Jonathan Edwards
Main Page: Jonathan Edwards (Independent - Carmarthen East and Dinefwr)Department Debates - View all Jonathan Edwards's debates with the HM Treasury
(9 years, 10 months ago)
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Mr Gauke
It is a pleasure to return to the Bill. I will start with new clause 1 and amendments 2 to 5. These are principally technical changes that, taken together, are intended to address two possible scenarios that could occur if a portion of income tax is devolved to the National Assembly for Wales following a referendum. The first issue relates to the tax status of an individual. This is directly relevant to the calculation of certain social security benefits, state pensions and child maintenance payments, and could be affected by the introduction of a Welsh rate of income tax.
An issue could arise where information regarding the tax status of an individual has not yet been established or is not available—for example, if a person has newly become self-employed and it is not yet clear what rate of tax will apply. The new clause resolves the issue by allowing the Secretary of State by order, subject to an affirmative resolution, to deem a person a Welsh taxpayer for the purposes of calculating their benefits.
The second issue relates to a situation where the Welsh rate of income tax has not been set for the coming year at the time when certain social security benefits need to be calculated. New section 116D of the Government of Wales Act 2006 requires the National Assembly to pass a Welsh rate resolution before the start of the tax year, but this could be set late in the preceding tax year, thus not allowing the Government sufficient time to make the calculations that need to be made. In such cases it would be important for the Secretary of State to be able to deem a Welsh rate. This mirrors the position in the Scotland Act 1998, which includes a similar power in respect of the Scottish rate of income tax. The Bill needs to provide for the same contingencies in respect of the Welsh rate.
Jonathan Edwards (Carmarthen East and Dinefwr) (PC)
In Committee, there was some confusion as to whether Kay Swinburne, the Conservative Member of the European Parliament who represents Wales but lives in England, would be eligible for the Welsh tax rate. Can the Minister clarify that?
Mr Gauke
I fear that the hon. Gentleman may not recall that debate correctly. There is no confusion about the definition of a Welsh taxpayer. A Welsh taxpayer includes anybody who represents Wales or a Welsh constituency. I hope that repetition will provide some clarity for him, but the position was already clear.
Mr Gauke
All I can say is that Wales has a very good MEP in Kay Swinburne and I am delighted that she has been re-elected—[Interruption.] Indeed: by the people of Wales.
I return to the new clauses and amendments before us. However rare the circumstances that I set out a moment ago might be, the potential hardship that a delay in the calculation of entitlements would cause to individuals makes it essential that we make these amendments to cater for such circumstances.
Amendments 2 to 5 are consequential and relate primarily to the commencement of the new clause. As I said, these amendments are minor and technical, but they address an important set of circumstances that could have a serious impact on some of the most vulnerable in society. I urge all hon. Members to support them.
On Government amendment 1, clause 6 gives effect to the Silk Commission’s recommendation that the Welsh Government should be funded from a combination of a block grant and some devolved taxes, with the clause conferring the required competence on the Assembly to legislate for these devolved taxes. Amendment 1 slightly alters new section 116A of GOWA, inserted by clause 6, to correct the possibly misleading impression that those taxes listed in chapters 3 and 4 of part 4A are the only taxes for which the Assembly has competence. The Assembly already has competence for local taxation, which includes council tax and business rates, and this minor amendment clarifies the position.
On amendments 11 and 12, we have been working closely with the Welsh Government in relation to Welsh funding. In particular, the Government recognise that there has been convergence between the levels of funding in Wales and England since devolution, and that this is a significant concern in Wales. As a result, in October 2012 we agreed to implement a joint process to review the levels of funding in Wales and England in advance of each spending review. If convergence is forecast to occur during a spending review period, options will be discussed to address the issue in a fair and affordable manner, based on a shared understanding of all the available evidence.
In advance of the 2013 spending round, a joint review was therefore undertaken by the two Governments and the outcome set out in a written ministerial statement. The review determined that funding levels are not expected to converge during the period to 2015-16. In fact, an element of divergence is forecast to occur. The review also determined that relative funding levels in Wales are within the range recommended by the Holtham Commission. These arrangements ensure that we have a shared understanding of funding levels in Wales, and that a process is in place to consider options if convergence is forecast to resume. There is therefore a firm basis for proceeding with the new financial powers in the Bill, and I hope that when the opportunity arises, hon. Members will withdraw amendments 11 and 12, but I look forward to hearing them make their case.
I turn now to amendments 9 and 10. When it comes to the extent of income tax devolution in Wales, there is a careful judgment to make. Devolving an element of income tax would increase the financial accountability of the Assembly and the Welsh Government in three important ways. First, it would enable the Assembly to fund more of the spending for which it is responsible. Secondly, the Welsh Government’s budget would be directly linked to their economic decisions in areas such as education, skills, housing and planning. Thirdly, the Welsh Government would be able to vary the levels of tax and spending in Wales. However, creating the link between the Welsh Government’s decisions and their budget involves transferring some risk to the Welsh Government. Specifically, the Welsh Government’s budget would benefit if the income tax base grew faster in Wales than the UK average, but would be adversely affected if growth in Wales was slower.
The larger the proportion of income tax we devolve, the greater the potential impact on the Welsh Government’s budget. Devolving 15p of income tax would increase the size of these impacts by 50%, compared to devolving 10p. Devolving all income tax to Wales, which is the stated aim of amendment 9, would increase the potential impacts even further.
Jonathan Edwards
In the light of what the Minister has just said, why has the Prime Minister made a manifesto pledge, should there be a no vote in Scotland, to devolve 100% in the case of Scotland?
Mr Gauke
No, my right hon. Friend the Prime Minister has not made a manifesto pledge. The Strathclyde Commission has put forward recommendations, which will be considered in due course by my party for the next Parliament. I should point out with regard to the amendment tabled by the hon. Gentleman and his colleagues, which suggests replacing 10 percentage points with 100, that the effect would be to produce negative tax rates—a minus 60% tax, a minus 55% tax and a minus 80% tax. I am not sure that that was quite what the hon. Gentleman sought to do, but I appreciate that he was trying to devolve all income tax to Wales. I take the opportunity to point out that there is a technical problem with amendment 9.
There is a balance to be struck between risks and rewards. At this stage we see no evidence that suggests we should move away from the Silk Commission’s recommendation to devolve l0p of income tax.
