I beg to move, That the clause be read a Second time.
With this it will be convenient to discuss the following:
New clause 3—National Assembly ability to hold binding referenda—
New clause 4—National Assembly for Wales: reserved powers—
‘(1) The Secretary of State will lay a report before each House of Parliament on the further legislative steps needed to move to a model of reserved powers for the National Assembly for Wales and shall lay the report before each House of Parliament within nine months of this Act receiving Royal Assent.
(2) Part 2, except the referendum-related provisions and sections 19 and 20 shall not come into force until the report has been laid in accordance with subsection (1).’
Amendment 8, in clause 19, page 22, line 8, at end insert—
‘(1B) Welsh Ministers may set their own capital expenditure priorities.”
We should be using this Bill to empower the Welsh Government—with an arsenal of powers to enable them to intervene in the Welsh economy. During our discussions on the Bill, we have debated fiscal powers and different elements of borrowing powers. However, we have not debated one lever that could be of enormous use to the Welsh Government and that might not necessarily cost a penny, but that would allow them to provide security to various infrastructure projects that might not take place without such backing.
New clause 2 would allow the Welsh Government to issue financial guarantees for private projects that they choose to support in such a manner. Government guarantees are useful for companies that are then able to draw down private investment to fund their projects. As I have said, these guarantees would cost the Government nothing, unless the project fails.
Effectively, guarantees mean that the Government financially underwrite a project. In many cases, guarantees are more useful for helping projects get off the ground than borrowing powers. It is a simple measure that would help the Welsh Government kick-start infrastructure development in Wales, boosting jobs and growth.
“The offer of a guarantee is helping to get projects going…There is a lot of infrastructure happening in this country because of this programme.”
The Institute of Civil Engineers said that the guarantee scheme had enabled
“viable projects to secure finance in difficult market conditions…It is an excellent example of government making creative use of its resources to get projects moving,”
Last October, the UK Government announced their £40 billion guarantee scheme. Projects earmarked for support included a £300 million biomass energy generation plant in Avonmouth in Bristol; a £400 million gas-storage facility in Islandmagee in County Antrim; two gas-fired power plants in Lincolnshire and Essex; mixed-use development of homes, offices and shops in Aberdeen; a wind farm on the Forth estuary; a renewable energy port facility in north Lincolnshire; a low-carbon fuel plant for commercial vehicles; development of the university of Roehampton campus in Surrey; a wood-fired generation plant in Tilbury in Essex; relocation of Northampton university; a Five-Quarter Energy gas plant in the north-east of England; and ethane storage facilities at the Ineos Grangemouth plant near Falkirk in Stirlingshire.
If we look at the UK Government’s list of prequalified projects, which was updated on
The UK Government guarantee scheme should not be confused with the national infrastructure plan, which is a wish list of future projects. The plan does include the proposed Wylfa B, with a promise of UK Government financing help following planning approval. The national infrastructure plan of December 2013 mentions
“a new cooperation agreement with Hitachi and Horizon with the aim of being able to agree an in-principle guarantee by the end of 2016 to support the financing of a new nuclear power plant at Wylfa, subject to final due diligence and ministerial approval.”
It has, therefore, still not reached the prequalified stage.
Returning to the UK Government guarantee scheme, the eagle-eyed will notice that none of the prequalified projects is located in Wales. Therefore, the Treasury is using Welsh taxpayers’ money to underwrite projects in other parts of the UK, and Wales has so far seen precious little, despite desperately being in need of better infrastructure to drive forward the Welsh economy. Driving forward the Welsh economy would be a real effort to rebalance the UK economy geographically, yet this Government have no real interest in doing so. They should either bring more infrastructure projects to Wales, or give the Welsh Government more tools to do so. I and my Plaid Cymru colleagues believe that it is for the people of Wales, through their democratic institutions, to decide which infrastructure projects to underwrite and where.
The UK Government have pledged to underwrite the £4 billion Thames super-sewer here in London. Some might regard that project as especially high-risk, considering the widely recognised indebtedness of Thames Water, a company that failed to pay any corporation tax last year, despite its profits increasing 79% to £259 million.
A few months ago, Welsh Members were invited to a meeting by the £280 million Circuit of Wales developers in Blaenau Gwent. They informed MPs and peers that one of the measures they needed above all else to get the project going was a Government guarantee. Hardly a week goes by without some Labour MP, Assembly Member or Lord saying that the circuit could be the saviour of the Welsh valleys. Today, Labour MPs will have their opportunity to give the Welsh Government the power to issue the guarantee required to get the project going. As ever, I do not hold out much hope that Labour MPs will put the communities they represent first, but the way they vote will be a matter of public record.
Our new clause 2 proposes that the Welsh Government should have the ability to issue guarantees—ultimately guaranteed by the Treasury—worth 5% of the UK Government scheme. That would enable the Welsh Government to underwrite £2 billion-worth of infrastructure projects, which would inevitably provide a significant boost to the Welsh economy.
Technically speaking, a guarantee gives rise to a contingent liability for the Government. In other words, it is a potential liability depending on something happening that will trigger the guarantee and require funds to be paid in full or in part to satisfy the guarantee. Given the uncertain nature of such liabilities, the Government do not score them against departmental expenditure limits, unless and until they result in payments being made.
The major infrastructure projects announced, or semi-announced, for Wales by the UK Government—the M4 relief road and rail electrification—will not come through infrastructure guarantees, but via puppet-master strings. The UK Government are seeking to force a future Welsh Government to use their borrowing capacity for the first, and the second is a complete shambles because neither Government can agree on who said what they would pay for.
Ultimately, Wales should get its fair share of economy-boosting infrastructure projects and the Welsh Government should be empowered to provide guarantees, without the constraints placed on them by Westminster as with the other cases I have just mentioned. If used prudently, the guarantees need not cost the Welsh taxpayer a single penny. It is a simple and effective mechanism.
