With this it will be convenient to discuss the following:
Clause 8 stand part.
Clause 9 stand part.
Clause 10 stand part.
Clause 11 stand part.
Amendment 33, in clause 12, page 12, line 24, at end insert—
“(a) for a sum paid out of the Welsh Consolidated Fund not to be applied for any purpose other than that for which it was charged or (as the case may be) paid out”.
The amendment sets out that Welsh legislation must provide that the Assembly has to authorise any drawing from the Consolidated Fund and that such funds can only be utilised for the purposes for which they were authorised.
Clause 12 stand part.
Clause 13 stand part.
Clause 14 stand part.
Amendment 38, in clause 15, page 14, line 3, leave out “translation of references” and insert “consequential provision”.
The amendment replaces “translation of references” with “consequential provision”, to reflect the overall effect of Clause 15.
Amendment 39, page 14, line 5, at end insert—
“( ) Cynulliad Cenedlaethol Cymru,”.
The amendment clarifies that any references in legislation, instruments and documents to “Cynulliad Cenedlaethol Cymru” is also to be read as a reference to the new name, in Welsh.
Amendment 40, page 14, line 6, at end insert—
“( ) Comisiwn Cynulliad Cenedlaethol Cymru,”.
The amendment clarifies that any references in legislation, instruments and documents to “Comisiwn Cynulliad Cenedlaethol Cymru” is also to be read as a reference to the new name, in Welsh.
Amendment 41, page 14, line 7, at end insert—
“( ) Deddfau Cynulliad Cenedlaethol Cymru, or”.
The amendment clarifies that any references in legislation, instruments and documents to “Deddfau Cynulliad Cenedlaethol Cymru” is also to be read as a reference to the new name, in Welsh.
Amendment 42, page 14, line 11, after “to”, insert “Cynulliad Cenedlaethol Cymru,”.
The amendment provides that if the Assembly changes its name then any reference in legislation, instruments and documents to the “Cynulliad Cenedlaethol Cymru” is to be read as a reference to the new name.
Amendment 43, page 14, line 12, after first “Wales,” insert “Comisiwn Cynulliad Cenedlaethol Cymru,”.
The amendment provides that if the Assembly changes its name then any reference in legislation, instruments and documents to the “Comisiwn Cynulliad Cenedlaethol Cymru” is to be read as a reference to the new name.
Amendment 44, page 14, line 12, after “Commission,” insert “, Deddfau Cynulliad Cenedlaethol Cymru”.
The amendment provides that if the Assembly changes its name then any reference in legislation, instruments and documents to “Deddfau Cynulliad Cenedlaethol Cymru” is to be read as a reference to the new name.
Amendment 45, page 14, line 17, after “name”, insert
“in Welsh or English (as the case may be).”
The amendment clarifies that the clause applies to any new names listed in the clause be they in English or Welsh.
Clause 15 stand part.
Clause 16 stand part.
Amendment 14, in clause 17, page 15, leave out lines 29 to 31.
This amendment and amendment 15 make provision for the definition of devolved competence in Clause 17 to be applied for the purpose of the amendments made to Clause 19 by amendment 13.
Amendment 15, page 15, line 35, at end insert—
“( ) In this section and section 58B ‘within devolved competence’ and ‘outside devolved competence’ are to be read in accordance with subsections (7) and (8); but for the purposes of section 58AB no account is to be taken of the requirement to consult the appropriate Minister in paragraph 11(2) of Schedule 7B.”
See the explanatory statement for amendment 14.
Clause 17 stand part.
Clause 18 stand part.
Amendment 13, in clause 19, page 17, line 27, at end insert—
“(2) After section 58A of that Act (inserted by section 17(1) of this Act) insert—
‘58B Transfer of functions within devolved competence
(1) Functions conferred on a Minister of the Crown by virtue of any pre-commencement enactment or pre-commencement prerogative instrument, so far as they are exercisable within devolved competence by a Minister of the Crown, are to be exercisable by the Welsh Ministers instead of a Minister of the Crown.
(2) Provision for a Minister of the Crown to exercise a function with the agreement of, or after consultation with, any other Minister of the Crown ceases to have effect in relation to the exercise of the function by a member of the Welsh Government by virtue of subsection (1).
(3) In this section “pre-commencement enactment” means—
(a) an Act passed before or in the same session as this Act and any other enactment made before the passing of this Act;
(b) an enactment made, before the commencement of this section, under such an Act or such other enactment; “pre-commencement prerogative instrument” means a prerogative instrument made before or during the session in which this Act was passed.’”
Clause 19 makes provision about transfer of Ministerial functions. The amendment provides for the transfer of all functions currently exercisable by Ministers of the Crown within devolved competence to the Welsh Ministers.
Clause 19 stand part.
That schedule 3 be the Third schedule to the Bill.
Amendment 16, in clause 20, page 18, line 8, at end insert—
“(ab) section 58B,”.
Clause 20 amends the power in section 58 of the Government of Wales Act 2006 to make provision by Order in Council for the transfer of functions to the Welsh Ministers to authorise provision to be made in respect of “previously transferred functions”. This amendment extends the definition of “previously transferred functions” to include functions transferred by the general transfer proposed by amendment 13.
Clause 20 stand part.
Clause 21 stand part.
New clause 2—Welsh thresholds for income tax—
“(1) Part 4A of the Government Wales Act 2006 is amended as follows.
(2) In section 116A(1)(a) (overview), after ‘of’ insert ‘and thresholds for’.
(3) After section 116D insert—
‘116DA Power to set Welsh thresholds for Welsh taxpayers
(1) The Assembly may by resolution (a “Welsh threshold resolution”) set one or more of the following—
(a) a Welsh threshold for the Welsh basic rate,
(b) a Welsh threshold for the Welsh higher rate,
(c) a Welsh threshold for the Welsh additional rate.
(2) A Welsh threshold resolution applies—
(a) for only one tax year, and
(b) for the whole of that year.
(3) A Welsh threshold resolution—
(a) must specify the tax year for which it applies,
(b) must be made before the start of that tax year, and
(c) must not be made more than 12 months before the start of that year.
(4) If a Welsh threshold resolution is cancelled before the start of the tax year for which it is to apply—
(a) the Income Tax Acts have effect for that year as if the resolution had never been made, and
(b) the resolution may be replaced by another Welsh threshold resolution.
(5) The standing orders must provide that only the First Minister or a Welsh Minister appointed under section 48 may move a motion for a Welsh threshold resolution.’”
This new clause would allow the National Assembly for Wales to determine the income thresholds at which income tax is payable by Welsh taxpayers.
New clause 3—Income tax receipts—
“(1) Section 120 (destination of receipts) of the Government of Wales Act 2006 is amended as follows.
(2) The Comptroller and Auditor General must certify for each tax year that Her Majesty’s Commissioners for Revenue and Customs have transferred the full amount of income tax paid by Welsh taxpayers in that tax year into the Welsh Consolidated Fund.”
This new clause would require the receipts from income tax paid by Welsh taxpayers to be paid into the Welsh Consolidated Fund.
I rise to speak to amendments 32, 33 and 38 to 45. My hon. Friends will seek to catch your eye later, Sir Alan, to speak on the aspects that concern them. I also wish to speak to clause 18 stand part.
Amendment 32 is a technical amendment. Clause 8 provides that Assembly legislation dealing with certain protected matters—the name of the Assembly, who is entitled to vote at Assembly elections, the voting system and so on—would require a super-majority of the Assembly. It requires the Presiding Officer to decide whether an Assembly Bill relates to a protected matter and to state that decision, and I do not disagree with any of that.
However, the clause then requires that that statement be in both English and Welsh and that the form of that statement be dealt with in the Assembly’s Standing Orders. While we agree that such statements should be made in both languages, amendment 32, which is in my own name and those of my hon. Friends, would remove those two provisions. It does that for two reasons. First, including them is at odds with much of the rest of the Bill, which recognises the Assembly as a mature legislator and allows it to determine its own internal arrangements rather than what is required by Westminster. Secondly, both Welsh and English are official languages of the Assembly—as someone rather paradoxically put it, English is a Welsh language in that respect—and both must be treated equally. Therefore, providing that the Presiding Officer’s statement must be made in both languages is unnecessary— nugatory.
Amendment 33 seeks to amend clause 12, which inserts a new section into the Government of Wales Act 2006. This would replace the previous arrangements for financial controls and provide that Welsh legislation should make provision for the matters contained within that section, such as accounts to be prepared of their expenditure and receipts by the First Minister or other Ministers who draw sums from the Welsh consolidated fund. We believe that the new section should include basic safeguards in the form of minimum requirements that Welsh legislation should provide for, and that reflect good governance. Section 124 of the Government of Wales Act 2006 currently provides for authorisation by the Assembly. Amendment 33 proposes that funds should be issued from the Welsh consolidated fund only in accordance with legislation or authorisation by the Assembly, and can be utilised only for the purposes for which they were authorised. This simple addition to the Bill would improve accountability and responsibility, and it would reflect the provisions for Scotland—that is, section 65 of the Scotland Act 1998.
