Wales Bill - Committee (3rd Day) (Continued)

– in the House of Lords at 8:30 pm on 15th November 2016.

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Amendment 66

Moved by Lord Hain

66: Schedule 1, page 69, line 3, at end insert—“Terms and conditions of employment and industrial relations in Welsh public authorities and services contracted out or otherwise procured by such authorities.”

Photo of Lord Hain Lord Hain Labour

My Lords, Amendment 66 stands in my name and that of my noble friends Lord Murphy and Lord Kinnock, and the noble Baroness, Lady Randerson. As Secretary of State, I took through the Government of Wales Act 2006 and I begin by commending the Minister for his empathy, skill and civility in our collective purpose, which is to get a Bill that does the very best for Wales. I hope he will see what we are doing as support for him in battles in Whitehall with some of his colleagues who I do not think really understand the Wales devolution settlement.

This amendment will come as no surprise to your Lordships. Not only did I explain at Second Reading that I would be tabling it, but I and my noble friend Lady Morgan of Ely also explored in detail the issues it raises during the passage of the Trade Union Bill through this House at the beginning of this year. At that time there were many references to the UK Government’s insistence on ignoring their own legal advice, ignoring a legislative consent Motion voted through by the National Assembly for Wales and ignoring the ruling of the Supreme Court in 2014 in relation to the Agricultural Wages Board. The Government’s insistence on pushing ahead with measures that interfere with the functioning—I stress this to the Minister—of the devolved public services in Wales demonstrated an intention to override the devolution settlement. I am sure that the Minister is concerned about that and I hope that he, with his known support for devolution, will change that policy in the Bill and accept the amendment.

The Minister may insist that this reservation amendment is unique: it is the only amendment in which we are seeking to go further than the Scottish settlement. I concede that. This should not, however, be taken out of context. It is precisely because the Government of Wales Act that I took through Parliament in 2006 has allowed the National Assembly for Wales and the Welsh Government to develop and foster unique relationships with public sector employers and trade unions that we find ourselves in this position. The UK Government are making a clear and in some ways remarkably transparent move to go beyond overriding decisions that the Welsh Government have taken since 2011 and deliberately take back powers because they are unhappy about decisions taken and the judgment of the Supreme Court—a matter to which I will return. I believe that this is an attack on the heart of the Welsh devolution settlement. The employment reservation is only one of many that other noble Lords have raised on this deeply flawed Bill—but it is an important one.

Over the past nearly 20 years, the Assembly has earned its place in the public consciousness. As we know from the referendum in 2011, the Welsh public have overwhelmingly endorsed the approach taken by the Assembly and confirmed their desire for public services in Wales to continue to be run from Wales. The Conservative Party supported the 2011 referendum, and the public were asked in that referendum whether they wanted the Assembly to make laws on all matters in the 20 subject areas it had powers for. At the top of that list were education, health, housing and local government—the very devolved areas specifically affected by this reservation. It is incongruous in the extreme to think that the argument put forward in another place by the Secretary of State that—I paraphrase—the 2006 Act never intended to give powers over employment matters in the devolved public services is a reason now to claw them back.

There have been many positive developments by the Welsh Government in their relationships with their social partners in the public services, including the Partnership and Managing Change agreement, signed up to by all public service employers and trade unions, the memorandum of understanding in local government and the implementation of the two-tier workforce code. We have been fortunate in Wales not to have seen a difficult and divisive strike by junior doctors. We might think that to be no accident. It comes out of precisely the culture made possible by the circumstances that flowed from the 2006 Act that this Bill now seeks to reverse.

All of these things have been possible because of the social partnership structures in place to ensure that the difficult decisions facing our public services at a time of austerity are worked through from the beginning with employers and trade unions round the table. All of this has been possible because the legislative framework has permitted this flexibility.

The legislative competence over the delivery of public services is undoubtedly devolved to the Assembly. There is no question about that. The Government’s own legal advice during the passage of what is now the Trade Union Act demonstrated that. The differentiation that must be drawn here is between collective bargaining over employment law matters—which it is widely agreed should be maintained at an England and Wales level—and industrial relations that intimately impact upon the day-to-day discussions to enable change and flexibility in the delivery of the services that affect the people of Wales.

I turn briefly to the Trade Union Act, for it is here that the UK Government appear to have developed their principled opposition by allowing the Assembly to retain its current legislative competence over industrial relations. During the passage of that Act in this House I referred to the Supreme Court judgment on the Agricultural Wages Board in 2014. Their Lordships made crystal clear their view that even though employment law was a reserved matter—I am not contesting that in this amendment—nevertheless the operation of services devolved to Wales, in this case agriculture, was a matter proper to the Welsh Assembly to legislate upon. The Supreme Court upheld that view.

The Welsh Government have made clear their intention to legislate in relation to three devolved aspects of the UK Trade Union Act 2016. The first is the administration costs of check-off, the means by which trade union subscriptions are automatically checked off in the payroll system in devolved public services—and in those services exclusively. The other aspects are the 40% overall support threshold for important public services and powers to regulate facility time. These are all matters that affect industrial relations in Welsh public services. They do not impinge upon employment rights and duties. In other words, the main contours of employment law remain a reserved matter. Rather, the Government are interfering with the legislative competence of the National Assembly and the Welsh Government to deliver effective public services through social partnership. Surely that cannot be right.

The effect of this amendment would be to provide an exception to the legislation as drafted to ensure that the Assembly retains its legislative competence—a competence it now has—over terms and conditions of service for employees in devolved public services and over industrial relations in such services. It is consistent with both the Wales TUC and the Welsh Government’s stated policy, which is not to break up England and Wales collective bargaining and to agree that employment rights and duties remain an area reserved to the UK Government—I stress this point. But it seeks to ensure that the Assembly maintains the legislative flexibility that it currently has to influence employment and industrial relations in the devolved public services over which it and the Welsh Government maintain legislative policy and fiscal control.

I hope that the Minister is listening carefully. I repeat that the amendment does not challenge the Government’s position that employment law covering such matters as strikes, unfair dismissal, health and safety and so on should be reserved. Indeed, it does not challenge the reserved status of any of the 17 employment Acts listed in Section H1 of new Schedule 7A on pages 68 and 69. They are all listed, ranging from employers’ liability to pneumoconiosis, the Trade Union and Labour Relations (Consolidation) Act 1992, the Employment Rights Act 1996 and so on. It does not seek to challenge any of them or to contest that they are reserved matters. I appeal to the Minister to reconsider the Government’s policy and to adopt a practical, common-sense stance in line with that of the Welsh Government and the Assembly.

When the Government claim to be marching in step with the Assembly on progressing greater devolution, surely there is nothing to be gained by confrontation on the matter of how public services in Wales are run. For confrontation between the Assembly and Westminster there will certainly be if the Bill is not amended—almost certainly also leading to another unedifying dispute in the Supreme Court. I hope that the Minister will accept this point and be conciliatory in his response so that we can move forward together, reserving properly reserved matters of employment law to the UK level but ensuring that the Welsh Government can run their public services and the industrial relations that are so crucial to those services in the way they choose to do in keeping with the devolution settlement.

Photo of Baroness Finn Baroness Finn Conservative

My Lords, the key purpose of the Wales Bill is to provide clarity over powers and accountability of those powers. The introduction of the reserved powers model makes clear what is devolved and what is reserved so that people in Wales know who is responsible for what. It is worth emphasising that the need for clarity lies at the heart of the Bill.

Employment law and industrial relations law are clearly reserved matters. It would be unworkable to have different employment laws applying in the different jurisdictions of Great Britain. This issue was also considered by the Smith commission for Scotland, and both the Smith commission and the Silk commission recognised the importance of having a single employment regime. Both concluded that employment and industrial relations law should remain reserved and neither recommended any sort of exceptions.

I appreciate that the noble Lord, Lord Hain, is not asking for the devolution of all employment law, the core issues of which will remain reserved, and I apologise to the noble Lord if I was not clear on this point when I spoke at Second Reading. The noble Lord and the noble Baroness, Lady Morgan, explained during the passage of the Trade Union Act 2016 that industrial relations law in devolved public services is a devolved matter. That Act is about employment law and industrial relations. The Government have consistently argued that these are reserved matters and that the Act will apply consistently across the whole of Great Britain.

This amendment would lead to the unwelcome creation of a two-tier system of employment rights in devolved public services as well as a regrettable reduction in clarity over industrial relations powers. The Wales Bill introduces a reserved powers model precisely to bring more clarity to the Welsh devolution settlement and the effect of the amendment would undermine that primary intent. I therefore urge that the focus now should not be on yet more interminable wrangling about where powers lie. The focus should instead be on the efficient delivery of quality devolved public services on which the Welsh people rely.

Photo of Lord Elystan-Morgan Lord Elystan-Morgan Crossbench 8:45 pm, 15th November 2016

My Lords, I very much regret that I must disagree respectfully with the submissions of the noble Baroness. Looking at it in a very narrow constitutional context, the issue is a massive irony. On the day the Supreme Court unanimously gave its judgment in the agricultural workers’ wages case, there was an epoch-making decision that changed the whole face of Welsh devolution. Until then, people had thought devolution was a fairly limited matter, limited to the specific expression of matters transferred, minus matters that were reserved. Nobody had conceived of what we might call the massive silent transfers, with which the decision of July 2014 was involved.

The irony we face is that that is the state of the law. It was the unanimous decision of the Supreme Court. There is no appeal from it. That is the state of the law at present. If the Bill passes in its present form there is a massive row-back, diminution of status and deduction of authority as far as Wales is concerned compared with the decision. I know I need not press the point with the Minister, who is an excellent lawyer and well understands this matter. If there is no change in this matter, there is a massive diminution of authority for Wales compared with that decision. That is the irony.

When the then Prime Minister, Mr Cameron, stood, as noble Lords will remember, in the grey dawn in Downing Street after the Scottish referendum—which was after the Supreme Court decision we are referring to—and said that Wales is at the very heart of devolution, what if he had said, at the same time, “Mind you, there’ll be far fewer rights for Wales when we’ve finished with the Bill than there are at present”? What would people have said? That is exactly the situation I put to the House. It is so plain and obvious that I do not think there can be any controversion regarding it at all. Although one may say it is politic to change the situation, it means doing so in such a way that would diminish the rights of Wales relating to devolution massively.

Photo of Lord Murphy of Torfaen Lord Murphy of Torfaen Labour

My Lords, I support the points made by my noble friends Lord Hain and the noble Lord, Lord Elystan-Morgan. I, too, spoke during the passage of the then Trade Union Bill. I hope the Minister will reply to the debate with greater knowledge of the devolution settlement than his colleague did. Inevitably, his ministerial colleague looked at it from the point of view of employment throughout the whole of the United Kingdom. This is not about that, however: my noble friend made it absolutely clear that employment law is reserved. This is about public services in Wales and how industrial relations operate within them.

Since these public services are wholly and exclusively devolved, so should be the modest industrial relations consequences that flow from that. We are talking not about strikes, but about the possibility of public bodies allowing their workers to have their wages docked for trade union subscriptions and about allowing public workers to have full-time officials paid for in those organisations. These are not revolutionary or tremendously difficult issues; they are issues that affect public services. The constitutional point that the noble Lord, Lord Elystan-Morgan, made is crucial to this, because it strikes at the heart of the devolution settlement in Wales. That is why the Welsh Assembly is taking it so seriously that it has promised it will legislate to change the trade union law in so far as it affects public services in Wales. That could be avoided at a stroke were the Government to agree to my noble friend’s amendment. They probably will not, but they will cause a huge amount of trouble to build up in the months and years ahead.

In the agricultural workers’ case, the Supreme Court made it clear that the service was devolved to Wales and that the industrial relations aspect of it was therefore devolved as well. Nothing could be clearer than that, so why are we entering a war with the Welsh Government and the Welsh Assembly on this issue? It is a pointless war which will not be won. I hope the Minister will give some hope to us. If he does not, I am sure the issue will be raised again on Report. If the amendment is unsuccessful then, the Welsh Assembly will pass a law and the Supreme Court might become involved. Why are the Government doing this when there is no need for it? The public services are devolved. I urge the Minister to think carefully about his reply.

