Tuesday 24th January 2017
(7 years, 3 months ago)
Commons ChamberWales Act 2017 View all Wales Act 2017 Debates Read Hansard Text Amendment Paper: Commons Consideration of Lords Amendments as at 24 January 2017 - (24 Jan 2017)
16:37 - The House divided: - Ayes: 170 / Noes: 281 - Question accordingly negatived.
The Secretary of State for Wales (Alun Cairns)
I beg to move, That this House agrees with Lords amendment 9.
Madam Deputy Speaker
With this it will be convenient to discuss Lords amendment 44.
Alun Cairns
I am pleased to open the debate on the amendments made to the Wales Bill in the other place. Given the number of Members who wish to speak in this relatively short debate, I shall aim to keep my comments relatively brief.
First, I place on record my gratitude to the peers who contributed to the scrutiny of the Bill during its passage through the House of Lords. It would be dangerous to try to name them all for fear of forgetting some, but a number who regularly attended briefing sessions and gave feedback throughout the process helped to get this important Bill through the other place without any Government defeats. I thank in particular Lord Bourne of Aberystwyth for steering the Bill so ably through the other House on behalf of the Government, supported by Baroness Mobarik as Whip for the Bill.
I also take the opportunity to place on record my thanks to a number of right hon. and hon. Members of this House. My right hon. Friend the Member for Chesham and Amersham (Mrs Gillan) started the process when she established the Silk commission in 2011. My right hon. Friend the Member for Clwyd West (Mr Jones) expertly guided through Parliament the Wales Act 2014, which implemented the Silk commission’s fiscal recommendations. I pay particular tribute to my right hon. Friend the Member for Preseli Pembrokeshire (Stephen Crabb). In his time as Secretary of State he took a number of bold decisions, most notably the establishment of the cross-party St David’s day process, which put in place the framework of the Bill. That was a bold move, as I have suggested—one that sought to bring all parties together to make a constitutional agreement that would bring both Houses together, understanding the politics of both sides of this House and of the other place.
My right hon. Friend was unstinting in his belief in the importance of the Bill and subjected himself to immense scrutiny with respect to its contents. I pay tribute to his work in setting the framework that has allowed my hon. Friend the Under-Secretary of State for Wales and I to take it through the Chamber.
It is also appropriate to pay tribute to Members on the other side of the House who played an important part in the scrutiny of the Bill, especially the former shadow Welsh Secretary, the hon. Member for Newport West (Paul Flynn), and his predecessor, the hon. Member for Llanelli (Nia Griffith), who was involved in the work, negotiations and discussions throughout the process, as well as the current Opposition Front-Bench team.
I wanted amendments 9 and 44 to be spoken to separately, to give right hon. and hon. Members the opportunity to consider the fiscal framework agreed between the UK Government and the Welsh Government. The amendments are directly linked to that agreement.
The agreement reached between the UK Government and the Welsh Government is an historic agreement that is fair for Wales and fair to the rest of the UK. During scrutiny of the Bill last summer, this House approved the removal of the requirement for there to be a referendum before Welsh rates of income tax were implemented, and the fiscal framework paves the way for the devolution of those historic tax powers from April 2019.
The block grant adjustment mechanisms that will take account of the devolution of stamp duty land tax and landfill tax are also part of that agreement, ensuring that the replacements for those taxes in Wales, which the Welsh Government are already legislating for, come on stream in April 2018.
Nick Thomas-Symonds (Torfaen) (Lab)
While the Secretary of State is talking about the fiscal framework, may I welcome the lifting of the cap on borrowing for capital expenditure to £1 billion? That is not quite the £2 billion that Front-Bench colleagues in the other place asked for, but I welcome it as a step forward. Does the Secretary of State agree that that measure will give the opportunity to continue investment in infrastructure in Wales, both digital and physical, and can also contribute to increased productivity?
Alun Cairns
I am grateful to the hon. Gentleman for the scrutiny he provided at previous stages, and for his comments just now. I will come to the numbers later, but I hope he recognises that there was a mature discussion between two institutions, and he is absolutely right that this measure paves the way for the Welsh Government to use their new borrowing powers to legislate for and finance things that really matter to the Welsh people.
The agreement ensures that, when tax powers are devolved, the Welsh Government will have fair funding for the long term, taking into account Welsh tax capacity and treating population change consistently across tax and spending. In doing so, we are delivering on the independent Holtham commission’s ambition of a long-term fair funding settlement and agreement for Wales.
Indeed, I spoke to Professor Holtham only last week, and he is clear that this is a “very fair settlement” and that there is now no case to argue that Wales is underfunded. The Government previously stated that Wales receives a fair settlement. This cements that in place and enhances the settlement.
Paul Flynn (Newport West) (Lab)
Does not the Secretary of State agree that the fiscal framework is already out of date because it is pre-Brexit and we now know that Wales will suffer severely if we come out of the single market? Is it not true that the Bill is just another stepping-stone on the way to a new Bill, which we will get when the terms of Brexit are declared?
