Wales Bill

Albert Owen Excerpts

Monday 31st March 2014 Commons Chamber

[Mrs Gillan]

The hon. Gentleman makes a good point—it is unusual for us to agree on anything, as he will attest —but we need to examine the matter before we set everything finally in concrete. Those on both Front Benches and anybody involved in the business of government should keep an open mind. Rather than saying, “It will be five or seven years for ever,” we should agree to revisit the matter at some stage. Constitutional arrangements are important, but the engagement of the electorate is perhaps one of the most important aspects of democracy.

[Albert Owen (Ynys Môn) (Lab)]

The right hon. Lady talks about holding elections on the same day, but I believe she voted for the police and crime commissioner elections to be held in the autumn, leading to a low turnout. Her stance on this issue is unclear.

[Mrs Gillan]

The fact that we had those elections on a separate day and the turnout was low is part of the experience that informs what I am saying now. I want to maximise engagement with the electorate, as I am sure does the hon. Gentleman. Unlike much of the debate so far, I am not making a partisan point on this issue. It is more a question of democracy and engaging with the electorate.

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[Hywel Williams (Arfon) (PC)]

I am very pleased to speak in this debate, because we in Plaid Cymru welcome the chance—at long last—to debate the Wales Bill, modest as it is. We particularly welcome the fact that the Bill is a vehicle for implementing greater financial powers for Wales. Those powers need to be looked at very carefully in Committee, and I look forward to such a debate, as does my hon. Friend the Member for Carmarthen East and Dinefwr (Jonathan Edwards). However, we cannot help but feel that the Bill is a lost opportunity to implement the full recommendations of the cross-party Commission on Devolution in Wales, chaired by Paul Silk.

I first want to reflect for a moment on the process and the time that it has taken to get to the Bill today. Following the overwhelmingly successful referendum in 2011—we in Plaid Cymru, as part of the One Wales coalition Government, had pushed for it—and realising the growing appetite of the people of Wales for greater control of their lives, as well as perhaps mindful of the growing appetite across these islands for constitutional change, the Westminster Government set up the Commission on Devolution in Wales to consider the devolution of further powers. Each of the main four parties nominated a commissioner. Eurfyl ap Gwilym served with distinction for Plaid Cymru, and I commend his work and that of the other commissioners.

The commission was instructed to produce two reports—the first on financial powers, and the second on wider policy issues. It was specifically instructed not to look at the issue of funding, namely the Barnett formula. As we have already heard, the independent commission headed by Gerry Holtham noted that Wales loses out on about £300 million each year. I take the point made by the hon. Member for Vale of Glamorgan (Alun Cairns), who is no longer in his place, that the figure varies, but if the UK economy takes off, as we all fervently hope and as the Government certainly hope, the loss will be increased.

The commission produced a highly commendable piece of work in November 2012. Its first report was a complex package of recommendations. I use the word “package” advisedly, because part of our concern about the Bill is that the whole package has not been adopted. We in Plaid Cymru wanted more, as our submission to the commission attests, but we gathered round the compromise that had a chance to work precisely because it was a package of reforms. I know that the commission came to its conclusions after a great deal of hard bargaining.

[Albert Owen]

The hon. Gentleman is making a very interesting point about the balance on the commission, but surely it is the place of Parliament to debate and decide changes in laws, not just to rubber-stamp commissions.

[Hywel Williams]

I take the hon. Gentleman’s point entirely. However, the commission was set up by the Government to look very closely at the question and it came to a unanimous judgment, but they then decided to adopt only some parts of its report. My point is that I wanted them to adopt the entire recommendations of part I of the Silk report. It is disappointing that they did not, because we can see the package of reforms that the commission came to as its conclusion.

It is also massively disappointing that the Government waited so long to respond to the report. We were told that they would respond in the spring of 2013. Then it was pushed to the summer. I remember making the point in the Welsh Grand Committee, when the Secretary of State said that spring officially ends in June, that July in Welsh is Gorffennaf—gorffen haf—which means the end of summer. We waited, and autumn came. The nights were drawing in, the countdown to Christmas began and, eventually, a full year after the commission produced its report, the Government responded.

