is coming to the fore in my consideration of some of the more controversial aspects of the Bill.

As the Minister knows, the Plaid Cymru group in the Assembly voted against the legislative consent Motion yesterday, for the simple reason that the Assembly is losing some powers, as we noted in a number of debates in the Chamber in Committee and on Report. Some of those powers may well have been assumed or unclear, but none the less they were used, some for substantive pieces of legislation. The existing legislative powers of the Assembly were endorsed by a 2:1 majority in a referendum in Wales in 2011 and some of the powers implicit in that vote are now being retracted. Some of the legislation enacted by the Assembly since that referendum was made using powers that will no longer be available to the National Assembly when the Bill becomes law. That is a perfectly valid basis on which to register a protest vote, as the Plaid Cymru group did in the Assembly yesterday. None the less, I hope that the Government of Wales will make full use of the powers now available to them under the Bill.

Sadly, the Bill does not provide the long-term settlement to which the Minister referred. No doubt in the fullness of time another Wales Bill will clear the uncertainties left by this Bill and address the issues, many covered by the Silk report, that were avoided in this Bill. Undoubtedly, for example, the devolution of police, prisons and justice will drive that demand, as well as more coherent powers over energy. By the way, I noted something that did not come to the fore during our early debates: the Home Office, which was then under Theresa May as Home Secretary, failed to give evidence to the Silk commission on these matters. I am sure that the Minister will recall that from his work on that committee. A whole new debate will arise, post-Brexit, on financial levers and further tax-varying powers.

Finally, I will say a word of tribute to the noble Lord, Lord Bourne, for the way in which he has conducted the passage of the Bill. His has been a stalwart performance—single-handed most of the time—and we admire the way in which he has kept on top of his brief throughout, although at times we disagreed with that brief. His experience, both as a key member of the Silk commission and a former party leader in the National Assembly, undoubtedly stood him in good stead in this matter. Many of us feel that there were times when he had to defend a government line when, in a previous incarnation, he may well have taken a different line. None the less, I hope that he will be recognised by his colleagues for the work that he has done and I hope that they will take note in future of the advice that he gives on matters relating to Wales. I hope that the Bill will help to the extent that that is possible within its limitations. I therefore wish well those who will live within the framework that is now being enacted.

[Lord Hain (Lab)]

My Lords, I echo the remarks of the noble Lord in thanking the Minister for the way in which he has handled the Bill. Its passage would have been a lot bumpier without his conciliatory approach. I also echo what he said about his officials, including the excellent Geth Williams, who once had the dubious privilege of working for me. I am glad that he survived to serve on the Bill, although what he makes of the dog’s breakfast that it serves up we will never know, his being a professional civil servant.

Finally, I appeal to the Minister. In the light of the Division on the question of employment and industrial relations last week, on which there was a tied vote, I have said to him privately and I repeat publicly that there is a way in which the Government could, even at this late stage, when the Bill goes back to the Commons, bring forward an amendment to tweak the amendment that was moved. As I said, there was a tied vote in the Lords last week. He could do that in a way in which the Government could overcome their reservations and satisfy everybody concerned. He will know that the Assembly has since voted on a Bill in this area. The issue is on its way to the Supreme Court. He can avoid that. It is not too late.

Wales Bill

Debate between Lord Hain and Lord Wigley

Committee: 3rd sitting (Hansard - continued): House of Lords
Tuesday 15th November 2016 Lords Chamber

[Lord Wigley]

My Lords, in view of the time, I shall try to truncate my comments. The amendment would give the National Assembly as of right a proportion of VAT revenues and so give Wales the same tax power in this regard as enjoyed by Scotland. It would also open the possibility, post Brexit, for some variation of VAT levels in Wales to help provide the cash stream needed to service capital investment programmes, as discussed earlier in Committee.

It is widely acknowledged, by the Institute of Welsh Affairs and others, that devolution of public spending responsibilities should be accompanied by the assignment of significant own sources of revenue. Wales’s funding framework has been highly unusual from an international perspective: there are not many Governments in the world with significant legislative and spending powers who do not also have a correspondingly important responsibility for raising tax revenues. If the UK Government are serious about securing a lasting devolution settlement for Wales, the devolution of VAT should be considered as part of a package of devolved fiscal powers.

The Scotland Act 2016 stated that revenues from the first 10 percentage points of the standard VAT rate would be devolved by 2019-20. The current UK VAT rate is 20%, so half of all the VAT raised in Scotland will be kept in Scotland. A recent article published by the Wales Governance Centre states that:

“Welsh VAT revenues have been far more buoyant than other major taxes, such that VAT has become the largest source of revenue in Wales (in contrast to the rest of the UK and Scotland, where income tax remains the largest source)”.

The report entitled Government Expenditure and Revenue Wales 2016 concluded that around £5.2 billion was raised in VAT revenue in Wales in 2014-15. With a similar deal to Scotland, around £2.6 billion would be assigned to the Welsh Government. There would of course be an offset from the Barnett block for however long that remains in its obsolete and unfair current format. Based on the report’s figures, it would mean that more than a third of total devolved expenditure would be financed by devolved and assigned taxes, up from 21% with currently proposed devolution.

I hope that the House will agree that this fiscal lever is essential to secure the success of the Welsh economy. I beg to move.

[Lord Hain]

My Lords, I normally agree with my noble friend on devolution matters, but I want to question the consequences of the amendment. If we look at change in income tax take in the UK and Wales during the past few years—indeed, since 2010-11—we see that income tax receipts have grown across the UK by 6% and in Wales by only 2%. Notwithstanding the noble Lord’s point that VAT represents a much larger proportion of tax receipts in Wales, I would be very surprised given the lower GDP and lower spending per head in Wales if Wales did not do badly out of the devolution of VAT. I have to oppose the noble Lord on that basis. Given his belief in an independent Wales, I understand ideologically why he would want just about everything devolved, but this measure would be folly in the context of the economic, financial and tax realities of Wales’s economy relative to that of the UK.

[Lord Wigley]

VAT is very much more stable and would be less likely to go down by the nature of the expenditure and the pattern of finances in Wales. There is that problem with income tax, but VAT has a much better prospect and I believe that we really should have it.

[Lord Hain]

The noble Lord may have a point in the sense that more VAT proportionately is paid by people on low incomes, and there are relatively low incomes in Wales, but I would want to see the figures. I would want to have the drains up on this proposal before I went anywhere near it, because I would not want Wales to be short-changed by such a reform. On that basis, I oppose the amendment.

Wales Bill

Debate between Lord Hain and Lord Wigley

Committee: 3rd sitting (Hansard): House of Lords
Tuesday 15th November 2016 Lords Chamber

[Lord Hain]

Before the noble Lord sits down, is he now saying that he will not be moving his Amendments 58 and 97 on the devolution of the Wales and Borders franchise? I was going to speak about that briefly.

[Lord Wigley]

As I understand it, the Government have moved on the Wales and Borders franchise. Perhaps the Minister can respond and there will be an opportunity for the noble Lord, Lord Hain, to intervene.

[Lord Hain]

I was going to say that I strongly support Amendments 58 and 97, in the absence of an assurance from the Minister to the contrary, because there is a strong case—following the St David’s Day agreement, the work of the Silk commission and, indeed, the logic of the case—that responsibility for this franchise should lie with the Welsh Government. To avoid taking up any more time, I hope the Minister will confirm that it will be devolved and the Government will bring forward an amendment to that effect at some point, presumably on Report.