European Union (Notification of Withdrawal) Bill

Debate between Owen Smith and Geraint Davies

Committee: 2nd sitting: House of Commons
Tuesday 7th February 2017 Commons Chamber

[Owen Smith]

It is a genuine pleasure to follow the excellent and characteristically shrewd speech by the right hon. and learned Member for Beaconsfield (Mr Grieve). I agree wholeheartedly with one point he made towards the beginning of his speech: we cannot allow the fact that there has been a referendum to absolve this House of its duty to scrutinise the Government’s progress in the negotiations, and to act in the national interest. I wholeheartedly agree with him on that. That view is conditioning my entire approach to this debate.

I disagreed with the right hon. and learned Gentleman, however, on the substantive point he made in respect of the concession made by the Brexit Minister. I disagree that the Government have made a substantive concession today. I confess that I am far less sanguine than some of my right hon. and hon. Friends about that. It does not feel to me that we have moved much beyond where we were in the Lancaster House speech. What is being offered to the House is a debate right at the end of the process, at a point—we do not know when exactly—seemingly in the dog days of the process. A choice at that point will be between the deal on offer, which in my view is likely to be a bad deal—one predicated on our leaving the single market and the customs union; the rock hard Brexit we all feared—and no deal. If there is no deal, the Minister confirmed today that the country will face exiting the European Union on WTO terms. What does that mean for the country? According to the director general of the WTO, it would mean a reduction in trade of around £9 billion per annum to the UK. Before the referendum, the Treasury thought it would mean an annual reduction in receipts of £45 billion per year. That was the reduction in GDP it foresaw. It is an eye-watering sum, equivalent to putting 10p on the basic rate of income tax. That is why, above all else, we have to consider where we are going incredibly carefully. If we end up there, it will be a disaster for Britain.

I said earlier that I wanted to speak in favour of amendment 43, tabled in the name of the hon. Member for Westmorland and Lonsdale (Tim Farron), but I would have liked to speak to my new clause 52, or even new clause 131, tabled by the Liberal Democrats, which would both have gone further and insisted on there being a second referendum. Apparently we cannot consider those amendments, however, because they would require a money commitment that the Bill does not have. That is ironic, given that the potential cost of falling out of the EU is £45 billion. Spending £100 million to make sure we do not do that seems like a pretty good deal.

[Geraint Davies]

Amendment 44, to be voted on tomorrow, makes provision for a referendum and valuation that does not need to be costed and therefore is in order, so those who want a second referendum on the final deal can vote for that amendment.

[Owen Smith]

I am pleased with that, and I hope that we will vote on it tomorrow.

I am insisting that we consider a second referendum—a confirmatory or ratificatory referendum, or whatever we want to call it—because I sincerely believe that Brexit will be a disaster for our country, and one that will cost us and future generations in lost trade, revenues and opportunities. I equally believe that it is a disaster for us to be dividing the country on this issue, as we have been, in respect of our values and the other crucial things we hold in concert.

Government Policies (Wales)

Debate between Owen Smith and Geraint Davies

Wednesday 26th November 2014 Commons Chamber

[Owen Smith]

It is nonsense to suggest that we are proposing a cut in the minimum wage. We will increase the minimum wage to £8, which will bring massive benefits for hard-pressed workers in Wales.

[Geraint Davies (Swansea West) (Lab/Co-op)]

On the income of the poorest workers, should we not bear in mind the impact of the bedroom tax? There simply is not smaller council housing for people to move into. In the event that people move into private housing, their rent goes up and the housing benefit goes up. In other words, it is simply a tax on the poorest for the sake of it. We will take it away when we get in, which will raise their incomes.

[Owen Smith]

My hon. Friend is of course right. That is why it looks increasingly as though the bedroom tax will cost the Exchequer money, not save it money. It is voodoo economics of the worst kind, because it penalises the most vulnerable people in our society. It is having an even greater impact in Wales, and the Secretary of State should acknowledge that.

Wales Bill

Debate between Owen Smith and Geraint Davies

Wednesday 30th April 2014 Commons Chamber

[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—

Wales Bill

Debate between Owen Smith and Geraint Davies

Monday 31st March 2014 Commons Chamber

[Owen Smith]

That is a very good point that we ought to consider. I would, of course, not support parliamentary or Assembly expenses being deployed for party political reasons.

