EU Budget (Surcharge)

Wayne David Excerpts

Monday 10th November 2014 Commons Chamber

[Mr Osborne]

My hon. Friend is absolutely right. We are pushing the case for reform in Europe while the Opposition want no reform in Europe. The people of Wolverhampton and elsewhere in the country have a very clear choice at the election. If they vote Labour, they will pay more to Europe; there will be no reform in Europe; Europe will continue to hold back the British economy because it is unreformed; and, of course, they will have no say. If they vote for the Conservative party, they will get a say on Britain’s future in Europe.

[Wayne David (Caerphilly) (Lab)]

The Irish Finance Minister has said:

“My understanding is that the UK will pay the whole amount”.

Is the Chancellor seriously saying that the Irish Finance Minister is wrong?

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.

Wales Bill

Wayne David Excerpts

Tuesday 6th May 2014 Commons Chamber

[Hywel Williams]

The hon. Gentleman surmises correctly. The model is clearer, more elegant and more easily understandable, and we will be able to debate it later.

Going back to the LCO process, the hon. Gentleman will recall, as he participated in those long debates on LCOs—

[Wayne David (Caerphilly) (Lab)]

As the world expert on LCOs, I certainly concur with the hon. Gentleman about the cumbersome system. It is far better that legislative powers are solely with the National Assembly for Wales. Does he agree that despite the faults of the legislative competence order, the House succeeded in improving substantially the suggestions that came from the Welsh Government regarding LCOs and what happened to the legislative process afterwards?

[Hywel Williams]

I certainly do not want to rehearse the discussions and arguments we had on LCOs. LCOs were a curate’s egg—occasionally they went through without touching the sides. I remember chairing the LCO on mental health, which lasted for two sessions. The LCO on the Welsh language took rather longer.

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[Owen Smith]

From a sedentary position, the Exchequer Secretary draws a distinction between the higher rate and the top rate. I fully accept that what I mean is the higher rate, by which I mean the 40% rate, as opposed to the additional rate of 45%.

[Wayne David]

Does my hon. Friend agree that the essential point is that, although we have asymmetrical devolution in the United Kingdom—there is a great deal of variation between the devolution settlements in Scotland, Wales and Northern Ireland—we still have one British economy? Having variation is one thing, but having huge divergence is something else altogether.

[Owen Smith]

The essential point we are making is that we, unlike the Conservative party, are not in favour of tax competition. We are not in favour of one part of the UK undercutting another, but the Secretary of State and the Tory party are. It is very simple.

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[Owen Smith]

Absolutely; Silk said precisely that. I am saying today for the clarity of the Committee that we believe that the current Government employed the argument for party political purposes. They attempted to stop the Welsh Government doing what they wanted to do, which was to maintain the Agricultural Wages Board for Wales. That would have had significant benefits for some of the lowest paid workers in Wales. On that basis, I believe we can say firmly that Wales would be better off if we moved to a reserved powers model, with the greater clarity and additional safeguards that it would bring.

Finally, Madam Chair—[Interruption.] I beg your pardon, Sir Roger; I did not see you slip into the Chair, but it is a great pleasure to serve under your chairmanship once more. On the background to these clauses, we did not have much chance to discuss the so-called fair funding lock. The ability of the Welsh Labour Ministers in Cardiff Bay to determine whether they think the funding settlement for Wales is fair and adequate, in advance of their moving to adopt any of the powers of income tax—or any of the other taxes—is an important test. I hope that the Government will rise to that challenge at some point in the future.

[Wayne David]

I rise to support amendment 7. I recognise that it is a probing amendment, but it is nevertheless important to discuss the volatility of stamp duty land tax revenues in Wales. I will also speak to amendment 43 and the need to move to a reserved powers model for the National Assembly for Wales. I am aware that those two issues are not really related, but both are in this group of amendments, and in my view both are extremely important.

As the Silk report states, stamp duty land tax is a “relatively volatile tax”. Indeed, as the director of CBI Wales said only last year, SDLT raised about £210 million in Wales in 2007, but only £115 million in 2008-09. That is a relatively small amount, accounting for about 2% of the Welsh block grant, but a variation from £115 million to £210 million in two years is not insignificant. As Silk himself stated, the devolution of stamp duty land tax could pose potential risks for the Welsh budget.

Let me be clear: I am in favour of the devolution of stamp duty land tax, but I would like reassurance from the Minister about precisely how that volatility will be managed. The essential point is that devolving SDLT has consequences for the block grant, which would be reduced by the amount of SDLT collected in Wales. I would like a fuller and clearer explanation from the Minister about exactly how the block grant offset will be determined. Will borrowed resources be used to meet any shortfall when the receipts from land tax are less than expected? Does the Minister agree with the Silk report that the value of the deduction should be decided between the UK and Welsh Governments, and not by the UK Government unilaterally? I suggest that the deduction should take into account the volatility of the tax and the forecast revenue in Wales. I would therefore like specific reassurances from the Minister that these admittedly esoteric but nevertheless extremely important issues will be clearly addressed, so that we know precisely what we have before us.

