Wales Bill

Owen Smith Excerpts

Wednesday 30th April 2014 Commons Chamber

[Owen Smith (Pontypridd) (Lab)]

I beg to move amendment 9, page 1, line 5, leave out subsection (1) and insert—

‘(1) GOWA 2006 is amended as follows.

(2) Leave out subsection 3(1) and insert in substitution—

“( ) The poll at an election to the National Assembly for Wales is to be held on a Thursday on a date to be determined by a Resolution of the National Assembly for Wales.”.

( ) Subsection 3(2) is amended by—

(a) leaving out “If the poll is to be held on the first Thursday in May”; and

(b) in paragraph 2(a) by leaving out “that day” and inserting “polling day”.

( ) Leave out sections 4 and 5.

( ) Section 13 is amended by inserting after subsection (1)(c)—

“(1A) The order may not include provision about the date of an election to the Assembly.”.’.

[The Second Deputy Chairman of Ways and Means (Dawn Primarolo)]

With this it will be convenient to discuss the following:

Amendment 30, page 1, line 6, at end insert ‘and after the words “order under”, insert ‘section 1A or’.

Amendment 10, page 1, line 8, at end add—

‘(3) A Resolution of the National Assembly for Wales under subsection (1) may not determine a date for the poll at an election to the Assembly that is the same as the date known or reasonably expected for a parliamentary general election as derived from the provisions of the Fixed-term Parliaments Act 2011.’.

Amendment 31, page 1, line 8, at end add—

‘(3) After section 3(1) of the GOWA 2006 insert—

(1A) A poll for an ordinary general election to the National Assembly for Wales may not be held within six months of the date of a general election to the United Kingdom Parliament.”.’.

Clause stand part.

[Owen Smith]

It is a pleasure to serve under your Bristolian and neighbourly chairmanship, Ms Primarolo.

Clause 1 relates to the timing of elections to the National Assembly for Wales. It is a response to the five-year term that has now been established for elections to this House. Our amendments 9 and 10 are probing amendments that seek to explore the Government’s willingness to concede the principle that the Assembly needs to have greater control and command over elections to it. That is what we are testing with our amendments.

[Mr Mark Harper (Forest of Dean) (Con)]

I am pleased the hon. Gentleman said that these were probing amendments, but I notice that he has not troubled the Committee with an explanatory note, which is disappointing. My reading of the amendment is that it removes any necessity for an election to be held to the National Assembly. It allows the National Assembly for Wales to have no more elections ever. It appears to be the “Labour doesn’t want to have an election ever again in Wales” amendment.

[Owen Smith]

I hoped that we would have a serious debate today and serious interventions from colleagues across the Chamber. Obviously it is not the intention or the effect of the amendment to get rid of elections to the National Assembly for Wales, not least because we want those elections not to coincide with the changes made in the House by the hon. Gentleman when he was pushing through the gerrymandering legislation relating to elections to the House and the five-year term that we now endure. “Endure” is the right word, given how little business is being brought forward by the Government and how little work we have to do in the House. Today we have an important and serious Bill before us and I hope the hon. Gentleman will engage with it in a serious manner.

[Mr Harper]

Will the hon. Gentleman give way?

[Owen Smith]

No. We all want to get on with the serious business before the Committee, not nonsensical point-scoring.

These are probing amendments. They explore the extent to which the Government agree with us that, in principle, it should be with the consent of the National Assembly that changes are made to elections that affect it.

[Mr Mark Williams (Ceredigion) (LD)]

I, too, am glad that these are probing amendments. I very much agree with the principle that the hon. Gentleman is establishing that these responsibilities should be devolved to the National Assembly, but what safeguards does he envisage operating there to ensure that gerrymandering, of which he has, sadly, accused the Government, could not occur in the National Assembly?

[Owen Smith]

The clear principle to which we are responding with these amendments was outlined by the Welsh Government in their response to the Green Paper produced two years ago. For the information of the Committee, that stated that

“no change to the Assembly’s current electoral arrangements should be made without the Assembly’s consent. This is the fundamental constitutional principle in issue. It is a necessary consequence of a constitution based upon the principle of devolution.”

That is a clear expression from the Welsh Government on the centrality of their view in any changes to legislation which affect the elections to their Chamber—to the Assembly in Wales. That is something we wish to explore today with the Government.

Clearly, the Bill arises from the shift to a five-year fixed-term Parliament for this place. Three separate pieces of legislation needed to be amended as a consequence—the Scotland Act 1998, the Northern Ireland (Miscellaneous Provisions) Act 2014, and now the Government of Wales Act 1998. Labour is not opposed to fixed-term Parliaments, as the hon. Member for Forest of Dean (Mr Harper) will recall. In previous manifestos, including the last manifesto, Labour has consistently pledged to shift to fixed-term Parliaments, but we have consistently said that a five-year fixed term for any institution was too long.

[Jonathan Evans (Cardiff North) (Con)]

I am grateful to the hon. Gentleman for the tone with which he started his speech. Will he explain the rationale for his sticking with a Thursday? Since he is aiming to give responsibility to the National Assembly and to let it decide the issue entirely, why does he say that the poll should be held on a Thursday? He will be aware of a growing body of opinion among those who undertake electoral research, who look to examples on the continent, where elections are held at weekends—traditionally on Sundays—or opportunities when people may be able to participate more in the electoral process. Perhaps he can help us to understand why, since he is putting the proposition that it is entirely a matter for the National Assembly, he has restricted polling day to a Thursday.

[Owen Smith]

It is a great pleasure to serve under your chairmanship, Dr McCrea. I had not spotted that you had arrived, for which I apologise.

The simple answer to the hon. Gentleman’s question is that this is, of course, the custom, practice and protocol in British elections for all institutions. I hear what he says about the interesting debate about whether, in an era of great cynicism towards and disinterest in and disengagement from politics, we ought to expand people’s opportunities to vote. Labour Members are looking seriously at that and have already suggested that it ought to be looked at, but for the purposes of this Bill and the principle under discussion, as opposed to the issue raised by the hon. Gentleman, it seemed simpler to stick to the customary practice of a Thursday. That is why we did not suggest a change.

[Huw Irranca-Davies (Ogmore) (Lab)]

Perhaps the hon. Member for Cardiff North (Jonathan Evans) will have an opportunity to table a probing amendment on that issue. Why does the Bill refer to five years? I understand that that is how this Parliament currently operates, but is there now an accepted body of wisdom that says that five years should be the default position of any democratic Assembly or Parliament?

[Owen Smith]

The reality is that the accepted, orthodox wisdom of electoral experts around the world, certainly in Britain, is that five years is probably too long and that four years would be more appropriate. Certainly in the history of this place, four years has been not the norm, but the exception. Ordinarily, over the long term, elections to this place have taken place rather more frequently than that. Our primary concern—this reflects the view of all parties in the National Assembly for Wales, particularly the Welsh Labour Government—was to ensure that the elections for this House and those for the National Assembly did not coincide on the same day, which would have been the case without the changes introduced by this Bill. Nevertheless, it struck us as important to probe the Government’s view of the degree of consent they ought to seek from the National Assembly and the respect they ought to show to devolution when making changes to an election that is not ours. I think that the view of most people—it is certainly the view of most experts—is that five years is too long.

[Mr Harper]

On Second Reading, the hon. Gentleman responded to a question asked by, I think, the hon. Member for Rhondda (Chris Bryant) by kind of giving the impression that Labour’s policy, if it were returned to power, would be to revert to a four-year term for this House and amend the Fixed-term Parliament Act 2011. Will the hon. Member for Pontypridd (Owen Smith), for the convenience of the Committee, confirm that?

[Owen Smith]

The hon. Gentleman claims that I implied that, but I do not think I have been explicit on the matter, either then or now. When we last debated the issue, we were clear that the majority opinion is that four years is better than five. Another orthodox opinion in Britain and elsewhere is that too many changes to constitutional matters are bad for the electorate and that constantly chopping and changing for partisan reasons—as the hon. Gentleman did when introducing the 2011 Act—is bad for democracy in Britain. In the light of that, and in a period in which people are disengaged from politics, we may choose not to be partisan and not to pursue that sort of strategy when we win the next election.

[Hywel Williams (Arfon) (PC)]

I want to refer to the point made by the hon. Member for Cardiff North (Jonathan Evans). There is a great deal of virtue in considering holding elections on days other than a Thursday. That is the practice in other countries. Perhaps the hon. Member for Pontypridd (Owen Smith) can help the Committee with his historical knowledge: have elections in the UK always been held on Thursdays? I seem to remember that at some point in our history they were not.

[Owen Smith]

I believe that the hon. Gentleman is right. Elections have not always been held on a Thursday. However, in recent memory and certainly in the last century, elections have mainly been held on a Thursday, which is why we are sticking to it in amendment 9. That is not the substantive point that we are trying to make; it is an interesting debating point, but not one that we need to bother the Committee with any longer.

With that, I conclude my remarks on our amendments to clause 1. We do not intend to put them to the vote, but we want to hear the Government’s views on the need for them to engage properly with, seek proper consent from and pay proper respect to the devolved Administration in Cardiff.