Alun Cairns
The hon. Gentleman is well aware that we have a positive dialogue with the Welsh Government on the nature and framework of the process and the ultimate outcomes of exiting the EU. I was happy to receive yesterday from the Welsh Government a paper outlining their proposals, and we will of course give it close consideration. It will be subject to a future Joint Ministerial Committee for the European negotiations.
Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)
No doubt, then, the Secretary of State would disagree with the hon. Member for Brecon and Radnorshire (Chris Davies), who said yesterday in an interview with me on ITV Wales that Wales should simply get in line with the Brexit process and just kowtow to the Prime Minister’s agenda?
Alun Cairns
I did not hear my hon. Friend’s comments, but should there be any attempt to frustrate the process of exiting the EU by the Welsh Government, the Welsh population would not expect or want it. After all, Wales voted to leave the EU, and it is only right and proper that we act on that instruction and direction, which came from the public in Wales. I would hope that the Welsh Government continue to engage positively in the way that they have.
Owen Smith (Pontypridd) (Lab)
Given the respect that the Secretary of State says there is between the institution of the National Assembly and the Government here at Westminster, should he not be disappointed that the Supreme Court has not ruled today that there should be a formal consultation with Wales via the National Assembly?
Alun Cairns
We have maintained that the views of the Welsh Government are important, but the views of other stakeholders in Wales are also relevant to the discussion. The Welsh Government will rightly form their view, and the UK Government will come to a conclusion that serves all parts of the United Kingdom, including other stakeholders in Wales, as part of the process. The legal action that the Welsh Government took was a matter for them. We have had the judgment, and we need to respect and act on it.
I shall return to the fiscal framework and the funding settlement for Wales. I have already mentioned Professor Gerry Holtham, but it is appropriate that we pay particular tribute to him for the work that he did. We should also pay tribute to my right hon. Friend the Chief Secretary for the part he played in the negotiations, and to the way the Welsh Government and Mark Drakeford, the Cabinet Secretary for Finance and Local Government, went about the negotiations with my right hon. Friend, whereby two mature institutions discussed serious matters that will have long-term positive consequences for Wales.
Liz Saville Roberts (Dwyfor Meirionnydd) (PC)
Does not the Secretary of State share my concern that the needs-based factor will be based on sums ascertained in 2009-10, which will be effectively 10 years old when it comes into effect? There should be a review before it starts.
Alun Cairns
I am grateful to the hon. Lady for her intervention, and for the scrutiny and interest she has rightly given the Bill, but I hope she recognises the significance of the fiscal framework. The needs-based factor to which she refers is 115%, and the current level is well above that. It will fall to 115% over time, recognising the fair settlement that Wales gets because of its needs. It is significant that that needs-based factor is being introduced into the Wales settlement for the first time. It is something for which the hon. Lady and her party have been calling for some time, but it took a Conservative Government to deliver it.
Stephen Crabb (Preseli Pembrokeshire) (Con)
My right hon. Friend has done a fantastic job of steering the Bill through its Commons stages. The hon. Member for Dwyfor Meirionnydd (Liz Saville Roberts) says that the figures are out of date, but when I sat down with Professor Holtham to think about how to scope out a fair funding floor for Wales, he was absolutely clear that there was no reason to think that just because of the passage of time the figures that he had in mind were somehow incorrect. The level that has been set by the Treasury is exactly right for Wales’s needs at this time.
Alun Cairns
My right hon. Friend played an important role in ensuring that we have the needs-based factor by framing the debate in such a way as to make possible a successful conclusion. Ultimately, the Welsh Government would understandably have rejected the Bill unless it was associated with an appropriate and fair funding settlement. I hope that Opposition Members will recognise the significance of the settlement, because it really does matter to the long-term funding of public services in Wales.
Stephen Doughty
Does the Secretary of State accept that, as the First Minister set out yesterday in the White Paper published with the support of Plaid Cymru and the Liberal Democrats, there is a difference between the Barnett funding formula and funding arrangements of the sort that we currently have under the common agricultural policy and the structural funds? As things are moving on very rapidly, will he make a commitment that Wales will not be left a penny worse off as a result of leaving the European Union?
Alun Cairns
The hon. Gentleman tempts me to go down a route for which no decisions have been taken. We are keen to engage and discuss those matters and, as we have already said, we are keen to engage with the Welsh Government and the other devolved Administrations on future funding arrangements. I hope that the hon. Gentleman will recognise the fairness of the way we have approached the Barnett settlement and the fiscal framework, and that that will give him confidence that, as we hope, we will achieve a fair settlement for Wales and all parts of the United Kingdom as we exit the European Union.
Alun Cairns
I would like to make a little progress, but I will happily give way later if time permits.
