Wales Bill

Lord Rowlands Excerpts

Tuesday 22nd July 2014 Lords Chamber

[Lord Rowlands (Lab)]

My Lords, many Members of the House who have spoken today have referred to their personal position on devolution. It was a curious coincidence that, as I prepared my thoughts on the Bill, I had an e-mail from a sixth-former in West Wales, Eleri Williams, with a questionnaire. The first question was: had I been a supporter of devolution? I fear that I am in a minority of one in this afternoon’s debate, as I confessed to her and now confess to the House that I was a most reluctant supporter of devolution. That was, frankly, from personal experience as a parliamentary historian who then had the great privilege of sitting for 33 years in the other House, 29 of them representing an iconic Welsh constituency. The notion that I should share this responsibility was rather underwhelming, and the notion that I would lose any constituency responsibility for health, education and transport was very unappealing. That was one factor that led me to stand down in 2001.

However, unlike my noble friend Lord Morgan—Professor Morgan—I think that since then the settlement has benefited from being gradual. We can so easily forget how frail and fragile the support for the settlement was in the first place; it was a very marginal issue. I believe that the gradual approach has been important in allowing the Assembly to build support for the process and for itself. Because of where I come from—the position I take on devolution—I believe that we should not be obsessed by aping the Scots or following the Scottish line. We should shape our devolution settlement based on our political culture and our own demographic factors. That is extremely important.

However, I believe that we are at a stage when one extremely important change has to be made, to which—as, I confess, a reluctant devolutionist—I now give my wholehearted support. That is the whole issue of reserved powers. As a result of the changes that have taken place, this reform is now overdue; it is a most important reform that needs to be made. I regret that it is not in the Bill—not only that, but I am not certain where the Government stand on the issue. Are they just saying that they do not have time to include those proposals in the Bill? Do they support in principle the idea that we should have reserved powers? That is an area that we will need to explore in Committee, because it is becoming extremely important. The case was powerfully made by my noble friend Lord Morgan earlier. That is certainly an issue that we shall pursue in Committee.

The next question that Ms Williams posed to me in her questionnaire was: what did I think about the electoral system? I explained to her that it had been designed primarily because of the fear that the Labour Party would dominate the Assembly if there had been a completely first-past-the-post arrangement, so the electoral system had been successful because there has not been a dominant party. I did have to say, however, that I thought that Clause 2, reversing the ban on dual candidacy, was foolish. I recall vividly the reaction, certainly in our area in West Wales—in the 2003 election, I think it was—to the notion that people who had lost an election should then be elected as Members. Whether we are for or against that, I should much prefer Clause 2 to go and to insert a clause that states that the Assembly should make those decisions. Let the Assembly from now on determine the electoral arrangements. Why is this House going to determine whether dual candidacy is right or wrong? It should be the Assembly’s responsibility, and it would be preferable if we abandoned Clause 2 and introduced a clause that allowed the Assembly to determine its electoral arrangements.

The borrowing powers are important and I support them, as I support the two minor taxes, although, again, I hope that we scrutinise them in Committee, because from reading some of the Commons debates, I do not think that either clause was scrutinised in a proper fashion, and I believe it to be the duty of this House to do so.

On the question of taxation, having read the carefully considered argument that Silk produces, I accept his argument for tax-varying powers, but I hope that we do not become obsessed by them. It would be political surrealism to believe that Governments of whatever political hue will seize on and make dramatic changes in taxation. At best, I think that they will be marginal. As my noble friend reminded us from the Front Bench, a 1p change in tax one way or the other is worth £200 million—not insignificant, but quite insignificant in a budget of £15 billion. I would not wish hot-headed debates to take place on whether we should say yes or no to 1p when a bigger debate about the whole nature and contribution of the Budget and the priorities in that Budget should be centre stage.

I turn finally to a point made by a number of noble Lords: the concern I share about the potential pressures on the Assembly in terms of scrutiny. I had the privilege of sitting with my noble friend Lord Richard on the Richard commission. We spotted then and felt that there was not a robust enough scrutiny system and that this was related to the number of Members of the House. We are now 10 years down the road, the Assembly is accruing more and more responsibilities and powers, and the issue of the robustness of the scrutiny process is a major concern.

With a Welsh Treasury we will have debates on taxation and on public finance issues, so we should remember how powerful and important a role is played in the other House by the Public Accounts Committee, and how uncomfortable Governments have been made by an awkward bunch of Back-Benchers questioning and pressurising. It is one of the great committees of the House and is very effective. I just do not feel that there is the same sense of an awkward squad creating problems and making Governments of whatever party uncomfortable and I think that that is partly related to the size of the Assembly itself: there are not enough Back-Benchers. Therefore I believe that we should accept, as a consequence of the Assembly accruing ever more power, that it has to have the capacity to scrutinise that power, otherwise we will have government but not a democratically scrutinised Government.

It is interesting that there has been almost unanimity in this House—it is easier for us to say, because we are not elected. It is a problem to present an unpalatable case for more politicians, but the case has to be made. It has to be seen in the context of the further accrual, the development of the devolution settlement and the expansion of the Assembly’s powers.

I welcome parts of the Bill and certainly look forward to scrutinising it. I do not know whether I should lock-step or not lock-step; I shall work that out in the course of our debates—and as for indexation and all the other issues, they look like the grist of a good Committee stage. However, I plead that we will not miss, as the professor and noble Lord, Lord Morgan, said, the slightly bigger picture; in particular, the importance of the role of an enhanced National Assembly to deal with the scrutiny of these powers.

--- Later in debate ---

[Baroness Randerson]

My Lords, this has been a good debate. I believe that it has reflected the constitutional importance of the Bill for Wales and for the United Kingdom as a whole. I fear that at times it was a debate on a Bill that many of us would like to write rather than the one before us. As the Minister in charge of the Bill here, my first priority is to ensure that we steer the Bill through safely in the time that we have left in this Parliament. It is very important to me personally that we ensure that that is done because across the Chamber today I have noted very strong support for the Bill in general terms.

I am a devolutionary enthusiast but I am also a pragmatist, and I realise that in some ways the timetable is not ideal. As several noble Lords have mentioned, the Bill is being discussed in the shadow of the Scottish referendum, a point made powerfully by the noble Lord, Lord Rowe-Beddoe. We will then have our Committee stage very close on the heels of the result of the Scottish referendum without having time to reflect and to develop ideas. Therefore, I urge noble Lords to judge the Bill on the basis of where we are at present and the fact that it is being very firmly based on the Silk 1 report. The Silk 2 report is for another day and it needs to be considered in the light of our party manifestos. My party’s manifesto will contain a very firm commitment to delivering the Silk recommendations, and I hope that I will see things that I recognise in the manifestos of the other parties represented here today.

I shall try to reply to as many of the issues raised by noble Lords as possible. Many speakers, including the noble Baroness, Lady Morgan, and the noble Lord, Lord Wigley, mentioned the lock-step. It is clearly something that is going to continue to generate passionate debate. I said in my opening speech that the Government continue to believe that the approach set out in the Bill is appropriate for Wales, given the potentially far-reaching and significant effects of allowing the Welsh Government to alter each income tax band independently. That is our belief, particularly in the light of the porous border between Wales and England and the figures quoted by noble Lords indicating that there is a very large population that might cross that border.

The Government believe very strongly in the impact of the tax banding system on ensuring that taxation is progressive and that it reallocates money across society. That is an important aspect that we have been bearing in mind in relation to the lock-step. However, as I said earlier, at this point the Government remain open to revisiting the arrangements for income tax devolution in the light of changes in Scotland, and I am happy to restate that. I also draw noble Lords’ attention to the fact that the new Secretary of State has made it clear that his mind remains open on the issue.

The noble Lord, Lord Anderson, asked: if you do not vary the rate of taxation, what is the point of it? The point of it is that it is the basis for borrowing power. It is used as the basis for borrowing power by the Scottish Government and it would be used as such in future by the Welsh Government.

Several noble Lords, including the noble Baroness, Lady Morgan, referred to the level of the block grant adjustment. A number of different views were expressed on this across the Chamber. I make it clear that if the income tax base in Wales grows faster than that in the rest of the UK, the Welsh Government will benefit, even if the Welsh rate is the same as the UK rate. Inevitably, however, if it grows slower, the Welsh Government’s budget will be lower. That is a simple consequence of more accountability, linking the Welsh Government’s budget to the performance of the Welsh economy. This arrangement would incentivise the Welsh Government to grow the economy in Wales but, importantly, it would protect it from UK-wide effects that the UK Government are better placed to manage. It is a fair system, designed to protect Wales from the greatest volatility and it is consistent with our aims of increasing the Welsh Government’s accountability.

