Wales Bill

Lord Hain Excerpts

2nd reading (Hansard): House of Lords
Monday 10th October 2016 Lords Chamber

[Lord Hain (Lab)]

My Lords, I agree with a great deal of what the noble Lord, Lord Crickhowell, said, especially on transparency over the proposed fiscal framework. That is a critical issue.

Although I welcome parts of the Bill, and although, as the Minister said, the Government responded to very strong objections to the draft Bill, it still feels that the way in which the reserved powers have been drafted repatriates powers back to the United Kingdom, for there are around 190 exceptions to the reserved powers to be granted to Wales. For instance the Assembly’s Agricultural Sector (Wages) Act 2014 would not be permitted under this Bill. Yet the Assembly not only passed it but also overcame a challenge from the UK Government when the Supreme Court found in their favour, enabling it to be placed in statute. How can this be progress towards empowering the Assembly? It seems more like a Whitehall grab-back of powers, as indeed the Welsh Assembly’s Constitutional Affairs Committee argued last week and as, among others, my noble friend Lady Morgan of Ely and the noble Lord, Lord Elystan-Morgan, recently argued publicly.

However, I wish to focus upon my two main objections at this stage to the Bill—objections I raised with the Minister during the courteous briefing that I thank him for providing before the conference recess. First, there is the question that I and my noble friend Lady Morgan of Ely discussed in detail in this House during the passage of the Trade Union Bill: the undermining of the fundamental workings of the devolution settlement by dictating the manner in which industrial relations within devolved public services in Wales are configured. This Bill reinforces that and it is a matter of dispute with the Welsh Government because the Assembly will shortly have before them a Bill which exempts devolved public services from the Trade Union Act. Since that has been supported by Labour, Liberal and Plaid Cymru Assembly Members it will likely be carried by a large majority. I will return to this matter.

Meanwhile, my other major objection is that Clause 17 of this Bill removes sections of the Wales Act 2014—just two years ago—that retain the requirement which has existed since 1997 that a referendum will be required to implement the powers to vary income tax under that Act. That is constitutionally unacceptable, even outrageous. In September 1997, as a Welsh Office Minister I helped to lead the Government’s campaign to win the referendum to establish the Welsh Assembly. With due respect, I do not recognise the comments of the noble Baroness, Lady Randerson, that Labour has been a back-marker on devolution; we introduced the Welsh Assembly and empowered it in the 2006 Act.

There was only one question before voters in 1997: did they want an Assembly or not? There was no second question on whether they wanted income tax devolved, as was specifically and importantly the case in the referendum on a Scottish Parliament. Ministers at the time took the view that to have such a second question in Wales would be to lose the referendum. Given how narrowly it was won, with just 0.2%, how wise that turned out to be. Leading politicians of all parties, including Conservatives, have been crystal clear in the past: to devolve income tax powers to Wales would therefore need another referendum like Scotland had on income tax. Indeed, just last year the 2015 Conservative Party general election manifesto committed to a referendum before income tax powers were raised. If your Lordships’ House were to amend the Bill to reinstate the referendum requirement, we would be doing so in line with the Salisbury convention on a government election manifesto commitment.

The current Secretary of State for Wales, Alun Cairns, was a Government Whip and voted for the 2014 Act which put into statute the necessity for a referendum just two years ago. He argued for that, as did all his Conservative MP colleagues at the time. So why have he and the Government done a U-turn after such a short time, thereby breaking their own manifesto commitment of just last year? There has been no clear explanation by Ministers. Could it be that they are frightened that, if invited to vote, a majority in Wales—perhaps a large one—would turn down the powers? I suspect so; otherwise, why be afraid of trusting the voters?

Could it be that the Government wish to ram income tax devolution through without addressing the irrefutable evidence that the way the Barnett formula has operated has short-changed Wales—by at least £600 million annually—in contrast to Scotland? Without a new “Barnett floor”, which the First Minister has insisted upon, and without the fiscal framework he wants, it would be pure folly for Wales to have income tax devolved. I note the point made very powerfully by the noble Lord, Lord Crickhowell, that there should be full transparency on the fiscal framework before Parliament enacts this legislation, amended or otherwise.

Could it be that the Conservative Government have an ideological objective to shrink the Whitehall state, offloading as much responsibility as possible on to individual citizens to fend for themselves, outsourcing to private providers and sub-contracting tax and spending to devolved legislatures? Having strenuously opposed political devolution in the past, the Conservatives now see the virtues of economic devolution in neoliberal terms. In that respect at least, the outcomes, if not the ideologies, of nationalism and neoliberalism can converge, because under both the redistributive power of the United Kingdom state is either severed or stunted.

The incontrovertible advantage of modern Britain is its 20th-century innovation: the pooling and sharing of risks and resources across the whole United Kingdom to ensure common welfare and decent standards of life for all citizens, regardless of nationality or where they live. At the heart of that pooling and sharing of resources has been a set of path-breaking decisions throughout the 20th century: common welfare standards first introduced by Liberal Governments and subsequently consolidated by Labour Governments up until 2010, ensuring common economic and social standards; common UK-wide old-age pensions; common UK social insurance—sick pay, health insurance, unemployment insurance and labour exchanges; common UK child and family benefits; a common UK national minimum wage; and a UK system of equalising resources so that everybody, irrespective of where they live, has the same political, social and economic rights, not just equal civil and political rights.

Pooling and sharing the UK’s resources has also enabled redistribution from richer to poorer parts of the UK, whether constituent parts of a nation such as the coalfield communities of the south Wales valleys or regions of England such as the north-east. Although the Holtham commission, in its case for devolving limited tax-varying and borrowing powers to Wales, set out complex compensating arrangements which attempted to ensure that Wales did not fall behind richer parts of the UK, it could not guarantee that the Treasury would always deliver this. We wait to see whether the First Minister has been able to secure that in his negotiations with the Government on a fiscal framework.

With around 40% of UK GDP concentrated in London and the south-east of England, I have seen no answer—whether from Ministers or, indeed, in this respect at least, separatists—to what is at the heart of the case for maintaining the integrity of the UK: redistributing resources from better-off to less well-off parts; and guaranteeing equal opportunity and security for all UK citizens regardless of nationality, race, geography, gender, sexuality, age, disability or faith. That has meant, as former Prime Minister Gordon Brown showed in his book My Scotland, Our Britain, that while inside the European Union the average income of the typical citizen of the poorest country is just 20% of that of the richest country, and in the USA the income of the poorest state is 55% of that of the richest, the average income of the typical Scot is 96% of the average income of an English citizen; for Wales, the figure is 87%.

In a post-World War II settlement subsequently maintained by the Conservatives, at least until recent times, Labour created a set of universal rights: free healthcare across the UK in the 1940s; and in the 1990s a UK-wide minimum wage and a tax credits system which discouraged the regions and nations from undercutting each other in a race to the bottom. A cornerstone of our social rights is the common UK welfare system, which transfers resources between individuals, dependent on their circumstances, right across the union. Pooling and sharing of resources at UK nation-state level must be sufficiently strong so as to continue to guarantee free healthcare, the rights to a pension when elderly, help when unemployed, sick or disabled, a decent family income and universal education, as well as defence and security. There is an implicit UK government guarantee that nobody in the union—whether in Wales, Scotland or elsewhere in the UK—can be prevented from accessing those common social and economic rights, and the services that flow from them, by reason of a shortage of resources.

That is why it is right that all UK taxpayers—English, Welsh, Scottish and Northern Irish citizens together—contribute their taxes at a UK level to fund these common rights and services, thereby guaranteeing that the UK Government and, where appropriate, the Scottish Parliament, the Welsh Assembly and the Northern Ireland Assembly, have the capacity to deliver them. With England constituting 84% of UK population and 87% of UK GDP, it would be mad for Wales to cut itself off from that, just as it would be mad for the north-east of England, with its similar GDP per head and demographic, to cut its income off from the rest of England—especially the south-east, which, as I pointed out earlier, contributes something short of half the UK’s wealth. This is especially serious for Wales, which has a huge net fiscal deficit involving a massive annual subsidy from the UK Treasury, estimated by the Library at £14.7 billion in 2014-15. That total, by the way, is similar to the entire Welsh Government block grant. I believe that this Government are encouraging an offloading of the centre’s responsibility to all its citizens—English, Scots, Welsh and Northern Irish—and, by design or default, encouraging separatism. For if the UK does not offer common rights and resources to enable universal access for each citizen, why should they offer their loyalty to the UK in return?

In making this argument, I remind your Lordships that I have been a consistent devolutionist all my political life. As the author of the Government of Wales Act 2006, I was proud to deliver the full law-making powers that the Welsh Assembly has enjoyed for some five years now, to the great benefit of its citizens. Therefore my objection to Clause 17 repealing the Government’s very own clause of just two years ago, committing to a referendum, is on two grounds. The first is constitutional and democratic. Surely it is not acceptable to move the goalposts from a referendum vote in 1997 by denying Wales the chance to have a vote on income tax, like the Scots did. Why should Welsh voters be treated as second class compared with Scots voters? The second is that, in any case, we step at great peril down the road of income tax devolution, the destination of which could be impoverishment in less prosperous parts of the UK, Wales included. Just in passing, while I certainly do not wish to put any ideas into the Conservatives’ minds, what about VAT if we leave the European Union? Membership of the EU means that it cannot be devolved: what does Brexit mean?

Let me turn to the manner in which the Bill will enable one important part of devolved public services in Wales to be dictated from Whitehall, namely industrial relations. I ask the Government to reconsider the manner in which the Bill reserves all employment law to the UK level in respect of devolved Welsh public services alone—not the private sector but just devolved public services. In doing so, and this may address the concerns of the noble Lord, Lord Crickhowell, let me be clear that I am not asking for employment law as a whole—including strikes, unfair dismissal, health and safety, maternity and paternity rights and so on—to be devolved. I agree that the core issues of employment law should be a reserved matter, not least to prevent businesses or devolved governments competing to undermine basic conditions of work in a race to the bottom.

However, what right does a UK Secretary of State have to impose upon Wales such matters as trade union facility time, training arrangements, arrangements to deduct trade union subscriptions by payroll, the political levy and other industrial relations issues to do with what the Welsh Government, in exercising their statutory powers, deem the best way to deliver effective and efficient public services on the basis of social partnership, which they do? I shall be supporting an amendment to empower the Assembly and the Welsh Government to achieve that, and I ask the Minister to do the same. Otherwise there will be a direct clash with the Welsh Government and the Assembly which will surely undermine the Conservative Party’s new-found and welcome conversion to the cause of devolution. In short, this Bill is fundamentally flawed and could badly short-change Wales. I ask the Government urgently to think again on the matters that I and others have raised.

Wales Bill

Lord Hain Excerpts

2nd reading (Hansard - continued): House of Lords
Monday 10th October 2016 Lords Chamber

[The Parliamentary Under-Secretary of State, Department for Communities and Local Government and Wales Office (Lord Bourne of Aberystwyth) (Con)]

My Lords, this has been a debate of rare quality. As has been said, we have had contributions from five former Secretaries of State—the noble and learned Lord, Lord Morris, and the noble Lords, Lord Crickhowell, Lord Hain, Lord Hunt and Lord Murphy—all, obviously, with vast experience of this area. We have also had a contribution of rare quality as a maiden speech from the noble Baroness, Lady Bloomfield. It was truly excellent and I am sure we all look forward to many contributions from her in the future, not only on Wales but focusing very much on it. We have also benefited greatly from the contributions of former Assembly Members, party leaders and former Ministers, from the noble Baroness, Lady Randerson, to the noble Lords, Lord Wigley, Lord Howarth and Lord Elis-Thomas, who also brought their great experience to bear.

I will try to deal with key points that have been made during the course of the debate. Obviously I look forward to engaging in Committee and thereafter on some of the detail. There is a genuine feeling that we want to move forward in a consensual way, as far as possible, and obviously many areas of the Bill have been welcomed pretty much universally—not least in the contribution of the noble Baroness, Lady Gale, on some of the internal workings, elections and so on, which we both agree should have been matters for the Assembly from a much earlier date—probably well preceding 2014.

I thank the noble Baroness, Lady Morgan of Ely, for her kind words in opening. We go back a long way together on devolution matters and I know that she is now adding her wisdom to the counsels of the Assembly. I thank her for what she said and look forward to engaging on some of the issues that she quite fairly set out.

Let me look at some of the key ones. First, on taxation, I can reassure the noble Lord, Lord Hain, that there is no neoliberal assault on the part of the Government. This is a pragmatic approach to an issue that it is high time that the Welsh Assembly—who knows, henceforward perhaps the Welsh Parliament—were able to deal with. It is appropriate that a body of such maturity has the tax powers we are talking about.

It is not, of course, a wholesale tax package. Listening to one or two noble Lords, it sounded as if we were devolving the whole of income tax powers to Wales. That is not the case. We are devolving 10p and there is an ability for the Government of Wales—which is currently the Labour Party, with a Liberal Democrat Minister—to set that at current rates. There is no obligation to vary it. They have to set a rate but they are quite at liberty to set it at the existing rate if that is what they want to do. We have taken away the condition that they are obliged to vary all the rates together. The lock-step has gone, which means that they can be varied quite separately.

That is appropriate now, devolution having come so far. It is nearly 20 years since there was the issue of whether a separate question being put in Scotland should be put in Wales, and a lot of water has flowed under the bridge. We would not be doing Wales any great service by holding things back and saying that there has got to be a referendum on the issue. There is no assault on the state. Listening to the present Prime Minister, it is quite clear that she realises that the state has a powerful role to play. That seems to strike a chord with the electorate because that is where the electorate is, too. That is important. I disagree on this issue with my noble friend Lady Finn. It is appropriate that we move forward on this without greater delay because, in my view, it would hold back Wales.

