Wales Bill

Lord Murphy of Torfaen Excerpts

2nd reading (Hansard - continued): House of Lords
Monday 10th October 2016 Lords Chamber

[Lord Murphy of Torfaen (Lab)]

My Lords, it is a great pleasure to follow the noble Baroness, Lady Finn, and to congratulate the noble Baroness, Lady Bloomfield, on her very fine maiden speech, which we all enjoyed. As an addition to the Welsh Members of the House of Lords, she is indeed most welcome. I also pay tribute to the Minister, the noble Lord, Lord Bourne, who I know is deeply committed to the business of Wales and its prosperity. He has enormous experience in the National Assembly for Wales and as a member of the Silk commission, which provided the basis for the Bill.

I welcome the Bill: it is better—a lot better—than the draft Bill that preceded it. As several noble Lords said, it is the fourth devolution Bill to come to Parliament in two decades. I have been involved in one way or another with all of them. It reminds me of a phrase by a previous Secretary of State for Wales, no longer in the House of Commons, who referred to devolution being a process, not an event. I was not sure at the time that I agreed with that idea, but when I look at my chequered relationship with devolution over the past 30 to 40 years, I understand it. My noble and learned friend Lord Morris gave a very interesting account of the birth of devolution in the Labour Government of the 1970s. I was a rather small but prickly thorn in both his flesh and that of the Labour Government as the treasurer of the Labour No Assembly campaign in the 1978-79 referendum, in which Wales of course overwhelmingly rejected devolution all those years ago.

I began to change my mind for a variety of reasons over the following 18 years and, by the time I became a Minister in Tony Blair’s Government and served on the same committee on devolution as my noble and learned friend Lord Morris, I had become a devo-sceptic—I had been a devo-hostile before. By the time I had finished my course as Secretary of State, I had become a devo-realist. Now I suppose I am a devo-enthusiast, to such an extent that I campaigned vigorously for the extension of the Assembly’s powers in the referendum in 2011.

Incidentally, I see nothing wrong in having this gradualist approach to dealing with devolution, whether it is here or in Northern Ireland or Scotland. There is no rule that you suddenly have to have a great Bill—like the great repeal Bill—which is all that has to be said or done about devolution. Of course, it does not work like that. We have asymmetric devolution in the United Kingdom, which means that it develops differently in different parts of our country. That applies to Wales as it does to Scotland and Northern Ireland.

Does the Bill do the trick? On reserved powers, it probably does—certainly in principle, but whether it does in practice needs to be seen. In Committee and on Report on the Bill, there is plenty of opportunity to examine that aspect of the Government’s commitment to the Silk commission’s report. I think that 200 reservations are too many, even after they have been trimmed down from the previous draft, but I quite understand how they got there.

My experience of Whitehall as Welsh Secretary on two separate occasions is that when Whitehall departments are faced, as they are here, with representations from the Welsh Office, Wales Office or Assembly about different powers and responsibilities, they react grudgingly and with great sulkiness, and I suspect that this has happened here. Government departments have been asked, “What do you want to keep? What do you want to give away?”. They rarely want to give anything away and there needs to be a central power with the Welsh Secretary, but with the help of the Prime Minister, to ensure that those grudging Whitehall departments are, frankly, told what to do. That is what lies at the basis of the inadequate nature of the devolved powers. There are some which have come to Wales which are welcome—for example, those dealing with oil and gas extraction and ports, except for Milford Haven. However, I am bewildered by the air passenger duty decision. If Northern Ireland and Scotland can have air passenger duty, why cannot Wales? If it is simply because of Bristol, that is not a good enough answer and we should have another look at that.

The entrenchment, as far as we can in our constitution, of the Assembly in law and the provision about electoral law for the Assembly and local government are welcome, but, like my noble friend Lord Hain, I have doubts about two issues. One, touched on by the previous speaker, is the question of employment law. I fully understand that, generally speaking, employment law should not be devolved; it should be a reserved matter for the United Kingdom Parliament and Government. But when it touches on policies and services run by the devolved Administrations, that is different. If the Assembly and local government in Wales are, for instance, to be able to deduct trade union subscriptions from wages, why on earth cannot they do that? The world would not fall in on the other side of Offa’s Dyke if that were to happen. It is not about strikes or general issues of employment legislation; it is about practicality and realising that the Assembly and the Welsh Government have a right to deal with those issues that are devolved.

It seems to me ironic that, because of the reserved powers situation, powers that the Welsh Government and Assembly currently have could go back to Whitehall. That cannot be right. I sincerely hope the Minister will have another look at those issues as well.

My noble friend Lord Hain and others also raised the question of the referendum on income tax powers. It depended, of course, not simply on a referendum but on the Assembly agreeing to income tax powers coming to the Assembly in Cardiff. I certainly would not go to the barricades about having a referendum but I remind noble Lords that in 1997, when the people of Wales voted on the whole issue of devolution, they were not asked, as in Scotland, whether they wanted tax-raising powers. I know that it is different if it is a separate referendum, and it is not likely to be very popular, but there is an issue of legitimacy there that needs to be addressed. Certainly the Assembly should give its approval before it decides to take up the issue of income tax powers.

Another vital issue, and something that we saw here in your Lordships’ House during the passage of the Scotland Bill some months ago, is that we cannot really deal with a Bill that, in this case, deals with a referendum on income tax without looking at the fiscal framework. I do not think that it is right for Members of this House to deal with the remainder of this Bill in Committee or on Report until some progress has been made with the fiscal and financial agreement between the Welsh Government and the United Kingdom Government. That is difficult at the moment, I know, because Barnett and the whole issue of the block grant needs to be addressed.

I am rather sceptical about devolving income tax powers, not because income tax on its own is a bad thing, or that the argument about accountability is bad—it is not. However, if all it does is plug the gap in a reduced block grant, that is not right. It should be over and above it. The reason for that is that with Brexit and the loss of European funding for Wales, and with the loss of Objective 1 funding—with which I had a great deal to do all those years ago, and which has benefited Wales enormously—the Assembly needs to be able to borrow money to deal with the great infrastructure projects. The way that it could do that is to have an income stream from income tax and also from other areas, including air passenger duty. I ask the Minister to look very carefully at the progress of these discussions and to keep the House informed on them. I hope that when we come to the Committee and Report stages we can deal with these matters with greater perspective.

I agreed with the noble Lord, Lord Crickhowell, when he talked about joint ministerial committees and interministerial conferences, and about the British-Irish Council, which acts as a means by which the different devolved institutions and the Republic can get together. I do not think that we have used those properly over the last number of years. In my view there would have been no need for the Supreme Court to do what it did if there had been proper discussions at ministerial level and it had been sorted out between Ministers of both the UK and Welsh Governments. The machinery is there, it has been set up for some years now, but it should not simply be a grandstanding or a great gesture. There should be working committees between the devolved institutions and the United Kingdom Government.

This is an opportunity. I think that this Bill should go through but that it needs serious amendment. I hope that, in Committee and on Report, noble Lords will have the opportunity to go into greater detail on some of the issues that I and other Members of the House have raised this evening.