Owen Smith
It was well worth waiting for the Secretary of State to intervene, but I think that the answer is no. Had he been paying attention, he would know that the First Minister has been very clear—[Interruption.] He says “Ah!”, but I think that there is no surprise in hearing that the First Minister has said that income tax-varying powers for Wales are not a priority, for all the reasons I have enumerated many times in this Chamber. If the Secretary of State was to debate some of these issues with me, rather than standing behind the Exchequer Secretary when it comes to all these detailed parts of his brief, perhaps we would have a clearer idea of his understanding of these issues.
Jonathan Edwards
Is the hon. Gentleman therefore concerned that the 22 local authorities in Wales can all put forward different levels of business rates?
Owen Smith
That is a tendentious and off-piste point, and I do not intend to busy the Chamber by bothering to respond to it.
We are still suspicious of the Government’s motives, not least because the leader of the Conservative party in Wales, Andrew R.T. Davies, has said explicitly that he wants to cut taxes for the wealthiest people in Wales. That is what we suspect that the Tory party would do if, heaven forfend, it were ever to assume power in Wales. We also still have suspicions that the Government are not really serious about doing this for Wales; in truth, we feel that it is more evidence that Wales is of interest to them only as a stick with which to try to beat the wider Labour party. We have heard this on health, on housing, and on education. Again, their perspective is to try to drive wedges into gaps that do not exist.
If the Government were serious about this, they would have undertaken some of the work that they have done in Scotland. When we last met here to debate this Bill on 6 May, we were anticipating a report by the Government—in fact, it was late by then—on the costs of implementing a similar scheme in Scotland. It did not come out on 30 March, as promised, but on 6 May—on the day, slightly unfortunately, of our debate. The report is entitled “Second Annual Report on the Implementation and Operation of Part 3 (Financial Provisions) of the Scotland Act 2012”. It contains welcome news, because it concludes that the total cost for Scotland will not be the £40 million to £45 million originally anticipated, but a mere £35 million to £40 million. That is what it will cost not Her Majesty’s Government but the Scottish Government to implement a separate Scottish tax regime.
One would have thought that if the Government were serious about implementing this, the cost to Wales should be measured, but the Treasury and the Wales Office have undertaken no such analysis. That is particularly troubling because of the point made by my hon. Friend the Member for Alyn and Deeside (Mark Tami), who is no longer in his seat. There is more complexity in implementing this scheme in Wales because of the greater population density on the border between England and Wales—on either side of Offa’s Dyke, or the line between life and death, as the Prime Minister refers to it. Just 4% of the Scottish population and 0.5% of the English population live within 25 miles of the Scottish border, whereas 48% of the Welsh population and fully 10% of the English population live within 25 miles of the Welsh border.
In Scotland, such measures would potentially affect just 450,000 people who travel back and forth across the border, whereas in Wales the number is likely to be closer to 6.5 million. The implementation costs for Wales are therefore likely to be greater, if not the volume of communication that the Government will have to undertake. Were they serious about this, we might have heard some analysis from them today, but we have heard not a jot.
Owen Smith
Absolutely, so perhaps the Secretary of State could come back to the Dispatch Box to explain why that connection was never made in Scotland, and why, in Scotland, the powers relating to the amount of borrowing were a function of the capital expenditure budget. Can he explain why that difference occurred? Obviously, he cannot, so once again, we know that the Government have simply made it up as they went along.
My last point deals with our fair funding amendments. We remain convinced that the Government do not intend to provide fair funding for Wales, and that any extension of devolution of taxation to Wales ought to be subject to a clear understanding, and agreement by the Welsh Government that the fair funding issue has been dealt with. The Exchequer Secretary acknowledged earlier that the issue of convergence has been accepted by the Government in the floor that has been put beneath the Barnett formula. The Holtham commission said that there was a shortfall of about £300 million—perhaps it is now as little as £150 million—in Wales, but we are convinced that the Welsh Government ought to be the arbiter of whether that fair funding test has been met. That is why we would encourage the Government to adopt our proposal of a back-stop power for the Welsh Government to determine whether fair funding is afforded to Wales.
Jonathan Edwards
Diolch yn fawr, Mr Deputy Speaker. It is a pleasure to serve under your guidance as we discuss this vital Bill, which will empower the Welsh Government with an element of fiscal responsibility for the first time. I would have hoped that all MPs representing Welsh constituencies were united in the view that one of our major roles as elected Members is to ensure that the Welsh economy is able to perform far better than it has in the recent past. Considering the incredible wealth inequalities that exist within the UK, with Welsh communities all too often at the bottom of the wealth league, I would have hoped that every political party was united in a mission to turn around the decades of neglect served upon Wales by successive UK Governments.
Far too many politicians in Wales rejoice at the underperformance of the Welsh economy, as it enables them to preach that Wales is far too poor, too small and too weak to succeed as an independent country. Their assertions are plainly ridiculous; Wales has all the ingredients to be a successful nation. We are a country that is rich in natural resources. Our people are highly talented, producing global leaders in science, academia, sport, culture and economics. The real question we should ask ourselves in Wales is: how do we find ourselves in such a predicament? Are we, as a people, content to languish at the bottom of every performance table and at the top of all poverty measurements?
If I was a unionist, I would be ashamed of the fact that gross value added per head in inner London is 12 times larger than that in west Wales and the valleys—the communities I represent. Westminster is not working for Wales, which is why my party believes that the potential of the people of Wales can be achieved only if our own democratic institution has the tools to move our country forward. History shows that changing the colour of the Government in Westminster will make no difference: the Westminster parties are all signed up to the same economic agenda that has failed Wales for far too long, and the people of Wales increasingly understand that. All polling indicates that they want the National Assembly empowered with more political responsibility. A poll by the Silk commission found that 64% believed that income tax should be devolved to the Welsh Government, so it is disappointing, to say the least, that the efforts of Plaid Cymru to improve and strengthen the Bill in Committee hit the infamous Westminster wall. In Committee, we endeavoured to preserve the integrity of the proposals of the Silk commission, which of course were the foundation for this Bill. Disappointingly, all the Westminster parties reneged on the cross-party agreement that had been made during the commission. The Bill undermines what was agreed in the Silk commission, cherry-picking from a comprehensive package. On more powers for Wales, the three Westminster parties are three peas in a pod, despite the protestations of their representatives in the National Assembly.