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[Hywel Williams]

I remain baffled—that is all I can say. Irrespective of Labour party internal divisions and wrangling, Labour has said that greater financial powers should have been granted, but now it is possibly saying that they should not be. The Tories remain divided on the lockstep. The greater part of the group in the Assembly complains that income tax powers with the lockstep are unusable, but the other part supported the London party and was given the sack.

I referred to the referendum when the hon. Member for Caerphilly (Wayne David) was in his place. The formulation of the question, if we ever have a referendum, will be extremely difficult, but rather than make the point myself, I shall but quote from the widely respected economist, Gerry Holtham, who told the Welsh Affairs Committee that Welsh politicians are being asked to

“fight a highly losable referendum. Tax is not popular, and, to be frank, neither are politicians at the present time. It is most unfair, but there it is. You are asking them to fight a losable referendum for a tax power they can’t use. It doesn’t look like a high-odds proposition to me.”

I tend to agree with him, particular given the possible complexity of the question, and the possible lack of a no campaign, which has been referred to.

The hon. Member for Nottingham North (Mr Allen), the constitutional expert and Chair of the Political and Constitutional Reform Committee, urged members of the Welsh Affairs Committee to seek to amend the legislation so that the lockstep is removed. He has said that the requirement for a referendum on the limited income tax powers is “ridiculous”. The Secretary of State, however, sung the praises of the lockstep, saying that it could be used to vary all rates and would put Wales at a competitive advantage. He has also noted his opposition to the devolution of long haul air passenger duty, as that would put Bristol airport at a competitive disadvantage. On the one hand, he argues against a competitive advantage, but, on the other, he refers to a competitive disadvantage. That does not seem particularly coherent to me, but there we are. In evidence to the Welsh Affairs Committee, the First Minister seemed to say that he wants Wales both to have a tax competition advantage and not to have one, as expertly adduced in a telling question asked by the hon. Member for Aberconwy (Guto Bebb). That incoherence shows that the cherry-picking of the Silk recommendations falls apart. It is a whole package.

On Labour’s new-found conversion to the need for reform of the Barnett formula, Plaid Cymru has been pointing out the consistent underfunding of Wales through the block grant for well over a decade, but successive Labour Secretaries of State have assured us that

“the Barnett formula serves Wales well”.

I am sorry that the right hon. Member for Neath (Mr Hain) is not here, because those are his words. I know them by heart because I have heard them so often. His consistent standpoint is that the formula serves Wales well and we meddle with it at our peril. I will not intrude on Labour’s private grief and confusion, and the further inconsistency on Barnett that Labour’s leader in the Scottish Parliament seems to generate so effectively and so unconsciously. After 13 years in power when Labour could have sorted the formula, it now cries for fair funding—the hon. Member for Pontypridd (Owen Smith) says that income tax powers without fair funding is a “Tory trap”.

Wales should be fairly funded, as Plaid Cymru has long argued, because every day we lose around £1 million in additional funding. Those figures change, as the hon. Member for Vale of Glamorgan has said—he would no doubt jump up and remind me were he in his place. We lose around £1 million every day, which we could spend on improving our health service, tackling the scandal of poverty or building new schools. For now, the Labour position is no fair funding and no income tax powers for Wales. We know why. That is Labour’s position because it fears that, if we address Barnett, its anti-independence campaign in Scotland will be finally scuppered. Oddly, therefore, the Labour party says in Wales that we must reform Barnett, but the very same unified and indivisible Labour party says in Scotland that we must not reform Barnett.

Meanwhile, the UK Government water down the Silk recommendations to conform to their fundamentally anti-devolutionist view that Wales cannot possibly have something that Scotland does not have. As we have seen this past week, events in Scotland may overtake them all.

[Albert Owen]

May I ask the hon. Gentleman what the view of Plaid Cymru’s sister party in Scotland is? If there is a no vote, which I hope there is, in the referendum in Scotland, will he and the sister party—the Scottish National party—argue for reform of Barnett in Scotland, which could reduce Scottish revenues from the UK Government?

[Hywel Williams]

My job is to represent Wales. The Labour party advertises itself as the unified, indivisible Labour party in England, Scotland and Wales. The hon. Gentleman’s point is bogus.

