Wales Bill

Wayne David Excerpts

Tuesday 24th June 2014 Commons Chamber

[Mr Gauke]

No, my right hon. Friend the Prime Minister has not made a manifesto pledge. The Strathclyde Commission has put forward recommendations, which will be considered in due course by my party for the next Parliament. I should point out with regard to the amendment tabled by the hon. Gentleman and his colleagues, which suggests replacing 10 percentage points with 100, that the effect would be to produce negative tax rates—a minus 60% tax, a minus 55% tax and a minus 80% tax. I am not sure that that was quite what the hon. Gentleman sought to do, but I appreciate that he was trying to devolve all income tax to Wales. I take the opportunity to point out that there is a technical problem with amendment 9.

There is a balance to be struck between risks and rewards. At this stage we see no evidence that suggests we should move away from the Silk Commission’s recommendation to devolve l0p of income tax.

[Wayne David (Caerphilly) (Lab)]

Will the Minister give the House an assurance that what the Government propose today has the full support of all the Conservative Members of the Welsh Assembly?

[Mr Gauke]

It is for this Parliament to determine what we should put in place in the Bill. We believe that our proposals strike the right balance. We support the powers. In the time that I have been involved with the Bill, it has not yet been made clear to me whether the hon. Gentleman’s party supports or opposes these measures, but perhaps we will find out today. This Government believe that the powers should be in place and that there should be an option, following a referendum, for devolution of an element of income tax to the Welsh Government. I hope, therefore, that hon. Members will accept the balance contained in the Bill and recommended by the Silk Commission, and that they will withdraw amendments 9 and 10.

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[Jonathan Edwards]

Diolch yn fawr, Mr Deputy Speaker. It is a pleasure to serve under your guidance as we discuss this vital Bill, which will empower the Welsh Government with an element of fiscal responsibility for the first time. I would have hoped that all MPs representing Welsh constituencies were united in the view that one of our major roles as elected Members is to ensure that the Welsh economy is able to perform far better than it has in the recent past. Considering the incredible wealth inequalities that exist within the UK, with Welsh communities all too often at the bottom of the wealth league, I would have hoped that every political party was united in a mission to turn around the decades of neglect served upon Wales by successive UK Governments.

Far too many politicians in Wales rejoice at the underperformance of the Welsh economy, as it enables them to preach that Wales is far too poor, too small and too weak to succeed as an independent country. Their assertions are plainly ridiculous; Wales has all the ingredients to be a successful nation. We are a country that is rich in natural resources. Our people are highly talented, producing global leaders in science, academia, sport, culture and economics. The real question we should ask ourselves in Wales is: how do we find ourselves in such a predicament? Are we, as a people, content to languish at the bottom of every performance table and at the top of all poverty measurements?

If I was a unionist, I would be ashamed of the fact that gross value added per head in inner London is 12 times larger than that in west Wales and the valleys—the communities I represent. Westminster is not working for Wales, which is why my party believes that the potential of the people of Wales can be achieved only if our own democratic institution has the tools to move our country forward. History shows that changing the colour of the Government in Westminster will make no difference: the Westminster parties are all signed up to the same economic agenda that has failed Wales for far too long, and the people of Wales increasingly understand that. All polling indicates that they want the National Assembly empowered with more political responsibility. A poll by the Silk commission found that 64% believed that income tax should be devolved to the Welsh Government, so it is disappointing, to say the least, that the efforts of Plaid Cymru to improve and strengthen the Bill in Committee hit the infamous Westminster wall. In Committee, we endeavoured to preserve the integrity of the proposals of the Silk commission, which of course were the foundation for this Bill. Disappointingly, all the Westminster parties reneged on the cross-party agreement that had been made during the commission. The Bill undermines what was agreed in the Silk commission, cherry-picking from a comprehensive package. On more powers for Wales, the three Westminster parties are three peas in a pod, despite the protestations of their representatives in the National Assembly.