Amendments 38 to 45 are technical in nature. They amend clause 15, which provides that if the Assembly changes its name, then any reference in legislation, instruments and documents to the “National Assembly for Wales” is to be read as a reference to the new name. This saves having to change each reference to the “National Assembly for Wales”, of which there may be many thousands. However, the clause neglects the fact that Assembly Acts are prepared bilingually, and so references to the Assembly and the commission will be in Welsh and English. Moreover, it does not address the issue of legislation, instruments and documents that refer to “Cynulliad Cenedlaethol Cymru”. The amendment clarifies that any references in legislation, instruments and documents to “Cynulliad Cenedlaethol Cymru” is also to be read as a reference to the new name in Welsh.
The same issues arise with regard to any change in the names of the National Assembly for Wales Commission or Acts of the National Assembly for Wales, which are also addressed in the amendment. The heading of the section inserted into the Government of Wales Act 2006 by clause 15 refers to “translation of references”. The amendment would change that to “consequential provision”. That is more appropriate, given the overall effect of clause 15, and avoids confusion between legal translation—that is, consequential provisions—and linguistic translation of references. I look forward to the Minister’s response and hope that he might consider adopting some of these changes on Report.
I now turn briefly to clause 18 stand part. This clause shows the speed of political change. After nearly five years of discussions about Silk and powers for Wales, we are now providing that Wales Acts are relevant to the European Communities Act 1972, although the UK has just voted to leave the EU. Obviously, this provision should remain in the Bill. We are still in the EU, and unpicking EU legislation from our domestic legislation will take many years and will not be easy. There are questions as to how decisions will be taken about which EU legislation remains.
I hope that the UK Government, of whatever stripe, but particularly of a right-wing Conservative complexion, will not take it upon themselves to decide what is, or what is not, relevant to Wales. We have already heard the comments from one Conservative leadership contender at the weekend calling for a “strong Union”, and we suspect that we know what that actually means. We need to know where Wales stands and how these powers will be determined. So-called Henry VIII powers, lying either with the UK Government or with Whitehall bureaucrats, will not be democratically acceptable.
My party, Plaid Cymru, is the official Opposition in Wales and the second largest party after the elections two months ago. The balance of competences review did not consider Wales in particular depth, but, post-Brexit, we must consider the question of which powers should be in Wales’s hands and not those of Westminster. The vote in Wales to leave the EU was not a vote to centralise power in Westminster.
I draw the House’s attention to today’s Assembly debate on a motion standing in the name of our former colleague, Simon Thomas, which states that the Assembly
“believes that following the withdrawal of the UK from the EU, provisions should be made to ensure that all legislation giving effect to EU Directives or Regulations pertaining to areas such as environmental protection, workers' rights, food safety and agriculture are retained in UK and Welsh law unless they are actively repealed by the relevant Parliament.”
The debate will repay close reading.
Whether or not Vote Leave was in a position to make the promises it made, they must be honoured by the Westminster Government because they were the Brexit promises that people voted for. That means additional money for the NHS through the Barnett formula, as well as protecting funding for our farmers and regional and structural funds post-2020.
It is right for clause 18 to remain part of the Bill, as it will be relevant until any official departure from the European Union takes place. However, the clause, like so many others, shows how the Bill has already been overtaken by events and why Wales should have so much more power than it provides. The Bill is far from being a once-and-for-all settlement, and we give notice that we will return to this matter later in this Parliament.
Thank you, Sir Alan, for calling me to speak on this hugely important Bill. The work leading up to it has played a significant part in my time in politics.
I pay tribute to the shadow Secretary of State for Wales, Paul Flynn. I have a special reason for welcoming him to his position: of all the other Welsh Members of Parliament, I am probably the nearest to being an octogenarian, and his wonderful example gives me promise and ambition for the future. If he can do it, there is no reason why I cannot, either. I thank him for that, as well as for the great wit with which he has entertained me over many years.
The Bill is wide-ranging. Inevitably, opinions on it will differ and there will be an element of compromise. In his response to earlier amendments, the shadow Secretary of State said that we need to be pragmatic. We all have different opinions, including in my own party. We all, I think, want this Bill to go through, but we need to accept that we are going to have to compromise.
The big compromise that I have to make relates to the fact that the Bill transfers energy powers to the Welsh Government, the idea of which fills me with horror. I would find it difficult to support the Bill, except that the Welsh Government have, disgracefully, already taken unto themselves those powers through their local government responsibilities. That makes the Bill’s transfer of energy powers much less damaging to mid-Wales and much less of an attack on the people of mid-Wales than it would otherwise have been.
The intention behind the Bill is to provide a much more stable, long-lasting and permanent settlement for Wales and to provide clarity on it. I am not sure about the word “permanent”. I do not think it is wise to have a Wales Bill every five years, which is pretty much what we have been doing. This is not permanent: I think we will come back to developing devolution at a pace at which we can bring the people of Wales with us. Plaid Cymru Members spoke earlier about the judicial position. When the body of Welsh law is no longer tiny and grows to be substantial, we may have to revisit the issue in the future, and the same may be true of other issues that we have not entirely foreseen.
Today, I want to make specific reference to clause 16, because it is absolutely fundamental. It deals with the power to vary income tax levels in Wales, which is hugely important, providing financial accountability to the Welsh Government. Like the Chairman of the Welsh Affairs Committee, I was opposed to devolution but came to terms with it almost immediately, which is what we should do when there is a referendum. It was a very close result but, as I was driving home from the count, I accepted that we would have a Welsh Assembly, and I am in total support of it. Not only that, but I think that we should accept the decision of the people and make a success of it. We are doing our best to do that.
When I became a Member of the Welsh Assembly, I was asked to be the Conservative financial spokesman. Clearly, one came upon the annual budget debate. As I was preparing to speak in that debate in the Assembly, I thought to myself, “This isn’t a budget; what we are dealing with here is just a spending plan”. When I was chairman of the finance committee on Montgomeryshire District Council, the biggest meeting of the year, by a long way, was the meeting at which we set the rates. We set aside a whole day to debate whether or not to put a penny on the rate. Every budget I have ever seen has on one side what will be spent and on the other how it will be raised.
I know from talking to people at election time that that is what is on their minds. It engages people to know that, if money will be spent on something, it will be taken from them in some way to pay for it. That is what elections should be about—but not in Wales. In Wales, if the Government are spending money, generally on something that the people might approve of because it is popular, they say, “This is what we are doing, aren’t we great?”. However, occasionally in politics we find that Governments have to support a law that is not so popular and is difficult to argue for in public because people are not altogether convinced. It is not acceptable just to say, “We can’t do that because we don’t have enough money from the Westminster Government”. The Government have to be financially accountable to people; that is what makes a parliament.
In this Bill, we intend to change the position and call the National Assembly for Wales the Welsh Parliament. I fully support that. However, if it is going to be called the Welsh Parliament, it has to have the powers and responsibilities, and particularly the financial accountability, that we would expect a Parliament to have. That is why that is so important in this Bill.
There is a division of opinion on this issue. Some of my colleagues do not agree with me, and we have had this debate previously. This is not an occasion on which I want to be political, but what I am about to say could be interpreted as being politically against the Labour party. It is not intended to be, but rather it is an attempt to demonstrate the position that we are in. A lot of people are opposed to granting the ability to vary income tax to the Welsh Government because they will always be led by Labour. I do not know why people are quite so pessimistic; the day will come when the Welsh Government will not be led by Labour. In fact, we are not so far from that day now. We had a Welsh Assembly election in which the total Labour vote was about 30% or 31%, and an EU referendum in which the advice of the First Minister, who was leading the campaign, was virtually ignored in Labour strongholds. It was not ignored by people who do not support Labour, but the very people who support Labour just dismissed the First Minister’s leadership of the campaign. The First Minister must wake up in the night thinking, “My position is looking a bit dodgy, a little weak. I’ve got 30% support and that may well have been halved in the EU referendum among Labour voters.”
I genuinely believe that we are on the verge of creating a proper democracy in Wales, one in which not everyone assumes that Labour will rule, but we have competition instead. People will be much more engaged and interested. My comments might be perceived as being against Labour, but they are not meant to be. I am saying that I am in favour of a genuine political debate whenever we have an election in Wales. I think we are not too far away from that.
One issue that has caused some controversy, on the Conservative Benches in particular, has been the need for a referendum on whether income tax powers should be devolved. I think we have had enough of referendums. As a general principle I am not in favour of them, and on this particular issue I do not think one is necessary. That has been my view for a long time. The referendum is suggested, and supported, as a blocking mechanism to make sure that the Welsh Government never become financially accountable. That is not the right way to go.