The UK Government’s proposals in the Bill effectively handcuff the Welsh Government. They are saying, “You can have tax powers, which can’t be used due to the lockstep, and you can have borrowing powers as long as you spend them on our preferred projects.” They are treating the Welsh Government and the people of Wales with contempt.
In these remaining stages, the Secretary of State needs to rethink his position. The leader of the Conservatives in Scotland has described the current Scottish fiscal arrangements as those of a “pocket money Parliament”. Surely there should be a better deal on offer for the people of Wales. A Bill genuinely aimed at helping the Welsh Government to drive forward economic growth would at the very least include this new clause.
My Plaid Cymru colleagues and I also tabled amendment 8. We remain concerned that the UK Government will seek to shackle the ability of a future Welsh Government to use the borrowing-for-investment powers as they see fit. The case in point is the plan to use the new borrowing capacity for a new M4 road. Plaid Cymru has long advocated infrastructure investment as a means of creating jobs and developing the Welsh economy, which still languishes at the bottom of the UK economic league table. However, it would be a dereliction of duty by any future Welsh Government if they agreed to use their borrowing capacity solely to fund a new M4 road, because, first, there are far better ways of relieving congestion on the existing M4 in south-east Wales; secondly, any future Government of Wales will have a duty to the whole of Wales, not just the south-east; and thirdly, if the powers are to be devolved, surely it should be a matter for the democratically elected Government of Wales to determine their own priorities, not a matter of command and control from the Treasury.
The Bill as drafted says that the Treasury will have final say on any infrastructure projects in Wales paid for via the borrowing powers. Our amendment 8 would enshrine the right of a future Welsh Government to choose as they see fit. Ultimately, as in other areas of the Bill, the Westminster Government are saying, “You can have the power to do x, y and z, but we still retain the right to overrule you or to attach conditions and caveats so that the power cannot be used freely.” We have seen that with the Government’s addition of the lockstep, the cherry-picking and the complete failure to give to Wales any devolved powers that match those for Scotland and Northern Ireland.
When the UK Government announced that they would make money available for investment in a new M4 relief road, it was unclear which funds would be allocated. As the Bill’s contents were gradually revealed, it became apparent that the Westminster Government intended to bind a future Welsh Government’s hands on the borrowing powers available by funnelling the new power into the project that they saw as the one worthy of investment—namely, the priority from a Treasury perspective. It is highly telling that the Government here want the money to be spent on the M4, as they see Wales through a colonial lens. For Westminster, Wales is worthy only of mineral and natural resource extraction and as a source of labour, which means that its only interest is in maintaining east-west links and that it has no interest in developing infrastructure internally in Wales.
In a close parallel, the UK Government stated that they would electrify the great western line to Swansea and the valley lines, but then reneged on their word. That also revealed the incompetence of the Labour Government in Wales, who completely failed to nail down the Westminster Government on the precise terms of the agreement. All along, the people of Wales are being let down by unionist parties who squabble among themselves and who deliver only mealy-mouthed promises and an economy in Wales that is still languishing.
Will the hon. Gentleman please explain or elaborate on the imperialist nature of the M4, because I am slightly at a loss?
The point I am making is that all the investment seems to be on an east-west basis, rather than on a north-south basis.
Plaid Cymru recognises the issue of congestion on the M4 corridor around Newport and wants investment to take place. However, the current Labour Welsh Government’s preference for a new M4 to the south of Newport at a cost of £1 billion is a disproportionate solution to the amount of congestion. According to Friends of the Earth and Professor Stuart Cole, the Welsh Government consultation documentation overestimated traffic growth in 2012 and 2013. The flows were lower than the Welsh Government predicted, so they do not have a strong enough statistical base on which to justify such a huge financial and environmental cost. As the Federation of Small Businesses has pointed out, committing the vast majority of Welsh borrowing capacity and money from outside the borrowing limit in the Bill to one single project is misguided and does not serve the whole of Wales or the whole of the Welsh economy.
I have huge respect for the right hon. Gentleman. I will outline two alternative proposals that would be a better use of the borrowing capacity of the Welsh Government than blindly following what the Treasury wants.
The new M4 will not be a quick and decisive solution, despite what its supporters say. It will not be completed until 2031, according to the Welsh Government. The £380 million blue route, an upgrade of the A48 corridor that includes flyovers, would represent better value for money and would avoid the environmental damage caused by building on the Gwent levels to the south of Newport. The road upgrade would be accompanied by modern traffic management methods, such as signage to direct traffic flows between the A48 and the existing M4, depending on congestion levels. The blue route is future-proofed until 2035 and, if needed, it could be developed further beyond 2035. Money saved by developing the blue route could be invested elsewhere in Wales. In our previous transport consultation, Plaid Cymru identified transport needs in north, mid, west and south Wales. Above all, Plaid Cymru’s proposal to support the blue route is more innovative and balanced than the proposal with which the Labour and Conservative parties are trying to push ahead. Wales must not get tied into the UK Government’s deal on the M4.
Ultimately, although a new route is needed to relieve the pressure on the M4, what is really needed is the development of a metro system for south-east Wales and the valleys. Early estimations have put the costs at about £1 billion. The reality is that the M4 is used as a local road in south Wales, as Paul Murphy well knows: 40% of journeys made on the M4 in that area are local ones of less than 15 miles. This means that—in one act—commuter journeys could be transferred to a metro system to relieve the pressure on the M4. The great thing about a metro system is of course that, after the initial outlay, a ready stream of revenue is provided through ticket sales that could be used in part to repay the initial expense and reinvest in services and upkeep. The success of the Newcastle and Tyneside metro could be repeated in south Wales if we had the necessary vision.