[Mr Harper]

It is a great pleasure to serve under your chairmanship, Dr McCrea.

I want to pick up the hon. Member for Pontypridd (Owen Smith) on his response to my intervention. I was deadly serious. If he wants to intervene, I will happily take his intervention, but I am afraid that his amendment would do exactly what I said it would do. It would amend section 3(1) of the Government of Wales Act 2006, which states that a poll

“at an ordinary general election is to be held on the first Thursday in May in the fourth calendar year following”

the previous one. In other words, the provision insists that there has to be an election every four years. His and his hon. Friends’ amendment would remove section 3(1) of Government of Wales Act and simply provide that the poll

“at an election to the National Assembly for Wales is to be held on a Thursday on a date to be determined by a Resolution of the National Assembly for Wales.”

That does not leave in the legislation any requirement for a periodic election. If the amendment were put into law and the National Assembly for Wales did not set a date for an election, there would never be such an election. An accurate characterisation of his amendment is that it is a “Labour party governs Wales for ever” amendment. Under his provision, if any party with a majority in the National Assembly for Wales simply does not set a date, there will be no election, and no back-stop in legislation would insist on an election. I absolutely accept that that may not have been the hon. Gentleman’s intention, but that is the effect of his amendment.

[Owen Smith]

As I have said, that effect was not our intention. I will not repeat myself, but I will say that were it our intention to stop more elections to the National Assembly for Wales, that would be a pretty peculiar thing for us to do because although we currently govern as a minority Government in Wales, we of course anticipate governing as a majority Government in Wales in the near future. I look forward to more elections in Wales, especially given the polls showing that both the hon. Gentleman’s party and the Liberal Democrats are failing badly.

[Mr Harper]

I am grateful to the hon. Gentleman for confirming that that effect was not the intention of his amendment. However, as I have said, that would be its effect, and the Committee obviously has to consider the amendment on the amendment paper—the one he drafted and tabled—not one that he probably now wishes he had drafted. As I have said, it is not sensible to give the National Assembly for Wales the power to do exactly what the amendment suggests, which is to have no back-stop at all.

I am now even more confused about the Labour party’s policy on term limits. The hon. Gentleman is quite right that, during the passage of the Fixed-term Parliaments Bill, his party did not disagree with the concept of fixed terms. It was very clear that it did not support five-year terms, but preferred four-year terms. On Second Reading just a few weeks ago, he made it clear in response to the hon. Member for Rhondda (Chris Bryant) that he wanted to move to four-year terms. I suggested that the hon. Member for Pontypridd ought perhaps to have a word with his party leader, and it sounds from his slightly more nuanced response that he has had such a conversation and been told that under no circumstances is he to pledge moving back to four-year terms. That probably also provides an answer to the hon. Member for Ogmore (Huw Irranca-Davies).

I will not say any more about the amendments of the hon. Member for Pontypridd, which he has confirmed are probing amendments, but I want to comment on Plaid Cymru’s amendments 30 and 31, specifically amendment 31. They highlight an important issue, which is one for the Committee to debate, about the coincidence of elections. We discussed that when we debated the Fixed-term Parliaments Bill, and it was one reason why I, as the then responsible Minister, decided to move the date of the National Assembly for Wales election.

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[Jonathan Edwards]

As I said, I think the Bill will be viewed as an important milestone in the constitutional development of our country, but it will not surprise the hon. Gentleman to hear that my ambition for Wales is greater than what is set out in the Bill.

[Owen Smith]

A moment ago the hon. Gentleman said that Labour was in some way seeking to undermine the Bill, and I am aware from media reports that that is the line Plaid Cymru is taking in the media. I wish to place on record that that is the opposite of what we are seeking to do. We are probing the Bill today but we will support it. We are looking to strengthen the powers held by the Welsh Assembly in many regards, and we are seeking greater symmetry on tax powers with Scotland. Crucially, we will be tabling amendments to secure fair funding in advance of any of those changes, and looking to ensure that we move to a reserved powers model—all of which I am sure the hon. Gentleman would support.

[Jonathan Edwards]

If that is indeed the hon. Gentleman’s position, I am sure he will join us in the Lobby when we vote on the new clauses later.

The second major context in which this debate takes place is the seismic events happening in Scotland. As I said yesterday in the Welsh Affairs Committee, the second part of the Silk commission’s work will be superseded by the result of the independence referendum, one way or the other. Even the Bill could be superseded by events in Scotland, as its proceedings in the Lords are likely to happen after the people in Scotland have cast their vote in the independence referendum.

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[The Parliamentary Under-Secretary of State for Wales (Stephen Crabb)]

I, too, would like to start by welcoming you to the Chair, Dr McCrea. It is a pleasure to serve under your chairmanship. I thank hon. Members on both sides of the Committee for their contributions to this early part of the first day of our deliberations.

Amendment 9 would give the Assembly the power to decide, by resolution, when Assembly elections are held, and would remove the Secretary of State’s powers in relation to varying the date of Assembly elections and proposing a date for extraordinary Assembly elections. Amendment 10 would prevent the Assembly from setting a date for an election on a day on which it knows, or reasonably expects, a parliamentary general election to be held. The amendments would permit the Assembly to determine the date of Assembly elections and consequently the length of its own terms. That reflects a recommendation made by the Welsh Affairs Committee arising from its pre-legislative scrutiny of the draft Wales Bill.

It is worth pointing out that the Silk commission considered the matter of legislative competence for Assembly elections to be outside its terms of reference and made no recommendations in this regard in its second report. Nevertheless, the Government believe that the devolution of further powers to the Assembly should not be undertaken in a piecemeal fashion, and that the issue would best be considered in the wider context of possible changes to the Welsh devolution settlement arising from the recommendations made by the commission in its second report. The Government made clear, on publication of the report, that recommendations requiring primary legislative change should be a matter for the next Parliament and the next Government, and consequently that they should be for political parties to consider in preparing their election manifestos. We believe the same principle should apply when considering whether legislative competence for Assembly elections should be devolved to the Assembly. It is important that electors are clear on how long they are electing Assembly Members for when they vote in the 2016 Assembly election, and that five-year Assembly terms are in place by then to ensure that Westminster and Assembly elections do not coincide in 2020.

The Fixed-term Parliaments Act 2011 moved this House to a fixed five-year cycle and consequentially provided that the next ordinary general election to the National Assembly for Wales would be moved on a one-off basis by one year from 7 May 2015 to 5 May 2016. This responded to concerns raised by the Assembly that holding general elections to this House and to the Assembly on the same day could lead to the Assembly elections being overshadowed. I am encouraged that Members of all parties seem to be in agreement on the position that we do not want the two elections coinciding. I particularly welcome the Labour party’s support in seeking to minimise the risk of that, which is evident in amendment 10.

Similarly, amendments 30 and 31, tabled by right hon. and hon. Members from Plaid Cymru, are intended to ensure that an ordinary Assembly general election does not take place within six months of a UK general election. I am encouraged that the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards) has been reassured by the debate so far and by our previous discussions, and that he is not going to press his amendments on that basis.

There is cross-party support for the principle that, as far as possible, we should seek to ensure that ordinary general elections to the Assembly and to this House should not coincide. With the next Assembly election scheduled for 2016, if the Assembly remains on a four-year cycle, the two sets of elections would coincide every 20 years, starting in 2020—something that all parties are clearly keen to avoid. Clause 1 makes it far less likely that Assembly elections and parliamentary elections will coincide in future. I therefore ask Opposition Members to support the clause, to consider the further devolution of powers to the Assembly in the context of preparing their own parties’ manifestos and consequently to withdraw or not press the amendments.

[Owen Smith]

I am grateful to the Minister for acknowledging that our amendments reflect the views of the Welsh Affairs Committee and, indeed, as I said earlier, those of the Welsh Government, and that they were tabled in good faith. I am equally pleased to hear that when it comes to looking at the Silk commission part I report or any legislation that might arise from it or be reflected in the manifestos before the next election, the Government will be open to considering whether the Assembly should be responsible for—or at least have the ability to consent to—when the elections should take place. In the light of the Minister’s remarks, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 1 ordered to stand part of the Bill.

Clause 2

Removal of restriction on standing for election for both constituency and electoral region

[Mr Harper]

I beg to move amendment 15, page 2, line 33, at end add—

‘(5) The Secretary of State shall make arrangements for an independent review of the—

(a) likely and possible impacts on the effectiveness of the Assembly of the removal of the restriction on standing for both constituency and electoral region. In particular, the review shall examine the implications for the desirable total number of Assembly members and the proportions elected by each route; and

(b) advantages and disadvantages of amalgamating the five Assembly electoral regions into one for the whole of Wales.

The Secretary of State shall lay a copy of the report of the review before each House of Parliament within nine months of this Act receiving Royal Assent.’.

The Temporary Chair (Dr McCrea): With this it will be convenient to discuss the following:

Clause stand part.

New clause 4—National Assembly to set number of AMs—

‘Her Majesty may by Order in Council provide for the transfer of responsibility for setting the number of Assembly Members to the National Assembly for Wales.’.