In Committee, Plaid Cymru put forward sensible and reasonable amendments that would have improved the Bill. Those included removing the damaging lockstep on the proposed income tax-sharing arrangement between the UK and Welsh Governments; inflation-proofing the borrowing powers included in the Bill; and empowering the Welsh Government to issue bonds and tax credits, as has been done in Scotland. We also tabled a series of constitutional amendments on matters as simple as enabling the National Assembly to determine its own name; to set its own number of elected Members; and to determine its own electoral system. Needless to say, none of the amendments was accepted by the UK Government and neither would Labour offer its support, preferring instead to table wrecking amendments that would further dilute the effectiveness of this Bill. I suspect that has something to do with the anti-devolution cabal currently ruling the roost in the Labour Westminster shadow Wales Office.

[Wayne David]

Can the hon. Gentleman answer this simple question: are he and his party in favour of tax competition and the race to the bottom among the nations and regions of the United Kingdom?

[Jonathan Edwards]

Enabling the Welsh Government with tax-raising powers would incentivise the Welsh Government to improve the Welsh economy. At the moment, they are a spending body, in essence; there is no incentive for them to improve the economy. That is why these fiscal powers are so important.

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As I said earlier, equality with Scotland is one of the most powerful messages in Welsh politics. Why should we not have the same powers as Scotland? Are the other parties content for Wales to have inferior powers to those of the other nations of the UK? The Labour party states, through its First Minister, that it wants the same powers for Wales as for Scotland, yet it does precious little about getting them. Only now is Labour meekly saying that it is standing up for Wales to get the powers that were given to Scotland a generation ago.

[Wayne David]

Is there not a contradiction between what the hon. Gentleman is now arguing for and his total support for the Silk recommendations? Surely he must choose one or the other.

[Jonathan Edwards]

I appreciate the hon. Gentleman’s intervention. As I have said, we endeavoured to preserve Silk during the Committee stage, but our attempts were completely torpedoed by the Government and by Labour. We are therefore saying that we are going to go beyond Silk in the remaining stages of the Bill.

Even the Financial Times says that the UK should move to a fully federal constitution. As I said earlier, it stated in its editorial on Monday last week:

“A shift to far greater fiscal devolution north of the border would have to be mirrored across the rest of the union. It would require a whole new constitutional settlement whose purpose would be to create a more federalised Britain...First, Wales and Northern Ireland would need to gain similar powers to those in Scotland to raise, and vary, tax rates.”

Crucially, it ended by saying that

“the creation of a new constitutional settlement...is not something that can be left on hold”.

Last week we also learned not only that 55% of the peoples of the UK want greater fiscal and policy powers for Scotland, but that 54% want Wales to have those same greater freedoms, according to an ICM poll commissioned by the Evening Standard.

We are moving towards a far looser Union, and that is why this Wales Bill is a major missed opportunity. I have always said that the powers on offer in the Bill would be completely overtaken by events in Scotland and I have been vindicated, not least by the fact that there is an increasing likelihood of Scotland voting yes in September, thereby making the Bill look like a sticking plaster put over a burst dam.

All the Unionist parties are now falling over themselves to offer increased devolution in Scotland, despite having previously said that that should not be an option in the referendum. They must be kicking themselves that they did not include it as a third option on the ballot paper. Who will believe a word they say when they promise jam tomorrow? I would say, based on past evidence—and on what the Exchequer Secretary to the Treasury has said today—that the only way for the people of Scotland to guarantee more powers for Scotland is to vote for independence.

I would draw the people of Scotland’s attention to the Wales Bill. Here we have a Government who set up a cross-party commission to bring forward a consensus which carefully put together a fully endorsed package of reforms. The Conservatives and the Liberal Democrats then reneged on their word by cherry-picking and watering down the recommendations of the cross-party commission. They added restrictions and caveats further to render the powers unusable via mechanisms such as the lockstep. The UK Government’s attempt to strangle the cross-party Silk commission’s original recommendations by adding caveats, restrictions and locksteps should be a salutary reminder to the Scottish people of the sincerity of Westminster’s promises regarding further devolution. If the Wales Bill is anything to go by, the Government here will make a big headline-grabbing announcement promising more devolution, only to reveal a paltry offer when the surface is scratched away.