In conclusion, it appears that the Westminster Government are intent on binding the Welsh Government’s hands on how they utilise the borrowing capacity. The M4 relief road is a case in point. Unfortunately, the current Labour Welsh Government lack the ambition and vision to do something different, and are blindly following the UK Government’s lead. Amendment 8 would make sure that a future Plaid Cymru-led Welsh Government were not bound in the same way but could prescribe more intelligent solutions to infrastructure problems and provide a boost for the whole of the Welsh economy, rather than just the primary corridor routes in and out of Wales that concern the Westminster Government. With your permission, Mr Deputy Speaker, I will therefore definitely push amendment 8 to a vote at the appropriate time.
It was interesting to hear the points made by Jonathan Edwards, but I want to concentrate on my party’s new clause 4 on reserved powers. I very much welcome the new clause, which relates to the laying of
[Interruption.] Perhaps I should give up for a second while negotiations are going on behind the Speaker’s Chair.
I repeat that I support new clause 4 on reserved powers for Wales. I remind the House that the Leader of the Opposition, who was in north Wales for the Labour party conference some months ago, said that the next Labour Government would introduce a
“new Government of Wales Act, with powers assumed as devolved to Wales, unless specifically reserved. Bringing Wales into line with Scotland—modernising and advancing the devolution settlement for generations to come.”
I do not see why the Government, and particularly the Secretary of State for Wales, should reject such a proposal. In an earlier incarnation, I was probably more sceptical about devolution than even he is now, but the world changes. As the hon. Member for Carmarthen East and Dinefwr mentioned several times, the world has changed with regard to what might or might not happen in Scotland in a few months’ time. Let us assume, as I hope will be the case, that the voters of Scotland vote no. If that happens, we know that the Government—not the Opposition—will make far-ranging changes to Scotland’s constitution, with its Government being given extra powers as a consequence of his Government’s commitments. The Secretary of State also knows that it is quite likely that a future Labour Government would agree to such proposals. I therefore cannot understand why he is opposed to reserved powers for Wales only a matter of weeks before the possible introduction of a new Bill for Scotland that would give extra powers.
That argument is simple enough, but in a sense it goes back to our previous debate about borrowing. The Treasury Minister tried to make the point, rather heavily I thought, that borrowing could not be greater in Wales because we did not have sufficient streams of income. However, the shadow Secretary of State pointed out that Scotland and Northern Ireland were given borrowing powers for different reasons. Therefore, it is strange that, within Government, Wales is going that way and Scotland is going another way. There is no reason why that should be the case.
This is a modest measure. The new clause calls for a report to come to Parliament looking at the issue of reserved powers. It will avoid the need for the Secretary of State to keep going to the Supreme Court when there are disputes on, for example, the Agricultural Wages
Board and other issues. This measure seems a simple solution to the problem. What happens in Scotland will have an effect. The Silk commission recommended this. Granting reserved powers to Wales—in other words, it would have all the powers it needed except those that are reserved to Westminster—is a way in which we can overcome the differences between Wales and Scotland.
I am following the right hon. Gentleman’s argument and I fully accept what he says about the benefits of a reserved powers model. However, it seems to us that the problem with the new clause is that it relies on a report some time in the future to bring that in. Accepting what he says and the obvious benefits of a reserved powers model, why do we need that report?
I hope that my hon. Friends on the Front Bench will elaborate a bit more on the matter, but my guess is that they discussed the issue of reserved powers at earlier stages and a new clause is necessary to revive the debate on that on Report. I agree that this measure is relatively modest in asking that a report be laid, but I am sure that my hon. Friend Nia Griffith will clarify that we are in favour of reserved powers, as described by the Leader of the Opposition in north Wales. There is no equivocation at all about whether we want reserved powers. We do. The new clause is framed in this way so that the House can debate what is an important issue.
From my reading of new clause 4, it does propose a reserved powers model, but that is contingent on a report not on the reserved powers model, but on borrowing by Welsh Ministers. The Opposition seem to be yoking two different things together. I suspect that it is a delaying, or even a wrecking tactic.
It certainly is not a wrecking tactic. I have made the position clear. I am just a Back Bencher, but Labour Front Benchers will also make it clear that the Labour party is committed to reserved powers for Wales. In the light of what is likely to happen in Scotland, that becomes much more important.
I am grateful to the former Secretary of State for giving way. He is definitely not just a Back Bencher, but does he genuinely believe that moving to a reserved powers model is a panacea for all the difficulties and challenges of a devolution settlement between England and Wales—issues such as water, transport, and the populous border, which the shadow Secretary of State described earlier? Does he genuinely believe that moving to a different starting point is a panacea to overcome the challenges in the current devolution settlement?
I do not think for one second that the model is a panacea for all the issues and problems that we face, but I think that it will give tools to the National Assembly and the Welsh Government that they currently may not have and make it easier for them to resolve various issues. I do not suggest for one second that the model means that we will have to end the important cross-border co-operation that exists, or that there will be no need for the Governments to discuss matters. Of course that will have to happen, because of points Members made earlier; large swathes of the population live on the border in Wales, in contrast to Scotland. I agree with the Minister that this model is not the complete answer but it is an answer. It is also an answer in the light of what both parties are thinking with regard to Scotland. Whatever happens in Scotland—like me, the Minister will argue for a no vote—it will undoubtedly change the political and constitutional landscape of our country and so Wales must be in a position to take part in that. Otherwise, we will be seen as an adjunct to a very large England, with Northern Ireland, with its own special issues, on one side.
Therefore, I agree with the new clause. I am sure that my hon. Friend the Member for Llanelli will be able to make the points that I have not made and that have been discussed by Members.
The new clause calls on the Secretary of State to issue a report on the further legislative steps needed to move to a model of reserved powers for the National Assembly for Wales. It seeks to prepare the way for Wales to enjoy the reserved model of powers, so that legislation should set out the areas that are reserved for the UK Parliament, rather than trying to define all the areas that Wales can legislate on.