Photo of Baroness Randerson Baroness Randerson Liberal Democrat Lords Spokesperson (Transport)

My Lords, I have put my name to the amendment because we need to establish a clear principle here: if the Welsh Government and Welsh Assembly are funding a service, they should have an element of control over the terms and conditions of their employees who are running it. It should come as no surprise to anyone here that I hold that view, because I spoke on this matter during the passage of the Trade Union Bill.

The Welsh Assembly has long had considerable powers —for example, over doctors’ pay, terms and conditions. The doctors’ contract could in principle be completely different in Wales from that in England. It is not, for reasons of pragmatic certainty and manageability, but it could be. I see that the Government have signed an amendment tabled by my noble friend Lady Humphreys on teachers’ pay and conditions. That is very much along the same lines as the issues that we raise in this amendment.

The Assembly effectively gained such powers after the agricultural wages issue was referred to the Supreme Court. I was in the Wales Office at that time. I am sure I came to this House and told noble Lords that we firmly believed that the issue of agricultural wages was not devolved, but the Supreme Court found otherwise. The noble Lord, Lord Hain, was probably quite surprised by the Supreme Court’s judgment, too; I do not think he believed that he had devolved agricultural wages or any other issue of that nature in the 2006 Act. The Supreme Court’s interpretation of it is not in some way unmanageable or at odds with everything else; it can be viewed as completely consistent with other aspects of the Assembly’s work.

I ask the Minister to think about the issue of trust, of what it will look like in Wales, if the Government try to row back on what has now been accepted as part of the powers of the Assembly. I urge the Government to think again.

Photo of Baroness Humphreys Baroness Humphreys Liberal Democrat Lords Spokesperson (Wales)

My Lords, I shall speak to Amendment 74 in my name and that of my noble friend Lord Thomas of Gresford. I am grateful to the noble Baroness, Lady Morgan of Ely, and the Minister for adding their names to the amendment, which will see power over teachers’ pay and conditions transferred to the National Assembly. I draw the Committee’s attention to my interests as a former teacher and my current membership of a teachers’ union.

I am sure that all noble Lords agree that the present system of teachers’ pay and conditions has served us well, with a clarity on pay scales that a single system has bought across both England and Wales. However, the system is a creature of its times. It was created in the days before devolution when a single system of education operated across England and Wales. Now our two education systems have diverged, with England moving to academisation and free schools, resulting in a system where English schools are no longer required to comply with the school teachers’ pay and conditions documents. It is more than likely that the Government’s announcement that they intend to introduce more grammar schools in England will contribute to further differentiation in salaries, as the new grammars attempt to recruit the very best teachers. Meanwhile, a fully comprehensive system still exists in Wales and the Cabinet Secretary for Education has vowed that there will be no grammar schools in Wales on her watch. Also, of course, Wales still fully complies with the teachers’ pay and conditions documents.

However, this places restrictions on the ability of the Welsh Government to respond to circumstances which arise. There are difficulties, for example, in recruiting head teachers in rural Wales and retaining staff in village schools. Devolving powers over teachers’ pay to the National Assembly would allow the Cabinet Secretary for Education and the Welsh Government the flexibility to begin to address these and other concerns.

My party has long been in favour of the devolution of teachers’ pay and conditions and, following our submission to the Silk commission, we welcomed the commission’s clarity in 2014 when it determined that teachers’ pay and conditions are an integral aspect of the school system, that they should be closely related to the devolved education function and that they should be devolved to the National Assembly. In recent days there has been some speculation in the Welsh media about the outcome of this debate today, with a teachers’ union voicing some doubts about the wisdom of the devolution of this power. I remind your Lordships, though, of the words of the general secretary of the Welsh teachers’ union, Undeb Cenedlaethol Athrawon Cymru—and here I declare an interest as someone who has retained her membership of that union. Speaking after the publication of the Silk report, she said:

“At a time when education policies in Wales and England are diverging at an increasing rate there’s little point in preserving a joint system of pay and conditions. It’s a power that’s already devolved in Scotland and Northern Ireland, and we’re extremely pleased that the Commission has made an unambiguous recommendation on the matter”.

It appears to me that that is the crux of this debate. We cannot continue to treat Wales differently from Northern Ireland and Scotland. The time for parity in these powers over teachers’ pay and conditions for all three devolved nations has surely arrived. In the debate on the second day in Committee in the other place, my honourable friend the Member for Ceredigion, among others, spoke to a similar amendment, which made the case for the devolution of powers over teachers’ pay and conditions. The Secretary of State’s response gave some comfort to those who spoke in favour of the amendment. He said,

“in principle I am in favour of devolving teachers’ pay and conditions, but there is a case for further discussions between the UK Government and the Welsh Government about how that can best be achieved”.—[Official Report, Commons, 11/7/16; col. 91.]

I would be very grateful if the Minister, when he speaks to this amendment, would outline the discussions that have taken place between the two Governments on this matter. I would like to give him the opportunity to formally inform the House whether the discussions have resulted in an agreement that the powers over teachers’ pay should be devolved to the National Assembly of Wales.

Photo of Baroness Morgan of Ely Baroness Morgan of Ely Shadow Spokesperson (Wales) 9:00 pm, 15th November 2016

My Lords, I support the amendment moved by my noble friend Lord Hain. The Welsh public sector workforce is the linchpin in ensuring that Welsh public sector authorities carry out their functions and provide services to the public. There is a well-recognised link between good employment practices and industrial relations within authorities and contractors and the quality of the services they provide to the public.

Since devolution, the Welsh Government have led with a distinct vision for public services, rooted in the principles of social partnership. These principles have guided the development of public service delivery in Wales, which is now distinct from that of England. As many noble Lords have noted, this amendment would not undermine the shared framework and protections in respect of employment and industrial relations, but would allow the Assembly to augment these where appropriate to support the effective delivery of devolved public services by Welsh public authorities. I ask the Minister how he thinks people based in London can have the first inkling of what is happening in our schools and hospitals, which are devolved.

For devolution to be meaningful, the Welsh Government must be able to continue to pursue social partnership, defining the relationship between public service employers and employees with integrity, transparency and trust. In proposing this reservation, the UK Government are seeking to divorce the terms of employment and industrial relations in public services from the delivery of those services. The reservation will fundamentally weaken the existing powers of the Government of Wales Act and will prevent Welsh Ministers exercising their legitimate functions prescribed by the Bill on public services. We know this because a leaked letter from the government legal opinion suggested that we currently have the rights over these powers.

I echo the point made by my noble friend Lord Murphy: let us avoid a future reference to the Supreme Court. This was supposed to be the final full stop in the whole legislative framework for the devolution settlement for Wales. If this goes through, I assure your Lordships that this will be not the full stop but the beginning of another battle.

Photo of Lord Bourne of Aberystwyth Lord Bourne of Aberystwyth The Parliamentary Under-Secretary of State for Communities and Local Government, The Parliamentary Under-Secretary of State for Wales

My Lords, I thank noble Lords who participated in the debate on this part of the Bill concerning employment law. I thank the noble Lord, Lord Hain, for his very kind words in opening the debate.

To put this in perspective, I think it is common ground between the noble Lord, Lord Hain, and I that employment and industrial relations law is a reserved area. I am not sure that that view is shared by the noble Baroness. She seemed to be suggesting that somehow our reservation meant the end of civilisation as we knew it. It is fundamental to the country that we live in. The UK Government believe that the underlying legislative framework concerning rights and responsibilities in the workplace must be reserved. I believe as much as anyone does in good employment practice. I worked in the public sector in Wales before I went into the Assembly. I was a member of a trade union. I do not think I can still be a member of that trade union or I would be. It is imperative that we have good employment law and good industrial relations. I would not contest this. This is a very important area, but we want a simple, unified system in Great Britain. As the noble Lord acknowledged, this is not something that is devolved to Scotland. It was not considered by the Smith commission or the Silk commission and it was not part of the St David’s Day process.

The system we have allows workers to be clear on their rights, whether they are in the public sector or the private sector, in England or in Wales. This is a fundamental principle and I cannot accept that the law underpinning the terms and conditions of public sector workers should be different from the law that underpins the rights of other workers. Whether that leads to better rights, more rights or worse rights, it seems fundamentally wrong. It is important to have common minimum standards which apply to all workers throughout Great Britain to minimise uncertainty and cost for both workers and employers. This is a matter of employment law; it is not about public service delivery.

Furthermore, it seems clear to me that if public sector employers in Wales, which would include the Welsh Government and public sector authorities, want to grant more favourable wages or more holidays then they are able to do so. They can do that presently and there is no question of it being taken back. Also, the judgment on the agricultural wages Act in the Supreme Court is an exception to the reservation. There is no question of that being clawed back as that specific piece of law remains.

If we had a diversified system of rights, workers might be reluctant to pursue the best progression opportunities in their organisation because they could get better rights in the private sector or the public sector—one or the other. They may find it more difficult to undertake collective bargaining and make their voice heard in isolation from colleagues in similar roles in Wales or the rest of Britain. I certainly believe in having strong industrial rights and strong employment rights—and obligations, too—but this has to be unified. As I said, both the Silk and Smith commissions came down in favour of a single employment regime, such as this, and there is nothing to prevent the Welsh Government or devolved public authorities agreeing specific arrangements with their staff, provided that they meet the requirements of employment and industrial relations legislation which apply across Great Britain.

The noble Lord, Lord Murphy, suggested that this amendment did not concern strikes. I am sure that I heard the noble Lord, Lord Hain, say that it related to altering the threshold, so it is about strikes and, as drafted, would certainly include the possibility of doing that. The Government could not sign up to that, nor to different rights on check-off or facility time. The rights should by all means be generous, but they should be unified across the country. I do not see that insisting on this is somehow apocalyptic in the way that some noble Lords suggested. The reservation of employment law ensures that there is a minimum floor of rights to offer workers key protections. At the same time, it recognises that each workplace is unique by allowing employers to provide additional pay or holidays in the public or private sector, if they want to do so.

Amendment 74 was put forward by the noble Baroness, Lady Humphreys, for the Liberal Democrats, and I have added my name to it for the Government. I am not sure whether that makes it an additional government amendment, but we are in agreement with removing the reservation relating to teachers’ pay. This has been a key priority for the Welsh Government and we are very happy to support this amendment. We have been listening on teachers’ pay and are content to support the noble Baroness’s amendment.

In relation to employment law, because we see specific difficulties regarding different rights in the public sector, some of which relate to the calling of strikes but do not affect pay and holidays—which the public sector can negotiate quite separately, as it does now—I urge the noble Lord, Lord Hain, to withdraw his amendment.

Photo of Lord Hain Lord Hain Labour

My Lords, can I express my severe disappointment at the change of tone in the Minister’s delivery? The rest of his responses to the amendments moved by my noble friends have been genuinely positive. He has conceded where he could and stood his ground where he could, but within the framework of the devolution settlement in which he believes, as I do. On this amendment, I do not mean to sound insulting, but the way that he came across was, I felt, like he was reading out a prepared text—no doubt supplied by the Wales Office in Whitehall—that simply does not recognise the reality of this amendment.

The noble Baroness, Lady Finn, said along with the Minister that there would be the creation of a two-tier system of employment rights. How is that possible, when the 17 Acts and regulations which are already listed as reserved matters on pages 68 and 69 of the Bill would remain reserved under the terms of this amendment? How is it possible that we would create a two-tier system of employment rights when all the employment rights would remain reserved? We are discussing the operation of industrial relations practice in Welsh public services, not in the Welsh private sector. There is no exception provided for the Welsh private sector, which is the largest area of employment in Wales. The amendment is simply about devolved public services and reserved matters and many others matters covering all the issues. I can read them out to remind the Minister, but they are there.

Photo of Lord Bourne of Aberystwyth Lord Bourne of Aberystwyth The Parliamentary Under-Secretary of State for Communities and Local Government, The Parliamentary Under-Secretary of State for Wales

The amendment would insert:

“Terms and conditions of employment and industrial relations in Welsh public authorities and services”,

so the amendment is not just about industrial relations.

“Terms and conditions of employment”,

is also contained in the amendment.

Photo of Lord Hain Lord Hain Labour

I understand that. I understand my own amendment. It refers to public services.