We have agreed a fair way for the block grant to be adjusted to take account of tax devolution and the devolution of a portion of income tax, and a transitional multiplier of 105% in the Barnett formula that will give the Welsh Government additional money, over and above current levels, whenever we increase spending in a devolved area. That 105% demonstrates the even longer-term transition to getting down to the floor of 115%. We are doubling the Welsh Government’s capital borrowing limit, so that they will be able to borrow up to £1 billion —as the hon. Member for Torfaen (Nick Thomas-Symonds) pointed out a moment ago—to invest in infra- structure throughout Wales.
Lords amendment 9 puts the new capital borrowing limit in place now, so that it will be available as soon as the Welsh Government start to raise revenues through the taxes we are devolving. Lords amendment 44 ensures that Lords amendment 9 comes into force two months after Royal Assent, thereby putting the new borrowing limit into place well in advance of the devolution of tax powers. As the hon. Member for Torfaen rightly highlighted, that will allow the Welsh Government to get on with things that matter, and to legislate and use the new financial capacity that the Bill will grant. Taken with the Wales Bill, the agreement paves the way to making the Welsh Assembly a more powerful, accountable and mature institution, with greater powers and responsibilities to grow and support the Welsh economy.
The fiscal framework agreement resolves once and for all the perceived issues of underfunding that have overshadowed political debate in Wales for so long. It provides the Welsh Government with a powerful new borrowing limit to deliver much-needed infrastructure investment, and it ensures that the devolved Government in Wales can become truly accountable to the electorate by raising around a quarter of the money that they spend. Gone are the days when poor levels of public service in Wales could be blamed on perceived underfunding. For too long, funding was used as an excuse for poor outcomes, but not any longer. If they want big government, the Welsh Government could even raise taxes to pay for it. Or, if they want to reduce income tax levels, they could look to drive out inefficiencies and allow Wales to be seen in a new entrepreneurial light. I urge the House to agree to the Lords amendments.
Jo Stevens (Cardiff Central) (Lab)
In the spirit in which the Bill has so far developed, we will this afternoon see something of a rarity in my life: I will, on occasions, agree with the Government and some of the measures they are taking. Before the Secretary of State gets too excited about that, though, it has to be put on record that the Bill has had a chequered history. It started out very badly—so badly that the Government had to take it away and start all over again. The second attempt was better, and we have now reached a point at which although it is still far from ideal, there has been considerable movement by the Government as a result of pressure from the Opposition and in the other place.
I put on record my thanks to my predecessors, my hon. Friends the Members for Llanelli (Nia Griffith) and for Newport West (Paul Flynn), and their Front-Bench teams, for their work during the Bill’s passage. I particularly thank my colleague Baroness Morgan of Ely and our team in the other place for the sterling efforts they made to secure numerous improvements to the Bill through debate and discussions with the Government, who took a largely constructive approach to concessions. We therefore support the Bill in its current, improved form, and will not attempt to frustrate its passage.
I shall not detain the House longer than necessary on matters on which there is agreement, but I wish to make substantial points on the Opposition amendments at the tail end of the selection list, on which I may wish to test the will of the House. We are hopeful that we can make good progress and reach those amendments.
Given the importance of the consequences of Lords amendments 9 and 44, it is right to put something on the record about them. They will raise the Welsh Government’s overall capital borrowing ability to £1 billion, and from April 2019 the annual capital borrowing limit will rise to £150 million—15% of the overall figure. As the Secretary of State pointed out, all that stems from the fiscal framework agreed by the Government here in Westminster and the Welsh Assembly Government. It is welcome news; I congratulate the Welsh Government. Like the Secretary of State, I particularly congratulate the Cabinet Secretary for Finance and Local Government, Mark Drakeford, for working so hard to seal this important deal with the UK Government. I also pay tribute to the Government for moving on this issue.
The increase in borrowing ability is so important because the austerity that successive Conservative Chancellors have imposed on Wales has had severe consequences for the Welsh Government’s ability to invest, particularly in infrastructure. As has been pointed out, with the loss of European funding that Wales will experience once we leave the EU, the ability of the Welsh Government to invest in infrastructure becomes even more critical. Therefore, moves to enhance the Welsh Government’s ability to invest in and develop infrastructure for the future are of course welcome. It is all about investing in Wales and boosting our economy, and this measure will go a significant way towards doing that.
Sensible infrastructure investment led by the Welsh Government will help improve productivity rates in Wales and increase the gross value added of Wales. However, as Members will hear me say several times today, the Government plans do not go far enough. In the other place, my Front-Bench colleague, Baroness Morgan, tabled an amendment to raise the borrowing cap to £2 billion based on the Holtham recommendations. We accept £1 billion as a step forward, but it is clearly not enough to properly meet the demands of the Welsh economy. Before the Minister responds to that point, I caution the Government against viewing the cap as a target. The point is to see the flexibility and dynamism provided by the higher limit, rather than to look at only how much is borrowed.
