Wales Bill

David Jones Excerpts

Tuesday 5th July 2016 Commons Chamber

[Chris Davies]

I may consider it, but at the moment I am thinking about going further, with deep regret, and looking to my first vote against the Government—my first rebellion, which is of great concern to me.

My position is not a criticism of the Welsh Assembly per se or of devolution. It is a criticism of the present incumbents down in Cardiff Bay. They have not delivered for us. Why on earth are we now looking to give them tax-raising powers? Sadly, I do not feel that they would be able to deliver that properly for the people of Wales. With great regret, I will not be able to support the Government’s proposal in this matter.

[Mr David Jones (Clwyd West) (Con)]

I apologise for the fact that I was not here at the beginning of the consideration of this group of amendments. Sadly, I was detained by another engagement.

Like my hon. Friends the Members for Vale of Clwyd (Dr Davies) and for Brecon and Radnorshire (Chris Davies), I have huge concerns about clause 16. I speak as the Secretary of State who took the Wales Bill 2014 through this House. Unlike my hon. Friend the Member for Vale of Clwyd, I was an enthusiast for tax-varying powers for the Welsh Assembly, because I thought that that would introduce a measure of accountability and potentially give the Assembly Government some incentive to introduce a more competitive tax regime in Wales. However, the Wales Act 2014 clearly states that such tax-varying powers should not be implemented until they are triggered by a positive vote in a referendum, and it is still right that such a referendum should be held; after all, tax-varying powers include the power to increase taxes.

If one expects the people of Wales potentially to pay more tax, it is only right that they should first be asked if that is what they want. That is what happened in Scotland in 1997, when the referendum had two separate questions, including one on taxation. Unlike hon. Members who have already spoken, I do not believe that it is beyond the bounds of possibility that the people of Wales would vote for tax-raising powers; after all, that is what the Scots did. However, imposing such a competence on the Welsh Assembly Government without giving the people of Wales the right to have their say in a referendum is utterly disrespectful of the people of Wales; after all, what was good enough for the Scots should be good enough for the Welsh.

I also share the concerns of my hon. Friend the Member for Vale of Clwyd. I stood in a general election only 14 months ago on a manifesto that made it entirely clear that there would be a referendum before tax-varying powers were triggered, and I do not believe that anything has changed 14 months later. If we make a manifesto pledge, we should adhere to it, so, like my hon. Friends, I will, sadly, be voting against the Government on clause 16. My right hon. Friend the Member for Chesham and Amersham (Mrs Gillan), who is also a former Secretary of State, has asked me to indicate that she will do likewise. Sadly, she is not able to be here at the moment, but she too regards this as a point of principle. I urge my right hon. Friend the Secretary of State to reconsider. By pressing ahead, he is breaking faith with the electorate of Wales.

[Paul Flynn]

The opening words of the splendid book I referenced earlier are:

“Only the future is certain. The past is always changing.”

We have seen splendid examples today of people fictionalising the past. I am proud of the Welsh Assembly, and I am proud that it was a creation of the Labour party in this Parliament. In deciding on its form, it would have been possible for us to adopt a first-past-the-post principle, which would have given Labour a majority in perpetuity. However, for very honourable reasons, it was decided not to do that. We also feared creating what was described at the time as Glamorgan County Council on stilts. There are other examples of socialist and social democrat countries, such as the Nordic countries, which have had parties equivalent to Labour for many decades, and which have produced some of the finest social services and human rights policies in the world.

It is absolutely wrong and mean-spirited not to recognise that the Welsh Assembly, as set up, is probably the finest example of democracy in the British Isles. Many of us were unhappy about the number of UKIP Assembly Members in May, but they gained 13% of the vote and they got 13% of the seats, which is absolutely right. However, for two Parliaments, including the ones when we set up the Assembly, when we could have done anything we liked, 20% of the voters in Wales voted Conservative and did not have a single Conservative Member of this Parliament. Why do people not object to that?