New clause 6—Transfer of responsibility for determining electoral system—

‘Her Majesty may by Order in Council provide for the transfer of responsibility for determining the system of election of members of the National Assembly for Wales to the Welsh Government.’.

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I have taken several interventions, so I intend to make progress. I want to say a word or two on clause 2, but I shall not dwell on it because we debated it fairly fully on Second Reading. It ought not to be very controversial. It simply returns the one—and indeed improves it slightly—to the one that the Labour party introduced when it set up the devolution arrangements, allowing candidates to stand both for a constituency and on the list. It seems to me that the subsequent change was a retrograde one, because effectively it reflected an attempt to disadvantage minority parties. It seemed to me, listening to the Second Reading debate, that the Labour party’s view is that minority parties in Wales means all other parties than itself; and there is some very good evidence from the Electoral Commission and others that that restriction—preventing candidates from standing in a constituency and on a list—particularly disadvantages smaller parties and disadvantages the Labour party less. It seemed to me, therefore, a particularly partisan change. Clause 2 simply restores the position to where it was, but with some sensible amendments to ensure that people cannot stand on a list that relates to the other end of Wales from the constituency that they are standing in.

[Owen Smith]

May I just check? The hon. Gentleman referred to the minority parties a moment ago. Is he referring to his own party, the Conservative party in Wales, as a minority party?

[Mr Harper]

No. I was referring to the Labour party’s view, which, when I listened carefully to the debate, seemed to be its definition—not mine; its definition—that a minority party was any party other than Labour. It seemed to me that the effect, and I think the intention, of the change that it made, which this Bill seeks largely to reverse, was a partisan one that was designed to favour Labour and disadvantage all others.

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[Owen Smith]

I intend to speak principally to clause 2 and not to amendment 2 or the new clauses. We tabled an amendment to delete the clause, but it has not been selected, so we will push the clause to a vote.

I fear that gerrymandering has been a hallmark of this Government’s legislation on the constitution. We saw it in the Parliamentary Voting System and Constituencies Act 2011 and the Fixed-term Parliaments Act 2011, and the hon. Member for Forest of Dean (Mr Harper) has today sought, in effect, to reintroduce, through the back door, his gerrymandering proposals to reduce the number of Members representing Wales, which would have a consequent effect on the number of Assembly Members. I fear that clause 2 in particular continues in that vein.

[Mr Harper]

I will resist, I hope, being provoked any further, but how can the principle of ensuring that Members of this House represent a broadly equal number of electors be called gerrymandering? Most people would think that it is a matter of basic fairness. We debated this issue at length when the Parliamentary Voting System and Constituencies Act was making its way through Parliament. I understand why Labour Members did not like it, because it had an effect on them, but it is about delivering equality of representation, which I would have thought they were in favour of.

[Owen Smith]

I am grateful to the hon. Gentleman for his intervention, but I think it was made in the same spirit as that with which he has repeatedly made other arguments, which is to cloak his party’s partisan intent in the Parliamentary Voting System and Constituencies Act, the Fixed-term Parliaments Act and, indeed, clause 2 of this Bill with the veneer of a principled objective. That is not true: the rationale for all of those measures was to benefit his party, which is a smaller party—a minority party—in Wales. I intend to demonstrate why that is the case.

[Hywel Williams]

The hon. Gentleman has used the magic word, “minority”. In what way is a party with 30 out of 60 seats and that does not command the support of more than 50% of the Welsh electorate who actually vote a majority?

[Owen Smith]

The point I was making is very simple and I do not need to embellish it, because I can rely on the evidence provided by the Government’s own impact assessment, which states extremely clearly that the proposal’s objective is to benefit the

“smaller parties in Wales who may have a smaller pool of high quality candidates to represent them in elections.”

Labour Members certainly would not for one moment contest the argument that the smaller parties in Wales—among which I would, unfortunately, count the Conservative party—may have a smaller pool of high-quality candidates to represent them in elections, but I do not believe that that is an adequate reason for seeking to amend legislation with regard to this country’s constitution and elections.

[The Secretary of State for Wales (Mr David Jones)]

The shadow Secretary of State will know that under the original Government of Wales Act 1998, there was no ban on dual candidacy. At what point did the damascene conversion of the Labour party against the concept of dual candidacy take place?

[Owen Smith]

I am very grateful to the Secretary of State for asking that question, because I think the date was 2 or 3 May 2003. The precise geographical location of that conversion was on a road not to Damascus, but to Ruthin. It was of course during the Clwyd West election—the election to the Assembly in his constituency in north Wales—when we witnessed the extraordinary state of affairs in which Labour quite clearly won the election and the Conservatives, the Liberal Democrats and Plaid Cymru lost it, but the Conservative, Liberal Democrat and Plaid Cymru representatives were all returned to the National Assembly for Wales in what any right-thinking individual would think was a complete denial of democracy and natural justice.

[Mr Jones]

Will the hon. Gentleman give way?

[Owen Smith]

I give way to the Secretary of State to put me right.

[Mr Jones]

I anticipated that the hon. Gentleman might mention the so-called Clwyd West question. Was it not always entirely foreseeable from the moment that devolution was instituted under this system that in some seats a number of representatives would be elected by first past the post, on the list, or both? It was always foreseeable and, frankly, the fact that it was not foreseen seems a large oversight by the Labour party.

[Owen Smith]

That may well have been foreseeable. Labour has acknowledged that it was a mistake to draft the legislation in such a fashion that it became possible for would-be Members of the Assembly to nest like cuckoos in individual constituencies for a period, anticipating their entry to the Assembly via the back door. However, we did not imagine that the measure would be used so shamelessly as it was by parties in the Secretary of State’s Clwyd West constituency.

[Mr Mark Williams]

Has there been the same acknowledgement that such a measure was a mistake for elections to the Scottish Parliament or the Greater London authority, in which dual candidacy is still permitted?

[Owen Smith]

The hon. Gentleman makes a good point, and we should consider this matter right across the piece. The evidence of elections in Wales that is before our eyes, particularly in Clwyd West, but in other seats as well—Llanelli springs to mind, where wannabe Assembly Members perched for a significant period, only to contest the seats under first past the post—suggests that the measure will be abused. It has not of course been abused elsewhere, but it has been abused in Wales. That is why we as representatives of Wales, who were then in government but are now in opposition, are seeking to prevent this Government from amending the law for Wales so that we guarantee that such sorts of abuses do not take place in future.

[Mr Williams]

If the principle runs so deep and the risk of abuse is so great, surely the hon. Gentleman should talk to his colleagues in Scotland and London about reforming the systems there, rather than picking—quite frankly—on the National Assembly for Wales and the people of Wales.

[Owen Smith]

As all hon. Members do, I talk regularly to colleagues in other parts of Britain, but we are now addressing legislation that relates to Wales. The evidence relating to Wales that is before our eyes—from recent history in the Secretary of State’s own seat—suggests that there is a problem there and that the measure has been abused. As best we understand it, public opinion also supports my contention that the system should be retained and that the proposed ban should not be lifted.

[Mr David Jones]

The hon. Gentleman has twice used the word “abused” in the context of Clwyd West. Will he please explain what he means by abuse in that context?

[Huw Irranca-Davies]

It is fairly straightforward.

[Owen Smith]

It is pretty straightforward. As I have said, there was an instance in Clwyd West of the abuse of natural justice and of what most people understand as democracy by a system that allowed people to enter the Assembly via the back door. That is supported by the evidence, and I want to enumerate some of the pieces of evidence, because they are extremely important.

[Mr Llwyd]

The hon. Gentleman has used the word “abused”, which is objectionable, and has referred to the back door. Why in 2003 did Rhodri Morgan, Lorraine Barrett, Sue Essex, Jane Davidson, Jane Hutt and Leighton Andrews all stand for a constituency and on a list if that was so obviously attempting an abuse?

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[Owen Smith]

Because that was quite clearly the system in place at the time. However, as I have acknowledged—my right hon. Friend the Member for Neath (Mr Hain) of course acknowledged it when he amended the law in 2006—we admitted that it was a mistake to allow people to abuse the system in such a fashion.

I hesitate to steal the thunder of my right hon. Friend, who referred to this matter so eloquently on Second Reading, but if we want evidence of the potential abuse of the system whereby an Assembly Member nests in a constituency that they subsequently want to seek election to through first past the post, we need look no further than the leader of Plaid Cymru, Leanne Wood. She published a memo to her members in an e-mail which provided what can only be described as a route map for such abuse. I did not intend to quote extensively from it, but as I have been provoked, perhaps I ought to remind the Committee of the details. She instructed her party:

“We need to be thinking much more creatively as to how we better use staff budgets for furthering the aims of the party.”

She went on:

“Regional AMs are in a unique position. They are paid to work full-time in politics and have considerable budgets at their disposal.”

She said:

“Consideration should be given to the location of their office—where would it be best for the region? Are there any target seats…within the region?”