Moving on to look at that in the wider context of the fiscal framework and the question that the noble Baroness, Lady Morgan, put to me initially about whether we should wait until we have got the legislative consent Motion, I can assure her that I think that that is absolutely appropriate. Although legally we could move this legislation forward without the LCM, that would not be the appropriate thing to do. We are looking for progress from the Welsh Assembly and, as I understand it, discussions between my right honourable friend David Gauke, the Chief Secretary, and Minister Mark Drakeford are going well. I hope that progress continues and that I will be able to give more details to noble Lords as matters progress. That is certainly our intention.

[Lord Hain]

I welcome what the noble Lord said. Could he give some guidance as to whether clarity on the financial framework will be provided before Report in this House?

[Lord Bourne of Aberystwyth]

I anticipate that it will be, but it does not have to be. Obviously we will want to make sure that steady progress is being made before Report. As things progress it is anticipated that we could have agreement on these issues before Christmas, but I will ensure that the House is updated on this. As I said, I certainly anticipate we will not go to Third Reading without it and probably we will not go to Report—but I will want to make sure we are making the progress to which I referred before we commit to taking it to Report.

I move to the question of the single jurisdiction. I think there was broad support for saying that, certainly at this stage, there is no desire to move away from a single jurisdiction. I have spoken to representatives of every single law school in Wales and that is pretty much their feeling. It is also the feeling of many practitioners in Wales. We would not be doing Wales any great favours by differentiating the Welsh jurisdiction from the English jurisdiction. It is quite possible, even at this stage, to accentuate and overemphasise the differences that exist. Historically, they are not great. It is very different from the position in Scotland, where the Scottish jurisdiction historically has been very different. So parallels there are not appropriate.

There is a body that is looking at the legal arrangements. As I have indicated, I will update noble Lords on how that body is getting on, because there is an appropriate interest in making sure we have Welsh judges—when I say “Welsh judges” I mean judges not necessarily of Welsh nationality but with Welsh experience—deciding issues that are steeped in Welsh law. That is quite appropriate and what the administrative arrangements we are looking at should take hold of.

I move on to look at reservations—another key area which overlaps to some extent with the Welsh jurisdiction issues around the separate position on alcohol. I well remember as a student at Aberystwyth that the time I felt most thirsty and in need of a drink was on a Sunday. Inevitably, the only place you could get a drink on a Sunday in Aberystwyth was the student union because it was membership only. Of course, the queue was about a mile long to get there. The alternative in those days was getting a bus into Montgomeryshire, which was a popular thing to do. So I can understand the strong feelings that exist on that issue.

Some of the points made on reservations were somewhat wrongheaded. The noble Lord, Lord Howarth, mentioned the position on knives in relation to the position on devolution to cities. Of course, cities will not have legislative powers in relation to knife crime, so I do not think it is a perfect analogy—but no doubt we can look at this as things develop in Committee. The noble Lord, Lord Elis-Thomas, said that adopting a reserved model is not a solution to all ills. Hear, hear to that. I never thought it would be. Obviously, the discussion on this will be about what is and what is not reserved. I am sure that we will take different views on some of that, but I look forward to discussing it when we come to Committee.

It is great to see the noble Lord, Lord Elystan-Morgan, in his place, firing on all cylinders as always. I thank him for his kind comments. I do not agree with his position on dominion status. I do not hear that as a great clarion call for something that the people of Wales want, but I understand that he has some material points to discuss in relation to reservations and I look forward to hearing them as we move forward.

The conferred model was silent about many issues that nobody would ever anticipate, as opposed to reserved issues such as defence, immigration, the Crown and foreign affairs. Sensibly, nobody was suggesting that therefore these were matters the Welsh Assembly could deal with. It is quite a difficult manoeuvre to go from conferred to reserved. I am very grateful that noble Lords have recognised that we have made progress on this. I look forward to hearing from noble Lords on some of the remaining issues of concern.

I will touch on one or two other aspects raised by noble Lords that are worthy of further investigation. One, brought forward by my noble friend Lord Crickhowell and echoed by the noble Lords, Lord Murphy and Lord Morgan, was the importance of working with existing institutions—perhaps getting the physics right, not just the chemistry, of the relationship between different Ministers to make sure we have some underpinning for when it is necessary for decisions, policies or interactions to be discussed between Cardiff and Westminster. That is a very good point that I will take away and look at to see what we can do on it.

Without getting into the purely philosophical, another issue that the noble Lord, Lord Elis-Thomas, mentioned was the permanence of the Assembly and the strength of the new clause that says the Assembly is permanent. That was something pushed for very hard by the Plaid Cymru representative on the Silk commission—but, on that issue, just as the India Act could in theory be repealed by the Westminster Parliament, I would not overlook the symbolic importance of including the clause that states that the Assembly is permanent because it perhaps underlines the way it is regarded politically. It is a matter of political realities. I am not suggesting that we can alter the Kelsen Grundnorm of the fundamental basis of the constitution, but it is something that has been widely welcomed.

As I said, this has been a debate of rare quality. I thank noble Lords for engaging constructively and I look forward to that constructive approach continuing. Lastly, air passenger duty is not just an issue of the potential unfairness to Bristol, which clearly was and, in the interim, remains an issue relating to the state aid position. It is also a question of fairness within the United Kingdom and in Wales. There is a great danger that we see this as just a tax, the variation of which can help Cardiff Airport. People in north Wales would not consider using Cardiff Airport; they use airports in England. Likewise, in central mid-Wales they would use Birmingham. It is a much broader issue of whether we do something about air passenger duty—as a Treasury issue, that is well beyond my pay grade—across the whole of the United Kingdom, which remains a possibility.

Once again, I thank noble Lords very much for the constructive way they have engaged. I look forward to Committee and continuing to provide information as it becomes available on the way that discussions are proceeding between the Treasury and Cardiff Bay. I beg to move.

Wales Bill

Lord Hain Excerpts

Committee: 1st sitting (Hansard - continued): House of Lords
Monday 31st October 2016 Lords Chamber

Moved by

[Lord Hain]

20: After Clause 8, insert the following new Clause—
“Candidates at general elections
In section 7 of the Government of Wales Act 2006 (candidates at general elections), before subsection (1) insert—“(A1) At a general election a person may not be a candidate to be an Assembly member unless the person is recorded on the electoral register as living in Wales.””

[Lord Hain (Lab)]

My Lords, in moving Amendment 20, I will speak also to Amendment 21. Both stand in my name and that of my noble friend Lord Murphy of Torfaen, and assert the fundamental principle that to represent Wales in its legislature, an elected Assembly Member should actually live in Wales—the same principle asserted by the amendment of the noble Lord, Lord Wigley, which I also support. In doing so, I find myself in the ironic position of seeking to amend my own Act, the Government of Wales Act 2006, which I took through Parliament as a Bill as Secretary of State for Wales. It never occurred to me until the last few weeks that any Welsh Assembly Member would, or indeed could, live outside Wales.

Amendment 20 makes the acceptance of formal nomination as an Assembly candidate contingent on living within Wales. However, if it is felt that is too prohibitive a requirement, since no candidate can be certain of election in advance, Amendment 21 instead makes the membership of the Assembly—that is, for an elected candidate—contingent on living within Wales. That is to say, disqualification would follow without residence within Wales and registration to vote within Wales. Either way, the principle is put in statute, as it would be by the amendment of the noble Lord, Lord Wigley, Amendment 22.

At the most recent Assembly election, 21 candidates stood who did not live in Wales. Fourteen were from the Monster Raving Loony Party, four were Conservatives, one was a Liberal Democrat and one an English Democrat. There was one UKIP candidate, Neil Hamilton, who was elected as a regional Assembly Member and who, I understand, still does not live in Wales but has nevertheless claimed and been granted appropriate expenses, in the same way as those Assembly Members who actually live in Wales. I am not suggesting that there is anything improper here, just that it is an anomaly.

To deal with another question that has been raised, I am informed that to be a Member of the Scottish Parliament or the Northern Ireland Assembly, there is similarly no requirement to be resident in Scotland or Northern Ireland, but that is no reason for Wales not taking the view which I advocate. Since devolution, Wales has been the first to adopt policies subsequently followed by other parts of the UK in a number of areas; for example, establishing an Older People’s Commissioner and free bus transport for pensioners. There is no reason why Wales cannot be innovative in this matter either. Indeed, I have been notified that there is widespread cross-party support in the Assembly for the amendment, including from Welsh government Ministers.

On the substance of the amendment, it is an insult to voters in Wales not to live in Wales, within the nation you are seeking to represent and may find yourself representing in the Assembly. Personally, I have always believed that a constituency Assembly Member, like a Member of Parliament, should live in or, at the very least, very close to their constituency, as I did as Member of Parliament for Neath.

Of course, regional Assembly Members have different duties and no constituents in the same way, but surely they should at least live in Wales as well. How can any Assembly Member living outside Wales possibly keep in touch with public opinion in Wales? How can they keep in touch with issues that arise day to day in the political culture, public life or civic life of Wales? How can they spot new problems or opportunities as they arise in the course of their daily experience living as normal citizens of Wales do? How can they reflect Welsh culture without living within it, as I have been privileged to do? How can they really understand the evolution of Wales’s young democracy as it very quickly develops?

It is fundamental, to me at least, that in a democracy, representatives are of the people and for the people, whatever your political party. I hope that the Government will agree with this principle and accept at least one of these three amendments. I beg to move.

--- Later in debate ---

[Lord Bourne of Aberystwyth]

My Lords, I thank noble Lords who have participated in the debate on these amendments. I thank the noble Lord, Lord Hain, for bringing the matter forward and, indeed, for admitting to a degree of “mea culpa” on earlier provisions.

The amendments would prevent individuals not resident in Wales, and not recorded as such on the electoral register, being Members of the National Assembly for Wales. As the Government committed to in the St David’s Day agreement, the Bill devolves powers over its own elections to the National Assembly for Wales. This includes the eligibility to stand as a candidate at such an election and the criteria under which a candidate may be disqualified from being an Assembly Member. These would be matters for Wales and the National Assembly for Wales. There is a slight irony in the fact that earlier we debated what “not normally” covers, yet here are seeking to legislate in areas that will now be presented to the National Assembly for discussion and decision. It is absolutely right that this area relating to electoral practice should be a matter for the National Assembly for Wales. I indicated to the noble Lord, Lord Hain—and I have had lawyers look at this—that these matters will be transferred to the National Assembly for Wales and it is right that it considers them.

Very good points have been made by noble Lords in relation to the arguments. The noble Lord, Lord Crickhowell, spoke about the residency requirement for those who may live just over the border at Knighton—close to the station perhaps, which is in England—rather than in the town of Knighton, and so on. They are issues that the Assembly will want to look at, just as it will no doubt want to look at the point made by my noble friend Lord Norton of Louth on the choice for electors. I speak as somebody who as an Assembly Member was determined to live in the area I represented; certainly, it was true then that everybody who was in the National Assembly for Wales lived in Wales. These are valid points for the Assembly to look at; they are not matters that we should pontificate on. With respect, I therefore ask noble Lords not to press their amendments.

[Lord Hain]

My Lords, I am grateful to the Minister. I will briefly respond to his points at the end of my remarks.

When I moved this rather innocent, inconspicuous amendment, I had no idea that it would provoke such a rich debate about political principles, political theory and the nature of democracy; it has been very instructive and valuable indeed. My noble friend Lord Murphy really came to the nub of the matter when he said that this was about a country’s parliamentary legislature. This is something very precious to Wales and which needs to be given proper respect. That, in a way, links to the point made by the noble Baroness, Lady Randerson, which she expressed very eloquently indeed. She said that Assembly Members should—by living in Wales, in this case—be subject themselves to the laws that they are passing and subject themselves to the policies that they are instrumental in enacting.

The noble Lord, Lord Crickhowell, made a number of interesting points, but at one point he was almost saying that there should be no restrictions at all on candidature, or at least on Assembly Members. The main gist of his argument was about candidates, and I anticipated that, with my noble friend Lord Murphy, with our Amendment 21, as did the noble Lord, Lord Wigley, with his amendment. I do not think that this is the same issue as that about Members of Parliament, because the constituency boundaries are not being changed by the change in the parliamentary constituencies at all. Of course, the parliamentary constituencies do not cross the border of Wales. The new legislation, if eventually enacted, does not do that either.

I agree with the noble Lord, Lord Wigley, about his amendment. Frankly, I could not have done as effective a job as MP for Neath as I hope that I did without living in the constituency. That means living and breathing the life of the local rugby clubs, the local businesses and the local schools and hospitals, as I did for nearly a quarter of a century. He made a series of fair points in relation to pressing his amendment, by which I am rather persuaded. We can happily concede that. He asked about the Neath by-election. I had actually bought a house in the constituency five months before that by-election, although I must admit that I had a crazy mortgage, in retrospect. That was an important principle that I, like the noble Lord, Lord Carlile, felt was right.

The noble Lord, Lord Norton, raised some very interesting points, but he seemed to offer no restrictions on where one must live in order to stand for, or be a Member of, the Assembly. You could be living anywhere—hundreds of miles away from Wales. I simply do not think that that is acceptable. My noble friend Lord Murphy made the point that, in practice, Welsh voters do not have a real choice about the particular Assembly Members they get through the regional lists, and I do not think that he addressed that point. It is, as my noble friend Lord Murphy said, a question of voting for the party.

[Lord Norton of Louth]

My point was that one should change the system so that the electors actually have a choice. The noble Lord is quite right about the point I was making. I would make it as open as possible for electors to choose whoever they want. I am all for eroding the restrictions on candidature. It is fundamentally a matter for the electors, so if a candidate does live hundreds of miles away, that is a matter for the electors. I remind him that, many years ago, it was actually a Labour Member who listed his address as Greece.

[Lord Hain]

I did discover all sorts of anomalies when I was Leader of the House of Commons about what was actually going on in terms of people’s residence, and I will not embarrass the noble Lord by mentioning where some of the Conservative MPs lived—that is another matter entirely. I am, as I say, more persuaded by the amendment in the name of the noble Lord, Lord Wigley, than by my two, if I have not dropped my noble friend Lord Murphy in it, so I am happy to withdraw our amendment in his favour.