Many successful businesses do not use 100% of their borrowing facility, but leverage their borrowing to a sensible percentage of the facility based on the economic context in which they are operating. The higher £2 billion that was sought would not necessarily have been used, but would have allowed greater flexibility and freedom for the Welsh Government to invest in a greater number and a greater scale of critical schemes and infrastructure projects.
I make these points to the Minister to put them on record and to push his conversations with the Treasury ahead of the forthcoming Budget, but, as I have said, we do welcome the step forward that Lords amendments 9 and 44 provide and we will not vote against them.
Liz Saville Roberts
I am sure that the House will join me in wishing the best to my hon. Friend the Member for Carmarthen East and Dinefwr (Jonathan Edwards), who is expecting the imminent arrival of the latest member of his family. [Hon. Members: “Hear, hear.”] I sympathise with all MPs who have to balance family life and parliamentary duty.
I, of course, welcome to an extent the fact that a fiscal framework is on the verge of being in place, giving the Welsh Government a degree of financial accountability that is intrinsic for any functioning democratic Parliament. Judgment is still very much out, however, on whether it can really deliver the economic accountability and levers for growth that are required in this tumultuous time. I therefore want to start with a few brief comments about the framework’s ambition, or lack thereof. I then want to ask the Minister a specific question about how the framework will operate before finally discussing the capital expenditure limit outlined in amendment 9.
Despite finally having this fiscal framework in place, we still lag behind every other devolved Administration in terms of powers and responsibilities. Earlier today—like most days—we were embroiled in the Brexit conundrum and all its unravelling economic implications, but the Government’s insistence on a patchwork approach to devolution means that Wales will not have the real levers for growth that it needs at this most difficult of economic times. If the Conservative party wants to talk about the real opportunities that a single market and customs union exit brings for Wales, it should be looking at the fiscal levers for growth, including VAT, the most important tax for Wales, and how it could be devolved. I hope the Minister will indicate that he plans to review the framework in the light of recent developments to ensure that Wales has such fiscal levers.
I briefly want to touch on a technical point that my party colleague, Adam Price AM, has already raised with the Welsh Government’s Cabinet Finance Secretary. The much trumpeted relative need provision of the fiscal framework—the 115% rule, which is referred to as the Holtham floor—was based on a set of criteria that determined Wales’s relative need in 2009-10. There seem to be no plans to conduct a review of that relative need when the floor is set to be implemented approximately three years from now, meaning that those relative needs will be based on figures that are 10 years out of date. This was discussed briefly in earlier interventions, but the 115% rule surely cannot be set in stone for all time, so I ask the Minister to propose a review to investigate that.
Alun Cairns
I am happy to clarify that the fiscal framework agreement, which is supported by the Welsh Government, includes opportunities for periodic reviews.
Liz Saville Roberts
I welcome those comments about periodic reviews as opposed to using 10-year-old statistics. I also have some concerns about the framework’s dispute resolution mechanism, but there may not be the time to discuss them here. We may be able to resolve that problem in future discussions.
I want to finish by emphasising the fact that both Governments lack ambition. In the Lords, Plaid Cymru called for a £2 billion capital expenditure limit, which was supported by Labour. However, under pressure from the devo-sceptic Tory party, we can see in amendment 9 that we are left with a capital expenditure limit of exactly half that. Although I am pleased that a fiscal framework is finally in place, I cannot avoid the observation that Wales is once again being short-changed through a lack of vision and ambition.
The Parliamentary Under-Secretary of State for Wales (Guto Bebb)
I beg to move, That this House agrees with Lords amendment 10.
Madam Deputy Speaker (Mrs Eleanor Laing)
With this it will be convenient to discuss Lords amendments 28 to 32, 46 and 137.
Guto Bebb
The amendments deliver a comprehensive and lasting devolution settlement for Wales on water and sewerage. As right hon. and hon. Members know, water is of great symbolic importance as well as practical significance in Wales. Throughout the Bill’s passage, few issues have evoked more passion and debate. There is no question but that there cannot be a clear and lasting devolution settlement for Wales without resolving the issue of water devolution. The Government have therefore been determined to grasp the nettle and resolve the matter once and for all.
I was therefore delighted last autumn, when we were able to announce that we would replace the Secretary of State’s powers to intervene on water with a statutory agreement between the UK Government and the Welsh Government—in other words, a water protocol between the two Governments. Replacing the intervention powers with a formal protocol represents a clear break with the past, and is another landmark in the history of Welsh devolution.
The existing intervention powers were put in place in the Government of Wales Act 2006, when the Labour party was in government. Since then, they have taken on almost totemic status, despite having never been used. Their removal is another important change—alongside many others in the Bill—that marks the coming of age of devolved government in Wales. Amendments 30 to 32 give effect to this historic change.
