The opening words of the splendid book I referenced earlier are:
“Only the future is certain. The past is always changing.”
We have seen splendid examples today of people fictionalising the past. I am proud of the Welsh Assembly, and I am proud that it was a creation of the Labour party in this Parliament. In deciding on its form, it would have been possible for us to adopt a first-past-the-post principle, which would have given Labour a majority in perpetuity. However, for very honourable reasons, it was decided not to do that. We also feared creating what was described at the time as Glamorgan County Council on stilts. There are other examples of socialist and social democrat countries, such as the Nordic countries, which have had parties equivalent to Labour for many decades, and which have produced some of the finest social services and human rights policies in the world.
It is absolutely wrong and mean-spirited not to recognise that the Welsh Assembly, as set up, is probably the finest example of democracy in the British Isles. Many of us were unhappy about the number of UKIP Assembly Members in May, but they gained 13% of the vote and they got 13% of the seats, which is absolutely right. However, for two Parliaments, including the ones when we set up the Assembly, when we could have done anything with liked, 20% of the voters in Wales voted Conservative and did not have a single Conservative Member of this Parliament. Why do people not object to that?
We intend to divide the House on amendment 11. Clause 16 has obviously taken up a great deal of the House’s attention, but Wales is suffering from referendum revulsion, and so are other parts of the country. We have had enough. We have been having these all through my childhood, on whether we close the cinemas on a Sunday or close the pubs on a Sunday. We have overdosed on referendums.
Let us look at examples of public votes, such as the decisions taken by the public to call a boat “Boaty McBoatface”, and in the European referendum. The choice in the European referendum was between two sets of lies by each party. Both sides are embarrassed by what they said a few weeks ago, because it has not
happened, after all the dire threats. We do not have £365 million for the health service and we do not have an emergency Budget; one could go on. I am afraid that the referendum on the alternative vote was even more disreputable, with two sets of outrageous lies put before the public. On Vauxhall bridge there was a sign saying, “If you vote for AV you’re in favour of taking protection away from our soldiers in Afghanistan and taking protection away from babies in hospitals”, suggesting that only that sort of person would vote for AV. It was nothing to do with the facts of the case. The propaganda in referendums has got to a level where the results are degraded and distorted. That certainly happened in the European referendum, and I think that faith in the process has gone.
In Wales, with each vote we have—it was a tiny minority the first time—there is momentum to build up trust in the Welsh Assembly. As the hon. Member for Montgomeryshire (Glyn Davies) argued very persuasively, it is not a real parliament unless it has its own tax-raising powers. That is a normal, essential development if we are to see the parliament of which we are so proud, on the soil of our own country for the first time for centuries, grow and take on its own decisions and responsibilities. Clause 16 provides for the removal of the requirement of a referendum on this.
We are grateful for the wisdom and generosity of the Government in how they have treated this Bill. It was a fairly ugly Bill to start with, but they have amended it and accepted all the various suggestions that were made to remove some of its less wise implications. It now has widespread support in the House from all parties and Government Members. Our problem now is that the removal of these powers also takes away the involvement of the Assembly in the process of deciding when they should be brought into force. Quite rightly, several of my hon. Friends have expressed anxieties about what would result from this, because we certainly do not want to legislate for a reduction in the amounts of money that the Welsh Assembly has.
The introduction of Welsh rates of income tax will represent a step change in devolution to Wales, replacing about £2 billion of the Welsh block grant with a more volatile revenue stream. It will therefore be essential that fair and robust new funding arrangements are established before this takes place. A new fiscal framework is required, agreed by the Welsh Government and the Treasury, which addresses each of the new factors that will affect the level of spend on devolved public services in Wales. That fiscal framework should not only cover the offsets made in return for devolved tax revenue but include a long-term commitment to the funding floor announced by the Chancellor in November. The UK Government’s Silk commission, to which we owe a great debt of gratitude, recommended that devolution
“of income tax powers…should be conditional upon resolving the issue of fair funding in a way that is agreed by both the Welsh and UK Governments.”