In Committee, Plaid Cymru put forward sensible and reasonable amendments that would have improved the Bill. Those included removing the damaging lockstep on the proposed income tax-sharing arrangement between the UK and Welsh Governments; inflation-proofing the borrowing powers included in the Bill; and empowering the Welsh Government to issue bonds and tax credits, as has been done in Scotland. We also tabled a series of constitutional amendments on matters as simple as enabling the National Assembly to determine its own name; to set its own number of elected Members; and to determine its own electoral system. Needless to say, none of the amendments was accepted by the UK Government and neither would Labour offer its support, preferring instead to table wrecking amendments that would further dilute the effectiveness of this Bill. I suspect that has something to do with the anti-devolution cabal currently ruling the roost in the Labour Westminster shadow Wales Office.
Wayne David
Can the hon. Gentleman answer this simple question: are he and his party in favour of tax competition and the race to the bottom among the nations and regions of the United Kingdom?
Jonathan Edwards
Enabling the Welsh Government with tax-raising powers would incentivise the Welsh Government to improve the Welsh economy. At the moment, they are a spending body, in essence; there is no incentive for them to improve the economy. That is why these fiscal powers are so important.
Mr Harper
It might help the House if we thought for a moment about what Opposition Members mean when they talk about a “race to the bottom”. They mean that we allow hard-working families and other people to keep more of their own money so that they can make decisions about spending it, rather than having it taken off them and spent by the Welsh Government. That is what Opposition Members mean and it indicates all too clearly what they are about.
Jonathan Edwards
Well, that is the hon. Gentleman’s position. But if the Labour party’s position were to hold true in Wales, there would be a uniform business rate across the 22 Welsh local authorities. There seems to be a slight misunderstanding in Labour’s position.
Alun Cairns
Extending that logic beyond business rates, the same would apply to council tax rates. We have seen a 12% increase in council taxes in Wales since 2010, whereas there has been a broad freeze here in England.
Jonathan Edwards
The hon. Gentleman makes my point for me. He says that there are 22 local authorities in Wales, all with fiscal powers to change council tax rates and non-domestic rates. The Labour party does not seem to think that is a problem in Wales in terms of tax competition.
In my opening remarks in Committee, I also said that events in Scotland would supersede the second part of the Silk commission’s work and probably this Bill. Although it might appear that I have fortune-telling abilities, I reassure you, Mr Deputy Speaker, that I have yet to acquire such powers. Earlier this month, the Tory Strathclyde commission recommended that in the increasingly unlikely event of a no vote in Scotland in September, the Scottish Government should be given full income tax powers, and powers over VAT and the welfare system. The proposed new powers would make the Scottish Government responsible for gathering 40% of the money they spend. Crucially for this Secretary of State and this Bill, the Prime Minister has fully backed the commission’s proposals and promised to include them in the Conservative manifesto for next year’s general election. Contrary to the Minister’s remarks, the Prime Minister said that there was no reason why these powers should not be transferred to Scotland after the general election. Ruth Davidson, the leader of the Conservative party in Scotland, has said that this was going to be in its 2015 manifesto. Therefore, Treasury Ministers’ revelations might be revealing in terms of the debate in Scotland over the next few weeks.
The Secretary of State finds himself in an uncomfortable position, as this Bill represents the Tory offer for Wales. The people of our country can easily compare and contrast what is on offer for Wales with what is on offer for Scotland. Furthermore, the BBC is reporting that all three Westminster parties are pledging an agreement of joint travel, promising more powers for Scotland. Yet, this Bill does not even take us in Wales to where Scotland is now. Wales is not a second-class nation and there is no more powerful message in Welsh politics than equality with Scotland. This Bill is far from being a settlement that will last a generation; if the Tories want to survive in Wales next year, this Bill is unlikely to make it past the Lords in the autumn.
Only last week, none other than the Financial Times stated in its editorial that the UK should move to a federal model, noting that
“the status quo is not an option.”
It added that Wales should be included in proposals for full fiscal and policy autonomy. Today, we will endeavour to put forward amendments that will strengthen the Bill considerably. As the Westminster parties have decided to torpedo the Silk commission, we will also put forward amendments that go beyond its recommendations and reflect the rapid change of the constitutional debate within these isles. We will seek to divide the House on our later amendments in the next group, so that the people of Wales can contrast Plaid Cymru’s ambition for Wales with the apathy of the Westminster parties.
First, however, I will speak to our amendment 9, which is a straightforward, probing amendment. It would make the Welsh Government responsible for 100% of the income tax revenue gathered in Wales, rather than having the meagre 10%-90% split income tax-sharing arrangement on offer in this Bill. My Plaid Cymru colleagues and I have already tried to maintain the integrity of the original cross-party Silk commission recommendations. We tabled relevant amendments to the Bill in Committee, but they were either voted down or abstained on by Labour MPs who would not support what their colleagues in the National Assembly had been saying.
I mentioned the fact that the Tory Strathclyde commission has reported its conclusions. It recommended 100% devolution of income tax to Scotland. The report was fully endorsed at the highest levels of the Conservative party, with the Prime Minister himself giving it his full backing and saying that its recommendations would be included in the Conservative manifesto at the next UK general election. I need not point out to the Secretary of State, therefore, that what his party is offering to Scotland reveals what is on offer here to be completely behind the times.
Wayne David
Is there not a contradiction between what the hon. Gentleman is now arguing for and his total support for the Silk recommendations? Surely he must choose one or the other.
Jonathan Edwards
I appreciate the hon. Gentleman’s intervention. As I have said, we endeavoured to preserve Silk during the Committee stage, but our attempts were completely torpedoed by the Government and by Labour. We are therefore saying that we are going to go beyond Silk in the remaining stages of the Bill.
Even the Financial Times says that the UK should move to a fully federal constitution. As I said earlier, it stated in its editorial on Monday last week:
“A shift to far greater fiscal devolution north of the border would have to be mirrored across the rest of the union. It would require a whole new constitutional settlement whose purpose would be to create a more federalised Britain...First, Wales and Northern Ireland would need to gain similar powers to those in Scotland to raise, and vary, tax rates.”
Crucially, it ended by saying that
“the creation of a new constitutional settlement...is not something that can be left on hold”.
Last week we also learned not only that 55% of the peoples of the UK want greater fiscal and policy powers for Scotland, but that 54% want Wales to have those same greater freedoms, according to an ICM poll commissioned by the Evening Standard.
We are moving towards a far looser Union, and that is why this Wales Bill is a major missed opportunity. I have always said that the powers on offer in the Bill would be completely overtaken by events in Scotland and I have been vindicated, not least by the fact that there is an increasing likelihood of Scotland voting yes in September, thereby making the Bill look like a sticking plaster put over a burst dam.