The Minister is saying that there should be common standards. Wales already has entirely differently configured public services. That is the beauty of devolution. There is a learning experience between the different constituent parts of the United Kingdom about where best practice occurs. In some areas, it is in Wales. We have not had a doctors’ strike. I do not think we have had the same teachers’ disputes. We have not had the same local government disputes. We have not had the same firefighter disputes. Why is that? It is because these are devolved public areas run in a different way in Wales, with a different system of employee/employer relations provided for—we believed until this Bill tried to overturn the provisions of the Supreme Court ruling—in the devolution settlement. I echo the great eloquence and legal authority of the noble Lord, Lord Elystan-Morgan, in saying that this is massive diminution—to use his phrase—of the authority of Wales. Indeed, it is a direct challenge to the Supreme Court, where it may well end up. As my noble friend Lord Murphy said, I do not think that is where the Minister wants to be in his private view of the future, even if that is where he is going to end up if he sticks to this stance.

The noble Baroness, Lady Randerson, underlined that the Supreme Court caught the UK Government by surprise. She was very frank about that. It perhaps even caught me by surprise by interpreting the devolution settlement in the way that it did in a very convincing way. I hope that the Minister recognises that he is now seeking to undermine that.

I remind the House of what my noble friend Lady Morgan of Ely said; she said that the terms of the Bill will prevent Welsh Government Ministers exercising their legitimate functions in public services in how they treat their employees and how they operate their industrial relations from training time to facility time to all the matters that are essential to running public services in Wales effectively.

My legal advice is that the Minister’s position is flawed. He may deploy government lawyers to contest that, and then we will see in the courts. We will have the Wales TUC and the Welsh Government and, I suspect, all the people of Wales right behind them challenging the UK Government’s position.

The question I shall conclude on is: are public services in Wales devolved or not—not just the policies, but the delivery, which depends on employees and the relationships between employees in the public sector and their managers being very good? That requires good industrial relations, and Wales has been able to achieve that. Wales would continue to be able to achieve it under the devolution settlement if this amendment were accepted.

Photo of Lord Hain Lord Hain Labour

I am not going to press it at this hour, but I reserve the right to press it on Report if there has not been a rethink by the Minister.

Amendment 66 withdrawn.

Amendment 66A not moved.

Amendment 67

Moved by Lord Wigley

67: Schedule 1, page 71, line 20, at end insert—“ExceptionWelsh language broadcasting and other Welsh language media.”

Photo of Lord Wigley Lord Wigley Plaid Cymru

My Lords, Amendment 67 seeks to devolve Welsh language broadcasting and Welsh language media to the National Assembly. There is currently an anomaly in that the Welsh Government have responsibility for and powers relating to the Welsh language, but no powers whatever over S4C or Welsh-language media, which are perhaps the most significant tools in promoting the Welsh language in this day and age. I should perhaps mention that I served on the S4C Authority’s board for three years during the last decade.

The survival of the Welsh language is a miracle, but it is a struggle that has to be perpetually refought and re-won from year to year. The language is important not just for its own sake but because it is the transmitter of our history, folk memory and culture from generation to generation, and a conveyor of our values and experiences as a nation. Welsh belongs to all of Wales—to those who speak it and those who, by accident of geography and history, do not. Its associated culture depends, in part, on language transmission, and its survival as a living part of our identity. It is no coincidence that our national anthem, so much loved by Welsh speakers and non-Welsh speakers alike, concludes with the line:

“O bydded i’r hen iaith barhau”—

“O that the old language should flourish”.

The Welsh language media are of cultural, economic and linguistic importance to Wales. S4C and its services have endured a painful period of financial instability following last year’s Autumn Statement. The then Chancellor announced a cut in the S4C grant from £6.7 million to £5 million by 2020. The first year of those cuts was reversed, but only the first year. This funding enabled S4C to provide an impressive new service in HD just in time for the 2016 Euros—something I believe the Secretary of State for Wales genuinely welcomed with open arms.

The original intention was that the same level of grant should remain in place until the UK Government’s independent review into the role, governance and funding of S4C was published in 2017. It looks now as if the independent review will not be finalised until after the current financial year comes to an end, which creates uncertainty over the future of S4C’s grant and its ability to maintain the quality and range of its programmes. It is not only the DCMS side of the funding equation that is in doubt: in September, we were told that the BBC Trust intends to freeze S4C’s funding until the end of the current licence fee agreement in 2022. This was portrayed in the media as a victory for the industry, however it represents a cut in real terms.

The UK Government may have an agenda to cut public funding for broadcasting in general in the long term. That in itself is highly regrettable when one considers the achievements and reputation of the BBC. But if, heaven help us, the BBC disappeared as a public service broadcaster, a whole range of broadcasting—radio, television and the new media outlets—would still remain in the English language. That is not the case for Welsh. Such far-reaching decisions could be a body blow for the prospects of the language surviving and flourishing. Why should such fundamental decisions, critical to our language and culture, rest—perhaps even linger by default—in the hands of government Ministers in the DCMS, who very often do not have any background or feeling for the issues relating to these powers as they will play out in Wales? Why should the people of Wales be bound by decisions made in London regarding the only media platform on which they can access services in their own language?

The Institute of Welsh Affairs and the Wales Governance Centre, in their report The UK’s Changing Union, which was published in 2013, both called for the full responsibility for S4C to be transferred to the National Assembly and Welsh Government. In the other place, the Secretary of State for Wales claimed that devolution of S4C was not included in the Silk commission report’s recommendations and used that as a reason to block my colleague’s amendment. May I correct him today? I am sure that our Minister in this House, having been a member of the Silk commission, will recall the words. The Silk commission concluded:

“In terms of our devolution principles, it is anomalous that the power to fund S4C public service broadcasting lies with the UK Government rather than the Welsh Government. We do not believe that this can be justified against our principles of accountability, subsidiarity and efficiency”.

It recommended that,

“within the framework that the bulk of funding should continue to be met from the licence fee, responsibility for funding the public expenditure element of S4C should be devolved to the National Assembly for Wales”.

The Secretary of State’s misinformation was echoed in the Answer to a Written Question that my colleague Jonathan Edwards MP asked in the other place of the Secretary of State in the Department for Culture, Media and Sport. This is as unacceptable as it is surprising.

I am not alone in my firm belief that Wales should have full control over a channel that belongs to the Welsh people. The Welsh language media are a central ingredient in our heritage and culture, and it is only right we are granted the entitlement to safeguard their future. I beg to move.

Photo of Lord Morgan Lord Morgan Labour 9:15 pm, 15th November 2016

My Lords, I strongly support the amendment. Language is of course central to the Welsh identity. More than that, this television channel is almost alone. In so many ways, Wales is less adequately prepared in terms of cultural media than Scotland is. There is effectively no Welsh press; there is certainly scarcely a Welsh-language press. I think Y Cymro still appears once a week but the Welsh-language press is minimal. Therefore the television service, particularly Sianel Pedwar Cymru, the Welsh channel, is central in a way that is true for no other sub-nationality.

What my noble friend Lord Wigley is proposing is precisely what Silk proposed. Some time after 2006, when we had the previous system, I remember sitting through a debate discussing whether Welsh-language matters were a competence of the Welsh Assembly and thinking, “Who in heaven’s name does have competence other than the elected representatives of the Welsh people?”. This seems a central matter that goes to the heart of devolution and is preserving and celebrating difference in Wales. I strongly support the amendment.

Photo of Baroness Randerson Baroness Randerson Liberal Democrat Lords Spokesperson (Transport)

My Lords, I have always felt that Welsh-language broadcasting should be part of the general broadcasting pool, not isolated from the rest of broadcasting. That way, I felt, there would be cross-fertilisation and Welsh-language broadcasting would not be seen as out of the usual in broadcasting.

On balance, though, it is clear that S4C has been under threat in recent years. Year after year, the Wales Office has to ride to the rescue of S4C by explaining to a Minister elsewhere in government why Welsh-language broadcasting is important and significant, and why it has a totemic importance in Wales well beyond the relatively small amounts of money that the Government are trying to cut from its annual amount. Indeed, if the control of S4C were devolved to the Welsh Assembly, I think S4C would still find itself under threat because it is responsible for spending a significant proportion of the total amount of money spent every year on the Welsh language. There are lots of other aspects of huge importance to the development of the Welsh language that would want part of that total amount of funding.

I do not think devolution is necessarily the answer but there needs to be a new settlement, a new concordat, or at the very least some kind of agreement between the UK Government and the Welsh Government to ensure that, year after year, the position of S4C is secure, not just in law and in theory but financially. The financial position of S4C should be secure so that there is not this constant fire sale going on. I therefore urge the Minister to look at a suitable solution to what I am sure he will acknowledge is a recurring problem.

Photo of Lord Murphy of Torfaen Lord Murphy of Torfaen Labour

My Lords, on more than one occasion, I probably rode to the rescue of S4C myself, and I very much agree with the noble Baroness, Lady Randerson, about the financial dangers unless we have guarantees. At the moment, the Welsh language is rightly devolved to the Welsh Assembly, so it would seem logical—would it not?—that Welsh-language broadcasting should be also. There are two issues that we should consider. First, Welsh-language radio broadcasting would presumably stay with the BBC. More significantly, were S4C to be devolved to the Welsh Assembly and the Welsh Government, there should be a proper financial settlement to go with it. At the moment, the United Kingdom Government provide the funds for S4C; were it to be devolved, that financial settlement absolutely must be devolved with it.

Photo of Baroness Morgan of Ely Baroness Morgan of Ely Shadow Spokesperson (Wales)

My Lords, I shall speak briefly on the issue of devolution of S4C. In this rapidly evolving digital environment, it would not be sensible to attempt to devolve responsibility for broadcasting in its entirety to Wales. Broadcasting institutions play a vital role in creating that common cultural citizenship for people across the UK. That would not be strengthened by any attempt to define responsibility for them among its constituent parts. We should acknowledge that the broadcasting landscape is changing very rapidly and that there is no guarantee that the current structures will remain in future. In the meantime, it is vital that the UK role is reinforced by measures aimed at strengthening the particular contribution which broadcasters make in each of those constituent parts: improving the accountability of UK broadcasting institutions to the National Assembly and to Welsh viewers and listeners is vital. This improved accountability can best be delivered by strengthening the position of Welsh Ministers with regard to appointments made to the regulatory bodies governing broadcasting in Wales—I am sorry if I have veered off the point of S4C directly, but that is an important point to underline.

I now turn to the issue of devolving responsibility for S4C to the National Assembly. At first glance, it seems an absolute no-brainer. Like the noble Lord, Lord Wigley, I have worked for S4C: my first ever job was to be responsible for photocopying the “Fireman Sam” scripts. However, unless there are strong safeguards for the continued overall funding of the channel, devolution carries great risks. That overnight decision to remove the vast majority of S4C funding from the Department for Culture, Media and Sport to the BBC with absolutely no discussion with the channel was an immense insult. As the BBC is not devolved, S4C’s fate now lies to a large extent with the BBC. The current system is certainly unsatisfactory but, until we have a clear financial commitment from the Government to give the Welsh Government the money, it would be unwise to risk this great institution of broadcasting in Wales.

Photo of Lord Elis-Thomas Lord Elis-Thomas Plaid Cymru

My Lords, as we have heard, we currently have substantial change in the structure of broadcasting. The BBC is going through major changes. The BBC Trust is moving out as a way of managing the BBC; personally, I welcome that. Ofcom is now playing a far stronger role in the whole question of content at the BBC. As part of the BBC structure, there will be from now on not only a director for Wales but also a member of the BBC board. So we have a new system of devolution internally inside the BBC. I was there at the time of the discussion with the noble Lord, Lord Crickhowell, and we were surprised at what we were offered by the then Government, which was the model of a traditional broadcasting authority. I have never believed that that was what was really required, and I still believe that we need to look at some stage at the governance of digital platforms in Wales and the rest of the UK, as well as internationally. We need to look at these issues in a new way.

I am anticipating what the Minister is going to say. Far be it from me to disagree with my noble friend on this issue, with his experience as someone who was a member of the S4C board, but now is not the time to disrupt relationships; now is the time to strengthen them—and to strengthen the relationship practically between S4C as a production body and BBC Wales and the other platforms active in digital production in Wales.