She went on:

“They need not be constrained by constituency casework and events, and can be more choosy about their engagements, only attending events which further the party’s cause. This can be achieved by following one simple golden rule: On receipt of every invitation, ask ‘How can my attendance at this event further the aims of Plaid Cymru?’ If the answer is ‘very little’ or ‘not at all’, then a pro forma letter of decline should be in order.”

I do not think that we need any further evidence of the potential abuse to which I am referring.

[Mr David Jones]

Is the hon. Gentleman’s criticism not of Leanne Wood, who I agree behaved wholly disgracefully? Is he not overlooking the many regional Members who were elected and behaved entirely properly? His criticism is not of the system, but of an individual who behaved reprehensibly.

[Owen Smith]

The Secretary of State might be right that some regional Members behaved perfectly appropriately. I agree with him that Leanne Wood did not behave appropriately in instructing her colleagues to respond in that way. The point that I am making is that the system as it was constituted, and as he proposes to reconstitute it, was open to such abuses. That is why we suggest that the current system, which we put in place when in office, should be retained.

[Mr Jones]

The hon. Gentleman is being extremely generous in giving way again. Surely these issues could be resolved by a change in the standing orders of the Assembly, rather than by changing the legislation. Does not the Assembly have the power to regulate itself? The hon. Gentleman looks puzzled. I would have thought that he would recognise that the Assembly is in a position to regulate the conduct of its Members through its standing orders.

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[Owen Smith]

The Assembly can do that, but that issue strikes me as rather tangential to the one that we are debating, which is the nature of the electoral arrangements that this House lays down for the Assembly, which the Secretary of State is seeking to change.

I will return to the guts of the matter, which is the evidence of the need for the change. I think that the evidence supports our view that no such change is required. I return to the evidence provided in the impact assessment by the Government. Although they concede that a majority of respondents to the consultation—a “small majority”, admittedly—were

“in favour of retaining the ban”,

they state that

“the Government does not think that a strong enough case for this was made in the consultation responses.”

[Interruption.] The Under-Secretary of State for Wales suggests that those were Labour responses. He really ought to take his consultation seriously. If the Government want their policy to be supported by the public, they ought to reflect the evidence, rather than dismiss it out of hand when it happens to be counter to their narrow, partisan interests.

[Susan Elan Jones]

I am intrigued and surprised that none of the three Plaid Cymru Members have stood up to defend their leader. In the interest of their silence, may I suggest a possible tweet for at least one of them: “We cannot answer what the shadow Secretary of State is saying, so we are silent and looking sheepish #nationalistsconfused”?

[Owen Smith]

I look forward to reading it on Twitter later this afternoon. To return to the evidence, the Government concede that this measure is solely designed to benefit the smaller parties in Wales—the Conservatives, the Liberals and Plaid Cymru—and that a majority of people responding to their consultation did not agree with their proposals to change it.

[David T. C. Davies (Monmouth) (Con)]

The hon. Gentleman just said that this change would benefit the smaller parties. Does he therefore think that not changing it would be beneficial to the largest party, and is he not also conflicted by an interest in this issue?

[Owen Smith]

I am merely quoting from the Government’s own impact assessment, which clearly states that this is for the benefit of the smaller parties in Wales, among which we count the Conservative party.

Public attitudes to this issue are relatively clear and there have been several reports. Most importantly, the Bevan Foundation—which is non-aligned although splendidly named after my great hero—conducted an analysis and a large survey to consider all these issues. It found that

“dual candidacy was unfair compared with those who felt candidates should be free to stand in both.”

As a reference to the detail included in that survey, I quote a respondent from Llanelli who asked:

“How can it be right that you vote one way and then the person who loses can still find a way to get elected?”

Someone from Swansea East said:

“I think it is unfair … It’s like people can sneak in the back door.”

and another said:

“It does seem unfair in a way, surely if they weren’t popular enough they shouldn’t be able to get in.”

Another respondent said:

“I don’t think some should have the added advantage of standing in both—it seems unfair really.”

and someone else from Llanelli said:

“You don’t have two bites of the cherry.”

[Mr David Jones]

Will the hon. Gentleman clarify whether the survey he refers to is the one that was commissioned by his hon. Friend the Member for Caerphilly (Wayne David), and although he refers to a large number of respondents, is it the case that there were precisely 47?

[Owen Smith]

It was indeed commissioned by my dear and hon. Friend the Member for Caerphilly (Wayne David), but the Bevan Foundation, as the Secretary of State will know, is a non-aligned charitable foundation. It would surely contest quite vigorously the implication—which I am sure he does not mean to make—that it is in any way aligned to the Labour party.

Of course, it is not just evidence from the Bevan Foundation that is important. International evidence suggests that this form of gerrymandering is not supported by the public. In New Zealand, for example, public opinion research conducted by the independent review committee, which is part of its Parliament and appointed to examine the electoral system, found that one key criticism was that it was possible for MPs to be defeated in an electoral contest but returned to the House through their position on the list—clear evidence that it is not just in Wales that people are concerned about that.

In fact, it is not just in New Zealand that there are concerns. In New Brunswick in Canada, an independent commission endorsed the ban on dual candidacy stating:

“The Commission heard that in some jurisdictions where candidates are able to run simultaneously on both ballots, voters are displeased with the case where a candidate is not successful in a single member constituency, but is elected anyway by virtue of being placed on the top of a party’s list.”

Evidence from two notable democracies—Canada and New Zealand—shows that it is not just those in the Labour party and in Wales who are worried about that process.

Of course, it is not just Labour Members who have been concerned about this issue: it used to be a concern of Members on both sides of the House. For example, Lord Crickhowell, a former Conservative Secretary of State for Wales, has said that the arrangements were “really pretty indefensible”. I would have thought that was a clear statement, but the current Secretary of State clearly does not agree.

Perhaps Liberal Democrat Members agree with the Chief Secretary to the Treasury who said when we last debated this in 2006:

“I should also point out that the Secretary of State for Wales has said that if the Commission had considered what he called the systematic abuses carried out by list members in Wales”—

which I have described here today—

“he would have reached the same conclusion that we have”—

“we” in that case being of course the Liberal Democrats—

“namely that a ban on dual candidacy is the only effective solution.”

We therefore have many examples from across the world, from Wales and from across the House of people’s concerns about the way in which the system has been abused.

[Mr Mark Williams]

The hon. Gentleman mentioned New Zealand and the international precedents that he asserts back his case. Is he aware that the final report of the commission that looked into the system in New Zealand concluded:

“It is proper and desirable…that political parties can protect good candidates contesting marginable or unwinnable electorates by positioning themselves high enough on their list to be elected”?

The New Zealand experience resulted in the ban being thrown out.

[Owen Smith]

I am aware of that: the point that I was making is that concern is felt about this issue across the world. It is not a narrow, partisan point: it has been widely discussed in other jurisdictions where this or similar systems have been applied. It has been suggested that this only applies in Wales, but that is not true. There are similar election arrangements in several Asian countries, including South Korea and Taiwan, where they have a similar ban on such behaviour.

[Mr Williams]

The key point is that the New Zealand experience validated the approach that the Government are taking in clause 2.

[Owen Smith]

I understood the point that the hon. Gentleman was making: I was merely pointing out the significant concerns in New Zealand that remain.

[Jonathan Evans]

The hon. Gentleman has shared with us the research that he has done on the position in New Brunswick. In neighbouring Quebec they had the same debate and came to the same conclusion as the Secretary of State.

[Owen Smith]

That is as may be. I merely say once more that this is not a straightforward, open-and-shut case, as it has been presented by the Government. We know otherwise—from the evidence of Clwyd West and other seats in Wales, from public opinion and, frankly, from what our constituents tell us about their dissatisfaction, which extends to the broader issue of the list and first-past-the-post system. We know that the public do not understand candidates being rejected under first past the post and then sneaking into the Assembly by the back door.

[Jonathan Edwards]

The hon. Gentleman says that he has been inundated by representations from constituents on this matter. I have to be honest and say that I have never had any discussion with a constituent on this issue. How many of the good people of Pontypridd have been on the phone to him?

[Owen Smith]

I am tempted to say that very few of my constituents—or, I suspect, those from any constituency in Wales—ever want to talk to me about the constitution, which seems to exercise Plaid Cymru all the time. Most people in Wales do not want to talk about the constitution: they want to talk about the cost of living crisis and the other problems that we have in Britain.

In conclusion, the evidence of the recent past in Wales suggests that the previous system was being abused. We have made a clear, principled non-partisan argument that the current system should be retained as it is. In so doing, we are striking a chord with the views of the Welsh Affairs Committee, which did not come to a final conclusion but did say, as a point of principle:

“we consider it unadvisable for electoral systems to be changed frequently. Successive changes to electoral systems risk being perceived as partisan by the public.”

This is clearly a partisan change. The public will see it for what it is and I am sure they would support us when, later this evening, we vote against clause 2 standing part of the Bill.

[Mr Peter Hain (Neath) (Lab)]

I welcome your Celtic insight into this debate affecting a Celtic neighbour, Dr McCrea. I apologise to you, and to those on both Front Benches, if I have to be out of the Chamber for the winding-up speeches.