The noble Lord, Lord Howarth, asked about stamp duty land tax volatility. The block grant adjustment will not reflect SDLT volatility. Instead, the Welsh Government are being given new tools to manage tax volatility, which is part of increasing accountability. Those new tools include a cash reserve that can be used to save tax revenues in good years and spend them when revenues are lower than they have been forecast to be. The Welsh Government will also be able to borrow up to £500 million and up to £200 million in any one year if there are insufficient funds in the cash reserve.

The noble Baroness, Lady Morgan, and other noble Lords referred to the sensitivity of the timing of this debate in relation to the Scottish referendum result. I agree, but of course hindsight is a wonderful thing. When the timescale for the Silk process was set out, people did not have any concept that there would be a Scottish referendum at this time.

Many noble Lords raised the reserved powers model. I think that universal support for that has been expressed today across the Chamber. Several noble Lords, including the noble and learned Lord, Lord Morris, also referred to the recent decision on the Agricultural Wages Board. That decision certainly adds to the debate on the issue. However, as several noble Lords recognised and acknowledged, it has to be a longer-term issue. That was recognised by the Silk commission in its second report which made it clear that it was something for manifesto decisions. Even if we made the decision today to go to a reserved powers model, we would not be able to create it and legislate in the timescale left. It is absolutely right that there is a wide public debate on this and I urge noble Lords to encourage that debate.

In many ways the same points should be made about the size of the Assembly and its capacity for scrutiny. It was also an issue raised in the second Silk report, but that is also something for manifestos.

[Lord Rowlands]

Do I take it that, in principle, the coalition Government are in favour of the reserved powers?

[Baroness Randerson]

I am specifically making it clear that the Government do not have a position on the reserved powers model. As the Silk report recommended, this is something for manifesto positions from the different parties. However, my party is in favour of the reserved powers model. That does not make it a government position, and it certainly is not something that can be created now. However much one might wish to do so, we cannot write the kind of complex legislation needed for a reserved powers model of devolution for Wales. If we tried to do so at that speed, we would be in danger of ending up with second-rate legislation, which the people of Wales do not deserve.

I move on to the point made by the noble Lord, Lord Wigley, on corporation tax. I remind the House that the Silk commission said that if corporation tax were devolved to Scotland and Northern Ireland it should also be devolved to Wales. There are no current plans to devolve to Scotland and Northern Ireland. However, the Bill contains the power to devolve further taxes to Wales by order. I would like noble Lords to note that. The noble Lord, Lord Anderson, raised the same issue about the power to devolve further taxes. A good example would be the aggregates levy once the EU Commission has completed its investigations. That provision is in the Bill as it stands.

The noble Lord, Lord Howarth of Newport, and others, raised the issue of borrowing powers and why they are not higher. I should point out that there are two capital borrowing limits: the annual limit and the overall limit. The overall limit in Scotland is £2.2 billion, which is supported by around £5 billion of annual devolved tax revenue. Using the same ratio, the overall limit in Wales would have been only £100 million. I ask noble Lords to bear that in mind when they ask for Wales to be treated like Scotland. We accepted that £100 million was inadequate so we increased it to £500 million specifically to enable M4 improvements to be undertaken, although there are no restrictions in law on how that could be spent. Obviously this is a power in perpetuity which the Welsh Government could exert for other things.

Local Authorities (Contracting Out of Tax Billing, Collection and Enforcement Functions) (Amendment) (Wales) Order 2013

Lord Rowlands Excerpts

Tuesday 12th March 2013 Grand Committee

[Lord Wigley]

Perhaps I may ask for clarification on a couple of points by the noble Baroness. First, am I right in saying that the interpretation of this order is the provision of greater powers of privatisation for local authorities if they choose to use them? Is that the implication—services that would otherwise be in-house in local authorities can be undertaken by private companies on their behalf?

Secondly, I refer to Article 2 on,

“Amendment of the Local Authorities (Contracting Out of Tax, Billing, Collection and Enforcement Functions) Order 1996”.

In subsection (2), there is reference to,

“the Detection of Fraud Regulations”.

Are these regulations that have already been made? Are they made by the Assembly or here? Is there already a statutory instrument in effect on that, or are we awaiting something to be confirmed?

[Lord Rowlands]

I wish to ask two questions. First, how much contracting out has been carried out since the 1996 order was introduced? What percentage of local authorities have already contracted out in this field? The Minister referred to my next point. One should perhaps be concerned that we are handing over information on the personal financial matters of individuals and families to a variety of different organisations which might have potential conflicts of interest as opposed to a local authority, which will not, because it is a statutory body. The Minister talked about safeguards and data protection but if you diversify and decentralise in the manner in which this order hopes and expects, how will the individual be safe in the knowledge that his or her finances cannot be abused in any way? At least when the local authority has this information, it is a statutory body and therefore is obviously accountable in every sense of the word. How will that accountability be enforced across a range of other organisations or companies that will be delivering these services?

[Baroness Gale]

My Lords, I thank the Minister for placing this order before us today. As she has outlined, its purpose is to amend the Local Authorities (Contracting Out of Tax Billing, Collection and Enforcement Functions) Order 1996. From April 2013, council tax benefit will be abolished and council tax reduction schemes will be introduced in Wales under the Local Government Finance Act 2012. In future, instead of receiving council tax benefit, low-income families will receive a reduction in their council tax. Currently, local authorities can contract out of administering the collection of council tax. The order we are debating is required to ensure that the new administrative functions are part of the council tax reduction scheme and can also be contracted out if local councils wish to do so. Those functions include such things as sending out decision letters and serving penalty notices. The noble Lord, Lord Wigley, and my noble friend Lord Rowlands asked some very interesting questions on those issues and I look forward to the Minister’s reply to them.

The drafting of the order is relatively uncontroversial but it is unfortunate that we have it at all. It comes about as a result of the Government’s decision to abolish council tax benefit. They are scrapping the national benefit and passing responsibility for it to local authorities in England and to the Welsh and Scottish Governments, and cutting funding by 10%. We accept that the Welsh Government have responsibility for the details of any schemes and are fully involved in setting up these details. The principle of getting rid of council tax benefit dismays us very much. In England, we see people on low incomes being asked to pay sums of money that they simply cannot afford. Most councils have had no option but to pass on some of the cuts. As a result, many low-income households currently exempt from council tax will have to pay it for the first time. Typically, they will have to pay between £96 and £225 a year. In Wales, a 10% cut would amount to an annual cut of some £74 per council tax benefit claimant. I wonder whether the Government fully understand the impact this will have on low-income families. Government Ministers have praised the freeze on council tax, which may, indeed, be welcomed by those on modest and high incomes. However, the removal of council tax benefit from those on the lowest incomes means an increase in what they will have to pay.

The Government say that pensioners must be protected from the cuts, which means that others face larger cuts, depending on the number of pensioners in a local authority. If councils also try to protect other vulnerable groups, such as disabled people or carers, the cuts enforced on working families will be even more severe. Because of the number of pensioners the average reduction across local authorities will work out at some 16%. In January the Welsh Minister for Social Justice and Local Government, Carl Sergeant, announced a £22 million support package to continue offering the full council tax discounts in Wales, and under prudent financial management the Welsh Government have been able to fund their proposals out of their reserves.

It has been a difficult time for the Welsh Government. They have had to balance an enormous number of cuts and manage them while facing a difficult budgetary situation. Towards the end of the winter they were able to see the effects on households of other welfare benefit cuts. They knew that they were perhaps not going to have so many payments for such things as severe winter weather. They were in a position to use that money for council tax discount. However, that prompts the question as to whether it can continue to be used in the future. It will certainly not be easy and councils are aware of the pressures on them.

Given that the Government are going ahead with the change, the Welsh Government and Welsh local authorities need the regulations in place as soon as possible. We will not oppose these regulations tonight.

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[Baroness Randerson]

The noble Lord makes an interesting point. It is something that we have come across on a fairly regular basis, that responsibilities are split in a way that is sometimes not obvious and sometimes surprising.

