Wales Bill

Debate between Lord Murphy of Torfaen and Lord Bourne of Aberystwyth

Report: 2nd sitting (Hansard): House of Lords
Tuesday 10th January 2017 Lords Chamber

[Lord Murphy of Torfaen (Lab)]

My Lords, as a co-signatory to my noble friend Lord Hain’s amendment, I support everything that my noble friend Lord Kinnock just said about the need to review the operation of devolving some income tax to Wales.

I congratulate the Minister and the Welsh Government on producing the fiscal framework. I defy anyone to understand it on their first or indeed second reading of it, but by the time you get to the third you get the general impression that it is an improvement in the finances for Wales over the last number of years. An improvement indeed: I have been living with the Barnett formula for three decades, and there is no question in my mind that the fiscal framework now before us is an improvement. However, there is no point in improving on the block grant if you then start losing out because of the income tax side of it, and that is the point that my noble friends have put. The important issue, as I am sure the Minister would agree, is that in the annual review of financing for Wales the impact assessment of this change will be very seriously examined. I am convinced that the comparisons between Wales and the whole of England mean that Wales could be disadvantaged unless we redress that in some way.

I support noble Lords who have dealt with the issue of Cardiff Airport. My noble friend Lord Kinnock, a former European Commissioner for Transport, put it distinctly: if we could give some advantage to Cardiff with regard to long-haul flights, that would not just be a benefit for Wales; it would benefit a whole swathe of England as well. I cannot for the life of me understand why the Bristol versus Cardiff argument applies in this case. Bristol has no runway capable of taking these long-haul flights. Cardiff has, and it is a very good runway. That could help the rest of the country as well as Wales, and I think the Minister must be persuaded that right across the House today people have said that this is a reasonable amendment that would not affect the Government’s position with regard to air passenger duty generally. I think the Government are wrong on that, by the way; if you devolve it to Northern Ireland and Scotland, you should devolve it to Wales too. Still, if Bristol is blocking this proposal, in the case of long hauls there is no block that the Government can actually agree to.

I hope the Minister will look favourably on all the different points that have been made today because they are made with the knowledge that over the last weeks and months the Government have accepted different points that have been put by Members of the House across the political spectrum. The Government have conceded on many issues, and I see no reason why they could not concede on this small but important point.

[Lord Bourne of Aberystwyth]

My Lords, I thank noble Lords who have participated in the debate on the amendments in this group. Much of their contribution has been persuasive and helpful.

I thank those who have acknowledged the progress made in relation to the fiscal framework and the agreement. I stress that the agreement has been made between the UK Government, by the Treasury, and the Welsh Assembly Government, via the Finance Minister and the Welsh Ministers in the Welsh Government. To that extent, this is something that the Welsh Government have welcomed. The noble Lord, Lord Hain, in a very fair analysis, said I had welcomed this agreement for the long term, which indeed I have. More importantly, perhaps, it was welcomed for the long term by Mark Drakeford, who said he regards the agreement as ensuring there will be,

“fair funding for Wales for the long term by implementing the funding floor recommended by the Holtham Commission”.

Those are his words. He is yet to give a full analysis, to be fair, but that is the press statement that he put out and it is notable that that is the view of the Welsh Government. I also stress that the Welsh Assembly will of course be having a say on the legislation in general when it considers the LCM, so no doubt we will be giving a view on this important part of the legislation, as well as the rest of the legislation, when it delivers that view. That is something that we anticipate.

I turn to Amendment 143A in the names of the noble Lords, Lord Hain, Lord Kinnock and Lord Murphy, which all three noble Lords have spoken to very persuasively. As I have indicated, we have a requirement under existing legislation, which we will take forward in relation to this new legislation, of an annual report that happens in November/December each year. We will seek to ensure that the impact assessment—the information that the noble Lords are seeking—is incorporated in that report. As I have indicated, it is partly the Treasury, partly the Wales Office and partly the Welsh Government; all three contribute separately to that report. I will seek to ensure that that information is there because noble Lords have made a very fair point. The Government have already published two such reports, so there is a template. Of course, I appreciate that the significance of the new income tax powers makes the next report somewhat different in nature.