It is important that we now move forward, whatever the weaknesses hon. Members on both sides of the House might find in the Bill. Realistically, income tax might not be varied for some time, or ever, depending on what happens in the referendum, but the Bill will give access to vital borrowing and investment powers.

The Silk commission produced its second report earlier this month. Plaid Members say that Wales should be moving to a reserved powers model as swiftly as possible. We believe it would make more sense to have a referendum on the Silk part II recommendations. That larger and more substantive referendum would consider both true income tax-varying powers and wider policy powers. We will table amendments to preserve the integrity of the Silk report recommendations. Given that the principle of fiscal devolution has been conceded in respect of the other tax-varying powers, we say there is no need for a referendum on a simple income tax-sharing model. I agree with the hon. Member for Islwyn (Chris Evans), who is in his place, who said today that that should be the case. We will seek to amend the Bill accordingly.

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[Albert Owen (Ynys Môn) (Lab)]

It is a pleasure to participate in the debate. When this matter was last discussed in the Welsh Grand Committee, I was the Chair of the Committee, so I had to remain impartial. I listened to a lot of the arguments, however, and this is my opportunity to express my views on the Bill and the devolution settlement.

I am a proud devolutionist, and I am proud of my party’s record on devolution. That process did not begin with the setting up of the National Assembly for Wales. One of my predecessors, the late Cledwyn Hughes, was one of the architects of devolution. He was the second Secretary of State for Wales after Jim Griffiths, but before Labour came into Government in 1964 he worked in opposition to establish the first Welsh Office and to devolve powers and responsibilities. Democratic devolution then came into being with the setting up of the National Assembly.

I am pleased to follow the hon. Member for Ceredigion (Mr Williams), and I agree with a lot of what he said. He asked about the weather in Llandudno. It has not been widely reported that unity broke out among members of the Labour party in Llandudno. Whether he perceived clarity or not, we certainly had an excellent conference, with unified speeches from the leader of the Labour party in Wales—[Interruption.] The hon. Member for Shrewsbury and Atcham (Daniel Kawczynski) seems to disagree with me on that. I do not think he was there, although I am sure he takes a great deal of interest in the matter.

At our conference, we saw a First Minister and a future Prime Minister agreeing on huge policy issues, including reserved powers. That was radical, and in the tradition of Labour pro-devolutionism. It was an excellent conference, and coming after the Plaid Cymru conference, it is not difficult to compare a good one with a car crash. We heard that Plaid Cymru members had fallen out over issues such as what constituted Welshness. By contrast, we were talking about the economy and the constitutional measures that a Labour Government would introduce, so if the hon. Member for Ceredigion wants reserved powers, I suggest that he tell the good people of Ceredigion to vote Labour. A Labour Government would deliver that. We would deliver on our promise, just as we delivered on our promise to establish a National Assembly for Wales.

The Secretary of State for Wales and I go back a long way politically. When we were debating the setting up of the National Assembly for Wales, we were on different sides of the argument, and I remember that we were on a panel with Lord Dafydd Elis-Thomas. Of the three of us, only two agreed with devolution; the third did not. I welcome the fact that the Secretary of State has now progressed in the right direction, however.

[Jonathan Edwards]

Is the hon. Gentleman saying that the First Minister now supports the lockstep proposals of the UK Government, which the shadow Secretary of State advocated earlier? That is not what the First Minister has been telling the people of Wales for the past three or four months.

[Albert Owen]

The shadow Secretary of State set out the Labour party’s position in Llandudno on Sunday, and that is the position that we will proudly put to the electorate in a forthcoming election. I understand that Plaid Cymru does not support devolution per se; it supports it as a vehicle for independence. That is the difference between us. Yes, we have grown-up conversations in Wales, but the people of Wales elect more Labour representatives than Plaid Cymru representatives. Plaid Cymru is the “party of Wales” in name only. Yes, the Labour party has differences of opinion within it—any modern democratic party does—but we now have a clear position, following our conference, and I hope that we will go on to get a majority Government in this place so that we can change the laws to best reflect the views of the people of Wales.