All the Unionist parties are now falling over themselves to offer increased devolution in Scotland, despite having previously said that that should not be an option in the referendum. They must be kicking themselves that they did not include it as a third option on the ballot paper. Who will believe a word they say when they promise jam tomorrow? I would say, based on past evidence—and on what the Exchequer Secretary to the Treasury has said today—that the only way for the people of Scotland to guarantee more powers for Scotland is to vote for independence.
I would draw the people of Scotland’s attention to the Wales Bill. Here we have a Government who set up a cross-party commission to bring forward a consensus which carefully put together a fully endorsed package of reforms. The Conservatives and the Liberal Democrats then reneged on their word by cherry-picking and watering down the recommendations of the cross-party commission. They added restrictions and caveats further to render the powers unusable via mechanisms such as the lockstep. The UK Government’s attempt to strangle the cross-party Silk commission’s original recommendations by adding caveats, restrictions and locksteps should be a salutary reminder to the Scottish people of the sincerity of Westminster’s promises regarding further devolution. If the Wales Bill is anything to go by, the Government here will make a big headline-grabbing announcement promising more devolution, only to reveal a paltry offer when the surface is scratched away.
Wayne David
I take the hon. Gentleman back to his comments a moment ago, when he said he was supporting Silk. He is now saying that he is not supporting Silk. Is he behind Silk or not? Does he want to see those proposals taken much further? He cannot have his cake and eat it; he must decide one way or another.
Jonathan Edwards
I am grateful to the hon. Gentleman for that second attempt, but I think I answered his question when he first intervened on me.
It is interesting that Labour Front Benchers have only now tabled amendments to the Bill to give Wales control over 15% of income tax revenue gathered in Wales. That proposal is in amendment 10. Admittedly it is better than the 10% on offer in the Bill as it stands, but it is still meagre and shows a lack of ambition and vision for Wales. That is symptomatic of the Labour Government in Cardiff and their puppet-masters here in Westminster. Of course, 15% is better than 10% and we shall be supporting the amendment if it is pressed to a vote, especially as it does not include the lockstep-plus mechanism I referred to in Committee. However, it still reflects Labour’s lack of dynamism. Why only 15%? That figure seems to have been chosen simply because it is ever so slightly better than the Tory and Lib Dem offering.
I see that Labour’s other amendments are more concerned with delay, obfuscation and preserving its own positions than with trying to get the best deal for Wales and its economy. On the vote in Committee to remove the lockstep restriction, Labour abstained, despite the Labour First Minister and Finance Minister having said that it should be removed. Where is Labour’s consistency? Again Labour Members say one thing in Wales and do another at Westminster. They are now saying that Wales should have control over 15% of income tax revenue, yet their amendment says nothing about the removal of the lockstep.
When the Westminster Government announced in November last year that Wales would be getting new powers, they stated that the powers would make Wales an “equal partner” in the UK. Nothing could be further from the truth. The Secretary of State for Wales has previously argued that Wales must be given “equal respect with Scotland”, yet his actions run completely against that. His party is effectively offering Scotland full income tax devolution, yet he is maintaining the lockstep in the Bill for Wales and proposing that we should have control of only 10% of the income tax revenues raised in our country.
In conclusion, I want the same powers for Wales as the other nations of the British state either have or are being offered. If the main party of Government here at Westminster has full income tax devolution for Scotland as its party policy, why on earth should Wales not have those same powers? The changing context of the Scottish independence referendum debate vindicates what I have said all along—namely, that its rapid development will ensure that the powers on offer in the Bill will not be the settlement for a generation that the Government are suggesting.
The Welsh economy needs those powers now, never mind in three years’ time—the earliest point at which they would come on stream. Ultimately, the powers on offer in the Bill pale into insignificance in the context of how the constitution of the British state will alter in the coming years. That should be noted by this Government and all the parties, and we should begin with full devolution of income tax, so that the Welsh Government can determine their own bands and rates.
Mr Gauke
I shall briefly respond to a number of the points raised in the debate. The first related to the cost of implementing the Welsh rate of income tax. HMRC is looking to develop a specific estimate for that cost but, because the timing of the introduction of a Welsh rate is uncertain and because it would depend on the outcome of a referendum in Wales, it is difficult to do so at this time.
I want to make two comments in regard to the comparisons with Scotland. First, the Scottish population is obviously larger than the Welsh population, so that will reduce some of the costs. Secondly, however, a counteracting element is that the number of people living close to the border might result in an increase in the number of people contacting HMRC to seek clarification. The hon. Member for Pontypridd (Owen Smith) mentioned the concern about the number of people working in Wales but living in England, and vice versa. We must remember that the definition of a Welsh taxpayer is based on where they live, not where they work. For the vast majority of people, it will be clear where they are, so we should not overstate those costs. As I have said, however, it is difficult to come up with a precise number at this point.
On the Strathclyde commission, I have made it clear that that will relate to what happens in the next Parliament. We certainly welcome Lord Strathclyde’s recommendations; there is much to take from them.
Jonathan Edwards
Given the comments of the Prime Minister and, especially, of the leader of the Conservative party in Scotland, does the Minister think that Ruth Davidson was being rather exuberant—for want of a better word—in proclaiming that those measures would definitely be in the manifesto?
Mr Gauke
I would say to the hon. Gentleman that what the Prime Minister says will be in the manifesto tends to be in the manifesto. That is a fairly wise approach.
The Opposition have set out their views and I think we have finally got some clarity. I think that Labour’s position is that we should not devolve any element of income tax to Wales, but that devolving 10p is not high enough and it should be 15p. In other words, it is saying that 15p is better than 10p, but nothing is better than anything. Labour also supports the Bill because it wants the Welsh Government to have access to borrowing powers that come as a consequence of having independent revenue streams, but it does not support the Welsh Government having access to the biggest independent revenue stream that might be available, which is income tax. I hope I have characterised Labour’s position correctly. It is simultaneously both for and against, on at least two different grounds.
With those points of clarification, I hope that the Government new clause and amendments will be accepted and that the Opposition amendments will not be pressed to a Division.
Question put and agreed to.
New clause 1 accordingly read a Second time, and added to the Bill.
New Clause 2
Infrastructure guarantees in Wales
‘Her Majesty may by Order in Council provide for the transfer of responsibility for providing infrastructure guarantees in Wales to the Welsh Ministers.’—(Jonathan Edwards.)