--- Later in debate ---

[Lord Bourne of Aberystwyth]

I am sure I can and I will make endeavours to do so. Clearly, this is related to the way in which the levy operates. This is a matter being conducted from Westminster, so I will endeavour to get this information for noble Lords. What I cannot do is indicate how it will be spent. This is a matter for the Welsh Government and the National Assembly for Wales.

I turn now to Amendment 80 on air passenger duty. In doing so, I wish to say how sorry I am that the noble Lord, Lord Rowe-Beddoe, is not in his place because of indisposition. I am sure we all wish him a speedy recovery. I know that he has very strong views on this issue; I have discussed it with him on many occasions. The amendment was spoken to formidably by the noble Baroness, Lady Finlay, with other noble Lords speaking in support.

The Government have considered the case and options for devolving APD to the Assembly, as we committed to do in the 2015 St David’s Day agreement. From extensive debates in Committee, noble Lords will be aware that there is an issue about state aid, particularly in relation to but not limited to Bristol. The noble Lord, Lord Kinnock, correctly indicated a competitive element with Birmingham. There is a competitive element with airports in the United Kingdom which is obviously accentuated with those that are geographically proximate. While we remain members of the European Union there is clearly an issue with regard to state aid rules that cannot be lightly ignored. I assume that that will not be the position once we complete the Brexit discussions and implement it, but that is some way into the future. I put that important issue on one side.

[Lord Murphy of Torfaen]

Is it not the case, though, that the state aid argument would apply equally in Scotland and Northern Ireland?

[Lord Bourne of Aberystwyth]

The rules certainly apply equally throughout the EU but you have to establish that there is a competitive element. The distance from Edinburgh to Newcastle, which would be the next nearest airport where there is no devolution of APD, is considerably longer—and, I think, is a considerably tougher journey—than that between Cardiff and Bristol. I think noble Lords would accept that. I suspect that it is longer than the distance from Cardiff to Birmingham as well, so there is that difference. In Northern Ireland there is a different issue. The issue there concerns the presence of an airport in a different member state rather than within the same member state. Therefore, the rules are the same but obviously the geographical issue is somewhat different.

Wales Bill

Debate between Lord Murphy of Torfaen and Lord Bourne of Aberystwyth

Monday 7th November 2016 Lords Chamber

[Lord Murphy of Torfaen (Lab)]

I support this amendment, the first of a series dealing with individual areas where the British Government do not want certain things devolved to the Welsh Government. I understand why that should be the case in some areas but the onus is squarely on the United Kingdom Government to explain why it should not be the case in others. I am not convinced that Milford Haven should be any different from any other Welsh port. If the issue is about the devolution of ports, the ports should be devolved, both Milford Haven and the rest of them. There may well be a reason but, given the general situation in regard to all these functions, as we go through them today and next week, I repeat, the onus must squarely be on the Government to explain why, under this new system of reserved powers, the Welsh Government cannot have responsibility for them.

[Lord Bourne of Aberystwyth]

My Lords, I apologise for being blindsided on the government amendments in this group but perhaps I may turn to them first before answering the points raised by noble Lords.

Through the government amendments we will give the Welsh Ministers new powers and more flexibility to make grants or payments to encourage freight modal shift from road to water. The Welsh Ministers are already able under Section 272 of the Transport Act 2000 to make grants or other payments for carriage of freight on inland waterways where this is wholly within Wales, but neither the Secretary of State nor the Welsh Ministers are able to award a grant for a cross-border inland waterway service. This relates to the porous nature of the water, canals and so on to which I referred earlier. Two separate grants would be needed—one for the section of waterway in England and the other for the section of waterway in Wales. The amendment will enable a single grant to be made by either or both the Secretary of State or the Welsh Ministers for a cross-border service on inland waterways. I hope noble Lords will acknowledge that that is very sensible. This already happens for rail in the mode shift revenue support scheme, which is a scheme for rail and inland waterways.