That is now the Government’s view—they have moved on from previous positions. The Silk Commission’s recommendations may be the bible of Mr Williams, but the commission was wrong to recommend a referendum. It was a weak recommendation. The commission should simply have recommended that the only way to financial accountability is to allow income tax to be varied by the Welsh Government, so that they become responsible. A referendum has been proposed in the past but is not what we should do now.
The Bill is broad-ranging and hugely important. It is the next step forward in making the Welsh Assembly into a Parliament. It will settle the constitution for some years to come—I would not like to predict how long it will be until we are back here talking about another Wales Bill; I might be an octogenarian by then. The Bill is an important step forward and I very much hope that it passes through here and the other place unhindered.
I speak in support of amendment 11 on income tax powers. I am interested in much of the Bill, but during the past week, in the aftermath of the Brexit result, a thought has come to me. I am now absolutely determined that, like highly calorific chocolate, constitutional experts are to be valued, savoured and enjoyed, but not indulged in very frequently. I spent the referendum evening sat around a table in a television studio in the company of a constitutional expert—I would argue that he is probably one of Wales’s finest. As we looked at the results coming in, many of them fairly miserable, the constitutional expert sprang to life and said, “Do you realise the impact of that on parts of the Wales Bill? Do you realise its impact on this and on that?” I sat there thinking that I was a little more interested about potential job losses at Airbus, what would happen to farms and all the rest of it.
Let us get back to the amendment. I have always supported a referendum on devolving income tax. Our amendment 11 would do something really practical. We argue that income tax powers should not be devolved to the Welsh Assembly until a full fiscal framework for Wales has been approved by both Houses of Parliament and the Welsh Assembly. That is an agenda of total respect.
I will tell the House why that is important. We all sit around discussing what it means to be Welsh, our patriotism and our different interpretations of it, often with the view that we have the one complete, absolute truth on the issue. But there is one thing that matters more and more, especially in the aftermath of the Brexit result. I can think of a million ways in which every single one of us in this Chamber could express our Welsh patriotism, but there is one way we can never do so: by supporting a deal under which ordinary Welsh people become poorer. That must be our litmus test, and that is why we must not only vote on this issue in both Chambers of this House, but we must also place it in the hands of our Welsh National Assembly.
I agree with part of what Glyn Davies said, but it is a pity that he has an obsession about never wanting a Labour Government in Wales again. Last week the Secretary of State said some interesting and thoughtful things on television in the wake of the EU referendum.
Let me clarify my view on that. We should not be in a position where we never have a Labour Government in Wales from time to time, but I object to the idea that we should never have anything but a Labour Government, and the assumption that Wales must always have a Labour Government or be led by Labour. We need variation—let us have somebody else, and then Labour can come back.
It does not much matter what I or the hon. Gentleman think—it has far more to do with what the electorate in Wales think. In all seriousness, this is about how we get the best deal for people in Wales, and for those of us who have never had an ideological objection to the Assembly having tax-raising powers, what we are proposing is sensible, workable, and goes with the grain of the majority of opinion in the Assembly, in this House and across Wales. The hon. Gentleman will probably disagree with me, but he said something interesting about how the Welsh Assembly, which was elected in 1997 with a small majority, has turned into something that very few people in Wales would want to get rid of, and quite right too. I think that this change and incremental increase in devolution, and the support for further fiscal powers, is right and proper, and it is time that the House supported it.
I rise to speak against clause 10 and the imposition of an obligation on the Assembly to undertake and publish justice impact assessments for Assembly Bills. Such assessments are intended to set out the potential impact of a Bill’s provisions on the justice system in England and Wales, and specifically on the Crown Prosecution Service, the Serious Fraud Office, courts and prisons. The obligation to undertake justice impact assessments—or justice impact tests—in Westminster Departments is voluntary in the sense that the UK Ministry of Justice provides guidance as a tool to help policy makers find the best way to achieve their policy aim. If the guidance approach is appropriate for Westminster, why should it be deemed acceptable to place an obligation on the Assembly by means of its own Standing Orders?
It is also being imposed on the Assembly through its own Standing Orders. In that same spirit, surely the Standing Orders of the Assembly should be a matter for Assembly Members alone, especially bearing in mind that the Bill trumpets its credentials as the harbinger of a new model of reserved powers. No other legislature in the UK is denied the freedom to decide on its own legislative process and Standing Orders. There is nothing of the kind in Northern Ireland, Scotland or England, and nothing currently in Wales. No reciprocal arrangement is in place whereby UK Government Bills are required—voluntarily or otherwise— to assess what impact they will have on Assembly responsibilities in Wales. What impact, for example, will the building of the super-prison in Wrexham have on public service provision in the area, the national health service and transport?
As a matter of principle, this approach—I refer to the one of mutual consideration and respect—might be welcomed, but the arrangement proposed in clause 10 can be compared with Goliath ordering David to assess the impact of his slingshot while chucking boulders around at will. This requirement, coupled with the powers of the Secretary of State to veto Welsh legislation under Section 152 of the 2006 Act, causes me some concern.
Finally, I take this opportunity to refresh the memory of the House that, were Wales to be equipped with a separate legal jurisdiction, there would simply be no need to jump through the hoops implicit in justice impact assessments. Clause 10 once again reminds us that underpinning the Wales Bill is the need to prioritise the single unified legal system of England and Wales, hedging the Assembly’s legislators about with an excess of checks and balances, rather than empowering them. We oppose clause 10 and we will vote against it when the time comes.
I wish to speak on clause 16 and the referendum on income tax powers. I preface my remarks by saying that I have always been an instinctive pro-devolutionist. I worked in the Assembly when it first began and I supported its establishment. I would go further than some aspects of the Bill in devolving powers and giving responsibilities to the Welsh Government. I support, as the First Minister has, a federal UK. I would like a constitutional convention and a written constitution that properly settles the duties and responsibilities of the respective Administrations across these islands. This is even more crucial in the aftermath of the EU referendum. I genuinely fear for the future of the UK at the moment. I have always considered myself a proud Welshman, but also proudly British and proudly European. I will continue to do so, but we have unleashed a whole series of very difficult questions in the aftermath of the vote that make our deliberations on the Bill all the more important.
Does the hon. Gentleman agree that the citizens of Switzerland and Norway are Europeans and may be proud to be European? They are just as European as anyone else in Europe, and he would be just as European as a Norwegian or a Swiss person is after Brexit takes place.
I am not going to be taken down that rabbit hole. I want to concentrate on the details of the Bill. I make my point because, despite having those views and pro-devolutionary instincts in supporting the vast majority of the Bill—as I said, I am even willing to go further—I have also always believed in applying two tests to proposals put before us.
First, whatever is proposed must deliver better outcomes for the people of Wales. It is absolutely crucial that we look at this in the context of our unique history. Our history is not the same as that of Scotland, our legal history is not the same as that of Scotland, and the nature of our polity and development is not the same as that of Scotland. There are distinctly unique things about Wales that we should consider that do not apply to Scotland. We always have to ask: is this the right solution? I apply that particularly to issues such as policing, the justice system and criminal jurisdiction. I am not saying that they should not be looked at in the future, but I believe in a practical test of whether they will deliver better outcomes. It is not just about sticking a dragon on something and saying it will be done better; this has to be approached in a very cold and hard-headed way.
Secondly, I have always believed in the consent of the Welsh people when making major constitutional change. I support very much the intent of amendment 11, which I will support if it is pressed to a Division. We have considered the fiscal framework for Wales before moving forward with any devolution of income tax powers. There is a fundamental principle at stake here. Clause 16 would remove the requirement for a referendum. We have had two referendums in this country, one in Wales and one in Scotland. In Scotland, the question related to the devolution of income tax powers. It was the second question in the Scottish referendum of 1997 and it passed by 63.48%. The Scottish people were asked that question and voted for it separately from the question on whether there should be a Scottish Parliament. In Wales, we had a referendum on
Whether or not people agree with devolving income tax powers, the question is a very fundamental one that changes the nature of the settlement for the Assembly and the Welsh Government. The question should be put to the Welsh people. I think it would pass in the current context, despite what some people say. Many in Wales would want to see it pass, and it should be put to them. It is a matter of precedent: we have had the two previous referendums, but we are not getting one on this question. I cannot understand why. We are not giving the Welsh people a voice. Whatever side people were on in the referendum campaign, it was crucial that the British had their say on such a fundamental decision.
I think that clause 16 is a mistake, but I will support our amendment 11, which goes fundamentally to the question of getting a fair fiscal settlement for Wales.
I rise primarily to speak to new clauses 2 and 3 in the name of my hon. Friends the Members for Arfon (Hywel Williams) and for Dwyfor Meirionnydd (Liz Saville Roberts) and myself. I intend to push them to a vote, with the leave of the Committee, but I understand that that will take place on the second day of the Committee, as opposed to today.