My second point is about whether we move from a conferred powers model of devolution for Wales to a reserved powers model. In my view, there is no perfect model of devolution. In Northern Ireland and Scotland there is a reserved powers model, but—let us be honest—those models have their problems. We will all have heard about Scotland and Antarctica. For those who are not au fait with that problem, there was an issue of whether Antarctica was included in the devolution model for Scotland. It was not on the reserved powers list, and therefore the assumption was that it was devolved to Scotland in issuing licences and permits for people to operate in Antarctica when they were based in Scotland. Of course, that was an oversight by drafters, and it was put right retrospectively. I simply cite that example to show that there is no perfect model of devolution. We can cite other difficulties that arose when Scotland adopted the reserved powers model, but the fact that no model is perfect does not mean that a reserved powers model for Wales would not be a huge step forward. It would be a huge step forward, because we have heard—very eloquently—from the shadow Secretary of State about numerous examples of issues that have been taken to the Supreme Court by the Wales Office. At root, the problem is a lack of clarity, which would not exist if we had more clearly defined the reserved powers model.

We are all concerned about the Conservative party’s determination to prevent the Welsh Government from introducing measures to protect Welsh agriculture workers, and the case for moving to a reserved powers model has been well put by the UK’s Changing Union project. Under the title “The benefits of a ‘Reserved powers’ model of devolution”, it said:

“A ‘Reserved powers’ model of devolution would benefit Wales and the UK as a whole. A ‘Reserved powers’ model would provide much greater clarity about the legislative powers of the National Assembly for Wales. This will benefit civil society organisations, politicians, civil servants and the general public—in short the democratic process as a whole. A ‘Reserved powers’ model would place the relationship between Cardiff and London on a more stable, adult footing and help reduce the number of unnecessary disputes”—

which have been alluded to already in this debate—

“between the two levels of government. A ‘Reserved powers’ model of devolution for Wales would place Welsh devolution on the same footing as devolution for Scotland and Northern Ireland making it far more likely the UK will be able to develop more effective mechanisms to manage intergovernmental relations between central government and the devolved territories.”

That is an effective summation of the strong case for moving to a reserved powers model. I emphasise that there is no ideal model of devolution. Inevitably, devolution is a dynamic, but if we had this model, it would be far better than what we have at the moment.

[Mr Mark Williams]

Would the hon. Gentleman add to that list the availability of maximum flexibility in the future? We had the Government of Wales Act 1998, the Government of Wales Act 2006 and we now have this Bill. This piecemeal, step-by-step approach to what some of us would like to see—home rule in a federal Britain—is going on and on, but a reserved powers model would give us greater opportunities for flexibility.

[Wayne David]

Home rule, of course, was championed by Keir Hardie, who was the first Labour Member of Parliament, representing Merthyr and Aberdare. Home rule is very important and we must look at mechanisms to enhance that principle and take it forward. A reserved powers model would provide flexibility, but it would also provide greater coherence, stability and clarity. On those principles, it is superior to what we have at the moment, but—as I have said—there is no such thing as perfect devolution. Whatever the nature of the devolution settlement, we will always need to discuss, debate and even argue about some issues. On balance, however, I think a reserved powers model would be the right choice.

Do the Government recognise that a cross-party consensus is emerging in Wales that a reserved powers model would be superior to what we have at the moment? I ask the Conservative Minister not to dig his heels in on this, but to recognise that there is a constitutional consensus and that it means something. It is one of the essential underpinnings of a progressive view on devolution. For goodness’ sake, do not give the impression that his opposition to a reserved powers model is all about trying to prevent what we would see as progressive measures to protect agriculture workers in Wales. He is genuinely concerned about constitutional stability and flexibility, as has been said, and about achieving something approaching a cross-party consensus on the way forward for devolution. That is why the amendment is very important indeed. In some ways, it takes us beyond the parameters of the Bill, but nevertheless, if the House were to support it, it would give an important indication of how we all see devolution moving forward. It is therefore very important that we support the second amendment, amendment 43 to clause 28.

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[Mr Gauke]

I shall deal with stamp duty land tax and landfill tax later in my speech. As for income tax, I am tempted to explain to the hon. Gentleman yet again about the lockstep attributes of our reforms. He has expressed concern about tax competition, but it seems to me from his earlier remarks that he does not believe in it, and that, if he had a chance to seek greater tax competitiveness for any part of the United Kingdom, including Wales, he would not do so. Indeed, he seems to be advocating a policy of “tax uncompetitiveness” for Wales. However, I must not detain the Committee too long on that subject.

[Wayne David]

Will the Minister give way?

[Mr Gauke]

I will, but I want to make some progress.

[Wayne David]

I realise that the Minister wants to make progress, and I know that he has rejected the suggestion that there should be an analysis of what might happen as a consequence of the Bill, but it would be helpful to have a clear articulation of the Government’s position on tax competition. Does he want tax competition, yes or no?

[Mr Gauke]

What we want is greater devolution in terms of income tax. When we debated the subject last week, I explained in some detail why we thought that it was a good thing, primarily because it would increase the accountability of the Welsh Government to the Welsh people, which I would expect Members in all parts of the Committee to want.

Amendments 32 and 33 were tabled by members of Plaid Cymru. Clause 6 introduces an important new power to devolve further tax powers to the Assembly via an Order in Council. The power has a broad scope, and can apply to brand-new taxes and to existing UK-wide taxes. The clause sets out the process for making such an order, which would need to be approved by both the House of Commons and the other place, as well as by the Assembly. Amendment 33 would remove Parliament from the process, so that the order would need to be passed only by the Assembly.

