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House of Lords

Wednesday, 15 October 2014.

3 pm

Prayers—read by the Lord Bishop of Truro.

Introduction: Lord Farmer

3.06 pm

Michael Stahel Farmer, Esquire, having been created Baron Farmer, of Bishopsgate in the City of London, was introduced and took the oath, supported by Baroness O’Cathain and Lord Leigh of Hurley, and signed an undertaking to abide by the Code of Conduct.

Health: Ebola


3.13 pm

Asked by Lord Giddens

To ask Her Majesty’s Government what is their assessment of the progress of international efforts to contain the spread of the Ebola virus.

Baroness Northover (LD): My Lords, the UK is playing a leading role in response to the Ebola outbreak in west Africa, having already committed £125 million to it. We are also mobilising our Armed Forces in the effort to defeat the disease, but the scale of the outbreak is unprecedented, and more needs to be done. We are very actively encouraging other countries to join the international response.

Lord Giddens (Lab): I thank the Minister for that response. I put down this Starred Question a month ago. Since that time, the situation with Ebola in west Africa has deteriorated markedly to become a tragedy of horrible proportions whose tipping point could become a catastrophe. That catastrophe could have global implications far beyond those we have seen so far. As Anthony Banbury, the head of the UN Mission for Ebola, said yesterday, major changes and major transformational policy on a global level are necessary by 1 December,

“or we face an entirely unprecedented situation”.

How is it possible to make these changes in such a short period of time? There are only six weeks in which we have to get a radical uplift in global policy.

Baroness Northover: The noble Lord is absolutely right; he was absolutely right to put down this Question. The situation has indeed got a lot worse since he did so. If this does not make the case for aid in terms of our own self-interest, as well as a moral case, I do not know what does. The epidemic is moving rapidly ahead of us in west Africa, as he points out, and he talks about a tipping point. The United Kingdom is leading a major effort to tackle the disease in Sierra Leone; the United States is doing that in Liberia and Guinea, and France is doing that in Guinea. However,

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a lot more needs to be done internationally and the UN is absolutely right about the need for unprecedented global action. The noble Lord is right about that.

Lord Alton of Liverpool (CB): My Lords, has the Minister seen the comments of the director-general of the World Health Organisation, Dr Margaret Chan? She said that this is,

“unquestionably the most severe acute public health emergency in modern times … I have never seen a health event threaten the very survival of societies and governments … I have never seen an infectious disease contribute so strongly to potential state failure”,

and that,

“the whole world is put at risk”.

Will the Minister detail to the House the ways in which this country, admirable though our efforts in Sierra Leone are with the provision of 700 beds, is bringing together the international community to fight a disease that is already predicted to take the lives of 1 million people in west Africa?

Baroness Northover: The noble Lord is right, and so is Margaret Chan. The noble Lord will no doubt be reassured to know that the Foreign Secretary is chairing a COBRA meeting on EU co-operation this afternoon—in fact, as we speak. It is extremely important to get that international engagement. The Prime Minister will chair another meeting of COBRA tomorrow at 3 pm. We have sought to galvanise international reaction to this. As the noble Lord said, it is absolutely critical that we do so.

Viscount Ridley (Con): My Lords, will the Minister congratulate those who are volunteering to go and work on this problem in west Africa for their courage, skill and generosity? Does she also agree that this will be defeated by on-the-ground, low-tech action but that, if it does not happen that way, we have a really serious problem because it will be a long time before vaccination and cure can help?

Baroness Northover: I am more than ready to endorse that view. It is astonishing to see the number of volunteers who have decided that they wish to go out to this extremely challenged region. We are humbled before that effort. My noble friend is right that we have to tackle this as a public health crisis but it is also encouraging to see the amount of effort now going into developing potential treatments and vaccines. It may come to nothing but I am extremely pleased that the United Kingdom is again leading in terms of the trials of the vaccine at the Jenner Institute in Oxford. If that works out, those vaccines should be available by the end of the year.

Baroness Kinnock of Holyhead (Lab): My Lords, does the Minister agree with President Kim of the World Bank that the world community has “failed miserably” in its response to Ebola? Dr Chan, head of the WHO, who was mentioned earlier, drew attention to the appalling neglect of the pharmaceutical companies, saying that, after 40 years of Ebola, there are still no vaccines or medicines. She said:

“The rich get the best care. The poor are left to die”.

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Baroness Northover: We can see how we are all interlinked—something that happens in one part of the world may very well affect another. It is encouraging to see that the pharmaceutical industry is now picking up speed. However, the noble Baroness is quite right: that has not been its history.

Lord Steel of Aikwood (LD): Will my noble friend be kind enough to have a word with the Home Secretary because there is a problem that doctors from west Africa working in this country who go to help in this crisis might run foul of the visa restrictions? It is very important that that sort of bureaucracy does not get in the way of sending the most valuable doctors—those who know the area and can speak the languages.

Baroness Northover: I am very happy to reassure my noble friend that the Home Secretary is looking at this at the moment. Tier 2 skilled workers can indeed return to their home country for short periods to provide support and can take their annual leave to volunteer. However, the Home Secretary is looking at this.

Baroness Hayman (CB): My Lords, alongside the need for developing vaccines and cures for the diseases of the poor that the noble Baroness, Lady Kinnock, described, is there not also a tremendous need to develop public health and basic health systems in the developing world in the future? On the Ebola crisis, does the Minister agree that, alongside our assistance on medical treatment services, it is very important that we also help on the prevention side by stopping transmission, getting good public information and sensitising communities? In that respect, will she endorse the work of the British NGO Restless Development—I declare a family interest—which has already sent 200 young Sierra Leonean volunteers to work in their own communities?

Baroness Northover: The noble Baroness is quite right about the importance of public health in strengthening health systems and changing various cultural practices. I again pay tribute to those who are working there at the moment.

Lord Collins of Highbury (Lab):Universal health coverage is an essential element. Will the Minister explain why the Government oppose that at the UN in terms of post-2015 objectives?

Baroness Northover: The United Kingdom supports the development of health systems in developing countries, and health is part of the approach to the new MDGs.

Schools: Class Sizes


3.21 pm

Asked by Baroness McIntosh of Hudnall

To ask Her Majesty’s Government what action they are taking to reduce class sizes, particularly in primary schools.

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The Parliamentary Under-Secretary of State for Schools (Lord Nash) (Con): My Lords, we are making every effort and are investing heavily to address the unprecedented increase in pupil numbers. The average class size remains below the statutory limit, despite a massive population increase. We are investing £5 billion of capital funding, which has already enabled local authorities to create 260,000 additional pupil places between May 2010 and May 2013. This includes 212,000 primary places. There are 300,000 more places in the pipeline for September 2015.

Baroness McIntosh of Hudnall (Lab): My Lords, I thank the Minister for that reply which, although welcome, strikes me as just a tiny bit complacent when we see that the figures for primary school children being taught in classes of more than 30 have gone up more than 200% between 2010 and 2014. Does he agree that most educationalists and teachers consider that, generally speaking, children do better in small classes? Indeed, that is what people who can afford to pay for their education are generally looking for. Will he say what he and the Government regard as the optimum primary school class size and on what evidence he bases his view?

Lord Nash: I would be interested in the noble Baroness’s definition of complacency because, despite the massive population increase, the previous Government cut the number of primary school places by 200,000 and the money by 26%. We have more than doubled the amount of money invested in class sizes. The relevant figures are that the class size in key stage 1 is 27.4 this year as opposed to 27.3 last year, a tiny increase. The pupil-teacher ratio is 21 in primary schools. Of course we would all like smaller class sizes, although the OECD and the EEF toolkit tell us that a reduction in class size gives a very poor return on investment and that increasing teacher quality and training is much better. It is true that some private schools have very low class sizes, but generally they are not as low as people think.

Lord Storey (LD): My Lords, my noble friend the Minister will be aware that the UK has bigger class sizes than most of its overseas competitors. He is also right to point out that the £5 billion being spent to reduce class sizes is more than the previous Government were able to provide. However, those resources take a long time to work through. Does he think that where class sizes exceed the so-called legal limit schools should be allowed to put extra resources in, or perhaps be given extra resources in terms of an extra teacher or a classroom assistant, or perhaps be able use the pupil premium in such cases?

Lord Nash: In fact, the OECD tells us that our secondary class sizes are quite a bit below the average international size although our primaries are somewhat higher. However, we have no evidence for the high numbers in class sizes that some people refer to—I saw 70 in the paper the other day which is clearly misreporting. The statistics I have given give us great comfort that we have the right amount of investment in the sector.

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Lord Lexden (Con): How does this Government’s record in building new schools compare with that of their predecessor?

Lord Nash: We are spending £18 billion on school buildings in this Parliament, which is more than the previous Government spent in their first two terms combined. We are building or improving the condition of 900 schools—double the previous Government’s performance in 13 years.

Baroness Massey of Darwen (Lab): Does the Minister agree that an absolute priority, as my noble friend said, should be reducing class sizes where possible and not spending money on new free schools set up in areas where excess places exist already?

Lord Nash: I cannot agree that an absolute priority should be reducing class sizes because I have already said that all the evidence is that that was a very poor return on investment. In fact, Andreas Schleicher tells us that there is no relation between class sizes and performance. I entirely agree that we should not be putting up schools in areas where there is no need and I can assure the noble Baroness that since I became a Minister, just over two years ago, virtually all the free schools we have approved have been in places of need.

Lord Tebbit (Con): My Lords, can my noble friend tell me why it is that when I was at primary school a teacher could teach a class of 48 or 50 pupils to read adequately and in fact rather better than is done in classes of 30 these days? What has changed—the teachers or the children?

Lord Nash: I suspect, sadly, the children. Certainly in primary schools in the early days I know that teachers have to spend a great deal of time getting pupils as they come into primary schools ready to learn.