Amendment 30 sets out the statutory requirements for the protocol that will be agreed between the two Governments, and we are absolutely clear that the protocol will have teeth. Both Governments will be subject to a duty to act in accordance with the new agreement, and once it is in place, both will need to agree any changes to it. The agreement will also need to include a process that both Governments sign up to for resolving any disagreements. The new arrangements will need to be negotiated, and that may take some time, but the Bill, as amended in the House of Lords, ensures that the Secretary of State’s water intervention powers can be repealed once an agreement is formally entered into.
Amendment 31 is also a crucial part of this package, as it imposes a duty on UK and Welsh Ministers to have regard to consumers on either side of the border when exercising functions relating to water resources, water supply or water quality.
The removal of these intervention powers ensured we were able to conclude our consideration of the wider devolution issues relating to water and sewerage, including the questions of whether powers over water and sewerage should be aligned with the England and Wales border and whether the sewerage intervention powers that were in clause 46 of the Bill when it left this House could be removed.
Amendment 30 removed the sewerage intervention powers from the Bill, and a great deal of work has gone into the question of whether the devolution boundary should be aligned with the geographical boundary of Wales.
Nick Thomas-Symonds
I welcome the giving up of the intervention power, but does the Minister remain concerned, as I do, that there will be no direct line of accountability between Ofwat and Welsh Ministers?
Guto Bebb
I dispute the view that there will be no direct line of accountability between Welsh Ministers and Ofwat. There will be an opportunity to consult and work through the Secretary of State. The protocol that is being put in place will also address that issue in more detail in due course. However, hon. Members should welcome the fact that we are moving in that direction on the mature basis of a protocol between the two Governments.
Ian C. Lucas (Wrexham) (Lab)
Will the Minister clarify the position on the Competition and Markets Authority? Its regulatory role is very relevant to water. Will it be accountable to the Welsh Government and the Assembly?
Guto Bebb
It is important to highlight that the Bill is not devolving competition power; it is being reserved. Therefore, the Welsh Government—and this place, obviously—will have the ability to ensure that the views of electors in Wales on this important issue are taken into account.
Of course, the Silk report recognised that water and sewerage devolution is complex and that further work was needed to consider the practical implications of implementing the commission’s recommendations. Immediately after the St David’s day agreement, the Government set up the joint Governments’ programme board with the Welsh Government to look at these issues and to report on the likely effects implementing the recommendations would have on the efficient delivery of water and sewerage services, on consumers and on the water undertakers themselves.
After considering the conclusions of that work, the Government brought forward amendment 28, which provides for new schedule 7A to the 2006 Act, which is inserted by schedule 1 to this Bill, to be amended to devolve water and sewerage policy as it relates to Wales. While, on paper, this simplifies the devolution arrangements, it will involve the unpicking of a considerable number of provisions in primary and secondary legislation to align respective ministerial powers and duties with the England and Wales border.
Amendment 29 provides an order-making power limited to making changes to previously transferred functions and to functions directly conferred by primary legislation relating to water and sewerage, so that we will be able to make the various associated changes through secondary legislation once the Bill has been enacted.
The amendments in this group provide a significant package of water devolution to Wales. They deliver a stable, mature and effective devolution settlement by aligning powers over water and sewerage with the national border and replacing the Secretary of State’s intervention powers relating to water with an intergovernmental protocol. These new arrangements are in the best interests of water consumers on both sides of the border. I urge the House to accept these Lords amendments.
Gerald Jones (Merthyr Tydfil and Rhymney) (Lab)
The devolution of water and sewerage matters to the Welsh Government is welcome—and, if we are honest, somewhat overdue. The tragedy of Tryweryn will never be forgotten, but the amendments in this group should, I hope, be another step forward in ensuring that something like it will never happen again. More broadly, while some cross-border aspects of water regulation will remain, we are pleased that the Secretary of State has given up his ability to intervene on this issue. Like my hon. Friend the Member for Cardiff Central (Jo Stevens), I find myself in the somewhat strange place of thanking the Government for their movement on this issue, albeit after some prodding both here and in the other place.
However, also like my hon. Friend, I still believe that these amendments do not go far enough. While they correct some problems, there remain discrepancies. As my hon. Friend the Member for Torfaen (Nick Thomas-Symonds) said, there is the issue of Ofwat’s accountability to the Welsh Government. When Ofwat is discharging its functions in Wales, surely it ought to be accountable in some way to the National Assembly for Wales and Welsh Ministers. As it stands, Welsh Ministers regulate water and sewerage operators in Wales, but with the Secretary of State being able to exercise his function of giving a general direction to Ofwat without any legally mandated consultation with Welsh Ministers. To be clear, we would argue that only Welsh Ministers should be able to provide directions in connection with matters relating to water and sewerage operators in Wales, or where licensed activities are carried out using the supply system of water or sewerage operators in Wales. Does that not seem a very reasonable and straightforward request? Surely it is not a step beyond imagining for the Minister that the regulator for a sector should be mandated to consult and speak to the politicians dealing with the implementation of that sector.