We recognise that it is important to give the Assembly and the Welsh Government the economic levers that are needed to generate growth in the Welsh economy, including the ability to introduce new taxes. We also recognise that—although this would depend on the proposal under consideration—if we are to proceed in a timely manner, it would be advantageous to be able to devolve further taxes without requiring primary legislation. However, a balance needs to be struck. Tax devolution should not be at the expense of reducing the overall tax receipts or competitiveness of the United Kingdom as a whole.

That last point is particularly important. As we stated in the Command Paper that accompanied the Bill, we would assess any proposals for further tax devolution against a number of criteria. For example, we would consider whether any new tax would affect the UK’s wider economic policy, impose disproportionate burdens on businesses or individuals, or create new tax avoidance opportunities. In short, the criteria would ensure that any new tax would not be to the detriment of the UK as a whole.

It is important for the devolution of further tax powers to take place in the constructive and collaborative manner that led to the Bill. It is therefore right for the resulting legislative process similarly to involve both the Assembly and Parliament, so that the proposal can be considered from the perspectives of both Wales and the wider UK. It would not be right for either to be able to legislate to devolve further taxes without the agreement of the other.

--- Later in debate ---

[Alun Cairns]

Not at all. I welcome those announcements. I wish there had been an announcement about improvement to the infrastructure in my constituency, and I wish there was to be improvement to the main infrastructure coming into Wales along the M4 corridor, but today’s announcements are obviously positive. However, we need to underline the delays that take place on that artery, that investment is essential and that borrowing powers need to be granted. Improvement should have taken place well before now. The original commitment was made pre-1997 but the Labour Administration cancelled it and the Welsh-led Labour Administration have not built it since. We should consider the delays, the accident records, the damage to the south Wales economy, and the hauliers based in my constituency who have had to set up on the Avonmouth side of the border because of the lack of investment and ambition over the past 15 years on the part of the Welsh Labour Administration.

[Wayne David]

Does the hon. Gentleman not accept that borrowing powers are vital because the Welsh Government’s capital budget has been cut by one third because of central Government cuts?

Women in Wales

Wayne David Excerpts

Tuesday 16th July 2013 Westminster Hall

[Stephen Crabb]

The danger when looking through any particular demographic lens—we could have been debating the impact of policies on young people, older people, disabled people or people from ethnic minorities—is that we are lured into making generalisations and over-simplifications. We have had a bit of that this afternoon, so hopefully I will inject some balance into the debate.

The starting point, of course, is the economic context and the enormous financial crisis that still faces this country. It is worth putting on record again—I know that Opposition Members will roll their eyeballs at this—that the reason why we are having to take very difficult decisions about public expenditure, and the reason why we are having to restore discipline to our national finances, is the financial mess that the Labour party left after 13 years in government. I will go further: future generations of women and girls would not thank us if we shirked our responsibility now and did not address the deficit and the debt. They would not thank us for the burden of debt that we might hand on to them if we did not take the difficult decisions that we are taking.

[Wayne David (Caerphilly) (Lab)]

I say with all due respect that we have had three years of this Conservative-led Government, and the record is now wearing a bit thin. It is no longer valid, if it ever was, to blame everything on the previous Government. Surely to goodness the Minister can form a better argument in defence of what he has done.

[Stephen Crabb]

The context is important, and it is valid. I reject what the hon. Gentleman says.

The Labour party is committed at the moment to cutting £7 out of every £8 that the coalition Government are cutting. The Labour party has said that it is committed to that level of budget cuts. Of course, it will not say where. I listened to the hon. Member for Newport East give a long list of cuts to which she objects, but she will not say what her party would have cut. She is also not saying that her party, if it were in government, would actually increase spending on any of those services. I hope she will forgive me for saying this, but it is a little disingenuous to attack all the efforts that we are making to restore discipline to our national finances without also being up front by saying, “As a party, if we were in government, we would probably be cutting all of these things, too.”

amendment of the law

Wayne David Excerpts

Monday 25th March 2013 Commons Chamber

[Alun Cairns]

My hon. Friend is absolutely right. I shall say more about Labour’s inconsistency later.

All the issues I have mentioned have had impacts on the living standards of families throughout the United Kingdom. Decisions such as these are difficult to take, but they must be seen in context.

What I welcome most is the Chancellor’s drive to create the most competitive of economic environments. That will attract investment, and will also continue to encourage the private sector in the UK to invest. The further reduction in corporation tax goes to the heart of a sustained economic recovery, and underlines the economic imbalance that we inherited. The 20% corporation tax rate means that we now compare exceptionally well with our major competitors. In Germany the rate is 29%, in France it is 33%, and in Italy it is 31%. Those are material considerations for anyone who is thinking about where to invest, and for any United Kingdom investor who is thinking of expanding. We should also bear in mind the uncompetitive position that we inherited. The increase in employers’ national insurance rates led to the term “jobs tax”, with which we are now familiar.

The ultimate judgment will come in the grades that the World Economic Forum confers on the competitiveness of the various nations. Having ranked fourth in 1997, we were dragged down to 13th by the Labour party. At last, however, we have recovered enough to rank eighth—and that happened before the announcement of the welcome changes in the Budget. Neither the 20% corporation tax rate nor the employers’ national insurance relief were taken into account.

Other Budget measures that I welcome include the “help to buy” mortgage guarantee schemes. That is an area of policy in which no Government would ideally become involved. However, bearing in mind the context I referred to earlier, the Chancellor had little choice other than to get involved. The scheme will provide a welcome boost to the construction and retail industries and various elements of the service sector, and it will make a significant difference to many families who want to buy their own home.

