Wales: Silk Report

Lord Thomas of Gresford Excerpts

Tuesday 21st January 2014 Grand Committee

[Lord Thomas of Gresford (LD)]

My Lords, I echo what has been said about Wyn Roberts. I spoke for the Liberal Democrats and he for the Conservatives when the devolution Bill went through in 1998 to 1999. He was not a party man, he was a Welshman, and he did much to deal with the choleric contributions of some of his colleagues on that Bill. We travelled down together occasionally from north Wales and shared a taxi. I was pupil to his brother, Eifion Roberts. I have had a close connection with him and I shall miss him. I send our respects to Enid, his wife.

This week, the coroner for north-east Wales, John Gittins, held an inquest into the death of Mr Fred Pring of Mynydd Isa, near Mold. Last March, he was suffering from severe chest pains and feeling ill when his wife telephoned 999 and requested help at one o’clock in the morning. There was no response. She made four phone calls, the last at ten to two to tell them that he had died. The reason, it appears, was that the five ambulances on call were outside the Maelor general hospital in Wrexham waiting to unload patients who were already on board. One had been there for more than five hours and another for an hour and a half. At the weekend, Mr Carwyn Jones, the First Minister, told the BBC that Wales was far behind England in accident and emergency response times because we were more honest about our statistics and that he wanted to change the targets.

Today we hear that all routine planned surgery across north Wales this week has been postponed due to “increased pressure”. Emergency operations are to be carried out at Abergele. This affects Wrexham, Ysbyty Gwynedd and Glan Clwyd. The NHS, said the First Minister on Sunday on the BBC, is open to improvement. We also hear today that the Welsh Health Minister has announced the closure of neonatal services at Withybush hospital.

Six of the 22 local authorities in Wales are under special measures with regard to education. When the PISA results were published last month, they showed Wales the worst country in the United Kingdom. I need not repeat the statistics because your Lordships will be well aware of them.

The Labour Government in Wales are a total disaster, and you wonder how they get away with it. On the economy, we learned last month from the latest figures on GVA, the measure of value of goods and services produced in the nations and regions in the UK, that Wales is the bottom of the pile. This month in my home area of Wrexham, Kellogg’s have announced 140 job losses; last month, Sharp announced that 250 permanent jobs and 365 agency staff were to go; and 230 workers have lost their jobs at the First Milk cheese-packing plant in Marchwiel.

When Wyn Roberts, other noble Lords who are in this Room and I campaigned for devolution in 1979 under the leadership of the noble Lord, Lord Elystan-Morgan, and again in 1998, we expected that a Welsh Government would successfully lead the way. In the major fields which were devolved to the Welsh Assembly, Labour-led Governments for the past 14 years have failed. I will never forget one Labour parliamentary candidate who once said to me that I was too concerned as a Liberal about the voters: “Don’t worry about them”, he said. “We don’t worry about them. They’ll vote for us whatever we do”.

It is not surprising therefore that the Labour Government are seeking to avoid accountability. At the moment, they are refusing to hold a referendum which would implement the proposed income tax changes under Silk. “We must reform the Barnett formula first,” says Mr Carwyn Jones. I have looked up a speech I made in this House in 2001, in which I said that it is essential that a needs-based formula be devised, taking into account factors such as deprivation, population sparsity and the local environment. We campaigned as Liberals, and I know that Plaid Cymru campaigned for changes to the Barnett formula over the same period. While the Labour Government were in the heyday of their power, the noble Lord, Lord Barnett, expressed his embarrassment at having his name linked to the formula. The Labour Government did absolutely nothing. In putting it forward as a precondition, Mr Carwyn Jones can wait for ever before there will be changes.

We Liberal Democrats would have preferred to have had the flexibility of income tax powers without the Scottish lock-step model. Wales is not Scotland. The Silk report pointed out in appendix F that the latest transborder travel-to-work figures are at their highest in north-east Wales, with 34,500 people travelling from Flintshire and Wrexham into England to work and 16,000 travelling in the opposite direction each day. I can appreciate the Government’s view that the temptation to live in the country with the lowest tax rate might cause some upheavals in Wales that it would not cause in Scotland. Nevertheless, I regret that that flexibility has not occurred.

However, sharing the income tax base between Westminster and Cardiff Bay will significantly enhance the accountability of the National Assembly and the Welsh Government. Income tax contributes the greatest proportion of tax revenue in Wales and will provide a relatively stable revenue stream. Stamp duty, if properly used, could help to lower the cost of developing and buying houses, and we would hope that control over business rates would encourage business investment. In our submission to the Silk commission we asked for borrowing powers equivalent to those of the Scottish Parliament, specifically 10% of the capital budget, and we hope that that is what we will ultimately obtain.