Amendment 32 is a technical amendment that should not be controversial. The Welsh language has thankfully gained official status in Wales. The National Assembly is a bilingual body and official statements must be made in both languages. There is, therefore, no need for the Bill to include such a provision. I support the principle of clause 8, which essentially means that before any changes can be made to the new constitutional powers devolved in the Bill the support of two thirds of Assembly Members would be required. This would essentially require cross-party consensus to change the name of the Assembly, people’s entitlement to vote, the electoral system, constituency numbers and the number of elected representatives in the National Assembly.
I look forward to a swift consensus developing around renaming the National Assembly “the Senedd”, which would help to create clearer boundaries between the legislature and the Executive. Despite previous changes to the Welsh constitution, far too many people and commentators cannot distinguish between the work of the Executive, the Welsh Government, and the work of the legislature, the National Assembly. I also look forward to a consensus developing around votes for 16-year-olds. If an individual is old enough to start full-time employment or serve in the armed forces, they must have a say over who gets to form the Government. Extending the franchise to 16-year-olds during the Scottish referendum was a huge success, and we should aim to replicate it in Wales, not least because it would mean only eight more years before my daughter can vote for herself, as opposed to filling in my ballot paper—following strict instruction, I hasten to add.
The hon. Gentleman and I disagree on many issues, but on this we are in firm agreement. I have heard from many constituents, particularly when visiting schools and colleges, that young people want the franchise extended to 16 and 17-year-olds. I spent a lot of time campaigning on the Scottish referendum, and it was clear to me that, if we engage younger people in the political process, not only can they take part fully in the debate but they can add to it. We should all support that.
I am grateful for that intervention. I think that we can move swiftly on this in Wales and build a consensus in the Assembly. It would be a very progressive move, as the hon. Gentleman has just outlined.
Did the hon. Gentleman also detect from polls in the last fortnight a healthy appetite among 16 and 17-year-olds for participation in the decision that we, as adults, were able to make and which they, as young people, should have been able to make?
That is another valid dimension. It was clear that the younger generations were very much in favour of remaining a part of the EU. The morning after the referendum, I was the guest speaker at the graduation service of Coleg Sir Gâr, the local further education college, and in particular the Gelli Aur campus, which specialises in agriculture courses. I started my speech by apologising to those generations of young people—mostly 16 and 17-year-olds—who had been unable to participate in the referendum but for whom the decision made on their behalf will arguably leave a far greater legacy.
A consensus seems to be growing here on 16 and 17-year-olds having the vote. Rather than Wales mirroring some other parts of the United Kingdom, we should be radical in moving forward even further by talking about compulsory voting in Wales. Seventy four per cent. voted in a referendum, but if those others who felt disfranchised voted, the result might have been different. What we are talking about is radical Welsh politics.
I am grateful for that intervention, and what the hon. Gentleman says will be part of the debate as we go forward. I recently took part in a radio programme with Jo Stevens, and we had a vibrant debate on this issue. My one concern about compulsory voting is that it moves voting from being a civic right to a civic responsibility, which is a very big change in attitude. I am not saying that I have closed my mind to it, and I acknowledge that the hon. Member for Cardiff Central made some persuasive arguments, but I shall reserve my judgment until the time comes.
Does not the hon. Gentleman agree that civic responsibility is a good thing per se? Rather like jury service, it is a means by which people can give something back to society. Compulsory voting, whereby someone votes for a party or just turns up and registers the fact that they have come to the polling station, is a responsibility that we should all have.
I appreciate that intervention, and the National Assembly has, of course, legislated on that basis through the organ donation Bill, whereby donating has become a civic responsibility for people in Wales as opposed to a voluntary responsibility in which people had a choice. All these things will be part of the mix when these powers are devolved. I believe our politics will be far healthier for that. Luckily, these issues will be determined by people further up the chain of command in my party than myself—by those who sit in our own sovereign Parliament in Cardiff.
I look forward to a consensus developing around the need for a proportional electoral system. If we are talking about compulsory voting, it has to go hand in hand with a change to a more proportional electoral system. We cannot allow one party to gain 50% of the seats on the basis of 30% of the votes, as we saw last May. That is bad for democracy and it is a hugely corrupting influence on our politics. There is a chance here for Labour Members to show that they are generally interested in the national interest as opposed to the interests of the Labour party. I shall hold my breath on that one, as Labour colleagues seem to be more interested in compulsory voting than having a proportional electoral system.
I fear that we are getting into a debate about PR, and my party is strongly of the view that we need to go down that road. We will have to address these issues as we go along. The last election was a wake-up call where one party had 50% of the seats but only 30% of the votes.
Speaking as someone who was involved in the first referendum, I know that this was a big issue. It was argued that the Assembly would be different and we would have a hybrid system, which was put in place to help the smaller parties such as the hon. Gentleman’s party. It is not the fault of the Welsh electorate that they do not vote for his party or do not like it. We have moved considerably from this place, which has a full first-past-the-post system, to a hybrid system. In north Wales, Labour topped the poll but did not get one Member.
I am grateful for that intervention. The people of Wales will listen to what politicians have said today, and they will make their own judgment. My personal view, for what it is worth, is that the number of seats that a party has within an electoral body should reflect the percentage of votes they receive during the election. We will see how things develop in Wales.
My hon. Friend the Member for Dwyfor Meirionnydd spoke at some length about clause 10. Needless to say, I agree with every word she says, and I will join her in the Lobby to vote against it later this evening.
Amendment 33, tabled by my hon. Friends, is designed to ensure that the legislature of Wales has to authorise the drawing of money from the Consolidated Fund and that such funds can be used only for the purposes for which they were authorised. This is straightforward, and I hope that the UK Government will accept it.
Under clause 14, the Secretary of State will no longer be statutorily bound to visit the National Assembly each year. This is a positive move, which equalises the relationship between the Westminster Parliament and the National Assembly. It might also save the embarrassment of some of the less active Members in the National Assembly. I seem to recall a story from the last Assembly in which the previous Secretary of State for Wales, Mr Jones—I am disappointed that he is not in his place, because I think he would have enjoyed this—had spoken more words than the previous Assembly Member for Islwyn.
Amendments 38 to 45 are technical, and I hope the UK Government will accept them. They deal with the naming of the legislature and the establishment of a legislatures commission in the event of a name change, and ensures that the provisions in clause 15 extend to both the English language and the Welsh language names.
I am afraid that amendment 11 leaves me in some anguish. On the face of it, in view of legitimate concerns over the debate about the fiscal framework that will need to accompany the devolution of income tax powers to Wales, there needs to be some sort of “safety trigger” advice enabling the National Assembly of Wales to protect itself should the Treasury decide to pull a fast one. The fact that Scotland has secured a favourable deal in relation to its fiscal framework is of little comfort when we are discussing the Welsh situation. Following the bitter experiences of the Barnett formula, there is a danger that Wales will once again be handed an inferior settlement, with huge potential costs to the Welsh taxpayer.
On Second Reading, I said that I wanted to see a Treasury statement of some sort before finally making up my mind about fiscal framework provisions in the Bill. I am pleased to see that a representative of the Treasury is present, and listening to the debate. In fact, however, the National Assembly does have such a “safety trigger” device. Political parties can, if they so choose, vote down the Bill during proceedings on the legislative consent motion, once it has been triggered by the Welsh Government.
It is clear that the Labour party in Wales is desperate to avoid fiscal responsibility. While I have to say—although the Financial Secretary is present—that I do not trust the Treasury as far as I can throw it to protect the interests of Wales, I should add, if the Shadow Secretary of State will forgive me, that neither have I much faith in the Labour party to put the interests of Wales first. It seems to me that amendment 11 is intended to ensure that Labour will be able to veto the devolution of income tax powers to Wales. I do not believe that a Government should be able to choose whether they should be fiscally responsible, and, with that in mind, I cannot and will not support the amendment.
I fully support clause 16. The principle of fiscal devolution has already been conceded with the devolution of minor taxes. I said on Second Reading that referendums should be held on issues involving a major constitutional change. Wales is on a journey towards a system whereby more of its tax receipts will be kept directly in Wales, as opposed to being collected by the Treasury and sent home. I welcome the change in approach, and hope to lubricate the process so that the vast majority of taxes are kept in Wales. In my opinion, the only major reserved tax should be national insurance, to cover the costs of social protection.
My hon. Friend Hywel Williams has already spoken about clause 18. I support amendment 13, tabled by members of the official Opposition, which transfers all functions currently exercisable by Ministers of the Crown in devolved areas to Welsh Ministers. Having read amendments 14 and 15, I am none the wiser about what they endeavour to achieve. Amendment 16 appears to back up amendment 13, which, as I have said, I support. We have no problems with clauses 20 and 21.
That brings me to new clauses 2 and 3. I begin my argument with a simple truism. Every single member of the Conservative and Labour parties in the House of Commons supported full income tax powers for Scotland during the passage of the Bill that became the Scotland Act 2016. I cannot understand the political reasoning for supporting the devolution of a major job creation lever to Scotland while denying it to Wales.