I wish to speak on clause 2 stand part, a clause that reverses the ban on dual candidature, which this House legislated for in 2006. On Second Reading I provided detailed evidence about the widespread abuses of the dual candidacy system in Wales that led to it being banned under the Government of Wales Act 2006, which I introduced. None of that evidence was disputed or rebutted by the Government or any of the parties. I readily confess to being one of the Wales Ministers who, prior to devolution, took the original 1998 Government of Wales Bill through Parliament that permitted dual candidature, but I never for one moment imagined the abuses that it would produce and the antipathy it would create. Voters never understood that it was widespread practice, from when the Assembly was established in 1999 up until 2007 when it was banned, for candidates rejected by a particular constituency to secure back-door election as Assembly Members through the regional list. They were then even able to claim to represent the very constituency that had rejected them.

After reading the Government’s proposals for repealing the ban on dual candidacy, I have searched in vain for substantial arguments beyond cries of political partisanship. The truth is that the ban has affected all candidates of all parties by preventing each one from having a two-way bet with voters. The ban simply puts the voters in charge by ensuring that, if a candidate is defeated in the constituency vote, that candidate does not get elected in defiance of the popular will. At a time when the political class—all of us—are held in lower repute than at any time in the history of British democracy, the very idea that the Government are proceeding to ensure election losers become winners is absolutely extraordinary. It holds the electorate in utter contempt.

Let us examine the case advanced by Ministers. First, the Government have used evidence borrowed heavily from the Scottish elections, which are similar to ours in Wales, and manipulated evidence from the Arbuthnott report to support their case. Ministers claimed in the Green Paper that the Arbuthnott report on the situation in Scotland found no justification for the argument that public dissatisfaction with dual candidacy had a negative impact on voter turnout. They also used evidence from the Electoral Commission’s 2006 “Poll Position” report, which focused on voting in the National Assembly elections. Clearly, however, the Government chose only to reflect the contents of those reports selectively.

In fact, the Arbuthnott report quoted the Scottish social attitudes survey 2003, which found a high degree of opposition to party control of candidates on their regional election lists. Moreover, opposition to party control of the lists was particularly acute—this is the important point—because of public confusion with the system, exacerbated when regional Members of the Scottish Parliament appeared to get in through the back door having been defeated as constituency candidates. In the 2003 Scottish election Arbuthnott report, the public was indeed concerned that 88% of regional MSPs elected had fought and lost in constituencies. The closed list system was seen to have undermined the election result in these scenarios, as it raised questions of legitimacy for regional MSPs in voters’ minds. The Electoral Commission’s 2006 “Poll Position” report on voting in Wales clearly demonstrated that more than half the Welsh population—56.7%, to be exact—opposed the closed list system, which is still in place, and that more than 60% of the electorate preferred to be represented by just one Assembly Member.

--- Later in debate ---

[Mr David Jones]

I, of course, share the general delight at serving under your chairmanship, Mr Chope.

This has been an interesting and very forthright debate. Clause 2—it seems unnecessary to say—will overturn the ban on dual candidacy introduced by the Government of Wales Act 2006. Under its provisions, candidates at an Assembly election cannot stand both in a constituency and on a regional list. Before 2006, candidates could of course stand in both.

Amendment 15, which was moved by my hon. Friend the Member for Forest of Dean (Mr Harper), would require the Secretary of State to commission an independent review of the possible effects of dual candidacy on the effectiveness of the National Assembly for Wales and to lay the findings before both Houses within nine months of Royal Assent. I fully understand his intention in tabling the amendment and to a certain extent I empathise with him. I welcome the opportunity to debate further the merits of removing the current unfair ban. My hon. Friend has highlighted the need for independent evidence on the effects of dual candidacy, which is of course important, but the fact is that ample evidence from independent bodies shows that dual candidacy is part and parcel of similar systems across the world.

The previous Labour Government justified imposing the ban on dual candidacy on the grounds that they said there was “considerable dissatisfaction” with the system, although they provided little evidence to support that position. Frankly, having listened to the debate, I have to say that I have heard little more evidence this afternoon. We have of course had the Bevan Foundation—

[Owen Smith]

Will the Secretary of State not confirm to the House that his own consultation for the Bill showed that the majority of respondents were in favour of retaining the current system?

[Mr Jones]

It is fair to say that there was a majority of one, but frankly most of the respondents were Labour Assembly Members. As I will mention later, the letters written by those Assembly Members bore a suspicious similarity to one another. It might almost have been that a template was provided for them.

The ban was introduced despite opposition from other parties in the House, academics and even the Electoral Commission. I know that several Labour Members served on the Welsh Affairs Committee before the passage of the 2006 Act, and I am sure that they recall the evidence of Dr Richard Wyn Jones, Dr Roger Scully and Glyn Mathias, the Electoral Commissioner for Wales, who all highlighted the potentially partisan nature of the changes. Professor Alan Trench of the constitution unit at University college London, who is currently a special adviser to the Select Committee, said in November 2011 that it was

“a pretty blatantly partisan manipulation of the electoral system”.

--- Later in debate ---

[Mr Jones]

It is not nonsense—absolutely not. The measure was put in place to favour the Labour party.

[Owen Smith]

Will the Secretary of State give way?

[Mr Jones]

No, I will make some progress. [Interruption.] I will give way in a moment.

In its evidence to the Welsh Affairs Committee in 2005—I do not think the hon. Member for Wrexham (Ian Lucas) was a member of that Committee—the Electoral Commission stated that it did not believe that the case had been made and that it would

“caution against any change that is perceived to be partisan and could add to a prevailing distrust of politicians”.

The Electoral Commission saw no evidence in favour of the ban during the passage of the Government of Wales Act 2006. During the pre-legislative scrutiny of the draft Bill, it reaffirmed that position. Even the Arbuthnott commission, which the last Labour Government set up to consider the electoral arrangements in Scotland, made it clear that

“dual candidacy is a common feature of mixed member proportional systems across the world”.

In ignoring those concerns and introducing the ban, the last Labour Government made the electoral system in Wales anomalous. Nowhere else in the world is dual candidacy banned under this type of electoral system. As we have heard, the last Labour Government chose not to impose a similar ban for elections to the Scottish Parliament or the London assembly, both of which use the same system. Dual candidacy is not banned in countries with similar electoral systems, such as New Zealand. This was touched on by the shadow Secretary of State, but the 2012 review by the Electoral Commission of New Zealand came to the conclusion that dual candidacy should continue to be a feature of its electoral system.

[Owen Smith]

I will take the Secretary of State back to the remarks that he made a few moments ago. Will he confirm that when he referred to the smaller parties that would benefit from the change, he was talking about the Conservative party in Wales?

[Mr Jones]

It is quite clear that the Conservative party is smaller electorally than the Labour party. That is fairly straightforward. However, I was referring not just to the Conservative party, but to the Liberal Democrats and Plaid Cymru.

[Owen Smith]

I am grateful for that clarification. Is he therefore saying that the Conservative party in Wales struggles to field high quality candidates?

[Mr Jones]

I do not think that we have had that difficulty in the past.

The Opposition have pointed to the fact that a majority of respondents to the Government’s Green Paper consultation were in favour of retaining the ban as further evidence in support of it. However, if one takes away the many Labour Assembly Members, who responded in a strikingly similar way, that would no longer be the case. The simple fact is that the ban was introduced to benefit one party, the Labour party, in one part of the United Kingdom, Wales, and in not Scotland or London.

In his evidence to the Welsh Affairs Committee during its pre-legislative scrutiny of the draft Bill, Professor Scully said that the claims that are made about dual candidacy, which have been repeated again and again by Labour Members,

“remain wholly unsupported by solid evidence”.

I repeat that the simple fact is that the ban was introduced as a partisan act that affects smaller parties disproportionately and ensures that good quality candidates are lost to the Assembly.

--- Later in debate ---

[Mr Harper]

That is a good point. There are two separate arguments, one about what we should call the different institutions and another about which body is the right body to pass the legislation to enact those changes. I think that the Government’s approach in clause 4, which recognises the reality of what we call the Welsh Government and reflects that in primary legislation passed by this Parliament, is the right one, rather than the approach followed by those who have signed up to new clause 5. That is why I will oppose the new clause, but I am glad that the hon. Member for Carmarthen East and Dinefwr is not going to press it to a vote. I hope that the Committee will support clause 4.

[Owen Smith]

I, too, welcome you to the Chair, Mr Chope. It is a pleasure to serve under your chairmanship.

We support clause 4, which renames the Welsh Assembly Government. That is what the Welsh Assembly has long said that it would like to happen and it reflects normal custom and practice across Wales, so we are pleased that the Government have decided to change things and use the term Welsh Government in future.

On new clause 5, we accept that there is a debate to be had about the name. Silk part II refers to the prospect of a Welsh Parliament and it is ironic that the leader of the Conservative party in Wales holds that view. I admire the chutzpah with which the Under-Secretary glossed over that, as it is an irony that the Opposition see clearly. However, this is an area of debate that ought properly to be dealt with in any legislation that reflects Silk part II rather than under this Bill, which properly reflects the preponderance of Silk part I. For that reason, even if the new clause were pressed to a vote, we probably would not support it.