Baroness Jones of Whitchurch (Lab): My Lords, does the noble Lord not accept that all the evidence shows that smaller class sizes make a difference for younger children—for infants in particular—and actually that is one of the key markers of going on to have educational achievement. Does the noble Lord not recognise that the Government have now been missing their target for recruiting new teacher trainers for the last three sessions and that we are heading for the perfect storm where we do not have enough teachers and classes are getting bigger? That is inevitably going to damage children’s education.

Lord Nash: I am not rushing to take lessons from the party opposite on pupil place planning. The ONS data which came out at the beginning of the last decade made it clear that there was a pupil place crisis looming and it was not until 2008 that the previous Government even managed to produce predictions for the size of the school population. As I say, they actually cut the number of primary school places by 200,000 and slashed the funding by 26%. We are the first Government for a long time actually to increase the amount of money available and we have also invested in new free schools in places where they are needed.

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3.29 pm

Asked by Baroness Falkner of Margravine

To ask Her Majesty’s Government what is their strategy for confronting ISIS.

The Minister of State, Foreign and Commonwealth Office (Baroness Anelay of St Johns) (Con): My Lords, we aim to degrade and defeat ISIL and reduce the threat to the United Kingdom and our interests. At home, the focus is on preventing attacks and countering ISIL’s ideology; abroad, we work with coalition partners to support moderate forces fighting ISIL and tackle ISIL’s access to funds and fighters. We are pressing for political reform in Iraq and for a political transition in Syria to isolate ISIL politically; and we provide humanitarian aid to those most affected.

Baroness Falkner of Margravine (LD): My noble friend has mentioned co-operation with partners, so she will undoubtedly be aware that the United States is moving to a strategy—if you can call it that—of using more drones in armed warfare in Syria. Given the experience that it has had with Pakistan, Yemen and several other countries, where more than 60,000 civilians have accidentally been killed as collateral damage, can she tell the House whether the United Kingdom is contemplating such a move? Can she also tell the House whether the Government have had any conversations with the United States about the pursuance of that strategy?

Baroness Anelay of St Johns: My Lords, I hope that my noble friend will understand that I am not in a position, and nor would the House expect me to be, to comment on United States military operations. However, I understand my noble friend’s concern about drones and their use; Members of the House have expressed that concern in relation to other matters previously. I can say that our military efforts are intended to help defeat ISIL on the battlefield. We are going to use our military capabilities in Iraq to achieve that objective while working to support political reform in Baghdad to ensure inclusive governance; while in Syria we are engaged in training and providing non-lethal equipment.

Lord Dannatt (CB): My Lords, having clarified that the objective of Her Majesty’s Government is to defeat ISIL on the battlefield, can the Minister confirm that they are ruling options neither in nor out, and that all options remain on the table for future engagement if required?

Baroness Anelay of St Johns: My Lords, when we had the recall of Parliament, the Leader of this House and my right honourable friend the Prime Minister made it clear that the security of this country is our first objective; that we had come to Parliament to seek agreement that we should engage in airstrikes in Iraq; and that if there were premeditated action which we

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needed to take elsewhere because of extreme danger to our humanitarian provision, we would return to seek the approval of Parliament.

Lord Sugar (Lab): My Lords, does the Minister agree with me that cutting off finance to these people will result in them being less of a danger? Would she care to go on the record in the House and disclose who the financiers of these evil people are? What have the Government—or the American Government—done to discourage those who are financing these people?

Baroness Anelay of St Johns: My Lords, ISIL finance comes from a variety of sources, as the noble Lord will be aware. There are allegations of funding from overseas countries. I do not have proof of that so I am not able to reveal it to the House, because it would not be factual. What is a fact, of course, is that ISIL has been engaged in taking oil production facilities and selling that oil illegally on the black market, and wherever it has rampaged with its evil regime it has seized banks and Iraqi security forces materiel. It has significant amounts of money.

Lord Elystan-Morgan (CB): My Lords, does the Minister recollect that, some time ago, Her Majesty’s Government gave blanket recognition to all the military forces that were fighting President Assad in Syria? Although ISIS was not specifically mentioned, does it not seem clear that there were kindred military forces, which now form part of ISIS, that were operating at the time? What have we done, if anything, to derecognise those forces?

Baroness Anelay of St Johns: My Lords, there is continuous evaluation of the variety of forces to which the noble Lord refers: how they operate and what they call themselves. The difficulty is that as soon as one lists one, it changes its name and becomes something else. Noble Lords will have watched very carefully over the summer and seen that what can apparently be ISIL or ISIS, and the different ways of referring to that, can suddenly form a breakaway group. We therefore have to refer to all of these groups that are trying to create havoc as ISIL.

Baroness Nicholson of Winterbourne (LD): I welcome the Foreign Secretary’s recent visit to Baghdad, but can the Minister disclose Her Majesty’s Government’s strategy towards the greater involvement of Turkey, which is, after all, fundamental to the security architecture of the region, of Europe and of the wider NATO circuit? What is happening in our relationship with Turkey? We are primus inter pares in our pressure for Turkey to enter the European Union; surely we have a unique position.

Baroness Anelay of St Johns: My noble friend is right to draw attention to the important role played by Turkey. It is clearly ISIL’s ambition to grab enough land so that it has an enormously long boundary with Turkey. As an important player in the European and east European field, Turkey has a vital role to play. It does that. It plays its role in the coalition effort, particularly through its humanitarian support in the

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region and through its support to the Syrian moderate opposition. We welcome Turkey’s support for the air strikes in Syria and Iraq and the President’s affirmation that Turkey is willing to play its part in the military campaign. We are now continuing to discuss with them what form that contribution might take.

Baroness Morgan of Ely (Lab): The Government have already spent around £25 billion training the Iraqi army. Many would question whether that money was well spent. Can the Government explain what further steps can be taken to develop the resilience of the Iraqi army and what the Iraqi army can do to command support from the different communities within Iraq?

Baroness Anelay of St Johns: The noble Baroness draws attention to an important fact—that in the early days of ISIL’s advance, the Iraqi security forces were not able to withstand it. The noble Baroness is alluding to the fact that it was felt that the security forces did not have the support of local communities, and they then fell back. We are engaged—the Foreign Secretary has made it clear on his visit to Iraq this week—in providing support to the Iraqi security forces in the form of training and guidance. I know that they value the surveillance help that we give them; we can give them the confidence, and then the people whom they are trying to protect will have confidence in them.

Palestine: Recognition


3.37 pm

Asked by Baroness Warsi

To ask Her Majesty’s Government what is their position on the recognition of Palestine as a state.

The Minister of State, Foreign and Commonwealth Office (Baroness Anelay of St Johns) (Con): My Lords, the UK is committed to seeing an independent Palestinian state. We will recognise a Palestinian state at a time of our choosing, when we think it can best bring about peace. A negotiated end to the occupation is the best way to meet Palestinian aspirations on the ground.

Baroness Warsi (Con): I thank my noble friend for that Answer and I congratulate her on her new job. Could the Minister detail the specific conditions or criteria that would need to be met for this Government to recognise the state of Palestine? What is the Government’s response to the overwhelming vote for recognition that we saw in the House of Commons on Monday?

Baroness Anelay of St Johns: My Lords, first, it would look churlish of me to thank my noble friend for wishing me well, but we both know what we mean. I am delighted that she remains a colleague in this House and a good friend.

My noble friend referred to the debate on Monday which caught the attention not only of this country but of the countries in the Middle East. The vote showed that Parliament considers the resolution of

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the Israeli-Palestinian conflict urgent. We agree with that. The issue is and will remain a foreign policy priority for the UK, but, as I said, we need to judge when it is right to take that decision. What we need to do is to find a negotiated end to the occupation. That is the most effective way of proceeding. My noble friend asked about criteria. Clearly, you judge criteria on a fluid system. You watch, you wait and you encourage the Middle East process to continue—and one does not give up.

Baroness Ramsay of Cartvale (Lab): Does the Minister agree with me that a premature and unilateral declaration of recognition would not only not aid the peace process in the Middle East towards a two-state solution but would in fact appear to be rewarding Hamas, which is a terrorist organisation that calls for the destruction of Israel and rains thousands of rockets down on her civilian population?

Baroness Anelay of St Johns: My Lords, I entirely agree with the noble Baroness.

Lord Alderdice (LD): Do Her Majesty’s Government understand that many people not just in the region but in this country and, increasingly, in Israel itself believe that the only way to save a two-state solution, if it is not already too late, is to recognise a Palestinian state immediately, and that without that Her Majesty’s Government unintentionally may be contributing to the intractability of the problem rather than its resolution by giving a veto to one side through their policy on recognition?

Baroness Anelay of St Johns: My Lords, I understand my noble friend’s strength of feeling. I also understand that there is a lot of public concern and, indeed, more than interest—rather, engagement—in all of this. However, one has to say that the Middle East process itself has not failed; it proceeds. Prime Minister Netanyahu and President Abbas continue to say that they are committed to a two-state solution. That is the way forward, whereas this country recognising Palestine now would not achieve anything. It would not remove the occupation or give everyone the opportunity to do what we need to do now, which is to focus on the people of Gaza and the rebuilding of it.

Lord Grocott (Lab): My Lords—

Baroness Deech (CB): My Lords—

Lord Hylton (CB): My Lords—

Noble Lords: Cross-Bench!

Baroness Deech: My Lords, does the Minister acknowledge that if a state of Palestine were to be recognised, the Palestinian residents within it would cease to be refugees, that those Palestinians living in other countries would have a right of return and would also cease to be refugees, and that there would be no more call for UNRWA and the refugee problem would be ended?

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Baroness Anelay of St Johns: My Lords, the noble Baroness makes an interesting point, but it would depend on the way in which the future state were created, so I think that there is more complexity to the issue than she raised.

Lord Grocott: My Lords, several noble Lords have referred to the—

Baroness Eaton (Con): My Lords—

The Lord Privy Seal (Baroness Stowell of Beeston) (Con): My Lords, I am sorry to interrupt from the Dispatch Box again. If noble Lords are very brief, we can hear from the noble Lord on the Labour Benches and then from my noble friend.