These additional funds of capital and revenue must be wisely spent, and the record of Labour Government in Wales is so poor that a further priority must be to make sure—to adopt the analogy used by the noble Lord, Lord Anderson—that the village has a new head man and a governing council as soon as possible. I am sure we can get cross-party consensus on that.

--- Later in debate ---

[Lord Wigley (PC)]

My Lords, I join noble Lords in mourning the loss of the late Wyn, Lord Roberts, of whom I had an earlier opportunity to speak in the Chamber. I very much thank the noble Lord, Lord Bourne, for facilitating this short debate and also pay tribute to his work on the Silk commission and that of other commissioners, including Plaid Cymru’s Dr Eurfyl ap Gwilym and, particularly, Paul Silk himself.

I am sure that the noble Lord, Lord Bourne, would agree that among the most remarkable aspects of the Silk commission was that, first, unlike Scotland, it was drawn up with terms of reference to which all four parties in Wales signed up and, secondly, its first report secured the support of all commission members. I am sure that the noble Lord would confirm that such agreement was achieved by some give and take and that the report was presented as a balanced package, not one to be cherry-picked. I regret very much that the Government, driven as they are by the Scottish agenda, could not accept the package in its entirety.

I regret that for two substantive reasons. First, by insisting on a lock-step on income tax, the Government denied the Assembly the significant degree of policy flexibility it might have otherwise enjoyed, and with it the possibility of creating a far-reaching investment programme that could stimulate the Welsh economy. Goodness knows that we need that. Business rate flexibility and stamp duty land tax are certainly worth having but are not in themselves enough. Secondly, by acting in this way, the UK Government have let the Welsh Prime Minister off the hook. Carwyn Jones has waxed eloquent this week on how the Tories and their Lib Dem backers squandered the opportunity provided by Silk. It has been enough of an excuse for Mr Jones to step away from a referendum, for what is the point of having a referendum on income tax powers that are unusable?

Had the Silk report been adopted in its entirety, with all the parties represented on the commission on board, it would have been impossible for Labour or any other party to wriggle out of having a referendum. A yes vote could have been secured again, as happened in the 2011 referendum when all four parties were united. I pay tribute to the noble Lord, Lord Bourne, in that context. That yes vote would have started making Wales’s Government truly answerable to the people of Wales in having to justify their expenditure and stewardship of Welsh taxpayers’ money. I cannot understand the Government taking this course of action which at one stroke negates everything they purport to advocate in terms of democratic answerability in Wales. Has Alex Salmond’s shadow really got them on the run to that extent?

I also respectfully disagree with the noble Lord, Lord Thomas of Gresford, and do not join him in talking Wales down in terms of the National Health Service. Goodness knows that there are people working hard enough and with great commitment in the health service in Wales, and they deserve our thanks. Of course, some bad decisions have been made by the Welsh Government, as by the Westminster Government. The noble Lord quoted a highly unfortunate situation in the NHS in Wales this week. One of the worst blind alleys that the Assembly pursued with regard to the health service was the creation of 22 local health boards, but I suspect that the noble Lord’s party supported it in doing that. The truth is that Barnett underfunding deprived the Assembly of some £5 billion since its establishment, and health and education in Wales have been underfunded as a result.

[Lord Thomas of Gresford]

I am sorry to take up the noble Lord’s time, but is that not the point? As soon as the NHS and education are under attack, what do they blame? It is the Barnett formula for failing to provide funds. We need accountability in this.

[Lord Wigley]

Of course we need accountability. That is why we do not need the lock-step, so that we get the tax linked in. I agree with the noble Lord on that. The fact is that if there was adequate funding, we would not have had some of the cutbacks that have been necessary in the health service in Wales.

The questions I wish to put to the Minister are these. First, could an income tax-sharing model be adopted before reform of the Barnett formula? Secondly, will the borrowing powers set out in the draft Bill include the old WDA borrowing powers, or is that a separate amount? Thirdly, is the M4 relief road dependent on getting these borrowing powers? Fourthly, how much of the £500 million borrowing limit will be available before a referendum? Fifthly, does the revenue stream from the minor taxes—the land tax and the aggregate levy—constitute enough to support the £500 million borrowing capacity? Lastly, the draft measure says that a yes vote in a referendum would allow the Secretary of State to raise the borrowing limit, but raise it by how much?

If I may put one key question to the Labour Front Bench, as Carwyn Jones has said that he will not hold a referendum until the Barnett formula has been replaced or radically amended, will the Labour Party give a copper-bottomed commitment that if it forms the next Government at Westminster after the 2015 election, it will reform or scrap Barnett as a matter of urgency?