[Stephen Crabb]

I agree very much with the comments made by my hon. Friend the Member for Forest of Dean (Mr Harper). There are two elements to the debate. The first is about what we call the legislature and the second is about where the decision is taken. As for the first, there is an emerging debate in Wales about what we should call the National Assembly and whether it should have its name changed. The leader of my party’s group in the Assembly has a view that I fully respect. He is an excellent colleague and I am sorry if I gave the impression that I was glossing over his views, but I still maintain the position that the debate is emerging and has not yet engaged with the public consciousness. Until we get to that point, it is probably a debate that will not be resolved.

As for the second part of the debate, the Silk commission referred to the decision on where the decision should be made in part II of its recommendations. We have been clear and consistent all along that decisions about the Silk part II recommendations are not for this Bill but for a future Parliament and a future Government and for the parties to consider in their manifestos. I stand by my earlier remarks and ask the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards) not to press his new clause to a vote.

Question put and agreed to.

Clause 4 accordingly ordered to stand part of the Bill.

Clause 5 ordered to stand part of the Bill.

New Clause 4

National Assembly to set number of AMs

‘Her Majesty may by Order in Council provide for the transfer of responsibility for setting the number of Assembly Members to the National Assembly for Wales.’.—(Jonathan Edwards.)

Brought up, and read the First time.

Question put, That the clause be read a Second time.

--- Later in debate ---

[Mr Gauke]

It is a great pleasure to serve under your chairmanship this evening, Mr Chope, and to set out the Government’s position on clauses 8 and 9 and the Government amendments. I will also take the opportunity to comment on the amendments tabled by others and will have the chance to debate taxation powers with the shadow Secretary of State for Wales, which I am sure will bring back many happy memories for him of serving on Finance Bills.

Subject to the outcome of a referendum, clause 8 amends the Government of Wales Act 2006 to introduce a Welsh rate of income tax to be paid by those defined as Welsh taxpayers. Clause 9 amends the Income Tax Act 2007 to set out how the Welsh rate of income tax determines the Welsh basic, higher and additional rates of income tax. It also defines the income that will be taxed at those rates.

I shall start with Government amendments 19 and 21. The income tax provisions in clause 8 form part of a new part 4A of the 2006 Act, which is introduced by clause 6. Part 4A’s introductory section includes a reference to the income tax provisions in chapter 2. The provisions in clause 6 will come into force two months after this Bill receives Royal Assent. However, the income tax provisions in clause 8 and 9 can of course be brought into force only following a yes vote in a referendum. Amendment 19 therefore removes the reference to chapter 2 from clause 6, and amendment 21 reinserts the reference into clause 8, bringing the commencement of the reference into line with the rest of the income tax provisions. That will ensure that the amended Act accurately reflects the legislative competence of the Assembly at a given point.

The provisions in clause 9 concerning the Welsh rate have been revised since the draft Bill. That necessitated changes to the power to allow for further consequential changes to be made under secondary legislation introduced by clause 8 in new section 116I of the 2006 Act to ensure that it continued to work as intended. Government amendments 22, 27 and 28 make further technical changes to that power in order to clarify that proposed new section 11B does not impose a charge to income tax. Rather, the effect of the new section 11B is to apply the Welsh rates of income tax to a Welsh taxpayer’s non-savings income.

On Government amendments 23 to 26, the power in new section 116I also allows an order to be made to ensure that HMRC can continue to operate the PAYE system effectively in the event that the Assembly passes a Welsh rate resolution at a late stage in the preceding tax year. Such an order would require employers to continue to operate PAYE on the basis of the information issued by HMRC, rather than the correct tax position for a specified period. The tax position of employees would ultimately be correct over the course of the tax year.

The scenario I have set out would also apply if, for whatever reason, the Assembly did not pass a rate-setting resolution at all, assuming that that had not previously been announced by the Welsh Government. Although I accept that that is unlikely to arise in practice, it is important to recognise that the Assembly has the option not to pass a rate if it so chooses. Amendments 23 to 26 therefore extend the order-making power to cover that scenario. I hope that hon. Members will support those amendments and Government amendments 19, 21, 27 and 28.

In amendment 41, I was pleased to see an amendment from the hon. Members for Pontypridd (Owen Smith) and for Llanelli (Nia Griffith) that supports the principle of income tax devolution, although I note that their latest approach would not provide Wales with quite the same outcome that they have now proposed for Scotland. None the less, it is progress. Although I confess to not having previously studied the issue very closely, I was not sure whether the Labour party opposed income tax devolution or thought that there was not enough of it. No doubt we will receive an explanation later.

[Owen Smith]

rose—

[Mr Gauke]

Perhaps we will receive an explanation immediately. I will happily give the hon. Gentleman that opportunity.

[Owen Smith]

I am grateful to the Exchequer Secretary, and this of course brings back warm memories of time spent debating Finance Bills. He failed to mention our amendments 38 and 39—I presume he will do so in due course—which seek to give symmetry between Scotland and Wales in relation to tax powers. While I am on my feet, may I ask him to return to what he said earlier about Welsh taxpayers under this legislation? Will he confirm for the House that that would designate all MEPs in Wales as Welsh taxpayers, including Kay Swinburne, a Conservative, who does not live in Wales?

[Mr Gauke]

All Welsh MEPs will be Welsh taxpayers. I will deal with the amendments the hon. Gentleman mentions, although I do not think that they would achieve symmetry. I note that he was not very clear in responding to my point that only a little while ago he said that devolution of income tax to Wales was a Tory trap, or something of the sort. Now he proposes that devolving 10p is insufficient and that it should be 15p. I do not know whether he holds both views at the moment, or just one. I will certainly give way if he can provide some clarity on that point.

[Owen Smith]

Of course, they are entirely reconcilable, as I shall explain later. However, I did not hear an answer from the Exchequer Secretary on whether Kay Swinburne, the Conservative MEP for Wales, who still lives in Ledbury in England, would be designated as a Welsh taxpayer under the terms of the Bill. That strikes me as an extraordinary oversight by a Conservative Minister.

[Mr Gauke]

I will repeat what I said: Welsh MEPs will be Welsh taxpayers. I am not sure that I can be any clearer.

On the extent of income tax devolution, there is a careful judgment to be made. Devolving an element of income tax increases the financial accountability of the Assembly and the Welsh Government in three important ways. First, it will enable the Assembly to fund more of the spending for which it is responsible. Secondly, the Welsh Government will be able to vary the levels of tax and spending in Wales. Thirdly, while the Welsh Government currently control many key levers to generate economic growth in Wales such as education, skills, housing and planning, the resulting economic performance currently has no impact on their budget. Devolving an element of income tax will directly link the Welsh Government’s budget to their economic decisions.

--- Later in debate ---

[Mr Gauke]

This is not about charging for public services. We have devolution of income tax in Scotland, where the issues that the right hon. Gentleman has mentioned may arise. I am surprised that, as a distinguished shadow Minister, he appears to be taking a position at odds with his own Front Benchers.

[Owen Smith]

rose—

[Mr Gauke]

Perhaps if I give way to the hon. Gentleman he will explain the apparent contradiction between his amendments and a statement that seems to involve opposition to the devolution of income tax altogether.

[Owen Smith]

There is absolutely no contradiction on our part. The Minister has come very late to the debate; I do not know why the Secretary of State does not feel able to answer these questions, but that is for him to respond to. We have said throughout that we have never thought that income tax devolution to Wales was a priority. We do not think there is a significant appetite for it in Wales, and we consider that it creates a Tory trap in two respects. The Conservative party is committed, in Wales and across the rest of the UK, to cutting taxes further for the wealthiest people. The Secretary of State has said that he wants to do that. He has further said that he favours tax competition, with Wales able to undercut England. We are not in favour of that. However, given that in the Bill the Secretary of State has drawn a clear line between the quantum of income tax that is nominally to be devolved to Wales and the amount of borrowing that will be afforded to the Welsh Government, and given that £1.7 billion has been cut out of the Welsh budget, particularly in capital, we are in favour of increasing the amount of money that they might borrow. Our 10p to 15p change would achieve that, if the Welsh people agreed to it in a referendum.

[Mr Gauke]

I am grateful for that lengthy speech. I may have come late to the debate, but it is perfectly clear that Labour has been all over the place on this matter. I come back to what I said about the advantages of devolving income tax. One of those, very significantly, is that there is much greater accountability for the Welsh Government, because if they are able effectively to use the powers that they currently have to get the Welsh economy to grow, they will benefit from that as a consequence of increased revenues.

--- Later in debate ---

[Owen Smith]

I am grateful to the Minister for giving way; he is being very generous with his time. This is like all our yesterdays, in that we are debating, by implication at least, the Laffer curve. He said a moment ago that if Wales were to pursue the right policies, it would see economic growth by deploying these new powers. Does he mean by that that taxes in Wales should be cut, as the Secretary of State has said he would do? If so, which taxes does the Exchequer Secretary propose to cut and by how much?