As my hon. Friend the Member for Wrexham (Ian C. Lucas) may well detail, it is not sufficient to believe that regulation from London will always work in the interests of communities in Wales. I will let him expand on that point and the ramifications of these amendments for the campaign he is fighting in his community. I pay tribute to him for his work in raising the issue, and assure the House that we support him on it.
Echoing my hon. Friend the Member for Cardiff Central, despite the gaps in these amendments and the problems we have with them, we will not vote against them. However, I would like the Minister to provide a substantive response to the points I have raised, to give us an assurance that the issue of Ofwat and the Welsh Government could be looked at, perhaps through some mechanism outside the Bill, and to keep the House informed of his progress on that.
Liz Saville Roberts
I rise to speak to the second group of amendments, led by amendment 10. My noble Friend Lord Wigley originally welcomed the Government’s announcement that they would devolve power over water, and in Committee he eloquently outlined how an historic wrong could be righted. He set out in great depth how the drowning of Welsh valleys has motivated his politics and the emotions of so many people in Wales, and how 50 years ago in Capel Celyn the compulsory eviction of families from their homes and land meant the destruction of whole communities. Llyn Celyn and Afon Tryweryn are in my constituency.
The high-handed way in which Westminster treated the people of Tryweryn still has repercussions in this place, as well as in communities across Wales. Amendment 30, in which the so-called water protocol is outlined, embodies the entrenched Tory resistance to addressing this injustice in any meaningful terms. What format the so-called protocol may take has never been fleshed out. In this Bill, we do not have a protocol or a draft protocol, and for that matter we do not have an outline of a draft protocol or a protocol by which to arrive at a protocol. However, despite that lack of clarity, the Government are willing to include clauses watering down this already thin provision.
Lords amendment 31 explicitly charges Welsh Ministers with the interest of English consumers when it comes to any changes to our water supply. It is important to note that the amendment specifically references English consumers. We are not concerned with communities or individuals even, but consumers matter and Wales’s natural resources are still not ours to dispose of to our best advantage. That is because the Government are prioritising the primacy of competition over the interests of Wales. The amendment refers us to the Water Industry Act 1991 to define consumers, but that Act was based on promoting competition. Does this mean that the protocol will be based on the Thatcherite dogma that the wellbeing of the consumer—in this case, the water consumer—is tied up with the tenets of free market competition?
Liz Saville Roberts
I thank the Minister for explaining this earlier, but perhaps he will explain it further.
Liz Saville Roberts
The Minister explained earlier that competition is a reserved matter. In this case, that prompts the question, what does such a dogma have to do with the reserved powers model for Wales, in relation to this most emotive of all subjects? My party and many people in Wales feel cheated. When the Minister played the card of water devolution, we were led to believe that this would be a real game changer, but I am afraid it is no more than smoke and mirrors.
We considered pushing Lords amendment 30 to a vote, but we will spare the Chamber such an exercise, given that we might only manage to tweak the wording of something we have already opposed. I want the record to reflect, however, that my hon. Friends and I will not be taken in by empty words dressed up as substance from the Government. This remains a cynical political sleight of hand—endeavouring to gain capital from an historical event of deep emotional significance in Wales.
Madam Deputy Speaker (Natascha Engel)
With this it will be convenient to discuss the following:
Lords amendments 2 to 8, 11 to 27 and 33 to 35.
Lords amendment 36 and amendments (a) and (b) thereto.
Lords amendments 37 to 43, 45, 47 to 136 and 138 to 177.
Alun Cairns
As I stated earlier, we have engaged constructively with peers, the Welsh Government, the Assembly commission, colleagues on both sides of the House and a range of other interested parties on the issues raised, and we have made changes to improve the Bill where there is a good case to do so. The Bill today is a better one as a result. The large number of amendments in the group is testimony to the fact that the Government have been open to improving the new devolution settlement where possible. I do not intend to discuss each amendment in detail, but I will draw some of them to the House’s attention.
We have amended the Bill to deal with concerns about how universities are treated in the new reserve powers model. During the Bill’s passage through the other place, concerns were raised by the higher education sector that defining universities as “Wales public authorities” might suggest that they should be classified more widely as “public authorities”. This was not our intention. Amendments 3, 4 and 115 resolve this issue by renaming “Wales public authorities” as “Devolved Welsh authorities”. This responds to calls from universities and Universities Wales. We have also ensured that the Open University will be defined as an authority that carries out a mix of devolved and reserved functions, reflecting its status as a UK-wide institution. This will allow the Assembly to legislate to confer functions on the Open University in devolved areas without requiring the consent of a UK Minister. We have also expanded the list of devolved Welsh authorities in response to concerns raised by the Welsh Government and others.