Lord Grocott: My Lords, various references to the problem of recognising a Palestinian state indicated that it would somehow inhibit the peace process. I ask: what peace process? What achievements can be chalked up to this alleged peace process? All we have seen from the process over the past 50 years is a continued diminution of the prospect of a Palestinian state because of the constant settlement activity in violation of all international law which the Israeli Government seem to be able to pursue with impunity.

Baroness Anelay of St Johns: My Lords, the developments with regard to settlements clearly have lost Israel many of its friends and it has a duty to rebuild trust by looking again at its policy on settlements. However, I do not agree with the noble Lord that we should give up hope on the Middle East peace process. As I said in answer to another noble Lord, the two main actors in this process wish to be engaged in it and will be engaged in it—and we will encourage them to do that.

Baroness Eaton: Given the fact that Arab citizens, together with members of all religions, are free to live in the state of Israel, does the Minister agree that the same must be the case in a Palestinian state in which all members of society, no matter what their race or religion, should be afforded absolutely equal rights in order to practise their respective faiths without any fear of persecution?

Baroness Anelay of St Johns: My Lords, one of the six priorities of the FCO is to have freedom of religion or belief, so I can say to my noble friend: yes.

Wales Bill

Committee (2nd Day)

Relevant documents: 6th and 8th Reports from the Delegated Powers Committee

3.45 pm

Amendment 19

Moved by Lord Roberts of Llandudno

19: After Clause 5, insert the following new Clause—

“Part 1AVoter registration

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Power of Secretary of State to make regulations for data sharing

(1) The Secretary of State shall by regulations impose a duty on government bodies requiring those bodies to provide specified information to registration officers in Wales for the purposes of electoral registration.

(2) Regulations under subsection (1) must include as government bodies the Driver and Vehicle Licensing Agency, the Department for Work and Pensions, HM Passport Office and the National Health Service.

(3) Regulations made under subsection (1) shall include the provision of data collected by specified government bodies by virtue of specified applications, which must include applications for new or renewed driving licences, Disability Living Allowance, Jobseeker’s Allowance, Employment and Support Allowance, new or renewed passports, and to register with a GP (as applicable to the specified government body).

(4) Registration officers shall use the specified information received in relation to a person—

(a) if the specified information received contains all of the information required, to register that person on the appropriate electoral register or registers; or

(b) if the specified information does not contain all of the information required, to make further enquiries of that person to receive the information required to register that person on the appropriate electoral register or registers.

(5) For the avoidance of doubt, nothing in this section shall give any government body the power to share any information about a person without that person’s consent.

(6) In this section—

“electoral register or registers” means the registers in section 9 of the Representation of the People Act 1983;

“specified applications” means any applications made by a person potentially eligible to be registered to vote as are specified in regulations made under section 1(1); and

“specified government bodies” means any government bodies specified in regulations made under section (1)(1).”

Lord Roberts of Llandudno (LD): My Lords, I will also speak to Amendments 20 and 61.

I begin by recalling some friends, who moved to live near Llanuwchllyn in Merionethshire, as it was. At the bottom of a farm field was a swiftly running stream. Glen, the wife, had six children. People said, “You must fence off the stream to safeguard your children”. She said, “No, I will not fence it, I will teach them to swim; by teaching them to swim, they will be able to survive whatever the circumstances”. So it is, I think, with young people today. We cannot safeguard them in every possible way, although we would like to. We would like to save them from every harm, but they must go out into a world that is full of threats and dangers. In this world they must survive—they must swim in the tide of destruction and total despair. They need to feel part of society and committed to its well-being.

Although it is not in this Bill, there was a suggestion on the previous day of this debate that we should think of reducing the voting age from 18 to 16. There was widespread agreement in the Committee that by reducing the age to 16, young people could become more a part of their communities and committed to the well-being of these communities. However, if they are to vote, they must first be registered to vote. Without the most accessible of methods being used,

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there will be many thousands of them who will not be on those registers. That means that their voices will not be heard. That is why Amendments 19 and 20 are so important.

The Electoral Commission found that only 44% of young people voted in the 2010 election, and only just over 50% were registered. That percentage of registration—just over half—shows that the present registration system is not working and cannot be defended. With an election on the horizon in a matter of months, surely we should move speedily to ensure that as many youngsters as possible are able to vote when that election comes. A maximum registration grant has been offered to some local authorities by the Cabinet Office. There are 22 local authorities in Wales, but I have heard of only one—Ceredigion—that has dealt with this particular grant and the amount was only £1,700. We must find out how it is possible to maximise the number of people on the register.

I am proud to be honorary president of the Bite the Ballot organisation. It is travelling throughout the country, trying to register as many young people as it can. In February of this year, it registered more than 35,000 young people in a matter of days. When they reach the age of 18, they will take their places automatically on the register. We understand that in the Scottish referendum more than 100,000 young people between the ages of 16 and 20 registered. Bite the Ballot’s efforts cost, I am told, 25p per registration. The Electoral Commission’s charge is £25, not 25p, per registration. New ways have been found and trodden, and now we must adopt them ourselves.

The United States enacted its national voter registration legislation in 1993—the “motor voter” initiative. Whenever a person, young or old, signed up for, say, a passport, a driving licence, national insurance or work and pensions, there would be on the form another box asking whether they wished to be included on the voter register. All they had to do was put a tick in that box. It was the simplest thing possible to get them on the register and enable them to vote. We can do it. It can be done. When people sign to donate, say, a kidney, they could place a tick on the forms. It is the easiest thing possible and would be without any great cost. People tell me that it will cost a lot of money, but how much do door-to-door canvassers cost? I suggest that we could even make a profit from this new method of signing up people on the register. In the new Northern Ireland schools initiative, 50% of young people signed up.

If we value the vote, it is our obligation to ensure that the utmost effort is made to make it possible for people to register. Schools and colleges could be visited and, with a person’s consent, the electoral registration officer could be provided with details of pupils to enable them to vote at 18. This would be a step in the right direction to enable a person’s voice to be heard as an elector. As I said earlier, they would be learning to swim and tackle the difficulties that they will face, especially in this world which, as we heard in Question Time today, is causing so much heartache. We can help our young people to face those problems. There is no complication. The Chief Electoral Officer for Northern Ireland says that thousands and thousands of youngsters were able to be signed up without any problem.

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A week or two ago, the National Assembly of Wales supported such initiatives and the four party leaders—Carwyn Jones, the First Minister; Andrew RT Davies, who leads the Conservatives; Leanne Wood, leader of Plaid Cymru; and Kirsty Williams, the Liberal Democrat leader—signed up to them. They were united in their support, as was the Presiding Officer. The Assembly overwhelmingly voted in favour of this measure being introduced in this Wales Bill. What right have we, as a Parliament in Westminster, to refuse the request of the Assembly in Wales? It is happy with this new registration initiative and asks for our support. I suggest that it would be very churlish and unwise indeed, at a time when devolution is so much in the headlines, to say, “No, Westminster will not allow what Wales wants”. It therefore gives me the greatest pleasure to propose these amendments. I beg to move.

Baroness Gale (Lab): My Lords, I support Amendments 19 and 20. It is a great pleasure to follow the noble Lord, Lord Roberts of Llandudno. As he said, in 2010, only 56% of 17 to 24 year-olds were registered to vote, and only 44% of them voted at the general election. In Wales in 2011, 35% of young people voted in the Assembly elections, an even lower number than at the general election. So the current low levels of voter registration in Wales, especially among younger voters, combined with the lower turnout in Welsh elections indicate that, with the general election in seven months’ time and the Assembly elections in 2016, this is the right time to be taking the actions set out in Amendments 19 and 20, which explore ways of developing a system in which government bodies provide information directly to the EROs. The aim is to empower citizens to register to vote when filling in, for example, applications for a new or renewed driving licence. People can apply for a provisional driving licence from the age of 15 years and nine months. Other methods could be through passports and benefits, or when registering with a GP.

The noble Lord, Lord Roberts, mentioned the American “motor voter” Act, which seems to have been very successful in 1993. He also mentioned the initiative taken in Northern Ireland, which has been very successful in improving the rate of registration among young people. Virtually all the young people who remain at school or college to complete A-levels or the equivalent are added to the register and this represents approximately 50% of the total eligible population in that age group. The schools initiative is the most productive aspect of the Chief Electoral Officer’s community engagement programme, with 99% of targeted schools visited, and 11,000 16 to 17 year-olds.

Having just moved to a system of online, individual electoral registration, which, according to the Cabinet Office, appears to be flourishing, we believe that Wales has the technological capacity to make this type of data-sharing system flourish. The Labour Party will make a manifesto commitment at the general election to a policy of school and college registration, as my right honourable friend Sadiq Khan, the shadow Justice Minister, announced recently. He said:

“Too many young people don’t register to vote. If we can’t get young people registered, then it makes the task of getting them to

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vote even more daunting. We need to do more to turn our young people into habitual voters. Improving citizenship education and getting them registered will be crucial”.

Welsh EROs will be required by this amendment to take active steps to increase the number of people registered from underrepresented groups, including the specific step of organising at least one voter engagement session per year, per school or further education college in their area of responsibility. If action is taken as set out in Amendments 19 and 20, it would mean that young people, people with disabilities and ethnic minority groups—those who have been consistently underrepresented in Wales’s democratic processes and are least likely to be present on the electoral register—could take an active part in democratic life. They could be registered to vote and, through voter engagement sessions, encouraged to use their vote.

I suggest that there is no time to lose in making Wales’s voter registration processes as easy and straightforward as possible. Having just moved to a system of online, individual electoral registration, it is even more important. Sixteen year-olds, depending on when their birthday is, can be registered to vote, and if we move to giving 16 year-olds the vote, it would mean that 14 year-olds would, depending on when their birthday is, be on the register. We are talking about individual registration, so a lot of education will be needed.