[Mr Gauke]

That is a matter for the Welsh Government. They might want to pursue tax policies, but I repeat that policies on education, skills, housing and planning all contribute towards economic growth. The situation at the moment is that the Welsh Government control many of the key levers to generate economic growth, but do not currently benefit from any resulting economic performance through the impact on its budget. This devolution of tax will address that situation. Equally, to go back to the point made by the hon. Member for Swansea West (Geraint Davies), it means that if bad policies are pursued and they damage growth, that will have a consequence for the Welsh economy. I am sure that he is not suggesting that the Welsh Government will pursue growth-damaging policies.

[Geraint Davies]

rose—

[Owen Smith]

rose—

[Mr Gauke]

I will give way one last time to each hon. Gentleman.

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[The Temporary Chair (Mr Christopher Chope)]

Order. The Minister is not giving way to the hon. Member for Swansea West (Geraint Davies). We must have some order. There are not many Members in the Chamber, but they seem to be making a mockery of the rules of order. I think that the Minister is giving way to the hon. Member for Pontypridd (Owen Smith).

[Owen Smith]

I merely wanted to ask whether, while talking about good and bad policies, the Minister would care to congratulate the Welsh Government on the good policy of Jobs Growth Wales. The policy has been seven times more effective than the Work programme in Wales, and has resulted in Wales having higher growth and, indeed, better unemployment figures than anywhere else in the UK.

[Mr Gauke]

It is worth pointing out that 12,000 new jobs, as I understand it, have been created under the Work programme in Wales, but I think that I should make a little progress, Mr Chope.

The change involves creating incentives for the Welsh Government, which of course means transferring some risks to them. Specifically, the Welsh Government’s budget will benefit if the income tax base grows faster in Wales than the UK average, but it will be adversely affected if growth in Wales is slower. Crucially, the larger the proportion of income tax that we devolve, the greater the potential impact on the Welsh Government’s budget. Devolving 15p of income tax would increase the size of the impacts by 50% compared with devolving 10p. There is a balance to be found between risks and rewards, and at this stage we see no evidence to suggest that we should move away from the Silk commission’s assessment, which resulted in the recommendation to devolve 10p of income tax. That recommendation is now reflected in the Bill.

[Owen Smith]

Will the Minister give way a final time?

[Mr Gauke]

I remember debates on Finance Bills in which it was very difficult to speak for long without a contribution from the hon. Gentleman, and nothing has changed. I will give way again.

[Owen Smith]

I aim to entertain and to scrutinise legislation properly. Simply on the question of risk, will the Exchequer Secretary tell us what risk the Welsh Government will bear in relation to the potential costs of the change? We know that it will cost between £40 million and £42 million to do it in Scotland. Will it be more or less for Wales? How much will it be?

[Mr Gauke]

At this point, it is not possible to say what the cost will be. I must say that, with the gain in greater accountability and the greater devolution of powers, hon. Members should welcome the change. The hon. Gentleman is aware that the issue is one for a future referendum. Whether the Welsh people want to go down such a route is a question for them, and such matters will clearly be relevant to that debate. However, on having a 10p rate rather than a 15p rate, I hear the arguments in favour of essentially no devolution whatsoever and those for having a larger sum, but we believe that we have got the balance right. I hope that hon. Members will accept the balance achieved by the Silk commission recommendation, and that the hon. Gentleman will not persist with amendment 41.

--- Later in debate ---

[Jonathan Edwards]

That is an important intervention. The Labour party’s position is that it is worried about tax competition, yet, based on its tax policy, the only tax competition that could happen would favour England and other parts of the British state.

[Owen Smith]

Let us be absolutely clear: Labour has not argued, and is not arguing, for a tax increase in Wales. We know that the Conservative party is saying that it wants to cut taxes for the wealthiest in Wales. We are seeking to future-proof the legislation so that a Labour Government in Wales would be able to mitigate against further Tory tax cuts for the wealthiest, and introduce tax justice in Wales.

[Jonathan Edwards]

That is the crux of the argument, and the division between the Labour party and my party. My view is that we should empower the National Assembly and have a mature debate in Wales about what the level of taxation should be. I think the hon. Gentleman is aware of where my political conscience lies—I tabled an amendment to the Finance Bill to reinstate the top rate to 50p. Let us have the debate. Let us trust our Assembly Members to have the debate and let us see the National Assembly mature. The one thing that devolving responsibility for these powers will do is lead to the maturing of the Assembly. Hopefully, we will see the growth and development of our democracy in Wales.

When the Welsh Affairs Committee carried out the pre-legislative scrutiny of the Bill, we had independent witness after witness—I hasten to add that my hon. Friend the Member for Arfon (Hywel Williams) had taken over my role in the Committee for that period, as I was enjoying my paternity leave with my son Llywelyn—giving evidence, except of course the Secretary of State and Treasury Ministers, arguing that the lockstep should be removed. Those giving evidence included the leaders of all the parties in the Assembly, not least the leader of the Liberal Democrats and the Conservatives in Wales. Several distinguished economists, academics and experts, as well as the Chair of the Select Committee on Political and Constitutional Reform, also gave evidence. When the Welsh Affairs Committee visited Scotland following the initial Silk report, there was much excitement about its proposals. Academics, economists, civil servants, Ministers and Back Benchers in the Scottish Parliament were all in favour of Silk’s proposals for Wales, as opposed to what they have in the Scotland Act 2012.

I need not remind Labour Members present that the Labour First Minister, Carwyn Jones, said that the lockstep is a “Tory trap” and that it should be removed. He said the lockstep was “a long way short” of what was considered to be good for Wales, adding that

“binding the rates together is not right for Wales”.

That is a clear indication of the need to remove the lockstep on income tax varying powers.

We in Plaid Cymru are seeking, through amendment 21 and several other amendments, to maintain the integrity of the original cross-party Silk commission recommendations. We believe that the Welsh economy needs that sensible package of reforms in order to increase its ability to bring about economic growth and create jobs. We believe that it is a necessary tool, which will help us to begin to rebalance the economy of the British state by giving greater power to the nations and regions, and will help Wales to begin to lift itself from the bottom of the UK economic league table.

In its present form, the Bill requires Wales to hold a referendum on the lockstep model of income tax and win it in order to gain access to the higher limit applying to borrowing to fund investment. We believe that Wales needs access to that money in order to invest sensibly in infrastructure, secure a good return on its investment, and provide jobs that will have a beneficial effect on the state of the Welsh economy. We are all mindful of the huge cuts in its capital budget that the National Assembly has suffered under the coalition Government.

Given that the lockstep was not the compromise agreed by the parties during the Silk commission’s deliberations, it would surely make more sense to devolve the model without the need for a costly referendum. It is simply an income tax sharing model, with a 90-10 split between the United Kingdom and Welsh Governments. Giving the Welsh Government the ability to vary tax is a theoretical exercise that, as the Treasury well knows, cannot become reality with a lockstep—hence the strings that are attached in the Bill. The big prize of what we propose would be the increased borrowing capacity that I believe is required to help the Welsh economy to regenerate and renew itself.

It is clear that all the other parties are now putting narrow self-interest ahead of the Welsh economy by attaching conditions and caveats to Wales’s gaining of greater fiscal and financial powers. The Tories and Liberal Democrats have their condition of the lockstep, while Labour has its caveat in regard to reform of the Barnett formula, on which its members continue to contort and refuse to commit themselves despite citing it as a precondition for greater financial powers for Wales.

As for the debate in Wales, Andrew R. T. Davies and Kirsty Williams have announced some exciting tax policies that they wish to pursue in relation to the ability to vary taxes. Unfortunately, their colleagues down here in London are completely undermining what they have pledged to the people of Wales in various policy announcements. That is a big hit to their credibility, which may be why the Secretary of State introduced the lockstep: perhaps he wanted to undermine Andrew R. T. Davies.

There has already been much public debate in Welsh civil society about the issue of the lockstep and the power to vary income tax bands individually in Wales. There has been controversy as the lockstep row has engulfed the Conservatives. The Welsh Secretary has claimed that the mechanism would not prevent Welsh Ministers from using the powers—although they have not been used in Scotland since 1999—and has suggested that a 1p cut across all three bands would increase Wales’s competitiveness, a claim which, according to the Welsh Government, would cost £200 million a year. Meanwhile, the leader of the Conservatives in the Assembly rejected the lockstep in his submission to the Welsh Affairs Committee hearing on the powers, prompting a damaging fall-out with the Secretary of State. All the Tory Assembly Members were seconded down here to No. 10 Downing street to try to repair some of the damage.

We are often given the impression that it is the Treasury that does the overruling in all these matters. If Scotland does not have it, Wales surely cannot have it. However, the ability to vary income tax bands individually, as per Silk, would truly allow for the ability actually to vary income tax in Wales, and would be a significant step in the maturing of our democracy. As I said in our first debate this afternoon, it would provide a very positive narrative for the Westminster parties in relation to Scotland, demonstrating that they were serious about reforming the settlement of the UK and going beyond what Scotland has at present.

--- Later in debate ---

The Bill gives the National Assembly for Wales—the Welsh Government—financial accountability for what they do. We have two days of debate in Committee. By giving income tax powers to the National Assembly, we are trying to create the foundation stone on which we can build a proper body in Cardiff Bay, serving, and answerable to, the people of Wales with true financial accountability. For that reason this proposal and the Wales Bill itself deserve our full support.