I agree with my hon. Friend the Member for Islwyn (Chris Evans) to an extent. Whether we like it or not, the people of Wales are not that interested in Silk; they are not that interested in constitutional issues. I and many others have supported devolution for many years, but I understand that not everyone is interested in it. Politics is the art of the possible. I would have liked an Assembly to be established in 1979, but the proposal was defeated convincingly by the people of Wales. I would have liked to see a stronger Assembly in 1997, but I was far more pragmatic and mature by then, and I realised that we pro-devolutionists needed to compromise in order to get the measure through.

I do not accept what the hon. Member for Ceredigion said about referendum fatigue. It is fundamentally important, when we are proposing major constitutional changes such as the setting up of new bodies in Scotland, Wales and other parts, including London, that we should have a referendum. Equally, it is right to hold a referendum when we are proposing to give more law-making powers to the National Assembly for Wales. We should also have one to decide the changes on taxation. I would have liked to see those powers established in 1997, but I know that we would have lost the referendum if we had proposed them at the time.

[Mr Mark Williams]

The clear case for a referendum on this issue was made in the Silk report. How many referendums does the hon. Gentleman envisage us having to endure as we head along the devolution road?

[Albert Owen]

I tried to answer that question earlier when I said that a referendum should be held when we are proposing a huge political or constitutional change. These taxation measures constitute such a change, as did the devolution of law-making powers and the setting up of the Assembly itself. When it comes to significant constitutional changes, I believe in trusting the people. I did disagree with the hon. Member for Arfon (Hywel Williams) when he said, “We’ll just take the recommendations of a commission.” We are a democratic body; we are elected Members of Parliament; we represent people and communities, and we are here to represent their views. Again, I think Plaid Cymru has been caught out slightly, because it is saying, “We want all the bits of the Silk commission, but we do not want the referendum.” Either you want it all or you do not want it all—it is pretty simple.

[Jonathan Edwards]

Surely the powers cannot be used on the lockstep. That is Labour’s position: those bands cannot be varied because of the lockstep. The referendum should therefore be on the need to remove the lockstep to allow the bands to be varied. Surely that should be the basis of the referendum; it should not be a referendum on devolving the lockstep.

[Albert Owen]

That is the hon. Gentleman’s position. I have made my position clear: when there are major changes on taxation, there should be a referendum. I am therefore supporting that measure in the Bill. We would lose most of the people of Carmarthen and Ynys Môn if we started talking about the lockstep. The serious problem we have is that when we eventually go to the people of Wales on a taxation referendum, we have to boil it down—[Interruption.] If he stops chuntering from a sedentary position, I will try to give an answer on a simple question that we understand in the first place. The beauty of a referendum is that we need to boil things down. The question as it is framed now would not be easy, which is what we have to work towards. That is where I am coming from on this issue.

It is very logical that the Bill proposes borrowing powers for the National Assembly for Wales. The hon. Member for Ceredigion talked about the abilities of community councils and town councils to borrow in a way that the Assembly cannot, so this is a natural progression. Many things such as stamp duty and landfill tax can produce the revenue streams to help with that borrowing. It is eminently sensible that that happens.

I repeat that we need to consult the people of Wales and have a referendum on the income tax issues in the Bill, so I support that approach. Not having those things would be out of sync with what we have done in the past, when we set up the Assembly and when we had a referendum on increasing its law-making powers. I supported both those referendums and I would support this one, too, but we have to get it right. I am as confused as anybody who has spoken in this debate about exactly what we are going to be telling the people of Wales. I know this is only a Second Reading and it is right that we debate these issues, but in Committee—that is the place to do it—we shall deal with the nitty-gritty of what the taxation actually means. The figures produced in the explanatory notes and in the Government’s various Command Papers are not easy to digest, so we need to have that scrutiny, which this House of Commons does best, before we finalise things.

There has been much debate about the position outlined by my Front-Bench team, and on that I agree slightly with the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards); those details need fleshing out just as much as any others. The purpose of parliamentary democracy is to have that debate and that parliamentary scrutiny, so that is the way we need to move forward. I have been consistent on the referendums issue, and I believe we must have a referendum if we are to move to being able to vary income tax powers or whatever the end result is of this Bill going through both Houses of Parliament.