I will move on to the minor taxes, particularly stamp duty land tax and landfill tax. We heard very little detail from the Secretary of Sport—[Interruption.] Well, there was very little sport there for anyone to have, to be perfectly honest. Hopefully we will have a bit more sport with the Secretary of State now. We will support the devolution of stamp duty land tax and landfill tax to Wales. However, there are many questions about how that will be implemented, so we will seek clarification during the passage of the Bill. Perhaps he will take note of some of these points now so that his Minister can respond to some of them later.

The first point concerns the suggestion that properties on the border between Wales and England would somehow be split, with stamp duty land tax being charged on the English portion and whatever its successor tax is being charged on the Welsh portion. It is an interesting concept. Will the Secretary of State tell us at some point during the passage of the Bill how many such properties there are on the border, given how populous it is? Will he tell us how the Government propose splitting those properties, as in many instances they are houses straddling the border? Will there be a number of bedrooms in England and a number in Wales? We know that the Government are keen on taxing bedrooms.

The second point relates to the cost of devolving that to Wales. We understand from the Bill that the Welsh Government will be asked to pay for the administration of any new tax, which is fair and just, and that that will be offset by any reduction in the cost to Her Majesty’s Government of administering the taxes as they had previously done in Wales. Given that the Secretary of State and the Treasury—this was confirmed by the Exchequer Secretary—have conducted little or no analysis of the impact of those various schemes in Wales, will he tell us how much he thinks it will cost the Welsh Government to administer and how much the offset will be?

On the even more important question of the reduction in the block grant that will come about as a result of the changes—it will be reduced by around £200 million and reviewed periodically—will the Secretary of State comment at some point during the Bill’s passage on the volatility associated with stamp duty land tax, because that figure of £200 million varies radically over time? Will he also tell us how he will calculate any differential in the rise and fall of house prices in England and Wales? By way of illustration, stamp duty land tax revenues in Wales have varied wildly over the past 20 years. They were £20 million in 1997, up to £95 million in 2003 and £130 million in 2005, and then down to £55 million in 2008-09 and £65 million last year. It is an extremely volatile tax, so I would be intrigued to know how the Treasury will account for it in any indexed reduction in the block grant, because that will have a significant impact on both the borrowing powers and, potentially, the revenues of the Welsh Assembly Government.

[Geraint Davies]

As I am sure my hon. Friend knows, over the past year house price inflation has been 13.2% in London and 6.8% across the UK. As I mentioned earlier, Boris Johnson is asking for stamp duty in London, where historically prices have always gone up faster. Is my hon. Friend at all concerned about the differential impact of stamp duty revenues, which he has alluded to already, plus pressure from elsewhere in the UK to have that tax resulting in a less fair and more complicated and confusing situation?

[Owen Smith]

That is a legitimate question. I have said previously that although we will support the devolution of stamp duty land tax and landfill tax and the putting of the income tax question to Wales, we remain concerned about tax competition. Over time, that might result in other parts of Britain wishing for similar degrees of autonomy, thereby reducing the ability of the central Exchequer to pool resources, share risk and redistribute from wealthier to less wealthy parts of Britain. That abiding concern of mine needs to be considered.

--- Later in debate ---

[Owen Smith]

No, I am going to move on. If the hon. Gentleman holds his water, I shall come back to income tax later.

Landfill tax is relatively uncontroversial save for the link to borrowing, to which I shall come later. There is also the link to the landfill communities fund. We heard nothing from the Secretary of State about that, but it is paid to communities with landfill sites within their boundaries. Has the Secretary of State done any analysis about the value of that fund to Wales? How much is collected and how much has been spent in Wales? How many landfill sites are there in Wales in comparison with England?

The Secretary of State is proposing that the landfill tax community fund also be devolved to Wales and that Wales should become responsible for meeting the costs of implementing a revised Welsh landfill scheme. Given that elsewhere in the Bill, the Secretary of State proposes that HMRC duties should not be replicated in Wales, why does he think the implementation of the landfill communities fund should be devolved? Is that yet another example of his wishing to pass responsibilities to Wales without there being the requisite resources?