[Wayne David (Caerphilly) (Lab)]

On “help to buy”, does the hon. Gentleman think it morally correct that millionaires can get support to buy second homes?

[Alun Cairns]

The hon. Gentleman recognises, I hope, that the economy needs to be kick-started. He always refers to the changes to the highest income tax rates and the 5% reduction that will take place next week. However, I remind him that the rate Labour introduced was temporary. If so, when was Labour planning to abandon it? The ultimate question that Labour Members have to answer is, will they reintroduce for the next general election the 50% rate that was in their manifesto? I will happily give way to the hon. Gentleman if he wants to intervene again. Obviously, he does not, because they are not prepared to say whether they will commit to doing that.

I am pleased that the homebuy scheme will be limited to three years because as I said, it is not a policy area that any Government would want to be involved with in perpetuity, because of some of the risks that have been highlighted. It simply is not a public sector initiative that any Government would want to undertake all the time.

If those who want to criticise such initiatives are to have any credibility, they need to offer some form of alternative. It is hard to believe the audacity shown by some Labour Members. Less than three years ago, they were responsible for, or were the loudest cheerleaders for, the policies that led us into this position, giving this country the most debt-ridden, overspent, unbalanced economy in modern history. Manufacturing had declined by more than 20%, public sector job numbers had ballooned and we had the highest debt level of any G20 nation. I notice that the Labour Members who were seeking to intervene and criticise earlier are now staring at their boots.

These initiatives are aimed at promoting growth and freezing or cutting spending. [Interruption.] The Labour critics really need to come up with some alternatives. Until they have accepted their responsibility, they will lack credibility and no one will listen. Even Lord Mandelson recognised that just last week. They came up with some sort of plans in the past. Spending the 4G auction money on 100,000 new affordable homes was one option; a two-year freeze on stamp duty was another. However, that money has already been used—on the national debt—so I look forward to hearing their alternatives.

This Budget will make a difference to families, and help to kick-start the housing sector and to make Britain’s economy much more competitive. I look forward to hearing the solutions that Labour Members will try—

Cyprus

Wayne David Excerpts

Monday 18th March 2013 Commons Chamber

[Greg Clark]

My hon. Friend makes a point that finds an echo throughout the Chamber. As the days go by, I think we are all reassured and relieved that we did not make the decision that the Labour party made in principle to join the euro.

[Wayne David (Caerphilly) (Lab)]

One of the fundamental rules of banking has been broken, in that the deposits and savings of ordinary people have been, in effect, taken over in part by the state. That is a fundamental breach. What assurances can the Government give us that this precedent will not be followed by other countries in the near future?

[Greg Clark]

As I said, we need to get resolution arrangements in place, but the ECB and the spokesmen for different members of the eurozone have been clear that the decision to impose this kind of levy was taken by the Cypriot Government with the eurozone. They could have done it in different ways, but that is the mechanism they chose.

National Assembly for Wales

Wayne David Excerpts

Wednesday 6th February 2013 Commons Chamber

[Geraint Davies]

It is a shame there is no one from Ukraine present to speak up for themselves—no disrespect to Ukraine, but that matter could be taken up in another place, namely Ukraine.

On double candidacy, the proposition was put in a manifesto which was voted for in an election. There was a White Paper and it went through a proper system. Of course, it is possible to disagree with something that has been properly considered and passed in a democratic way—I respect that and I am sure that we all share that view—but we are complaining about proposals that were put through in a one-sided and seemingly political way without proper collaboration with the institution that would then have to run the situation, namely the National Assembly for Wales.

Could the Minister confirm whether the boundary changes are now dead and buried in the aftermath of the vote here, particularly in the light of a Wales Office spokesperson saying that it is now not in anyone’s interests to change the boundaries as proposed by the Green Paper?

[Wayne David (Caerphilly) (Lab)]

The proposed parliamentary boundary changes have been abandoned, which means that £1.5 million has been wasted by this Government. Does my hon. Friend agree that, should the Minister confirm, as is likely, that the review of the Assembly boundaries is dead and buried, they will have wasted even more money?

--- Later in debate ---

[Wayne David]

My hon. Friend has used the word “gerrymander” a couple of times and he is right to use that term. Does he agree that the bottom line is that the proposed boundary changes for Wales were all about preventing the election of another Labour Administration in Wales? That was the motivation and it has been stopped.

[Geraint Davies]

The evidence certainly points in that direction. Thankfully, there are different institutions in the United Kingdom that can take forward different policies and ideas. For example, in Wales people can go to university for £3,000 a year or about £10,000 across three years, rather than pay £30,000. In this place, the Conservatives say, “It is impossible to have lower fees. Where would the money come from?” That idea and many others show that there are different ways of doing things. That is healthy for democracy.

The attempt to use the power that this place has had historically to blunt the blade of innovation in Wales is quite wrong. Unfortunately, all the evidence suggests that these changes are being proposed for party political gain.

--- Later in debate ---

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

I congratulate the hon. Member for Swansea West (Geraint Davies) on securing this Adjournment debate on the Green Paper on future electoral arrangements for the Assembly.

Hon. Members will recall that we debated the Green Paper in Westminster Hall on 3 July last year. I was not in Westminster Hall for that debate and I am not sure whether the hon. Gentleman was. I have watched the video and read it in Hansard and neither makes for a particularly edifying experience. It was not a particularly good debate, so it is worth revisiting some of the issues this evening.