Photo of Lord Thomas of Gresford Lord Thomas of Gresford Liberal Democrat Shadow Attorney General 9:30 pm, 15th November 2016

My Lords, most of the debate has so far referred to the necessity to devolve control over Welsh broadcasting to the Welsh Assembly, and the arguments have all been made in structural terms, but I want to put in a word for S4C. It is very good. Its children’s programmes in the morning are outstanding and are carried worldwide in various languages. Its farming programmes and programmes about the natural world are also outstanding, and the sporting coverage probably takes up more of my weekends than anything else on television. In fact, I spend quite a lot of time in Scotland, and when I am there my wife is amused to see that, much of the time, I am watching S4C. I am saying nothing about Scottish broadcasting, but there we are. It is not just the sport, of course—it is the musical tradition as well. It is heartening to see so many young people taking part in classical music and choral works, as well as in much more modern music. It is excellent, and we cannot allow this debate to come to an end without making that clear.

Photo of Lord Elystan-Morgan Lord Elystan-Morgan Crossbench

My Lords, I greatly appreciate the kind and generous words of the noble Lord, Lord Thomas of Gresford, on S4C. I support the amendment completely, but there is a possible compromise, if I may be so bold as to suggest it. Many months ago, when the question of the BBC charter was mentioned, I asked the Government whether they would be prepared to have in-built in the charter a guarantee on the adequate financing of S4C as well as on its guaranteed independence and future. The reply that I received was somewhat anodyne, but I was assured that so great was the affection of Her Majesty’s Government for the Welsh language that I had nothing to fear at all. It may be that that is a compromise that would guarantee effectively the future of S4C, its independence and finance, and I commend it to the noble Lord.

Photo of Lord Bourne of Aberystwyth Lord Bourne of Aberystwyth The Parliamentary Under-Secretary of State for Communities and Local Government, The Parliamentary Under-Secretary of State for Wales

My Lords, I thank the noble Lord, Lord Wigley, for moving this amendment on Welsh language broadcasting and other Welsh language media—and I note that that is the exception that is set down. I do not think that it is limited to S4C, as some noble Lords have assumed. It is not. I join other noble Lords in applauding the work of S4C; it is an extraordinarily strong and effective institution that does marvellous work for Wales in relation to the language and more broadly, and it has totemic significance and real significance and generates jobs in the Welsh media sector, which is important.

As the noble Lord said, it is absolutely right that the Silk commission recommended that funding the public expenditure element for S4C should be devolved to the Assembly. It was part of its recommendations but was not taken forward in the St David’s Day proposals: I understand that it was considered in that process but there was no consensus round it. It is also worth noting that as recently as June last year, the Welsh Government said, through Minister Ken Skates, that they could not support the devolution of broadcasting. Admittedly, that was said across the piece but it was the general position.

Where does that leave us? I will try to give an update on the financial commitments made by the Government, in response to the noble Lord, Lord Elystan-Morgan, and other noble Lords. The Government have agreed that funding for S4C—as opposed to Welsh language broadcasting—would be protected in 2016-17 at its current level of £6.8 million. The settlement for Exchequer funding in following years was set out at the 2015 spending review and in September the BBC confirmed that it will protect licence-fee funding for S4C at £74.5 million until 2022. That is beyond the length of this Parliament, as noble Lords will be aware. The Government then committed to a comprehensive review of S4C in 2017, covering its remit, funding and governance to ensure that the broadcaster can continue to meet the needs of Welsh-speaking audiences in the future. I will endeavour to find out if we have any further details on the process and will write to noble Lords to update them on what the timetable is.

Broadcasting is different from almost any other area of activity in that it is international, national UK and national Wales. I am conscious of the fact that, historically, many people have been quite keen to see S4C’s budget settled in Westminster because they thought it was safer here that it would be in Wales—I had better be careful what I say. I notice a change of tenor in that position. Given that the Welsh Government do not seem to be seeking this, and given that there was no consensus in the St David’s Day process, I will have a look at it. I am very content to discuss this with the noble Lord, Lord Wigley, and others to see if there is anything we can do to strengthen the position of S4C and the involvement of the Welsh Government—a point raised by the noble Baroness, Lady Morgan. I appreciate what the noble Baroness, Lady Randerson, has said on the issue of the difficulty of broadcasting. As I said, it is internationalised in many ways so is unique among activities.

I am very conscious of the fact that the noble Baroness, Lady Morgan, was photocopying “Fireman Sam” scripts at S4C, so spoke with great authority. My first job in life was loading Britvic bottles on a production line. We had very different experiences: the noble Baroness was more clerical and managerial than I was in those heady student days. I appreciate that this is an important area and I will have another look at it and speak to the noble Lord, Lord Wigley, to see if there is anything we can do to strengthen this position. I hope that, with that, he will be content to withdraw the amendment.

Photo of Lord Wigley Lord Wigley Plaid Cymru

My Lords, I am grateful to all noble Lords who have taken part in this debate, which has brought out a number of issues relating to S4C. I am grateful to the Minister for his undertaking to look again at some aspects of this. On that basis, I beg leave to withdraw the amendment.

Amendment 67 withdrawn.

Amendment 67A not moved.

Amendment 67B

Moved by Lord Bourne of Aberystwyth

67B: Schedule 1, page 74, line 6, leave out “or training” and insert “, training or libraries”

Amendment 67B agreed.

Amendment 67C not moved.

Amendment 67D

Moved by Lord Bourne of Aberystwyth

67D: Schedule 1, page 74, leave out lines 20 to 22 and insert—“176_ Proceedings and orders under Part 4 or 5 of the Children Act 1989 or otherwise relating to the care or supervision of children.”

Amendment 67D agreed.

Amendment 68

Moved by Baroness Morgan of Ely

68: Schedule 1, page 74, line 36, leave out “, deaths and places of worship” and insert “and deaths”

Photo of Baroness Morgan of Ely Baroness Morgan of Ely Shadow Spokesperson (Wales)

My Lords, I draw the attention of the Committee to the immense overcomplexity that has been introduced in the Bill by the Government insisting on the arbitrary reservation of powers. This amendment refers to the reservation of births, deaths and places of worship.

The first thing that will strike your Lordships is the fact that the other great milestone in life, marriage, is not covered here, nor is civil partnership. These are covered by a different clause—Clause 174. Nor, indeed, is adoption mentioned in this clause. That is mentioned in Clause 175. I do not know about other noble Lords, but I always understood that registrars covered births, marriages and deaths. The separation of these functions conducted by the same registrars is another example of the unnecessary complexity of the legislation as drafted. It would have been just as valid to introduce an amendment to remove all the reservations of arrangements for registering births, adoptions, marriages, civil partnerships, deaths and places of worship. This would have brought Wales into line with Scotland and Northern Ireland, where these matters were not reserved in the 1998 Acts, reflecting the decision of Parliament to legislate separately for these matters in those jurisdictions since the introduction of such registration in the 19th century.

Although the basics of registration arrangements in England and Wales are the same, there are already significant differences between the two countries. The use of the Welsh language in registration is a distinctive feature of arrangements in Wales. At those key points in life’s journey at which legal registration is required, to be able to use one’s mother tongue is clearly a matter of great importance. Registrars are appointed by local authorities and work within their structures, and legislative responsibility for local government is, of course, devolved to Wales.

My amendment, however, focuses on removing the reservation of the registration of places of worship. This registration is different from the others in two respects. First, it relates to the registration of buildings used for a particular purpose—places of worship—rather than to the registration of life events of individuals—birth, marriage, death. Secondly, it is voluntary. We do not in England and Wales require that places of worship be registered, and the Places of Worship Registration Act 1855 makes that clear. However, such registration is required if a place of worship is to be registered for the conduct of marriages or civil partnerships, or to gain exemption from council tax or business rates.

Places of worship have always played a vital role in Welsh society, but since the Welsh Church Act 1914, which led to the disestablishment of the Church of England in Wales, now the Church in Wales, in 1920, the law of England and Wales has acknowledged that the religious situation in Wales is significantly different from that of England. The Welsh Church (Burial Grounds) Act 1945 continued that separation of law regarding ecclesiastical property in England and Wales. The law in Scotland and Northern Ireland has always been different from that in England and Wales, and so these matters were rightly not reserved in the Acts of 1998 relating to those jurisdictions. The removal of the reservation of legislative responsibility for the registration of places of worship in Wales is therefore an entirely logical step now that there is a National Assembly to legislate for Wales, when it is surely no longer appropriate for Parliament to continue to legislate for Wales alone on such matters.

The Church in Wales is not an established church, unlike the Church of England. However, its incumbents retain the role of registrars for marriages conducted in their premises, and its church buildings remain exempt from registration, as in England. These matters remain governed by the Welsh Church Act 1914 and subsequent legislation of this Parliament which relates only to Wales. Moreover, in spite of its being disestablished in 1920, the Church in Wales still retains a historic obligation in common law to marry parishioners simply on the basis of residence, whether or not they are members of the Church. Now that there is an elected National Assembly, which can legislate for Wales, again it would seem appropriate that the Assembly should decide whether—and, if so, how—to amend these arrangements in the future.

In 2001, the Welsh Government established the Faith Communities Forum, which enables them to consult all religious faiths and not just Christian churches in a formal way. An excellent relationship has been established through that forum. This Parliament has no such consultative mechanism specifically with faith groups in Wales, and the UK Government are regarded by many as rather remote when it comes to such matters. If these reservations are removed, we can be confident that the Welsh Government and the National Assembly will have the mechanisms in place to ensure that any future changes are made in consultation with faith groups and others, such as humanists, with an interest in these matters. I beg to move.

Photo of Lord Bourne of Aberystwyth Lord Bourne of Aberystwyth The Parliamentary Under-Secretary of State for Communities and Local Government, The Parliamentary Under-Secretary of State for Wales 9:45 pm, 15th November 2016

My Lords, I thank the noble Baroness for moving this amendment in relation to the civil registration of births, deaths and places of worship. I have listened carefully to her argument. Civil registration functions, including the registration and administration of births, deaths, marriages, civil partnerships, adoptions and associated functions, and the registration of places of worship, are overseen by the Registrar-General for England and Wales, and the Government do not have plans to devolve any of these functions. Perhaps I may try to explain some of the difficulties that would arise in relation to devolution and answer some of the issues raised by the noble Baroness.

First, the noble Baroness raised the issue of the Welsh language, which is obviously very valid in relation to registration. However, it is already possible to register events in both English and Welsh where the events take place in Wales. The registration Acts, as extended by the Welsh Language (Wales) Measure 2011, the Welsh Language Act 1993 and the Welsh Language Act 1967 enable any person who can speak and understand Welsh to make a bilingual registration. Welsh local authorities, by virtue of their obligations under their Welsh language schemes, should provide registration staff who can speak, write and understand Welsh to accommodate citizens who desire this service.

The current position is that the Places of Worship Registration Act 1855 extends to England and Wales. Amendments 68 and 69 seek to separate civil registration functions by specifically devolving responsibility for the registration of places of worship to the Assembly. There are clear efficiencies in administering the responsibilities across England and Wales, and the inevitable cost of separating after over 150 years would appear to be disproportionate to any wider benefit.

The Registrar-General is an independent statutory officeholder—appointed under Section 1 of the Registration Service Act 1953—who exercises functions through the General Register Office, set up under Section 2 of that Act. As the arrangements are well established, there are significant links to, and dependencies on, the provision of civil registration in a unified system across England and Wales, including the use of a single computer system for all registrations. It works well in its current form and it does not make sense to separate out one element of it. I have not heard of any particular groundswell of support for a change in the law in relation to marriage in Wales. It is, in any case, not a devolved matter, and it is a very complex issue, as one can imagine, with the diverse faiths that we have in this country.

However, I can reassure the noble Baroness on one specific point. Looking at faith and integration in the devolved Administrations, I have already been in contact with the devolved Ministers in Scotland, Northern Ireland and Wales. I have arranged meetings so that we can discuss issues such as this, and I have had a positive response from Minister Carl Sargeant in Wales and from the other Ministers. We will be looking at issues such as this in the devolved forum, although I have to say that the issue of marriage law is not specifically a matter for the Department for Communities and Local Government; it is a matter for the Ministry of Justice.

However, it is a very wide-ranging issue because of the nature of the conduct of marriages. Some faiths’ marriages are recognised automatically if they take place in particular religious buildings—specifically, those of the Church of England, the Church in Wales and the Society of Friends, and synagogues—but that would not be true of other faiths as things stand. At some stage, this whole area probably will be looked at. However, as I say, this is not my specific ministerial responsibility, so I say that without being certain whether it is proposed at the moment. I do not think it is, but no doubt at some stage it will be looked at.