I also think that my noble friend Lady Gale made an important point about the Assembly having the right to do this and I would like the Minister to look at actually inserting into the Bill a power explicitly conferred to the Assembly to make provision for the eligibility of candidates. On that basis, and agreeing with the point of the noble Lord, Lord Carlile, that the principle at stake here has to be addressed one way or another—if not by this Parliament, then I hope by the Assembly, though it is a matter for that body—I beg leave to withdraw the amendment.

Amendment 20 withdrawn.

Wales Bill

Lord Hain Excerpts

Committee: 3rd sitting (Hansard): House of Lords
Tuesday 15th November 2016 Lords Chamber

[Lord Howarth of Newport]

My Lords, this group of amendments gives the Minister the opportunity, if he chooses to take it, to explain to the Committee what consistent principles have animated the choice of reservations that the Government have made in drawing up this legislation. We have a ragbag of reservations—as has been noted in previous debates, some 200 different reservations across an extraordinarily diverse range of policy areas—and in this group of amendments we have dealt with a miscellany of topics, including council tax benefit, careers services, sports grounds, libraries and adoption. It may be difficult to achieve consistency of principle in considering such a range of topics.

As I mentioned in an earlier debate, the Welsh Affairs Select Committee recommended that as the Government came to draw up this legislation providing for further devolution to Wales and introduced the reserved powers model, guidance should be issued to Whitehall departments as to the principles they should adopt in deciding what powers they wished to reserve to the centre—to the Government of the United Kingdom —and what questions they should ask themselves as they were judging these matters. I know that the Minister always seeks to achieve the best devolution settlement that he can for Wales. He cares about good government in Wales. He is a good representative and champion of the people of Wales and he wishes to achieve a devolution settlement that is coherent, commands wide acceptance and will endure. But it is difficult to achieve that if there is, apparently, no basis of principle for the reservation of powers.

It would be helpful if the Minister could tell us something about the process that has been adopted by the Government, partly in consultation with the Government of Wales—but I am thinking particularly of the process of consultation within Whitehall—as they came to decide that these 200 or so different powers should be reserved. Why have they chosen them? Is there any consistent principle lying behind that choice? If not, why not? Of course, the pressures of pragmatism are always very strong and one respects and understands that, but it may also be that there has been, as has also been said before in our debates, something of a dog in the manger attitude at work—that departments have not thought through with any thoroughness or care what is appropriate to devolve and what is appropriate to reserve but rather have said, “I think we’ll hang on to this”; essentially, “What we have we hold”. It would be a shame if we were driven to conclude that that was the basis on which the reservations have been chosen by the Government.

I hope the Minister can tell us about the process and encourage us to think that this has been done on a considered and principled basis and, for that reason, that these are decisions that should be respected and will stand the test of time for good, practical reasons.

[Lord Hain (Lab)]

My Lords, in supporting the persuasive case made by the noble Baroness, Lady Randerson, I want to press the Minister on the question of job searches, which are automatically part of the careers service—careers being devolved, as has been mentioned. Has the Bill been drafted with a view to DWP questions, which of course are reserved? Jobcentres, in managing benefits, are also concerned with getting people into work and therefore job searching and providing skills and so on. Are the Government looking at this matter from a DWP and therefore a reserved perspective, but not taking account of the fact that careers are devolved and job searches are by definition part of a supportive, active, flexible careers service?

Perhaps the Minister could clarify this when he responds. If the DWP dimension is the reason that this is not being devolved in the way that the noble Baroness, Lady Randerson, has argued should be the case, will he look at it again to see whether it is possible to reconfigure this part of the Bill?

[Baroness Morgan of Ely]

My Lords, I will follow up on my noble friend Lord Howarth’s point on the principles that guided the determination of what should be reserved. To be fair to the Minister, we asked this question before but it was past 10.30 pm so I will give him another opportunity to state on what basis those principles were set—why have they been determined in this way? I underline the point made by many other noble Lords: we know the Minister to be a friend of Wales and that he is doing his very best for Wales. However, it would be interesting to understand why and on what grounds the other departments are making their case on the basis of reserving quite so many powers.

--- Later in debate ---

[Lord Hain]

Before the noble Lord sits down, is he now saying that he will not be moving his Amendments 58 and 97 on the devolution of the Wales and Borders franchise? I was going to speak about that briefly.

[Lord Wigley]

As I understand it, the Government have moved on the Wales and Borders franchise. Perhaps the Minister can respond and there will be an opportunity for the noble Lord, Lord Hain, to intervene.

[Lord Hain]

I was going to say that I strongly support Amendments 58 and 97, in the absence of an assurance from the Minister to the contrary, because there is a strong case—following the St David’s Day agreement, the work of the Silk commission and, indeed, the logic of the case—that responsibility for this franchise should lie with the Welsh Government. To avoid taking up any more time, I hope the Minister will confirm that it will be devolved and the Government will bring forward an amendment to that effect at some point, presumably on Report.

[Baroness Morgan of Ely]

My Lords, as currently drafted, reservation 183(c) removes the ability of the National Assembly to introduce town and country planning legislation relating to the development of railways. This aspect of the Bill clearly rows back on the existing devolution settlement, as the National Assembly currently has the ability to legislate on town and country planning matters, which can include the construction of railways.

The Welsh Government are clear that the development and use of land for such infrastructure falls within the current devolved planning system. This is supported by the fact that, since devolution, subordinate legislation has been made by the Welsh Government under the Town and Country Planning Act 1990 to make provision for railway development, and that such development can be, and has been, given consent under the planning system.

More recently, the Welsh Government made regulations under the Town and Country Planning Act 1990, as amended by the Planning (Wales) Act 2015, to make provision for railway development to constitute development of national significance in Wales. At no point during the scrutiny of the Planning (Wales) Act was the issue of legislative competence raised in the context of railways by stakeholders, which included the UK Government. The inclusion of railways in the reservation would restrict the National Assembly’s ability to legislate further for railway development in the context of developments of national significance. There is a clear need to preserve the existing devolution settlement, which Amendment 70, in deleting reservation 183(c), achieves. I urge the Committee and especially the Minister to support this amendment.

Amendment 109 deals with railway franchising. At present, the majority of rail services in Wales are provided under the Wales and Borders franchise operated by Arriva Trains Wales. This was concluded following the joint parties’ agreement in 2006, which set out the division of responsibility for the management of the Wales and Borders franchise between the two Governments. From early 2017, the Welsh Government will become a franchising authority in their own right, with responsibility for awarding the next Welsh rail franchise, due to start in October 2018.

The current Railways Act does not allow the Welsh Government to permit public sector organisations to bid for rail franchises—a matter which was conceded for Scotland following Smith commission recommendations. We on this side of the House do not have ideological objections to the nationalisation of railways, unlike the UK Government. In fact we think that the German nationalisation model, which has been allowed to run franchises in the UK, has simply stuffed UK taxpayers’ money into the pockets of German taxpayers. The French nationalised railways run a much cheaper and more efficient system than any of our current players in the UK. We would like to see flexibility so that if the Welsh Government wished to bid for that franchise, they could do the same for Welsh people. The Welsh Government have stipulated time and again that they may be interested in applying for such a franchise or allowing a not-for-profit organisation to bid. Again, we would like the UK Government to explain on what grounds they justify this discriminatory action.

[Lord Hain]

I strongly support my noble friend’s case. Would she also say that the model of Welsh Water could be a very good one for the Wales and Borders franchise? That is not least because, being a not-for-dividend company, Welsh Water is able to raise capital at a far cheaper rate than on the open markets in the City, as other water companies are required to do. It is therefore a better model and that option should be available to the Welsh Government, should they choose to pursue the franchise in the future on that basis. I do not think that the existing Bill allows for that.

[Baroness Morgan of Ely]

The noble Lord is quite correct in his assessment. One of the problems is that the Welsh Government have indicated that they would be interested in looking at some kind of not-for-profit model, such as that of Dwr Cymru. But one of the real problems here—the real shame—is that the timing on this issue is very bad because while we hope that the Government will accede to our request on this matter, if they agree to do so it will come too late for the current procurement round. That round has already opened, so the earliest that we could see a Welsh public sector bid or a not-for-profit franchise bid on this matter would be 2028. I suppose that would be better late than never; at least we will be ready for the next time. I hope that the Minister will be able to give us some comfort on this issue.

I support the views of the noble Baroness, Lady Randerson, in relation to devolving the training, testing and certification of driver licensing to Wales.

Finally, I ask the Minister for clarification on a point regarding the regulation of bus services in Wales. Traffic management is already devolved, in addition to the regulation of transport facilities. These will continue to be devolved, thankfully, under the Bill by virtue of the fact that they are not reserved. Under the new settlement, there is new scope for the Assembly to legislate concerning local bus registration. Ministers currently have limited executive powers in respect of local authorities co-ordinating bus operations, as set out in the Local Transport Act 2008, including voluntary and statutory quality contracts.

I believe that there should be scope in the Bill to allow for the regulation of buses in Wales. I hope that the Minister can confirm that this is indeed the case. Can he confirm whether the associated benefits of regulation, include the possibility of capping and regulating fares and integrated ticketing, will also be possible? It is unclear to me whether reservations concerning competition and consumer protection could prevent these important issues being pursued. Some assurance on that would be helpful. Can he also confirm that the Bill in its current form does not prevent the Assembly legislating in relation to the registration of bus services and franchising, or indeed other areas covered by traffic management and regulation in addition to other transport facilities and services, such as parking, street works and the blue badge parking scheme?

Wales Bill

Lord Hain Excerpts

Committee: 3rd sitting (Hansard - continued): House of Lords
Tuesday 15th November 2016 Lords Chamber

Moved by

[Lord Hain]

66: Schedule 1, page 69, line 3, at end insert—
“Terms and conditions of employment and industrial relations in Welsh public authorities and services contracted out or otherwise procured by such authorities.”

[Lord Hain (Lab)]

My Lords, Amendment 66 stands in my name and that of my noble friends Lord Murphy and Lord Kinnock, and the noble Baroness, Lady Randerson. As Secretary of State, I took through the Government of Wales Act 2006 and I begin by commending the Minister for his empathy, skill and civility in our collective purpose, which is to get a Bill that does the very best for Wales. I hope he will see what we are doing as support for him in battles in Whitehall with some of his colleagues who I do not think really understand the Wales devolution settlement.

This amendment will come as no surprise to your Lordships. Not only did I explain at Second Reading that I would be tabling it, but I and my noble friend Lady Morgan of Ely also explored in detail the issues it raises during the passage of the Trade Union Bill through this House at the beginning of this year. At that time there were many references to the UK Government’s insistence on ignoring their own legal advice, ignoring a legislative consent Motion voted through by the National Assembly for Wales and ignoring the ruling of the Supreme Court in 2014 in relation to the Agricultural Wages Board. The Government’s insistence on pushing ahead with measures that interfere with the functioning—I stress this to the Minister—of the devolved public services in Wales demonstrated an intention to override the devolution settlement. I am sure that the Minister is concerned about that and I hope that he, with his known support for devolution, will change that policy in the Bill and accept the amendment.

The Minister may insist that this reservation amendment is unique: it is the only amendment in which we are seeking to go further than the Scottish settlement. I concede that. This should not, however, be taken out of context. It is precisely because the Government of Wales Act that I took through Parliament in 2006 has allowed the National Assembly for Wales and the Welsh Government to develop and foster unique relationships with public sector employers and trade unions that we find ourselves in this position. The UK Government are making a clear and in some ways remarkably transparent move to go beyond overriding decisions that the Welsh Government have taken since 2011 and deliberately take back powers because they are unhappy about decisions taken and the judgment of the Supreme Court—a matter to which I will return. I believe that this is an attack on the heart of the Welsh devolution settlement. The employment reservation is only one of many that other noble Lords have raised on this deeply flawed Bill—but it is an important one.

Over the past nearly 20 years, the Assembly has earned its place in the public consciousness. As we know from the referendum in 2011, the Welsh public have overwhelmingly endorsed the approach taken by the Assembly and confirmed their desire for public services in Wales to continue to be run from Wales. The Conservative Party supported the 2011 referendum, and the public were asked in that referendum whether they wanted the Assembly to make laws on all matters in the 20 subject areas it had powers for. At the top of that list were education, health, housing and local government—the very devolved areas specifically affected by this reservation. It is incongruous in the extreme to think that the argument put forward in another place by the Secretary of State that—I paraphrase—the 2006 Act never intended to give powers over employment matters in the devolved public services is a reason now to claw them back.

There have been many positive developments by the Welsh Government in their relationships with their social partners in the public services, including the Partnership and Managing Change agreement, signed up to by all public service employers and trade unions, the memorandum of understanding in local government and the implementation of the two-tier workforce code. We have been fortunate in Wales not to have seen a difficult and divisive strike by junior doctors. We might think that to be no accident. It comes out of precisely the culture made possible by the circumstances that flowed from the 2006 Act that this Bill now seeks to reverse.

All of these things have been possible because of the social partnership structures in place to ensure that the difficult decisions facing our public services at a time of austerity are worked through from the beginning with employers and trade unions round the table. All of this has been possible because the legislative framework has permitted this flexibility.

The legislative competence over the delivery of public services is undoubtedly devolved to the Assembly. There is no question about that. The Government’s own legal advice during the passage of what is now the Trade Union Act demonstrated that. The differentiation that must be drawn here is between collective bargaining over employment law matters—which it is widely agreed should be maintained at an England and Wales level—and industrial relations that intimately impact upon the day-to-day discussions to enable change and flexibility in the delivery of the services that affect the people of Wales.

I turn briefly to the Trade Union Act, for it is here that the UK Government appear to have developed their principled opposition by allowing the Assembly to retain its current legislative competence over industrial relations. During the passage of that Act in this House I referred to the Supreme Court judgment on the Agricultural Wages Board in 2014. Their Lordships made crystal clear their view that even though employment law was a reserved matter—I am not contesting that in this amendment—nevertheless the operation of services devolved to Wales, in this case agriculture, was a matter proper to the Welsh Assembly to legislate upon. The Supreme Court upheld that view.