During discussion of the Bill, the Conservative party’s position was presented by the Secretary of State for Scotland, who said:
“The Scottish Parliament will see a huge increase in its financial accountability to the people of Scotland.
The major new powers of tax, welfare and other matters will give added weight and effectiveness to the powers it already possesses.
So significant are the changes to its powers, and so immense the potential for their use, the Scotland Bill will create, in effect, a new Scottish Parliament.
In tech-speak, you could say that this will be ‘Holyrood 2.0’.”
Labour Members were equally excitable. The former shadow Secretary of State for Scotland, Ian Murray, said:
“When this Bill becomes law, it will present the Scottish Parliament with the opportunity to make Scotland the fairest nation on earth.”
I could have a lot of fun reading out quotes relating to the Scotland Bill, but this raises a serious question for my political opponents.
My new clause 3 would enable income tax receipts from Wales to be paid directly into the Wales consolidated fund. Effectively, there would be 100% devolution of income tax, as enjoyed by Scotland. If the Conservatives supported full income tax powers for Scotland to make the Scottish Parliament more accountable to the people of Scotland, why do they oppose the same powers for Wales? If Labour supported those powers because they would enable the Scottish Government to create the “fairest nation on earth”, why are they opposed to empowering their own Government in Wales with the same powers to achieve that laudable aim?
In what sense would it make Wales poorer? I am more confused by the Labour position the more Labour Members intervene. The hypocrisy of Labour’s position does nothing to further the good name of politics. Most depressingly, it shows that both the Labour party and the Conservative party rejoice in treating the people of Wales as second-class citizens and Wales as a second-class nation.
Will the hon. Gentleman not accept the fundamental and basic point that unfortunately Wales is a far poorer country than Scotland and that the danger in what he is proposing is that he will make Wales poorer?
That is a damning indictment of the current situation. I have faith in my own people and my own country to be able to develop our own economy and create wealth. The big plus of devolving fiscal powers is that it would incentivise the Labour Government in Cardiff to stop spending money on their pet projects and start concentrating on increasing tax revenues to spend on public services. That is why I support the devolution of fiscal powers.
I have great faith in the Welsh people as well, and I have a lot of faith in the Welsh Labour Government. However, does the hon. Gentleman not accept that even in the short to medium term Wales would be poorer? Wales is a net recipient of funding from the rest of the UK, and that helps benefit all the people in Wales. In the short term, we would lose out. Does he not accept that?
The powers as envisaged do not involve the complete block grant. The block grant—the total money available to Wales—will not change on day one. The only issue of contention is the fiscal framework; I have been making that point. The devolution of the fiscal power itself is not an issue in terms of making Wales poorer on day one.
There is also a technical reason why we should be fully devolving income tax powers. It is far more difficult to create a fair fiscal framework to accompany the partial devolution of income tax as opposed to full devolution. The result of this would be to enable future Welsh Governments to continue to avoid responsibility for their mistakes. In the interests of transparency, accountability and—critically—incentivisation, I hope even at this late stage that the UK Government will accept my new clause 3.
A key element of ensuring that the devolution of income tax is devolved successfully is the empowerment of the National Assembly to set income tax thresholds. New clause 2 aims to achieve this objective and I will press it to a vote on the second day of Committee, with the Chair’s permission. If we have time, I would also like to press new clause 3. We will discuss these new clauses on Monday.
New clause 2 is of vital importance as we embark on the journey of devolving income tax powers. The setting of thresholds is a key component of being able to use those powers based on domestic considerations. The Welsh economy in comparison to other parts of the UK is, regrettably, currently a lower-wage economy, a concern raised by Labour colleagues. New clause 2 would enable the National Assembly ultimately to determine the number of income tax thresholds and the levels at which they are set, including, critically, the basic rate. That freedom would enable the Finance Minister of the Welsh Government, whoever he or she may be, to set innovative income tax structures aimed at maximising revenues for the Welsh Exchequer to invest in Welsh public services, but also to encourage wealth creation and encourage investment.
It has been a consistent policy of the current Chancellor to increase personal allowances—in other words to increase the rate at which people begin paying income tax. Brexit may lead to a radical reversal of this policy in the coming months and years by the next Chancellor as revenues reduce. However, the key point is that as long as the ability to set personal allowances is reserved to London and Wales has a low-wage economy, decisions by Chancellors here could have significant impacts on the revenue available to invest in Welsh public services.
It really is all or nothing when it comes to the devolution of income tax and, as someone who supports making the Welsh Government fiscally responsible, I very much hope that the UK Government decide to support the former. Diolch yn fawr iawn.
I shall speak to several amendments, in particular amendment 11, which provides that income tax powers may not be devolved to the Welsh Assembly until a fiscal framework has been approved by both Houses of Parliament and the Welsh Assembly.
We have always said that a fiscal framework must ensure that Wales is not disadvantaged by taking on the devolution of some income tax powers. In the wake of the EU referendum result, it is all the more urgent that the Government develop a coherent and redistributory regional funding strategy not just for Wales, but for the whole of the UK.
The EU uses specific criteria for designating the areas that should receive structural funds by comparing the income of an area with the EU average. Areas in Wales such as the valleys and west Wales have benefited because they have a GDP that is less than 75% of the EU average, as has Cornwall, and many other areas have benefited because their GDP is between 75% and 90% of the EU average, including south Yorkshire and Merseyside. It is, broadly speaking, a needs-based system. As Members across the House will remember, Holtham recommended that funding for Wales should be based on a needs-based formula. However, a sophisticated formula would take time to develop.
It is simply unacceptable for Wales to accept the devolution of income tax without an order in both Houses and the consent of the Welsh Assembly, because those measures would give elected Members the chance to discuss the funding and the fiscal framework so that we do not see a cut to our funding and then get told to make up the rest by increasing income tax.
I wholeheartedly agree with the point about the potential trap for Wales. Does my hon. Friend share my concern and that of many of my constituents about the uncertainty that is being created for projects such as the south Wales metro, which was due to be funded by the EU? We are not clear where that £150 million of funding will come from. If we do not have clarity on Wales’s fiscal framework and on whether we will be better off or not, projects like that will be in doubt.
I very much agree with my hon. Friend. It is even more serious than that because many jobs depend on EU funding. People might find that they no longer have the apprenticeship opportunities, training opportunities and many other things that are supported by the EU but that are not quite as obvious as the concrete structures.
It would be very difficult for the Welsh Government to make up a significant shortfall in the block grant. The block grant is some £15 billion per annum, whereas the total income tax raised in Wales amounts to some £4.9 billion. It would be very difficult to make up any percentage cut to that £15 billion, particularly if we wanted to protect the standard taxpayer. It is therefore vital that there is an opportunity for negotiation and for a vote and approval before any devolution of income tax.
People might think that I am very suspicious of the Conservative party and that I do not trust it an inch. [Hon. Members: “No!”] Well, I just think that we have to look at the facts. Look at what it has done with councils in England. It has told them that if they want to increase social care funding, they can raise it through council tax hikes. If anyone thinks that the UK Government run by the Conservative party are committed to fair funding or needs-based formulas and are free from partisan bias, I remind them that between 2012 and 2020 the average cut in spending power per household in Labour council areas in England is more than five times higher than the average cut in Tory local authority areas.
I regret to inform my hon. Friend that the situation is worse than she describes, because when special funding was identified for councils, 85% of it went to Conservative-held authorities.
My hon. Friend confirms my very worst fears. Instead of having needs-based funding, the average cut per household in a Tory area will be in the region £68 by the end of the Parliament, whereas in Labour council areas it will be more than £340. My fear is that the block grant will be cut and we will be told to make up the rest through income tax hikes in Wales. As Members are well aware, there has been no full assessment of the impact on Wales of different rates of tax on the different sides of a very porous border, so we really have no idea what will happen.
I will not repeat our many previous arguments about the importance of keeping the UK together and of having an income tax base right across the UK. All of us in the many regions of the UK contribute to the wealth that is generated in London through the companies that people work for in Wales and other parts of the UK. London therefore has an enormous tax take compared with other areas and is the only place that consistently provides a surplus, whereas other areas have to take from the pool. That is why we should not go down the route of complete separatism, as suggested by Plaid Cymru. Any tampering with income tax must be done with the consent of both Houses here and the Assembly to ensure proper negotiation and a proper agreement about funding for Wales, so that we are not left short of money.
By and large, I am happy with the measures and the devolution of some further powers to the Welsh Assembly. To be perfectly frank, I have never been a devolutionist, but I accept where we are and we must make it work. I know that the Secretary of State for Wales, my right hon. Friend Alun Cairns, and the Under-Secretary of State for Wales, my hon. Friend Guto Bebb, will be doing everything that they can in the Wales Office to ensure that these further provisions are a success and contribute in a positive and constructive way to the Welsh economy and Welsh national life.