That is absolutely essential. There are fears that this might well be a Trojan horse that could be abused in the way that my hon. Friends have suggested. This issue remains unresolved beyond the next five years. Until the fiscal framework has been agreed, there must be no move to implement the Welsh rates of income tax. The UK Government have agreed a fair fiscal framework with the Scottish Government. It is appreciated that the
model of the Welsh Senedd will develop along the lines of the Scottish Government, but it would be unacceptable for the fiscal framework proposed for Wales to have any less favourable terms than those agreed for Scotland. Amendment 11 addresses that issue by ensuring that the Assembly and both Houses of Parliament have clearly defined roles in ensuring that the conditions are right for income tax powers to be devolved to Wales. It cannot be right that the UK Government could commence powers over income tax in Wales without the approval of the Assembly. I urge the Government to consider those amendments seriously.
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We believe that clause 10, which is a new addition to the Bill, is unnecessary and inappropriate. Justice impacts are only one part of a much wider process of assessing the impact of Bills. The measure is already provided for in the Assembly’s Standing Orders. The clause goes against the whole thrust of the Bill, which is to sweep away micromanagement of the Assembly and to give it full responsibility for its own procedures. If there are areas of Assembly scrutiny that need strengthening, that is a matter for the Assembly itself to determine. If aspects of Welsh Government planning for Bill implementation need strengthening, they should be addressed through an appropriate intergovernmental protocol.
The clause deals with practical matters that need not be addressed in statute. The key issue is to create a proper joint process for addressing the future of the jurisdiction, as proposed in our amendment to clause 1. The issue is a distraction from the main picture presented and it devalues the Bill.
We have also tabled amendments 14, 15, 13 and 16. Amendment 13 makes provision for the Executive competence of Welsh Ministers to be aligned with the legislative competence of the National Assembly—that is to say that Welsh Ministers should gain all relevant Executive functions in devolved areas. Given that the Government’s intention in producing the Bill was to provide clarity and coherence on the Welsh devolution settlement, it is difficult to understand why such a simple provision as the alignment of Executive and legislative competence has not been included.
The Government have made it clear that they believe that the reserved powers model of devolution is superior to the conferred powers model. That major improvement to the Bill is warmly welcome. It is a great about-turn by the Government and we are glad that they had the humility to accept the criticism they received—some of it was very cruel—about their ugly and hideous first version of the Bill. We are on common ground, but why does the Bill provide for reserved legislative competence while continuing to operate on the basis of the conferred powers model in respect of Executive powers for Welsh Ministers? The continued heavy reliance on transfer of function orders, with their itemised listing of the statutory powers available to Welsh Ministers, is a relic from the past and it should be swept away. We need now fully to accept the logic of the reserved powers model and align legislative and Executive competence in the way proposed by the simple and straightforward formula suggested by amendment 13. It is an amendment of rare literary merit and it should be accepted on that basis alone.
It has become clear that the Government have used the Scotland Act as a guide in developing this Bill, so it is difficult to understand why a fundamental principle of the Scottish devolution settlement is not being replicated in the Wales Bill. The Bill provides for the extension of the competence of the National Assembly in a number of areas. Surely, as the legislative powers of the Assembly expand, it is essential that closer alignment between the legislative and Executive responsibilities is achieved. That is what amendment 13 would achieve, and I urge the Government to accept it.
The further point I would like to make is on the question of borrowing. The current level of capital borrowing permitted to the Welsh Government, £500 million, is unreasonably low given their annual spend of about £14 billion. The Bill provides an opportunity to redress this imbalance by giving Welsh Ministers a more meaningful degree of borrowing power. Both the Holtham commission and the Silk commission recommended setting what amounts to a higher level of capital borrowing for the Welsh Government. The Scottish Government saw an increase in their borrowing capability as art of the recent Scotland Act, and now is the time to do the same for Wales. The new fiscal framework to be agreed by the Welsh Government and the UK Government will set out the terms for any future increase in capital borrowing. At the very least, however, the introduction of Welsh rates and income tax should be accompanied by a significant uplift in the borrowing season.
New clause 6 has been prepared to address this omission. It is a logical consequence of the partial devolution of income tax, which will produce a new revenue stream for the Welsh Government. Increasing the borrowing cap in this way would strengthen the range of financial tools available to the Welsh Government, allowing them to invest in Wales with vital infrastructure. I urge the Government to accept the amendments.