The Welsh Government have made clear their intention to legislate in relation to three devolved aspects of the UK Trade Union Act 2016. The first is the administration costs of check-off, the means by which trade union subscriptions are automatically checked off in the payroll system in devolved public services—and in those services exclusively. The other aspects are the 40% overall support threshold for important public services and powers to regulate facility time. These are all matters that affect industrial relations in Welsh public services. They do not impinge upon employment rights and duties. In other words, the main contours of employment law remain a reserved matter. Rather, the Government are interfering with the legislative competence of the National Assembly and the Welsh Government to deliver effective public services through social partnership. Surely that cannot be right.

The effect of this amendment would be to provide an exception to the legislation as drafted to ensure that the Assembly retains its legislative competence—a competence it now has—over terms and conditions of service for employees in devolved public services and over industrial relations in such services. It is consistent with both the Wales TUC and the Welsh Government’s stated policy, which is not to break up England and Wales collective bargaining and to agree that employment rights and duties remain an area reserved to the UK Government—I stress this point. But it seeks to ensure that the Assembly maintains the legislative flexibility that it currently has to influence employment and industrial relations in the devolved public services over which it and the Welsh Government maintain legislative policy and fiscal control.

I hope that the Minister is listening carefully. I repeat that the amendment does not challenge the Government’s position that employment law covering such matters as strikes, unfair dismissal, health and safety and so on should be reserved. Indeed, it does not challenge the reserved status of any of the 17 employment Acts listed in Section H1 of new Schedule 7A on pages 68 and 69. They are all listed, ranging from employers’ liability to pneumoconiosis, the Trade Union and Labour Relations (Consolidation) Act 1992, the Employment Rights Act 1996 and so on. It does not seek to challenge any of them or to contest that they are reserved matters. I appeal to the Minister to reconsider the Government’s policy and to adopt a practical, common-sense stance in line with that of the Welsh Government and the Assembly.

When the Government claim to be marching in step with the Assembly on progressing greater devolution, surely there is nothing to be gained by confrontation on the matter of how public services in Wales are run. For confrontation between the Assembly and Westminster there will certainly be if the Bill is not amended—almost certainly also leading to another unedifying dispute in the Supreme Court. I hope that the Minister will accept this point and be conciliatory in his response so that we can move forward together, reserving properly reserved matters of employment law to the UK level but ensuring that the Welsh Government can run their public services and the industrial relations that are so crucial to those services in the way they choose to do in keeping with the devolution settlement.

[Baroness Finn (Con)]

My Lords, the key purpose of the Wales Bill is to provide clarity over powers and accountability of those powers. The introduction of the reserved powers model makes clear what is devolved and what is reserved so that people in Wales know who is responsible for what. It is worth emphasising that the need for clarity lies at the heart of the Bill.

Employment law and industrial relations law are clearly reserved matters. It would be unworkable to have different employment laws applying in the different jurisdictions of Great Britain. This issue was also considered by the Smith commission for Scotland, and both the Smith commission and the Silk commission recognised the importance of having a single employment regime. Both concluded that employment and industrial relations law should remain reserved and neither recommended any sort of exceptions.

I appreciate that the noble Lord, Lord Hain, is not asking for the devolution of all employment law, the core issues of which will remain reserved, and I apologise to the noble Lord if I was not clear on this point when I spoke at Second Reading. The noble Lord and the noble Baroness, Lady Morgan, explained during the passage of the Trade Union Act 2016 that industrial relations law in devolved public services is a devolved matter. That Act is about employment law and industrial relations. The Government have consistently argued that these are reserved matters and that the Act will apply consistently across the whole of Great Britain.

This amendment would lead to the unwelcome creation of a two-tier system of employment rights in devolved public services as well as a regrettable reduction in clarity over industrial relations powers. The Wales Bill introduces a reserved powers model precisely to bring more clarity to the Welsh devolution settlement and the effect of the amendment would undermine that primary intent. I therefore urge that the focus now should not be on yet more interminable wrangling about where powers lie. The focus should instead be on the efficient delivery of quality devolved public services on which the Welsh people rely.

--- Later in debate ---

[The Parliamentary Under-Secretary of State, Department for Communities and Local Government and Wales Office (Lord Bourne of Aberystwyth) (Con)]

My Lords, I thank noble Lords who participated in the debate on this part of the Bill concerning employment law. I thank the noble Lord, Lord Hain, for his very kind words in opening the debate.

To put this in perspective, I think it is common ground between the noble Lord, Lord Hain, and I that employment and industrial relations law is a reserved area. I am not sure that that view is shared by the noble Baroness. She seemed to be suggesting that somehow our reservation meant the end of civilisation as we knew it. It is fundamental to the country that we live in. The UK Government believe that the underlying legislative framework concerning rights and responsibilities in the workplace must be reserved. I believe as much as anyone does in good employment practice. I worked in the public sector in Wales before I went into the Assembly. I was a member of a trade union. I do not think I can still be a member of that trade union or I would be. It is imperative that we have good employment law and good industrial relations. I would not contest this. This is a very important area, but we want a simple, unified system in Great Britain. As the noble Lord acknowledged, this is not something that is devolved to Scotland. It was not considered by the Smith commission or the Silk commission and it was not part of the St David’s Day process.

The system we have allows workers to be clear on their rights, whether they are in the public sector or the private sector, in England or in Wales. This is a fundamental principle and I cannot accept that the law underpinning the terms and conditions of public sector workers should be different from the law that underpins the rights of other workers. Whether that leads to better rights, more rights or worse rights, it seems fundamentally wrong. It is important to have common minimum standards which apply to all workers throughout Great Britain to minimise uncertainty and cost for both workers and employers. This is a matter of employment law; it is not about public service delivery.

Furthermore, it seems clear to me that if public sector employers in Wales, which would include the Welsh Government and public sector authorities, want to grant more favourable wages or more holidays then they are able to do so. They can do that presently and there is no question of it being taken back. Also, the judgment on the agricultural wages Act in the Supreme Court is an exception to the reservation. There is no question of that being clawed back as that specific piece of law remains.

If we had a diversified system of rights, workers might be reluctant to pursue the best progression opportunities in their organisation because they could get better rights in the private sector or the public sector—one or the other. They may find it more difficult to undertake collective bargaining and make their voice heard in isolation from colleagues in similar roles in Wales or the rest of Britain. I certainly believe in having strong industrial rights and strong employment rights—and obligations, too—but this has to be unified. As I said, both the Silk and Smith commissions came down in favour of a single employment regime, such as this, and there is nothing to prevent the Welsh Government or devolved public authorities agreeing specific arrangements with their staff, provided that they meet the requirements of employment and industrial relations legislation which apply across Great Britain.

The noble Lord, Lord Murphy, suggested that this amendment did not concern strikes. I am sure that I heard the noble Lord, Lord Hain, say that it related to altering the threshold, so it is about strikes and, as drafted, would certainly include the possibility of doing that. The Government could not sign up to that, nor to different rights on check-off or facility time. The rights should by all means be generous, but they should be unified across the country. I do not see that insisting on this is somehow apocalyptic in the way that some noble Lords suggested. The reservation of employment law ensures that there is a minimum floor of rights to offer workers key protections. At the same time, it recognises that each workplace is unique by allowing employers to provide additional pay or holidays in the public or private sector, if they want to do so.

Amendment 74 was put forward by the noble Baroness, Lady Humphreys, for the Liberal Democrats, and I have added my name to it for the Government. I am not sure whether that makes it an additional government amendment, but we are in agreement with removing the reservation relating to teachers’ pay. This has been a key priority for the Welsh Government and we are very happy to support this amendment. We have been listening on teachers’ pay and are content to support the noble Baroness’s amendment.

In relation to employment law, because we see specific difficulties regarding different rights in the public sector, some of which relate to the calling of strikes but do not affect pay and holidays—which the public sector can negotiate quite separately, as it does now—I urge the noble Lord, Lord Hain, to withdraw his amendment.

[Lord Hain]

My Lords, can I express my severe disappointment at the change of tone in the Minister’s delivery? The rest of his responses to the amendments moved by my noble friends have been genuinely positive. He has conceded where he could and stood his ground where he could, but within the framework of the devolution settlement in which he believes, as I do. On this amendment, I do not mean to sound insulting, but the way that he came across was, I felt, like he was reading out a prepared text—no doubt supplied by the Wales Office in Whitehall—that simply does not recognise the reality of this amendment.

The noble Baroness, Lady Finn, said along with the Minister that there would be the creation of a two-tier system of employment rights. How is that possible, when the 17 Acts and regulations which are already listed as reserved matters on pages 68 and 69 of the Bill would remain reserved under the terms of this amendment? How is it possible that we would create a two-tier system of employment rights when all the employment rights would remain reserved? We are discussing the operation of industrial relations practice in Welsh public services, not in the Welsh private sector. There is no exception provided for the Welsh private sector, which is the largest area of employment in Wales. The amendment is simply about devolved public services and reserved matters and many others matters covering all the issues. I can read them out to remind the Minister, but they are there.

[Lord Bourne of Aberystwyth]

The amendment would insert:

“Terms and conditions of employment and industrial relations in Welsh public authorities and services”,

so the amendment is not just about industrial relations.

“Terms and conditions of employment”,

is also contained in the amendment.

[Lord Hain]

I understand that. I understand my own amendment. It refers to public services.

The Minister is saying that there should be common standards. Wales already has entirely differently configured public services. That is the beauty of devolution. There is a learning experience between the different constituent parts of the United Kingdom about where best practice occurs. In some areas, it is in Wales. We have not had a doctors’ strike. I do not think we have had the same teachers’ disputes. We have not had the same local government disputes. We have not had the same firefighter disputes. Why is that? It is because these are devolved public areas run in a different way in Wales, with a different system of employee/employer relations provided for—we believed until this Bill tried to overturn the provisions of the Supreme Court ruling—in the devolution settlement. I echo the great eloquence and legal authority of the noble Lord, Lord Elystan-Morgan, in saying that this is massive diminution—to use his phrase—of the authority of Wales. Indeed, it is a direct challenge to the Supreme Court, where it may well end up. As my noble friend Lord Murphy said, I do not think that is where the Minister wants to be in his private view of the future, even if that is where he is going to end up if he sticks to this stance.

The noble Baroness, Lady Randerson, underlined that the Supreme Court caught the UK Government by surprise. She was very frank about that. It perhaps even caught me by surprise by interpreting the devolution settlement in the way that it did in a very convincing way. I hope that the Minister recognises that he is now seeking to undermine that.

I remind the House of what my noble friend Lady Morgan of Ely said; she said that the terms of the Bill will prevent Welsh Government Ministers exercising their legitimate functions in public services in how they treat their employees and how they operate their industrial relations from training time to facility time to all the matters that are essential to running public services in Wales effectively.

My legal advice is that the Minister’s position is flawed. He may deploy government lawyers to contest that, and then we will see in the courts. We will have the Wales TUC and the Welsh Government and, I suspect, all the people of Wales right behind them challenging the UK Government’s position.

The question I shall conclude on is: are public services in Wales devolved or not—not just the policies, but the delivery, which depends on employees and the relationships between employees in the public sector and their managers being very good? That requires good industrial relations, and Wales has been able to achieve that. Wales would continue to be able to achieve it under the devolution settlement if this amendment were accepted.

[The Deputy Chairman of Committees (Baroness Fookes) (Con)]

I am not clear whether the noble Lord wishes to withdraw the amendment or press it.

--- Later in debate ---

[Lord Hain]

I am not going to press it at this hour, but I reserve the right to press it on Report if there has not been a rethink by the Minister.

Amendment 66 withdrawn.

--- Later in debate ---

[Lord Wigley]

My Lords, in view of the time, I shall try to truncate my comments. The amendment would give the National Assembly as of right a proportion of VAT revenues and so give Wales the same tax power in this regard as enjoyed by Scotland. It would also open the possibility, post Brexit, for some variation of VAT levels in Wales to help provide the cash stream needed to service capital investment programmes, as discussed earlier in Committee.

It is widely acknowledged, by the Institute of Welsh Affairs and others, that devolution of public spending responsibilities should be accompanied by the assignment of significant own sources of revenue. Wales’s funding framework has been highly unusual from an international perspective: there are not many Governments in the world with significant legislative and spending powers who do not also have a correspondingly important responsibility for raising tax revenues. If the UK Government are serious about securing a lasting devolution settlement for Wales, the devolution of VAT should be considered as part of a package of devolved fiscal powers.

The Scotland Act 2016 stated that revenues from the first 10 percentage points of the standard VAT rate would be devolved by 2019-20. The current UK VAT rate is 20%, so half of all the VAT raised in Scotland will be kept in Scotland. A recent article published by the Wales Governance Centre states that:

“Welsh VAT revenues have been far more buoyant than other major taxes, such that VAT has become the largest source of revenue in Wales (in contrast to the rest of the UK and Scotland, where income tax remains the largest source)”.

The report entitled Government Expenditure and Revenue Wales 2016 concluded that around £5.2 billion was raised in VAT revenue in Wales in 2014-15. With a similar deal to Scotland, around £2.6 billion would be assigned to the Welsh Government. There would of course be an offset from the Barnett block for however long that remains in its obsolete and unfair current format. Based on the report’s figures, it would mean that more than a third of total devolved expenditure would be financed by devolved and assigned taxes, up from 21% with currently proposed devolution.

I hope that the House will agree that this fiscal lever is essential to secure the success of the Welsh economy. I beg to move.