I am happy to discuss this further with the noble Baroness but, as I say, the Government have no plans to devolve this function. Therefore, I ask the noble Baroness to withdraw the amendment.

Photo of Baroness Morgan of Ely Baroness Morgan of Ely Shadow Spokesperson (Wales)

My Lords, I will be very brief. I am not quite convinced by the argument that the separation would lead to efficiency and cost savings—we could say that about almost all devolved areas of policy. The whole point here is that you need to respond to local needs. I am very happy to hear that the Minister has initiated the devolved forum to look at this, and I look forward to hearing more about that. It would perhaps be an idea for us to discuss this further. It is just another one of those things for which I can think of no good reason to retain it nationally. I have not been convinced that there is a good reason and so we will just have to agree to differ on that point. I beg leave to withdraw my amendment.

Amendment 68 withdrawn.

Amendments 69 and 70 not moved.

Amendment 71

Moved by Baroness Morgan of Ely

71: Schedule 1, page 75, leave out line 28

Photo of Baroness Morgan of Ely Baroness Morgan of Ely Shadow Spokesperson (Wales)

I am sorry, my Lords, but I seem to be monopolising things a little this evening. In moving Amendment 71, I will speak to all three amendments in the group. The first relates to the community infrastructure levy—a planning charge that was introduced by the Planning Act 2008 as a tool for local authorities in England and Wales to help deliver infrastructure to support the development of their area.

In Wales, local planning authorities currently have the power to charge a levy. These authorities all prepare local development plans for their areas, which include an assessment of their future infrastructure needs, for which the levy may be collected. The authority can set charges based on the size and type of the new development. It can set different rates for different geographical areas and for different intended types of development. The levy is intended to encourage development by creating a balance between collecting revenue to fund infrastructure while ensuring that the rates are not so high that they put development across the area at serious risk. The levy can be used for a variety of infrastructure projects, such as roads and transport, schools and educational facilities, and even flood defences, medical facilities and sports and recreation facilities. As long as these have been identified in the authority’s local development plan then it can address this issue and appeal to the fact that it can have a community infrastructure levy.

The Welsh Government argued for the devolution of the community infrastructure levy in their evidence to the Silk commission in 2013. The issue was not addressed by the commission and thus did not feature in the UK Government’s St David’s Day document. However, the levy is inextricably linked with the delivery of already devolved responsibilities. The Secretary of State has not, to my mind, made the case for reserving the community infrastructure levy and we believe that this reservation should be deleted.

On the issue of compulsory purchase orders, these are an essential facet of highways and planning, both of which are devolved matters. In addition, compulsory purchase orders are essential to education services, to housing provision and to the NHS. Again, these are all devolved. The reservation of compulsory purchase of land in the Wales Bill would constitute yet another rolling back of power on what was previously a silent subject. The proposed reservation, if implemented, would cause unnecessary difficulties across a range of devolved activities that are underpinned by powers of compulsory acquisition of land.

Reserving the whole subject of compulsory purchase of land would risk rolling back, or at least creating uncertainty about, powers over the range of legislative competences already noted. Reform proposals across all these areas that may require adjustments to land acquisition powers would be likely to run into concerns about whether such powers are ancillary and necessary within the meaning of paragraph 2 of new Schedule 7B, issues upon which we have already touched. As it stands, the reservation is wholly unjustified and wholly unexplained. In this context, we need more laser-like focus on the more limited set of issues on which a common England and Wales approach is really necessary.

Finally in this group, I address the issue of buildings. Executive functions to set standards for the design, construction and demolition of buildings through binding regulations have already been transferred, with some exceptions, to Welsh Ministers under a 2009 transfer-of-functions order. Reservation 186 narrows the current competence of the Assembly, while Clause 47 extends the executive functions of the Welsh Minister. Removal of this reservation would therefore achieve a closer alignment of executive functions and legislative competence in Wales. As things stand, should Welsh Ministers wish to change current primary legislation governing Wales in relation to building standards, a request would have to be made to the UK Government, proposals agreed with them and time found in the parliamentary calendar. This would be a sledgehammer to crack a nut.

I am wholly unclear as to why the UK Government think that the legislative framework for buildings in Wales can only be amended at Westminster. Again, this seems a wholly unjustified and narrow approach to the Welsh devolution settlement. Prior to this, a renowned constitutional expert said that the previous Wales Act covered everything except the kitchen sink. He added while considering this report that in this Bill, the Government have even reserved the kitchen sink. I hope that your Lordships agree that the Government have simply gone too far in pushing back Assembly powers. Will the Minister explain in particular why he thinks that,

“the regulation of … services, fittings and equipment provided in or in connection with buildings”,

needs to be devolved? I beg to move.

Photo of Lord Howarth of Newport Lord Howarth of Newport Labour 10:00 pm, 15th November 2016

My Lords, in warmly endorsing the case made by my noble friend Lady Morgan of Ely on the three amendments in this group, I shall add a word on Amendment 73 concerning the regulation of the design and construction of buildings. I shall illustrate why it would be unfortunate if this reservation were to be retained and why my noble friend is right to propose that this should be devolved. We have seen extraordinary vagaries in building regulation policy on the part of the Government of the United Kingdom. For example, the Government committed themselves to a requirement that all new homes should be designed to be lifetime homes by, I think, 2013. That was a commitment made in 2008, but when the moment came in 2013 and it had not been met, when the change to the building regulations was announced in 2015, the lifetime homes criteria were so diluted as to be rendered almost useless and ineffectual.

Let me explain what this is all about. Originally the Joseph Rowntree Foundation and subsequently the Habinteg Housing Association developed 16 design criteria to ensure that the design and construction of new homes is such that they can be easily adapted at minimal cost to become more accessible to people as their lives go on, as they become older or as they become disabled. It makes eminently good sense economically and socially, yet we have seen a reneging on the commitment that had previously been made. The same has happened with another commitment by government to require that new homes should be designed and constructed so as to be carbon neutral; this was to be achieved by 2016. It was hailed as a very progressive and excellent policy in the interests of the environment, but again in the same set of announcements in 2015 the Government reneged on the commitment, and of course it was a turning point that was deplored by everyone who cares about the environment. So what we have seen is a set of decisions on housing design made in Whitehall and at Westminster which have been detrimental to the environment, the construction industry, the architectural profession and surveyors, and detrimental to the interests of disabled and elderly people, all of which will add costs to social services and the health service because the longer you can keep people in their own homes, the better.

I do not want to elaborate on or labour the point any further except simply to say that whereas it is clearly the right of the Government of the United Kingdom, but regrettable when they use it, to march people up the hill and down again and to do these about-turns on policy, and to retrogress in terms of social and environmental policy, I cannot see why these processes should be inflicted on Wales. If Wales wishes to pursue a project to create carbon-free homes and build lifetime homes for the people of Wales, why on earth should they not be entitled to have that? This is just an instance of where I think it would be greatly to the detriment of Wales if the Government insist with the rigour they are applying at present on denying Wales sensible discretion on matters that on any reasonable basis could well be devolved and where we have actually seen the practical effect of policy as made in London being seriously detrimental.

Photo of Lord Bourne of Aberystwyth Lord Bourne of Aberystwyth The Parliamentary Under-Secretary of State for Communities and Local Government, The Parliamentary Under-Secretary of State for Wales

My Lords, I thank the noble Baroness, Lady Morgan, for proposing these amendments.

Amendment 71 would devolve to the Assembly competence to legislate for how infrastructure funding should be collected in relation to development. This is currently accomplished through the community infrastructure levy, which applies across England and Wales, and the mechanisms we use to raise funding for infrastructure to support development are undoubtedly important. I appreciate the points made by the noble Baroness and I am aware of the issues raised on the matter in the other place. In addition, the Welsh Government have argued persuasively in discussions with the UK Government that the community infrastructure levy should be devolved. I can therefore confirm that, as the Secretary of State announced on 31 October, we are content to devolve competence over the levy to the Assembly and I expect to table a government amendment on Report to achieve this. I hope that that is reassuring to noble Lords.

The noble Baroness, Lady Morgan, made some interesting points, when speaking to Amendment 72, about why she believes that the compulsory purchase law in its entirety should come within the legislative competence of the National Assembly and not be reserved to the United Kingdom Parliament. The debate has highlighted the lack of clarity that exists in the current devolution settlement. As compulsory purchase is a so-called “silent subject”, the United Kingdom Government and the Welsh Government have formed different views on the extent of the Assembly’s legislative competence in this area.

This reservation has been the subject of detailed and productive discussions between the United Kingdom Government and the Welsh Government. The United Kingdom Government consider that legislating on the general rules and framework of the compulsory purchase system, such as the compensation regime in the Land Compensation Acts, falls outside the Assembly’s current legislative competence. However, we accept there are arguments that the Assembly could confer or modify powers in legislation for bodies to acquire land by compulsion for devolved subjects. These would include powers for local authorities to acquire land for housing, planning or education purposes, among others.

I assure the noble Baroness that discussions between the two Governments on this reservation are at an advanced stage and appear to be going well. Discussions are fruitful. I would therefore like to reflect further on her points as the Government conclude their consideration of the extent of this reservation.

Amendment 73, also tabled by the noble Baroness, Lady Morgan, seeks to remove the reservation concerning building standards and building reservations. The noble Lord, Lord Howarth, also spoke with effect on this. Before responding to the amendment, I note that, through earlier transfer of functions orders and Clause 47 of the Bill, Welsh Ministers will have powers to make building regulations in respect of almost all buildings in Wales. There will now be parity in England and Wales as to buildings for which building regulations may be made by the Secretary of State and Welsh Ministers respectively. As drafted, the noble Baroness’s amendment goes considerably wider than this to devolve competence to the Assembly over building standards. I am aware that this devolution is being sought by the Welsh Government. There are some genuinely difficult issues here in terms of organisations currently exempted from the application of building standards in England and Wales. I am none the less happy to reflect on this further, with a view to returning to it on Report.

I hope I have been able to provide reassurance to the noble Baroness and I ask her not to press her amendments.

Photo of Baroness Morgan of Ely Baroness Morgan of Ely Shadow Spokesperson (Wales)

My Lords, things are getting much better. We have had three positive replies. I thank the Minister for his constructive approach on those issues. We look forward to working with him much more closely on them in the next few weeks, and to new amendments coming, we hope, on Report. I beg leave to withdraw the amendment.

Amendment 71 withdrawn.

Amendments 72 and 73 not moved.

Amendment 74

Moved by Baroness Humphreys

74: Schedule 1, page 78, leave out lines 7 to 13

Amendment 74 agreed.

Schedule 1, as amended, agreed.

Schedule 2: New Schedule 7B to the Government of Wales Act 2006

Amendments 75 to 78 not moved.

Amendments 78A to 80A

Moved by Lord Bourne of Aberystwyth

78A: Schedule 2, page 82, line 40, leave out “Sections 144(7) and 146A(1)” and insert “Section 144(7)”

78B: Schedule 2, page 83, leave out lines 1 to 38 and insert—“(2) A provision of an Act of the Assembly cannot, unless it is an oversight provision, make modifications of—(a) section 146A(1) of the Government of Wales Act 1998, or(b) sections 2(1) to (3), 3(2) to (4) or 6(2) and (3) of the Public Audit (Wales) Act 2013 (anaw 3),or confer power by subordinate legislation to do so.(3) A provision of an Act of the Assembly cannot, unless it is an oversight provision and also a non-governmental committee provision—(a) make modifications of section 8(1) of the Public Audit (Wales) Act 2013 so far as that section relates to the Auditor General’s exercise of functions free from the direction or control of the Assembly or Welsh Government, or (b) confer power by subordinate legislation to do so.(4) An “oversight provision” is a provision of an Act of the Assembly that—(a) relates to the oversight or supervision of the Auditor General or of the exercise of the Auditor General’s functions, or(b) is ancillary to a provision falling within paragraph (a).(5) A “non-governmental committee provision” is a provision conferring functions on a committee of the Assembly that—(a) does not consist of or include members of the Welsh Government, and(b) is not chaired by an Assembly member who is a member of a political group with an executive role,or a provision conferring power by subordinate legislation to do so.(6) A person designated under section 46(5) to exercise the functions of the First Minister is treated as a member of the Welsh Government for the purposes of sub-paragraph (5)(a).”