The current situation is that the model of devolution in operation for Wales is the conferred powers model. Following the referendum in March 2011, the National Assembly for Wales was empowered to make primary legislation in the 20 broad policy areas. Therefore, the areas where the National Assembly can legislate are conferred upon it and listed in the statute. However, Scotland and Northern Ireland enjoy the reserved powers model, which means that the legislation sets out the areas where the devolved legislature cannot legislate—areas that are reserved to the UK Parliament.
“Part 2, except the referendum-related provisions and sections 19 and 20 shall not come into force until the report has been laid in accordance with subsection (1).”
What is that caveat? What is the hold up in moving towards a reserved powers model in the new clause?
That provision is to ensure that the report is actually laid. That is the point of it. It says, “Let us make sure that this is a genuine part of what happens during the passage of the Bill, rather than the issue being kicked into the long grass.” Otherwise, the danger is that the new clause, which asks for further progress on reserved powers, would just be kicked into the long grass. That would be the problem. It is integrally linked now with the progress of the Bill.
The whole point is that this is what we want to see. We are committed to a reserved powers model and that is what we would like to see progress on. It seems a missed opportunity not to have that in the Bill, so we want to put it in.
I share the passion for the reserved powers model. The point the hon. Lady is making about the contrast with Scotland and Northern Ireland is an admirable one. My party leader has said that. So has Plaid Cymru and elements of her party, but why do we need subsection (2) of the new clause? I do not understand. Why cannot we proceed with the reserved powers model anyway?
The important thing is that we are firmly committed to the reserved powers model and we wanted to find a way to put that in the Bill. We have put it in the new clause in this way because that is what we have been advised.
The Silk commission part 2 makes the recommendation that Wales would be better served by the reserved powers model, and it therefore seems to us that the Bill provides an ideal opportunity to pave the way for that change. Not to do so would be a missed opportunity, which is why we are proposing the new clause. The model is already there for Scotland and Northern Ireland.
My right hon. Friend the Leader of the Opposition confirmed our commitment to a reserved powers model when he announced at Welsh Labour conference that Labour has a manifesto commitment for next year’s general election to introduce a
“new Government of Wales Act, with powers assumed as devolved to Wales, unless specifically reserved. Bringing Wales into line with Scotland—modernising and advancing the devolution settlement for generations to come.”
Labour is the party that brought devolution to Wales and Scotland. It remains the only party that is committed to and can deliver devolution in the UK and get the best deal for Wales. Therefore, let us look at why we believe that the reserved powers model would serve Wales better than the current model.
As the Welsh Government told the Silk commission:
“The reservation model is a technically superior method of devolving legislative competence on a devolved legislature. In our view, the conferral model is incapable of prescribing with any degree of certainty exactly what the Assembly can legislate about…The Welsh model therefore lacks…clarity and certainty, and much time is spent addressing potential arguments about whether provisions of a Bill relate to such undefined subject-matter.”
Indeed, the submission from the Hywel Dda institute of the Swansea university school of law also concluded that
“the reserved powers model is, in principle, superior in terms of accessibility, clarity, stability, sustainability, effectiveness and consistency with the principle of subsidiarity”.
I am listening intently to the hon. Lady’s arguments about the benefits of a reserved powers model, and I fully agree with her. I was here when the original Wales Bill was drafted some years ago. Why was it not put in as it was for Scotland at that stage, rather than the conferred model?
I very much hope that the right hon. Gentleman will welcome the move forward that we are making in light of the referendum that showed that the people of Wales wanted to go that step further. I think it reflects the mood that there is and where we are with the present situation in Wales.
I am very pleased to hear that Mr Williams is offering his support, particularly as his hon. Friend the Member for Brecon and Radnorshire (Roger Williams) stressed his wholehearted support for a move towards the reserved powers model only a few weeks ago here in this Chamber. His thoughts were, of course, echoed on
“So, what you will find in our manifesto is a commitment to implement Silk 2 in full.”
I hope today that we will see that support demonstrated in full by his party.
Turning to the Secretary of State for Wales, I think I will have a rather more difficult time persuading him to even contemplate moving to a reserved powers model for Wales. Indeed, he is on record as preferring the current settlement and I suppose even that is a big step forward for him from our days together on the Welsh Affairs Committee, when he wanted a referendum to make provision for turning the clock back and reversing the devolution settlement.
That brings me on to further evidence for wanting to move to a reserved powers model. As hon. Members will know, since the Welsh Assembly received its full law-making powers in May 2011, there have already been three referrals to the Supreme Court seeking clarification as to whether proposed legislation is within the competence of the Assembly. Two of those referrals have been made by the Attorney-General. The first of those was the Local Government Byelaws (Wales) Act 2012, which was passed by the Assembly in July 2012. The Supreme Court delivered a unanimous judgment in November 2012 that it was within competence of the Assembly. That process both delays the legislation and comes with a cost.
In this case, the legal cost of the Treasury Solicitor’s Department for representing the Attorney-General in relation to the Bill was £59,000. The legal cost incurred by the Welsh Government was £30,000 and about £15,000 was spent on civil service time in the Wales Office. The First Minister’s spokesman called it a
“ridiculous situation that has arisen on what is a totally uncontroversial piece of legislation…The primary policy objective of the Bill is to simplify and rationalise how local authorities make byelaws to deal with nuisances in their areas…So why the UK government has decided to take this to the Supreme Court, at the last minute, is inexplicable.”
You really do have to ask yourself, Madam Deputy Speaker, why the Secretary of State even thought it necessary to ask the Attorney-General to refer it in the first place. It is difficult not to conclude that it had something to do with his general antipathy to any new steps in devolution.
The second referral by the Attorney-General was the Agricultural Sector (Wales) Bill, passed by the National Assembly for Wales in 2013, and we are still awaiting the outcome. That Bill seeks to retain in Wales an equivalent of the Agricultural Wages Board, which has been abolished by this Government in England. It therefore represents a difference in policy between the UK Government and the National Assembly for Wales.