[Lord Hain]

My Lords, I normally agree with my noble friend on devolution matters, but I want to question the consequences of the amendment. If we look at change in income tax take in the UK and Wales during the past few years—indeed, since 2010-11—we see that income tax receipts have grown across the UK by 6% and in Wales by only 2%. Notwithstanding the noble Lord’s point that VAT represents a much larger proportion of tax receipts in Wales, I would be very surprised given the lower GDP and lower spending per head in Wales if Wales did not do badly out of the devolution of VAT. I have to oppose the noble Lord on that basis. Given his belief in an independent Wales, I understand ideologically why he would want just about everything devolved, but this measure would be folly in the context of the economic, financial and tax realities of Wales’s economy relative to that of the UK.

[Lord Wigley]

VAT is very much more stable and would be less likely to go down by the nature of the expenditure and the pattern of finances in Wales. There is that problem with income tax, but VAT has a much better prospect and I believe that we really should have it.

[Lord Hain]

The noble Lord may have a point in the sense that more VAT proportionately is paid by people on low incomes, and there are relatively low incomes in Wales, but I would want to see the figures. I would want to have the drains up on this proposal before I went anywhere near it, because I would not want Wales to be short-changed by such a reform. On that basis, I oppose the amendment.

[Lord Rowlands (Lab)]

I support my noble friend because I worry about taxation. It can be very regressive in an individual context. There is a history of it, and it could be not only in income tax but in VAT. We should be very careful before we proceed down that road.

Wales Bill

Lord Hain Excerpts

Committee: 4th sitting (Hansard): House of Lords
Wednesday 23rd November 2016 Lords Chamber

[Lord Judge (CB)]

My Lords, I have the privilege of being a member of the Constitution Committee, but I speak on my own behalf. I do not have the privilege of being a Welshman but I have the privilege of looking at a statute; I have the privilege of remembering what a baleful influence Henry VIII was on the history of Wales, and his baleful influence looks as though it will continue. The 1536 Act was intended to crush the Welsh nation and the Welsh language. The devolution process was intended to row back hundreds of years of history.

We are being invited to give Henry VIII powers to a Minister, by secondary legislation, to amend, modify, repeal or get rid of—whatever language we care to use—primary legislation. I have a very strong view on this, and shall address the House interminably about the besmirching effect on our constitutional arrangements of such clauses. However, I do not have to stop there in this instance. If Parliament chooses to give Henry VIII powers to the Minister, that is Parliament’s choice, but here it is giving Henry VIII powers to a Minister to reject, modify, get rid of or dispose of the legislation of the National Assembly—in other words, to eradicate, nullify or replace a statutory provision, enacted by a democratically elected legislature of our United Kingdom, on which the people living in Wales will have acted while the particular legislation has been enforced, and all without any consent from the Assembly. That seems an astonishing insult to the democratic process. The affirmative procedure that will undoubtedly be suggested as the solution does not—I say this with great respect—address the democratic deficit.

The solution to the problem involves having another look at Clause 2 and transposing it into Clause 53. I do not need to spell this out. It is perfectly obvious that the consent of the Welsh Assembly is needed. I reject in Clause 2 that weasel word “normally”, which has all sorts of connotations that are not helpful to the analysis. There is another word beginning with “n” which should take its place: never.

[Lord Hain (Lab)]

My Lords, I shall speak to Amendments 120 and 120A, first to Amendment 120, standing in my name and those of my noble friends Lord Murphy of Torfaen and Lord Kinnock and the noble Baroness, Lady Randerson. It is a very straightforward amendment. Clause 2 introduces a new requirement that Parliament,

“will not normally legislate with regard to devolved matters without the consent of the Assembly”.

That was at the heart of the amendments that have just been addressed. It is an admirable clause, and its logic should surely apply to the Bill as well. In other words, the Bill should not come into effect—which is what the terms of Amendment 120 spell out—without the legislative consent of the Assembly. That is all it is asking for. I know that the Minister has worked very closely with Welsh Government Ministers, and his officials with theirs, so it seems to me that there should be no objection on his part to this amendment. Indeed, I hope he will respond in a conciliatory way because in that way, I think, he will also expedite progress on the Bill.

I turn to Amendment 120A, standing in my name and that of my noble friend Lord Murphy of Torfaen. It will ensure that the Bill cannot come into force unless the Treasury has laid before each House of Parliament a document which sets out a fiscal framework for Wales agreed by the United Kingdom Government and the Welsh Government. As Your Lordships are aware from my speech at Second Reading, I am deeply sceptical that Wales will benefit from income tax devolution and fearful that Wales will actually lose out. The Treasury will not permit much-needed borrowing powers for Wales unless these are set against the revenue-raising powers that this Bill provides for. The First Minister desperately needs that borrowing to invest in infrastructure—from new roads and rail links to relieve chronic congestion, to new hospitals and schools. What is more, the Treasury will not otherwise provide the cover it could so easily do at such minuscule interest rates as currently exist for that infrastructure investment. I think this is financial smoke and mirrors—Treasury subterfuge. Yet the Government have trapped Wales between a rock and a hard place.

I am suspicious that Wales is being badly short-changed by this income tax devolution, which is what I seek to address in this amendment. It is not about the substance of devolution, because that has already been debated, but about the fiscal framework that accompanies it. We do not yet have sight of the fiscal framework to accompany tax devolution, though we are grateful to the Minister for promising, in answer—and on the record—to my question on Second Reading, that we would be able to scrutinise it very carefully by Report. I am also grateful for his recent letter on the subject. All I can say is that it will have to be a mighty, mighty generous fiscal framework to Wales to persuade me to support it. The Treasury in a generous frame of mind will be a novel experience for us all. I speak as someone who, like my noble friend Lord Murphy, has negotiated with the Treasury as a Cabinet Minister on behalf of Wales.

Therefore I wish to put a series of arguments to the Minister which will need to be fully addressed by the fiscal framework. In the time that he has left to tidy up that framework, I hope he will address them.

I draw first on the authoritative 2010 report of the Independent Commission on Funding and Finance for Wales, chaired by Gerald Holtham. The key point is that Holtham acknowledged explicitly the risk that Wales’s income tax base might grow more slowly than the United Kingdom’s income tax base—that is to say, the risk of differential tax base growth. If that happened, the Wales budget would shrink relative to the UK as a whole and the degree of redistribution to Wales from richer parts of the UK would reduce.

Holtham noted that one option could be to index deductions from the block grant to the growth over time of the devolved tax base in Wales. This would completely offset a devolved income tax in Wales and eliminate any risk arising from differential tax base growth. Other options would only partially eliminate this risk. So Holtham came up with a compromise, concluding in paragraph 5.25 that the,

“best compromise appears to be very infrequent reviews of the tax bases of the devolved administration and a consequent adjustment to deductions from the block grant”.

Such reviews and adjustments would require negotiations between the Wales Government and UK Ministers. Holtham suggested reviews every 12 to 15 years. Frankly that is far, far too long a period in my view, especially with the outlook for the British economy looking so uncertain with Brexit, as the Chancellor confirmed in his Statement today.

Holtham made no recommendation for any kind of Treasury assurance to ensure that Wales did not lose out. The Holtham report simply recommended that the block grant should be reduced by an equivalent amount in the first year of the new system and that in,

“subsequent years, the size of the block grant deduction should be calculated to reflect the growth of the relevant income tax bases across the UK as a whole”.

That leaves the Wales budget open to being squeezed due to the Wales income tax base growing at a slower rate than that of the UK as a whole, with no guarantee that the Treasury would top up the block grant to fill the gap, meaning that Wales could certainly lose out. Holtham recommended that the block grant should be based on a needs-based formula that would determine budgets across England, Wales and Scotland. The three most relevant factors determining need would be demography, deprivation and costs.

Based on past spending in England, Scotland and Wales, Holtham recommended that Wales should receive £115 per person to spend on devolved activities for every £100 per person spent on comparable activities in England. Will that be achieved by the fiscal framework—I hope that the Minister will reassure me—or will Wales be left with a funding gap? Holtham acknowledged that, had his needs formula been applied in 2010-11, Wales would have received only £112 for every £100 spent on devolved activities in England, due to weaknesses in the Barnett formula. This would have left Wales with a shortfall, a funding gap of about £400 million. Will the fiscal framework eliminate that gap?

I also refer to the report by the respected Wales Governance Centre, Income Tax and Wales, published in February this year. On page 4 of the executive summary, it chillingly warns that,

“the method chosen to reduce the Welsh block grant to account for the additional Income Tax revenues has the potential to cause losses of hundreds of millions of pounds each year to the Welsh budget”.

Hundreds of millions each year—that is a massive risk, surely; a serious risk of hospitals and care homes closing, teacher numbers being cut, and local government budgets being savaged still further on top of the current round of austerity. Those issues need to be addressed in the fiscal framework.

The Wales Governance Centre draws attention to important developments since the Holtham and Silk commissions. UK Government decisions to raise the personal tax allowance have drawn disproportionately more of Welsh incomes out of the income tax base than across the UK as a whole. So while UK income tax receipts have grown by 6% across the UK since 2010-11, the equivalent figure for Wales is only 2%—worryingly, only one-third of the UK figure. That is because Wales has income levels below the UK average. Fifty-five per cent of all taxpayers’ income in Wales comes from individuals earning less than £30,000 per annum compared with 42% across the UK.

When in November 2015 the previous Chancellor of the Exchequer announced the Government’s decision to drop the referendum requirement for income tax devolution to Wales, he also declared that they would protect the Welsh budget by introducing a floor underneath Wales’ relative per capita funding, to save it from any so-called “Barnett squeeze”. But lack of clarification about this proposed Barnett floor has prevented the Wales Governance Centre from checking in detail how it might interact with income tax devolution and subsequent block grant adjustments—so we just do not know. The floor may be flawed, but nobody can tell.

--- Later in debate ---

[Lord Bourne of Aberystwyth]

My Lords, much as I have the greatest respect for the noble Lord, that is not a tenable argument in law, as I am sure he knows. I take the point about the political dimension, as he knows, but on the legal aspect, the two bodies operate in just the same way. However, as I say, I will write to noble Lords on that. I understand the arguments being put forward, by the noble Lord, Lord Rowlands, in particular, as well as his point about the evolving devolution process, which makes this type of arrangement sensible where there is reciprocity. I will write to noble Lords on that point.

Amendments 120 and 120A were spoken to effectively by the noble Lord, Lord Hain, who took us through some of the financial aspects that have to be considered. I understand that. First, on something I have stated many times, although I will certainly state it again, we will not move to Third Reading—as I said at Second Reading—until there is a legislative consent Motion. So, if there is no legislative consent Motion—and there may not be; that is an issue for the National Assembly for Wales and the Ministers of the Welsh Government—we will have no Third Reading.

In relation to Report, I understand from discussions with officials—this may well be confirmed by Members of the Opposition Front Bench, who obviously have had discussions with Welsh Ministers—that there is a desire for us to move to Report so that we are closer to the sort of Bill that we will see at the end and so that the Welsh Government can then move to the legislative consent Motion, content that we are moving in an appropriate way. So we are keeping in touch on that, but I understand that there is a consensual element here to having Report, the first date of which is already public and will take place before Christmas.

We will have two days on Report to reflect on many of the important issues we have dealt with, and the second day will be soon after we come back in the new year. As I understand it—the noble Baroness pressed me on this issue—we are hoping for a legislative consent Motion in the middle of January before moving to Third Reading shortly after that. That is the suggested choreography, but of course we are in the hands of the Welsh Government and the National Assembly for Wales in relation to the legislative consent Motion. I cannot be definitive about that but I can be definitive, as I think I have been in the past, that we will not move to Third Reading until we have the legislative consent Motion. I should also say that there is pressure elsewhere in the legislative programme, as I am sure noble Lords will accept.

[Lord Hain]

Just briefly, given what the Minister has just said, does that mean that the fiscal framework will not be available to be scrutinised before the Assembly has given its legislative consent Motion? In other words, if he is promising it only by Third Reading, is he saying that the legislative consent Motion would have to be passed by the Assembly without the fiscal framework being agreed—or, indeed, without both Houses having had a look at it?

[Lord Bourne of Aberystwyth]

The noble Lord raises a point about my stating that we would not proceed until Third Reading. That is a restatement of what I said at Second Reading—I checked that before coming to the House. As I have indicated, the precise timing of the legislative consent Motion is not dependent on me, the Government, the House of Lords or on the House of Commons but on agreement between the Treasury and Welsh Government Ministers and then the agreement of the National Assembly for Wales.

On the fiscal framework document, the noble Lord will know that the Bill has already been through the other place and will go back there for consideration of government amendments—we have many government amendments that are measures that we all agree upon. But I am not sure that in any event that would give the opportunity for consideration of the fiscal framework as it will be only Commons consideration of Lords amendments: so they will only be able to consider any amendments we make on Third Reading.

I will endeavour through representations to see what additional information we can give on the discussions. Another meeting is due on 1 December, and from what we can gather, discussions are going well—I have heard this from both the Welsh Government side and our own Treasury side. I will endeavour to give an update as to where we are on 1 December. If we are able to give additional information, I will be happy to do that—but to some extent that will depend on the consent of the Welsh Government as well as our own Government. I do not foresee any problem on that, but obviously that is for them to determine. The date of the legislative consent Motion is dependent not just upon having the fiscal framework agreed, as I understand it; it then has to be considered by the Constitutional and Legislative Affairs Committee of the National Assembly—I can see that the noble Baroness, Lady Morgan, is indicating agreement to that.

--- Later in debate ---

Tabled by

[Lord Hain]

120: Clause 55, page 43, line 32, at end insert—
“(1A) Subsections (2) to (7) are subject to subsection (1B).(1B) The following provisions may not come into force until the Welsh Assembly has passed a legislative consent motion in respect of this Act—(a) sections 1 to 52,(b) section 53(1), and(c) Schedules 1 to 5.”

[Lord Hain]

My Lords, I hope that the Minister will give an assurance that a Treasury Minister will write to me specifically answering the points that I made earlier. On that basis, I will not move the amendment.

Amendment 120 not moved.