I wish to discuss the electoral arrangements, as I am slightly confused as to why these provisions have been bolted on to this financial measure, other than to suit a deal done between the coalition parties and Plaid Cymru to try to get the Bill through. We have heard about the Government of Wales Acts. I supported doing away with the dual candidacy because I thought it was unfair and undemocratic that a person who stands for election in a seat and loses, often comfortably, can then arrive in that democratic institution through another means—that is fundamentally wrong.

When we had a debate in this House some time ago—I cannot cite the Hansard reference—the Under-Secretary told us about the consultation exercise, when people were in favour of keeping the ban on dual mandates.

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

rose—

[Albert Owen]

I am happy to take an intervention if the hon. Gentleman wishes to be helpful.

[Stephen Crabb]

I am glad the hon. Gentleman will take an intervention on that. He will be as aware as anybody that a significant number of the people responding to that consultation saying they were in favour of the ban were Labour Welsh Assembly Members.

[Albert Owen]

I do not know who the people were. The hon. Gentleman may well be right, but Labour is obviously the biggest party in Wales and has a strong voice there, unlike some other parties. It was a consultation exercise—[Interruption.] I am getting chuntering remarks from the hon. Member for Carmarthen East and Dinefwr again, but perhaps Plaid Cymru should also have had enough intelligence to do standard letters to put its view across in this open consultation. The point I am making is that this coalition proposal, supported by Plaid Cyrmru, is on the wrong side of the argument. These parties are doing it for their own political reasons. Nobody has said to me, “Wasn’t it terrible what you did in 2006 when you banned the dual mandate?” Nobody has raised the issue and it is right to leave things as they are. I shall be voting against the measure when the time comes, for the reasons I have given.

Individuals have been mentioned, which is wrong, but I must mention the leader of Plaid Cymru who, when she was elected, made a bold statement that she was not going to stand on the list. She made the brave decision to go before the electorate as an individual and leader of her party. She chose the seat for Rhondda, which she had every right to do, but now she has the jitters. She no longer feels secure in her statement, so she wants the lifeboat of a list place to get her into the Assembly for Wales; that is what this is all about. That is why I point to a deal being done. I smell a dirty deal here between the coalition parties and Plaid Cymru.

[Mr David Jones]

I have to say that the hon. Gentleman has raised a red herring there. I assure him that there has been absolutely no deal with Plaid Cymru. He knows me well enough to know that of all the parties in this House, Plaid Cymru is probably the last one I would ever do a deal with.

[Albert Owen]

I will take the Secretary of State’s word on that, but he is pandering to its views and helping it out. I certainly will not be doing that when it comes to voting on this Bill.

There are lots of things in this Bill that I do support. I have mentioned some already including the borrowing powers, the landfill tax and the stamp duty measures. I will support the Bill on Second Reading if there is a Division, but I will be working with Members from across the House to scrutinise it so that we get to a position where it is sellable to the people of Wales in a referendum, because I am, first and foremost, a democrat and a devolutionist, and a proud one too.

[Guto Bebb (Aberconwy) (Con)]

It is a pleasure to speak in this important debate. I will be brief, as most of what I had intended to say has already been said, and said quite eloquently. It is important to touch on some of the arguments that have been made today.

Let me start with the issue of double-jobbing. We have had a degree of confusion from the Opposition Benches over the issue of whether or not a list Member can stand in a constituency. Such confusion ill becomes this Chamber, because the argument we have heard is basically one against the d’Hondt system of electing Members to any Assembly, which is one with which I have some sympathy. The decision to choose that system was taken by the Labour Government, by the right hon. Member for Neath (Mr Hain) who is no longer in his place. It is odd to argue that that system is being used in a way that allows people to stand in individual constituencies and on the list in almost every single country that operates it apart from Ukraine and Wales. It is difficult to argue that Wales should be following the lead from Ukraine rather than from any other democratic country in Europe.

That argument is a red herring, and it is undoubtedly the case that the gerrymandering happened in 2006 when the ban came into place. If Opposition Members, who have given us a number of anecdotal stories about the issue, were to go to mid-Wales, they would hear plenty of people talking about the loss they felt when my hon. Friend the Member for Montgomeryshire (Glyn Davies) failed to be returned to the Assembly, because of the change in the legislation by the Labour party. He was a fine Assembly Member, and would have continued to be so if it were not for the gerrymandering of the system. It is clear that this Bill aims to address that matter, and it addresses it in a way that represents the views of the civic society and three of the political parties in Wales. It is a shame that the parochial and partisan nature of the Opposition means that they cannot support this much-needed change.