As the noble Lord, Lord Roberts, said, the four Welsh party leaders signed a letter to the Prime Minister, the Deputy Prime Minister, the Secretary of State for Wales and the Welsh Office Ministers, expressing support for Amendments 19 and 20. In addition, the Presiding Officer of the Assembly, Dame Rosemary Butler, wishes to offer her full support for this approach. She recently announced her intention to start a national conversation with young people about voting rights, including votes at 16 and the voter registration process, before the end of this year. That is a strong endorsement.

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The four parties in Wales believe that this is the right way in which to encourage people to register—so there is an all-party agreement in Wales. The four party leaders have signed this. It may have happened before, but it is not often you get the four party leaders in Wales agreeing to such a great step forward. It was also the wish of elected Members of the Welsh Assembly when they debated this matter on 24 September. If we could go ahead with this, we would go a long way to improve democracy in Wales. I ask the Minister to have talks with the Secretary of State for Wales, the Deputy Prime Minister and the Minister for the Constitution so that, when we reach Report, the Minister has some very good answers—unless, of course, she can do that today. It would certainly show that Westminster is listening to Wales.

I trust that the Minister will agree that this is an urgent matter, bearing in mind that the general election is only a few months away and the Welsh Assembly elections are in 2016. Time is of the essence to encourage all people to register to vote, especially young people. There is all-party support in Wales for these amendments

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and I trust that the Minister will listen to the voice of Wales, as clearly expressed in the letter of 13 October. I look forward to what she has to say in her reply.

Lord Elis-Thomas (PC): My Lords, I am very grateful to my colleague in the adjacent barony of Llandudno, along with my colleague in the barony of Llanrwst, for introducing this topic. I speak of course, as the Lord of Nant Conwy—a fine historic barony in the history of Wales—but we will leave that for today. Before the Minister responds to the debate, let me say that I would encourage her to respond positively.

As noble Lords will be aware today, for the feast of St Edward the Confessor holy communion in the abbey close to us occurs at his shrine, which unfortunately also includes the grave of Edward I—a place that I do not normally visit. But having visited that place this lunchtime has enabled me further to consider how appropriate it is that, at this time of the feast of St Edward the Confessor, we should continue our debate on the future of the nations of these islands. Such a debate is stimulated by the whole question of participation.

The Minister will be aware, because she and the noble Lord, Lord Bourne, were there at the time, that the Assembly is already empowered to spend money to promote its activities as a part of democratic participation. We did that alongside the Electoral Commission in the period before the last referendum. But these have been sporadic initiatives. What we want is a systemic way in which to ensure that there is automatic participation by the potential electorate before they get to voting age in democratic elections, by being clearly included and prompted. There is no coercion here; it should be seen as part of citizenship that the opportunity to participate is presented to the potential voter.

I remember an occasion when I took part in one of these promotion things when I visited my native county of Carmarthenshire and spoke to young people in primary school, whereupon we had a real vote in the classroom itself. At the end of the day, apparently, one of the young pupils went home and told her parents, “A man from Cardiff whom I had seen on television came to my school and told me to tell you that you have to come out to vote”. So there are dangers in these things. The more we can make this acceptable as a painless and democratic part of our electoral system, the better. This might be the first opportunity for the Minister to accept an amendment in principle and bring back an even better one on Report.

Lord Tyler (LD): My Lords, I am delighted to add my signature to this group of amendments. Although I am very proud of my Celtic ancestry in a different part of the United Kingdom, I am not Welsh, not a lawyer and not even a Methodist local preacher. So I can be incredibly succinct in saying that what is so important about this group of amendments is that it is based not on any theory but on practical experience both in Northern Ireland and now in Scotland, as my noble friend Lord Roberts has said. I hope that, in that spirit, the Minister will be able to accept these amendments in toto because they do not in any way

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extend into a new area. They simply take advantage of the practical experience we have had in other parts of the United Kingdom.

Lord Howarth of Newport (Lab): My Lords, given the very disappointing levels of registration and turnout among young people to which both the noble Lord, Lord Roberts, and my noble friend have referred, we clearly need to be a lot more energetic and imaginative in the ways in which we seek to engage young people in our democratic processes. I find the proposals in these amendments very attractive, but I wonder whether the Minister, or the noble Lord who moved these amendments, would offer any thoughts on two issues.

The first is that it is going to cost money. The noble Lord, Lord Roberts, suggested that these processes could be carried out even, perhaps, at a profit. I would be grateful if he could clarify how this might occur because, if we ask electoral registration officers to take on additional responsibilities and to become busier, it is likely to cost money. In this time of austerity, when local authorities are operating within such extremely stringent financial limits, there are questions about priorities. When local authorities are finding it extremely difficult to carry out the responsibilities that they wish to do in relation to education, social services, housing and so forth, where would the pursuit of improved levels of electoral registration best lie within their scale of priorities?

The other issue on which I would be interested to hear the views of the Minister and of the noble Lord is whether we should move to giving the vote to young people at the age of 16. Of course we want to encourage young people to participate in our democracy. Many young people would wish to do so and feel ready to do so at 16. When I was the Member of Parliament for Newport East and used to hold meetings with sixth-formers in my constituency, I was quite surprised to find how many young people had their doubts as to whether it was appropriate to lower the voting age to 16. I would be interested to hear the thoughts of noble Lords opposite as to whether that sentiment has changed in the 10 years since I ceased to be a Member of Parliament for a Welsh constituency and whether, if we enfranchise people at 16, we will see them positively engaging in democracy with that new opportunity.

Lord Lexden (Con): My Lords, I am glad to follow the noble Lord, Lord Howarth of Newport, whom I have known personally and respected for many years. I strongly support Amendment 20 which provides the key to securing a marked and rapid increase in the number of young people registered to vote. Time and again, the need for effective action to tackle the acute problem of underrepresentation among the young has been highlighted, not least in the reports of the Hansard Society of which I have the privilege to be a trustee.

Across the House we support the marvellous organisation Bite the Ballot, which is bringing determination and dedication to the task of getting many more young people on to the register, as we have heard. Surely we must give the organisers of Bite the Ballot the tools they need for this vital job. Nothing, it tells us, is more important than the creation of a sustained and lasting partnership between electoral

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registration officers and schools based on the model developed in Northern Ireland. We have heard today from my noble friend Lord Roberts and others that this is the wish of the Welsh Assembly, too.

The case for such a partnership is surely overwhelming—it has been proved beyond all doubt in Northern Ireland. The Province has pointed the way. As a staunch unionist, I say: let Wales, and indeed the rest of the country, follow where Northern Ireland has led. It would be a tragedy if the United Kingdom as a whole failed to reap the benefits of what has been pioneered in Northern Ireland—a point that I hope my noble friend on the Front Bench would be particularly sympathetic towards, given her dual responsibilities in Wales and Northern Ireland, and I am quite convinced that St Edward the Confessor would be on our side.

Lord Richard (Lab): My Lords, perhaps I may say a brief word. Following the noble Lord, Lord Tyler, I should perhaps declare an interest. First, I am Welsh; secondly, I am a lawyer; and, thirdly, I am not a Methodist minister but my grandfather was, so I suppose that that qualifies me to speak on this amendment. I do so for one basic reason, which is to assure the Government that there is very warm cross-party support in the House for these amendments. When the Minister replies, I hope that we shall not hear, as we have on many occasions on the Bill so far, that this is not the right time to do it. It seems to me to be absolutely the right time to do it. Indeed, if you are looking for a better time to do it, it will be difficult to find one. With elections looming for the Assembly in 2016, it seems to me absolutely right that we should go down this route now.

The desirability of the amendments is perfectly clear. What is proposed is not based upon anything fanciful; it is based upon practical experience of the way that it has worked in Northern Ireland. There is also some evidence in the United States that this type of approach is effective, and I cannot see for the life of me any reason why it should not be introduced in Wales in time for the next election. I hope that the Minister is not going to get up and say merely that it is not the right time to do it; I believe that the House thinks that it is.

The Parliamentary Under-Secretary of State, Wales Office (Baroness Randerson) (LD): My Lords, there must be, and clearly is, concern across the Chamber about the low engagement of young people in particular with our democracy and with civic life. However, I have to make the point to noble Lords that registration in itself does not mean that young people vote. Experience in Northern Ireland—and, as my noble friend Lord Lexden made clear, I am very familiar with that experience—has shown that voting does not necessarily follow from registration. Therefore, I think that we have to work very hard at what is a complex issue which goes beyond simply having to ensure, quite rightly, that more people vote.

Lord Richard: Before the noble Baroness leaves that point, it is perfectly true that if you register, you do not necessarily vote, but it is also true that if you do not register, you cannot vote. With great respect, we are talking here about the qualifications for voting.

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Baroness Randerson: I think that the noble Lord misunderstood what I was saying, which was that this is a very complex problem that goes well beyond these amendments, and is one of which the Government are very well aware.

My noble friend’s Amendment 19 would impose a duty on the Secretary of State to make regulations which require government bodies to provide registration officers with personal data. Registration officers could then use this information to add people to the electoral register or make contact with them in order to obtain the necessary information. Amendment 61 is consequential on Amendment 19, and Amendment 20 inserts two new subsections into Section 9A of the Representation of the People Act 1983, in order to place duties on registration officers in Wales to ensure that they focus their registration efforts on specified groups, particularly young people, disabled people and people from certain ethnic groups.

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The Government are committed to increasing democratic engagement and the levels of electoral registration. I would like to take this opportunity to thank my noble friend and to congratulate him on his work in this area. While the Government strongly support and share the noble Lord’s intentions, we cannot accept these amendments today for a number of reasons. However, that does not mean that we are unaware of the need to take action to address these issues, and I wish to explain the action that is being taken by the Government at this time.

The proposals in Amendment 19 do not differentiate between those who are already on the register and those who are not, but simply require government bodies to send specified information to registration officers. To set up this type of system and to introduce the infrastructure to allow different government bodies to securely—please note that word—share information with registration officers would be costly, as was made clear today by the noble Lord, Lord Howarth. It would place a sizeable burden on those bodies.