Brought up, and read the First time.
Mr Deputy Speaker (Mr Lindsay Hoyle)
With this it will be convenient to discuss the following:
New clause 3—National Assembly ability to hold binding referenda—
‘Her Majesty may by Order in Council provide for the transfer of responsibility for holding binding referenda to the National Assembly for Wales.’
New clause 4—National Assembly for Wales: reserved powers—
‘(1) The Secretary of State will lay a report before each House of Parliament on the further legislative steps needed to move to a model of reserved powers for the National Assembly for Wales and shall lay the report before each House of Parliament within nine months of this Act receiving Royal Assent.
(2) Part 2, except the referendum-related provisions and sections 19 and 20 shall not come into force until the report has been laid in accordance with subsection (1).’
Amendment 8, in clause 19, page 22, line 8, at end insert—
‘(1B) Welsh Ministers may set their own capital expenditure priorities.”
This amendment and amendment 5 enable the new clause inserted by new clause NC1 to come into force by order of the Secretary of State if the majority of voters in a referendum held under clause 11 vote in favour of clauses 8 and 9 (the income tax provisions) coming into force.
Jonathan Edwards
We should be using this Bill to empower the Welsh Government—with an arsenal of powers to enable them to intervene in the Welsh economy. During our discussions on the Bill, we have debated fiscal powers and different elements of borrowing powers. However, we have not debated one lever that could be of enormous use to the Welsh Government and that might not necessarily cost a penny, but that would allow them to provide security to various infrastructure projects that might not take place without such backing.
New clause 2 would allow the Welsh Government to issue financial guarantees for private projects that they choose to support in such a manner. Government guarantees are useful for companies that are then able to draw down private investment to fund their projects. As I have said, these guarantees would cost the Government nothing, unless the project fails.
Effectively, guarantees mean that the Government financially underwrite a project. In many cases, guarantees are more useful for helping projects get off the ground than borrowing powers. It is a simple measure that would help the Welsh Government kick-start infrastructure development in Wales, boosting jobs and growth.
I need only quote what the Chief Secretary to the Treasury had to say about the importance of guarantees when he launched the most recent outline of UK Government-backed projects:
“The offer of a guarantee is helping to get projects going…There is a lot of infrastructure happening in this country because of this programme.”
The Institute of Civil Engineers said that the guarantee scheme had enabled
“viable projects to secure finance in difficult market conditions…It is an excellent example of government making creative use of its resources to get projects moving,”
Last October, the UK Government announced their £40 billion guarantee scheme. Projects earmarked for support included a £300 million biomass energy generation plant in Avonmouth in Bristol; a £400 million gas-storage facility in Islandmagee in County Antrim; two gas-fired power plants in Lincolnshire and Essex; mixed-use development of homes, offices and shops in Aberdeen; a wind farm on the Forth estuary; a renewable energy port facility in north Lincolnshire; a low-carbon fuel plant for commercial vehicles; development of the university of Roehampton campus in Surrey; a wood-fired generation plant in Tilbury in Essex; relocation of Northampton university; a Five-Quarter Energy gas plant in the north-east of England; and ethane storage facilities at the Ineos Grangemouth plant near Falkirk in Stirlingshire.
If we look at the UK Government’s list of prequalified projects, which was updated on 16 June, we will see that none of those projects is in Wales. Despite heady announcements from the UK Government about “co-operation agreements” and the inclusion in the national infrastructure plan of projects in Wales, not one has even reached the prequalified stage, according to the publicly available list.
The UK Government guarantee scheme should not be confused with the national infrastructure plan, which is a wish list of future projects. The plan does include the proposed Wylfa B, with a promise of UK Government financing help following planning approval. The national infrastructure plan of December 2013 mentions
“a new cooperation agreement with Hitachi and Horizon with the aim of being able to agree an in-principle guarantee by the end of 2016 to support the financing of a new nuclear power plant at Wylfa, subject to final due diligence and ministerial approval.”
It has, therefore, still not reached the prequalified stage.
Returning to the UK Government guarantee scheme, the eagle-eyed will notice that none of the prequalified projects is located in Wales. Therefore, the Treasury is using Welsh taxpayers’ money to underwrite projects in other parts of the UK, and Wales has so far seen precious little, despite being desperately in need of better infrastructure to drive forward the Welsh economy. Driving forward the Welsh economy would be a real effort to rebalance the UK economy geographically, yet this Government have no real interest in doing so. They should either bring more infrastructure projects to Wales, or give the Welsh Government more tools to do so. I and my Plaid Cymru colleagues believe that it is for the people of Wales, through their democratic institutions, to decide which infrastructure projects to underwrite and where.
Jonathan Edwards
The point I am making is that all the investment seems to be on an east-west basis, rather than on a north-south basis.
Hywel Williams
Apropos of that intervention, I would have thought that the hon. Member for Alyn and Deeside (Mark Tami) was rather more interested in developing the A55 than the M4.
Jonathan Edwards
I am sure that that very useful intervention will be noted by the constituents of the hon. Member for Alyn and Deeside (Mark Tami).
Plaid Cymru recognises the issue of congestion on the M4 corridor around Newport and wants investment to take place. However, the current Labour Welsh Government’s preference for a new M4 to the south of Newport at a cost of £1 billion is a disproportionate solution to the amount of congestion. According to Friends of the Earth and Professor Stuart Cole, the Welsh Government consultation documentation overestimated traffic growth in 2012 and 2013. The flows were lower than the Welsh Government predicted, so they do not have a strong enough statistical base on which to justify such a huge financial and environmental cost. As the Federation of Small Businesses has pointed out, committing the vast majority of Welsh borrowing capacity and money from outside the borrowing limit in the Bill to one single project is misguided and does not serve the whole of Wales or the whole of the Welsh economy.
Paul Murphy (Torfaen) (Lab)
I am listening with extreme interest to the hon. Gentleman’s points. It seems to me that Plaid Cymru is therefore actively opposing the development of the relief road around the M4, which he will have to explain to those who vote for Plaid Cymru in Gwent and Glamorgan.
Jonathan Edwards
I have huge respect for the right hon. Gentleman. I will outline two alternative proposals that would be a better use of the borrowing capacity of the Welsh Government than blindly following what the Treasury wants.