It is also important to point out that I sympathise with some of the comments made by the hon. Member for Rhondda (Chris Bryant), who is no longer in his seat, in relation to the issue of five-year terms. As a member of the Welsh Affairs Committee, I have supported the recommendation as it stands, but I have some reservations. It is not necessarily the case that I am opposed to an extension to five years to the Assembly term; it is more that I have reservations about taking a five-year term as a norm. I would be fairly relaxed if we decided to move to four-year terms in Westminster and the Assembly.

I fully accept that the argument for a five-year term for the Assembly is to ensure that the two elections do not clash, but I have reservations about whether five years is, in any way, shape or form, better than four. As things stand, the intention of the legislation is to ensure that Assembly elections can be held separately from Westminster elections, which is something that I support. However, I also agree with the hon. Member for Rhondda that we always seem to extend terms rather than reduce them, which is a shame.

Let me turn to the issues of importance in the Bill. My personal view is that the key issue is financial and fiscal accountability. We can talk about all the elements of the legislation, but in truth we are considering an attempt to ensure that the Welsh Government and the Welsh Assembly are accountable for fiscal decisions made in Wales. It is here that we see the confusion in the Opposition’s argument.

Yes, it certainly was a sunny Saturday in Llandudno. As I did not want to impose myself on the Welsh Labour party conference, I was personally in Llanfairfechan, where the weather was also suitably good. However, we should reflect on the confusion that came out of the Welsh Labour conference. When I argued in not one but two Welsh Grand Committees for the concept of fiscal accountability, I was informed in fairly robust terms by the hon. Member for Pontypridd (Owen Smith) that the Welsh Assembly did not need any further accountability. Indeed, I can quote the hon. Gentleman, who is no longer in his seat, directly:

“I have just made the point that I do not believe for a moment that having additional responsibility for tax-varying powers would confer any extra degree of accountability on the Welsh people.”—[Official Report, Welsh Grand Committee, 5 February 2014; c. 18.]

I am delighted to see that he has just returned to his seat. He made those comments on 5 February, yet at the conference on Sunday we had his new Llandudno declaration. Clearly, a road to Damascus conversion occurred somewhere along the A470 between Pontypridd and Llandudno.

[Albert Owen]

It will come as no surprise to the hon. Gentleman that we are a democratic party and our conferences are the places where we make such decisions as a democratic body. I know that he has been a member of other parties, but that is the position of the Labour party. If he wants clarification, perhaps he should ask questions rather than giving opinions.

[Guto Bebb]

I am grateful to the hon. Gentleman for that intervention. I am sure that the Labour party is a democratic institution; it also believes strongly in the hereditary principle, as we have found out from Aberavon.

The hon. Member for Pontypridd made a clear statement in the Welsh Grand Committee on 5 February that there was no need for fiscal devolution for the Welsh Government to have any further accountability, yet in his speech in Llandudno on Sunday he clearly made the point that the further devolution of income tax varying powers so that they were on a par with those in Scotland was necessary to give that accountability.

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[Geraint Davies]

It is a new constitutional phenomenon that I have just introduced. I am sure the hon. Gentleman will delight in it, being a person who indulges in that sort of thing.

If I may reference Scotland for a moment, rational and emotional powers are at play. There are people who thought that Scottish independence was going to go down the tube because of currency, the EU and inward investment, but now, of course, the wind is blowing in a different direction. The people of Scotland feel that they are being told that they cannot live without us and there are the emotions of divorce, so there is a mixture of rational economic argument and emotion. The feeling in Wales is that, rather than facing years and years of Tory austerity, we want to decide our own thing. The reality is that if Scotland leaves the UK we will end up with more Conservative Governments, because of the residual demography, and that will change the appetite for devolution.