It is important that we do not underestimate the issue of security. Having brought in the statutory instrument on these issues for Northern Ireland, I am very well aware that the issue of data security is at the forefront of people’s minds. I will give just one example. There is a category of elector who is anonymously registered for very good reasons, because they fear for their safety. It is essential that any system that is set up recognises and deals with those people who wish to be—and who have a right to be—anonymously registered. The campaign for anonymous registration was led in Great Britain by women’s organisations and women’s refuges, because of concern about a whole group of women who feared for their security and safety. That is the kind of practical issue that needs to be dealt with in order to introduce the excellent principles which lie behind my noble friend’s amendment.

There is a need to be able to distinguish between those who are and are not already on the register. Under my noble friend’s proposal, it is probable that government bodies would devote significant resource to sending information to registration officers about

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people who are already on the register. Section 9A of the Representation of the People Act 1983 already provides registration officers with powers to take all the steps that are necessary for the purpose of complying with their duty to maintain registers.

I am committed to local decision-making, as are this Government, and we regard local registration officers as those who best know their local area. We believe that this would be carried out most efficiently by registration officers, and that the solution should not necessarily be on a centralised basis.

The Government are already making far more effective use of data to improve the completeness and accuracy of the electoral register. We have already run three pilot studies and a complete nationwide data-matching exercise. During the transition to individual electoral registration, we expect that around 80% of those already on the electoral register will automatically be transferred on to the new individual electoral register, after their name and address are matched against government records.

Pilots have taken place, including at the Department for Education and of course the Welsh Department for Education and Skills, the DWP, Royal Mail, and the Student Loans Company. Subject to parliamentary approval we also intend to run pilots in late 2014 and early 2015 that will test the usefulness of DVLA data matching with existing electors and also for identifying individuals who are known to the DVLA who are missing from the electoral register.

There are of course two issues here. There is data matching to check that you have accurate information about those who are on the register, and data mining to spot people who are not on the register but who ought to be. The full evaluation of both these approaches will be available in the summer of 2015.

Lord Tyler: As my noble friend will know, I have been following the DVLA issue through the IER process for a number of years and I welcome what she has just said. But even more valuable than all these pilot studies would be to look very carefully indeed at the very recent experience in Scotland. The levels of registration, particularly among young people, exceeded anything we have seen anywhere else in the United Kingdom. One of the differences between Scotland and Northern Ireland on the one hand and England and Wales on the other is that there is greater direction in Scotland to the local electoral registration process to make sure that there is an equal quality of service at the lower level.

As I mentioned quickly in my previous remarks, I encourage the Minister and her colleagues to look very carefully indeed at the recent experience in Scotland. It is practical experience—it is not a pilot in a particular area. As the noble Lord, Lord Richard, said earlier, it gives added impetus to the suggestion that now is the right time to take a forward step in this area.

Baroness Randerson: My noble friend makes a good point. Of course, the Electoral Commission will be doing a report on the referendum in Scotland that will cover those issues.

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I recognise that there is considerable sympathy in this Chamber and beyond for the aims of Amendment 20. I assure noble Lords that I share them. However, the Government are already taking steps to increase the engagement and registration levels of traditionally underregistered groups. Five national organisations and every registration officer in Wales, as in England and Scotland, have shared £4.2 million of funding aimed at maximising the rate of voter registration as part of the transition to IER. I draw my noble friend’s attention to the fact that every electoral registration officer in Wales has received that funding—not just one. Cardiff received almost £25,000 in order to engage more with underregistered groups and Ceredigion received £4,290 in order to take that work on. The amounts given were based on a formula that related to the level of underregistration in every local authority throughout Great Britain and the number of 16 to 18 year-olds within that area specifically so that EROs could go into schools and do the engagement work that is encompassed in my noble friend’s amendment.

Perhaps I may also respond to his comment that it needs only a tick in a box—would that that were so. Unfortunately, there is a complex legal basis for voting. The form has to be set out in a particular way and it has to be of some considerable length. The tick-box would work in terms of expressing an interest in voting, but, as the noble Lord, Lord Howarth, pointed out, it means that you have to follow up on the person. It is to be hoped that if they have ticked a box, they would respond to a letter, but people often tick boxes and then do not respond to a letter, so they could well require door-to-door canvassing. Ticking a box sounds good and it works up to a point, but in itself it does not actually get anyone on to the register. Northern Ireland is indeed a case of best practice in our country. That effort was based on going into schools and getting young people to fill in paper forms. The crucial difference between Northern Ireland and the rest of the UK is that Northern Ireland has a paper-based system and we now have online electoral registration.

Perhaps I may return to the amendment. I know that the Electoral Commission sent a briefing to noble Lords setting out its view that while it strongly supports the principle of EROs working with local education establishments to encourage registration, there is no need for additional legislation to provide for this. I should point out that there is no obligation in Northern Ireland on the electoral officer to engage with schools and colleges. That work was done without any legal obligation or basis. However, in the light of concerns expressed by noble Lords and indeed in the letter referred to from the four party leaders in the Assembly, I will be happy to look at this issue again. However, I should say that registration officers already can and do visit schools, colleges and other locations in Wales in order to target under-registered groups and fantastic work is being done up and down the country by civil society organisations to find new ways of reaching a range of underregistered groups and encouraging them to register to vote. The Government are proud to fund this type of activity and I congratulate the wide range of organisations engaged in this work.

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I want to make a final point about Northern Ireland in response to the comments made about the low levels of registration among young people there. Yes, the figures were woefully low in part because they had not been doing the annual canvass. That has proved to be the crucial thing. The annual canvass must be maintained alongside all the additional work. However, given that registration had fallen to very low levels in Northern Ireland, considerable remedial work needed to be done.

The noble Lord, Lord Elis-Thomas, referred to the National Assembly. The National Assembly has an excellent record in terms of its outreach work with young people. I think that at one point the Assembly was the major tourist attraction in Wales. A large number of young people come into the Assembly to learn about politics and to hear excellent debates. That is the kind of thing I was referring to in the first sentence of my response. It is about more than registration—you have to engage young people and explain why it is relevant to them.

I have already referred briefly to online registration. It brings voter registration into the 21st century and it is particularly attractive to young people because it is easier, simpler and faster. More than 410,000 applications have been made online by people aged between 16 and 24 since 1 July this year. More than 90% of the users of the system have been either satisfied or very satisfied, so it is obviously an easy system to use. The Electoral Commission has further noted that a statutory change specifically relating to electoral registration officers in Wales would be complex to manage at a time when they are dealing with things throughout the UK on IER. However, in the light of the concerns and the consensus here today, I certainly undertake that, before Report, I will discuss with the Minister for the Constitution all the issues that have been raised. I will also discuss with the Electoral Commission the issues that it put forward in its circular to all of us saying that these amendments are not necessary.

4.30 pm

Lord Elis-Thomas: In the spirit in which the Minister has spoken, and in the spirit already referred to by colleagues of the all-party consensus emerging very strongly in the National Assembly—I draw the attention of Members of this House to the Motion that has today appeared on the Order Paper signed by the four party leaders, which will be debated in the Assembly on Tuesday—would it be possible for her to give an assurance that she will speak to the First Minister, the appropriate representatives, the Presiding Officer and so on in the National Assembly on this matter?

Baroness Randerson: The noble Lord has anticipated my next sentence. In the light of the letter that has been received, I will, of course, liaise with Members of the National Assembly, because it is very important to ensure that their views are taken into account. In the light of these points, I urge my noble friend to withdraw the amendment.

Lord Roberts of Llandudno: I am most grateful to my noble friend for her full reply. I understand her reluctance, but I do not accept it and I hope that on

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Report we will have a very different statement from her. Perhaps I may tackle one or two matters. First, over the next four or five years, we are going to face a referendum on whether we remain in Europe. If that referendum takes place on the register as it is, then half our young people will not be eligible to take part. There will be a general election next May, and unless we move immediately—there is no time to lose—our young people will not have a voice in that election. There is no time to waste. I know that there are “t”s to cross and “i”s to dot, but there is certainly no time for anybody—including the Electoral Commission—just to hope that this will go away. It will not go away.

Secondly—this is the most important point of all—what is the relationship between the Houses of Parliament here in London and the Assembly in Cardiff? Yesterday I asked the Electoral Commission itself who has the last word: is it the civil servants or the Electoral Commission or is it the parliamentarians representing us at every level? The answer, of course, is that it is the parliamentarians. I say to my good friend here that something must be done immediately to come to an understanding. If the Assembly in Cardiff has voted 41 to a handful in favour of this, if all four leaders of the parties there have voted and written in favour of this, then unless we do something, we could well create resentment in Wales that will cause us to have another referendum, this time not in Scotland but in Wales itself. Therefore, I urge the Minister—I know she will; I know her well enough—to move in immediately and perhaps by Report give us a glimmer of light, if not a big flashlight, on this matter. I beg leave to withdraw the amendment.

Amendment 19 withdrawn.

Amendment 20 not moved.

Clause 6: Taxation: introductory

Amendment 21

Moved by Lord Wigley

21: Clause 6, page 6, line 15, at end insert “and associated tax credits”

Lord Wigley (PC): My Lords, as well as Amendment 21, I will also speak to Amendments 22 and 23, all standing in the name of my noble friend Lord Elis-Thomas and myself. Amendments 21 and 22 are aimed at allowing the Welsh Government to introduce new tax credits as well as devolved taxes. That would mean that Wales was able to help target areas that require economic stimulation in one form or another.

Paragraph 4.6.8 of the Silk commission’s first report stated:

“In addition to the use of taxes to achieve policy outcomes in devolved areas, credits can also be applied so that activities are effectively subsidised. While existing tax credits such as the working tax credits (and in future the Universal Tax Credit) should remain UK wide, the Welsh Government should be able to introduce its own credits in relation to devolved taxes and through use of devolved grants and subsidies to promote investment and getting people into work”.

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I hope that the Government will therefore either accept these amendments or bring forward their own amendments on Report to achieve that end—unless of course the Minister can persuade me that some other power exists or is in the pipeline that will achieve that.