Yet again, we saw it referred by the Attorney-General. You might almost suspect, Madam Deputy Speaker, that that was a referral made by the UK Government because it disagreed with the legislation and was unwilling for the Welsh Assembly to do things differently. But to most people, it just looks like wasting public money, fighting an expensive legal battle to try and stop the Labour Welsh Government from retaining an equivalent board in Wales to protect Welsh farm workers—a move that has the support of the Farmers Union of Wales and people in Wales.
Furthermore, as my right hon. Friend Paul Murphy, who has direct experience of these matters, said in a previous debate, when he was Secretary of State for Wales, disputes between the devolved Administrations and the United Kingdom Government were resolved at a governmental and political level and they should never get to the stage where they are resolved by the courts. He stressed that there is machinery within Government for resolving disputes between the devolved Administrations and their Parliaments and the UK Government.
The third referral was of the Recovery of Medical Costs for Asbestos Diseases (Wales) Bill by the Counsel General. The Bill was introduced by a Back-Bench Assembly Member and passed by the National Assembly in November 2013, and again, we are still awaiting the outcome of that referral.
If we moved to a reserved powers model of devolution for Wales, that would help address any such issues in the future and afford the Assembly the respect it and the Welsh people deserve. That is why we are anxious to see the new clause included in the Bill.
With all due respect to right hon. and hon. Members who have spoken today, I would like to begin with a quote that, for me, exceeds anything that has been heard today for eloquence:
“The will of the people is the only legitimate foundation of any government, and to protect its free expression should be our first object.”
I quote that in support of our new clause 3, which stands in the name of my hon. Friend Jonathan Edwards and my right hon. Friend Mr Llwyd. The quote comes from Thomas Jefferson, third President of the United States, primary author of the declaration of independence and, as I am sure the Western Mail would remind us, one of 16 of the 56 signatories to the declaration who were of Welsh extraction. Jefferson’s argument is that the validity of any Government is bound up with their purpose of representing the will of the people. That could also claim to be the primary motive behind our new clause 3.
In Committee, we in Plaid Cymru tabled amendments, as my hon. Friend the Member for Carmarthen East and Dinefwr said earlier, that would grant further powers to the National Assembly, including the power for it to decide on the number of Assembly Members, change its name should it wish to do so, and make amendments to secure further financial powers. We were disappointed that more Members from other parties did not support those amendments, but this new clause encompasses them all.
We believe that decisions of this nature are better made when elected representatives have the backing of the people, and the most straightforward means of determining the will of the people on any particular subject is, of course, a referendum. New clause 3 would therefore give the National Assembly the power to hold binding referendums on issues on which it already holds competence, and on questions relating to further transfers of constitutional or financial powers, such as those that have been proposed in respect of changes to income tax.
The National Assembly could ask the people of Wales questions such as how many Assembly Members they believe should sit in the Assembly, what the voting system should be, and whether new fields should be devolved if we do not get to the reserved powers model. That would give our people a clearer say in the Assembly’s decision-making process.
The Wales Bill allows for a referendum on the question of transferring to the Welsh Government power over 10% of income tax receipts, but the notion that there should be a new Bill in this place each time a referendum is needed on a reserved matter is convoluted, to say the least, and convoluted is not good; witness the wretched legislative competence order process. Plaid Cymru is not in favour of holding a referendum for the sake of it. For example, the transfer of minor taxes to Wales—as recommended by the Silk commission—without recourse to a referendum has set a precedent. We have argued that the planned referendum on income tax powers is not necessary, but circumstances will certainly arise in the future when holding a referendum will be the proper and practical way forward.
Unlike in other countries with written, codified constitutions, the transfer of such a power to Wales would require no official constitutional change; it could be done by an Order in Council. A recent precedent for that was signed into being by the Edinburgh agreement in 2012:
“The United Kingdom Government and the Scottish Government have agreed to work together to ensure that a referendum on Scottish independence can take place…the referendum should: have a clear legal base, be legislated for by the Scottish Parliament, be conducted so as to command the confidence of parliaments, governments and people, deliver a fair test and a decisive expression of the views of people in Scotland and a result that everyone will respect”— an excellent set of principles. The agreement goes on:
“The governments have agreed to promote an Order in Council under Section 30 of the Scotland Act 1998 in the United Kingdom and Scottish Parliaments to allow a single-question referendum on Scottish independence to be held before the end of 2014.”
There we have the basis for a referendum for Scotland and, I would argue, the basis for a power of referendum for the Assembly. That Scottish agreement is valid for that one referendum, and no other referendum can be held under those specific terms unless they are renewed. Our new clause, however, would confer a continuing power to the Assembly.
According to a recent study published by the Political Studies Association, there have been 49 independence referendums worldwide, both official and unofficial, with an average turnout of 79%—far higher than the average turnout in UK general elections over past years. I point out that in democratic countries after 1945, the average yes vote in such referendums has been 62%. Not all those referendums have been recognised by national or state Governments; for example, in 1946 the Danish Government refused to recognise the result of an independence referendum in the Faroe Islands. After negotiation, however, the islands were granted what we would now call devo-max: all powers except foreign affairs and defence were devolved.
The independence referendum due to be held in Catalonia on
I am slightly confused about the argument. As the hon. Gentleman rightly points out, the situation in Madrid is one of Madrid refusing to recognise the right of the Catalonian Government to hold a referendum. The situation in Edinburgh is of an agreement between the UK and Scottish Governments, which showed that the two Governments could work positively together. The argument in favour of the new clause seems to be based on the failure of another Government in another country.
My remarks, which will appear in print tomorrow, will repay close reading, as that was precisely the argument I made. The position in Catalonia and the rest of Spain is far inferior to that in the UK, and I am pointing out the superiority of that Edinburgh agreement as the basis of my arguments for a legally binding system of referendums to be established for Wales.