We intend to divide the House on amendment 11. Clause 16 has obviously taken up a great deal of the House’s attention, but Wales is suffering from referendum revulsion, and so are other parts of the country. We have had enough. We have been having these all through my childhood, on whether we close the cinemas on a Sunday or close the pubs on a Sunday. We have overdosed on referendums.

Let us look at examples of public votes, such as the decisions taken by the public to call a boat “Boaty McBoatface”, and in the European referendum. The choice in the European referendum was between two sets of lies by each party. Both sides are embarrassed by what they said a few weeks ago, because it has not happened, after all the dire threats. We do not have £365 million for the health service and we do not have an emergency Budget; one could go on. I am afraid that the referendum on the alternative vote was even more disreputable, with two sets of outrageous lies put before the public. On Vauxhall bridge there was a sign saying, “If you vote for AV you’re in favour of taking protection away from our soldiers in Afghanistan and taking protection away from babies in hospitals”, suggesting that only that sort of person would vote for AV. It was nothing to do with the facts of the case. The propaganda in referendums has got to a level where the results are degraded and distorted. That certainly happened in the European referendum, and I think that faith in the process has gone.

In Wales, with each vote we have—it was a tiny minority the first time—there is momentum to build up trust in the Welsh Assembly. As the hon. Member for Montgomeryshire (Glyn Davies) argued very persuasively, it is not a real parliament unless it has its own tax-raising powers. That is a normal, essential development if we are to see the parliament of which we are so proud, on the soil of our own country for the first time for centuries, grow and take on its own decisions and responsibilities. Clause 16 provides for the removal of the requirement of a referendum on this.

We are grateful for the wisdom and generosity of the Government in how they have treated this Bill. It was a fairly ugly Bill to start with, but they have amended it and accepted all the various suggestions that were made to remove some of its less wise implications. It now has widespread support in the House from all parties and Government Members. Our problem now is that the removal of these powers also takes away the involvement of the Assembly in the process of deciding when they should be brought into force. Quite rightly, several of my hon. Friends have expressed anxieties about what would result from this, because we certainly do not want to legislate for a reduction in the amounts of money that the Welsh Assembly has.

The introduction of Welsh rates of income tax will represent a step change in devolution to Wales, replacing about £2 billion of the Welsh block grant with a more volatile revenue stream. It will therefore be essential that fair and robust new funding arrangements are established before this takes place. A new fiscal framework is required, agreed by the Welsh Government and the Treasury, which addresses each of the new factors that will affect the level of spend on devolved public services in Wales. That fiscal framework should not only cover the offsets made in return for devolved tax revenue but include a long-term commitment to the funding floor announced by the Chancellor in November. The UK Government’s Silk commission, to which we owe a great debt of gratitude, recommended that devolution

“of income tax powers…should be conditional upon resolving the issue of fair funding in a way that is agreed by both the Welsh and UK Governments.”

That is absolutely essential. There are fears that this might well be a Trojan horse that could be abused in the way that my hon. Friends have suggested. This issue remains unresolved beyond the next five years. Until the fiscal framework has been agreed, there must be no move to implement the Welsh rates of income tax. The UK Government have agreed a fair fiscal framework with the Scottish Government. It is appreciated that the model of the Welsh Senedd will develop along the lines of the Scottish Government, but it would be unacceptable for the fiscal framework proposed for Wales to have any less favourable terms than those agreed for Scotland. Amendment 11 addresses that issue by ensuring that the Assembly and both Houses of Parliament have clearly defined roles in ensuring that the conditions are right for income tax powers to be devolved to Wales. It cannot be right that the UK Government could commence powers over income tax in Wales without the approval of the Assembly. I urge the Government to consider those amendments seriously.

--- Later in debate ---

[Mr David Jones]

Will my right hon. Friend explain what extraordinary event has happened in the past 14 months to move devolution on to such a large extent?