However, my concern about tax-raising powers is long standing, and it would be remiss of me if I did not raise on behalf of the people whom I represent in Gower the issue of a referendum on tax-raising powers. I am well aware and have no doubt that we have all seen enough of referendums to last a lifetime, but one on tax-raising powers for Wales would be slightly less contentious and would take place in a slightly better spirit.
The National Assembly for Wales, and devolution in general, has been on something of a journey over the past two decades. There have been mistakes, many potholes in the road and things that could have been done differently, but we have taken this course together and I am sure that everyone is committed to working to ensure that devolution works for the people of Wales. There is no doubt that Welsh national life has benefited from devolution, and it is important that people feel that our institutions are close to the decision-making process. There is still work to do on such issues, but things do not happen overnight at such a young institution. Speaking as a recent former Assembly Member, it is promising to have seen some progress and maturity in the Assembly as an institution since the last election.
I want to make it clear that when there has been a major decision that would greatly affect the devolution process, the people of Wales have been consulted every time. There have been close votes. Indeed, the one that created the National Assembly was on a knife edge, but the Assembly was created. The Welsh people then voted to give the Welsh Government law-making powers. Now, the next stage of that process, and perhaps one of the most important, is to give the Welsh Government the power to levy taxes. It is argued that such powers are vital to economic growth, families’ security and the future prospects of the Welsh nation. If used well, tax-raising powers could create huge economic opportunities that drive our economy forward and increase the fortunes of our people, their children and things that they consider important to them. If they are used poorly, however, that could place a burden on family budgets, put encumbrances on small and medium-sized business, which are the lifeblood of the Welsh economy, and drive key companies and economic figures away from the burdens of a tax-laden Wales to Scotland, Ireland or England.
These powers are as crucial as any that have gone before, and if we are to be true to the Welsh people and to the devolutionary process that we have undertaken over the past two decades, it is only right and correct that we allow the Welsh people a voice on these powers. It is their democracy, their devolutionary process and their futures that are being decided, and some might quite rightly say that if they were worthy of being given the choice then, why not now?
The Under-Secretary has previously said that a referendum was not an absolute manifesto promise, but I contend that it was implied to the people of Wales and to my constituents that a referendum would be offered. I must admit that I am disappointed that it will not be on offer as I campaigned fiercely on the issue. However, after a great deal of soul searching, I will not vote against the Government on this. I hope that we can continue a dialogue on this issue and others to ensure that this Bill provides the very best outcome for our people in Wales.
It is a pleasure to serve under your chairmanship once again, Mr Gray. Many points that I was going to make have already been raised by other Labour Members, especially by my hon. Friend Nia Griffith. None the less, I wish to discuss the idea of a referendum on income tax that was raised by my hon. Friend Stephen Doughty, who is no longer in his place. Byron Davies talked about the Conservative manifesto, but I am more concerned with the fact that, under the Wales Act 2014, it is clear that if there were to be a referendum on the devolution of powers to raise income tax, it would be held before the powers could be transferred to the Assembly.
I said on Second Reading that I am a devolutionist. I have long argued that major constitutional changes should be made by referendums, and I supported that in 1997 and 2011. However, in recent weeks I have been persuaded by some of the arguments on whether we should hold referendums on this specific issue and a range of others, including on having a go at the Government of the day. I make that point seriously, because I am not convinced that this is the major constitutional change that it once was. The Assembly already has tax-raising powers, but we do need some safeguards, which is why I will support amendment 11.
I know that you will not allow me to digress too much, Mr Gray, but let me say that I used to support the single transferable vote for elections. In theory, it is great textbook stuff, but as someone who has campaigned regularly in the Republic of Ireland, I can say that the practical implication of that has put me off. I have also been put off referendums over the past few weeks. None the less, we do need to move forward on income tax, which is why amendment 11 is the right vehicle to help us do that. What it suggests is that both Houses of Parliament in London and the National Assembly for Wales in Cardiff Bay would make that decision. They would have a mature debate on income tax, in which we would look at the whole fiscal framework and the settlement that we have at present.
Like my hon. Friend the Member for Llanelli, I am worried that if we were to give the Assembly the power to raise income tax, this Government would say, “There you are. You now have the tools to do the job. Get on with it and start raising your own taxes”, while they cut the block grant and other fiscal measures. Our Welsh constituencies would end up poorer, which worries me considerably.
It would be fair and right to have safeguards, and it is what the people of Wales want. This Chamber of elected Members and the second Chamber should look at the matter in greater detail along with the National Assembly for Wales. It is right to have that consensus and some safeguards to ensure that the people of Wales are not worse off as a consequence of the measure.
We all know that the Barnett formula has a flaw, and we all argued that in the 2015 election—it was in all our manifestos. I have concerns because for every pound that is spent in the UK, Wales gets £1.15 in return. It gets more than England, but not as much as Northern Ireland or Scotland. In the future, if these income tax measures were given to the Welsh Assembly by a Government who were keen to get rid of them without having that proper debate in both Houses of Parliament and the Welsh Assembly, I would worry that the people whom we are here to represent would be in a worse position. I understand the theory, but it is the practice that worries me, and for that reason, I will support amendment 11.
With regret, I stand to oppose clause 16, which relates to the removal of the requirement for a referendum on the devolution of income tax or a proportion of it to the Welsh Assembly. I want to give my reasons for that. In Scotland there was a referendum before such a change took place. Also, the manifesto on which I stood for election—both the UK version and the Welsh version—reiterated the requirement for a referendum. When I and other members of the Select Committee on Welsh Affairs scrutinised the draft Wales Bill, it contained no such proposals. We must ask ourselves why at this stage we want to remove the requirement to have a referendum. In other words, why do we want to repeal this requirement that is in the Wales Act 2014? It is clear that the Welsh people would not vote in favour of the devolution of income tax, so this is an attempt to circumvent the will of the people, in my eyes.
Why do we wish to devolve income tax? Financial accountability has been talked about, but I believe that unless and until the Welsh Assembly Government levy the vast majority of taxes, they will continue to blame this place for not being in a position to provide them with limitless funding. Of course, any situation whereby they would levy most taxes would equate more or less to Welsh independence, which I feel the Welsh population do not favour.
If these powers are transferred, what will happen to the level of taxes? We are told by some that the powers would not be used, and if that is true then why would we wish to transfer them to Cardiff? Some, of course, fear that tax levels would be increased and, clearly, from my point of view, that would harm the Welsh economy. Some have suggested that tax could actually be reduced. That is highly unlikely, but if it ever occurred it would undoubtedly lead to calls from some nearby English regions for similar reductions. Any competitive advantages would be eliminated.
From a north Wales perspective, there are 50,000 cross-border commutes every day and 1 million people of working age live on either side of the border. This is a political border that does not reflect how people live their lives or how businesses operate, and there is already cross-border disparity in the standard of public services, which leads to much frustration. Why would we want to make the situation worse? I believe that differential tax rates could lead to confusion, further complication of an already complex tax system, additional associated costs, and consequences, intended or otherwise, for where people choose to live and work, whether that is in England or Wales.
We have just undergone the latest Assembly elections and, as in the past, disinterest and disengagement were evident, with votes cast primarily on the basis of politics in this place and with reference to the EU referendum, and I am afraid that sums up the level of enthusiasm for more Welsh devolution, at least in my area. It is clear that there is no call or mandate for additional powers and particularly not for tax-raising powers, and I see this as simply yet another step in the gradual break-up of the UK, which my residents do not want. Indeed, now that the prospect of partial income tax devolution has been raised, we are already seeing calls for further tax devolution. I feel strongly that this is an unnecessary and undesirable proposal and, with great regret, I will have no choice but to vote against the clause.
Last week, I had the great pleasure of congratulating Paul Flynn on regaining his seat on the Front Bench after a gap of 27 or 28 years. That was in a slightly different role to the one he has taken today, but I am delighted to see him there. I am also more than delighted to see Carolyn Harris sitting next to him. Many Members will not know that a certain television company did a programme—it should have been a series—about two MPs trying to get to Westminster. They were me, now the Member for Brecon and Radnorshire, and the hon. Lady. She was my leading lady and I was her leading man, and I am delighted to see that the star is now shining brightly on the Labour Front Bench. That, I am afraid, is where the pleasantries stop, and pleasantries they are, I say to the hon. Lady.
I, too, have reservations and concerns about clause 16. I made my objections clear on Second Reading just a few weeks ago, and here we are, too quickly for my liking, already at Committee stage. I have great concerns about a referendum on income tax. I stood on many a doorstep, on many a street, on many a farm throughout two and a half years of the election campaign, and as we got closer to the election, it was a clear manifesto commitment that we would deliver a referendum on this very important matter. I am deeply disappointed that the Government have decided to do away with that referendum. I have made these feelings clear to various members of the Government and I have made my views clear in this place. Sadly, the Government have decided to go on with the clause and I, too, will vote against it today.