78C: Schedule 2, page 85, line 20, after “Part 5” insert “not listed in sub-paragraph (2)(d),”

78D: Schedule 2, page 85, line 24, leave out from “taxes” to end of line 25

79: Schedule 2, page 86, line 32, at end insert—“(d) the Joint Committee on Vaccination and Immunisation;(e) the Human Tissue Authority;(f) the NHS Business Services Authority or Awdurdod Gwasanaethau Busnes y GIG;(g) NHS Blood and Transplant or Gwaed a Thrawsblaniadau’r GIG.”

80: Schedule 2, page 87, line 22, at end insert—“(h) the Joint Committee on Vaccination and Immunisation;(i) the Human Tissue Authority;(j) the NHS Business Services Authority or Awdurdod Gwasanaethau Busnes y GIG;(k) NHS Blood and Transplant or Gwaed a Thrawsblaniadau’r GIG.”

80A: Schedule 2, page 88, line 5, at end insert—“(f) any function of the Treasury under section 138(2) or 141(4),”

Amendments 78A to 80A agreed.

Amendments 81 and 82 not moved.

Schedule 2, as amended, agreed.

Clauses 23 to 26 agreed.

Amendment 83

Moved by Lord Wigley

83: After Clause 26, insert the following new Clause—“Assignment of VAT(1) The Government of Wales Act 2006 is amended as follows.(2) In section 117 (Welsh Consolidated Fund), after subsection (2) insert—“(2A) The Secretary of State shall in accordance with section 117A pay into the Fund out of money provided by Parliament any amounts payable under that section.” (3) After that section insert—“117A Assignment of VAT(1) Where there is an agreement between the Treasury and the Welsh Ministers for identifying an amount agreed to represent the standard rate VAT attributable to Wales for any period (“the agreed standard rate amount”), the amount described in subsection (3) is payable under this section in respect of that period.(2) Where there is an agreement between the Treasury and the Welsh Ministers for identifying an amount agreed to represent the reduced rate VAT attributable to Wales for that period (“the agreed reduced rate amount”), the amount described in subsection (4) is payable under this section in respect of that period.(3) The amount payable in accordance with subsection (1) is the amount obtained by multiplying the agreed standard rate amount by—10/SRwhere SR is the number of percentage points in the rate at which value added tax is charged under section 2(1) of the Value Added Tax Act 1994 for the period.(4) The amount payable in accordance with subsection (2) is the amount obtained by multiplying the agreed reduced rate amount by—2.5/RRwhere RR is the number of percentage points in the rate at which value added tax is charged under section 29A(1) of the Value Added Tax Act 1994 for the period.(5) The payment of those amounts under section 64(2A) is to be made in accordance with any agreement between the Treasury and the Welsh Ministers as to the time of the payment or otherwise.”(4) The Commissioners for Revenue and Customs Act 2005 is amended as follows.(5) In subsection (2) of section 18 (confidentiality: exceptions) omit “or” after paragraph (j), and after paragraph (k) insert “, or(l) which is made in connection with (or with anything done with a view to) the making or implementation of an agreement referred to in section 117A(1) or (2) of the Government of Wales Act 2006 (assignment of VAT).”(6) After that subsection insert—“(2A) Information disclosed in reliance on subsection (2)(l) may not be further disclosed without the consent of the Commissioners (which may be general or specific).”(7) In section 19 (wrongful disclosure) in subsections (1) and (8) after “18(1)” insert “or (2A)”.”

Photo of Lord Wigley Lord Wigley Plaid Cymru

My Lords, in view of the time, I shall try to truncate my comments. The amendment would give the National Assembly as of right a proportion of VAT revenues and so give Wales the same tax power in this regard as enjoyed by Scotland. It would also open the possibility, post Brexit, for some variation of VAT levels in Wales to help provide the cash stream needed to service capital investment programmes, as discussed earlier in Committee.

It is widely acknowledged, by the Institute of Welsh Affairs and others, that devolution of public spending responsibilities should be accompanied by the assignment of significant own sources of revenue. Wales’s funding framework has been highly unusual from an international perspective: there are not many Governments in the world with significant legislative and spending powers who do not also have a correspondingly important responsibility for raising tax revenues. If the UK Government are serious about securing a lasting devolution settlement for Wales, the devolution of VAT should be considered as part of a package of devolved fiscal powers.

The Scotland Act 2016 stated that revenues from the first 10 percentage points of the standard VAT rate would be devolved by 2019-20. The current UK VAT rate is 20%, so half of all the VAT raised in Scotland will be kept in Scotland. A recent article published by the Wales Governance Centre states that:

“Welsh VAT revenues been far more buoyant than other major taxes, such that VAT has become the largest source of revenue in Wales (in contrast to the rest of the UK and Scotland, where income tax remains the largest source)”.

The report entitled Government Expenditure and Revenue Wales 2016 concluded that around £5.2 billion was raised in VAT revenue in Wales in 2014-15. With a similar deal to Scotland, around £2.6 billion would be assigned to the Welsh Government. There would of course be an offset from the Barnett block for however long that remains in its obsolete and unfair current format. Based on the report’s figures, it would mean that more than a third of total devolved expenditure would be financed by devolved and assigned taxes, up from 21% with currently proposed devolution.

I hope that the House will agree that this fiscal lever is essential to secure the success of the Welsh economy. I beg to move.

Photo of Lord Hain Lord Hain Labour

My Lords, I normally agree with my noble friend on devolution matters, but I want to question the consequences of the amendment. If we look at change in income tax take in the UK and Wales during the past few years—indeed, since 2010-11—we see that income tax receipts have grown across the UK by 6% and in Wales by only 2%. Notwithstanding the noble Lord’s point that VAT represents a much larger proportion of tax receipts in Wales, I would be very surprised given the lower GDP and lower spending per head in Wales if Wales did not do badly out of the devolution of VAT. I have to oppose the noble Lord on that basis. Given his belief in an independent Wales, I understand ideologically why he would want just about everything devolved, but this measure would be folly in the context of the economic, financial and tax realities of Wales’s economy relative to that of the UK.

Photo of Lord Wigley Lord Wigley Plaid Cymru

VAT is very much more stable and would be less likely to go down by the nature of the expenditure and the pattern of finances in Wales. There is that problem with income tax, but VAT has a much better prospect and I believe that we really should have it.

Photo of Lord Hain Lord Hain Labour

The noble Lord may have a point in the sense that more VAT proportionately is paid by people on low incomes, and there are relatively low incomes in Wales, but I would want to see the figures. I would want to have the drains up on this proposal before I went anywhere near it, because I would not want Wales to be short-changed by such a reform. On that basis, I oppose the amendment.

Photo of Lord Rowlands Lord Rowlands Labour

I support my noble friend because I worry about taxation. It can be very regressive in an individual context. There is a history of it, and it could be not only in income tax but in VAT. We should be very careful before we proceed down that road.

Photo of Baroness Morgan of Ely Baroness Morgan of Ely Shadow Spokesperson (Wales)

I endorse the views of my two colleagues on the Labour Benches. I think it would increase budget volatility for the Welsh Government without enhancing their powers in any meaningful way. I underline one other point, and that is that we would, potentially, have different rates in England and Wales. Imagine the chaos that that could cause communities and businesses on both sides of the border. The economies of England and Wales are closely integrated and I am mindful that having varying rates applied on opposing sides of the border could pose significant issues in the long run, so I am really sorry—it always pains me not to agree with my noble friend Lord Wigley—but I cannot support this amendment.

Photo of Lord Bourne of Aberystwyth Lord Bourne of Aberystwyth The Parliamentary Under-Secretary of State for Communities and Local Government, The Parliamentary Under-Secretary of State for Wales 10:15 pm, 15th November 2016

My Lords, I thank the noble Lord, Lord Wigley, for moving Amendment 83, which seeks to assign a share of the VAT revenues generated in Wales to the Welsh Government in the same manner that a share of VAT raised in Scotland will be assigned to the Scottish Government following the Smith commission agreement, given effect through the Scotland Act 2016. In parenthesis, I may be wrong but I do not think that Scotland has the right to vary the rate, so it is possible to protect that element.

It is important to understand the purpose of VAT assignment, which is to increase the link between the Scottish Government’s policy decisions and their budget, and thereby further increase their accountability and give them power for a purpose. While assignment does not, as I said, enable the Scottish Government to change VAT policy in Scotland, they have a wide range of policy levers at their disposal which can affect the performance of the Scottish economy and can therefore impact VAT revenues in Scotland. For example, the Scottish Government’s approach to skills, planning, housing and transport all have an effect on the performance of the economy and therefore on VAT—as, of course, can their approach to taxation. The impact of these decisions on the Scottish economy, and in particular on VAT revenues, will in the future feed through into the Scottish Government’s funding.

Of course, these arguments can also be made in relation to Wales. The Welsh Government have a similar range of economic policy levers and one of the Government’s key aims is to increase their accountability and to give them power for a purpose. However, I share some of the caution urged by the noble Lords, Lord Hain and Lord Rowlands, and by the noble Baroness, Lady Morgan of Ely. The independent, cross-party Silk commission gave full consideration to the case for assigning a share of the VAT receipts generated in Wales and, while it recognised some of the arguments I have set out, it ultimately recommended against VAT assignment in Wales. Unlike in Scotland, there is therefore no clear consensus of support for the proposition. Our focus at this time should be to work with the Welsh Government to implement the Wales Act 2014 and to look at the main thrust of this legislation and take it forward on that basis. I therefore urge the noble Lord to withdraw his amendment.

Photo of Lord Wigley Lord Wigley Plaid Cymru

I am grateful for the contributions made by my noble friends on this side, and for the response of the Minister, of course. All I say is that it is bizarre that we have devolved income tax, which is in Wales a relatively low-take tax, while we do not have a proportionate amount of the VAT. If we do not have the right to vary the VAT percentages, there will not be the effect on the poorer people in the community that has been referred to. However, we are not going to get very far with this tonight, and since it is getting late, I beg leave to withdraw the amendment.

Amendment 83 withdrawn.

Clause 27: Bus service registration and traffic commissioners

Amendments 83A and 83B

Moved by Lord Bourne of Aberystwyth

83A: Clause 27, page 24, line 11, leave out “subsection (9)(g), (i) and (j)” and insert “subsections (2), (3) and (9)”

83B: Clause 27, page 24, line 13, at end insert—“( ) In section 6A (applications for registration etc where restrictions are in force), after subsection (12) insert—“(13) The power to make regulations under subsection (11), so far as exercisable in relation to Wales, is exercisable by the Welsh Ministers (and not by the Secretary of State).”( ) In section 6B (applications for registration where quality contracts scheme in force), after subsection (8) insert—“(9) The power to make regulations under subsections (5) and (7), so far as exercisable in relation to Wales, is exercisable by the Welsh Ministers (and not by the Secretary of State).””

Amendments 83A and 83B agreed.

Clause 27, as amended, agreed.

Clause 28 agreed.

Clause 29: Transfer of executive functions in relation to Welsh harbours

Amendments 83C and 83D

Moved by Lord Bourne of Aberystwyth

83C: Clause 29, page 25, line 12, leave out “sections 11 and 43(1)” and insert “section 11”

83D: Clause 29, page 25, line 27, at end insert—“( ) section 1 of the Harbours (Loans) Act 1972;”

Amendments 83C and 83D agreed.

Amendments 84 to 86 not moved.

Clause 29, as amended, agreed.

Clause 30: Transfer of executive functions: amendments of the Harbours Act 1964

Amendments 87 to 90 not moved.

Amendment 90A

Moved by Lord Bourne of Aberystwyth

90A: Clause 30, page 26, line 35, at end insert—“( ) In section 43 (provisions with respect to loans made by Minister)—( ) after subsection (1) insert— “(1A) Any loans which the Welsh Ministers make under section 11 of this Act shall be repaid to them at such times and by such methods, and interest thereon shall be paid to them at such rates and at such times, as they may from time to time direct.”;( ) after subsection (2) insert—“(2A) Such sums as are necessary to enable the Welsh Ministers to make loans under section 11 of this Act may be issued to them out of the Welsh Consolidated Fund.”;( ) after subsection (4) insert—“(4A) Any sums received by the Welsh Ministers under subsection (1A) of this section shall be paid into the Welsh Consolidated Fund.”;( ) after subsection (5) insert—“(6) The Welsh Ministers shall, as respects each financial year, prepare an account of sums issued to them under this section and of the sums to be paid into the Welsh Consolidated Fund under subsection (4A) and of the disposal by them of those sums respectively, and send it to the Auditor General for Wales not later than the end of November following the year; and the Auditor General for Wales shall examine, certify and report on the account and lay copies of it, together with his report, before the National Assembly for Wales.”;( ) in the heading, at the end insert “or the Welsh Ministers”.”