The new M4 will not be a quick and decisive solution, despite what its supporters say. It will not be completed until 2031, according to the Welsh Government. The £380 million blue route, an upgrade of the A48 corridor that includes flyovers, would represent better value for money and would avoid the environmental damage caused by building on the Gwent levels to the south of Newport. The road upgrade would be accompanied by modern traffic management methods, such as signage to direct traffic flows between the A48 and the existing M4, depending on congestion levels. The blue route is future-proofed until 2035 and, if needed, it could be developed further beyond 2035. Money saved by developing the blue route could be invested elsewhere in Wales. In our previous transport consultation, Plaid Cymru identified transport needs in north, mid, west and south Wales. Above all, Plaid Cymru’s proposal to support the blue route is more innovative and balanced than the proposal with which the Labour and Conservative parties are trying to push ahead. Wales must not get tied into the UK Government’s deal on the M4.
Ultimately, although a new route is needed to relieve the pressure on the M4, what is really needed is the development of a metro system for south-east Wales and the valleys. Early estimations have put the costs at about £1 billion. The reality is that the M4 is used as a local road in south Wales, as the right hon. Member for Torfaen (Paul Murphy) well knows: 40% of journeys made on the M4 in that area are local ones of less than 15 miles. This means that—in one act—commuter journeys could be transferred to a metro system to relieve the pressure on the M4. The great thing about a metro system is of course that, after the initial outlay, a ready stream of revenue is provided through ticket sales that could be used in part to repay the initial expense and reinvest in services and upkeep. The success of the Newcastle and Tyneside metro could be repeated in south Wales if we had the necessary vision.
In conclusion, it appears that the Westminster Government are intent on binding the Welsh Government’s hands on how they utilise the borrowing capacity. The M4 relief road is a case in point. Unfortunately, the current Labour Welsh Government lack the ambition and vision to do something different, and are blindly following the UK Government’s lead. Amendment 8 would make sure that a future Plaid Cymru-led Welsh Government were not bound in the same way but could prescribe more intelligent solutions to infrastructure problems and provide a boost for the whole of the Welsh economy, rather than just the primary corridor routes in and out of Wales that concern the Westminster Government. With your permission, Mr Deputy Speaker, I will therefore definitely push amendment 8 to a vote at the appropriate time.
Paul Murphy
It was interesting to hear the points made by the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards), but I want to concentrate on my party’s new clause 4 on reserved powers. I very much welcome the new clause, which relates to the laying of
“a report before each House of Parliament on the further legislative steps needed to move to a model of reserved powers for the National Assembly for Wales”.
[Interruption.] Perhaps I should give up for a second while negotiations are going on behind the Speaker’s Chair.
I repeat that I support new clause 4 on reserved powers for Wales. I remind the House that the Leader of the Opposition, who was in north Wales for the Labour party conference some months ago, said that the next Labour Government would introduce a
“new Government of Wales Act, with powers assumed as devolved to Wales, unless specifically reserved. Bringing Wales into line with Scotland—modernising and advancing the devolution settlement for generations to come.”
I do not see why the Government, and particularly the Secretary of State for Wales, should reject such a proposal. In an earlier incarnation, I was probably more sceptical about devolution than even he is now, but the world changes. As the hon. Member for Carmarthen East and Dinefwr mentioned several times, the world has changed with regard to what might or might not happen in Scotland in a few months’ time. Let us assume, as I hope will be the case, that the voters of Scotland vote no. If that happens, we know that the Government—not the Opposition—will make far-ranging changes to Scotland’s constitution, with its Government being given extra powers as a consequence of his Government’s commitments. The Secretary of State also knows that it is quite likely that a future Labour Government would agree to such proposals. I therefore cannot understand why he is opposed to reserved powers for Wales only a matter of weeks before the possible introduction of a new Bill for Scotland that would give extra powers.
That argument is simple enough, but in a sense it goes back to our previous debate about borrowing. The Treasury Minister tried to make the point, rather heavily I thought, that borrowing could not be greater in Wales because we did not have sufficient streams of income. However, the shadow Secretary of State pointed out that Scotland and Northern Ireland were given borrowing powers for different reasons. Therefore, it is strange that, within Government, Wales is going that way and Scotland is going another way. There is no reason why that should be the case.
Stephen Crabb
The hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards) said that the purpose of amendment 8 is to ensure that the Welsh Government can use their new borrowing powers to invest in projects that they, rather than Her Majesty’s Treasury, want to take forward. I should point out that the Bill already provides Welsh Ministers with complete flexibility to decide how to use their borrowing powers, in much the same way that they have complete flexibility regarding their resource and capital budgets. I wonder whether the hon. Gentleman was confusing the requirements for the early borrowing powers with the wider borrowing powers the Bill sets out. Regarding the former, he is right that there is a specific agreement between the Welsh Government in Cardiff and the UK Government—specifically the Treasury—to facilitate early movement on a strategic project of importance to the Welsh nation and economy: namely, the M4 upgrade. So, rather than it being a project imposed from above by the UK, it is very much demand-led from within Wales.
Jonathan Edwards
The Bill as I read it states that the Treasury has the final say on what the Welsh Government will be able to use those borrowing powers for, and the UK Government have made it crystal clear that their priority is the M4 relief road.
Stephen Crabb
There is a line in the Bill that refers to Welsh Ministers being able to borrow with the approval of the Treasury. That merely refers to the overall borrowing limit, which the Treasury will agree with the Welsh Government. It is not about the Treasury signing off on individual projects. We want to give the maximum possible freedom to Welsh Ministers to use their borrowing powers to decide on exactly the infrastructure projects they want to take forward. I am very happy to continue this discussion with the hon. Gentleman another time, but that is the situation.
On new clause 2, the Welsh Government already have the power to provide guarantees in relation to their devolved responsibilities. Section 70 of the Government of Wales Act 2006 states that
“Welsh Ministers may give financial assistance (whether by way of grant, loan or guarantee) to any person engaged in any activity which the Welsh Ministers consider will secure, or help to secure, the attainment of any objective which they aim to attain in the exercise of any of their functions.”
So there are no handcuffs or binds on Welsh Ministers. For example, they already have the powers to support the Circuit of Wales with a guarantee, should they choose to do so. Conversely, the UK Government would not be able to provide a guarantee under the terms of the Infrastructure (Financial Assistance) Act 2012 as the Circuit of Wales project does not meet the infrastructure criteria set out in the legislation.