I move on now to the points made by the noble Lord, Lord Rowlands, who asked if there is more contracting-out now. I simply point out that this has always happened—for example, currently only three of the 22 local authorities in Wales have in-house bailiffs. Contracting-out on billing and bailiff services is very common. But a great deal of work has been done by the Welsh Government and by individual local authorities to have codes of conduct and best practice examples to ensure that bailiff services are run by improving standards over the years. A great deal of progress has been made on those issues.

[Lord Rowlands]

I apologise for interrupting the Minister again. I can understand the situation with bailiffs, but my feeling would be that a bailiff would not receive detailed personal information of the individual’s financial circumstances in the same way as some of the other services that are contracted out. That would give the external provider direct access to people’s personal finances, in a way that a bailiff probably would not have.

[Baroness Randerson]

I believe that external services will have no more access than they have had in the past, but they will continue to have an obligation to treat that material as confidential and deal with it in a responsible manner. Local authorities will continue to have—this is not new—a responsibility to ensure that any organisation or individual whom they appoint as a contractor to work on their behalf operates to the highest standards, and maintains confidentiality of personal data. To address here the remarks of the noble Baroness, Lady Gale, as a very keen advocate of local authorities and someone who believes fervently in local government—and I am very proud of our local government system throughout Britain—I believe that councils are raising council tax, which is the tax that funds a lot of their spending. It is right that they have responsibility for the whole of the functions associated with the raising of that tax. It is important that we have confidence to delegate power to local authorities throughout Britain in order to enable them to raise tax and spend it as efficiently and practically as possible.

Finally, I turn to the remarks made by the noble Baroness, Lady Gale.

[Lord Rowlands]

If some of these services are contracted out to an external provider and an individual feels that he or she has a grievance at the way that services are being administered, to whom does the individual appeal? If the local authority were doing it, it would be the Local Government Ombudsman. If, for example, an external provider committed a potential act of maladministration, could the individual go to the local ombudsman for redress of the grievance against the external provider?

[Baroness Randerson]

They will continue to appeal in the normal manner, the way in which they have been appealing since the establishment of council tax. The appeal will be to the valuation tribunal in the normal manner.

The noble Baroness, Lady Gale, expressed concern about the ending of council tax benefit. I do not believe it is an issue of concern in principle that council tax reductions will be done by councils rather than through the benefits system. I think it is very sensible to unite the reductions in council tax for those of limited means with the organisation that levies the tax in the first place. It is part of the Government’s policies of decentralisation and trusting local authorities. In this case, the Welsh Government have made a central scheme, and there are certain limited exceptions that local authorities can make decisions upon, but there is a largely standard scheme throughout Wales.

The concern that the noble Baroness expressed related to people who she believes will not receive the council tax reduction in future. I assure her that throughout Wales, if you are entitled to council tax benefit now, you will be entitled to a council tax reduction in future because the Welsh Government chose to supplement the funding being provided.

I hope that I have addressed all the points that noble Lords have raised. I am now in a position to answer the question asked by the noble Lord, Lord Wigley, about the Explanatory Memorandum. This order adds new administrative functions to the 1996 order which relate to council tax reduction schemes, but under the Contracting Out (Functions of Local Authorities: Income-Related Benefits) Order 2002 local authorities could in the past have carried out those functions for council tax benefit.

It may be useful if I review the record and check that I have answered all questions fully. I will pay particular attention to the point raised by the noble Lord, Lord Wigley, about additional functions. I commend the order to the Committee.

Empowerment and Responsibility: Financial Powers to Strengthen Wales

Lord Rowlands Excerpts

Tuesday 11th December 2012 Grand Committee

[Lord Rowlands]

My Lords, I support a number of findings of the Silk commission. I support the proposed transfer of stamp duty land tax, of minor taxes and of business rates, as mentioned by the noble Lord, Lord Wigley. I also support the idea of additional borrowing powers. It is absolutely absurd that a Welsh Assembly Government cannot borrow when almost every other authority can. Apparently to do that one needs to service the debt. I assume and hope—perhaps the Minister will confirm this—that if you transfer the range of minor taxes, plus stamp duty land tax, it will bring in sufficient income to service any borrowing power. If that is the case, the package will be easy to introduce immediately. I also agree with all noble Lords who stated that it would be impossible to introduce major tax-varying powers unless the Barnett issue was addressed. There is little or no point in having tax devolution if such underfunding has not been addressed.

I will confine my remaining remarks entirely to one issue that I have raised before: my concern about the effect on low-income communities such as those I represented of raising tax rates by 3 percentage points or more. I hoped that the Silk commission would tell us what the impact would be on those communities of exercising such a power. I found the answer on two very difficult—in fact, almost incomprehensible—pages on estimates of the impact of income tax changes in Wales. There is a very complex equation and the introduction of the notion of the elasticity of taxable income. I hope that the Minister will translate those two pages into language that I can understand. It is essential to understand the impact the changes would have. If we will the power to a Government to raise the basic rate of tax by, say, 3p or whatever, we should understand the consequences for communities.

The most interesting in a wealth of tables in the report is that on income and income tax in Wales in 2009-10. It shows that of the 1,390,000 individuals who paid tax, 900,000—nearly two-thirds—had an annual income of between £10,000 and £20,000. Nearly 1.4 million people fell into that income tax bracket. I suspect that the percentage was bigger in Merthyr because the percentage of those on lower incomes will have been even higher. That substantial group of 900,000 or more would carry the additional tax burden if we raised the basic rate of income tax. Therefore, I am concerned that if we go down this path, it could lead to a regressive form of taxation. In constituencies such as the one I represented, we would be swapping—in fact, converting—beneficial public expenditure into a tax burden. That would be the effect of implementing additional rates of income tax. We must be honest. Politically it is highly unlikely that a future Welsh Assembly Government of any complexion will substantially reduce income tax and cut expenditure. The whole ethos of political life, among almost all parties now, would be against such a proposal.

If we will the power, we have to accept the consequence of it. I am not convinced, as the people on whom the burden of this would fall are those who should least expect to carry that burden. I keep an open mind, and am very supportive of all the other range of taxes, but I remain sceptical until I can find out exactly what the impact would be on the communities I represented of raising the basic rate of tax above the standard rate. We are not only talking about raising it 1p, 2p or 3p but, at this moment, have a very unfair tax anyway. The moment you come into tax and use up your personal allowances, which will eventually be around the £10,000 mark by the end of this Parliament, the tax on every pound then leaps from 0% to 20% because there is no middle band. I deeply regret the previous Administration’s abolition of the 10p band and have not been able to work out whether Silk recommends that a Welsh Government could actually introduce one. That would at least make an easier tax progression, if that was possible. I am sorry to end on a discordant note but, although it is now 10 years since I represented my former constituency, I still sense and feel that an injustice could be perpetrated if we started to raise the basic rate of tax on low-income communities and low-income families of the kind I represented.

Wales: Devolution

Lord Rowlands Excerpts

Thursday 19th July 2012 Lords Chamber

[Lord Rowlands]

My Lords, I had the privilege of serving on an earlier commission, the one chaired by the noble Lord, Lord Richard. The report that we produced paved the way, first of all, for the transfer of legislative competence and, secondly, for the full legislative powers that were then endorsed in a referendum. I am afraid that I disagree with the noble Baroness, Lady Randerson, on her strictures about the gradual processes by which we have pursued devolution. One significant and fundamental benefit has arisen from the way in which we have processed devolution, which is that we have begun to build consensus. The noble Lord, Lord Roberts of Llandudno, reminded us of just how fragile the referendum vote was. We were bitterly divided in Wales on the issue of devolution. The gradual nature of the approach that has been taken has therefore been very important in the process of building consensus. There is, now, a growing consensus around the devolution settlement.

I am also therefore grateful for the thoughtful way in which we are approaching the issue of fiscal devolution. Although I understand the point made by noble Lords that we should first of all decide on powers and then look at fiscal devolution, we have reached a rather constitutionally illogical position. We remember the great cry of the American colonies:

“No taxation without representation”.

We have representation without taxation. There are very few legislative bodies in the world that have full legislative power but do not have any form of tax powers. There is a compelling constitutional logic in place that some kind of tax power should accompany legislative power.

The questions that arise the moment that we say that are: what and how? The Holtham report, which is very useful, is based on some interesting principles and made some observations that we would be foolish to ignore. The first, which I will quote directly from paragraph 2.9 of the report, is that,

“tax devolution that leads to tax competition may undermine a tax base and lead to too-low levels of tax for the union as a whole”.