[Wayne David]

I take the hon. Gentleman back to his comments a moment ago, when he said he was supporting Silk. He is now saying that he is not supporting Silk. Is he behind Silk or not? Does he want to see those proposals taken much further? He cannot have his cake and eat it; he must decide one way or another.

[Jonathan Edwards]

I am grateful to the hon. Gentleman for that second attempt, but I think I answered his question when he first intervened on me.

It is interesting that Labour Front Benchers have only now tabled amendments to the Bill to give Wales control over 15% of income tax revenue gathered in Wales. That proposal is in amendment 10. Admittedly it is better than the 10% on offer in the Bill as it stands, but it is still meagre and shows a lack of ambition and vision for Wales. That is symptomatic of the Labour Government in Cardiff and their puppet-masters here in Westminster. Of course, 15% is better than 10% and we shall be supporting the amendment if it is pressed to a vote, especially as it does not include the lockstep-plus mechanism I referred to in Committee. However, it still reflects Labour’s lack of dynamism. Why only 15%? That figure seems to have been chosen simply because it is ever so slightly better than the Tory and Lib Dem offering.

I see that Labour’s other amendments are more concerned with delay, obfuscation and preserving its own positions than with trying to get the best deal for Wales and its economy. On the vote in Committee to remove the lockstep restriction, Labour abstained, despite the Labour First Minister and Finance Minister having said that it should be removed. Where is Labour’s consistency? Again Labour Members say one thing in Wales and do another at Westminster. They are now saying that Wales should have control over 15% of income tax revenue, yet their amendment says nothing about the removal of the lockstep.

When the Westminster Government announced in November last year that Wales would be getting new powers, they stated that the powers would make Wales an “equal partner” in the UK. Nothing could be further from the truth. The Secretary of State for Wales has previously argued that Wales must be given “equal respect with Scotland”, yet his actions run completely against that. His party is effectively offering Scotland full income tax devolution, yet he is maintaining the lockstep in the Bill for Wales and proposing that we should have control of only 10% of the income tax revenues raised in our country.

In conclusion, I want the same powers for Wales as the other nations of the British state either have or are being offered. If the main party of Government here at Westminster has full income tax devolution for Scotland as its party policy, why on earth should Wales not have those same powers? The changing context of the Scottish independence referendum debate vindicates what I have said all along—namely, that its rapid development will ensure that the powers on offer in the Bill will not be the settlement for a generation that the Government are suggesting.

The Welsh economy needs those powers now, never mind in three years’ time—the earliest point at which they would come on stream. Ultimately, the powers on offer in the Bill pale into insignificance in the context of how the constitution of the British state will alter in the coming years. That should be noted by this Government and all the parties, and we should begin with full devolution of income tax, so that the Welsh Government can determine their own bands and rates.

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[Hywel Williams]

My remarks, which will appear in print tomorrow, will repay close reading, as that was precisely the argument I made. The position in Catalonia and the rest of Spain is far inferior to that in the UK, and I am pointing out the superiority of that Edinburgh agreement as the basis of my arguments for a legally binding system of referendums to be established for Wales.

In the UK, the important referendums and constitutional changes have occurred over the last 10 to 20 years, including the devolution referendum in 1979, the one in 1997, and the more recent referendum on our electoral system. In 2011, the people of Wales were asked in a referendum whether they wanted the Welsh Assembly to be given full and primary law-making powers; 63.5% of those polled voted yes. That stood in stark contrast to the results of earlier referendums that right hon. and hon. Members will remember. In 1979, for example, 79.7% voted against devolution; in 1999, there was a narrow majority of 50.3%, secured on a small turnout of 50.1%. That is how it was, but since then, I would argue that the people of Wales have grown to favour devolution, as have some right hon. and hon. Members in this place. The Assembly has grown in confidence, and as it gains further powers, it should surely have the power to ask the people of Wales what they think. That would be in the interest of legitimacy and accountability.