Amendment 90A agreed.

Amendments 91 and 92 not moved.

Clause 30, as amended, agreed.

Clauses 31 and 32 agreed.

Clause 33: Development consent

Amendments 93 to 95 not moved.

Clause 33 agreed.

Clauses 34 to 36 agreed.

Amendment 96

Moved by Lord Rowe-Beddoe

96: After Clause 36, insert the following new Clause—“Tax on carriage of passengers by airIn Part 4A of the Government of Wales Act 2006, after Chapter 4 insert—“CHAPTER 5TAX ON CARRIAGE OF PASSENGERS BY AIR116O Tax on carriage of passengers by air(1) A tax charged on the carriage of passengers by air from airports in Wales is a devolved tax.(2) Tax may not be charged on the carriage of passengers boarding aircraft before the date appointed under subsection (6). (3) Chapter 4 of Part 1 of The Finance Act 1994 (air passenger duty) is amended as follows.(4) In section 28(4) (a chargeable passenger is a passenger whose journey begins at an airport in the United Kingdom), for “England, Wales or Northern Ireland” substitute “England or Northern Ireland”. (5) In section 31(4B) (exception for passengers departing from airports in designated region of the United Kingdom) for “England, Wales or Northern Ireland” substitute “England or Northern Ireland”.(6) Subsections (3) to (5) have effect in relation to flights beginning on or after such date as the Treasury appoint by regulations made by statutory instrument.””

Photo of Lord Rowe-Beddoe Lord Rowe-Beddoe Crossbench

Amendment 96 stands in my name and those of the noble Baronesses, Lady Morgan of Ely and Lady Randerson, and the noble Lord, Lord Wigley. I refer noble Lords to my register of interests, specifically as past chair of Cardiff Wales Airport. Your Lordships will be pleased to know that I do not intend to repeat what I have said in the past on this vexed issue. The Minister is well versed on the subject as a result of his previous membership of the Silk commission, before his ennoblement, on which he sat with distinction—and which recommended that this particular tax be devolved.

As a brief background, the tax was introduced in 1994 at a rate of £5 per passenger for travel within the United Kingdom and the European Union and £10 per passenger for travel elsewhere. Over the past 22 years, there have been several increases and changes in the structure. Since April this year, band A is levied at £13 per passenger at the reduced rate and £26 per passenger at the standard rate. For journeys of more than 2,000 miles—band B—the reduced rate is £73 and the standard rate is currently £146. These are significant amounts, I am sure your Lordships will agree.

Despite some small changes in structure, these taxes continue to be the highest in the world and represent a growing barrier to tourism, trade and investment in our country. Internationally, the tax is currently either being frozen or, in many cases, abolished. It is worth noting that, for domestic flights within the United Kingdom, air passenger duty is twice the amount of that paid for travel to and within Europe. This has a significant impact on domestic air services and, of course, regional connectivity—something which we hear a lot about on the development on new runways in the south-east. One must never forget the congestion on the roads or the slowness of our rail building. Air connectivity in the regions is very important and becoming increasingly so.

However, this tax—it is my favourite subject, really—is another example of the asymmetrical devolution of powers that has been thrust upon Wales continuously. In January 2013, the Government devolved APD to the Northern Ireland Executive on all direct long-haul flights there, which set the tax at £0. That still pertains. In January 2015, as part of the Scotland Bill, air passenger duty was devolved and the Scottish Government have since announced that they will reduce the level of APD by 50% between 2018 and 2021 and abolish the tax completely when public finances allow. In February 2015, in line with the St David’s Day agreement, the Government announced that they were considering the case—or recommendation, call it what you will—and the options for devolving this tax to Wales. Is the deliberate omission of this provision from the Bill therefore the result of the Government’s consideration?

It is clearly recognised that the devolution of APD could provide a much-needed boost to the Welsh economy through the growth of inbound tourism, additional trade links and a much-needed increase in destinations from Cardiff Airport, particularly for long haul. Abolishing this tax in Wales on long haul alone could bring an increase of 27% in jobs within aviation-related employment at Cardiff and indirect support employment in the greater area. This would give rise to a 28% increase in the GVA impact for the Welsh economy, which would clearly include the anticipated 41% increase in inbound tourism. I am sorry that it is so late an hour to give the Committee these numbers and percentages, but the abolition of this tax could be significant for the economy of our country.

In the other place, the honourable Member for Carmarthen East and Dinefwr posed this question on Report, which I repeat:

“Why would the Wales Office seek to deny Wales the same powers as Scotland and Northern Ireland?”.

Again, he asked a little later,

“why would it deny the ability of the Welsh economy to grow?”.—[Official Report, Commons, 12/9/16; col. 701.]

Wales needs parity with Scotland and Northern Ireland. It is in the interests of the development of our economy and therefore clearly in the interests of the people of our country. I beg to move.

Photo of Baroness Randerson Baroness Randerson Liberal Democrat Lords Spokesperson (Transport)

My Lords, I was very pleased to put my name to this amendment. This is a tale of two airports—the rivalry between Bristol and Cardiff airports—but someone listening to this debate who is not familiar with the geography that lies behind the arguments within it could be forgiven for thinking that these two airports are near neighbours. The argument is always put forward that, if you devolve responsibility for APD to the Welsh Assembly, it will cut the level of the duty and that will put Bristol Airport at a disadvantage. However, these airports are 102 kilometres apart, and they are not easy kilometres. They include driving along the M4, with its congestion, over the Severn bridge with its tolls and over very poor road links around Bristol to the airport, so it frequently takes in excess of two hours to go between the two airports. If you try going by public transport, you have an extremely complex journey involving trains and buses.

I urge noble Lords to think about the contrast with Edinburgh and Glasgow airports, which now, courtesy of the Scottish Government, have the freedom potentially not to levy APD. They are both closer to the English border than Cardiff airport is to the English border—for example, Edinburgh is 57 kilometres from the English border. The argument that it is all right for Scotland to have this power but not for Wales to have it does not stand up to close scrutiny.

There is a very important point of principle that I apply when I look at Welsh devolution, and that is whether it is consistent with the other devolution settlements. I agree that very often there are good reasons for differences, but I can see no specific reason why there should be a difference with Scotland on APD. I accept there is a good reason for a difference with Northern Ireland. It has a land border with the Republic of Ireland, which has the freedom to levy a different rate of APD, so there is a pragmatic reason why Northern Ireland has that freedom, but I can see no reason why Scotland is different. I accept that the Scottish Government have control over the judicial system and that that does not apply in Wales and will not apply for a considerable time. I accept those differences as a result of history, but I have thought about this long and hard and I cannot accept that the Assembly should not have powers over APD simply because Bristol Airport has been very effective at lobbying.

This issue is especially important because the Welsh Government have put taxpayers’ money into this and invested in developing Cardiff Airport, which has worked extremely well. It has produced good results under the leadership of the noble Lord, Lord Rowe-Beddoe, and Roger Lewis. It is very important that the airport in Cardiff is allowed to grow and to develop fully and is not forced to try to do so with one hand tied behind its back.

Photo of Lord Murphy of Torfaen Lord Murphy of Torfaen Labour 10:30 pm, 15th November 2016

I agree very much with the noble Baroness, Lady Randerson. Over the past three days in Committee, the Minister has been very helpful. He knows his stuff. He probably knows devolution better than any other Minister in the current Government. I rather suspect that he might not agree with us on this but I hope he can. I think this debate is about Bristol, not air passenger duty. As the noble Baroness rightly said, if it is about devolution, there is no reason whatever that the treatment should not be the same for Wales as it is for Scotland and Northern Ireland.

It seems to me, too, that Cardiff is our Welsh national airport and should not be disadvantaged because of people who lobby for Bristol Airport. As good an airport as Bristol is, that is not the issue. This is about devolution, not about Bristol Airport.

Photo of Lord Wigley Lord Wigley Plaid Cymru

My Lords, I will speak briefly in support of Amendment 96, so ably moved by the noble Lord, Lord Rowe-Beddoe. We are glad to hear his expertise in this particular debate.

The amendment provides for the devolution of air passenger duty to the National Assembly for Wales. As has been mentioned, long-haul air passenger duty is already devolved to Northern Ireland and Scotland. It was included as a key part of a carefully crafted package of devolved measures in the recommendations of the Silk commission—of which the Minister was a central part—and would be used to give competitive advantage to Wales.

Plaid Cymru MPs attempted several times to include APD devolution in the other place, but this was met by a deluge of England-centric counterarguments from the Secretary of State and his Ministers. They seemed more interested in the possible effects of devolving APD to Wales on airports in Liverpool and Manchester than the benefits to Wales. I exclude the noble Lord from this criticism, which is based on what was said on 11 July in another place, but I am dumbfounded as to how Wales Office Ministers, who are meant to be working in the interests of their constituents, can justify their position in prioritising English airports. In this instance, I gently say to government Ministers that their job is to stick up for Wales—goodness knows, there are enough other people in the Palace of Westminster to argue England’s corner.

A recent Western Mail poll found that 78% of Welsh people are in favour of devolving APD, showing that public opinion is clearly on that side. Increasing footfall at the airport would generate substantial revenues elsewhere in Wales, and enable Wales to better market itself for trade, tourism and inward investment purposes, which will become a top priority in the post-Brexit world which we, sadly, will soon inhabit. Let us also remember that Cardiff Airport is owned by the people of Wales. It should be a matter for Welsh Ministers to decide on an aviation strategy that best serves those people. Airports in England should not have the power to determine government policy and block a beneficial Welsh devolution settlement. I support the amendment.

Photo of Lord Hunt of Wirral Lord Hunt of Wirral Conservative

My Lords, I have to start with an apology. I think this is the first occasion on which I have ever disagreed with my noble friend Lord Rowe-Beddoe. I cannot agree to his proposed new clause—“Tax on carriage of passengers by air”—for three reasons. I hope that when I say what I am about to say, he will recognise that I worked very closely with him in attracting inward investment to Wales and, indeed, in and around Cardiff Airport.

My first point is that, sadly, this debate, like so many debates about the great country where I was born, is centred on south Wales. There has been no mention, apart from a sudden reference just now by my noble friend Lord Wigley, to Liverpool and Manchester airports. I view the airports of England and Wales as a whole, and I will come to a solution in a moment, but Cardiff is certainly not the airport of choice for people living in and around where I was born. It is certainly not the airport of choice for those in central Wales. Indeed, the needs of a large part of the geographical territory of Wales are not met by Cardiff.

Secondly, I have never been a strong supporter of air passenger duty. No doubt, when all the volumes are written and all the Cabinet papers published, it will be seen that I was never a supporter of APD or insurance premium tax. However, I have to acknowledge that it is a very clever way of raising revenue—so much so, as the noble Lord told us, that I think it now totals £3.1 billion a year. The noble Lord seeks, with the best of intentions, at one single airport, to make it possible for the owners of that airport—by the way, I think there is a conflict between owning the airport and setting the tax—to be able to move the duty up or down. Because it is such a clever way of raising money, if the Welsh Government were ever a little short of revenue—and I think they usually are—it would be perfectly possible for them, under his proposed new clause, to raise the amount of revenue from APD. I just do not think I want to go down that route.

Thirdly, there is an urgent need to develop a better policy for regional airports. I am aware that the Government published a consultation paper—last year, I think—looking at the future of regional airports. We are, after all, the Parliament of the United Kingdom, so I would have thought we had to look at regional airports across England and Wales to find the best possible policy for ensuring their success.

I think there are three possibilities. The first is to devolve air passenger duty within England and Wales, a possibility that, if I recall correctly, was raised. Secondly, rates could be varied from airport to airport, with a view to strengthening the claims of that particular airport. Thirdly, we could give much more aid to regional airports. I recall, and the noble Lord may remember this, that several of the companies that decided to make substantial inward investment in Wales cited the efficiency of Heathrow Airport as the reason they were able to come to Wales.

