My Lords, I shall follow on from my noble friend Lord Rowlands on the issue of the apprenticeship levy and very briefly and simply make the case for reconsideration of the policy being implemented now by the Government in both the public and private sectors.
I believe that within the formulas currently being employed—and this applies very particularly to Wales because of our substantial local government and public sector, for various historic and structural reasons—there should be better treatment for both private and public employers who are already proven good trainers. There is insufficient discrimination in the way the system is intended to operate now to give higher rebates or greater inducements to improve apprenticeship training, numerically and in qualitative terms, because those who are already good trainers, who have the custom and habit of making substantial provision for the training of new generations of skilled personnel, are simply not getting rewarded as they should for good performance, and their strong intention to continue with that good performance, by comparison with employers who are and will be levy payers who have a much weaker record of the employment and development of apprenticeship skills. I make that plea in the context of this Bill because it has direct relevance.
There was a time, a very long time ago, in the early 1990s, when I had various obligations in my mid-life crisis of being leader of the Labour Party. We developed an apprenticeship levy scheme that was deliberately constructed in order to reward public and private sector companies and institutions with good records of apprenticeship performance and to finance their bonus, as it were, out of the levy on those with weaker performances. So there was a dual spur of inducement to improve apprenticeship performance in rewarding those who had good records—and intended to improve upon them—and in the minor penalty, but nevertheless a penalty, on those who had no such record of good performance. There was an inducement for them to reduce their levy obligations by improving their performance.
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I am certain that if that principle were to be installed as part of the improved but in some respects questionable new system of apprenticeship levies, there would be greater rewards. It would have a particular application for some of the employers mentioned by my noble friend, for example, because these local authorities are very substantial employers in the areas that they serve. The obligations resulting from the levy will not be offset by the rewards that they can derive from it, and therefore by a great perversity the people of those areas and the authorities themselves will be disadvantaged by having established good apprenticeship training
performance. Surely that cannot be the purpose underlying this change and in their own interests, as well as those of employers who provide a good model, I hope that the Government will give it some reconsideration.
Arising from other points made thus far in the debate, I again refer briefly to the possibility of changing arrangements and devolving powers relating to air passenger duty to the Cardiff Government. I make this argument to provide devolution in order to exercise absolution. The whole purpose of devolving responsibility for air passenger duty on long-haul flights from Cardiff Airport would surely be to give the devolved Government in Cardiff the right not to make the levy. There are lots of reasons for supporting such an argument, including that of the disproportionate cost inflicted on long-haul passengers on very modest or low incomes, who for a variety of social and family reasons need to travel on long-distance flights. But that is not the argument I offer this afternoon; I would provide Cardiff Airport with an advantage that could add attracting long-haul trade to its very substantial existing advantage of really speedy transfer times.
To a certain extent, I refer to the fortunate experience of the publicly owned Manchester Airport—a very successful airport which continually secures profitable operation and very high standards of efficiency. What the enterprising local authorities that own Manchester Airport did, a couple of decades ago now, was to undertake an initiative seeking deliberately to attract long-haul flights. They hoped that by so doing they would attract a degree of short-haul flights from other European destinations. And so it came to pass—so much so that it now has a substantial trade in long-haul which attracts inward and outward flights from and to other European destinations.
I do not suggest for one second that Cardiff would, over a short period, be able to achieve a rapid transition to Manchester’s throughput of passengers, which is now huge. The expansion there over the last 25 years has been remarkable and entirely commendable. But if Cardiff could distinguish itself by offering a holiday on air passenger duty and seeking to attract long-haul flights, it could have a special convenience and passenger attractiveness for a great arc of the population of the UK, running from Bristol right through Gloucester to Oxford and up to Birmingham, where it would obviously be in competition with long-haul flights from Birmingham’s excellent international airport.
Nevertheless, by offering that additional inducement, it would be attracting the attention of global passengers to the fact that Cardiff is a very convenient destination for a large segment of the UK population. And it would have the added inducement of offering cheaper travel costs as a result of not having to make the passenger levy. I just hope that the Government will think in enterprising terms of trying to facilitate the competitive operation of long-haul flights both as a way of relieving pressures on hub airports in the London area—which is an advantage in itself—and as a way of stimulating the potential for a different level of aviation business out of Cardiff Airport.
My other point echoes—as one would expect, as my name is on my noble friend Lord Hain’s amendment—the central point that my noble friend
made with great effectiveness. It is that such is the disparity of growth in tax revenues between the all-England average and the Wales average that there is a very direct need in terms of economic justice as well as the facilitation of good government and properly financed activities for compensating for the difference in the rate of increase of tax revenues, where blame to no one is an established fact of life.
Just as I would make the argument that we work continually for the day when Wales has no right to claim European regional funding—that is the ambition that we have had throughout the whole time that we plotted and planned and campaigned to secure Objective 1 status for Wales—I would also make the argument for direct guaranteed annual compensation for the different rate in growth in tax revenues, which is structural and not the fault of anyone, and for it to be an advantage for Wales, or at least the provision of economic enablement to Wales, that we would seek to work to end, simply because Wales had become so fortunate and so rich and so effective in its tax gathering that it was experiencing prolonged periods of economic growth, and therefore revenue growth, and so at some time in the future would not need such compensation.
In the meantime, however, because of the structural disequilibrium between Welsh tax growth and all-England tax growth, the very least that we should be seeking is fair comparisons between areas in England of similar industrial and economic structure and history to those in Wales, or, even more directly—and much more simply—we should make the comparison between Welsh rates of income tax growth and the English rate. Unless this basic equilibrium is addressed structurally and constitutionally, the disparities will continue to grow and, with them, the great disadvantages and some of the economic disincentives. So I ask the Minister, who I know is deeply committed to the basic well-being and future development of Wales, to give the most positive consideration to the proposal made by my noble friend.