Do the people of Wales want this clause? Do they want the possibility of the Assembly raising a proportion of their taxes? I have yet to hear one person mention that they would like the Welsh Assembly at Cardiff Bay to have this opportunity. During many hours, over many weeks, and what seem like many months I have, as a member of the Welsh Affairs Committee, heard specialists, lawyers and academics saying that it would be a very good idea, but I have not heard one constituent or one member of the public from Wales request that. It would be a great shame to go ahead with the clause today.
Scotland had the opportunity of a referendum; Wales does not. Bringing forward the clause is wrong and the timing is wrong. The Assembly has not yet, over 17 years, fully delivered on many matters for which it has responsibility. I could go on for hours about health, education and agriculture.
I heard the hon. Gentleman speak on Second Reading and I am sure he is going to repeat a lot of what he said then about how he dislikes the Assembly, but before he does that, will he seriously consider Labour’s amendment 11, which suggests that we have a pause and that both Houses of Parliament and the Assembly debate this important issue, on which we are to represent our constituents? I respect the hon. Gentleman’s view. He has heard the reasons why I am moving away from demanding a referendum. Will he consider supporting that amendment?
I may consider it, but at the moment I am thinking about going further, with deep regret, and looking to my first vote against the Government—my first rebellion, which is of great concern to me.
My position is not a criticism of the Welsh Assembly per se or of devolution. It is a criticism of the present incumbents down in Cardiff Bay. They have not delivered for us. Why on earth are we now looking to give them tax-raising powers? Sadly, I do not feel that they would be able to deliver that properly for the people of Wales. With great regret, I will not be able to support the Government’s proposal in this matter.
I apologise for the fact that I was not here at the beginning of the consideration of this group of amendments. Sadly, I was detained in another engagement.
Like my hon. Friends the Members for Vale of Clwyd (Dr Davies) and for Brecon and Radnorshire (Chris Davies), I have huge concerns about clause 16. I speak as the Secretary of State who took the Wales Bill 2014 through this House. Unlike my hon. Friend the Member for Vale of Clwyd, I was an enthusiast for tax-varying powers for the Welsh Assembly, because I thought that that would introduce a measure of accountability and potentially give the Assembly Government some incentive to introduce a more competitive tax regime in Wales. However, the Wales Act 2014 clearly states that such tax-varying powers should not be implemented until they are triggered by a positive vote in a referendum, and it is still right that such a referendum should be held; after all, tax-varying powers include the power to increase taxes.
If one expects the people of Wales potentially to pay more tax, it is only right that they should first be asked if that is what they want. That is what happened in Scotland in 1997, when the referendum had two separate questions, including one on taxation. Unlike hon. Members who have already spoken, I do not believe that it is beyond the bounds of possibility that the people of Wales would vote for tax-raising powers; after all, that is what the Scots did. However, imposing such a competence on the Welsh Assembly Government without giving the people of Wales the right to have their say in a referendum is utterly disrespectful of the people of Wales; after all, what was good enough for the Scots should be good enough for the Welsh.
I also share the concerns of my hon. Friend the Member for Vale of Clwyd. I stood in a general election only 14 months ago on a manifesto that made it entirely clear that there would be a referendum before tax-varying powers were triggered, and I do not believe that anything has changed 14 months later. If we make a manifesto pledge, we should adhere to it, so, like my hon. Friends, I will, sadly, be voting against the Government on clause 16. My right hon. Friend Mrs Gillan, who is also a former Secretary of State, has asked me to indicate that she will do likewise. Sadly, she is not able to be here at the moment, but she too regards this as a point of principle. I urge my right hon. Friend the Secretary of State to reconsider. By pressing ahead, he is breaking faith with the electorate of Wales.
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 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.
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.
It is a pleasure to serve under your chairmanship in this important debate, Mr Gray.
In opening, I say that it is a pleasure to welcome Paul Flynn to his place. He is the Member of Parliament for my parents-in-law, and an active constituency Member. We all know how active he is, usually on the Back Bench, but it is a pleasure to see him on the Front Bench. I extend a welcome to Carolyn Harris—I have some roots in Swansea, having been brought up in that part of the world. I also pay tribute to the hon. Members for Llanelli (Nia Griffith) and for Clwyd South (Susan Elan Jones), for the work that they have put into consistent scrutiny of the Bill in its early stages. I am grateful for the co-operation and support they gave me as we sought to bring about broad agreement on where the Bill stands. There is not agreement on everything, but I am grateful to all Members who have contributed for the broad consensus that has come forward.
Clauses 8 to 21 and the amendments related to them deal with changes to Assembly processes, the devolution of income tax powers and the functions of Welsh Ministers. Clause 8 would insert a new section into the Government of Wales Act that determines what types of protected subject matter would, if contained in an Assembly Bill, require that that Bill be passed by a super-majority, which is two thirds of all Assembly Members. The protected subject matters in clause 8 include the name of the Assembly, those entitled to a vote in the Assembly elections, the system used in Assembly elections, the specification or number of Assembly constituencies and regions, and the number of Members returned for each constituency or region. These are in line with the protected subject matters included in the Scotland Act 2016, with two exceptions. The Bill provides that any change to the name of the National Assembly for Wales be subject to a super-majority requirement. The Bill also provides for the specification of constituencies, regions or equivalent electoral areas as protected subject matter. The super-majority requirement will ensure that there is broad support across the Assembly for those fundamental changes.
In the first instance, it would be for the Presiding Officer to determine and make a statement on whether or not an Assembly Bill relates to any of those protected subject matters. It is this part of the clause that amendment 32, tabled by Plaid Cymru, seeks to change. The amendment would remove the requirement for the Presiding Officer’s statement to be made in both the English language and the Welsh language. It would also remove the requirement for the Assembly’s Standing Orders to determine the form of the statement and the manner in which it is to be made.
It goes without saying that the Government are fully committed to the Welsh language. The Wales Office has two Ministers who speak Welsh, of which I am one, and a third Minister who is learning Welsh. It is good to see that the political tension around the Welsh language seems to be a relic of history, which is, I am sure we would all agree, a positive move. But the intention behind proposed new sections 11A(5) and 111A(6) of the Government of Wales Act 2006, as inserted by clause 8, is to ensure that the Welsh language is treated equally to English when the new super-majority processes are incorporated into the workings of the Assembly.
Does the Secretary of State agree that it is outrageous for those organisations supporting the Welsh language to assume that because we are leaving the European Union the support for the Welsh language will in some way be greatly diminished? The UK Government and Welsh Government have been huge supporters of the Welsh language, and there is no earthly reason why that should not continue in future.
I am not going to give way, because there are many technical amendments I need to cover and I want to make some progress.
I say to Hywel Williams, who moved amendment 32, that he has made a persuasive argument that the Assembly processes would ensure that Welsh is treated equally anyway, without adding a prescriptive provision to the Government of Wales Act. I would like to give the matter more thought but undertake to return to it on Report. I therefore hope that he will consider withdrawing the amendment.
I am grateful to the Secretary of State for that response and will listen to the rest of his speech with interest. I will withdraw the amendment. There is a progression in the normalisation of a language such as Welsh, from a point where it has to be specified to one where it is assumed, which is where we are in the National Assembly. That is an important point to make.
The hon. Gentleman makes an extremely important point that demonstrates the maturity of the debate and the acceptance of the language.
Clause 8 also provides for the Counsel General or the Attorney General to be able to refer the question of whether a provision of an Assembly Bill relates to a protected matter to the Supreme Court for a decision. The Counsel General or the Attorney General may make such a reference to the Supreme Court at any time during a period of four weeks from either the Assembly rejecting the Assembly Bill or its being passed.
There is precedent for a requirement for a super-majority on matters of constitutional importance. Under the Government of Wales Act 2006, the Assembly vote that triggered the 2011 referendum on Assembly powers required two thirds of Assembly Members to vote in favour. The Government believe that the safeguards in the Bill are sensible and command broad support across Wales.
Supplementing clause 8, clause 9 amends requirements for the Assembly Standing Orders on Assembly Bill proceedings, to reflect the new processes required as a result of a reference to the Supreme Court. The clause provides for Assembly Bills to be reconsidered by the Assembly in the event that the Supreme Court rules against the Presiding Officer’s decision on whether the Bill relates to a protected subject matter. That is in line with procedures put in place for the Scottish Parliament in the Scotland Act 2016, which has been passed by both Houses.
Clause 10 relates to justice impact assessments, on which there was considerable debate. The UK Government and Welsh Government have a number of well-established processes for assessing the impact of legislation on matters ranging from regulation to equalities. Indeed, on Second Reading I discussed the fact that Assembly Bills are assessed against their likely impact on the Welsh language and on equalities. It is also important to recognise that, through the Treasury and a range of other Departments, Her Majesty’s Government issue guidance and requirements relating to expectations of how public spending will be conducted and how public interests will be guarded. That is the principle under which the justice impact assessment should be considered, rather than how it has been interpreted by many.
