Wales Bill - Committee (2nd Day)

Part of the debate – in the House of Lords at 3:07 pm on 7th November 2016.

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Photo of Lord Rowlands Lord Rowlands Labour 3:07 pm, 7th November 2016

My Lords, I declare an interest as honorary president of the National Training Federation for Wales, and in its early years I was one of its advisers. The federation brings together many or most of the training providers that deliver the apprenticeship and skills policies and funding from the Welsh Assembly Government. I am grateful to the noble Lord, Lord Wigley, for tabling this amendment and bringing to our attention the peculiar and now very difficult situation that has arisen as a result of the introduction of the levy.

I say nothing about the merits of the levy. Frankly, it is a fascinating piece of interventionist politics in the labour and employment market. In fact, it reminded me—although I make no direct comparison—of when I was first in the other place in 1966 and a Chancellor of the Exchequer introduced something called the selective employment tax. I am not sure how many Members still remember that or it its fate. It was a novel tax which did not last; I wonder how long this novel levy will last.

The heart of the problem, as the noble Lord, Lord Wigley, pointed out, is that the conception and launch of the apprenticeship levy completely ignored the fact that in three of the four nations of the United Kingdom, the whole policy is devolved. Policy, funding and operation of all forms of training, including apprenticeships, has been devolved. There was no real consultation on how the levy would apply to or could be accommodated within the policies and processes that have developed to deliver apprenticeship and training programmes in Wales, Scotland and Northern Ireland.

I continue to be amazed that there are still corners of Whitehall and the Treasury where people have not realised that devolution has happened. This is an extreme example of just that point. I hope that when the Minister replies he will promise that something like the process that has happened in this case—when a Treasury or a Chancellor decides to do something that may have a profound impact on the policy and processes of the devolved Administrations—will not happen again.

Ever since the announcement of the levy and its operation, there have been attempts to understand how one can accommodate it within the terms, policies and processes that I know have been well developed within the Welsh Government and Welsh Assembly. To go further than the noble Lord, Lord Wigley, we have now reached the bizarre situation where a UK-wide levy may be impossible for any Welsh company or organisation to access. I will explain why in a minute.

Let us remind ourselves where the levy applies. It applies not only to companies but to all public bodies, third-party bodies and organisations with a payroll of more than £3 million. Therefore, the Welsh Government and Welsh health authorities will pay the levy, but I see no means by which they could access it to promote their training. In fact, they do not need to because, as a result of the extremely positive and forward-looking policies of the Welsh Government and Welsh Assembly, we have a system to develop apprenticeships, skills and training in Wales that is working very satisfactorily and requires no levy of any kind. It is therefore unnecessary.

Perhaps the Minister can confirm this, but I gather that in England, it is to be delivered by something called a digital voucher. We have had voucher systems in training levies before, and they have invariably failed. This has all the hallmarks of being an unnecessary bureaucratic nightmare. As a result, as I understand it, the Welsh Government and the Welsh Assembly have decided that they will not take part. They will not implement the digital voucher system. I hope that I have got that right; if not, the Minister can disabuse me. I gather that that is true of the other Administrations as well. So the means by which Welsh companies or organisations could access the levy money—the digital voucher—will not be put in place in Wales or the other devolved Administrations.

The Welsh Assembly and the Welsh Government already have a very well established programme and process. They have identified their priority areas. This has always been a major part of its budget. I think I am right in saying that in the most recent budget, it was agreed that £111 million would fund the whole apprenticeship and skills programmes. Welsh companies and organisations can access those skills and apprenticeship schemes through the process of going through the training provider network that has been created. In other words, there is no room for a levy, as far as I can see. I do not know how it can be inserted into this process. Again, as the noble Lord, Lord Wigley, said, this is so opaque and confused that I am not sure that I have got it right, so I hope the Minister will help us to understand it

As the noble Lord, Lord Wigley, pointed out, there are a lot of cross-border issues. For example, can a company, operating across both borders draw down the English voucher system to be used in Wales? I do not think that it can. So again, I cannot understand how it would be possible for Welsh companies and organisations to tap into the potential resources raised by the levy. Secondly—the noble Lord Wigley’s amendment presses this point—we should have transparency. At present, HMRC, which is the means of collecting it, does not plan to identify the Welsh contribution. It does not intend to identify how much of the levy has been raised in Wales, so I cannot understand how it can be operated.

I hear that somehow the problem will be solved by the Barnett formula. We all know that its sell-by date has long gone. To and use the Barnett formula, which even Lord Barnett disowned some time ago, is preposterous. If it is to be used, how will it be done? How will companies and organisations which pay the levy be able to access it to service Welsh apprenticeships and training, through the Barnett formula, if that is the process planned? How will that happen? I understand that the Barnett formula is not priority- allocated. It is just a general pool, which does not mean that it will go into training or apprenticeships.

I am grateful to the noble Lord, Lord Wigley for introducing this amendment because it has raised very serious issues in an area of policy on development and training on which I want to compliment the Welsh Government and the Welsh Assembly. The Minister will know that. I believe that this levy has added confusion and uncertainty, and sadly is a terrible example of a non-consultation with devolved Administrations on issues that are fundamental to such Administrations.