The Government have introduced several amendments relating to tribunals that resulted from extensive discussions with the Welsh Government, the Ministry of Justice and the senior judiciary and which are intended to improve the management of the workload of devolved tribunals and to maximise flexibility in the deployment of judicial resources in Welsh tribunals. The amendments tabled in the other place will create a statutory office of president of Welsh tribunals to oversee the work of the devolved Welsh tribunals. New schedule 5 provides for a two-stage process for the appointment of a person to this new statutory role. The new clauses will also allow for the deployment of judges between Welsh tribunals and reserve tribunals in England and Wales so that they might share expertise in a way that cannot happen under current legislation. These are important amendments that are the product of constructive work with the Welsh Government, the Ministry of Justice and others.
The Government’s key aim in introducing the new reserved powers model is to deliver clarity on the boundary between the Assembly’s competence and the competence of this Parliament, particularly in the light of the Supreme Court judgment on the Agricultural Wages Board settlement. Many amendments therefore either alter or remove altogether reservations contained in new schedule 7A to the Government of Wales Act 2006.
The Government have tabled a number of amendments to deal with the planning system and the law that governs the construction of buildings, responding to concerns raised by the Welsh Government. Amendment 71 devolves competence for planning in relation to railways, making it consistent with the position in Scotland. We have also brought forward amendments that replace the full reservation of compulsory purchase with one that covers only compensation. This was again in response to discussions between the UK Government and the Welsh Government.
As for amendments to schedule 1 more widely, we have demonstrated our willingness to devolve significant further powers to the Assembly where a clear rationale can be made for doing so. Amendment 80 removes the reservation relating to teachers’ pay and conditions. This was something that I was keen to devolve from the outset, but I recognised concerns that were expressed by colleagues on all sides of the House as well as by the teachers’ unions. Following constructive engagement with the First Minister and discussions between officials, we are pleased that we both came to the same conclusion—that education is a devolved matter and that it makes more sense for the Assembly and Welsh Ministers to decide the pay and conditions of teachers in Wales, particularly in the light of the greater divergence between the education models that exist in England and the education model that exists in Wales. It is sensible to devolve teachers’ terms and conditions.
Amendment 72 devolves the community infrastructure levy in Wales. That was a priority for the Welsh Government, and has been for a number of years. We have listened to the case that they made and we are again delivering on a demand made by them. We were happy to respond positively and constructively to these calls.
Finally, amendments 36 and 52 devolve legislative and Executive competence to the Assembly and Welsh Ministers to regulate the number of high-stake gaming machines, authorised by new betting premises licences in Wales. This is an issue in which the hon. Member for Swansea East (Carolyn Harris) showed particular interest and passion during the earlier stages of the Bill’s scrutiny. The Silk commission made no recommendation on the devolution of betting, gaming and lotteries, but we agreed as part of constructive dialogue with the St David’s day process to consider non-fiscal recommendations made by the Smith commission that it would be appropriate to take forward in Wales.
Nick Thomas-Symonds
I, too, place on record my congratulations to my hon. Friend the Member for Swansea East (Carolyn Harris) on the success of her campaign on this issue. Does the Secretary of State agree that when statistics show that an average of £3,000 a day is being staked on these machines, it is very important to devolve these powers and for the regulations to be implemented?
Alun Cairns
I will come on to that specific point, because a review is being conducted by the Department for Culture, Media and Sport which will address the specific issues that the hon. Gentleman raises. For the moment, I shall stick to explaining the rationale behind the amendments on fixed odds betting terminals.
One proposal was for the powers to be devolved to stop the proliferation of these so-called fixed odds betting terminals. We concluded that these powers should be devolved in Wales, as they are in Scotland, coming out of the Smith commission. Amendments 36 and 52 therefore ensure that the Bill mirrors the provisions in the Scotland Act 2016 in respect of high-stakes gaming machines. The amendments apply to sub-category B2 gaming machines, and would provide the Welsh Government with a means to address public concerns in Wales regarding the proliferation of these machines. These machines were regulated by the Gambling Act 2005, which was introduced when the Labour party was in power.
The Opposition amendments would go much further than what is already devolved in the Scotland Act by extending this provision to all existing gaming machines with a stake of more than £2, and by devolving powers over existing licences. We did not believe that that was appropriate. As I mentioned a moment ago, the Government have already announced a review into the issue because we recognised the flaws in the 2005 Act. As a result, we are carrying out a thorough process to examine all aspects of gaming machine regulation, including the categorisation, maximum stakes and prizes, location and number of machines, and the impact that they have on players and the communities in relation to, for instance, problem gambling and crime. All those factors are potentially relevant and interrelated. The powers that we have agreed to devolve are intended to enable the Welsh Government and the Assembly to take action to prevent the proliferation of fixed odds betting terminals.
The review that we have announced is the appropriate mechanism for consideration of all those issues in a far more holistic way. I urge Opposition Members not to press their amendments to a vote, but if they pursue them, I shall do my best to respond to some of the issues that concern them. I urge Members to support the Lords amendments.