I cannot believe that any one of us wishes to produce an arrangement that would lead to that kind of consequence. The second issue—I was particularly struck by those passages in the Holtham report that deal with the relationship between the English and Welsh economies—is that the economy of Wales is highly integrated with that of England. I was startled by the figures that the report produced: 48% of the population of Wales lives within 25 miles of the border with England, while 90% of our population lives within 50 miles of that border. There is a corresponding, very large, population on the other side of the border—something like 30%. That is in very stark contrast to the situation around the border between England and Scotland. Our border overlap is some 30%; the English-Scottish overlap is 5%. When one says that one does not want asymmetry but conformity or some sort of symmetry, one has to recognise the very different arrangements and situations that apply. Clearly, if one embarked on some tax variations, that border issue would become extremely important. We have therefore to be very careful in the way in which we handle that situation.

Nevertheless, Holtham concluded that,

“small differences in basic rates of income tax (up to around three pence) … could be sustained … without being likely to induce significant migration or changes to labour supply”.

I have, however, a different niggling question about income tax-varying powers. It is not about migration; it is about the impact on communities where incomes are below the national average, which was certainly the case with those that I represented. What would be the effect not only on families but on communities’ purchasing power if you added 3p to the existing basic rate of income tax? The noble Lord, Lord Wigley, mentioned the experiences with regional taxation in the United States. I have read quite a bit about those and know that some of them are very regressive. You have to be very careful, because regional taxes can be regressive. We must be extremely vigilant in this respect.

Before I buy either the Holtham line or the 3p line, I want a meaningful impact assessment to be made. What would be the impact of such a change on the internal purchasing power of, for example, the Merthyr and Rhymney communities of adding 2p or 3p to the basic rate? I could not say yes to the granting of such powers unless I knew what impact I was making.

We all know of Chancellors who have brought in Budgets that have had unintended fiscal consequences. I was a passionate fan of the 10p band, which benefited the constituents whom I represented. I therefore regretted it bitterly when the previous Administration abolished that band. It has left us going from 0% to 20%. If we were to add another 3% to that, one would be left to ask where marginal tax rate issues kick in. We saw a Budget in March that had unintended consequences. The Chancellor completely miscalculated the impact of abolishing, on grounds of simplification, age-related allowances. We should not embark on this kind of change without a full impact assessment. If I were to make any recommendation to the Silk commission, it would be to let us have such an impact assessment so that we can make a judgment on what taxes it would be meaningful, reasonable and sustainable to devolve.

However, as many other noble Lords have said, the fundamental issue is not tax but the Barnett formula. Politicians can vie over this—it has been said that the previous Administration ducked the issue and it will be interesting to see whether this Administration do so, too—but it is not the politicians who drew it to our attention but a very powerful recommendation of the Holtham report. Holtham argued:

“Even if our proposals for tax devolution were implemented in full, the block grant would still account for around 85 per cent of the total resources … Ensuring that Barnett is replaced by a system that sets the block grant by reference to Welsh relative needs therefore should be a priority for Wales”.

I think that most of us would endorse that conclusion, and we sincerely hope that the noble and learned Lord, Lord Wallace, whom I have known for many years and who is not a man to duck an issue, will not duck this one, too.

Parliamentary Constituencies and Assembly Electoral Regions (Wales) (Amendment) Order 2011

Lord Rowlands Excerpts

Tuesday 22nd November 2011 Grand Committee

[The Advocate-General for Scotland (Lord Wallace of Tankerness)]

My Lords, the purpose of this draft order is to implement the recommendations made by the Boundary Commission for Wales in four interim review reports in relation to the boundaries of certain constituencies and electoral regions of the National Assembly for Wales. If approved, these changes will alter seven of the existing 40 constituencies for the next Welsh Assembly elections, which are scheduled to take place in 2016. This is, however, subject to the commitment that my right honourable friend the Secretary of State for Wales has given to look carefully at the implications of having different boundaries for Assembly constituencies and parliamentary constituencies in Wales.

I should perhaps clarify at the outset that the order affects Welsh Assembly boundaries only and has no impact on the boundaries of any Welsh parliamentary constituencies at Westminster.

I wish to put on the record thanks to the Boundary Commission for Wales and its secretariat for its work in carrying out these reviews. As always, the commission has carried out its duties thoroughly and conscientiously. I particularly thank the deputy chair of the commission, Mr Justice Lloyd Jones, for overseeing this work.

[Lord Rowlands]

I apologise for interrupting the Minister but he said that this order did not have anything to do with the parliamentary boundaries, so why does it have the words “Parliamentary Constituencies and Assembly Electoral Regions” in its title?

[Lord Wallace of Tankerness]

That is a very good question and I hope that the answer I give will satisfy the noble Lord. He will know that this is an amendment order and it is amending the Parliamentary Constituencies and Assembly Electoral Regions (Wales) Order 2006. However, I think we are clear that it will affect only the Assembly constituencies. A smaller number of people are affected. Nevertheless, for the electors and the relevant Assembly Members concerned, these are important. I am sure that MPs in the other place whose constituencies cover the areas affected will have been interested in the changes; indeed, they were debated there yesterday.

--- Later in debate ---

[Lord Rowlands]

My Lords, I wish to speak briefly, partly because one of these orders amends the constituency which I had the privilege of serving. I, too, am somewhat puzzled by the point made by my noble friend—in particular, not on the rights and wrongs of the argument, but on the wording of the Explanatory Memorandum under the title “Guidance”. It says:

“The changes being made by the Order will be applicable for the next elections for the National Assembly for Wales, currently scheduled for 2016”.

It does not say “may be” or “could be” or “subject to further possible change”; it is an absolute statement meaning that when we approve this order, it will establish the constituency boundary for Merthyr Tydfil and Rhymney in the 2016 Assembly elections. I am puzzled by the conflicting guidance that we are getting from the clear explanatory note and other statements that have been made. I speak as the former Member for this constituency and am a great believer in expansion and all 18 new electors who are added to it.

The Merthyr/Brecon boundary has a wonderful chequered history. The enfranchisement of Merthyr in the first place, which was the very last amendment to the then Reform Bill 1832, included in the constituency at the very last minute Cefn Coed-y-Cymer, which is in the Vaynor area. Some time later it went out and then it came back in, and I had the privilege of serving the Vaynor ward as a part of the Merthyr Tydfil and Rhymney constituency. There is a bit of a history to this Brecon/Merthyr boundary discussion.

The point I find comforting about this order is the way in which it powerfully reaffirms a very good principle that I fundamentally support, that there should be a clear correlation between community boundaries and Assembly and parliamentary constituency boundaries. The Boundary Commissioner and we have all agreed that what we are doing here is altering boundaries, albeit in small measure, to ensure that we confirm and conform to the principle that there is an excellent correlation between community boundaries and parliamentary and Assembly boundaries. Therefore I find it richly ironic that this order is made under the Parliamentary Voting System and Constituencies Act, the very Act which most of us fear is going to destroy and undermine that close relationship. We cannot see how, in pursuit of this holy grail of equalisation, we will actually be able to maintain and sustain the close correlation between local community boundaries and parliamentary constituency boundaries. I find it richly ironic that this order is being used to confirm a great principle, while the Act itself, we fear—and the Boundary Commission’s report is coming out—will undermine that very principle. Therefore, I fear I must tell the Minister that, while there is consensus on this order, I doubt if there is going to be consensus on any future orders.

--- Later in debate ---

[Lord Wallace of Tankerness]

Perhaps I could just repeat what the noble Baroness quoted to me: my right honourable friend the Secretary of State for Wales said at Oral Questions that she would seriously consider the point that was made. It would be wrong for us to prejudge the outcome of any consultation that could take place, but I assure the noble Baroness and the Committee that no change will be made without proper consultation. The Secretary of State has given a commitment to consider the point that was made to her in exchanges in the Commons, and that consideration is what she is currently doing.

[Lord Rowlands]

Why, therefore, is no such qualification included in the Explanatory Memorandum to the order? Why is there nothing saying, “Oh yes, but there may now be changes of the kind that the Minister is saying might happen”?