Plaid Cymru would obviously like Wales to go down the road of independence and it sees this as a stepping stone. It talks about fair deals and fair funding for Wales even in the knowledge—this is an important point on what is behind the Tory agenda, too—that the difference between taxes raised versus expenditure in Wales is about £15 billion. The Conservative plot is to reduce the number of Welsh MPs, give borrowing and tax raising powers to Wales and forget about giving Wales its fair share of both revenue and capital. In the case of Scotland, the difference, coincidently, is also about £15 billion, but it currently makes up that difference in oil.

We therefore have a situation where it is convenient for everybody to go along this path, but the people of Wales want fair funding now. What that means in relation to the Barnett formula, as has been mentioned, is an extra £300 million a year. Wales should have the same needs-based formula as the English regions. It is not difficult to work that out, so that should just move forward.

With regard to capital, like other parts of Britain outside London and the south-east, Wales gets a small fraction of the investment per head that London gets—London gets about £5,000 per head and Wales gets about £500 per head. That is a problem for everyone outside London. If we migrated some of that investment outside London, we could put pressure on the system to make it more balanced. Britain is quite unusual in that respect. In Germany, for example, Berlin does not dominate Munich or Dusseldorf, so there is no necessity for that balancing.

If the response in Wales is, “Well, we are not getting enough money to do our own thing, so we will have to borrow it,” who will pay for that borrowing? That is the real fear, because there is no money on the table for that. Then there is the false analysis that the borrowing needs to be hypothecated against an income stream from income tax or other taxes, and that the amount of borrowing should be determined by the size of those streams. Frankly, that is just false. It is not the case that in order to justify more borrowing we need more income tax devolution. It is the case that the amount of money Wales will get in future, as the Secretary of State argues, will be broadly the same; it will not be distorted by this method.

My right hon. Friend the Member for Neath (Mr Hain) and I fear that we will end up with less money over time because the tax take per penny of income tax is 70% of what it is in England. If we assume for a moment that the global amount of money remains the same, then where does the extra money for paying back the borrowing come from? Well, it comes from nowhere. The reality is that the money would be paid back by top-slicing revenue, which means top-slicing the amount of money for services. That is what will happen if Wales does not get its fair share of UK funding.

We have already seen the signs and symptoms of the stealthy stranglehold that the Tories want to put on Wales, with the recent U-turns on the valleys lines. All of a sudden we hear, “Here you are. You can borrow some money.” A moment ago there was going to be electrification from Paddington to Cardiff and then through to Swansea, including the valleys, but all of a sudden we are told, “Well, the small print states that the Welsh Assembly has to do that, and it can do that by borrowing.” In fact, the commitment to go through to Swansea is not even fulfilled. The Government said that they would electrify the line from Paddington to Cardiff and then from Bridgend to Swansea, but they will not do the bit in the middle. If the Welsh Assembly Government say that they will not do that because they have another priority, which they might have, as is their right, we will have a bit in the middle that is not electrified, and that is not electrification through to Swansea, so the Government have broken their word.

[Albert Owen]

I am a little confused by my hon. Friend’s terminology, because he talks about small print. I do not see any small print. The Prime Minister made a statement to the BBC in which he said that he would pay for electrification to Swansea and the valleys. That was in his statement, not in any small print.

[Geraint Davies]

Perhaps I have been misinterpreted. There was no small print. There was a big announcement, as my hon. Friend has just said, by the Prime Minister, the Secretary of State and others. The small print I was referring to was the weasel words in the long-winded document that was exchanged between Ministers, which presumably changed the headline proposition. It had been, “We will provide this,” and then the Minister argued, “When we went through it all I found here on page 23 that it says that actually it is interpreted in this way, so according to our lawyers the Welsh Government will have to do that.” That is not what we heard on the radio.

--- Later in debate ---

[Stephen Crabb]

There is a lot of upside in the proposals, which I hope Opposition Members have the intelligence and foresight to recognise. In fact, the Silk commission calculated that Wales would have been better off under the system we are proposing had it been in place in the past decade. That answers the question asked by the right hon. Member for Neath—he asked whether Wales will be better off. The Silk commission estimated that, had the system been in place in the past 10 years, the people of Wales would have been better off. I hope that that also provides assurance to the hon. Member for Swansea West (Geraint Davies), who sees the Bill as a nasty plot and conspiracy.