Susan Elan Jones
I support Labour’s amendment (a) to Lords amendment 36, which would reduce the relevant stake for fixed odds betting terminals to £2. I welcome the review that is being carried out by the Department for Culture, Media and Sport, and I also welcome the move to devolve this power to the Welsh Assembly. My reason for doing so is very much in line with all the work that has been done by my hon. Friend the Member for Swansea East (Carolyn Harris), but I fear that we could find ourselves in a ridiculous position. All of us—apart from certain advocates for the betting industry—know that what is happening with fixed odds betting terminals is deeply concerning. Figures as high as about £1.7 billion have been quoted as the profits made on these horrible machines, which cause so much devastation in our communities. We all agree that something must be done fairly urgently, but I fear that the House of Commons could collectively vote to put in place a stake of below £10 but then, if we pass the Lords amendment as it stands, the stake could be reduced only to a minimum of £10 in Wales. That does not seem right to me.
Let me put it another way. Collectively, the House could vote for a maximum stake of £2 in England and Wales, but once the matter is devolved to Wales, the Welsh Government would be limited to £10 and then the House of Commons could not go for a lower stake here, simply because the Government would tell us that that this was a case of English votes for English laws and we would be banned from lowering the stake.
All we are asking for is something very pragmatic—something that would give us the right to decide the level of the stake and benefit communities. Let us make no bones about it: these machines, and what is happening in the gambling industry, are hitting our poorest communities the hardest. We see the impacts of it in our industrial villages and in our towns. Let us say once and for all to the harder elements of the gaming industry, some of whom I am sure will be e-mailing us all later, that the nonsense of what is happening with FOBTs must come to an end. Let us say, “Do not think you can intimidate us, or those in the communities who are fed up with the hold that you have on them.”
It is time for us to act firmly. It is time for us to give the Welsh Government full devolution in this regard. It is time for us to lower the stake even further, if possible. It is time for the Welsh Government to have the power to do that, and, hopefully, this place will as well.
Alun Cairns
With the leave of the House, Madam Deputy Speaker, I would like to respond to the points that have been made. I thank all those Members who have made contributions today, and throughout the Bill’s passage through the House and the other place.
I am disappointed that the Opposition want to divide the House on the proposals we introduced in the other place on fixed odds betting terminals. Those proposals responded positively to calls that were made by colleagues on both sides of the House and by the Welsh Government. The Silk commission made no recommendations in that area, but having considered the Smith commission recommendations for Scotland we believe it is right to put the Assembly on the same footing as the Scottish Parliament and allow it to legislate on the proliferation of fixed odds betting terminals in Wales.
Albert Owen (Ynys Môn) (Lab)
The Secretary of State asserts that only Members on this side of the House oppose the proposals, but Conservative Members of the Welsh Assembly oppose what the Government are proposing and have supported my hon. Friend the Member for Swansea East (Carolyn Harris), including Darren Millar from north Wales. Has the Secretary of State consulted his Assembly Members on this point?
Alun Cairns
The hon. Gentleman makes a relevant point. We take the issue of problem gambling seriously. As I mentioned, we are committed to looking at all aspects of gaming machine regulations as part of a wide-ranging review of gambling. The regulation of fixed odds betting terminals is covered by the Gambling Act 2005, and we recognise that flaws exist in the current regulatory arrangements. They were introduced by the Labour party and it is time that they were reviewed. That is what my right hon. Friend the Secretary of State for Culture, Media and Sport is doing. We will act when that work has been completed, so I hope hon. Members will vote against the Opposition amendments and in support of the Lords amendments tabled by the Government.
The hon. Member for Newport West (Paul Flynn) suggested that the Bill showed a half-hearted approach to devolution. In the positive spirit in which the Bill has progressed through both Houses, I remind him that legislative competence orders were in place when we came into power in 2010 and started this process. A conferred model was in place then; the Bill introduces a reserved model. We have in place a needs-based funding settlement—something that has been called for for decades—and we are devolving significant tax powers. We have removed the water intervention powers and extended the Welsh Government’s powers in a significant range of areas, such as energy, fracking, elections and running their own affairs. A host of positive steps have been taken.
We all know that Members in the other place rightly pay close scrutiny to matters of constitutional importance in Bills such as this. Despite being in a minority in the other place, the Government were not defeated on the Bill, so I hope that Members from both sides of the House, and all Opposition Members, will recognise the significance of the Bill and, once and for all, welcome it because of the positive steps it takes in bringing about a devolution settlement that will last for a long time to come.
Lords amendment 1 agreed to.
Lords amendments 2 to 8, 11 to 27 and 33 to 35 agreed to.
After Clause 48
Gaming machines on licensed betting premises
Amendment (a) proposed to Lords amendment 36.— (Jo Stevens.)
Question put, That the amendment be made.