In the UK, the important referendums and constitutional changes have occurred over the last 10 to 20 years, including the devolution referendum in 1979, the one in 1997, and the more recent referendum on our electoral system. In 2011, the people of Wales were asked in a referendum whether they wanted the Welsh Assembly to be given full and primary law-making powers; 63.5% of those polled voted yes. That stood in stark contrast to the results of earlier referendums that right hon. and hon. Members will remember. In 1979, for example, 79.7% voted against devolution; in 1999, there was a narrow majority of 50.3%, secured on a small turnout of 50.1%. That is how it was, but since then, I would argue that the people of Wales have grown to favour devolution, as have some right hon. and hon. Members in this place. The Assembly has grown in confidence, and as it gains further powers, it should surely have the power to ask the people of Wales what they think. That would be in the interest of legitimacy and accountability.
I referred to the Edinburgh agreement, and I suggest that a similar agreement in Wales should be called not “the Cardiff agreement” but “the Celyn clause”. This refers to Capel Celyn, which, Members will recall, was the village drowned in 1965 against the express wishes of elected and representative bodies throughout Wales—and, I understand, the wishes of every Welsh MP bar one. That was a transformational event in Welsh politics, and we have seen the effect of it over many decades. That effect is clear and provides a firm reminder of what can happen when the will of people is so resolutely ignored. That is why we tabled new clause 3, giving the Assembly the right to hold legally binding referendums. I certainly commend it, but I assume that the matter will be discussed, possibly in greater detail, at some point in the future.
Let me make a few brief points about new clause 4. My Plaid Cymru colleagues and I have supported the reserved powers model for the National Assembly for a very long time. We are glad to see the Damascene conversion of the Labour Front-Bench team—better late than never! We certainly believe that this is the next step for our country; it would certainly clear up much of the confusion, not least in the minds of the public and others, as to the split of powers between the National Assembly and Westminster. I say to the Welsh public and others that I too often see people from the media refer to Assembly matters as if they were Westminster responsibilities, and vice-versa.
We in Plaid Cymru were, as I mentioned, against the LCO—legislative competence order—model, which so blighted the lives of those in the Welsh Affairs Committee and held up the pragmatic and practical transfer of the most innocuous of powers to the Welsh Government, as well as some rather more controversial powers. We wanted the boldest arrangements, but that was not forthcoming under the Government of Wales Act 2006—until the referendum. Circumstances have changed again, and the need for a move to a reserved powers model is even more pressing than before.
No one in this place or in the Assembly can be sanguine, given a recent survey showing how far we have failed as politicians to inform our constituents of the reality of the split in power. As I said, the media are far from blameless. Having said all that, it is disappointing that in the second part of their new clause 4, the hon. Members for Pontypridd (Owen Smith) and for Llanelli (Nia Griffith) have chosen to hinge any developments in relation to this matter on delaying the minor taxes. I must therefore view the new clause, I am afraid, as a delaying tactic at best, and as aimed at wrecking this part of the Bill at worst.
I support granting and extending borrowing powers to the Welsh Government. It is important that the Welsh Assembly has at least some facility to borrow what it deems necessary, as local government does. I also share the concerns expressed about the possibility of eventual tax competition, and I deeply regret that the Government have proposed no modification of the Barnett formula to address the shortfall in what Wales receives.
It also causes me concern that the Government do not appear to accept the need to address what we consider to be a fundamental shortcoming in the current devolution settlement. I believe that we need to move from a conferred powers to a reserved powers model, which would allow the Welsh Government to make law in any area unless it was clearly stated that they were unable to do so. That is why I support new clause 4.
I should make it clear that I am not one of those people who believe that a transformation of the model would solve all the problems of devolution. Devolution inevitably throws up issues that our constitutional arrangements in this country have not confronted in the past, and there will be new challenges to meet. Nevertheless, I think that if we made that fairly significant change, the problems would be fewer and far easier to get to grips with.
Members have heard me refer in the past to the difficulties experienced in Scotland in connection with what is known as the Antarctica issue. When Antarctica was not mentioned in the list of reserved powers, it was assumed that Scotland had devolved powers in relation to it. That was not the intention, and it was not what the Scottish Parliament wanted. However, the issue was resolved, although there have been other problems as well. Those difficulties do not alter my belief that there is a strong, objective and balanced argument in favour of a move to the reserved powers model. As we know from debates held in Wales and in the House of Commons, that was one of the key recommendations of the Richard commission, and was also mentioned by the Silk commission.
For me, there are three fundamentally important arguments in favour of the shift. First, it would undoubtedly clarify the current devolution settlement and make it more understandable. I have read a number of academic papers that support that contention. The Hywel Dda Institute at Swansea university has argued strongly that it would make the settlement “conceptually simpler” . I agree. As the institute says, it would deal with many of the so-called “jagged edges”.
Housing is an example of that. Schedule 7 of the Government of Wales Act 2006 lists housing as being eligible for legislation by the Welsh Government, but there is a complication. It lists a number of exceptions: for instance, it excludes
“Coal, including mining and subsidence”.
As we know, subsidence plagues the south Wales valleys, and there is inevitably a relationship between it and the plight of many houses in valley communities. That prompts the question: is housing that is affected by subsidence within the scope of potential legislation? The answer is yes, but a strict reading of the 2006 Act as it stands does not make that very clear, because of the different ways in which the various exceptions are listed. I believe that a reserved powers model would make such instances much more intelligible, and much less fraught with difficulties of, in particular, a legal nature.
Some parts of the Act contain even more obvious problems. No doubt the hon. Gentleman will be as alarmed as I was to read in the Western Mail about a survey that suggested that 40% of people thought that the national health service in Wales was directly administered from this place. There is an issue about the clarity of our democracy and our systems, even when it comes to core issues such as that.