Some Opposition Members have sought to link the devolution of income tax to so-called fair funding. That is another diversion they are throwing up, and another barrier they are erecting, so that they do not have to contemplate greater and truer accountability for the Government in Cardiff Bay, which they would prefer not to contemplate. The joint statement from the UK and Welsh Governments in October 2012 established a clear process to review relative levels of funding for Wales and England in advance of each spending review. The announcement recognised that levels of funding for Wales relative to England were not currently converging, but that, if convergence in funding is forecast to resume during the period, both Governments are committed to discussing a sustainable and fair solution. The fair funding mechanism agreed with the Welsh Government in 2012 worked very well in practice ahead of the last spending review. I hope that that, too, reassures hon. Members.

Current funding levels are well within the parameters recommended as fair by the Holtham commission. Safeguards are in place to address convergence if and when it resumes. Therefore, the funding regime for Wales should not be seen as a barrier to income tax devolution. That is one more smokescreen the Opposition are throwing up to disguise their basic opposition to, and dislike of, fiscal devolution.

A number of hon. Members mentioned borrowing powers for capital investment. There is clearly a broad consensus on all sides in favour of giving the Welsh Government the ability to borrow to invest in Wales’s infrastructure. Some Opposition Members want the Welsh Government to be able to borrow more than the £500 million permitted under the Bill—some suggested they should be able to borrow a virtually unlimited amount. The UK Government have set the limit considerably higher than we would have if we had used the tax and borrowing ratios we used in the Scotland Act 2012. Had we done that, the borrowing limit would be closer to £100 million, based on the taxes devolved in the Bill. We have set a higher capital borrowing limit of £500 million initially, but with flexibility for that limit to be increased if the Welsh Government gain access to further independent streams of funding, such as an element of income tax. If Opposition Members want to see the Welsh Government have a greater borrowing capacity, they should join us in campaigning for a yes vote in an income tax referendum.

What we are not prepared to accept is reckless borrowing without the means of paying that money back. Borrowing must be commensurate with the independent revenue streams. The Government have not worked hard over the last four years to build a reputation for financial prudence and competence, and tackling Britain’s deficit effectively, only to throw away that hard-earned reputation by allowing the Welsh Government to borrow beyond their means.

The hon. Member for Swansea East (Mrs James) said that she would welcome sight of the “workings-out”—I think that was the phrase she used—to help her to understand how we arrived at the £500 million borrowing limit. I suggest that she looks at pages 26 and 27 of the Command Paper that was published alongside the Bill, which is clear on the rationale and the basis for deciding on the £500 million figure. It is higher than would have applied if we had stuck closely to the Scottish ratios, and that is because we want the Welsh Government to crack on with the job of improving the M4. That was agreed with Welsh Ministers, and it gives them the tools to make progress quickly and to tackle that major infrastructure problem.

The hon. Lady also asked why Northern Ireland’s position was different. Northern Ireland is not a good benchmark for hon. Members to use in comparing borrowing regimes. The Northern Ireland Executive exercise many of the powers and responsibilities that are exercised by local authorities in other parts of the UK. In particular, they collect the equivalent of council tax and business rates and have borrowing powers similar to those held by local authorities.

Opposition Members did not talk much about borrowing, which will have a huge, transformational impact in allowing the Welsh Government to invest in new infrastructure in Wales, and nor did they talk much about the impact of lowering taxes in Wales, creating a low-tax economy and creating new jobs. They saved most of their energy and time for discussing the ending of the ban on dual candidacy. In fact, the right hon. Member for Neath used large chunks of a speech he made in 2006, if my memory serves me right. It has been like “Groundhog Day” as Opposition Members—although I am sure they were reflecting the concerns they have heard in their constituencies—manned the barricades to oppose a sensible measure—

[Albert Owen]

Is the Minister criticising Opposition Members for referring to a measure in the Bill? Surely it is the purpose of a Second Reading debate to talk about the measures in the Bill.

[Stephen Crabb]

I am criticising Opposition Members on two counts. One is the amount of time that they took talking about a relatively minor issue, when they could have used their time to better effect by talking about the real, everyday concerns of the people of Wales who will be affected by the measures in the Bill. I also criticise Opposition Members on this issue because they are wrong. They are in the minority. All other parties support the measure. Wales is the only country with such a ban on dual candidacy.