Furthermore, it is the size of the UK Exchequer that enables the UK Government to guarantee substantial infrastructure projects, such the Wylfa Newydd nuclear plant that has been guaranteed with Hitachi. Wales, therefore, benefits from UK Government guarantees in relation to energy and other infrastructure, while the Welsh Government can decide how to provide financial support to help deliver their own devolved responsibilities.
Jonathan Edwards
I can base my position only on the list of prequalified projects, which was last updated by the Government on 16 June. I have a list here of a page and a bit, which has not a single Welsh project on it.
Stephen Crabb
All I can do is reiterate the information that I have received from the Treasury that there are indeed Welsh projects at the prequalification stage. We are currently talking about infrastructure guarantees to Welsh businesses and other companies that want to invest in Wales. I will happily write to the hon. Gentleman with further information to clarify the situation. On that note, I hope that Members agree that the existing arrangements and the Bill before us are therefore optimal and will withdraw amendment 8 and new clause 2.
I turn now to new clause 3, which would allow the transfer of responsibility for referendums to the National Assembly for Wales. I am afraid that with this new clause, we once again find Plaid Cymru trying to shoehorn far-reaching and fundamental changes to the wider devolution settlement for Wales into this specific Bill, which takes forward the recommendations of part 1 of the Silk commission.
Referendums, such as the one this Bill provides for, are intended to allow the electorate to decide on key constitutional issues. Competence for the conduct of referendums, except in very exceptional circumstances, such as those around the Scottish independence referendum, rests at a UK level. I have seen no evidence yet to suggest that there should be any change to the existing devolution settlement.
It is also worth noting that the Silk commission made no recommendations about that issue when it examined the devolution settlement in its second report. Furthermore, there have been no calls from the Welsh Government or the Assembly for this competence to be transferred.
This Bill is focused on delivering new fiscal powers to Wales that were recommended by the Silk commission in its first report, and new clause 3 forms no part of that. I therefore ask Opposition Members to withdraw this amendment as well.
Finally, I turn to new clause 4, which bares a striking resemblance to an amendment tabled by Opposition Members in Committee. The new clause seeks to postpone the commencement of part 2 of the Bill, apart from the referendum provisions and clauses 19 and 20 in relation to borrowing powers, until the Secretary of State has laid a report before both Houses of Parliament setting out the steps needed to move to a reserved powers model of devolution. That report would need to be laid within nine months of the Bill’s enactment, generously giving the Government three months longer than the Opposition permitted in their Committee stage amendment.
With these new clauses, Labour Members once again seek to connect directly the commencement of the parts of the Bill that will devolve tax-raising powers to the Assembly with one of the most far-reaching of the Silk commission’s part 2 recommendations. Other hon. Members have described that as a delaying tactic; some have even described it this afternoon as a wrecking tactic. It reveals yet again the Welsh Labour party’s opposition to the proposals in the first Silk commission report to devolve income tax powers to Wales. It is merely a smokescreen for Labour Members’ deep and widely held scepticism and suspicion—they have used those words this afternoon—and they fundamentally oppose fiscal devolution, which is the next important stage of devolution for Wales.
As this Government have made clear on a number of occasions, a move to a reserved powers model would be a fundamental change to the devolution settlement in Wales. We have also made it clear, as did the Silk commission, that this should be a matter for party manifestos at the next election. Therefore, there is nothing to be gained by requiring the Government to report to Parliament on the legislative steps needed to move to a reserved powers model.
Once again, the Labour party seems to be mired in confusion about its position in relation to the Silk commission’s recommendations in the part 1 and part 2 reports. As is typical of the Labour party, it wants borrowing powers, but it does not want the means to pay back the money borrowed. It does not want true accountability for the devolved Government in Wales; it just wants public spending on the never-never. Just such a reckless attitude by the Labour party got this country’s finances into such a mess in the last Parliament.
This coalition Government have no intention of returning to that sorry state of affairs. We are committed to devolving the tax and borrowing powers in the Bill as soon as possible, so that the Welsh Government can become accountable for raising the money that they spend and for repaying the money that they borrow. I therefore invite Opposition Members to consider the full implications of new clause 4 and not to press it.
Jonathan Edwards
We have had an interesting debate on this group of new clauses and amendment 8, three of which Plaid Cymru tabled: first, to allow the Welsh Government to issue a guarantee to enable them to boost economic development; secondly, to release the handcuffs on borrowing powers to enable them to choose their own priorities—the borrowing capacity in the Bill will be more or less completely consumed by the M4 project that the Treasury favours; and, thirdly, to hold binding referendums based on the Edinburgh agreement.
Labour tabled new clause 4. Obviously, as a party, we fully support the move to a reserved powers model for Wales. It is a pity that the Labour party decided to spoil the new clause with a second element, which is obviously a delaying tactic. The Welsh economy needs these powers now, rather than waiting for a report. It is obviously a wrecking new clause, typical of Labour’s attitude during progress on the Bill in all its various stages. Plaid Cymru is not a tribal party—we vote as we see fit—but we cannot support new clause 4 because of the wrecking element in its second part.
With your permission, Madam Deputy Speaker, I intend to press amendment 8 to a vote at the appropriate time, but I will not press new clause 3 and ask leave to withdraw new clause 2.
Clause, by leave, withdrawn.
New Clause 4
National Assembly for Wales: reserved powers
‘(1) The Secretary of State will lay a report before each House of Parliament on the further legislative steps needed to move to a model of reserved powers for the National Assembly for Wales and shall lay the report before each House of Parliament within nine months of this Act receiving Royal Assent.
(2) Part 2, except the referendum-related provisions and sections 19 and 20 shall not come into force until the report has been laid in accordance with subsection (1).”—(Nia Griffith.)
Brought up, and read the First time.
Question put, That the clause be read a Second time.
Mrs James
I support having both first-past-the-post and regional Assembly Members. They add a great deal to the Assembly and, as I have already said, the system is fairer and proves that people who stand for smaller parties get a voice. That cannot be opposed, but I am opposed to people standing on both lists.
Mrs James
I want to finish, because I promised to be brief and I want to keep my speech tight.
It is no wonder that the public see us politicians as a bit devious and above and beyond the basic rules, because we always apply rules that suit us. That is what the public see this as, purely and simply: politicians having a second bite of the cherry when they do not. I ask the Secretary of State to reconsider the amendment and to consider our proposals seriously.