Wales Bill

Lord Hain Excerpts

Report: 1st sitting: House of Lords
Wednesday 14th December 2016 Lords Chamber

[Lord Bourne of Aberystwyth]

My Lords, I indicated on the latter point that I certainly intended that we would publish, in some form, the findings of the group on this matter. Yes, I will reflect on what has been said and say more on Third Reading, when we will be further forward in discussions, to provide extra reassurance. I come back to the point that obviously we want to move by consensus in talking with the Welsh Government and, more broadly, with the National Assembly for Wales. Again, I remind noble Lords that the LCM is a requirement before we can move to Third Reading, so the membership of the National Assembly has to be happy with what is proposed—otherwise, presumably, no LCM will be forthcoming.

[Lord Hain (Lab)]

My Lords, I apologise for not being here for the whole debate. The Minister mentioned the fiscal framework in the context of the LCM. I would be grateful if there were a prospect of that being published soon, as he kindly indicated to me, so that the House will have a chance to look at it before considering any amendments to be tabled for 10 January.

--- Later in debate ---

[Lord Crickhowell]

My Lords, I had not intended to intervene again on this issue. I have long experience of dealing with the port authority and sometimes the relationships were very good. One particular person was running the authority during my early years as the local MP with whom I had an absolutely first-class relationship. However, they were not always as good. What people ought to understand about the port authority is that it will not be the Welsh Government, or indeed the UK Government, actually operating and controlling things; that is very much for the port authority, which has extensive powers. I once had a profound disagreement with the authority over a campaign that I and others fought on the safety issue because we were deeply concerned about some of the actions being taken not by the Government but by the port authority for its own commercial or other reasons.

I wonder whether there is not some solution here. I understand entirely the crucial fact that the gas terminals are at the end of pipelines that carry gas into England and form an important part of our energy package. Surely it would be possible for some agreement to be reached by the Government with the Welsh Assembly that would take the authority for dealing with the strategic link and the gas facility out of the specific responsibility of the Welsh Government and make it a separate strategic effort, while somehow allowing the Welsh Government much more involvement for the reasons that have been outlined in the handling of such matters as safety within the port.

The fact is that the town of Milford, the oil facilities and the people who live around them on the south of the haven, as well as Neyland and Pembroke Dock, are all close to areas where, if an accident occurred, the impact would be enormous on the local population. So there is a real issue here, and I have a good deal of sympathy with the view that these matters should not necessarily be in the hands of a trust port whose powers were established a long time ago in very different circumstances. I wonder whether the powers and authority of this port should not be looked at again, perhaps jointly, by the Welsh Government and the UK Government, because there are practical issues here that go back to the original creation of this facility, when the circumstances were wholly different.

I understand the vital strategic issue, which needs to be covered and dealt with adequately, but I hope that the Government will give at least some further thought at some stage—whether they can do it during the passage of this Bill I am not sure—to the way in which these issues are managed and handled in the port of Milford Haven.

[Lord Hain]

My Lords, following that very interesting contribution from the noble Lord, Lord Crickhowell, perhaps I may ask the Minister to explain exactly how all the other issues to do with Milford Haven port are devolved to the Welsh Government. Economic development—which is crucial in the area—environmental questions, safety issues and matters relating to the sea are all devolved, yet, uniquely, Milford Haven port is excluded. If the sole reason for that is the energy question—one can understand the strategic importance of the LNG capacity there—surely the vehicle to address that might be a protocol. Since the Minister has wheeled out the protocol—I do not mean that pejoratively—in a way that is meant to satisfy the legitimate demands for control over water within Wales, why could that not be the vehicle for addressing the strategic energy question, while ensuring that the Welsh Government have full control over Milford Haven as they have over all other ports?

[Lord Bourne of Aberystwyth]

My Lords, I thank noble Lords who have participated in the debate on these amendments. Obviously, the Government have some amendments in this group as well, which I will move in due course.

Amendments 14 to 26 and Amendments 86 to 89 are opposition amendments. We debated amendments that were very similar to Amendments 14 to 26 and Amendments 86 to 89, tabled by the noble Baroness, Lady Morgan of Ely, and the noble Lord, Lord Wigley, in Committee on 7 November. The amendments would remove the reservation of reserved trust ports from the Bill and so transfer functions to the Welsh Ministers and devolve legislative competence for these ports to the Assembly in the same way as the Bill does for other ports wholly within Wales.

During that debate, in light of our discussion and the points raised by noble Lords, I undertook to take another look at the reservation of reserved trust ports without prejudice—that is, not saying that I would come along with revised proposals. I am now convinced of the strategic case for excluding Milford Haven and will seek to explain why.

Trust ports have unique governance arrangements. They are run by independent statutory bodies whose role is to manage, maintain and improve a harbour. Trust ports operate on a commercial basis, generally without financial support from government. Harbour authorities for trust ports have no shareholders but are accountable to, and run for the benefit of, their stakeholders, who include port users, local communities and local economies as well as local government and national Governments. Any profits are reinvested by the harbour authority in the port for the benefit of those stakeholders. Indeed, it is the duty of a trust port board to hand on the harbour to succeeding generations in the same or better condition. There are five trust ports in Wales, at Caernarfon, Milford Haven, Neath, Newport and Saundersfoot.

In light of the unique governance arrangements that I have just outlined, the Government believe that trust ports that have a nationally significant role in Wales should continue to be accountable to UK Ministers, which is what the reservation of reserved trust ports in the Bill achieves. During our debate on 7 November, all noble Lords who participated were in agreement about the importance of the port of Milford Haven. The significant volume of liquid bulk cargo—that is, oil and oil products, and liquefied natural gas—passing through the port each year is a clear testament to that. The oil refinery and fuel storage facilities at Milford Haven, which are dependent on the port, play an important national role in securing supplies of road and aviation fuel in Wales and England.

Perhaps I may at this stage take issue with something that the noble Baroness, Lady Morgan, stated in relation to the Murco refinery. I am in a position to say something from direct experience because I was chair of the Haven Waterway Enterprise Zone when the Murco refinery was threatened with closure, which sadly came to pass. The two Governments, the Government in Wales and the Government at Westminster, worked closely and amicably in relation to this; there was no disagreement. As chair of the enterprise zone, I had frequent discussion with the Department of Energy and Climate Change, as it was at the time, and the Minister there. There were also discussions with the relevant Welsh Minister. It was all perfectly amicable. So on matters relating to Milford Haven, I would not want noble Lords to think that the two Governments are always at loggerheads on these issues; that was certainly not the case in relation to the Murco refinery and on other issues that came up while I was chairman there over a period of some two years.

It is because of the importance of the oil refinery and fuel storage facilities at Milford Haven, dependent on the port, that we take the view that it is of strategic significance. The turnover threshold in Clause 32, referred to by the noble Baroness, is used to determine which trust ports in Wales are reserved trust ports and is based on a turnover threshold in the Ports Act 1991. Although the context is different, it seemed to be a suitable test for determining which trust ports in Wales are nationally significant and so should be reserved.

I accept—I note the spirit of contributions made by the noble Lord, Lord Hain, and others—that Welsh Ministers will remain a very important stakeholder for Milford Haven given their devolved responsibilities for other matters, such as for economic development, surface transport and marine licensing. I say once again that it is wrong to anticipate that every time a serious issue arises the two Governments will not work together. I refer noble Lords by way of example to the situation in relation to foot and mouth. That would no doubt be the case if there was some national emergency involving both Wales and the rest of the United Kingdom. The two Governments would work successfully together again where there was a need for it.

[Lord Hain]

In that case, if the Minister is saying that the two Governments would work together anyway in the common interest of both Wales and the rest of the UK, why would that not apply also in the case of the strategic energy question?

[Lord Bourne of Aberystwyth]

My Lords, if I have understood the point correctly, this is in the context of our firm belief that the port is of strategic UK significance but that there are occasions when it is absolutely right that the Welsh Government need to be involved. They are a significant stakeholder in the port at the moment and—again, I can speak from experience of chairing the enterprise zone—are involved very much in issues there. It is not that the two Governments were at loggerheads; that is far from the case. It seems that we always anticipate that the two legislatures and the two sets of Ministers will always be at each others’ throats; that is far from the case. These two mature institutions very often—indeed, most often—work very successfully together. That is the point I am seeking to make.

[Lord Hain]

My Lords—

[Lord Bourne of Aberystwyth]

May I just develop this point? I remind noble Lords that the rule on Report is that they should speak only once—but I will give way since I am sure that it is a relevant contribution. I shall write to noble Lords on issues that have been discussed to explain how the relationship with the Welsh Government works, the matters they are involved in and, perhaps, how we can move that forward to ensure that we have harmonious relationships.

[Lord Hain]

I am grateful. Incidentally, that was an intervention, not another speech. If the Welsh Government and the UK Government will not be at loggerheads on things, why would the Welsh Government be at logger- heads with the UK Government on the supply of LNG, which is just as important to Wales, proportionately, as it is to the rest of the UK? I do not understand the logic of the Minister’s point.

[Lord Bourne of Aberystwyth]

My Lords, we could disagree on this issue until the cows come home but the basic point, which I think the noble Lord would accept, is that some matters are rightly retained as reserved matters for the United Kingdom Government while other matters are appropriate for the Welsh Government. It is our belief that the significance of this port in UK terms means that this should be a reserved port and not a devolved port. We disagree on that, but that is the basis on which we are moving forward, recognising that the Welsh Government have a role to play in relation to Milford Haven—a role that they fulfil at the moment. As I say, I will endeavour to ensure that I write to noble Lords to explain how that relationship is working at the moment.

In our debate on 7 November, some noble Lords questioned the matter of the devolution of strategic ports in relation to Aberdeen, which has been cited, quite appropriately, I acknowledge, in relation to Scotland. That was, of course, a devolution arrangement that was put in place in 1998. The Government’s thinking has developed since then and the Wales Bill includes the important concept of reserving to the United Kingdom Government trust ports that are nationally significant. I repeat to the noble Lord, Lord Hain, and others that that is the reason we seek to retain Milford Haven as a reserved port.

Government Amendments 27 to 35 are concerned with reciprocal requirements for the consent of the Secretary of State and the Welsh Ministers imposed by Sections 42C and 42D of the Harbours Act 1964. These requirements relate to harbour orders and schemes made under that Act which amend existing harbour orders and schemes made by the Secretary of State or the Welsh Ministers. The amendments are needed because the consent requirements are not consistent with the new devolution settlement for harbours in Wales set out in the Bill.

The amendments remove the reciprocal consent requirements. The transfer of harbour functions to the Welsh Ministers in the Bill will mean that the Welsh Ministers, not the Secretary of State, will exercise these harbour order and scheme-making functions for all harbours wholly in Wales, apart from reserved trust ports, which I shall refer to as “devolved harbours”. This would cover issues such as improvements to harbour facilities in relation to devolved harbours. The Secretary of State or his delegate could make such orders or schemes relating to devolved harbours only in very limited circumstances. In all such cases, the Secretary of State or his delegate will have a duty to consult the Welsh Ministers before making such a scheme or order, including under new provisions in the amendments.

Also, it would be unduly restrictive if Welsh Ministers were required to obtain consent from the Secretary of State when making, for example, a harbour revision order for a devolved harbour that alters the effect of a harbour revision order made for the harbour by the Secretary of State before the new devolution settlement. Other amendments in the group contain consequential amendments applying to Clause 36—provisions supplementary to Clauses 34 and 35—covering the Secretary of State’s new consultation obligation introduced by the amendments.

Lastly, Amendment 31 removes wording from Clause 36(1) which carries an exception from the duties to consult where consultation is not reasonably practicable. This amendment has been requested by Welsh Ministers.

Government Amendments 54 and 110 to 114 fulfil a commitment I gave in Committee to examine further the fisheries management functions being transferred to Welsh Ministers to regulate fishing vessels outside the Welsh zone. Amendment 54 introduces a new clause that transfers additional fisheries management functions to Welsh Ministers. The functions replicate, to a large extent, those already exercisable in the Welsh zone which were transferred under the Welsh Zone (Boundaries and Transfer of Functions) Order 2010. The effect of the amendments is that Welsh Ministers will have available to them the functions they require to manage Welsh vessels wherever they are. They also preserve the United Kingdom Government’s requirement to retain a symmetry between the concurrent functions available to the Secretary of State in relation to Scottish and Welsh fishing vessels operating outside their respective zones. Welsh Government officials worked with their colleagues in the Wales Office and in the Department for Environment, Food and Rural Affairs to recommend these amendments, which we are pleased to present.

Finally in this group, Amendment 55 requires the Secretary of State to consult Welsh Ministers while setting strategic priorities in relation to the Secretary of State’s delivery, in Wales, of functions under two pieces of primary legislation: the Coastguard Act 1925 and the Merchant Shipping Act 1995. In practice, each of these functions is carried out by the Maritime and Coastguard Agency, an executive agency of the Department for Transport. While day-to-day operational and incident response decisions are, quite properly, the responsibility of the chief executive of the Maritime and Coastguard Agency, the Secretary of State is responsible for setting its strategic priorities. Areas covered include the 24-hour search and rescue helicopter service provided by the coastguard and the promotion of seafarer health and safety standards.

Noble Lords will be aware that statutory provision has been made for consultation between the Scottish Government and the Secretary of State in the Scotland Act 2016, and in Committee I agreed to reflect on the case for making similar provision for Wales, in line with the amendments brought forward in Committee by the noble Baroness, Lady Morgan, and the noble Lord, Lord Wigley, and by the Smith commission in respect of Scotland. I am pleased to say that we can make such provision, and this amendment is the result. I commend the government amendments in this group and urge noble Lords not to press their amendments.

Wales Bill

Lord Hain Excerpts

Report stage (Hansard - continued): House of Lords
Wednesday 14th December 2016 Lords Chamber

[Baroness Randerson (LD)]

My Lords, I look forward to the Minister’s response to this because he is not on a good wicket at the moment. This is not a good week to be defending privately run franchises or arguing that railways run by the private sector are automatically the solution to all our problems. I reassure the Minister that on these Benches, we are not massive fans of nationalisation either—we are fans of what works. As you study franchises across Britain and railways across Europe and the world, you will see that all sorts of configurations work in different circumstances and that similar configurations do not work in other places. There is no one solution.