[Lord Wallace of Tankerness]

Quite simply because the Explanatory Memorandum is a statement of the effect of the order as the law currently stands, not a statement of policy. I hope that in presenting the order I made it very clear—I think I have repeated it twice now—that that is subject to the commitment that my right honourable friend has made. Just to be clear, the Explanatory Memorandum is a statement of what the effect of the order would be as a matter of law; it is not intended to be a statement of policy. I hope that clarifies the position. The Secretary of State is doing what she said in that exchange that she would do and considering what the effect is of the fact that there are implications of the disjunction.

My noble friend Lady Randerson asked me to confirm that that was the case in Scotland. It is indeed the position that the UK parliamentary constituencies do not match the Scottish parliamentary constituencies. I would be brave to say that the political parties necessarily find it easy but I rather suspect that individual members of the public, who at the end of the day matter most, have little difficulty in identifying their Member of the Scottish Parliament and their Member of the UK Parliament.

Perhaps for clarity, I should say that there is nothing at the moment in law or in any arrangements that would look at how Welsh Assembly constituencies would change. I say purely as a matter of fact that when the disjunction took place in Scotland, primary legislation was brought in in Scotland to make provision for a separate boundary review of the Scottish parliamentary constituencies. Let us not interpret that as in any way a commitment that we are about to bring forward legislation, but that is factually how that position has been addressed in the longer term in Scotland.

[Lord Wallace of Tankerness]

My Lords, I cannot answer that question because there is no answer to it at the moment, other than that, having established boundaries, clearly they cannot go on for ever. The very nature of our system is that the boundaries should be regularly updated. We now say that UK boundaries should be done on a regular basis every five years; previously, as I have indicated, it was done every eight to 12 years. It is clear that at some stage some mechanism will need to be put in place to allow an update of the boundaries, but it would be presumptuous and premature of me to speculate now on when that would be, and indeed on whether we will use the same people to do it and what the criteria would be for these boundaries. That is a debate for another day. There are no proposals. However, the noble Lord was right to identify the fact that, as there is a disjunction, there has to be a mechanism at some point for updating the boundaries for the Assembly.

[Lord Rowlands]

I apologise, but if there are changes of the kind that are being foreshadowed, would they require legislation and where would that legislation take place?

[Lord Wallace of Tankerness]

I am almost certain that it would require legislation and it would be Westminster legislation, just as with Scotland when as a result of a disjunction there was primary legislation in 2004. I am as certain as I can be that that is what the position would be.

This debate has been useful because it has brought out a number of important issues, and I am sure that there will be further discussions when the Boundary Commission for Wales produces its proposals for the Welsh parliamentary constituencies. I very much valued the historic insight into the boundaries between Merthyr Tydfil and Rhymney, where the noble Lord served with distinction when he and I were colleagues in the Commons. Since then, people have come and gone over a number of years, and this is perhaps just the latest instalment; I am sure that there will be many in years to come when our successors are sitting here or in the other place—with whatever role this place has in a century’s time. On the basis that in the terms of the order there does not need to be any dispute, I commend the order to the Committee.

EU Committee: Court of Justice of the European Union

Lord Rowlands Excerpts

Monday 17th October 2011 Lords Chamber

[Lord Rowlands]

My Lords, I too am grateful to our chairman and to the staff of our committee for helping us to prepare this report. Like a rather large number of Members of this House, I am something of a veteran of European treaties and the institutional changes that have flowed from them: Maastricht, Amsterdam, Nice and Lisbon—I have been through them all. I have sat through and taken part in some of the debates we have had.

If we retrospectively reflected on the experience of treaty change and institutional change, I have a sneaking suspicion that we would find a rather high proportion of either unintended consequences of those changes or that at least the assessment of what impact these changes would make has often been wrong or ill conceived. My noble and learned friend Lord Boyd made a reference to one such glaring example to which we draw attention in our report, in paragraph 52, on the European Chemicals Agency. This was established on an assumption that there would be only 250,000 licences granted. As my noble friend has said, the figure is now likely to be 2 million. As the president of the General Court said in evidence, a proportion of them will be challenged so it is inevitable that the workload of the General Court will increase. Here is a perfect example of the way in which treaty change was made or institutions were established without any effective impact assessment.

This strengthens our case for being, if not pessimistic, realistic about the changes the Lisbon treaty will have on the work of the Court of Justice. The Lisbon treaty created a fundamental change in the architecture, destroying the whole of that third pillar and bringing within the jurisdiction of the Court of Justice the areas of freedom, security and justice. What will flow from that is a very significant increase in the workload of the European Court of Justice. It was flagged up first by our European Union Committee in 2007-08 in what I thought was the most thorough and wonderful scrutiny of the impact of the Lisbon treaty. On page 127, the European Union Committee flagged up that there would be problems with the workload of the Court of Justice as a result of this change and the inclusion of this extra jurisdiction.

We have followed that up and have confirmed those concerns in our report. In paragraphs 42 and 43, we spell out that it is not simply a matter of more cases but that they will be in areas likely to generate much more difficult and important forms of litigation, and that for the first time the Court will be dealing with individuals in custody, and therefore will need speedy justice, a fast-track approach. Indeed, that is presumably partly why in the Lisbon treaty there is a fast-track procedure to deal with it. If one reads further on what this fast-track procedure is, the assumption was that 10 or fewer cases a year would be fast-tracked. Now we suspect that with the changes that have occurred to the jurisdiction there will be a lot more fast-tracked cases. There will be two consequences of that. First, it could displace other, less urgent cases to be dealt with over a longer and longer time. Secondly, in the annexe to our report, on page 67, it says that if there were an increase in fast-track cases,

“the number of cases that the Court could handle … would decrease sharply”—

because of the nature of fast-tracking, there is going to be a very significant potential displacement of other cases. I do not think we are being alarmist in saying to the House and to Ministers that this is going to create a much greater problem than is being recognised at the moment.

When I joined our chairman and two others in going to Luxembourg, I was rather surprised by how rather sanguine many of the Court administrators were about the impact these changes are going to have on the work of the Court of Justice. Sadly, not only did I find them sanguine in Luxembourg, I now find that Ministers here are sanguine. The letter from Mr Lidington says that he is not convinced that the Court is facing an imminent crisis. I do not know what imminent means, but certainly within the next two or three years we are going to see a very significant increase and significant pressure. It is not unjustifiable to present it as a potential crisis, with which Ministers do not appear to be fully engaged.

I hope tonight when the noble and learned Lord replies that we will at least have something more than the replies we have had so far to our reports, and of course to the other suggestions that have been made by the Court itself since our report came out. Reading Ministers’ responses so far, it appears that they are very good at telling us what they do not want to do but not at telling us how they are going to handle the crisis. I think they are in a state of semi-denial that there is a crisis on the horizon and I hope tonight to be enlightened not only on the proposals they have but to be reassured that in fact they appreciate and understand the potential seriousness that the courts face.

--- Later in debate ---

[Lord Wallace of Tankerness]

My Lords, first, I join the noble Lords, Lord Liddle and Lord Anderson—the three of us not being members of the committee—in congratulating my noble friend Lord Bowness and the members of his committee on this important work which they have undertaken. I think the first call for evidence was in the summer of 2010 and that the report was published just one week after the president of the Court published his proposals. The fact that it was timely shows the foresight of the committee in identifying what is undoubtedly a very important issue.

I believe that the report’s conclusions and recommendations have been a valuable contribution to the current debate. We have heard those conclusions and recommendations echoed in the contributions this evening, which I will seek to address. It is important that we take this opportunity to discuss these matters. The noble Lord, Lord Anderson, asked what the Government believe in. They believe very much in the effective and uniform interpretation, application and enforcement of European Union law across the Union, which was a point well made by my noble friend Lord Bowness in his opening remarks.

We believe that the Court of Justice has a vital role to play in ensuring that member states and European Union institutions act in accordance with the treaties. It is therefore essential to the functioning of the single market that it ensures that there is a level playing field for United Kingdom businesses operating in other member states, and vital in upholding the rights under European Union law of British citizens living and working in other member states. That point was well made by my noble friend Lord Dykes, who emphasised that the Court has that important role in safeguarding the rights of people who are not only United Kingdom citizens but citizens of the European Union.