Within the UK Government, Departments bringing legislation forward to this House are required to assess its likely impact on the justice system. The importance of that assessment is self-evident: for legislation to be effective it must be enforceable. It is vital that that enforcement process is ready and resourced sufficiently to cope with new demands placed upon it.
We recognise the need for Assembly legislation to make effective enforcement provision, and we are putting that beyond doubt in the Bill. Schedule 2 introduces new schedule 7B to the Government of Wales Act 2006, to make it clear that the Assembly may modify private law for a devolved purpose, and that only certain core elements of criminal law are outside its competence. The Assembly will be able to create and modify offences for the purpose of enforcing devolved provisions. It has the power to create civil or criminal sanctions against wrongdoing, defer decision making to the courts, or provide for appeals on a range of devolved matters—indeed, it does so already.
The England and Wales justice system shoulders a significant portion of the burden of enforcement regimes. Impacts are felt across the justice system, including by the courts, the judiciary and lawyers—many of those points have been rehearsed in this debate and on Second Reading. I underline the need for proper consideration of any new legislation, so that the Ministry of Justice and the justice system can adjust their working practices to cope with those necessary changes.
Clause 11 makes a minor change to Assembly procedure to enable the Presiding Officer to submit Bills for Royal Assent. As the Silk commission recommended, and as we set out in the St David’s day agreement, we are aligning Royal Assent processes for the Assembly with those in Scotland. That means that in future the Presiding Officer, rather than the Clerk of the Assembly, will submit Bills for Royal Assent and deal with other related processes.
Clause 12 allows the National Assembly for Wales to design and put in place accounting and audit arrangements for devolved bodies. Taking on those responsibilities is a natural next step in the progress of devolution to the Assembly. Under the Scotland Acts, the Scottish Parliament has similar arrangements. The Government of Wales Act 2006 is extremely prescriptive about the budgeting process of the National Assembly for Wales, but the Government believe that such arrangements are outdated and no longer appropriate for a mature legislature. Clause 12 therefore allows the Assembly to legislate for comprehensive accountancy arrangements, including the preparation and publication of accounts, and the functions of the Auditor General for Wales. That replaces previous arrangements for financial controls in the 2006 Act. Given the significant powers now devolved to the Assembly, the Government believe that the time is right to update those arrangements.
Amendment 33 would add to clause 12, but I believe that it goes further than is necessary. Clause 12 concerns what the Assembly must legislate for to ensure that its practices fit with international best practice and what the people of Wales want. I do not believe that we should change that arrangement in the way proposed in the amendment. Under clause 12, the Assembly will have significant control over its own affairs, but it would not be in line with international best practice or arrangements in other devolved Administrations to give the Assembly the extra responsibility that amendment 33 would provide. Clause 12 already devolves significant responsibility to the Assembly, and amendment 33 is not the right way to do that.
Clause 13 relates to the composition of Assembly Committees, and clause 14 relates to the Secretary of State addressing the National Assembly for Wales, as I will be doing tomorrow with pleasure. However, those clauses are out of date and undermine the maturity of the Assembly, because it is not for this place to dictate the composition of Assembly Committees, or to say that the Secretary of State should have the right to address the Assembly once a year. I am therefore pleased that we are acting to remove those clauses.
Clause 15 makes consequential changes that arise from the Assembly changing its name in an Act. The Bill will empower the Assembly to manage its own affairs, including changing its name if it wishes. The Assembly will be able to change its name to the Welsh Parliament or the Welsh Senedd, or whatever it deems appropriate, and the clause will ensure that any change of name in law is reflected throughout the statute book.
Amendments 38 to 45, tabled by the hon. Members for Arfon, for Dwyfor Meirionnydd (Liz Saville Roberts) and for Carmarthen East and Dinefwr (Jonathan Edwards), seek to amend clause 15. The amendments would ensure that if the Assembly changes its name, any Welsh language references in the statute book to the National Assembly for Wales, the National Assembly for Wales Commission and other related bodies would reflect the change. The amendments seek to change these references across the statute book in the same way that the clause currently provides for changes to the Assembly’s name in the English language. Amendment 38 also seeks to change the title of the clause, presumably because references to translation could be misinterpreted in the context of the other amendments proposed.
As I have already said, the Government are fully committed to the Welsh language. It is our greatest inheritance as a nation and we have a responsibility to continue to develop it. On the face of it, the amendments would make sensible changes to the clause to ensure changes to the statute book, as a result of the Assembly changing its name, would be reflected elsewhere in legislation. I would like to reflect on the amendment, consult Opposition parties, and return to this subject on Report.
Clause 16 and amendment 11 dominated much of the debate. Clause 16 removes the need for a referendum before Welsh rates of income tax are introduced. Back in 2012, the Silk commission’s first report recommended a referendum before a Welsh rate of income tax could be implemented. The Government agreed to the recommendation and the Wales Act 2014 provided for a referendum if the Assembly voted, by a two-thirds majority, to trigger one.
The debate, however, has moved on substantially since that time. There is clearly a strong consensus that Welsh devolution has moved on since the 2014 Act and the Welsh Government should not have to call a referendum before assuming the power to raise, vary or even reduce a portion of income tax. The Welsh Government cannot carry on being akin to a large UK spending Department. That does not create a positive environment for political debate, with a healthy level of accountability. There is already a precedent for devolving tax-varying powers without the need for a referendum.
I am grateful to my right hon. Friend for his intervention. I was about to go on to say that two important principles have been acknowledged. First, the Assembly is more mature. That is reflected in the legislation we are passing to enable the Assembly to reach out and respond further to Welsh needs.
Secondly, when my right hon. Friend was Secretary of State for Wales, he established the principle of devolving significant tax-varying powers without a referendum. In the 2014 Act, the devolution of stamp duty land tax and the aggregates levy, in addition to powers over council tax and the subsequent full devolution of business rates to Wales, account for a broad income of £2.5 billion. The Welsh rate of income tax, which we propose to devolve is—at about £2 billion—significantly less than that. This important principle has been accepted positively by the Welsh public and by civic society. That stands firm and is a backstop to clause 16.
Does my right hon. Friend not accept that the significant difference is that very many more people pay income tax than pay stamp duty land tax or landfill tax? Is that not the point: it affects nearly everybody in Wales?
I remind my right hon. Friend that a similar number of people who pay income tax also pay council tax, and that many will be business owners who pay business rates.
Much reference has been made to the Welsh Conservative manifesto and I remind right hon. and hon. Members what it said. Our manifesto for Wales stated that a funding floor would be introduced in the expectation that the Welsh Government would hold a referendum. We have fulfilled our end of the bargain, having introduced a funding floor of 115%, as has been mentioned. That is the floor—if I may gently correct Albert Owen—and the spending level is currently higher. If the Welsh Government are not going to introduce a referendum—I do not think that any of us want one after the events of recent weeks—we will need to take steps, so I hope that the House will agree clause 16 as it stands.
Clauses 17 and 20 deal with the functions of Welsh Ministers and devolve important new powers to them. Clause 17 will insert new subsection 58A into the Government of Wales Act 2006, conferring common law-type powers on Welsh Ministers—the kinds of powers exercised by a natural person, such as the power to enter into contracts, make payments or set up companies. It is difficult to believe that Welsh Ministers do not already hold these powers, and it demonstrates how current legislation is out of date with modern thinking and concerns.
Clause 19 deals with the transfer of ministerial functions. The Bill provides for a clear separation between devolved and reserved powers, an important component in which is being clear about which so-called pre-commencement Minister of the Crown functions in devolved powers are to be exercised in the future. We intend to transfer to Welsh Ministers as many of these functions as we can. We will do so in a transfer of functions order made under section 58 of the Government of Wales Act and will bring forward a draft order during later stages of the Bill. Several other transfer of functions orders have been made under section 58 since the Assembly was established.
I turn now to amendment 11, tabled by Labour, which would place a requirement in the Bill for a so-called fiscal framework. I should underline that the precedent in Scotland was not for the inclusion of such a provision in legislation; instead, the UK and Scottish Governments negotiated an agreement. I would hope that a mature relationship has developed between the Welsh and UK Governments, and between the First Minister and me, in respect of how we conduct our affairs. Clearly, there is no way I want to see Wales in a detrimental position—that is the starting point of our negotiations—and I am optimistic that we can come to an agreement over the appropriate adjustments to the Welsh block. Holtham has made some recommendations that are a good starting point for those discussions. Few people believed we would ever get to the position of introducing a funding floor. I hope, therefore, that that funding floor of 115% might give people confidence.
I would like us to reach a position where the Welsh Government can grant a legislative consent motion. Under the model we followed in Scotland, a legislative consent motion came only after the fiscal framework was agreed. I would hope that, once we have reached an agreement on a fiscal framework and a Barnett adjustment, a legislative consent motion could then be used as proof and evidence. For that reason, the amendment proposed is unnecessary—appropriate structures are in place to allow for that mature discussion to take place.