I do not think it is necessarily appropriate for the Welsh Government to be trying to run a railway service. However, it is conceivable that the Welsh Government might wish, for example, to enter into a partnership with the private sector on some kind of joint venture, or to set up some sort of novel structure, of which they would be a part, perhaps on a not-for-profit basis. I remind the Minister that Transport for London is a real success story in many respects, and has a structure that quite clearly includes a government element. I also remind the Minister that when the Government were forced to take over the east coast main line from a failing private sector franchise, they did rather a good job of running the railway and saving the situation. Therefore, we support in principle the idea of giving the Welsh Government the freedom to decide what shape of franchise they want and to participate in that process if they wish to do so.

I realise that the Minister will say that there are practical difficulties because the railway runs not just in Wales but in England. If the rail franchise is run by the Welsh Government, it might be regarded as slightly irregular, I suppose, for the service in England, but no more irregular than the private sector franchise being run by the Dutch state railway company, which is what happens in England at the moment. I also realise that we are talking about a long way into the future, because the processes for the next franchise will not be prepared until 2028. For that reason, I hope the Minister will listen and think about this. There is value in playing the long game on the railways and in looking at how we can get the best investment in services in the long term. One thing that would persuade the Welsh Government to invest in railways in Wales would be to give them a little more power and control over them.

[Lord Hain (Lab)]

My Lords, in supporting my noble friend Lady Morgan’s excellent speech, I make one brief point. The Welsh Government are not seeking to have their civil servants run the rail franchise—I do not believe anybody thinks that that would be a good idea—but to configure the right package for Wales. We can take the example of Welsh Water. To be precise on this and, I hope, not pedantic, Welsh Water is a not-for-dividend company. It is not a not-for-profit company. It has to make profits to invest. Any entity taking over the Wales rail franchise would have to do the same. But Welsh Water is run much more efficiently than privatised water companies in England because it can raise its capital at a far cheaper rate on the market than private companies—noble Lords can look at the figures—because it does not have to satisfy the shareholders’ speculative roundabouts. The amendment would give the Welsh Government the opportunity to invite bids of that kind.

Finally, if the Minister is serious about his support for devolution to Wales, why does he not respond to the Welsh Government’s specific request to have this amendment carried into statute?

[Lord Hunt of Wirral (Con)]

My Lords, I have a great deal of sympathy with the amendment and the wise words of the noble Baroness, Lady Randerson. Having listened to the discussions on the Bill, however, I strongly support a step-by-step approach. I can see the arguments on either side and recognise that the Silk commission recommended devolution. My recollection is that it recommended that the executive responsibility for the Wales and border passenger rail franchise be fully devolved. But it did so with a number of conditions and safeguards. The Government confirmed in the St David’s Day Command Paper that they would consider which non-fiscal parts of the Smith commission agreement might be implemented for Wales, including the commitment to amend Section 25 of the Railways Act 1993 to permit public sector operators to bid for rail franchises, for which Scottish Ministers are responsible.

As I understand it, the commitments that have been made have now caused the two Governments to work together on the detailed arrangements for the next franchise, including how cross-border routes could be procured and managed and signalling the likelihood that services primarily serving English markets would be transferred to other franchises for which the Secretary of State is responsible, all of which is welcome. I suppose my main question for the Minister is: can he please give us an update on exactly where we are because I would not want us to accept the amendment if it flies in the face of the careful consideration between the two Governments of how this could all be brought into effect in time for the next franchise, but in particular during the course of next year?

Wales Bill

Lord Hain Excerpts

Report: 2nd sitting (Hansard): House of Lords
Tuesday 10th January 2017 Lords Chamber

[Lord Hain (Lab)]

My Lords, I will address Amendment 143A standing in my name and that of my noble friends Lord Kinnock and Lord Murphy of Torfaen. The amendment expresses concern about, and seeks an impact assessment on, the problem of differential tax receipts. Over the past few years, as the Minister will know, tax receipts in the UK have increased at a rate three times that of those in Wales. A gulf is opening up and Wales needs to be protected.

After the concerns on these and other matters that I and fellow Labour Peers have repeatedly expressed about the dangers to Wales of being short-changed by the devolution of income tax, I nevertheless congratulate the Secretary of State and the First Minister of Wales on reaching agreement on a new fiscal framework. It seems that they may have found a pragmatic path forward, one which both rejects the status quo and assures Wales of fairer funding for the future—though perhaps not quite as far over the horizon as the noble Lord, Lord Bourne, claimed when he announced the agreement. The new framework prolongs the life of the 115% funding floor for Wales, guaranteed in 2015 for the current Parliament. It accepts the assessment of Welsh needs relative to England made by the Holtham commission, while deftly sidestepping Holtham’s recommendation to adopt an entirely new formula for linking funding to relative needs across all parts of the UK. Instead, it embraces our old friend the Barnett formula, and thereby delivers the latest instalment in a long success story. By injecting a new needs-based factor into the Barnett formula and setting a welcome floor under the Welsh budget, the new fiscal framework goes a long way to protecting Welsh needs. I welcome that and I welcome the Minister’s role in it.

The Holtham Commission on Funding and Finance for Wales found the unvarnished Barnett formula distinctly unfit as a means for matching the funding allocated to Wales with Welsh relative needs. It judged it to be unsustainable over the medium term, but it also acknowledged that Barnett, with its modifications, gets the job done, as it is done again in this new fiscal framework. In his covering letter announcing the agreed fiscal framework on 19 December 2016—and we were grateful for notification of that—the noble Lord, Lord Bourne, claimed that the agreement,

“provides Wales with a fair level of devolved funding for the long term”.

Only time will tell whether that ambitious claim proves true. If by “the long term” the Minister means the 40-plus years that the Barnett formula in its various manifestations will have lasted by the time this new fiscal framework comes up for its first review, that will mean that the annual block grant to Wales in the 2020s will be derived from what it was at the end of the 1970s. I wonder how many Members of this House feel comfortable at such a prospect—basing budgets on spending patterns set 40 years ago, albeit with some adjustments along the way.

Let us hope that the Barnett formula, with this new 115% Welsh floor, does not set in stone the definition of Welsh needs regardless of how things change in the years that lie ahead. For example, we welcome the many new residents settling in Wales from parts of England, but they tend to be of a certain age and will create increased burdens for Welsh social care and the health service in the future. Let us hope that the Barnett formula, therefore, does not set this situation in stone.

For all its positive features, the new framework has its limitations. I will mention four. First, I acknowledge that it does respond to the call that I made seven weeks ago, when this House last debated these issues, for clarification about how any funding floor would interact with income tax devolution and block grant adjustments. While it lasts, the 115% funding floor limits the damage that the differential growth in tax receipts that we have seen between Wales and England can do to the Welsh budget. That is a bit like having third-party fire and theft insurance; it is valuable but falls short of comprehensive cover and is subject to change on renewal in the 2020s. The claim in paragraph 32 that the framework applies the same population figures to both tax and spending in calculating changes to the Welsh block grant does not persuade me that the ongoing threat from differential tax growth after the transitional period has been met.

I was also troubled and not a little bemused by the Written Answer given on 5 January by the noble Baroness, Lady Neville-Rolfe, to my Question:

“To ask Her Majesty’s Government what assessment they have made of the extent to which the agreement on the government of Wales’ Fiscal Framework published on 19 December compensates for the lower percentage increase in income tax receipts in Wales compared to the UK since 2010–11”.

I remind the House that the UK has seen a 6% rise in tax receipts since 2011. Wales has seen a 2% rise, which is a significant difference. The noble Baroness’s Answer was opaque, to say the least:

“As set out in the Welsh Government’s fiscal framework, the UK and Welsh governments have agreed to apply a block grant adjustment for each band of income tax separately. Doing so will fully account for the different proportions of basic, higher and additional rate income tax payers in Wales and the rest of the UK. This means that the Welsh Government will hold an appropriate set of risks and opportunities regarding their new income tax powers, as part of a wider funding agreement that the UK and Welsh governments agree is fair for Wales and fair for the rest of the UK”.

To be frank, that is Treasury-speak for not answering the Question. Does that mean that the lower percentage increase in income tax receipts in Wales compared with the UK will be specifically compensated for or not? Perhaps the Minister can enlighten us on this crucial matter, which could otherwise see Wales short-changed in this Bill.

Secondly, the framework does not deliver on the grand claims that have been made about tax devolution increasing financial empowerment and enhancing accountability—which is supposed to be what it is all about. The initial baseline adjustment to the block grant in 2019-20 will be set at the receipts that would have been generated by Welsh rates at 10%, whatever rates the Welsh Government actually choose to set. That is what Annex B of the agreement states. If the Welsh Government choose in that year or subsequent years to raise income tax rates by more than 10% and to spend the extra revenue, the effect would be to boost Welsh GDP via the standard Keynesian balanced budget multiplier. But it would distort rather than enhance political accountability, just as central government manipulated council tax for years to deter local authorities from raising council tax to fund extra spending on local priorities.

Thirdly, the new framework shows no sign of having given any consideration to indexing block grant adjustments in Wales to changes in comparable regions in England rather than to England as a whole. Holtham found that the two English regions Wales came closest to in 2010 were the north of England and, perhaps surprisingly, London. Wales’s needs were around 15% above the England average while the south-east of England excluding London had needs that were nearly 15% below the England average. Comparing Wales to England as a whole, including its better-off regions rather than to the closest equivalent English regions, does a disservice to Wales.

Fourthly, the only provision the new fiscal framework makes for updating estimates of relative needs at some future point is to say that things will be looked at again by both the UK and Welsh Governments when Welsh funding begins to reach 115% of equivalent spending in England, expected to be at some point in the 2020s. This will be towards the end of a transition period during which Welsh funding will be deliberately driven down towards 115% from its current 120% level. By the way, it has reached 120% only because Westminster-driven cuts in public spending have converged in line with the Barnett formula imperatives after years of Labour Government public spending rises, and should a future UK Government increase spending, that convergence would resume; hence the need, I believe, for an impact assessment. The Minister helpfully mentioned in his opening remarks that this could be provided in the annual report to which he referred. If he can reassure us on that point, that would give me some encouragement in terms of whether to press this amendment or not.

[Baroness Finlay of Llandaff (CB)]

My Lords, I want to speak briefly to Amendment 80 in the group, to which I have added my name. There are two specific categories, the first being the structure of Cardiff Airport itself for taking long-haul flights and secondly its relationship to other airports and the benefits for the region of south Wales.

The Cardiff Airport runway is particularly long, so it is often used as a diversion runway for flights that cannot land at other airports for a variety of reasons. For many years it has received the largest aircraft when they need to come in for servicing. Another advantage is that Cardiff does not have a major crosswind problem because the airflow around the Sully cliffs is not severe enough to cause any difficulties when landing large aircraft. The airport is therefore particularly suited to long-haul aircraft. This narrow amendment poses a question that is different, in that it would allow Wales to determine its future in this area.

The other aspect is Cardiff Airport’s relationship with other airports in the region. It is extremely convenient for people in west and south Wales who face problems in conducting commercial relationships in other parts of the world, so the development of the airport would certainly be invigorating. It would also help areas around Bristol and Hereford. Moreover, the skies over London are very crowded. Anyone who has been on an aircraft going round in circles as it stacks to land, and seeing other aircraft both above and below, knows that that can feel scary. One is aware of just how crowded the skies can be. Aircraft coming in to land at Cardiff Airport do not pass over populated areas because the approach is over the Bristol Channel, thus there are no problems with noise affecting residential areas. Because of Cardiff Airport’s position, passengers can travel away easily along roads that are not prone to congestion or major traffic jams. People can move on to other destinations or approach the airport with relative ease.

I hope that the Minister will think again and I wonder if we could come back to this issue at Third Reading, even if the amendment has to be made narrower still, so that we do not miss a really important opportunity to do what is right for the region and right for air travel, and would meet what was a core recommendation of the Silk commission.

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[Lord Thomas of Gresford]

My Lords, it is always a great pleasure to follow the noble Lord, Lord Elystan-Morgan. As I have told your Lordships before, I voted for him in 1964 when he was a Plaid Cymru candidate. I know that he has recovered from a serious illness to play an important part in this Bill and we are all very pleased to have him with us today. When he talked about the advantages of building a fence between neighbours, I wondered whether he was proposing to build one between England and Wales. I would support him in that—particularly if the English have to pay for it.

In preparation for this debate I spent the new year viewing five or six episodes of S4C’s excellent series “Y Gwyll”—“Hinterland”—kindly provided by S4C at its Christmas party before the break. It is a somewhat grim picture of policing in a rural Welsh community. I had some interest in that because my first five years were spent in Llangollen police station where my father was the station sergeant. His territory covered a large area of rural Denbighshire.

In one of the episodes of “Y Gwyll”, Chief Inspector Matthias has to confront a man armed with a shotgun in a remote cottage high up in the hills. It rang a bell since my father had to do precisely that. As my father approached him, the man shot himself rather than my father. In the denouement of the series, broadcast over the Christmas season, the retired chief superintendent turned out to have murdered the policeman investigating his past while his replacement, the current chief superintendent, murdered his predecessor in turn—which did not accord with my memory of the Denbighshire constabulary of those days.

The series depicts the Welsh language, the people, the way of life, the rural remoteness and the stretched facilities, emphasising the different society and community in which we live. It is not surprising that a significant majority of Welsh people, when asked for the purposes of an opinion poll in connection with the Silk commission, were of the view that the Welsh Assembly and the Welsh Government should have responsibility for policing in Wales. Indeed, devolution of policing was supported by the Welsh Government, the chief constables, the majority of police commissioners, the Police Federation and other professional police bodies.