I referred to the Edinburgh agreement, and I suggest that a similar agreement in Wales should be called not “the Cardiff agreement” but “the Celyn clause”. This refers to Capel Celyn, which, Members will recall, was the village drowned in 1965 against the express wishes of elected and representative bodies throughout Wales—and, I understand, the wishes of every Welsh MP bar one. That was a transformational event in Welsh politics, and we have seen the effect of it over many decades. That effect is clear and provides a firm reminder of what can happen when the will of the people is so resolutely ignored. That is why we tabled new clause 3, giving the Assembly the right to hold legally binding referendums. I certainly commend it, but I assume that the matter will be discussed, possibly in greater detail, at some point in the future.

Let me make a few brief points about new clause 4. My Plaid Cymru colleagues and I have supported the reserved powers model for the National Assembly for a very long time. We are glad to see the Damascene conversion of the Labour Front-Bench team—better late than never! We certainly believe that this is the next step for our country; it would certainly clear up much of the confusion, not least in the minds of the public and others, as to the split of powers between the National Assembly and Westminster. I say to the Welsh public and others that I too often see people from the media refer to Assembly matters as if they were Westminster responsibilities, and vice-versa.

We in Plaid Cymru were, as I mentioned, against the LCO—legislative competence order—model, which so blighted the lives of those on the Welsh Affairs Committee and held up the pragmatic and practical transfer of the most innocuous of powers to the Welsh Government, as well as some rather more controversial powers. We wanted the boldest arrangements, but that was not forthcoming under the Government of Wales Act 2006—until the referendum. Circumstances have changed again, and the need for a move to a reserved powers model is even more pressing than before.

No one in this place or in the Assembly can be sanguine, given a recent survey showing how far we have failed as politicians to inform our constituents of the reality of the split in power. As I said, the media are far from blameless. Having said all that, it is disappointing that in the second part of their new clause 4, the hon. Members for Pontypridd (Owen Smith) and for Llanelli (Nia Griffith) have chosen to predicate any developments in relation to this matter on delaying the minor taxes. I must therefore view the new clause, I am afraid, as a delaying tactic at best, and as aimed at wrecking this part of the Bill at worst.

[Wayne David]

I support granting and extending borrowing powers to the Welsh Government. It is important that the Welsh Assembly has at least some facility to borrow what it deems necessary, as local government does. I also share the concerns expressed about the possibility of eventual tax competition, and I deeply regret that the Government have proposed no modification of the Barnett formula to address the shortfall in what Wales receives.

It also causes me concern that the Government do not appear to accept the need to address what we consider to be a fundamental shortcoming in the current devolution settlement. I believe that we need to move from a conferred powers to a reserved powers model, which would allow the Welsh Government to make law in any area unless it was clearly stated that they were unable to do so. That is why I support new clause 4.

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[Wayne David]

That is a fair point, and I will touch on it a little later. We have asymmetrical devolution in the United Kingdom; we have different forms of devolution in different parts of the UK. While there are good reasons for that, it does not help the general public’s understanding of what is devolved and what is not devolved. If we had greater consistency in the bedrock of devolution between Northern Ireland, Scotland and Wales, that would help that public understanding. Some may say that strictly speaking the Northern Ireland settlement is not quite akin to the Scottish settlement, but nevertheless in effect we have a reserved powers model in place and it would be advantageous if Wales were to follow their examples.

As Members, and in particular my hon. Friend the Member for Llanelli (Nia Griffith), have said, there has been an unfortunate conflict between central Government and the Welsh Government through the Supreme Court. There have been three referrals of legislation to the Supreme Court. We have heard about the then Local Government Byelaws (Wales) Bill, which the Government here in London questioned. They asked for the Supreme Court to make an adjudication, and the position of the Welsh Government was upheld, but we must consider the amount of time and effort that went into questioning such a relatively small measure and whether that meant there was better government.