That is a fair point, and I will touch on it a little later. We have asymmetrical devolution in the United Kingdom; we have different forms of devolution in different parts of the UK. While there are good reasons for that, it does not help the general public’s understanding of what is devolved and what is not devolved. If we had greater consistency in the bedrock of devolution between Northern Ireland, Scotland and Wales, that would help that public understanding. Some may say that strictly speaking the Northern Ireland settlement is not quite akin to the Scottish settlement, but nevertheless in effect we have a reserved powers model in place and it would be advantageous if Wales were to follow their examples.
As Members, and in particular my hon. Friend Nia Griffith, have said, there has been an unfortunate conflict between central Government and the Welsh Government through the Supreme Court. There have been three referrals of legislation to the Supreme Court. We have heard about the then Local Government Byelaws (Wales) Bill, which the Government here in London questioned. They asked for the Supreme Court to make an adjudication, and the position of the Welsh Government was upheld, but we must consider the amount of time and effort that went into questioning such a relatively small measure and whether that meant there was better government.
“it took five Supreme Court Justices…several of the UK’s leading constitutional lawyers and a great many officials across three Governments to decide it was lawful to make minor changes to the way Welsh local councils deal with things like dog-fouling and loitering in public lavatories.”
That raises this question: what sense is there in that? How on earth can that be defended as good government? It cannot be.
I genuinely wonder whether the hon. Gentleman is suffering from amnesia, as he was a part of a Government who created that exact system. If he does not think the Supreme Court is the relevant mechanism for resolving disputes between two Governments over legislative competence, then what is, under the reserved model he supports?
I just think it is very important to learn. I know that is anathema to the current Government, but if we recognise that devolution is a developing process it is vital that we learn and make things better and, when things are clearly not as they should be, make improvements. That is a good way to approach government.
I remind my hon. Friend and the House that there are highly developed mechanisms in these islands to resolve disputes of any nature through the Joint Ministerial Committee, or simply between ministerial committees, without having to go to courts of law. There are better means of proceeding, and we should use them rather than go to the Supreme Court.
My right hon. Friend makes an extremely good point. He has tremendous experience in these matters—far greater than I have—and I would certainly bear out what he has said. A common sense way to approach disputes between different legislatures in the
United Kingdom is to sit down and talk, and use the established structures, and not resort to expensive, time-consuming legal processes that are very obtuse to most people. That is one lesson to be learned.
We must also learn the lesson that we need a different model. We need a reserved powers model to form the bedrock of our developing devolution settlement in the United Kingdom.
I have listened carefully to the hon. Gentleman’s comments, and to those of Paul Murphy and Nia Griffith, who is on the Opposition Front Bench. If the Labour proposal is to move to a reserved powers model, which is clearly the case judging from the arguments presented today, do Opposition Members believe that the report they envisage should look at the consequences for the largest part of the United Kingdom, which is England, because not once has any Opposition Member talked about any potential impact on the English electorate?
I have no qualms at all about talking about England, because we are a United Kingdom, but if I deviated from my notes and spoke at length about England you, Madam Deputy Speaker, would take me to task pretty quickly,.
It is important to recognise that the Local Government Byelaws (Wales) Act was not a one-off. We have seen an attempt—perhaps most significantly, politically—to prevent the Welsh Government from carrying through their legislative plans for the agriculture sector. That is a far more emotive issue, particularly for workers who are directly affected by this Bill—or, as may happen, the lack of it. However, that reinforces the constitutional point that the current situation is unsatisfactory, facing as we do ongoing legal challenges on the basis of politics, rather than, as my right hon. Friend Paul Murphy said, Members sitting down together where there is a genuine dispute between the two legislatures and working things out.
The conclusion I come to is that what we therefore need is a system that transcends party politics: a constitutional arrangement that is seen to be fair to everybody, and that respects the integrity of the United Kingdom but also the development of devolution in Wales; a settlement based on a reserve powers model that is far more intelligible to people in Wales, and that will help them to understand far more easily the basis of our devolution arrangements in Wales and the United Kingdom as a whole.
Jonathan Edwards said that the purpose of amendment 8 is to ensure that the Welsh Government can use their new borrowing powers to invest in projects that they, rather than Her Majesty’s Treasury, want to take forward. I should point out that the Bill already provides Welsh Ministers with complete flexibility to decide how to use their borrowing powers, in much the same way that they have complete flexibility regarding their resource and capital budgets. I wonder whether the hon. Gentleman was confusing the requirements for the early borrowing powers with the wider borrowing powers the Bill sets out. Regarding the former, he is right that there is a specific agreement between the
Welsh Government in Cardiff and the UK Government—specifically the Treasury—to facilitate early movement on a strategic project of importance to the Welsh nation and economy: namely, the M4 upgrade. So, rather than it being a project imposed from above by the UK, it is very much demand-led from within Wales.
There is a line in the Bill that refers to Welsh Ministers being able to borrow with the approval of the Treasury. That merely refers to the overall borrowing limit, which the Treasury will agree with the Welsh Government. It is not about the Treasury signing off on individual projects. We want to give the maximum possible freedom to Welsh Ministers to use their borrowing powers to decide on exactly the infrastructure projects they want to take forward. I am very happy to continue this discussion with the hon. Gentleman another time, but that is the situation.
“Welsh Ministers may give financial assistance (whether by way of grant, loan or guarantee) to any person engaged in any activity which the Welsh Ministers consider will secure, or help to secure, the attainment of any objective which they aim to attain in the exercise of any of their functions.”
So there are no handcuffs or binds on Welsh Ministers. For example, they already have the powers to support the Circuit of Wales with a guarantee, should they choose to do so. Conversely, the UK Government would not be able to provide a guarantee under the terms of the Infrastructure (Financial Assistance) Act 2012 as the Circuit of Wales project does not meet the infrastructure criteria set out in the legislation.
Furthermore, it is the size of the UK Exchequer that enables the UK Government to guarantee substantial infrastructure projects, such the Wylfa Newydd nuclear plant that has been guaranteed with Hitachi. Wales, therefore, benefits from UK Government guarantees in relation to energy and other infrastructure, while the Welsh Government can decide how to provide financial support to help deliver their own devolved responsibilities.