As the Parliament of the United Kingdom, we ought to look at the policy for regional airports as a whole. I do not know whether the Minister can give us any idea when we will see a policy applying to regional airports in England and Wales, but I hope we will soon. In the meantime, do not let us go off in one direction or another in favouring or disfavouring one particular airport. We have to strengthen regional airports in England and Wales as a whole.

Photo of Baroness Morgan of Ely Baroness Morgan of Ely Shadow Spokesperson (Wales)

My Lords, I agree with the case eloquently put by the noble Lord, Lord Rowe-Beddoe, and others. A reduction in air passenger duty would help air passengers, support growth and jobs and cut costs for businesses. I urge the Minister to support this amendment.

Photo of Lord Bourne of Aberystwyth Lord Bourne of Aberystwyth The Parliamentary Under-Secretary of State for Communities and Local Government, The Parliamentary Under-Secretary of State for Wales

My Lords, I thank noble Lords who have participated in this debate on air passenger duty, specifically the noble Lord, Lord Rowe-Beddoe, who has served with distinction in so many areas of public life in Wales, not least in relation to Cardiff Airport. His very good work is being carried on by Roger Lewis.

As we committed to in the 2015 St David’s Day agreement, the Government have considered the case and options for devolving APD to the Assembly, informed by consideration of the impact this would have on regional airports in England, as they happen to be; as things stand, Wales has only the one international airport, in Cardiff.

It is clear from the debate that noble Lords are aware that Cardiff and Bristol airports are about an hour apart, and the population density of the border area there means that more than 4 million people live in the overlapping catchment areas of the two airports. I must take issue with the noble Baroness, Lady Randerson, with whom I am normally in agreement as she is normally very fair: the distance from Cardiff and Glasgow airports to the English border is not the relevant one. There is no international airport in Berwick-upon-Tweed. It is a long while before you get to an international airport, which is Newcastle.

Photo of Baroness Randerson Baroness Randerson Liberal Democrat Lords Spokesperson (Transport) 10:45 pm, 15th November 2016

I understand that difference, but anyone who can get from Cardiff Airport to Bristol Airport in an hour is not obeying the speed limit.

Photo of Lord Bourne of Aberystwyth Lord Bourne of Aberystwyth The Parliamentary Under-Secretary of State for Communities and Local Government, The Parliamentary Under-Secretary of State for Wales

My Lords, I think the last time I made that journey was with the noble Lord, Lord German, who was driving, but we will gloss over that.

As noble Lords will be aware, those airports are close together, although I accept that it is not always an easy journey, because of the build-up of traffic. However, the nature of the England-Wales border has led to a number of English regional airports raising serious and legitimate concerns about lower APD rates in Wales. As my noble friend Lord Hunt suggested, the rates could go up as well as down; we need to realise that they would not necessarily go down, at least not all the while.

The Government must ensure that devolution does not lead to undue market distortion. Currently we are bound by the state aid rules of the European Union, in any event, which was something that the Silk commission considered long and hard in looking at this issue. I do not have the Silk report in front of me, but I seem to remember that we recommended the devolution of tax on long-haul routes, not overall. It is true that we looked at the analogy of Northern Ireland—which is different because people there have the option of going to Dublin which, being in a different member state, could vary the rates anyway—and we were persuaded just in relation to long haul. I think I am right in saying that no long-haul flights currently take place from Cardiff; I appreciate that that that could make a difference. I am looking at the noble Lord, Lord Rowe-Beddoe.

Photo of Lord Rowe-Beddoe Lord Rowe-Beddoe Crossbench

There are long-distance flights and they are being negotiated all the time. They go on as charter flights right through the year, so there are long-distance flights. While I am on my feet, may I say that your commission recommended that long haul be devolved? I apologise to the noble Lord, but that was your position.

Photo of Lord Bourne of Aberystwyth Lord Bourne of Aberystwyth The Parliamentary Under-Secretary of State for Communities and Local Government, The Parliamentary Under-Secretary of State for Wales

I am grateful for the clarification on the existing charter flights. I am aware of our recommendation for long haul, although the scope of the amendment is probably broader.

As I said, the position in Scotland is very different because the airports are a long way from the next international airports, so the competition and fairness argument cannot apply. The United Kingdom Government have to look at these things in the context of fairness, and it would genuinely not be fair to an airport in England, which is unable to vary the rates, to compete with an airport that could. Noble Lords must surely see that point.

The point made by my noble friend Lord Hunt, speaking with a north Walian voice, was that this tax, if we were to adopt it, would not help the people of north Wales, for whom the nearest international airport would be Manchester or Liverpool; or, indeed, the people of mid-Wales, for whom it would be Birmingham —I am not sure that this is a plea for Birmingham, but I thought I would get in before it.

Photo of Lord Thomas of Gresford Lord Thomas of Gresford Liberal Democrat Shadow Attorney General

I take issue with that. We have always wanted to develop our connectivity in Wales. There have been attempts to use the Broughton airstrip from time to time; I have flown on a regular service from Broughton to Cardiff in the past, and a very good service it was. Unfortunately, it did not pay.

If it were possible to reduce air passenger duty, Broughton would make a very good place from which to start flights, and I am sure it would be very popular in north Wales. Liverpool and Manchester are closer than Cardiff and Bristol. Edinburgh and Glasgow are closer than Cardiff and Bristol. They do not complain; they compete.

Photo of Lord Bourne of Aberystwyth Lord Bourne of Aberystwyth The Parliamentary Under-Secretary of State for Communities and Local Government, The Parliamentary Under-Secretary of State for Wales

The point being, my Lords, that they are either, in the case of Glasgow and Edinburgh, both able to vary the rates or, in the case of Liverpool and Manchester, both unable to vary them, so they are on an even playing field, which would not be the case between Cardiff and, for example, Bristol. The noble Lord talks about the possibility of Broughton, but that would not give rise to long-haul flights. If noble Lords will allow me to go down memory lane, I remember going out on the roadshow with the Silk commission, and this was not a popular suggestion in north Wales. I remember people in the audience across the political divide saying that this would be a tax that would help people in south Wales, not people in north Wales.

Photo of Lord Wigley Lord Wigley Plaid Cymru

The Minister made references to north Wales. I hope that he is not starting to play the old game of playing north against south, because it is to the benefit of the whole of Wales if the Welsh economy flourishes. It is essential that we use these levers to benefit Cardiff and the economy around there. If it has benefits in terms of tourism, that is a benefit to the whole of Wales. We have a number of small airports around Wales. The service from Cardiff up to Valley, for example, is a valuable one. We have an airport in Caernarfon and other airports. What is essential is that we get a coherent policy to work for the whole of Wales and not to have it happen, as is happening again tonight and happened in the House of Commons, that we play the hand for the sake of English airports at the expense of Cardiff Airport and the strategy of the Welsh Government.

Photo of Lord Bourne of Aberystwyth Lord Bourne of Aberystwyth The Parliamentary Under-Secretary of State for Communities and Local Government, The Parliamentary Under-Secretary of State for Wales

My Lords, that is an unfair suggestion. I am certainly not playing north Wales against south Wales—I am informing noble Lords of what happened when we were out on the road. There is only one international airport in Wales. If we are talking about APD in relation to long-haul flights, that means only Cardiff in relation to Wales, as things stand; that is undoubtedly the case. I am the first person to stand up for Wales, as I hope that the noble Lord will accept, but we cannot do that in isolation from what is happening in the rest of the country. If the measure being talked about is unfair, I am afraid that it will not see the light of day in the context of looking at what is fair for the United Kingdom. Yes, we must stick up for Wales, but it has to be done in the context of fairness.

I shall progress the argument a little to see if there are other things that we can be doing. As I have said, we do not want to look at the position of market distortions, but we want to help Cardiff Airport if we can. We looked at a review of this to see whether it would be possible to devolve APD to Wales while supporting English regional airports against the impacts of reduced APD. However, there are no obvious options that could mitigate against the impacts on regional airports elsewhere, if devolving the tax to the Assembly meant that Bristol could face 25% fewer passengers. That is significant. I shall ensure that I circulate full details of our review into these options to noble Lords so they can see it.

I hope that noble Lords will accept that this is not a desire not to do what is best for Wales, but a desire to do what is best for Wales while recognising that we cannot fail to be fair to the rest of the country. If that happens in this case to be England, I make no apologies for that. Bristol Airport does not have the ability to vary APD, and we cannot do that in the context of the Bill.

I have listened carefully to the debate, and I shall circulate the details of the review, when we had a look to see if there was anything that we could do. There was a long debate in the Silk commission, and it was not along party-political lines; it was generally divided on the issue of what we could do for Wales, partly because of fairness and partly because of the issue that still exists about state aid and the fear of action in relation to that—valid action. On that basis, I ask the noble Lord to withdraw his amendment. As I say, I shall circulate details of the review that we had to see whether there was anything that we could realistically do to help Wales—and, in this context, that means Cardiff Airport.

Photo of Lord Rowe-Beddoe Lord Rowe-Beddoe Crossbench

I thank the Minister for his response and thank all noble Lords and noble Baronesses who have participated in this short debate. I thank the noble Baroness, Lady Randerson, who mentioned 102 kilometres. It is an important number because under current EU regulations 100 kilometres has associations with state aid, which the Minister brought up. In Cardiff we have been fighting allegations about state aid—successfully, I am happy to say. I am also very pleased that the elephant in the room was mentioned, not by me but by everybody else. Yes, of course it is Bristol—and this is a pure political gesture. We know it and feel it in ourselves. If we look at the constituency make-up around the city of Bristol and in the south-west, we will understand why. However, I am sorry that the noble Lord, Lord Hunt, disagrees with me for the first time—or I disagree with him.

I will come back on just two points. Cardiff is our international airport, whether it is situated in Ceredigion or in south Wales. We cannot have them all over Wales. We can put up little airports and support ones like Valley and Broughton so we can use them, but Cardiff is our international airport. The status of long-haul flights is under heavy negotiation at the moment and regular routes will be announced soon.

I say to my noble friend Lord Hunt that there is a little group called the Regional and Business Airports Group which represents 32 regional airports in the United Kingdom. In September 2015, it wrote a discussion paper, in which it advocated on behalf of the regional airports in the United Kingdom the devolution of this,

“market distorting tax which impacts far more heavily on smaller airports than larger ones”.

That is quite an interesting document—it was addressed to the energy and transport tax team—and perhaps the Minister could take a look at it.

I thank all noble Lords. It is late at night and I will withdraw the amendment, but I will have to come back at some stage.

Amendment 96 withdrawn.

Amendments 97 and 98 not moved.

Clause 37: Development consent for generating stations with 350MW capacity or less

Amendments 99 to 102 not moved.

Clause 37 agreed.

Clauses 38 to 45 agreed.

Amendments 103 to 105 not moved.

Clause 46: Intervention in case of serious adverse impact on sewerage services etc

Amendments 106 to 107A not moved.

Clause 46 agreed.

Clauses 47 and 48 agreed.

Amendment 107B

Moved by Lord Bourne of Aberystwyth

107B: After Clause 48, insert the following new Clause—“Financial assistance for inland waterway and sea freight(1) Section 272 of the Transport Act 2000 (financial assistance for inland waterway and sea freight) is amended as follows.(2) For subsection (4) substitute—“(4) So far as it relates to inland waterways that are wholly in Wales, the power conferred by this section is a power of the Welsh Ministers.(4A) So far as it relates to— (a) the carriage of goods by an inland waterway that is partly in Wales, or(b) the carriage of goods by sea where the carriage concerned is wholly or partly by sea adjacent to Wales,the power conferred by this section may be exercised concurrently or jointly by the Secretary of State and the Welsh Ministers.”(3) For subsection (6) substitute—“(6) In this section—“inland waterway” includes both a natural and an artificial inland waterway;“sea adjacent to Wales” means the sea adjacent to Wales out as far as the seaward boundary of the territorial sea.(7) An order under section 158(3) of the Government of Wales Act 2006 determining, or making provision for determining, any boundary between waters which are to be treated as parts of the sea adjacent to Wales and those which are not applies for the purposes of the definition of “sea adjacent to Wales” in this section as it applies for the purposes of the definition of “Wales” in that Act.””

Amendment 107B agreed.

House resumed.