I feel I must quote the Counsel General for Wales, Theodore Huckle QC, who has said that

“it took five Supreme Court Justices…several of the UK’s leading constitutional lawyers and a great many officials across three Governments to decide it was lawful to make minor changes to the way Welsh local councils deal with things like dog-fouling and loitering in public lavatories.”

That raises this question: what sense is there in that? How on earth can that be defended as good government? It cannot be.

[Stephen Crabb]

I genuinely wonder whether the hon. Gentleman is suffering from amnesia, as he was a part of a Government who created that exact system. If he does not think the Supreme Court is the relevant mechanism for resolving disputes between two Governments over legislative competence, then what is, under the reserved model he supports?

[Wayne David]

I just think it is very important to learn. I know that is anathema to the current Government, but if we recognise that devolution is a developing process, it is vital that we learn and make things better and, when things are clearly not as they should be, make improvements. That is a good way to approach government.

[Paul Murphy]

I remind my hon. Friend and the House that there are highly developed mechanisms in these islands to resolve disputes of any nature through the Joint Ministerial Committee, or simply between ministerial committees, without having to go to courts of law. There are better means of proceeding, and we should use them rather than go to the Supreme Court.

[Wayne David]

My right hon. Friend makes an extremely good point. He has tremendous experience in these matters—far greater than I have—and I would certainly bear out what he has said. A common sense way to approach disputes between different legislatures in the United Kingdom is to sit down and talk, and use the established structures, and not resort to expensive, time-consuming legal processes that are very obtuse to most people. That is one lesson to be learned.

We must also learn the lesson that we need a different model. We need a reserved powers model to form the bedrock of our developing devolution settlement in the United Kingdom.

[Guto Bebb]

I have listened carefully to the hon. Gentleman’s comments, and to those of the right hon. Member for Torfaen (Paul Murphy) and the hon. Member for Llanelli (Nia Griffith), who is on the Opposition Front Bench. If the Labour proposal is to move to a reserved powers model, which is clearly the case judging from the arguments presented today, do Opposition Members believe that the report they envisage should look at the consequences for the largest part of the United Kingdom, which is England, because not once has any Opposition Member talked about any potential impact on the English electorate?

[Wayne David]

I have no qualms at all about talking about England, because we are a United Kingdom, but if I deviated from my notes and spoke at length about England, you would take me to task pretty quickly Madam Deputy Speaker.

It is important to recognise that the Local Government Byelaws (Wales) Act was not a one-off. We have seen an attempt—perhaps most significantly, politically—to prevent the Welsh Government from carrying through their legislative plans for the agriculture sector. That is a far more emotive issue, particularly for workers who are directly affected by this Bill—or, as may happen, the lack of it. However, that reinforces the constitutional point that the current situation is unsatisfactory, facing as we do ongoing legal challenges on the basis of politics, rather than, as my right hon. Friend the Member for Torfaen (Paul Murphy) said, Members sitting down together where there is a genuine dispute between the two legislatures and working things out.

The conclusion I come to is that we need a system that transcends party politics: a constitutional arrangement that is seen to be fair to everybody, and that respects the integrity of the United Kingdom but also the development of devolution in Wales; a settlement based on a reserved powers model that is far more intelligible to people in Wales, and that will help them to understand far more easily the basis of our devolution arrangements in Wales and the United Kingdom as a whole.

[Stephen Crabb]

The hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards) said that the purpose of amendment 8 is to ensure that the Welsh Government can use their new borrowing powers to invest in projects that they, rather than Her Majesty’s Treasury, want to take forward. I should point out that the Bill already provides Welsh Ministers with complete flexibility to decide how to use their borrowing powers, in much the same way that they have complete flexibility regarding their resource and capital budgets. I wonder whether the hon. Gentleman was confusing the requirements for the early borrowing powers with the wider borrowing powers the Bill sets out. Regarding the former, he is right that there is a specific agreement between the Welsh Government in Cardiff and the UK Government—specifically the Treasury—to facilitate early movement on a strategic project of importance to the Welsh nation and economy: namely, the M4 upgrade. So, rather than it being a project imposed from above by the UK, it is very much demand-led from within Wales.