We absolutely support the extension of borrowing powers to Wales. They are vital to make up for the £1.7 billion cut in funding for Wales—an almost 40% cut in capital funds—that the Government have implemented since 2010.

It is crucial that the Welsh Government be given the ability to borrow in order to try to back-fill the enormous holes in their budget left by the Secretary of State and his colleagues.

There are two measures relating to borrowing in the Bill, both with limits of £500 million—one to cover volatility in tax receipts and the other to cover capital. I wish to talk about the latter. The Silk commission, whose recommendations the Secretary of State keeps telling us he has largely stuck to, said that £1.3 billion should be devolved to Wales for capital borrowing, but the Bill limits it to £500 million. The Secretary of State says, as he repeated earlier, that the rationale for that is to draw a connection between the amount of money devolved to Wales—the volume of taxes—and the volume of money that might be borrowed. The Secretary of State says, as does the Command Paper on the Bill, that that is just like the position of Scotland. In fact, the Command Paper goes further than he did in saying that the Bill is generous given that in Scotland over £5 billion of taxes are devolved and £2.2 billion of borrowing is allowed—£220 million each year—and that if a similar ratio were applied to Wales, then Wales would get not £500 million but £100 million.

The problem with that rationale is that it is not true. The Scotland Act does not draw a connection, as the Secretary of State suggests, between the amount of taxes devolved to Scotland and the amount of borrowing. The Command Paper associated with the Scotland Bill said:

“Scottish Ministers will be allowed to borrow up to 10% of the Scottish capital budget any year to fund capital expenditure”—

that is, £230 million of an overall stock of £2.2 billion. The Scotland Act drew a clear correlation between the size of the capital budget and the amount that could be borrowed. The Command Paper for the Wales Bill, which the Secretary of State said was just like that for the Scotland Bill, reads:

“Specifically, the Scottish Government’s capital borrowing limit is £2.2 billion while it is taking on responsibility for tax revenues that are currently worth around £5 billion. Hence the ratio between the two is slightly less than 1:2. Applying the same tax/borrowing ratio in Wales would have given the Welsh Government a limit of around £100 million.”

The crucial question is why the Government have moved the goalposts for Wales. Why cannot Wales have the same rationale for its volume of borrowing as the Scots? That would give us about £1 billion-worth of borrowing—between £1 billion and £1.5 billion—rather than the paltry £500 million on offer.

Moreover, given the volatility of all tax returns, how sensible is it for the Government to draw a direct line between the receipts that Wales receives and the amount it can borrow? What if those receipts declined? What if we were in another recession? We would therefore see, I presume, a reduction in the amount of borrowing that Wales could undertake, which would frankly be economic stupidity.

[Geraint Davies]

Does my hon. Friend agree that there is a danger of moving the focus from Wales having its fair share of capital investment—for example, on transport, where there is £5,000 per head for transport in London and about £500 in Wales—because as soon as we get more borrowing powers the Government will say, “You pay for the valleys line electrification—you can borrow the money”? Is this not an excuse for making Wales pay out more from less?

[Owen Smith]

That is absolutely right. That is what we have been most concerned about throughout the passage of this Bill, and we describe it as a trap. The Tory party is seeking to wash its hands of Wales, and it is not interested in funding capital expenditure properly in Wales. We have therefore seen that the valleys line promise was not worth the paper it was written on, and the words of the Prime Minister and the Secretary of State were equally worthless. We are deeply concerned that this will be an excuse for the Tory Government to ask the people with the shallowest pockets in Britain to put their hands deepest into them to fund things that traditionally would have come through general taxation and from the wider benefits of our economic union.

On income tax, let me be clear: we are and remain opposed to tax competition across Britain. We believe in an economic and social union and in the ability of the central state to pool resources, share risk, and share rewards. That is especially true in Wales, as we are a net beneficiary—indeed, the greatest one—of that principle of progressivity and risk-sharing across Britain. That is why we remain opposed to the principle of undercutting one part of Britain with lower taxes in another, which is what the Secretary of State is proposing. We agree with the Government that the principle of progressivity ought to be retained. That is why we agree, broadly speaking, with the notion of the lockstep to tie bands together. But we have deep and abiding concerns about the hidden agenda that the Conservative party has, along with its nationalist colleagues, for greater tax competition in Britain.