Some hon. Members from Wales participated in the consultation and are keen to know where we have reached, particularly, as the hon. Member for Swansea West said, in the light of the vote last week on the Electoral Registration and Administration Bill—I will come to that in a moment. I was going to say that this debate is timely given that vote, but I will not congratulate the hon. Gentleman on that because, as the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards) has reminded us, it is keeping us all from the football. We are, however, grateful to him for keeping us updated with scores. That might prove to be one of the more interesting points of the debate this evening.

My right hon. Friend the Secretary of State for Wales has made it clear that following last week’s vote in the House the Government will not now take forward the Green Paper proposals on Assembly constituency boundaries. I hope that answers one of the questions raised by the hon. Member for Swansea West. Indeed, the Government have been clear all along that the changes to the make-up of Assembly constituencies proposed in the Green Paper—either reinstating the link between Assembly and parliamentary constituencies, or retaining 40 Assembly constituencies but making them a more equal size—would be predicated on Parliament approving the proposals of the four UK boundary commissions for new parliamentary constituencies.

The hon. Gentleman opened his remarks by stating his delight that the proposals for revised parliamentary constituency boundaries were defeated, but I thought he gave the game away as to his agenda this evening. I think he is throwing up a smokescreen for the vote that he and his colleagues took that evening, which was not only a vote against fairer-sized parliamentary constituencies across Wales and the UK, but a vote against cutting the cost of politics.

[Wayne David]

The Minister says the motivation was cutting costs but will he explain why his Government are in the process of creating 50 extra peers for the other place?

[Stephen Crabb]

We will not take any lessons from the Labour party on spending money. The hon. Gentleman was a distinguished Minister in the previous Government and perhaps bears more responsibility than most, in terms of collective responsibility, for some of the decisions taken by that Government with such disastrous financial consequences for this country. We will take no lessons from the Labour party on the good use of resources.

I think that the hon. Member for Swansea West and his colleagues will come to regret the vote that they took last week, which was, as I have said, against fairer-sized parliamentary constituencies and cutting the cost of politics. Voters want more out of democratic system; they want more value for money and to know that their votes count. The hon. Gentleman’s constituency has an electorate of 60,000 or 61,000, but some of his colleagues have 94,000, 95,000 or 96,000 constituents. He should be able to see as well as anyone the inbuilt unfairness in the current system of parliamentary boundaries.

--- Later in debate ---

[Stephen Crabb]

I have been clear about the consequences of the vote taken in the House last Tuesday—I was disappointed with the outcome—and that we will not proceed with the aspect of the Green Paper that deals with changes to Assembly constituency boundaries.

Of the three questions I have highlighted, the most pressing is on the length of Assembly terms. Hon. Members will be aware that, as a result of concerns expressed by the Welsh Government during the passage of the Fixed-term Parliaments Act 2011, the Assembly election scheduled for May 2015 was deferred by one year until 2016 to avoid a clash with the next general election. That is a good example of the UK Government listening to the concerns raised by the Welsh Government and, to address another point the hon. Gentleman raised, collaborating with them. That is a one-off change. The two elections are set to coincide again in 2020 unless provision is made to prevent it.

A majority of respondents to our consultation favoured a move to five-year terms to reduce the likelihood of elections coinciding in future. The decision is a finely balanced one—good arguments have been made in support of both options—but however we decide to proceed, we are mindful that electors in Wales should be clear on how long they are electing their representatives for. Importantly, all four political parties in the Assembly favoured a move to five-year terms. It is worth putting that on the record.

In the Green Paper, the Government set out our intention to repeal the prohibition on a candidate at an Assembly election standing in both a constituency and a region. All three Opposition parties in the Assembly favoured removing the ban, but I acknowledge that, overall, a small majority favoured retaining the prohibition in their responses to the consultation. A significant majority of respondents agreed with our proposal to prevent Assembly Members from sitting in Westminster.

The hon. Gentleman mentioned competency—that issue was discussed at length during the debate of 3 July 2012. I should point out that the Government are simply operating within the framework that the previous Government set out in the Government of Wales Act 2006. As he knows, the Act states that competency and responsibility for electoral arrangements for the Welsh Assembly resides at Westminster. There is a Silk process—part 2 was launched recently, which provides a great opportunity for people who have concerns and other ideas to contribute. The Government have made it clear that we will listen and read very carefully all submissions to Silk part 2. We will announce our response in due course. The hon. Gentleman was not in the House at the time, but other hon. Members in the Chamber were, and I remind him that they supported the previous Government’s legislation and the framework that retains competency and responsibility for Welsh Assembly elections at UK level.

[Wayne David]

The Minister indicates that a large part of the Green Paper is redundant because of last week’s events in the House. Will he issue another Green Paper? If not, the consultation was on a largely flawed document.

--- Later in debate ---

[Stephen Crabb]

The hon. Gentleman is an experienced parliamentarian and I think he is trying to tempt me to say more than I am able to at this stage. The Green Paper presented a package of changes and proposals. As hon. Members recognise, one significant part of the package is not being proceeded with, so we now have to look at the other elements on their own terms and decide how we can proceed with them, and, if we proceed with them, what would be the best legislative vehicle for them. I am not, therefore, in a position to give him all the information he is looking for this evening, but I am sure we will come back to it.

[Wayne David]

The Minister mentioned that £3,000 had been wasted because a large chunk of his document is now totally irrelevant. Does that £3,000 include the time civil servants spent on the element that has been ditched?