Accordingly, the Government share your Lordships’ views that the Court of Justice of the European Union is in need of reform in order to work through its sizeable backlog of cases and to reduce the time taken to process cases in the future. I can confirm that since the publication of the committee’s report, officials have been engaged in discussions with their counterparts in the European Union about reform of the Court, following on a set of six recommendations made by the president of the Court to the Council. Discussion has continued between officials and at ministerial level on a bilateral basis and within the Council. The noble and learned Lord, Lord Boyd of Duncansby, asked about that. I can confirm that there have been meetings. In July, the Minister for Europe raised the issue at the General Affairs Council. As I have indicated, discussions continue at a working level, most recently on Friday of last week. The Government are engaging constructively in these meetings with an open mind. We certainly see merits in a number of the recommendations, to which I will deal with in more detail.

I am sure your Lordships’ House will forgive me for not divulging the details of working group discussions, which by their very nature are confidential, but I can indicate in the broadest terms that officials of the United Kingdom Government have been focusing on negotiating changes to the Court’s structure and its rules of procedure, which would enhance the quality of the Court’s judgments and reduce the turnaround time of cases while emphasising—it is important to emphasise this and to remind ourselves of the need for—cost efficiency. In the current economic climate, it is vital to ensure value for money for our taxpayers, and the proposals that the Court makes must be assessed according to financial and budgetary implications. Indeed, I think that even the summary of the conclusions of the committee’s report acknowledged that there were cost implications.

As the debate has made clear, the most significant reform under discussion is the composition of the General Court and specifically the question of how to expand its capacity. I will perhaps deal with that in more detail later. We know that the committee proposed an increase of one-third to 36 members. The president of the Court has tabled a proposal to add to the number of members of the General Court by 12 judges, which is of course one of the key subjects under discussion within the Council. As has been identified, and as I will elaborate, there are other possible options, such as the creation of a specialist trademark court or specialist chambers within the General Court, for managing trademark cases. Officials are considering how each would improve the efficiency of the court, the political and legal implications that they would have and the financial ramifications.

The noble and learned Lord, Lord Boyd of Duncansby, and the noble Lord, Lord Rowlands, asked whether there was an imminent crisis. Although we recognise the huge challenge with regard to the General Court, the report itself, as well as contributors to the debate this evening, recognises that the Court of Justice has done a remarkable job in managing its case load. It was in that context that we did not accept that there is an imminent crisis with regard to Court of Justice—I think the noble Lord, Lord Rowlands, said “potential crisis”. Clearly this is something that we want to focus on to ensure that it continues to build on the advances that it has made.

The report itself recommended that there should be the appointment of extra Advocates-General. It is not clear what evidence this is based on. Significantly, it is not one of the proposals which the Court itself felt was necessary when the president of the Court put forward its proposals. Other measures have come forward from the president of the Court that we would aim to assist: the possibility of the appointment of a vice-president, and the proposal with regard to how grand chamber might be restructured. We are looking at that seriously. We want to ensure that, in doing so, there is continuity, across the courts, of the jurisprudence of the Court. That particular proposal is somewhat complex.

On the issue that was described in your Lordships’ report as the “green light”, we would not necessarily go as far as that but we think it is of considerable importance, when national courts are framing their reference, that they do so concisely. We would certainly encourage them to put forward any proposal and conclusions that they may have reached in framing that reference, so that when the Court of Justice looks at these preliminary references it is very focused on the particular issues.

My noble friend Lord Bowness made some specific points, reminding us that the Council also legislates. Those points were extremely well made. Certainly the Government are seeking to ensure that there is clarity not only for those who subsequently have to interpret the law in the courts but perhaps most importantly for those who have to implement the law in their businesses and daily lives. That is certainly the objective of the negotiations, but I think it is also fair to say that, in a negotiation involving 27 member states, that objective is not always as easy to achieve as one might hope.

A similar answer applies to the question raised by the noble Lord, Lord Rowlands, and my noble friend Lord Bowness about the legislative implications of certain decisions. Perhaps that should not be a counsel of perfection. It ought to be given attention, but again I suspect that that is easier to say, and to make exhortations for, than it is to deliver in the legislation itself.

[Lord Rowlands]

Does the noble and learned Lord accept the fact that, as a result of the change in jurisdiction, there is going to be a very considerable increase in fast-tracking procedures within the Court of Justice and that this will have very considerable consequences for the rest of its workload?

[Lord Wallace of Tankerness]

The noble Lord raised the point about the possibility, post-Lisbon, of fast-tracking and asked whether there was going to be a significant increase. There are issues there which need to be considered. There is not yet any evidence of that coming through, but it is not something to which we are turning a blind eye. According to the Court of Justice’s report on its work in 2010—after the Lisbon Treaty came into force—the use of the urgent preliminary measure in respect of the area of freedom, security and justice was requested in six cases, and granted in five. It is of course relevant to the work of the Court of Justice in its consideration of preliminary references, which is its other main volume of work. It is less relevant in the case of the General Court, which does not do that kind of work. I shall come onto that, as there is agreement across the House that there are quite clearly issues as regards the work of the General Court.

We fully recognise that there are issues that need to be considered in terms of the particular problems which the General Court is facing. Justice delayed is justice denied: it is a phrase which trips off the tongue, but it is one with substance and truth. The position of the General Court is one to which we are giving our attention. The proposal on the table is the one that has come from the President of the Court. It is that there should be an increase in the size of the Court by nine. The House has reasonably asked about our position with regard to the consideration of a specialist trademark court or specialist chambers within the General Court. We see merit in the proposal put forward by the committee of your Lordships’ House of increasing the number and we are considering it against our basic criteria of quality of judgments, their timeliness and cost-effectiveness. That is why we are not ruling it out, but why we also believe that some of the other options ought to be given consideration too.

The noble and learned Lord, Lord Boyd of Duncansby, referred to the letter sent on 4 July by my right honourable friend the Minister for Europe to the noble Lord, Lord Roper. He pointed out that while he recognised the point that judges on a specialist tribunal may not be widely deployable, creating a specialist tribunal would free up judges in the General Court currently working on trademark cases to deal with other types of case. It is important to note that judges currently dealing with trademark cases, which form a substantial part of the General Court’s work, would be freed up for other work. The Commission itself said in its response to the President’s proposals, published at the end of last month, that it has looked at the possibility of specialist chambers within the General Court. It is important that these options are fully explored with regard to what will deliver the best in terms of efficiency, speed and quality of judgment.

However, as I have indicated, we cannot ignore the question of finance. I take the point made by my noble friend Lord Dykes that in the totality of the European Union budget it may appear a small matter, but nevertheless it is the Government’s position that there should be no increase in real terms over the next spending period. We want to examine the costs of the different options. The estimate of the Court itself on an increase of 12 judges is some €13 million. We would want to drill down on that and ask why the cost is more than €1 million per extra judge. We would also wish to look at the fact that the Court has had over the past year an underspend of €5.5 million. It is not unreasonable, in exploring the different options, to bear in mind the costs and to try to ensure that we not only achieve what is best in terms of speed of delivery, but also that there is efficient use of taxpayers’ money—not just that of British taxpayers, but of taxpayers throughout Europe.

As the noble and learned Lord, Lord Boyd, said, we recognise that delay sometimes brings its own costs, and that must be part of the equation, but we feel that considerably more work could be done, not least given the fact that there was a €5.5 million underspend of the Court’s budget last year. Obviously, as the committee itself indicated, it may be possible to find funds by deprioritising other parts of the budget.

I hope I have emphasised the fact that the Government take this issue seriously. We appreciate the constructive proposals that have been put forward. As I have indicated, we are not ruling out the possibility of an increase in judges. At the present time, the proposal on the table is for an extra 12 judges, which has come from the President of the Court. We are giving these matters detailed consideration through working groups and at ministerial level. We are also conscious that the outcome in the end should be to ensure that the Court of Justice, as one of the institutions of the European Union, delivers and serves the wider purposes both of the Union itself and of European citizens. They should be on the receiving end of justice when the call comes for it. I hope that I have reassured your Lordships that we are taking this matter seriously and working diligently to get the right outcome in terms of speed, quality and cost-effectiveness.

