Wales Bill

Debate between Huw Irranca-Davies and Jonathan Edwards

Wednesday 30th April 2014 Commons Chamber

[Jonathan Edwards]

As one of the more reasonable Members on the Labour Benches—

[Huw Irranca-Davies]

Stop!

[Jonathan Edwards]

—is it the hon. Gentleman’s view that if there were a decision in future to change the electoral system in its entirety rather than the minor change proposed in the Bill, it should be for the Assembly to make that decision, rather than the House of Commons?

[Huw Irranca-Davies]

That is a good discussion to have and it will flow from part II of the Silk commission, which we will debate in the Chamber. It is a worthwhile debate to have in the present situation, where Parliament still has sovereign powers and still in essence passes to the Assembly the ability to do certain things, bearing in mind the commitment from our Front Bench in principle that we look favourably upon the idea of reversing the current position, where it is only the delegated powers that the Assembly can legislate on. That debate is not for today, but the time will come.

The explanatory notes, which Ministers seek to use to justify the reversal, say in paragraph 12 that the concern expressed by many people

“has been refuted in studies by the Electoral Commission and others which have demonstrated that the prohibition”

that is currently in place—the ban—

“has a disproportionate impact on smaller parties who have a smaller pool of potential candidates to draw upon.”

I am genuinely bemused by that. In my own constituency, which is a strong Labour constituency, not only are there Tory voters, but there are Tory elected representatives, a Plaid Cymru representative, and others. I cannot believe that they do not have a sufficient number of alternative candidates to put on a regional list.

All we are talking about is a handful—four candidates—appearing on a regional rather than first-past-the-post list. If they do not have the numbers, that is a real signal of a lack of confidence in the capacity of what have today been termed “minority parties” in the regions. I simply do not believe it—there are people who will and should come forward. Equally, we would have to do the same in the regions. There is an onus on the party to bring people forward in the valleys, the vale, west Wales and elsewhere. The argument that each region would not have four candidates who can be put on the list just does not hold water.

Finance (No.2) Bill

Debate between Huw Irranca-Davies and Jonathan Edwards

Tuesday 8th April 2014 Commons Chamber

[Jonathan Edwards]

I am sure that my hon. Friend’s surgeries, like mine, are filled weekly with individuals who face problems with reductions in the support that they receive. With all that in mind, it is difficult to look them in the eye and support a tax cut for those on the highest incomes. It undermines the case for the moral crusade I alluded to earlier and public support for the fiscal policy of the current UK Government.

[Huw Irranca-Davies (Ogmore) (Lab)]

The hon. Gentleman is making some good points. Does he agree that, while there are technical issues in determining the exact point at which the Government will gain more or less from a tax, there is a significant signal from the 50p tax rate, which is that we are, at least to some extent, all in it together? His constituents are not far from mine, and the average median wage in the Ogmore valley is less than £21,000.

[Jonathan Edwards]

The hon. Gentleman always makes very intelligent points. I believe that he is talking about the Laffer curve. I will discuss the optimal rate of taxation later, but I agree wholeheartedly with his comments.

A report for the Office for National Statistics entitled “The Effects of Taxes and Benefits on Household Income, 2011/12”, which was released in July 2013, showed clearly that, while income tax is progressive, as it should be, the effect of indirect taxes such as VAT means that the bottom fifth of the income groups pay the most out as a percentage of their gross income at 36.6% in taxes, while the top fifth pay 35.5%. The overall tax system is therefore still heavily weighted in favour of the highest earners. Plaid Cymru believes in progressive taxation irrespective of the timing and state of the wider economy. We believe that those with the broadest shoulders should bear the burden of taxation. A Scandinavian model of progressive taxation is part of our DNA.

The House has voted on this measure only once, during the resolution votes following the 2012 Budget debate. I am delighted that it was Plaid Cymru and Scottish National party Members who called that vote. The shadow Chancellor must have been having an off-day, because the entire parliamentary Labour party abstained, apart from two honourable exceptions, the hon. Members for Bolsover (Mr Skinner) and for Newport West (Paul Flynn), if my memory serves me correctly. Although Labour Members voted against the Government’s 2012 Budget, which reduced the 50% rate to 45%, they missed the only vote that we have been able to have directly on the reduction of the top rate.

--- Later in debate ---

[Jonathan Edwards]

That is an important point about forestalling, which I will talk about in more detail later.

I note that the Office for Budget Responsibility’s March 2012 “Economic and fiscal outlook” states on page 110 that

“the revenue-maximising additional tax rate is around 48%.”

Again, that blows a hole in the Government’s argument that their reduction of the additional rate was based on sound economic and revenue-raising evidence. That is why they should now commit to carrying out a full report, as the new clause would compel them to do. I would argue that 48 is slightly closer to 50 than to 45.

The Chancellor told the House in 2012:

“The increase from 40p to 50p raised just a third of the £3 billion that we were told it would raise.”—[Official Report, 21 March 2012; Vol. 542, c. 805.]

I know my A-level maths is a little shaky, but that still makes £1 billion, a significant sum to the good people of Carmarthenshire and the good people of Wales and the rest of the UK. The Chancellor’s justification for the tax cut for the super-wealthy was that they would avoid the tax, they might leave the UK, it raised only £1 billion, and the reduction would lose the Government only £100 million. Having brought forward their income to avoid the 50p rate in the first year, the rich delayed it in the final year to benefit from the reduction to 45p. That forestalling and deferment will have cost the Treasury billions that could have been used to avoid some of the worst cuts to those on low incomes, such as those resulting from the bedroom tax.