[Stephen Crabb]

If ever there was a false premise to an intervention, that was one. It was not wasted at all. We had extremely valuable responses to the consultation that will feed into our deliberations about the other parts of the Green Paper package. [Interruption.] The hon. Gentleman laughs. If we were not consulting, he would be the very first Member to stand up and complain about a lack of consultation. We can never win with the Opposition: there is either too much consultation or not enough consultation, or we are going too fast or going too slow. Actually, we think we have the balance right. We are taking the time to do this properly. We know that the most timely part of the changes will be, as I said earlier, the need to make a decision about the length of the Assembly term—whether we move from four years to five years—and we will proceed on that in a timely manner.

Banking Union and Economic and Monetary Union

Wayne David Excerpts

Tuesday 6th November 2012 Commons Chamber

[The Financial Secretary to the Treasury (Greg Clark)]

I beg to move,

That this House takes note of European Union Documents No. 13682/12, a draft Regulation amending Regulation (EC) No. 1093/2010 establishing a European Supervisory Authority (European Banking Authority) as regards its interaction with Council Regulation (EU) No…/… conferring specific tasks on the European Central 5 Bank concerning policies relating to the prudential supervision of credit institutions, No. 13683/12, a draft Regulation conferring specific tasks on the European Central Bank concerning policies relating to the prudential supervision of credit institutions, No. 13854/12, Commission Communication: A roadmap towards a Banking Union, and an unnumbered Explanatory Memorandum: Towards a Genuine Economic and 10 Monetary Union: Interim report; and welcomes the Government’s decision to remain outside the new supervisory arrangements while protecting the single market in financial services.

I welcome these debates. The subject matter of today’s debate is, if anything, even more important than what we discussed last week. It is essential that proposed developments in the EU are robustly scrutinised by this Parliament. I am grateful for all the work done by the European Scrutiny Committee and its equivalent Committee in the House of Lords, as they applied their attention to the 1,100 European documents that were referred to them last year.

One theme we will come on to is how we can strengthen the scrutiny of sovereign national Parliaments over the institutions and policies of the EU. I believe that that is essential. It is principally Members of this House and our colleagues in the other place who will search for assurance that our national interest is not being blown away by a zeitgeist that is capable of carrying people along in the wrong direction.

This week is a particularly appropriate one in which to recall the value of that questioning voice. It was 15 years ago on 10 November 1997 when the then Leader of the Opposition first stood out against all fashionable opinion at the time and, in a speech to the Confederation of British Industry conference, committed my party to oppose joining the proposed euro. I had a hand in preparing that speech, and I recall one of the lines that I was proud made the cut. It said that

“if the nightmare of our experience in the ERM teaches us anything, it is not to steer by the siren voices of a supposed consensus, but to exercise the independent judgement of a cool head.”

Of course, the two people responsible for that decision and that speech are now our Foreign Secretary and our Chancellor of the Exchequer. They were excoriated at the time for declaring on that day that they intended

“to campaign against British membership of the single currency at the next general election”.

I believe that this caused the brand-new Labour Government of the day to hesitate, and by missing the moment, they spared Britain from a disastrous fate.

Fifteen years on, the documents that we are considering today are a direct consequence of the creation of the euro and, in particular, of the failure to address from the outset some of the inevitable factors. Now, as then, it is imperative that the United Kingdom exercises the independent judgment of a cool head to determine whether the new policies being proposed are consistent with the interests of our own economy.

Let me deal first with the proposals on banking union. The first thing to say is that we and the EU need to tread particularly carefully on matters that affect financial services. The financial services industry, including banking, is not evenly distributed across all member states of the EU. The United Kingdom has a vastly greater strength in the conduct of, and international trade in, financial services than any other member state. Financial services and related areas employ more than 2 million people in this country—two thirds of them outside London—and contribute £1 out of every £8 of Government revenue. That is about £1,000 for every man, woman and child in this country.

We have a £37 billion trade surplus in financial services and Britain accounts for 61% of the whole of the EU’s exports of financial services. Commissioner Barnier said last month:

“It is in our general interest in Europe to have the biggest financial centre in the world. A strong City is good not only for Britain but for Europe.”

That is a welcome recognition. We will never jeopardise an industry of such particular importance to the United Kingdom.

In scrutinising these proposals, we need to have a clear fact in mind. People do not need banking union because they are part of a single market. The appetite for banking union arises solely because of the problems of the single currency. However, although banking union is primarily a matter for members of the eurozone, it strongly engages Britain’s interests in two ways.

[Wayne David (Caerphilly) (Lab)]

Does the Minister honestly believe that the Prime Minister throwing a tantrum, walking out of a Council meeting and claiming that he exercised a veto when he did not is helpful to Britain’s national interests?

[Greg Clark]

I and, I think, the country are pleased that the Prime Minister was prepared to stand up for British interests, and I know that he will always do so. It is certainly not a matter of regret.

I think it is desirable from the point of view of the British economy that, since the eurozone exists, it should be successful, rather than a source of economic weakness. Indeed, as the Governor of the Bank of England has said:

“The biggest risk to the recovery”

in this country

“stems from the difficulties facing the euro area, our main trading partner.”

Secondly, we need to be vigilant to ensure that our access to the single market in banking, now and in the future, is not undermined and jeopardised by the creation of a banking union. That means putting in place safeguards to ensure that the UK cannot be discriminated against in the future in single market decision-making processes.