The amendment would also give the Welsh Ministers new powers to award grants or other payments under Section 272 of the Transport Act 2000 for freight services by sea to, from or within Wales. At present only the Secretary of State is able to do so. Although the waterborne freight grant scheme is a Great Britain-wide scheme, the Welsh Ministers do not currently have the same powers as the Scottish Government to award grants under it. The amendment will put that right.

Joint and concurrent powers will offer the flexibility to make awards for cross-border freight services by inland waterway and sea. They also allow for the possibility that there could be circumstances in which the Secretary of State might wish to provide support for services to or from a reserved trust port in Wales and another port in Wales.

Government Amendments 83C, 83D and 107B transfer further powers to the Welsh Ministers to allow them to make loans to harbour authorities under the Harbours (Loans) Act 1972 and the Harbours Act 1964. They enable the Welsh Ministers to make the loans out of the Welsh Consolidated Fund and they apply requirements for the loan accounts to be certified by the Auditor-General for Wales and laid before the Welsh Assembly. The effect of the amendments is to ensure that in relation to harbours wholly in Wales, other than reserved trust ports, the Welsh Ministers can fully exercise the loan-making functions currently conferred on the Secretary of State, subject to equivalent controls.

The Bill already provides for the Welsh Ministers to make loans under Section 11 of the Harbours Act 1964 to harbour authorities for works to harbours wholly in Wales, other than reserved trust ports. The first amendment will also allow Welsh Ministers to make loans to these harbour authorities to pay off capital debts, temporary loans and overdrafts as provided for by the Harbours (Loans) Act 1972.

The second amendment inserts new provisions into Section 43 of the Harbours Act 1964 which supplement the transfer of loan-making powers under the Harbours Act 1964 and the Harbours (Loans) Act 1972. These comprise giving the Welsh Ministers the power to set the repayment terms of any loans made; enabling the issue to the Welsh Ministers of sums to make the loans from the Welsh Consolidated Fund; requiring that all loan repayments must be paid into the Welsh Consolidated Fund; and requiring the Welsh Ministers to prepare annual accounts in respect of loans issued to and repaid by harbour authorities and the Auditor-General for Wales to certify and report on the accounts of the Welsh Assembly.

The noble Baroness, Lady Morgan of Ely, has tabled a number of amendments which would remove reservations for reserved trust ports from the Bill and indicated her intention to oppose that Clause 32 stand part of the Bill, which would remove the definition of a reserved trust port. Amendments 61 to 64 seek to remove reservations for and other references to reserved trust ports from Schedule 1, which reserves legislative competence for these ports. Amendments 84 and 86 to 95 seek to remove reservations for and other references to reserved trust ports from Clauses 29, 30 and 33, dealing with the transfer of the executive functions to Welsh Ministers. Clause 32 does not contain any reservations but defines the term “reserved trust port”, and its removal from the Bill would be consequential upon the amendments The Government believe that the reservations for reserved trust ports are an essential element of the Bill and therefore cannot support the amendments of the noble Baroness.

However, in the light of the comments made—particularly by my noble friend Lord Crickhowell, who obviously is well acquainted with the trust port—but without any promises, I will have another look at this issue. The point of the noble Baroness, Lady Randerson, that we should not be slavishly mirroring Scotland, is well made. We have to look at the issues specifically on the basis of the nature of Wales. It is right that this would be the only port caught within the definition by some margin—all the other ports are much smaller. Some noble Lords have said that this is just replicating the current position but that is not true because other trust ports would be transferred under the proposals in the Bill.

It is right that this is significant in relation to LNG—I have got 63% but we will not argue about 1%—and gas. It was also at one stage suggested by the current First Minister as a base for the nuclear fleet. The Government are not considering that but it gives an indication of the important strategic role played by Milford Haven. It is a deep water port of unique significance. As I say, I will have another look at the issue but without making a promise on the conclusion.