The Silk commission reported in favour, although it was careful to say that the devolution of the governance and administration of the police would not involve the devolution of legislative competence for police powers or the criminal law. It also did not recommend devolution of matters dealt with at the UK level by the National Crime Agency—serious and organised crime, fraud, cybercrime and child protection. However, proposed new Section B5 of Schedule 1 to the Bill reserves policing to the Home Office—and that is an argument for another day.

My Amendment 81 deals with subsidiarity, leaving out the reservation of anti-social behaviour to the Westminster Government which the Bill proposes. Anti-social behaviour is essentially a matter for the local community. That is what is reflected in all the parts of the Anti-social Behaviour, Crime and Policing Act 2014 that are specifically reserved in proposed new Section B6 of Schedule 1 to the Bill.

Under Part 1 of the 2014 Act, which deals with injunctions, applications for an injunction may be made by a list of bodies, the first of which is the local authority. The next one is a housing provider, and only third on the list is the chief officer of police. Other bodies which may apply for an injunction include the Natural Resources Wales body and Welsh Ministers exercising security management functions.

Similarly, under Chapter 1 of Part 4, community protection orders, the initiative to issue a community protection order against an individual or a body lies with the local authority, where it is satisfied on reasonable grounds that the conduct of that person is having a detrimental effect of a persistent or continuing nature on the quality of life of those in the locality, and that the conduct is unreasonable. It is for the local authority to apply for the order and to take action if the individual or body fails to comply with the notice.

Your Lordships will see that anti-social behaviour is already dealt with at the local authority level. In Chapter 2 of Part 4, it is the local authority alone which may make a public spaces protection order if it is satisfied on reasonable grounds that activities carried out in a public place within the authority’s area have had a detrimental effect on the quality of life of those in the locality and that the activities are unreasonable and of a persistent or continuing nature. Again, the local authority applies for the order, the local authority enforces it.

Under Chapter 3 of Part 4, power to make and exercise a closure notice for premises associated with nuisance or disorder rests with either a police officer of at least the rank of inspector or the local authority.

Part 5 gives power to landlords to recover possession on anti-social behaviour grounds, and Part 6 is headed “Local involvement and accountability” and lays down requirements for the police to consult with local authorities and community leaders in the preparation of community remedy documents, the purpose of which is to require an individual to carry out certain specific actions.

The whole of Parts 1 to 6 of the 2014 Act is concerned with what a local authority, in the main, or a local policeman does in relation to problems within the community. It indicates how localised the legislation is. It is only sensible because other agencies which are concerned with the same sort of thing are devolved—the health service, education, ambulance and fire services, and so on.

The other powers reserved to Westminster in Section B6 refer to dangerous dogs or dogs out of control. It is a perfect example of why this should be devolved—devolution works. I am sure that many of your Lordships will recall the Dangerous Dogs Act 1991. It was regarded as an example of knee-jerk legislation and has always been thought to be utterly unsatisfactory. After toying with the idea of pet anti-social behaviour orders, an idea first put forward in the satirical political show “The Thick of It,” the Government passed Part 7 of the 2014 Act, which made some patchwork reforms. It is still not satisfactory.

Meanwhile, up in Scotland, the Scottish Parliament passed the Control of Dogs (Scotland) Act 2010, which dealt with the whole question comprehensively and sensibly. The initiative in Scotland lies not with the police but with an authorised officer who is defined as an officer appointed for that purpose by a local authority. Each local authority in Scotland must appoint at least one such officer, skilled in the control of dogs and with the capacity to instruct and advise others in matters relating to the control of dogs. The Act deals with the control of dogs and with the prosecution and punishment of owners of dangerous dogs in Scotland. Why does Westminster want to reserve to Westminster power over dangerous dogs and their control when Scotland has legislated so effectively? We have passed—or, rather, the Welsh Assembly has passed—the Control of Horses (Wales) Act 2014. If the Assembly can be allowed to legislate for the control of horses, why not dogs?

When I was living in the Llangollen police station, we had a Pembrokeshire corgi called Rex who, having been reared by my aunt, only understood Welsh. He was not one of those brown and white royal jobs—he was a proper dog, black and white with a long tail. During the last election, my wife, the noble Baroness, Lady Walmsley, and myself were canvassing near Pistyll Rhaeadr, the famous waterfall in Montgomeryshire, one of the seven wonders of Wales. She came to me rather disturbed and said that there was a dog in the next farm and that it was a bit snappy. I patted her rather condescendingly on the head, said leave it to me and went through the gate. Sure enough, there was a black and white Welsh collie, which kept jumping up at me. I said, remembering my youth, “Steddwch”, which means “Sit”—and the dog bit me. Surely, that was an issue not for Whitehall but one for Cardiff.

[Lord Hain]

My Lords, how to follow that? I shall speak to Amendment 90 in my name and in those of my noble friends Lord Murphy, Lord Kinnock and Lady Morgan. I begin by expressing my disappointment that the Minister has not been able to persuade the rest of the Government to think again on this issue and that they continue to press ahead with their transparent move, not simply to go beyond overriding decisions that the Welsh Government have taken since 2011, but deliberately to claw back powers from the National Assembly. From everything the Minister has told your Lordships, and much of what the Bill contains, this is supposed to be a pro-devolution, not an anti-devolution, Bill. But in the way in which devolved public services are configured, and especially their staff relations organised, it is repatriating powers that are already the preserve of the Assembly. Surely, that cannot be right.

When we considered this amendment in Committee, the Minister acknowledged our shared belief that employment law is, and should remain, a reserved matter. He said that,

“the underlying legislative framework concerning rights and responsibilities in the workplace must be reserved”.

I agree with that. He went on to say that the,

“system we have allows workers to be clear on their rights, whether they are in the public sector or the private sector”.

Again, I agree. However, he then said that this,

“is a fundamental principle and I cannot accept that the law underpinning the terms and conditions of public sector workers should be different from the law that underpins the rights of other workers”.—[Official Report, 15/11/16; col. 1384.]

On that point, we diverge.

My noble friend Lady Randerson spoke previously about the fact that the Welsh Assembly has long had considerable powers—for example, over doctors’ pay, terms and conditions. The principle has been conceded and accepted by the Government, ironically, as it has been in this very Bill in another respect. A government amendment to give the Assembly legislative competence over teachers’ pay and conditions has been accepted as part of this Bill. For the Minister to somehow then argue that it is impossible to disentangle fundamental employment rights from the terms and conditions of employees in the devolved public services seems somewhat irrational and contradictory, to say the very least. For the sake of clarity, I hope the House will permit me a short time to highlight the four different elements of this and to unpick a number of aspects that have been conflated during previous debates.

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[Lord Balfe (Con)]

My Lords, I would like to say a few words about Amendment 90. I will not stray into the internal affairs of Wales but this matter came up in debating the Trade Union Bill last year. The noble Baroness, Lady Morgan, mentioned the need for sound constitutional principles. I think that supporting sound constitutional principles should lead us to resist Amendment 90—which, to use a term of the noble Lord, Lord West, represents mission creep.

The amendment looks fairly innocuous and can be split into two parts. On “Terms and conditions of employment”, we keep hearing how Wales has managed to escape difficulties with doctors and has an excellent education system—although I am not sure whether the recent OECD figures bear that out—thanks to its ability to deal with terms and conditions. But, when you move on to the next bit of the amendment, “and industrial relations”, you open up a Pandora’s box. Given the Explanatory Notes accompanying the Bill, once you admit that industrial relations in Welsh public authorities are a devolved matter, you open up a huge area of debate as to what constitutes a public authority or industrial relations. For instance, could you have a different minimum wage for public servants in Wales or would you then get disputes between the private and public sectors?

[Lord Hain]

I acknowledge that the noble Lord represents Conservative trade unionists, which must be a noble and valiant role to play, but the definition of public services is in the legislation passed by this House. It is set in statute; there is no question of redefining it or inventing new public bodies. It is all defined and the amendment repeats that.

[Lord Balfe]

I thank the noble Lord for his intervention, but I am sure that there would be plenty of room for disputes; this would not end the dispute. Perhaps the Supreme Court is needed to rule on this, but the proposed clause would not help us to go forward in any way. It is a slippery slope. We have a difficulty and clearly it needs to be defined. If this clause were passed and added to the Bill, it would not be the end of the matter; it would actually complicate matters and make them more confused. I make a practice of reading absolutely every scrap of paper that comes to me from the TUC—not a week goes by without something arriving—and, if this were such an important matter, I wonder why no one has asked me to support or even consider supporting this clause. It is sheer opportunism.

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Moved by

[Lord Hain]

90: Schedule 1, page 76, line 3, at end insert—
“Terms and conditions of employment and industrial relations in Welsh public authorities and services contracted out or otherwise procured by such authorities.”

[Lord Hain]

I beg to test the opinion of the House.

Wales Bill

Lord Hain Excerpts

3rd reading (Hansard): House of Lords
Wednesday 18th January 2017 Lords Chamber

[Lord Wigley]

My noble friend is of course far better versed than I am in these matters. It may well be, as the noble Baroness suggests, that the parson’s nose is coming to the fore in my consideration of some of the more controversial aspects of the Bill.

As the Minister knows, the Plaid Cymru group in the Assembly voted against the legislative consent Motion yesterday, for the simple reason that the Assembly is losing some powers, as we noted in a number of debates in the Chamber in Committee and on Report. Some of those powers may well have been assumed or unclear, but none the less they were used, some for substantive pieces of legislation. The existing legislative powers of the Assembly were endorsed by a 2:1 majority in a referendum in Wales in 2011 and some of the powers implicit in that vote are now being retracted. Some of the legislation enacted by the Assembly since that referendum was made using powers that will no longer be available to the National Assembly when the Bill becomes law. That is a perfectly valid basis on which to register a protest vote, as the Plaid Cymru group did in the Assembly yesterday. None the less, I hope that the Government of Wales will make full use of the powers now available to them under the Bill.

Sadly, the Bill does not provide the long-term settlement to which the Minister referred. No doubt in the fullness of time another Wales Bill will clear the uncertainties left by this Bill and address the issues, many covered by the Silk report, that were avoided in this Bill. Undoubtedly, for example, the devolution of police, prisons and justice will drive that demand, as well as more coherent powers over energy. By the way, I noted something that did not come to the fore during our early debates: the Home Office, which was then under Theresa May as Home Secretary, failed to give evidence to the Silk commission on these matters. I am sure that the Minister will recall that from his work on that committee. A whole new debate will arise, post-Brexit, on financial levers and further tax-varying powers.

Finally, I will say a word of tribute to the noble Lord, Lord Bourne, for the way in which he has conducted the passage of the Bill. His has been a stalwart performance—single-handed most of the time—and we admire the way in which he has kept on top of his brief throughout, although at times we disagreed with that brief. His experience, both as a key member of the Silk commission and a former party leader in the National Assembly, undoubtedly stood him in good stead in this matter. Many of us feel that there were times when he had to defend a government line when, in a previous incarnation, he may well have taken a different line. None the less, I hope that he will be recognised by his colleagues for the work that he has done and I hope that they will take note in future of the advice that he gives on matters relating to Wales. I hope that the Bill will help to the extent that that is possible within its limitations. I therefore wish well those who will live within the framework that is now being enacted.

[Lord Hain (Lab)]

My Lords, I echo the remarks of the noble Lord in thanking the Minister for the way in which he has handled the Bill. Its passage would have been a lot bumpier without his conciliatory approach. I also echo what he said about his officials, including the excellent Geth Williams, who once had the dubious privilege of working for me. I am glad that he survived to serve on the Bill, although what he makes of the dog’s breakfast that it serves up we will never know, his being a professional civil servant.

Finally, I appeal to the Minister. In the light of the Division on the question of employment and industrial relations last week, on which there was a tied vote, I have said to him privately and I repeat publicly that there is a way in which the Government could, even at this late stage, when the Bill goes back to the Commons, bring forward an amendment to tweak the amendment that was moved. As I said, there was a tied vote in the Lords last week. He could do that in a way in which the Government could overcome their reservations and satisfy everybody concerned. He will know that the Assembly has since voted on a Bill in this area. The issue is on its way to the Supreme Court. He can avoid that. It is not too late.

[Lord Crickhowell (Con)]

My Lords, I do not intend to speculate about what might be done in another place as we debate this issue at Third Reading here. Nor do I think that I will follow the noble Lord, Lord Wigley, in looking far into events that may or may not happen in the future. I very much welcome the amendments moved by my noble friend.

Before I pay some very well-deserved tributes, perhaps I might be allowed to voice just one regret about the way in which we legislate these days. If practical and possible, it would be much better if, instead of having a Bill that amends previous Bills so that we finish up with something almost unbelievably complex and difficult to interpret, we produced an entirely fresh Bill that everyone would be able to follow and understand without a degree of expertise that might be difficult to find even among those who guide the Welsh Assembly and this Parliament. I think that that would be a much better way of legislating.

I think that it was during Report that the noble Lord, Lord Kinnock, who is not here today, commented that he had once taken a different view about devolution, and I acknowledge that I had, too. When the final decision was taken by the narrowest of margins to go ahead, I said that I believed that when one crossed the Rubicon one should go on and make a success of it. I subsequently thought about that remark and realised that it was not very wise, because when Caesar crossed the Rubicon we had conflict, murder, civil war and the end of the empire. I am glad to say that that has not been the history of devolution in Wales or of the creation of the Welsh Government.

On this occasion it is right to pay considerable tribute to two Secretaries of State for Wales—the previous and the present ones—for their strong initiative in taking things further forward and producing a settlement that I believe will last for some considerable time. I believe that they and the Government deserve credit for the role that they have played in carrying devolution forward.

I pay a special and particular tribute to my noble friend Lord Bourne of Aberystwyth, whose performance on the Front Bench has been simply heroic and which he has combined with his responsibilities in other departments. I simply do not know how he manages to do it—and do it so well. However, I thank him. I believe that all those who have taken part in the debates on the Bill will at least share in that tribute. His role has been totally outstanding.