The Commission’s current proposals are not yet acceptable in that respect. For example, the European Banking Authority—which, as Members know, is the organisation that currently ensures that there is a level playing field for banking within the single market—operates on the basis not of unanimity but of majority voting. The European Central Bank regulation specifies that that the ECB would

“coordinate and express a common position of representatives from competent authorities of the participating Member States in… the EBA”.

That effectively requires participating member states in the euro to caucus in adopting positions and voting in the European Banking Authority.

--- Later in debate ---

[Greg Clark]

I do not think that there is any difference between us on this. It is essential that this arrangement is legally sound. At the moment, the negotiations are continuing and the shape of the regulation is evolving, but the sensible commitment I have given is to make sure not to proceed unless we are satisfied that it is legally robust.

Let me talk about some of the other measures we need to bear in mind. We must make it absolutely clear that both now and in the future there should be no requirement, for example, for clearing houses that handle significant amounts of euro-denominated business to be located geographically in the eurozone, as proposed by the ECB—a proposal against which we have launched legal proceedings. That blatantly undermines the single market and the United Kingdom’s financial services industry. It is a poor indication of the ECB’s attitude if it intends to proceed in such a way. We need to be clear, too, that London is home to more clearing houses than any other EU capital and such proposals are unacceptable.

As the House will see, there is some way to go before the banking union proposals are acceptable to the Government. They will not be agreed by the United Kingdom unless and until we are satisfied that the UK’s position in the single market has been secured.

Let me turn briefly to the document known as the four presidents’ report, which was published on 12 October. It is an interim report that gives a general overview of the measures that the euro area member states might want to consider taking to improve the functioning of the euro. At this stage, there is little detail in the report apart from in the area of banking union and a great deal more discussion will be needed before there is agreement even on which issues should be explored further. The House will have a particular interest, however, in the discussion about democratic legitimacy and accountability.

I emphasise again that although the UK will not be part of the arrangements, it seems to me to be important that when significant decisions are being taken at the eurozone level about national matters, national Parliaments should be able to scrutinise those decisions, just as the Bank of England, the UK regulatory authorities and not least Ministers are accountable to this House and the House of Lords.

[Wayne David]

I welcome what the Minister has just said, but does he accept that in much of the documentation we are discussing, as the European Scrutiny Committee has pointed out, preference is given to the European Parliament rather than national Parliaments as regards accountability?

[Greg Clark]

Indeed it is. The point I am making very clearly—perhaps not clearly enough—is that I think there should be a greater role for national Parliaments.

The Chairman of the European Scrutiny Committee, my hon. Friend the Member for Stone, was characteristically eagle-eyed and meticulous in his regard for independence when he baulked at the line in my explanatory memorandum that stated that

“there should be further consideration of how we can use national parliaments to enhance legitimacy and oversight.”

He is absolutely right that “use” is not the mot juste and instead I should have said that the authority of national Parliaments should be respected. It was the very independence and rigour of his and the Committee’s scrutiny that I was commending, and anyone who labours under the misapprehension that his Committee can be used does not know him or his colleagues. I will be more exact in future.

When the document was considered in the October Council, the Prime Minister secured an explicit commitment that the final report and road map in December must include concrete proposals to ensure that the single market’s integrity is respected. I look forward to this afternoon’s debate and tell all hon. Members who will participate that their guidance and advice will be taken seriously by the Government as the detailed negotiations on all these matters proceed in Brussels and across capitals in Europe over the weeks and months ahead.

--- Later in debate ---

[Wayne David]

My hon. Friend has set out a precise and appropriate agenda for the country to pursue, but does he agree that for that agenda to be pursued effectively we need the ability to put across arguments and to persuade? What we do not want is rhetoric and empty gestures, which is what we are getting from the Government.

[Chris Leslie]

I worry that that is the problem with the Government’s approach to the negotiations. I do not deny for a moment that this is a tall order as a negotiating strategy, but it is necessary to protect our national interests. Of all the 10 non-eurozone countries, we have the most at stake. As I said, 40% of the EU financial services sector comes from Britain. We cannot allow ourselves to be treated as an afterthought in these negotiations. Why are the Government letting others shape the thinking and make all the running on EU banking union reform? Our vital national interests are on the line. We need a clearer negotiation strategy from the Government from the one we have seen to date.

Multiannual Financial Framework

Wayne David Excerpts

Wednesday 31st October 2012 Commons Chamber

[Greg Clark]

I will not give way, because I want to make progress.

We have touched on a number of themes in the debate already—shamelessness, wastefulness, hypocrisy and betrayal—which leads us neatly to the position of the Labour party. Those sitting on the Opposition Front Bench are the same men who gave away so much of our rebate and who would surely surrender the rest on demand to curry favour with Europe. It is the party that, the last time it was in power and had the opportunity to negotiate an MFF, agreed not to a cut or a freeze, but to an 8% real-terms increase. It is a party whose socialist comrades in the European Parliament declared that the Commission’s proposed 10% increase was

“not sufficient to finance all the EU’s objectives”.

It is a party that nearly bankrupted our country but now claims conversion to the rigours of fiscal rectitude. It is a party whose last act in office was to sign Britain up to the EU stabilisation mechanism when it did not ever have a mandate to govern. It is a party that is so caught up in its cynical political games that it calls for a cut in the budget but at the same time says we should not deploy our veto to secure Britain’s interests. It is not a party that deserves to be taken seriously, as its opportunistic posturing this week shows.