[Owen Smith]

It is a pleasure, Mr Hoyle, to serve under your chairmanship, and to call you by your true name. This clause is one of the most important in the Bill, so it is a shame that we do not have a huge amount of time to discuss it. There are many important questions about how it will work in practice in Wales. The Exchequer Secretary attempted to answer some, but not all, of those questions, and there remains significant uncertainty as to how income tax varying powers would work in Wales and what the real risks would be to the Welsh Government’s budget and to the services on which the Welsh people rely through that budget.

I take some comfort from the Minister’s observation that there is probably a long time between today and these measures being deployed in anger in Wales. Crucially, from our perspective, we have been clear about the triple lock—about knowing that this would be good for Wales and for the Welsh budget, that fair funding was secured for Wales and that the Welsh people had assented at a referendum to these measures being employed in Wales. All of those three tests would have to be passed.

However, there remains on our part significant concerns about the motivation behind these proposals from the Conservative Government. We are suspicious that the true motivation is to cut taxes in Wales for the wealthiest, as the current Government have done across the rest of the UK. That suspicion is based on a very clear reading of the statement made by the leader of the Conservative party in the National Assembly, who, in a wide-ranging speech last year, explicitly called for cuts solely to the top rate of tax in Wales. This is not a fantasy on our part. The leader of the Tories says that he wants to cut just the top rate, and the Secretary of State wants tax competition through cutting across the board.

[Mr Gauke]

The hon. Gentleman will be aware that, under the provisions in this Bill, a tax cut for one rate of income tax will apply to every rate of income tax. Does he understand that point, because that is what a lockstep means?

[Owen Smith]

I entirely understand that point, absolutely, completely and utterly. I also understand that the leader of the Conservative party in Wales has placed on the record his desire to cut solely the top rate of tax—[Interruption.] The Secretary of State is muttering from a sedentary position. I presume that he is referring to his colleague, the leader of the Tory party in Wales, because it was he who called for a cut to the top rate of tax. We understand perfectly well how this legislation will work in Wales, but we are not in favour of any one part of Britain undercutting another through tax competition, which is unfortunately the position of the Secretary of State for Wales—[Interruption.] He keeps chuntering from a sedentary position that I do not understand it, but, dare I say, if he had greater faith in his own understanding of his own Bill, introduced in this House with amendments tabled in his name, he would stand at the Dispatch Box to explain the Treasury position and the tax amendments. Unfortunately, he clearly does not understand it sufficiently not to have to rely on his colleague the Exchequer Secretary. We are extremely grateful to the Exchequer Secretary for turning up to act as a human shield for the Secretary of State for Wales, but it is a crying shame that the Secretary of State and the Minister require his support.

[Mr Gauke]

There is no doubt that the Secretary of State understands the measure but, given what we have heard so far from the shadow Secretary of State, perhaps it would have been better if one of the shadow Treasury team had been making the speech instead. They might have understood it.

[Owen Smith]

The Exchequer Secretary can continue to attempt to suggest that I do not understand the Bill, but I understand it perfectly. I understand perfectly how lockstep works, but equally understand that this Government have cut taxes for the wealthiest in Britain. They have exclusively cut the additional 50p rate to 45p. I also know that his party in Wales has proposed that it would like to go further with Wales, so he will forgive us if we are suspicious of the “tax cuts for the wealthy” motives of the Conservative party. I think we will continue to be suspicious. Unless he would like to get to his feet and tell us that he does not intend that his colleagues in Wales should cut taxes for the wealthiest, I suspect that he will not wish to intervene further.

On the subject of the complexity and cost of the Bill, the Exchequer Secretary left us entirely without answers about how it will work. In order to illustrate its complexity, I highlighted that he has today moved a poorly drafted clause that will see a Welsh Tory Member of the European Parliament who does not live in Wales and who does not have a residence of any description in Wales, but who lives in England, designated as a Welsh taxpayer. The logic of that is entirely lost on me, but I should have thought that he would want to check who his European Members are in Wales and where they lived before he determined that they would get a tax break—in her case, a £700 tax break—were his Government to do what the Secretary of State for Wales has suggested and cut all the tax bands in lockstep by 1%. That is the tax cut that she would get in Wales, despite the fact that she does not actually live in Wales.

[Jonathan Edwards]

The hon. Gentleman’s point about Kay Swinburne is an interesting one. Based on that, where does he expect that Stephen Kinnock will pay taxes should he be successful in winning Aberavon? Would it be in Aberavon, in Copenhagen or where he pays tax at the moment, in a tax haven in Switzerland?

[Owen Smith]

rose—

[Hon. Members]

Just answer.

[Owen Smith]

I intend to answer. I fully anticipate that my friend, Mr Kinnock, were he to be so lucky as to win the forthcoming general election and be returned as the hon. Member for Aberavon, a great and noble seat in the Welsh Labour tradition, intends, as he has stated on the record, to live in Aberavon. The irony of this poorly drafted legislation that has been brought before us by those on the Treasury Bench today is that it would not matter where he lived. He could live in Copenhagen or in England and he would still, for the purposes of this half-cocked Bill, be considered a Welsh taxpayer. I do not think that the people of Aberavon would understand that and I suspect that the people of Wales will not understand why an English Tory MEP living in Ledbury will be deemed a Welsh taxpayer.

Let me return to the point about the complexity, if I may, and read a small section of the Bill to the Minister for the delectation of the House. It is entitled “Close connection with Wales or another part of the UK” and can be found in proposed new section 116G in clause 8. It says in subsections (3) and (4):

“T”—

the Welsh taxpayer—

“has a close connection with a part of the UK if in that year—

(a) T has 2 or more places of residence in the UK,

(b) for at least part of the year, T’s main place of residence in the UK is in that part of the UK,

(c) the times in the year when T’s main place of residence is in that part of the UK comprise (in aggregate) more of the year than the times when T’s main place of residence is in each other part of the UK (considered separately), and

(d) for at least part of the year, T lives at a place of residence in that part of the UK.

(4) In this section ‘place’ includes a place on board a vessel or other means of transport.”

I read those subsections for the enjoyment of the Leader of the House, who I am delighted to say has joined us, to point out what a ludicrously complex piece of drafting that is, and what a ludicrously complex Bill it is. We point that out because attending that complexity is cost—enormous cost.

The Secretary of State, or rather the Exchequer Secretary—the Secretary of State did not answer because he was not at the Dispatch Box—could not tell us how much it would cost to implement these measures in Wales. That is a surprise. He also talked about accountability. He might have been a little more accountable for his own Department, because it is today that the Government and his Department should have published the second annual report on the implementation of part 3 of the Scotland Act, inwhich we were anticipating, as outlined in the Secretary of State’s impact assessment to this Bill, a renewedand updated view on the costs associated with the implementation of these measures in Scotland. That has not been published today. It was not published in April as Ministers promised.

That is a dereliction of duty, not least because it leaves us in Wales with no idea as to how much these measures will cost. But we have reason to believe and to fear that it will be a significant amount of money, because we know from the first report on the implementation of the Scotland Act that it will cost more than £40 million to implement such measures in Scotland, and we know from the Government’s own impact assessment that it is likely to cost more in Wales. The reason is the porosity and populous nature of the border between England and Wales: 48% of the Welsh population and 10% of the English population live within 25 miles of that border, which means that fully 6.3 million people live along that border. In contrast, just 4% of the Scottish population and just 0.5% of the English population live within 25 miles of the border between England and Scotland, which means that just 450,000 people live along that border.

If it has taken so far, as the Government have conceded, £1.7 million to start the analysis of how these measures will work in Scotland, how Scottish taxpayers will be identified, how a pay-as-you-earn system will work, how employers will deal with it, and what the nature of the information to be provided to newly designated Scottish taxpayers will be—it is already £2 million-ish and counting, and soon to be £40 million for Scotland—do we not need to have some idea in Wales, as a part of prudent management of Treasury finances, and eventually Welsh Government—finances, of how much money it will cost the Welsh? If the Minister wants to offer us some indication, I should be grateful, but at the moment we are in the dark, and in the dark we remain concerned that the costs will be greater for Wales, and the disbenefits for Wales, therefore, potentially also greater.

In the light of the fact that there is such a long period before the measure comes into force, we will not press the amendments that we have tabled to the clause, but we will maintain our concerns about the motivations that lie behind it. We will continue to push for fair funding for Wales, not to the detriment of Scotland but in the interests of the people of Wales, and we will continue to ask the Minister to clarify what exactly this measure will mean for the Welsh people, and whether they will be better or worse off if the Bill were ever to be enacted.

[Mr Gauke]

After what is a relatively short speech from the hon. Member for Pontypridd (Owen Smith), I am still not entirely sure whether he is for or against it, but we are certainly for the devolution of income tax in the way set out in the clauses. I hope that the clauses and the Government amendments will have the support of the whole House, and that all other amendments will not be pressed.

Amendment 21 agreed to.