We have reason for that concern, because the plans are not terribly well hidden. We have already heard that the leader of the Welsh Conservative group wishes to cut just the top rate of tax and that the economic adviser to the leader of the nationalist party in Wales wishes to do the same, and cut taxes only for the wealthiest in Wales. If we need any further illustration, we simply have to look at this Government’s record: they introduced a millionaire’s tax cut even as they increased VAT, which is paid, regressively, by the least well-off people in Britain.

--- Later in debate ---

[Geraint Davies]

The Prime Minister said that the UK Government would pay for the electrification of the railway lines, which are essentially UK infrastructure. I think that it is disgraceful, frankly, that while £52 billion is to be spent on HS2, the Secretary of State will not even fight for that extra bit of money for Wales. We desperately need it. He should resign.

[Owen Smith]

I just want to clarify for the House that the Prime Minister said:

“It’s this government”—

I presume he means Her Majesty’s Government—

“that’s putting the money into the electrification of the railway line all the way up to Swansea and, of course, the valley lines.”

Constitutional Reform (Wales)

Debate between Owen Smith and Geraint Davies

Thursday 19th May 2011 Westminster Hall

[Owen Smith (Pontypridd) (Lab)]

Thank you, Mr Davies, for calling me. It is a pleasure to serve under your chairmanship for the first time.

I will start by saying that it is slightly unusual for me to speak on the Front Bench today, as I am following the precedent of the Minister when he was in my shoes, as it were, in Opposition. Like me, he was a member of the Welsh Affairs Committee in Opposition. It is the Committee’s report that we are debating today and therefore I can say to the hon. Member for Monmouth (David T. C. Davies), who is the Chairman of the Welsh Affairs Committee, that I add my support for the way that he chairs the Committee generally and particularly for the way that he chaired it while this report was being produced. He brought us to a point of considerable agreement across all parties and today he elucidated very well the arguments that we had during the weeks that we debated the Bill. I was less certain about the transformation that he underwent during his speech into a shop steward for MPs from all parties. I certainly will not go so far as the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards) in putting the hon. Gentleman’s commendations on my election literature. Nevertheless, the way in which he spoke up for MPs today is very welcome.

The Bill represents what the Committee referred to as a “profound change” to the constitution of the UK Parliament and particularly in respect of Wales, and we have heard that spelled out in different ways by different Members today. Reasonable Members of Parliament cannot argue with that conclusion, because any change that diminishes by fully 25% at a stroke the political representation of a country is a profound change. Any change that breaks a parliamentary protocol in respect of the representation of one country in a Parliament that has been established for almost 200 years—as we heard from my right hon. Friend the Member for Torfaen (Paul Murphy), that protocol was established in the Great Reform Act of 1832—is a profound change. That protocol established an over-representation, if you like, for Wales, but it is an over-representation that is designed to reflect the asymmetrical nature of the Union that we have between Wales, Scotland and England, and to offer some protection and insurance that the junior partner in that Union—that is, Wales—does not have its voice drowned out by the leviathan—that is, England —on its border. I believe that the changes that we are discussing potentially threaten the Union, and any such change is absolutely a profound change.

One of the great disappointments for the Opposition during the all-too-hasty passage of the Bill was the seeming inability of the Government to acknowledge the arguments that many people from across the House—on the Tory side as well as on the Opposition side—were making. For the Opposition’s part, I feel that we acknowledged that there is an important argument to be made about equality and fairness in representation being observed and implemented, to the extent that that is possible in representation between different constituencies. We acknowledged that that is an important and long-standing priority.

However, that is not the only consideration or priority that ought to have been considered by the House. It was profoundly disappointing that the Government singularly refused to acknowledge that there might be other considerations, and I suspect that we will hear something similar in a moment from the Minister. The principal one among those other considerations is the importance of giving insulation and protection to the junior partner in this asymmetrical union that we have, and the corresponding danger of changing that balance and the voice of Wales being singularly diminished in Westminster.