[Wayne David (Caerphilly) (Lab)]

The previous Labour Government argued for the repatriation of regional policy to save money. Do this Government stand by that?

[Greg Clark]

One of the issues that I hope unites Members of this House is a reflection that the structural funds need to be cut. They are one aspect of the budget that is recycling money from one set of taxpayers to another, often the same taxpayers. If there is no reason for it, it should be cut, and that is part of our negotiations.

--- Later in debate ---

[Mr Cash]

Absolutely; that is a very good point indeed.

I would like to dig a little deeper into what this money is supposed to be used for. It is all set out in the papers laid before the House for the purposes of this debate. They talk about turning the EU into a “smart”—whatever that means—“sustainable and inclusive economy” delivering

“high levels of employment productivity and social cohesion.”

How on earth are they going to achieve that given the measures they think will produce growth? Almost every single aspect of what they want to deliver is based on increasing grants and subsidies, but not on asking where the money is coming from.

The money comes from our constituents. It comes from the taxpayer. It does not grow on trees. That is what they do not understand. Therefore, the entire strategy on which this multiannual financial framework is based is nonsense. It is an Alice in Wonderland fantasy, as I have repeatedly said when I have had the opportunity to meet the other 27 Chairmen of the national scrutiny committees. I have noticed that there is increasing awareness, too. The hon. Member for Luton North (Kelvin Hopkins) was with me only a few weeks ago, and he noticed the degree of response I was getting from the other member states’ national chairmen. They understood that they were in deep trouble.

The money does not grow on trees in Spain; that is why there are demands for independence from Catalonia. The money does not grow on trees in France or Germany either. The fact is that it has to be found.

[Wayne David]

The hon. Gentleman and I have significant differences about what this country’s approach to the EU should be, but does he agree that the important thing at this moment in time, with every EU member state having to make public expenditure cuts, is that the EU itself should make cuts? That message should go out from both sides of this House.

[Mr Cash]

The hon. Gentleman is right. I do not think this is just a cynical move, even though there is an element of that. As I find when I go to meetings with those in the presidency, there is a recognition: they know they cannot go on spending money that is not there. That is the truth. That is all this argument is really about. It is about the big landscape of whether, like Mr Micawber, we can just hope something will turn up. It will not; it has to be built through real growth policies.

Unfortunately, the report the European Commission produced only a few months ago shows it has not got a clue how to generate that growth. I was also deeply disturbed to see that the amazing report by the European Parliament calling for all these increases was welcomed by the vice-president of the European Commission, Maroš Šefcovic. He said the MFF was “an investment budget” for delivering growth in “the entire EU.” He condemns himself outright simply by endorsing the 150 pages of unadulterated rubbish that came out of the European Parliament in its interim report.

UK and Welsh Governments (Finance)

Wayne David Excerpts

Tuesday 11th September 2012 Westminster Hall

[Stephen Crabb]

There are established processes in place, through the comprehensive spending review, for looking at all those issues. I hope that the hon. Gentleman will take me at my word when I say there is a genuine commitment among the new team in the Wales Office, and our colleagues in the Treasury, to work with Ministers in the Welsh Government to explore those issues in depth, and ensure that Wales gets the fairest possible outcome.

The hon. Member for Arfon raised some other financial matters. Progress has been made on the issue of the housing revenue account, about which the hon. Member for Carmarthen East and Dinefwr spoke so powerfully in, I think, November 2010. The Government are working with the Welsh Government on how the HRA in Wales can be abolished, in line with the approach taken in England. We agree that any reform of the HRA subsidy system would need to be fiscally neutral, as it was in England. I know that Plaid Cymru Members have strong feelings about the current system, but Ministers here and in Cardiff agree that it is not unfair to Wales. However, they are considering ways to improve it. Discussions are continuing, and we are currently awaiting clarification from the Welsh Government to proposals that they made in August. I emphasise, again, that we are operating within the framework of the UK fiscal system, and need to bear in mind the consequences to other parts of the system of change affecting Wales.

Hon. Members should be aware that the former system of end-year flexibility has now been replaced with a new budget exchange system. In designing that system, the Government worked closely with the Welsh Government and have implemented a system that provides increased flexibility for the devolved Administrations to manage their own underspends. The Welsh Government have signed up to that approach, as indeed have the other devolved Administrations. I want to make one point about underspends. Generally it is not good to have many of them. Administrations should plan prudently as well as spend prudently, and if they do that, and carry out their spending plans efficiently, there should not really be any case for large underspends at the end of the year.

I hope that I have dealt with all the points that the hon. Gentlemen raised. I look forward to hearing the outcome of the talks.

[Wayne David (Caerphilly) (Lab)]

I welcome the Minister to his position—to both of them, in fact. He is a remarkable person, as he is able to spend so much time both as a senior Whip and a Wales Office Minister.

I want to ask him about the future, and how he sees the work of the Silk commission progressing to part II. Will he talk about the future constitutional relationships? Will there be dialogue with the commission on the West Lothian question, for example?

[Stephen Crabb]

Part II of the Silk commission goes way beyond the subject that we are debating, as the hon. Gentleman knows. It looks at wider devolution in Wales, and the potential for devolving other powers. Part I, which has more of a bearing on what we are discussing, looks at potential fiscal devolution; so, tempted again as I might be, I am not going down that path.

[Wayne David]

We have got plenty of time.

[Stephen Crabb]

I know we have plenty of time, but I am still not going to talk about that issue when we are debating funding issues.

Question put and agreed to.