I turn to Amendment 23. At present, any devolved tax to be implemented in Wales must be agreed by each House of Parliament as well as the National Assembly. We feel that it is wrong that a party in the Welsh Government implementing a manifesto pledge should be prevented from doing so by Governments in London. If the objective of this Government is to get the devolved Government to accept full responsibility for their actions then surely they should be given full and undivided authority in such matters. Manifestos and devolved taxes are matters for Wales, and the UK Government should not interfere in them. This amendment therefore removes the requirement for each House of Parliament to agree to the devolved tax so that it is in the hands of the National Assembly. It would mean that the people of Wales were absolutely clear as to where responsibility lies. I beg to move.

Baroness Morgan of Ely (Lab): My Lords, the tax credits that currently exist are closely associated with welfare payments. The whole issue is integrated into the wider debate about welfare support which provides a basic living standard for people who are working and yet need state help. Introducing any amendment that would erode the provision of welfare in Wales would be a mistake—in particular, without that very comprehensive and structured debate about the implications in Wales. The Minister suggested that the noble Lord is talking about a new kind of tax credit. Could the noble Lord elaborate on what kind of thing he had in mind, beyond what currently exists?

Lord Wigley: If the noble Baroness refers to the Silk report, she will see the arguments made there. The whole point and ethos of the Silk report is to open out as much freedom as possible for the devolved authorities to develop ideas and even experiment with this area to reach the objectives that both she and I would wish they did. It is giving them more tools. I hope that those tools help them do the job.

Lord Howarth of Newport: My Lords, whatever the future structure of the United Kingdom, the union is surely to be based upon twin principles of solidarity and diversity. Tax credits are a principal structure of the welfare state. As my noble friend just now suggested, the welfare state is a fundamental underpinning of that solidarity. Given that in the last figures I saw only about 2% of the people of Wales do not wish to maintain the union, I very strongly suspect that noble Lords are a little bit ahead of themselves—not for the first time—and that the people of Wales would wish nothing to be done that would weaken the welfare state and undermine that principle of social solidarity that ought to underpin the union. I make this point particularly because great figures in Welsh political history were among the leading architects of the welfare state. Whether by accident or design, we should not do anything to undermine the welfare state and the solidarity

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that binds the people of Wales together with the rest of the United Kingdom through the welfare state and associated principles of fiscal redistribution.

Lord Newby (LD): My Lords, Amendments 21 and 22 seek to include a reference to “associated tax credits” as part of the power to add further devolved taxes. I thought that the noble Lord was going to discuss tax credits associated with devolved taxes. In respect of landfill tax, at the moment, existing site operators can contribute a percentage of their tax liability to environmental benefits and get a 90% tax credit. As far as devolved taxes are concerned, that ability will still exist. For that type of tax credit, the power is there.

I think that the noble Lord, Lord Howarth of Newport, was talking about welfare benefit payments. Welfare benefits are not covered by the Bill. There has been no proposal to devolve power over welfare benefits to the Welsh Assembly. I thought that the noble Lord made strong arguments about why that might be opposed. The Bill makes no provision for devolving discretion over welfare benefits to Wales for good reason, and the Government are not minded to change their view on that.

Amendment 23 would remove the UK Parliament from the process of creating further devolved taxes. The Bill enables the Government to devolve further existing taxes as well as enabling the Welsh Government to create new devolved taxes. Clause 6 requires that if either of these powers is used the order would need to be approved by this House and the other place as well as by the Assembly.

Lord Wigley: Where powers to devise and implement new taxes in Wales are devolved to the National Assembly and those taxes have an appropriate dimension where tax credits could be introduced, would the powers allow that?

Lord Newby: Yes, they would, just as for existing taxes. The same principle would apply to any further taxes that were devolved to the Welsh Assembly.

Clause 6 requires that if either of the powers devolving further existing taxes or enabling the Welsh Government to create new ones is used, the order would need to be approved by this House and the other place as well as by the Assembly. The amendment would remove the UK Parliament from this process so that the order would need to be passed by the Assembly only. That would mean that the Assembly could pass an order under which existing tax powers would be transferred from the UK Parliament without this Parliament having any say. Clearly, that cannot be right. Surely it is important that the process of tax devolution continues to take place in the constructive and collaborative manner that has led to this Bill. As a mere Englishman now grappling with what we do about devolution within England, I have found the Silk process extremely impressive and one that could possibly be successfully emulated in England. The follow-up to the Silk process, under which there have been discussions with the UK Government and parliamentarians about how to take that forward, has been extremely constructive.

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As for how we manage the existing devolution of tax proposals and take them forward, we have established the Joint Exchequer Committee, based on a similar body in Scotland, consisting of leading parliamentarians in Wales and the Treasury, specifically to look at how we implement the existing powers and at what further can be done. That would be one of the ways in which it would be sensible to contemplate adding additional tax powers. If Members of the Welsh Assembly have strong views about additional tax powers—and first they would have to express those views—they will then have a vehicle for discussing them. It seems to me that that is a very sensible way forward. Any change or devolution of powers over tax from the UK to Wales has, at the very least, implications for tax legislation in the rest of the UK, so it is only logical that the rest of the UK is involved in the discussions. It must be right that any future order-making process, whether initiated by the UK Government or the Welsh Government, should involve both the Assembly and Parliament. I hope that the noble Lord will withdraw his amendment on that basis.

4.45 pm

Lord Wigley: My Lords, I listened with considerable interest to the responses I have had, and part of the clarification has been helpful. Certainly with regards to the tax credit associated with any new taxes, that may come along. However, may I just say to the Minister and to the House—without in any way wanting to cut across what has been largely a consensus approach to this legislation—that the whole point of giving new powers to the National Assembly for Wales or indeed to the Scottish Parliament is to trust them and enable them to go on with their business. We had for a period after the 2006 Act powers to legislate in Wales but in every instance we had to get orders passed through the House of Commons and the House of Lords. In its wisdom, Parliament has seen that this is probably not the right way to do it—if you have a dog you allow him to get on with it and do not try barking yourself. In this regard as well, if the people of Scotland had been told that any powers that they will get over taxation will be second-guessed at Westminster and orders will need to be put through before they can be implemented there might have been some second thoughts in Scotland as well on 18 September.

I believe that there is a strong opinion in Wales that, while all the details of devolution for Scotland and for Wales may not be at the same place in their development and some details may not even be appropriate, the principle is that the elected Assembly in Wales, the National Assembly, and the elected Parliament in Scotland should have the clear-cut responsibility for what has been devolved and that people should be able to see that. Once you bring in mechanisms to second-guess and to veto you are cutting right across that approach. I realise the Minister will not be in a position to give me any authoritative response with regard to the similarity or contrast between the powers for the National Assembly and those for the Scottish Parliament but it is undoubtedly an issue that will raise its head again, and I invite the Government to give further thought to it. On that basis, I beg leave to withdraw the amendment.

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Amendment 21 withdrawn.

Amendments 22 and 23 not moved.

Clause 6 agreed.

Amendment 23A

Moved by Baroness Morgan of Ely

23A: After Clause 6, insert the following new Clause—


In the event that the power to add new devolved taxes under section 116C of GOWA 2006 is exercised, the Chancellor of the Exchequer shall undertake a review of the benefits of parity in the devolution of taxes between Wales and Scotland, and shall review the existing principles of tax devolution.”

Baroness Morgan of Ely: In this amendment we are looking at future-proofing the legislation. We are very aware that there is a fast-moving feast going on in terms of constitutional changes in Scotland so we need to look at how we future-proof it. That is why we have suggested that if any new taxes are devolved to Scotland—and I must say that we probably need to tighten up the amendment’s wording—we would like an opportunity to assess whether they could be offered to Wales as well. That is the idea behind the amendment.

We are conscious that things are changing very quickly and we do not want to lock ourselves in because of the timing of this Bill. Labour is very keen to ensure through our suggestion, which we will come to later, that Wales can vary income tax rates, for example, to 15p in the pound rather than 10p, which is consistent with our position in Scotland. That is not the position of the Tory party which has suggested that it wants to see 100% of income tax being devolved to Scotland. The amendment looks at this consistency in approach and would at least give us the opportunity to think about whether we might like to pick up other opportunities that may be offered to Scotland later; we have to understand that there will be an impact on other parts of the UK if income tax rates are varied. It is correct to ensure that we take the temperature of how devolution has changed between now and the time when the powers to vary taxation at a Welsh level are taken up.

It is interesting to look at the joint agreement that has been made by the parties and the Assembly. On the proposal that if, for example, air passenger duty for long-haul flights were to be devolved to Scotland and Northern Ireland, we would want to look at that. That is the spirit of the amendment: we need to understand that if they are getting extra powers it will have an impact on us. We need to think about how we would want to respond to that.

Lord Newby: My Lords, Amendment 23A seeks to place two statutory duties on the Chancellor of the Exchequer when a new devolved tax is created in Wales. The first would be to review the benefits of symmetry in the devolution of taxes between Scotland and Wales. This would effectively require the Government to assess whether a tax being devolved to Wales should

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also be devolved to Scotland, although the way in which the noble Baroness moved the amendment inverted Scotland and Wales.

The second duty would be to review the principles of tax devolution. These are three: it should have cross-party support; it should be evidence-based; and any devolution of taxation should not be detrimental to the rest of the UK. These are good principles, and I am not sure that we want to have a root-and-branch discussion of them. What the noble Baroness was talking about, however, were the circumstances in which Scotland gets more powers, and the formalisation of a structure under which the Welsh Assembly not only thinks about them but has a process for discussing those matters with the UK Government.

