Wales: Devolution

Lord Rowe-Beddoe Excerpts

Thursday 19th July 2012 Lords Chamber

[Lord Rowe-Beddoe]

My Lords, I also thank the noble Baroness, Lady Randerson, for securing this debate—a debate on a highly pertinent and relevant matter.

The Silk commission appears to be on track to complete and publish part 1 of its work in the autumn of this year. I tend to agree with the noble Lord, Lord Elystan-Morgan, that parts 1 and 2 are the wrong way round, but so be it. If the commission does reach the conclusion of part 1 by the autumn, it will then have to be prepared to offer recommendations on a package of powers to improve the financial accountability of the Welsh Assembly. I can well imagine that whatever those recommendations are, they will receive considerable support. However, part 2 of the commission’s work, reviewing the powers of the Assembly, is likely to be much more contentious, and the linkage between part 1 and part 2 is inseparable. Businesses of all sizes and shapes can be severely hampered by uncertainty, which is disliked, and any question of tax-varying powers is also disturbing. The Holtham commission, which has already been quoted today, recommended measures in regard to income, property, land and minor taxes, but it also proposed exploratory discussions with the United Kingdom Government in regard to corporation tax.

I shall briefly highlight two or three submissions to the Silk commission which are at variance with the poll—which has been quoted on all sides of your Lordships’ House this morning—showing that 64% are in favour of tax-raising powers. I say that these submissions are at variance, but they represent quite a body of opinion. The Institute of Directors in Wales, for example, said in its written evidence that its members feared that,

“business could be seen as an easy source of cash for social or environmental policy areas that the WG has traditionally favoured”.

CBI Wales said that,

“the retention of the unitary tax system for corporation tax”,

is necessary to retain “the status quo”. The National Farmers Union Cymru said that its members had,

“a wide range of views”—

as can be expected—

“on what, if any, fiscal powers the NAfW should have”.

The NFU also said that it felt that the Barnett formula did,

“not serve Wales … well”.

Noble Lords have talked about the Barnett formula and I am going to say a little more about it. If we do not address the Barnett formula, we will simply be playing round with the deck chairs. If we do not know the baseline, what is the point of talking about anything else? We have no national accounts, and the tax take in Wales is not published at the moment. That has got to be done. If we do not have a satisfactory baseline, we will only be playing about with those deck chairs, as long as they exist.

The Barnett formula is the elephant in your Lordships’ Chamber, in the Welsh Assembly Government, in Wales and in Scotland. All your Lordships would agree that Wales has suffered, as was amply illustrated by your Lordships’ Select Committee in its report published in July 2009, which has been referred to. I was privileged to serve on that committee, which the noble Lord, Lord Richard, so ably chaired. Its first witness when we were taking evidence was none other than the noble Lord, Lord Barnett. I will quote from the noble Lord’s opening statement:

“The system I decided to use at that time to change was that any increase or decrease in the overall budget for public expenditure for the whole of the UK should be divided amongst the regions on a population basis which was roughly 85 per cent England, 10 per cent Scotland and 5 per cent Wales. Northern Ireland was taken as the same at 5 per cent but of course in Northern Ireland's case they got a lot more than that for a variety of reasons which will be fairly obvious”.

A few minutes later he said:

“I thought it might last a year or two before a government would decide to change it. It never occurred to me for one moment that it would last this long”.

It is now 35 years later and it has lasted this long. It is a totally inadequate way in which to block-fund the constituent nations of this Union. If we do not, as I said earlier, address the inequalities quickly and expeditiously, I cannot see how any meaningful changes can be agreed and implemented to a baseline which is demonstrably not fit for purpose.

It is my belief that both the previous Government and the current Government recognise—of course they do—the grave seriousness of the problem, but there seems to be no political will to address and resolve it. There are reasons why the previous Government backed away and reasons why the current Government back away. I am sure they do not have very much thought to agree with what may happen in Scotland in 2014, with the referendum. However, they are just putting off the inevitable. It has to be done.

All my life, throughout my education, I had impressed upon me—and I firmly believe and have upheld it—the great virtues of an unwritten constitution. I have in these past few years come to realise that the virtues seem to be rather less than the obvious problems and faults that now emerge in the continuous way in which the constitution is added to, bolted on to and changed in this piecemeal way. It has been mentioned already, but these continuing piecemeal changes are such that we are in urgent need of a national United Kingdom convention to consider the governance of England, Scotland, Wales and Northern Ireland in the 21st century and where we have got to. Asymmetric devolution: so crazy when you think about it. Then we have the problems of the north-east of England, which I was well aware of when I was on the Barnett Formula Select Committee. The rest of England increasingly feels that it is somehow missing out. It is not quite sure what it is missing out on, but it is missing out. Federalism, in some shape or form, is becoming increasingly attractive to me. It could address what I believe are the well-founded concerns of the inhabitants of this United Kingdom.