The hon. Member for Carmarthen East and Dinefwr also made the point that he did not believe that there were any current Welsh infrastructure projects that were at the prequalification stage for an infrastructure guarantee. The information that I have received from the Treasury is that there are indeed projects based in Wales. They are at the prequalification stage for an infrastructure guarantee, but the project sponsors have chosen not to reveal their identities for commercial and other good reasons. The Wales Office is keen to promote the infrastructure guarantee programme. My right hon. Friend the Secretary of State for Wales held a successful event in north Wales, promoting the programme to the business community. I, through the Wales Office infrastructure working group and alongside Treasury officials, have been promoting it to other businesses in Wales. We want to see more Welsh projects come forward and benefit from the infrastructure guarantee scheme.
I can base my position only on the list of prequalified projects, which was last updated by the Government on
All I can do is reiterate the information that I have received from the Treasury that there are indeed Welsh projects at the prequalification stage. We are currently talking about infrastructure guarantees to Welsh businesses and other companies that want to invest in Wales. I will happily write to the hon. Gentleman with further information to clarify the situation. On that note, I hope that Members agree that the existing arrangements and the Bill before us are therefore optimal and will withdraw amendment 8 and new clause 2.
I turn now to new clause 3, which would allow the transfer of responsibility for referendums to the National Assembly for Wales. I am afraid that with this new clause, we once again find Plaid Cymru trying to shoehorn far-reaching and fundamental changes to the wider devolution settlement for Wales into this specific Bill, which takes forward the recommendations of part 1 of the Silk commission.
Referendums, such as the one this Bill provides for, are intended to allow the electorate to decide on key constitutional issues. Competence for the conduct of referendums, except in very exceptional circumstances, such as those around the Scottish independence referendum, rests at a UK level. I have seen no evidence yet to suggest that there should be any change to the existing devolution settlement.
It is also worth noting that the Silk commission made no recommendations about that issue when it examined the devolution settlement in its second report. Furthermore, there have been no calls from the Welsh Government or the Assembly for this competence to be transferred.
This Bill is focused on delivering new fiscal powers to Wales that were recommended by the Silk commission in its first report, and new clause 3 forms no part of that. I therefore ask Opposition Members to withdraw this amendment as well.
Finally, I turn to new clause 4, which bares a striking resemblance to an amendment tabled by Opposition Members in Committee. The new clause seeks to postpone the commencement of part 2 of the Bill, apart from the referendum provisions and clauses 19 and 20 in relation to borrowing powers, until the Secretary of State has laid a report before both Houses of Parliament setting out the steps needed to move to a reserved powers model of devolution. That report would need to be laid within nine months of the Bill’s enactment, generously giving the Government three months longer than the Opposition permitted in their Committee stage amendment.
With these new clauses, Labour Members once again seek to connect directly the commencement of the parts of the Bill that will devolve tax-raising powers to the Assembly to one of the most far-reaching of the Silk commission’s part 2 recommendations. Other hon. Members have described that as a delaying tactic; some have even described it this afternoon as a wrecking tactic. It reveals yet again the Welsh Labour party’s opposition to the proposals in the first Silk commission report to devolve income tax powers to Wales. It is merely a smokescreen for Labour Members’ deep and widely held scepticism and suspicion—they have used those words this afternoon—and they fundamentally oppose fiscal devolution, which is the next important stage of devolution for Wales.
As this Government have made clear on a number of occasions, a move to a reserve powers model would be a fundamental change to the devolution settlement in Wales. We have also made it clear, as did the Silk commission, that this should be a matter for party manifestos at the next election. Therefore, there is nothing to be gained by requiring the Government to report to Parliament on the legislative steps needed to move to a reserve powers model.
Once again, the Labour party seems to be mired in confusion about its position in relation to the Silk commission’s recommendations in the part 1 and part 2 reports. As is typical of the Labour party, it wants borrowing powers, but it does not want the means to pay back the money borrowed. It does not want true accountability for the devolved Government in Wales; it just wants public spending on the never-never. Just such a reckless attitude by the Labour party got this country’s finances into such a mess in the last Parliament.
This coalition Government have no intention of returning to that sorry state of affairs. We are committed to devolving the tax and borrowing powers in the Bill as soon as possible, so that the Welsh Government can become accountable for raising the money that they spend and for repaying the money that they borrow. I therefore invite Opposition Members to consider the full implications of new clause 4 and not to press it.
We have had an interesting debate on this group of new clauses and amendment 8, three of which Plaid Cymru tabled: first, to allow the Welsh Government to issue guarantee to enable them to boost economic development; secondly, to release the handcuffs on borrowing powers to enable them to choose their own priorities—the borrowing capacity in the Bill will be more or less completely consumed by the M4 project that the Treasury favours—and, thirdly, to hold binding referendums based on the Edinburgh agreement.
Labour tabled new clause 4. Obviously, as a party, we fully support the move to a reserve powers model for Wales. It is a pity that the Labour party decided to spoil the new clause with a second element, which is obviously a delaying tactic. The Welsh economy needs these powers now, rather than waiting for a report. It is obviously a wrecking new clause, typical of Labour’s attitude during progress on the Bill in all its various stages. Plaid Cymru is not a tribal party—we vote as we see fit—but we cannot support new clause 4 because of the wrecking element in its second part.
With your permission, Madam Deputy Speaker, I intend to press amendment 8 to a vote at the appropriate time, but I will not press new clause 3 and ask leave to withdraw new clause 2.
Clause, by leave, withdrawn
New Clause 4
National Assembly for Wales: reserved powers
‘(1) The Secretary of State will lay a report before each House of Parliament on the further legislative steps needed to move to a model of reserved powers for the National Assembly for Wales and shall lay the report before each House of Parliament within nine months of this Act receiving Royal Assent.
Brought up, and read the First time.