Parliamentary Voting System and Constituencies Bill

Lord Rowlands Excerpts

Wednesday 26th January 2011 Lords Chamber

[Lord Rowlands]

My Lords, I had the privilege of representing for 30 years one of the most remarkable constituencies in the country. It cannot be denied that Merthyr Tydfil has played an enormous role in the political, social and cultural developments in Wales, particularly in south Wales. It also has a remarkable sense of continuity. There has been mention of the Reform Act 1832. That Act created Merthyr Tydfil as a constituency, although not until the very last minute. In the last moments of the debates in the Commons and the last stages of the third Reform Bill, the Government eventually gave in to pressure to create the constituency of Merthyr Tydfil. In three successive Bills it was proposed that Merthyr should be a contributory borough of Cardiff. Neither Merthyr nor Cardiff thought that that was a good idea. Cardiff believed that it would be swamped by the Merthyr hordes and Merthyr considered that it was—as it was at that time—a more populous and more economically thriving community than the decaying county town of Cardiff. At the very last minute, the boundary change was made, and the concession was made.

When I reread the proceedings of the 1832 Reform Bills, two things struck me. One was that the Government of the day, and Lords Grey, Althorp and Russell, made considerable concessions to gain parliamentary assent. They seem to have accepted that the only way they could get that major Reform Bill through was by building parliamentary assent. They made concessions that some people thought they never should have made, but they were made. You do not create great parliamentary reform of this kind through ministerial macho approaches. It is important to build parliamentary assent. One of the saddest things about our lengthy debates is that no such attempt to build parliamentary assent has been made—not so far, anyway. I hope that at this late stage that process can and should start.

As I say, Merthyr Tydfil was created by the Reform Act 1832. During the 19th century it grew in population and electorate and became a two-Member seat. In 1900, it produced a remarkable dual membership: the first Labour Member of Parliament, Keir Hardie, who served the constituency alongside one of the richest men in Britain, the mighty coal owner DA Thomas, later Viscount Rhondda. In 1918, it reverted to a single-Member seat. Since 1918 to this very day, the core of the Merthyr constituency is the Merthyr county borough. However, given its remit, I have no guarantee or assurance that the Boundary Commission will respect that core. It may do what a former Boundary Commission once recommended and fracture the core of that constituency—the community-based constituency that I had the privilege of serving. I am fortunate that, in 34 years in the other place, I went through only one parliamentary Boundary Commission.

Listening to these debates has brought back many memories of that experience. One of the first proposals of the Boundary Commission convened before the 1983 election was that Aberfan and the Merthyr Vale ward in the heart of the Merthyr Valley should be transferred to a new constituency in the Cynon Valley. There were two problems with that. First, there happened to be a rather large mountain between the two and there was no direct route between them, which meant that local people thought that the Boundary Commission was working off a flat map with no contours of any kind.

Secondly, can one imagine the total insensitivity of supposing that Aberfan and Merthyr Vale be removed from the Merthyr constituency at a time when, some years after the Aberfan tragedy, we were still dealing with its long-term consequences at both parliamentary and borough level? That is the kind of insensitivity that I fear will arise time and again if the Boundary Commission’s remit stays as it is. It will not respect the community feeling that is such a passionate part of our political and community life. I felt that most forcefully when in 1983 the then Boundary Commission eventually amended the constituency by attaching the Rhymney Valley to Merthyr. This was not thought well of in the Rhymney Valley. There are deep attachments not necessarily to counties but to constituencies. The people of Rhymney Valley were passionately attached to their constituency of Ebbw Vale. It was little wonder that that was the case as they had been represented for more than 30 years by Aneurin Bevan and were represented at that time by Michael Foot. It took a huge effort to try to rebuild and connect communities to make the new constituency of Merthyr Tydfil and Rhymney feel as one, and these were communities with identical political and social values.

While Boundary Commissions are impartial, they are certainly not infallible. The great value of local inquiries is that they allow communities to educate the commissioners in what communities are all about. However, communities will be denied that under this Bill if the Boundary Commission makes the absurd proposals that have been made in the past, which happily were quickly rejected because of the outrage that they caused locally. That experience could be repeated over and over again, as they cut across normal communities and move wards around, as is feared will be the consequence of the Bill.

I also want to touch upon the second point about the relationship between the number of Members of Parliament at Westminster and the union. I heard and reread the first attempt by the noble and learned Lord, Lord Wallace, to defend this argument a week last Monday. He said:

“The important point to remember is that the reform means that a vote in Cardiff will have an equal value to a vote in Belfast, Glasgow, Edinburgh or London. To me, that does not undermine the union; giving an equal value to a vote in Cardiff, Edinburgh, Belfast and London will, we hope, bring the union closer together”.—[Official Report, 10/01/2011; col. 1227.]

The notion that by cutting 10 constituencies in Wales and reducing representation to the Commons by 25 per cent will somehow create a closer sense of union is an absurd suggestion by the noble and learned Lord, who has made a very good fist of a very poor case throughout most of these debates. I do not think that the kind of cut that is envisaged will create a closer union; I think it will sow seeds of disunion.

I cannot follow the argument of the noble Lord, Lord Crickhowell, that numbers do not matter. Besides equality, they matter every now and then in the Lobbies. Among other things, therefore, a proper representation—certainly not 30—is essential for the good maintenance of the union, alongside devolution itself. I might be a bit of an endangered species in this case. My noble friend Professor Lord Morgan was, I think, thinking of me; I am an old-fashioned Labour unionist at heart and in the Bevanite tradition that meant that you had to be where power is. Power is and will remain, very substantially, in Whitehall and Westminster to influence the affairs of Wales. We cannot afford to reduce that representation, or to be perceived to have done so. Never mind being perceived; it will have happened if we cut the numbers by the amount suggested.

I do not know whether the noble Lord, Lord McNally, and the noble and learned Lord, Lord Wallace, feel any affinity to the great Whig/Liberal tradition that created the Reform Act 1832, with Lords Grey, Althorp and Russell. At least during the course of that Bill they made very strategic concessions to create parliamentary assent. Thankfully, as a result of that pressure, they created the constituency of Merthyr Tydfil. I suggest to the noble Lord, Lord McNally, and the noble and learned Lord, Lord Wallace, that they start making strategic concessions tonight by accepting these amendments.

[Viscount Tenby]

My Lords, I rise because my name has been mentioned on a number of occasions during this debate and I ought at least to thank noble Lords for the plug. I promise that my contribution really will be brief because all the songs have already been sung so expertly—probably the correct analogy to use in relation to Wales. There is a great deal of pleading for special causes in the Bill and there is, of course, ample justification for Wales to be included. Even if it were argued, as it has been today, that Wales might have been slightly overrepresented in recent years—no one is arguing about that; there is no dispute about it—it does not deserve to lose 10 constituencies at the stroke of a legislator’s pen. These amendments, so powerfully moved by the noble Lord, Lord Touhig, would address this unfairness.

A number of distinguished former Welsh MPs from all sides of the House have contributed to this debate, and in terms of such practical experience I am indeed a piping voice without substance. However, I can at least claim this; I had a grandfather, father, aunt and uncle, all of whom represented rural Welsh constituencies—for all the parties represented in this House, I have to say. I can testify to the additional burdens that physically large constituencies can impose on their representatives. This is compounded by a road network that has hardly improved over the years—I am sorry, but that is the case—and a rail system that many would argue has actually deteriorated. The personal ties which an MP can establish with constituents fairly easily in a well defined and concentrated urban area must be far harder to achieve over a large and disparate geographical mass. In the case of Wales, any attempt to extend the size of already large constituencies to encompass the 76,000-elector figure could result in the entirely inappropriate solutions referred to so tellingly by the noble Lord, Lord Lipsey, in what I will call the Brecon-Radnor debate earlier in the week.

All these matters should surely be looked at carefully without a ticking clock in the background, which is why I hope that Amendment 102AB, in the name of my noble friend Lord Williamson, will be received favourably by all sides of the House.

National Assembly for Wales (Legislative Competence) (Housing and Local Government) Order 2010

Lord Rowlands Excerpts

Tuesday 13th July 2010 Grand Committee

[The Advocate-General for Scotland (Lord Wallace of Tankerness)]

My Lords, I beg to move that the Grand Committee does report to the House that it has considered the draft National Assembly for Wales (Legislative Competence) (Housing and Local Government) Order 2010. For ease, I shall henceforth refer to this order as the housing LCO. This is the first LCO that I have spoken to in this House. It is a particular pleasure to deal with devolution issues that relate to Wales after many years of being more familiar with devolution issues that relate to Scotland.

This draft housing LCO was approved by the National Assembly on 24 February. The previous Government laid the draft LCO before Parliament in March. For whatever reason, no time was found to debate the LCO in either House before the general election. I am pleased that the coalition Government committed to take forward the housing LCO in our programme for government, which is what we are doing. The draft LCO was approved by the other place on 7 July, having been debated in Committee on 5 July, and it comes before this Grand Committee today for debate only two months after the coalition Government took office.