On the symmetry of devolution settlement, until now the Government have been clear that we consider devolution decisions for each country on their own merits. The existing arrangements provide flexibility for the Government to consider Wales and Scotland either separately or at the same time. However, the Scottish referendum result puts us in a new position in discussing devolution. Nobody seriously believes that we are at the end point in terms of devolution anywhere in the United Kingdom. Over the next year or two, we are clearly going to see a debate of an intensity that we have not seen in England at all, and have not seen in Wales since the Assembly was first established. We are talking about considerable potential changes. In these circumstances, it seems that the Welsh Assembly will be involved in those discussions, not least through the Joint Exchequer Committee if it has any specific proposals. There will be also be almost ceaseless debate in any constitutional convention, if one is established, or more generally in Parliament about what the future structure should look like.

I therefore think that the kind of formal review the noble Baroness proposes will be unnecessary. There will be no lack of opportunity for these issues to be debated. The challenge to the English regions and counties and to Wales is to produce a compelling argument for the kind of change that is required, and then to seek and obtain a political consensus for it. Whoever is in government after the next election will be faced with a situation in which there is a clear appetite for devolution in various respects. That will only crystallise into action when there is real pressure and a consensus in the nations and regions of the UK as to what that future of greater devolution might involve. With that in mind, I hope that the noble Baroness will feel able to withdraw her amendment.

Baroness Morgan of Ely: I thank the noble Lord. It is important to understand that, at the moment, we do not know what that process is. My concern is that if we do not get this down somewhere, it is possible that Wales will be left out of that debate, until a mechanism is devised. Ministers have talked eloquently about the mechanism that may be put in place but, at the moment, there is no formal structure. At this point, we are trying to make sure that there is a proper mechanism in place so that there is an opportunity for us to work out whether anything that is offered in Scotland is something we would want to take up in Wales.

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Amendment 23A withdrawn.

Clause 7 agreed.

Clause 8: Welsh rate of income tax

Lord Rowlands (Lab): My Lords, I wonder if I may briefly intervene before the Minister moves her amendments. I have a very modest amendment, Amendment 31, which has been included in this list. It addresses a completely separate point from the whole swathe of government amendments and I would suggest that we take Amendment 31 separately. I hope that that would be possible.

Baroness Randerson: I understand the noble Lord’s point but I am intending to speak to my amendments and then give way to the noble Lord to make his points. I will then respond separately. Although it is in the same group, there will be plenty of time for us to give separate attention to the noble Lord’s amendment.

Lord Rowlands: I appreciate the Minister’s offer but it is a very different point altogether. I think that it would disrupt the flow of the debate on the Government’s amendments if Amendment 31 was included and involved in it.

Baroness Randerson: Following the points that the noble Lord has made, we will uncouple his amendment and have a separate debate at that point.

Amendment 24

Moved by Baroness Randerson

24: Clause 8, page 9, line 5, leave out “a rate” and insert “rates”

Baroness Randerson: My Lords, I am delighted to be introducing this series of amendments. Concerns were raised across the Chamber at the previous stage of the Bill. The Government have listened and, as a result, have tabled the amendments that we have before us. These amendments seek to remove the lock-step from the income tax provision in Clauses 8 and 9, which has been subject to a great deal of debate during the passage of the Bill thus far.

The Bill would enable the National Assembly for Wales to set a single rate of income tax that would be applied to all three income tax bands if income tax devolution were approved in a referendum. These amendments would allow the Assembly to set separate Welsh rates for each band instead, as the Silk commission recommended. I said at Second Reading in July that the Government were prepared to revisit these arrangements, and that is what we have done. The lock-step has been debated at some length in both Houses throughout the passage of this Bill and we have listened to and reflected on the arguments that have been raised. Through these amendments, all three income tax rates would still be reduced by 10p in Wales, with the Assembly taking control of nearly half of all income tax paid as a result.

It would then be for the Assembly to set a separate Welsh rate for each band which would be added to the reduced UK rates. I believe that these amendments

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remove a significant barrier to devolving an element of income tax to Wales. Subject to their inclusion in the Bill, my hope is that the Welsh Government will now feel that they can call a referendum on income tax devolution as soon as possible after the Bill receives Royal Assent.

As a result of this Bill and the full devolution of business rates which we will implement next April, the Welsh Assembly will become responsible for raising around a quarter of the money it spends. By removing the lock-step, the Welsh Government now have no reason to delay a referendum. It is high time that the Assembly is given power and responsibility for raising significant amounts of its own revenue and thereby becomes more accountable to the people of Wales.

These amendments align the income tax provisions in the Bill with the Silk recommendations and show that the Government are prepared to listen to the arguments of those who disagree with us. The amendments show that we are prepared to be bold in progressing devolution in Wales. I therefore urge noble Lords to support them. I beg to move.

5 pm

Lord Wigley: My Lords, I am very glad to have the opportunity to speak in this debate and to welcome the step taken by the Government in moving their ground with regard to lock-step. The noble Baroness, Lady Randerson, will well remember that I expressed some fairly strong feelings at an earlier stage with regard to lock-step. We felt that it was an inappropriate restriction and I am delighted that the Government have seen fit to move on it.

Amendment 37, standing in my name and that of my noble friend Lord Elis-Thomas, is included in this bank of amendments. We had a very useful debate on Monday in relation to constitutional principles on which there was a lot of consensus. Although the Government could not necessarily immediately accept the points that we made, they undertook to look at some of them. I hope that the same spirit will be adopted in their approach to other financial matters as has been shown with regard to the lock-step.

Amendment 37 seeks to ensure that the Assembly will be able to levy the three Welsh rates of income tax as it sees fit. The amendment is drafted to ensure that the Assembly will get full responsibility for raising and spending one of the three largest sources of government income alongside national insurance and VAT. If we give the Assembly the power to control these rates, it will enable Welsh Ministers to create additional jobs, which we hope will lead to an increase in the Welsh tax base. That would be an incentive for investment in the Welsh economy—which it certainly needs. As I say, we welcome the fact that the lock-step has been removed, which will give the Welsh Government greater freedom.

Amendment 38 stands in the name of the noble Baroness, Lady Morgan, who will no doubt speak on it in a moment. I will listen carefully to the arguments that she will put forward but I have some sympathy with what appears to be the intention of that amendment. However, I will listen carefully to what she has to say, and will listen to the Minister’s response to

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Amendment 37 to hear how the Government intend to build on their intention to give maximum flexibility to the Welsh Government.

Baroness Morgan of Ely: My Lords, the Labour Party understands the principle of the need for accountability and the need for the Welsh Assembly politicians to have responsibility not just for spending money but also for raising it. Devolving an element of income tax will undoubtedly increase the financial accountability of the Assembly. It will enable the Assembly to fund more of the spending for which it is responsible and will allow the Welsh Government to vary the levels of tax and spending in Wales and, crucially, it will allow Wales to borrow against tax.

We focus in these amendments on issues of income tax. However, it is worth pointing out that this is just one tax. In context, in 2013 income tax was 26% of the total tax take in the United Kingdom. It is significant, visible and understandable, but it is worth remembering that it is only one tax.

Devolving income tax powers to Wales has never been a priority for the Labour Party and the Welsh Government. However, it is important in terms of positioning the Assembly in the right place in the long term. We should remember that it was the Labour Party which devolved income tax powers to Scotland, but only after asking the Scottish people in a referendum whether they wanted that power. We would have to undertake a similar referendum if Wales were to follow suit. I will elaborate on this further when we discuss that group of amendments.

We will not always be in this situation. We are future-proofing here. I am confident that one day the Welsh economy will grow. There are clear signs that the Welsh Government’s efforts in this area are already bearing fruit. However, we must be aware that the whole principle behind the concept of the UK as a political entity is that we are supported by a social system that is available to all. We must be careful not to erode that basic philosophy and so provide fuel to the nationalist fire. There is a £16 billion annual gap between what Wales raises and what it spends. We must not lose focus on this issue. This is the economic foundation stone of the UK.

What drives us in the Labour Party is not some ideological zeal to create an independent utopia in Wales, but a practical, hard-headed approach to what is best, in particular for those who are struggling on low incomes, are desperate to make ends meet and are often dependent on the state to keep them afloat. We must remember that Wales has a weaker tax base than the UK as a whole. We must be careful when devolving tax powers that we do not lose out. HMRC estimated that in 2010 there were 89,000 higher rate taxpayers in Wales. They represented 7% of all taxpayers and were responsible for 33% of all the income tax revenues raised in Wales. There were only 4,000 additional rate taxpayers paying 45p in Wales. I could practically name them—they were mostly Tories, I will let you know. On the whole, we must understand that our tax base is very weak and we must be careful when we go down this route.

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It is also worth noting that a very small proportion of revenues are raised by local taxation and the consequent tendency of Whitehall to wish to dictate how funds from the centre are used has seriously eroded local democracy and accountability. We must be very cautious and note that local revenue-raising should not go too far, since that tends to reinforce the regional disparities of income and wealth.

Tax differentiation can also lead to tax competition. In principle, this is not something that we encourage. We must be clear that we do not want to embark on a race to the bottom in relation to taxation. We are fearful that there is a hidden agenda on the part of the Conservative Party, which is for ever anxious to reduce the role of the state. The Conservative Party is committed to cutting taxes for the wealthiest people. Let us be clear: tax competition will lead to less money in the state pot, which means less money for our schools and hospitals.

The Conservative Leader of the Assembly, Andrew RT Davies, has said that he would like to make Wales into a “low tax economy”. He has pronounced proudly that he wants to cut just the top rate of tax. We must be aware that every time there is a tax cut, it is accompanied by a cut in services. It seems odd to consider this, at this moment in particular, in isolation from the discussions in the rest of the United Kingdom, and we need to consider what is happening in relation to the Smith commission in Scotland. That is why Labour would like to see this discussion occurring in the context of a broader constitutional convention involving the public and representatives of civil society. We must acknowledge that there is a disconnect between politicians and the public, and it is critical that we do not have a conversation about how money is collected and distributed from the distance of an ivory tower. However, the genie is out of the bottle and we need to respond.

Let us be clear that devolving income tax powers will not be a panacea for the economy of Wales. The chances are that income tax variations will not be significant. The previous Secretary of State suggested that he would like to see a 1p cut in income tax rates across the board. Research has suggested that that would cost £200 million. That would mean £200 million in terms of cuts to services—the equivalent of 7,700 nurses losing their jobs—in the hope that the economy would grow. That could happen but in the context of a Welsh Government budget of £15 billion it is hardly going to make a massive impact.