The Committee’s report was quite prescient in giving warnings about those dangers. We have heard today from my hon. Friend the Member for Islwyn (Chris Evans) that it was prescient in its warning that the changes being proposed could lead to a diminution of trust in politics. The Government told us that the rationale for pursuing the Bill was, in many respects, to try to rebuild trust in politics, which we all accept has been damaged in recent years. However, the Opposition fail to see how removing politicians further from the electorate and increasing the gap between electors and elected will help to rebuild trust. If anything, a rational observation is that it is likely to do the reverse and increase people’s mistrust in politics, especially when people look at these changes and understand—as we in the Opposition understand—that they are motivated by a partisan rationale.

The hon. Member for Carmarthen East and Dinefwr and my right hon. Friends the Members for Cardiff South and Penarth (Alun Michael) and for Torfaen, who are both former Secretaries of State for Wales, and indeed other Members have already discussed the next point that I want to make; in particular, my right hon. Friend the Member for Torfaen spoke with great power about it. It is that we are deeply concerned about the impact that this change will have on the Union.

Nationalist politicians, with their variable success at the recent election, are undoubtedly emboldened in some respects by the change that is being proposed. For all that we hear the hon. Member for Carmarthen East and Dinefwr talk about the importance of representation in this place, I think that nationalist politicians are emboldened by the extent to which the Bill and some of the other things that we have discussed today are putting the debate about the Union at the top of the agenda. The Bill and the other issues that we have debated are throwing into question the constitutional settlement that we have understood for the last 200 years—indeed 300 years—and challenging us to think about what we mean by the future of devolution, how Wales is to be represented and what balance is to be struck in the light of devolution.

I agreed with the Minister when he said in an intervention that perhaps we had not fully thought through the implications of devolution. We now need to do that and to think holistically about all these issues instead of doing what I fear is precisely the Government’s intention, which is to look at them piecemeal and for party advantage.

I share the concerns of my right hon. Friend the Member for Torfaen that, for all the Prime Minister’s avowed intention to fight with every fibre of his being for the Union, we are hearing far too much from Conservative Back Benchers who are resentful of Wales. They are resentful of the different decisions that are being made in Wales and of what they perceive to be the parts of the UK, including Wales, that are both politically hostile—they do not elect Conservative candidates—and economically dependent, which is the bit that really worries me. There is an ugly spirit at the back of those concerns that Wales is getting more than it is due and that Welsh needs are being over-accommodated, both in terms of political representation and the economy.

[Geraint Davies]

Does my hon. Friend agree that there is a worrying and increasing number of Conservative MPs who take the view that having separation of both Wales and Scotland from England would be a price worth paying to have a perpetual Conservative Government running England?

[Owen Smith]

I share some of the concern about that issue. I do not think that my hon. Friend is overstating the case, because we have heard far too many noises off from Conservative MPs that lead us to fear that many of them think that breaking up the Union would be a price worth paying. I certainly do not share that view and I do not think that any Opposition Members do either.

Another area that we have touched on today and that the Committee’s report was again prescient about is the impact on the National Assembly of the changes that are being proposed. During the passage of the Bill, we were repeatedly told that breaking the link between elections in constituencies in Wales for the National Assembly and elections for Westminster effectively meant that the National Assembly would be unaffected by the Bill. However, it is only a couple of short weeks since the Bill’s passage and already we have heard the Secretary of State for Wales, in response to a question put by the hon. Member for Carmarthen East and Dinefwr in Welsh questions last week, entertain the notion that a Calman-style commission in Wales might look beyond financial matters and indeed might look at the nature of the elections to the National Assembly and the make-up of the electoral districts for the National Assembly. That is worrying. It is looking like another broken promise from the Government if we are now going to see the National Assembly being so directly impacted by the Bill.

I ask the Minister to try to clarify today what was implied by the Secretary of State’s response to the hon. Gentleman’s question last week. If the Minister is unable to tell us exactly what that commission is going to look at, can he at least tell us whether it will look at alternatives to the current voting system? The hon. Member for Carmarthen East and Dinefwr slightly misrepresented me when he said that in our discussions last week I said that we had to stick pretty much with what we have got. I did not say that. What I said was that we certainly should not shift instantly if we are to consider these matters through 30 list members and 30 first-past-the-post members. The rejection of the alternative vote last week raises the question of whether we ought to look more seriously at first past the post and I think that there is an opportunity for us to put other alternatives on the table, such as having 60 members, two per constituency, in a first-past-the-post system. There might be a significant amount of agreement across the House for that as an alternative system.