[Alun Cairns]

I am grateful to my right hon. Friend for his intervention. I was about to go on to say that two important principles have been acknowledged. First, the Assembly is more mature. That is reflected in the legislation we are passing to enable the Assembly to reach out and respond further to Welsh needs.

Secondly, when my right hon. Friend was Secretary of State for Wales, he established the principle of devolving significant tax-varying powers without a referendum. In the 2014 Act, the devolution of stamp duty land tax and the aggregates levy, in addition to powers over council tax and the subsequent full devolution of business rates to Wales, account for a broad income of £2.5 billion. The Welsh rate of income tax, which we propose to devolve is—at about £2 billion—significantly less than that. This important principle has been accepted positively by the Welsh public and by civic society. That stands firm and is a backstop to clause 16.

[Mr David Jones]

Does my right hon. Friend not accept that the significant difference is that very many more people pay income tax than pay stamp duty land tax or landfill tax? Is that not the point, that it affects nearly everybody in Wales?

[Alun Cairns]

I remind my right hon. Friend that a similar number of people who pay income tax also pay council tax, and that many will be business owners who pay business rates.

Much reference has been made to the Welsh Conservative manifesto and I remind right hon. and hon. Members what it said. Our manifesto for Wales stated that a funding floor would be introduced in the expectation that the Welsh Government would hold a referendum. We have fulfilled our end of the bargain, having introduced a funding floor of 115%, as has been mentioned. That is the floor—if I may gently correct the hon. Member for Ynys Môn (Albert Owen)—and the spending level is currently higher. If the Welsh Government are not going to introduce a referendum—I do not think that any of us want one after the events of recent weeks—we will need to take steps, so I hope that the House will agree clause 16 as it stands.

Clauses 17 and 20 deal with the functions of Welsh Ministers and devolve important new powers to them. Clause 17 will insert new subsection 58A into the Government of Wales Act 2006, conferring common law-type powers on Welsh Ministers—the kinds of powers exercised by a natural person, such as the power to enter into contracts, make payments or set up companies. It is difficult to believe that Welsh Ministers do not already hold these powers, and it demonstrates how current legislation is out of date with modern thinking and concerns.

Clause 19 deals with the transfer of ministerial functions. The Bill provides for a clear separation between devolved and reserved powers, an important component in which is being clear about which so-called pre-commencement Minister of the Crown functions in devolved powers are to be exercised in the future. We intend to transfer to Welsh Ministers as many of these functions as we can. We will do so in a transfer of functions order made under section 58 of the Government of Wales Act and will bring forward a draft order during later stages of the Bill. Several other transfer of functions orders have been made under section 58 since the Assembly was established.

I turn now to amendment 11, tabled by Labour, which would place a requirement in the Bill for a so-called fiscal framework. I should underline that the precedent in Scotland was not for the inclusion of such a provision in legislation; instead, the UK and Scottish Governments negotiated an agreement. I would hope that a mature relationship has developed between the Welsh and UK Governments, and between the First Minister and me, in respect of how we conduct our affairs. Clearly, there is no way I want to see Wales in a detrimental position—that is the starting point of our negotiations—and I am optimistic that we can come to an agreement over the appropriate adjustments to the Welsh block. Holtham has made some recommendations that are a good starting point for those discussions. Few people believed we would ever get to the position of introducing a funding floor. I hope, therefore, that that funding floor of 115% might give people confidence.

I would like us to reach a position where the Welsh Government can grant a legislative consent motion. Under the model we followed in Scotland, a legislative consent motion came only after the fiscal framework was agreed. I would hope that, once we have reached an agreement on a fiscal framework and a Barnett adjustment, a legislative consent motion could then be used as proof and evidence. For that reason, the amendment proposed is unnecessary—appropriate structures are in place to allow for that mature discussion to take place.

Amendment, by leave, withdrawn.

Clause 8 ordered to stand part of the Bill.