Owen Smith
I echo the Secretary of State’s thanks to colleagues from all parts of the House who have engaged in debate and scrutiny of this Bill on the Floor of the House over what feels like quite a long period of time. We have had a constructive set of discussions, which have revealed some of the divisions between Ministers and their Conservative colleagues in the Welsh Assembly and exposed the clarity of the Opposition’s support for devolution.
I join the Secretary of State in thanking Paul Silk and the members of his commission for preparing the groundwork for this Bill, and also for reflecting on the future of Welsh devolution, not just in respect of fiscal powers but beyond that. I am sure that we will debate the measures in the second part of the Silk report at some future stage.
Labour supports much of this Bill, and will not oppose it on Third Reading. In particular, we support the Government’s decision to afford Wales borrowing powers. I have said on many occasions in this House that, in not being able to borrow, Wales has been at a disadvantage compared with other parts of the UK. We have acknowledged that that was a mistake of previous devolution legislation. Wales is a legislature that should be able to borrow in order to invest in vital infrastructure. It is welcome that the Government have recognised that, and are moving to afford Wales those borrowing powers. It is a shame that the borrowing powers are not the same as those that will be enjoyed in Scotland, but, overall, we are supportive of the measure.
We are supportive, too, of the proposal to devolve stamp duty, land tax, landfill tax and other minor taxes. Business rates are also to be fully devolved to Wales. We look forward to the Welsh Government, with their progressive values, using those powers in a fair and progressive manner to deliver, hopefully, innovative and progressive solutions for Welsh people in respect of land and businesses taxes.
I also welcome the move towards a more symmetrical position between Wales and Scotland. Wales is not Scotland, and the history of our two countries is very different. The way in which we came to support devolution is very different, and I have often said that. That asymmetry can be explained by our different histories and the different degrees of support for devolution in Wales and Scotland at the point of the initial referendum. However, that position has changed, which could be due in part to the impending referendum in Scotland. The Secretary of State rightly referred to it as a momentous moment for British democracy and for our country. It is right that we consider how things have moved, and why people’s support for Welsh devolution has strengthened. It seems increasingly clear to us, and also to the Government, that a more symmetrical system of devolution might add to the stability of the devolution settlement and diminish the cause of separatism.
We are disappointed that the Government have failed in this Bill to undertake any serious analysis of how the costs and benefits of tax devolution will be weighed for Wales. Any Government who were truly serious about affording these powers to another Parliament and Assembly should have undertaken that sort of analysis. Indeed, this Government did undertake that sort of analysis in respect of the Scottish proposals to take on taxation powers. I cannot therefore understand why the Government and the Secretary of State for Wales in particular have refused to insist that colleagues in the Treasury undertake a similar measure for Wales.
The argument has been made that a considerable gap is now expected between the passing of the Bill and the adoption of these powers, but there was a considerable gap—three years or so—between the passing of the Scotland Act 1998 and the uptake of its powers, and that did not prevent the Government from seeing the necessity of undertaking the work in advance.
It is also disappointing that the Government have failed to offer any real guarantee about whether Wales will be better or worse off under these provisions. We still do not know whether the block grant will be eroded over time. Initially, it will be protected, but the Exchequer Secretary told us again here today that if Welsh gross domestic product and revenues grew more slowly than those of England, Wales would have less money over time to spend on vital public services. Given the problems of meeting the demand for public services in Wales because of our specific demographics and history, and of a £1.6 billion cut to the Welsh budget since the Conservatives came to power, it would be better for the Government to give some sort of guarantee to the Welsh people that they would not be worse off.
Jonathan Edwards
Does not that point indicate that the hon. Gentleman has no faith in the Labour party’s abilities to improve the Welsh economy while in control of the Welsh Government ?
Owen Smith
No, it does not indicate that at all. It indicates that we are not fantasists. We understand the fiscal reality of Wales, which expends £35 billion a year in public expenditure and raises £17 billion a year in tax revenues, leaving a very large shortfall. We understand that that shortfall is made up by virtue of our being part of a generous Union that shares risks and pools rewards across the UK. Our fear is, of course, that Plaid Cymru Members wish to use this—honourably, from their perspective, as they believe in a separate, independent Wales—to fuel their cause of separatism. We are not interested in fuelling their separatist cause. That is why we have asked questions about the Bill.
We are concerned that the Government have failed to take this opportunity today to use the Bill to take forward the reserved powers model. For the reasons that I mentioned earlier, we think that it would be beneficial for Wales to be placed on a similar footing to Scotland in respect of the devolution model, and the Government could have taken that step in the Bill.
The biggest failing relates to the measuring of benefits and costs to Wales. We will now need to rely on noble Members of another place to undertake further scrutiny of the long-term impact on Wales of the volatility of tax revenues and of the costs of establishing an Exchequer function for Wales. The reason why the Government have not undertaken such scrutiny is that, I fear, they are not terribly interested in Wales. If they were more interested in Wales, they would not have implemented £1.6 billion-worth of cuts. If they were interested in Wales, they would not constantly mislead the public, as we have heard this evening, and seek to divide and rule in Britain when it comes to the respective merits of our health care systems, housing, education and all manner of other things where the Secretary of State chooses to bad-mouth Wales. If they were genuinely interested in assisting Wales, he would have demanded that the Exchequer Secretary undertake a similar analysis to the one that he undertook with Scotland.
The bit of the Bill in which the Government are most interested—as I suspect are nationalist hon. Members—is the bit on dual candidacy. We have heard eloquent and compelling arguments from Labour Members as to why it is right that we banned dual candidacy. It is not right for losers to be turned into winners, as was the case in Clwyd West, in the Secretary of State’s seat. The public do not understand how political alchemy is used to transform people who have been rejected under first past the post, and to put them back into office via the back door. The Secretary of State and his colleagues have wholly failed to explain why they are doing that, other than for narrow party political advantage.
It is fair to say that we have not had many laughs here in the last couple of days, debating this rather dry and dusty devolution Bill. One thing that has amused me is the attempt to paint my party, and indeed me, as somehow anti-devolution. That is as amusing as it is risible because, of course, the Labour party is the party of devolution. We campaigned for it for 100 years; we delivered it, and we will continue to deliver it. We have concerns about tax-varying powers because we do not want them turned to what we think would be malign intent—to fuel the separation of Wales from England. The Secretary of State is right to say that we face a very important choice in Britain; the Scottish people face an important choice. We do not want to fuel separation by encouraging tax competition, with one part of Britain undercutting another in a race to the bottom. That is anathema to Labour values and anathema to the values of the people of Wales.