Recent claims by some on the Government Benches that the tax cut for the richest has yielded more revenue conveniently gloss over the increased likelihood of those with an accountant being able to move their income into the following year, given the Government’s indication a year ahead of time that they were enacting the tax cut. My advice to the Government would be to enact the proper closing of loopholes to ensure that the super-wealthy pay their fair share, instead of the fig leaves of action that the Government have offered previously. They have still not introduced proper measures to make up the HMRC estimate of £35 billion lost each year through avoidance and evasion. Other estimates put the figure much higher. Claims that the rich were fleeing because of the 50% rate are also not very well grounded. Research by the TUC, using HMRC figures, indicated that 59% of those paying the 50% additional rate were employees, most working in banking and therefore unable to leave.

[Huw Irranca-Davies]

Does the hon. Gentleman understand the disconnect between those who are super-wealthy and the argument that he is making, when I, my constituents and my family, who rely on public services, the national health service and so on, see the sense in paying progressively higher rates of tax, myself included, to make sure that those services are available? Why is it that the super-wealthy do not see the sense in providing for public services? Is it, perhaps, because they do not rely on them?

[Jonathan Edwards]

That is certainly one argument, and I shall talk about how, with such an attitude, the super-wealthy are cutting off their own noses, and how a progressive taxation system would benefit them as well as people like the hon. Gentleman and me, who earn far less than those who get hit by the top rate.

As the 2012 HMRC paper that examined the effect of the 50% additional rate of income tax noted,

“there was a considerable behavioural response to the rate change, including a substantial amount of forestalling: around £16 billion to £18 billion of income is estimated to have been brought forward to 2009-10 to avoid the introduction of the additional rate of tax.”

This is a massive sum which would arguably have been included in taxation had the measure been announced with immediate effect.

The most recent figures from HMRC revised liabilities up by £2.8 billion in 2010-11, £3.3 billion in 2011-12 and £3.5 billion in 2012-13. This means that HMRC says it earned a total of £9.6 billion more than previously thought from the 50p tax rate. These are of course projections of taxable income, but that makes the case for the new clause which I am pushing.

Growth and Infrastructure Bill

Debate between Huw Irranca-Davies and Jonathan Edwards

Monday 17th December 2012 Commons Chamber

[Huw Irranca-Davies (Ogmore) (Lab)]

Does the hon. Gentleman therefore consider Labour’s position on the devolution of projects providing up to 100 MW, which would include the vast majority of wave and tidal power schemes and many others, to be good and sensible, not least because it recognises that larger UK national infrastructure schemes, such as a Severn barrage scheme, were it ever to happen, are of interest to England and Wales?

[Jonathan Edwards]

I am grateful for that intervention and I welcome the hon. Gentleman to the world of Twitter —he was tweeting in Welsh over the weekend and I was very pleased to see it. I shall come on to Labour’s current policy later in my speech.

As I introduced my Bill, I said that the people of Wales were extremely protective of their natural resources. Naturally, as a result of the vote there was a public outcry in Wales, with Labour accused of betrayal. Subsequently, the First Minister made a public statement that the Labour party, despite the voting record of its MPs, supported total control over energy planning policy. His Government then published an energy policy document that highlighted how the sector was key to the future of the Welsh economy. I could not agree more, which is why I have introduced my new clause this evening.

I hope that, if pushed to a vote, the Lib Dems will maintain their principled position. If Labour MPs sit on their hands or join the Tories in the Lobby, the credibility of Carwyn Jones will be shot to pieces. The shadow Secretary of State for Wales has said today in the Western Mail, in response to my new clause, that Labour in Westminster supports the devolution of planning for energy projects only up to a limit of 100 MW. That shows a complete lack of coherence between Labour in London and Labour in Cardiff. It flies in the face of and contradicts the wishes of the First Minister, who said in March that he did

“not see why 100 MW should be the limit in the future.”

In addition, in June this year, John Griffiths, the Minister for Environment and Sustainable Development, stated that

“the Welsh Government…wishes to have further devolution of power over energy”

and “do not limit” themselves at 100 MW.

During a recent “Sharp End” interview, the First Minister adopted Plaid Cymru’s position and said that he wanted full control over energy planning policy. If energy policy is the key to the future of the Welsh economy for jobs and growth—I am certain that it is—why should a 100 MW limit be set? Total control over energy planning policy would allow the Welsh nation best to decide its energy future and would be essential in driving growth in our economy.

From a good governance point of view, there needs to be consistency in planning policy. Having two different authorities responsible for policy is a disincentive for investment, leads to a lack of coherence in energy and economic strategy and is awfully complicated for my constituents. I have two technical advice note 8, or TAN 8, areas in my constituency, which are designated zones towards which the Welsh Government direct onshore wind development. The projects under 50 MW are determined by the local planning authority and those above are determined by Ministers here in Whitehall. Local people experience a huge difference when dealing with both authorities. With the LPA, they have direct access to planning officers and local councillors, whereas not a single official or Minister has even bothered to come to north Carmarthenshire to discuss with them the Brechfa Forest West development, which has just landed on the Secretary of State’s desk in London. The arrangements lead to a huge democratic deficit and my surgeries are constantly filled with angry and disillusioned people. My new clause would help to deal with that.

I have tabled a modest and reasonable amendment that would enable the people of Wales better to plan our energy infrastructure over 50 MW on a par with Scotland. It will also help the Welsh Government play their part in helping the UK Government to achieve the aims of this Bill, leading to greater policy coherence and unleashing the economic potential of Wales’s energy resources. If Ministers refuse to accept the new clause, I am minded to press it to a Division.