Noble Lords may be aware of the discussions that have taken place between the coalition Government and the Welsh Assembly Government in relation to the scope of this LCO. I shall address that issue immediately. The coalition Government have been concerned that this LCO devolves legislative competence that the Assembly would not necessarily need. The Assembly Government are committed to seeking legislative competence to suspend the right to buy in areas of housing pressure. However, competence in the LCO covers disposals of social housing generally, including abolition of the right to buy. Indeed, as I understand the situation, when an LCO on this issue was first proposed in 2008, the Welsh Affairs Committee in the other place recommended that it should not proceed while it included the ability to abolish the right to buy. We are grateful indeed for the reassurances given by the Welsh Assembly Government that they are fully committed to the right to buy scheme and have no intention whatsoever to abolish it.

The coalition Government are similarly grateful for a further reassurance from the Assembly Government not to seek powers to usurp the views of local people and dictate the location of Gypsy and Traveller sites. Given these assurances, and our commitment to progress this order through Parliament before the Summer Recess, I am pleased to support this LCO today.

[Lord Rowlands]

I apologise for interrupting the Minister, but as this is a vital point perhaps we might clear it up straightaway. He says that an assurance has been given, and I am sure that that is true, but paragraph 7.23 of the Explanatory Memorandum states that,

“legislative competence would enable the Assembly, if it so wished, to replace the current Right to Buy scheme with improved and updated schemes to assist home ownership”.

That suggests that the Assembly might abolish the scheme but replace it with something else. Does the present competence order still allow the Assembly to do such a thing?

--- Later in debate ---

[Lord Rowlands]

My Lords, I, too, offer my best wishes to the noble and learned Lord, Lord Wallace. He has a remarkable record. He has served in not one but two coalition Governments, which is pretty good going. He and I go back a long way. In the 1980s, as young Back-Benchers—not so young in my case, but he was young—we spent some time trying to make Ministers’ lives more uncomfortable on various energy Bills. I welcome him. It is not our job to make his life more uncomfortable than necessary during his service to this House and to Welsh affairs.

Like other noble Lords, I believe that the role of this House in scrutinising LCOs is to consider the drafting and the process and to ensure, above all, clarity of competence, but not necessarily to pick at the policies, as the noble Lord, Lord Roberts of Conwy, has done. That is not our fundamental function, because those are the functions of elected Members; it is they who make the decisions and come to the conclusions that they do about whether we should adopt this or that policy. I have never adopted the view that we should take a strong political view, whether one feels strongly for or against an order politically. It is the duty of this House to respond on the process and clarity of competence. As the noble and learned Lord, Lord Wallace, reminded us, he and I served on the Constitution Committee, which began the task of scrutinising these LCOs when they first came into being.

There was an issue of clarity of competence on the right to buy. I was interested in the Minister’s reply to my brief intervention that the competence still stands. Paragraph 7.23 states that the order will give the Assembly the competence,

“to replace the current Right to Buy scheme with improved and updated schemes to assist home ownership”.

That is incorporated in this order; it has not been removed. I happen to support the policy, but I wonder whether the noble and learned Lord and I in our early Back-Bench days would have been as generous about this proposal as we plan to be today. We are saying to the Government that we can give the Assembly the power because it has told us that it is not going to use it. If I was a Minister proposing such a proposition, I would imagine a fair degree of criticism of such a position. However, that is the position that we have arrived at, with the Minister saying that the Government have had assurances that the power is not going to be used—although he admitted that that cannot bind future Governments in the Welsh Assembly. Nevertheless, we are going to let the power go through because it is not going to be used. I confess that that is normally an appealing case to Back-Benchers, wherever they stand on an issue. I look forward to a further defence of that position when the Minister comes to reply.

Before I come to the rest of what I want to say, let me make an aside. As the noble Lord, Lord Roberts of Conwy, said, there have been some 140,000 sales of council property. My constituency days are now more than 10 years ago, but I cannot remember towards the end of my period in the mid-1990s many right to buys being exercised in Merthyr and Rhymney. The first great swathe of purchases took place in the mid-1980s. I am interested to find out how much of a pressure there is. Can the Minister give us figures on how many sales took place last year under the right to buy? I fear and suspect that by far the largest portion of that 140,000 was purchased in the first decade. I wonder how much of an issue it is. Because I no longer have a constituency to serve, I accept that I may not have a feel for whether the pressures are still there and in what form and degree. Perhaps we could have some figures on recent purchases that have taken place—for the last 12 months, for example.

I do not want to quibble with the policy because I have full sympathy with the burden of the case made for this LCO, but I want to put this into an LCO context. I suppose that I belong to a small band of people—there are not many of us—who are fans of LCOs. I happen to be a fan because they arose out of the deliberations of the Richard commission, on which I had the privilege to serve. Wherever one stood on the issue of the full transfer of powers, LCOs were seen as an interim measure that would enable the Assembly to expand legislative competence. Therefore, I have been a great defender of the process and I continue to be one.

Before I sit down, I shall suggest to the Minister that, between now and the referendum, we should assess what has happened and the extent to which legislative competence has been transferred. For example, seven new matters are to be put into Schedule 5 as a result of this one order. When one looks at the informative Explanatory Memorandum and the appendix to it, which shows the other amendments that have been made to Schedule 5 to the Government of Wales Act, one can tot up more than 60 matters that have been included in the schedule since the passing of the Act, as a result of these orders and of framework powers in legislation. I contend that that is a significant and meaningful transfer of legislative competence from Westminster to the Assembly.

Despite the tendency to malign these orders, they have served a legislative purpose, which I am willing to defend wholeheartedly, as a means by which the Assembly has been given competence to legislate. Perhaps in reply the Minister could bring us up to date on how many LCOs there have been. I used to keep count, but an election and a couple of other things have interrupted my arithmetic. I thought that there were a dozen or 15 before, but perhaps he could give us an update on the number of LCOs that have passed through this House. I do not believe that either this or the other place has created a logjam for transferring legislative competence to the Assembly. These orders have gone through.

To date, how many measures in the Assembly have flowed from these orders? Have we been holding up the Assembly in its legislative activity? The last time I took stock, only a third of the LCOs had led to measures. Again, that would be useful informative background to the debates that will take place in the months to come on the transfer of power under Part 4 of the 1998 Act through a referendum. I would like an assessment of where we stand. How many measures have flowed from the orders that we passed in this place and the other place as a result of the 1998 Act?

My other question relating to the informed debate that we should have on these issues in the run-up to the referendum is: what, in total, will be left to transfer under Part 4 in the main areas of policy? Let us take housing, health and education. Paragraph 4.2 of the Explanatory Memorandum says:

“The Welsh Ministers already have devolved to them significant executive powers and secondary legislative powers across a wide range of legislation relating to housing”.

That has already happened. It lists 10 Acts that are involved. In the area of housing, health and education, how much legislative competence has already been transferred within the total responsibility of the Welsh Assembly Government? I have the impression that we have now substantially transferred a considerable degree of competence to legislate in these three key areas. This order is very much an addition to that list.

Finally, I seek clarification from the Minister on the exceptions. As he will know, when we have scrutinised other orders, exceptions have been attached to the order to show that the writ will not run in certain respects. In this case, the exceptions are of a general kind. Provisions relating to housing benefit and to council tax benefit are exempt or excluded from the power to legislate within the Assembly. In the wake, possibly, of a successful referendum, so that Part 4 comes into play, what will happen to these exceptions? Will they remain or will they be swept aside by Part 4? In other words, under Part 4, will the whole area of council tax and housing benefits be transferred legislatively to the Assembly, so that the Assembly can change the character of such benefits? Until now, we have maintained a degree of conformity and uniformity across England and Wales in social security benefits, particularly those for council tax and housing. I should like to see how this will unfold during the debates that we will have in the coming months.

I support the order, just as I have supported, with occasional queries and questions, the orders that preceded it. Once or twice, the Constitution Committee has raised serious issues about drafting. I hope that we can be confident that Assembly consideration of this kind of legislation after a successful referendum will be as vigilant as, I believe, that of both Houses and the Welsh Affairs Select Committee has been in helping us to scrutinise LCOs, which have been an important development in Welsh legislative history.