Of course, differential taxation of income would involve the need for a separate Welsh revenue collection mechanism that must be neither inefficient nor costly. The Government do not seem to be clear about the costs involved in establishing this mechanism. In Scotland, it is estimated that differential taxation would cost between £40 million and £42 million to set up. Can the Minister give some indication of how much it would cost to set up in Wales?

In anticipation of the Bill receiving Royal Assent, the Welsh Government have already set out in a White Paper how that mechanism would work. The Welsh Government and the National Assembly will have the ability to develop certain taxes shaped to the needs,

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circumstances and priorities of Wales. This is the first Welsh tax legislation in modern times. It is both historic and significant for Wales but we need to consider border issues, and I therefore turn to our Amendment 36.

We need to be aware of the complexity of border issues in relation to Wales, compared to Scotland. The Scotland-England border is not nearly as densely populated as the Wales-England border. Only 3.7% of the population of Scotland and 0.5% of the population of England live within 25 miles of the English-Scottish border. In Wales, the situation is totally different, with 48% of the population of Wales and 10% of the population of England living within 25 miles of the Wales-England border. There are more than 130,000 daily commuters. The fact is that introducing a variation in income tax could give rise to the possibility of higher taxpayers moving across the border in one direction or another. My understanding is that no Treasury impact assessment has been undertaken on this matter, although I understand that the previous Secretary of State said that a consultation has happened. Can the Minister confirm whether that is the case and will she commit to a Treasury impact assessment on that border issue?

I turn now to the lock-step issue. The Government have put down an amendment to remove the lock-step, thereby allowing the Welsh Government to vary increases or decreases to individual tax bands independently of one another. Again we would argue that this discussion ideally needs to be set in the context of a UK debate over the organisation of tax across the whole UK. To deal with this in isolation is inviting trouble, and that is why we need urgently to establish the constitutional convention. The public should have a greater say on where power should lie across the UK, including on the nature of tax devolution. Further devolution should not be piecemeal. The Minister referred to that in her comments on Monday. The notion of breaking lock-step is something that needs to be discussed in that broader context

5.15 pm.

It is vital that any new tax reform delivers the clearly expressed desire for increased powers in Scotland and prevents an increasingly asymmetrical devolution settlement which denies the Welsh people the same powers. We also need to acknowledge that the political weather has changed recently and there is an appetite for even further devolution within Wales. Labour is not opposed outright to a discussion about the future of lock-step, but we think that it has to be placed within that broader discussion. Labour said clearly that we would like to see the option of tax systems in Wales and Scotland being looked at together. We have tabled an amendment to that effect which would ensure that Wales, if it chooses, is not left behind as those new powers are debated for Scotland. That was the point of the parity amendment.

The Tory Minister in the House of Commons just a few months ago said:

“Income tax devolution must work within the integrated UK-wide income tax system … the pooling and redistribution of tax revenues is a key feature of our fiscal model and ensures that wealth is shared among the regions and countries of the UK. The income tax structure is a key mechanism for achieving wealth redistribution”.—[Official Report, Commons, 30 April 2014; col. 947.]

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The Command Paper specifically says that the Government are firm in their view that the income tax structure is a key mechanism to redistribute wealth across the whole of the UK, which is why the progressivity of the system is properly determined at the UK level. So I ask the Minister, what has changed since that debate in the House of Commons? What evidence has been received since that Second Reading debate to bring about such a stark change in opinion? The Government have always said that tax devolution should not benefit one part of the UK to the detriment of another. What has caused this Damascene conversion? We on the Labour Benches need to be sure that the answer is not in a hidden agenda to shrink the role of the state, with the introduction of tax competition which could lead to a race to the bottom, less money for services and a further erosion of the progressive tax system which is respected and understood across the whole country.

The whole premise of the income tax reform debate in Wales around the Wales Bill to date has been predicated on that model, which includes lock-step. As a result, the Government need to be very careful about rushing into a new model for income tax devolution without proper analysis and consultation. It is important that these matters are scrutinised and I am sure that the House of Commons will want to scrutinise this again in the Commons, rather than seeing a system that is announced from the stage at the Conservative Party conference. We acknowledge that there are issues with the lock-step system. Gerry Holtham described the income tax powers with the lock-step as, “virtually unusable”. He explained:

“The form of income tax devolution set out in the Bill is most unlikely ever to be used”.

This raises important questions about the suitability of lock-step if these income tax powers were ever to be enacted.

The Tories may be late converts to Labour’s arguments for devolution, but they should not jump the gun and rush constitutional changes with these back-of-an-envelope assessments. Labour is fully open to further discussions about income tax devolution. We made this clear in our submission to the Smith commission and have tabled amendments to the Bill calling for that symmetry to be respected.

I turn to our amendment, which proposes to extend the devolution of income tax, as set out in the Bill, from 10p to 15p. It seems that setting any rate of income tax devolution is difficult at this point in the discussion on constitutional reform, when we have that moving feast happening north of the border. By Report, we may have a clearer picture of what is emerging.

This amendment is in the spirit of the new move towards greater fiscal powers for Wales and Scotland. In delivering the potential for more wide-ranging tax-varying powers for Wales, this amendment would increase the financial accountability of the Welsh Assembly while facilitating greater borrowing powers than are currently planned. The amendment will help to deliver that symmetry that we are talking about between the devolution settlements in Wales and Scotland. Extending the devolution of income tax from 10p to 15p would

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give Wales control of 75% of basic rate income tax, more than 60% of all income tax raised in Wales, and more than one-third of the taxes that it spends.

We will later debate the metric used by the Government to determine the borrowing cap, which is currently £500 million. The UK Government insist that that has been predicated in reference to the level of income tax autonomy given to Wales. While we dispute this rationale, we nevertheless argue that, if they insist on this metric, extending the Welsh rate from 10p to 15p would allow the Welsh Government the potential for further borrowing powers in future. That greater scope for borrowing powers is vital if Wales is to invest in our future economy and mitigate against the lack of investment from the UK Government. We could borrow in order to fund key infrastructure projects such as the M4 relief road, which need to be invested in.

The Conservatives have now suggested that 100% of income tax should be devolved to Scotland. It would be interesting to understand the logic of why the Conservative Party wants that 100% of income tax devolved to Scotland and only 10p in the pound devolved in Wales. What we will see is a further asymmetrical approach to devolution and, ironically, with the lock-step being removed, Wales will in this Bill move further ahead than Scotland, which still at the moment has the lock-step in place.

Plaid suggested that the matter should be entirely determined by the Assembly, but we are still part of the UK and our tax powers will have an impact on the UK. Therefore, it is correct that the UK has a say in to what extent income tax powers should be devolved. Income tax and other direct taxes per head in Wales raised £5,500, considerably less than the UK average of £7,300, and nowhere near enough to cover our public service expenditure. I warn the Government to be very careful about how we proceed down the slippery slope on taxation. If we are going to go down this route, let us do it with our eyes wide open and be aware of any unintended consequences of what may happen if we devolve income tax powers to Wales.

Lord Howarth of Newport: My Lords, it must be right as a matter of equity that Wales should have the same powers to alter tax rates as does Scotland, but my noble friend is right to remind the House that the exercise of those powers could be a poisoned chalice. In the extremely unfortunate situation in which we find ourselves, in which the Government are pledged to retain the Barnett formula, it is very hard to foresee circumstances in which it would be in the interests of Wales to use such further devolved powers of taxation. So long as Wales gets an unjust and inadequate funding settlement from the Exchequer, not based on needs but based on population, Wales will be at a loss, and it would be very dangerous for the Government of Wales to accept that it is their job to make up the shortfall by raising tax rates in Wales. I think that that would lead to extremely unhappy long-term consequences for the economy and society of Wales.

So, although I support my noble friend in her amendment to create powers that would be comparable to the powers in Scotland, we should keep our eyes wide open as to the realities of this. I cannot foresee

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that, in the absence of reform of Barnett, there is going to be any possibility of a stable and acceptable new constitutional settlement for the United Kingdom. However, these are larger issues that we shall debate another day.

My noble friend is also right to remind the House that the nature of the border between Wales and England also imposes a very powerful, practical restraint on the scope for differentiating tax rates. If people who are living in Wales near the border feel themselves to be so penalised, so disadvantaged by differential tax rates in Wales as compared with England, a number of them will move their residencies across the border and that would be very detrimental to Wales. As far as I can foresee, the practicalities are pretty unattractive compared with the notional possibilities that we are discussing in this legislation.

Baroness Randerson: Noble Lords will have noticed that the pleasant agreement and consensus across the Chamber has disappeared in the last group of amendments. I thank the noble Lord, Lord Wigley, for his speech, bearing in mind that the transfer of powers proposed in his amendments would mean Wales becoming entirely separate in taxation terms. He will not be surprised to hear me say that I am not going to accept these amendments.

However, I wish to spend some time on the speech by the noble Baroness, Lady Morgan, and to express some considerable surprise. I took the trouble to reread what she said at Second Reading. The Labour Party’s views appear—to use a colloquial phrase—to be all over the place because of the considerable gap between what the noble Baroness said at Second Reading, what she is saying now, what the First Minister of Wales has said and what the honourable Owen Smith said in the other place. Name a person, name a debate and you can have a slightly different view. In fact, there is a huge gap between one debate and another.

The principle of accountability lies behind the proposal in the Bill to devolve an element of income tax to the Welsh Assembly. The noble Baroness asked me what the reason was for the Government changing their mind on the lock-step. The reason was quite simple. People such as the First Minister said that this power was no use, therefore they could not use it. They said that the lock-step was not a good idea. We listened to people and it seems that, across parties and across the country, there has been huge support for the removal of the lock-step except now, suddenly, in the Labour Party, which had condemned the lock-step as being fatally flawed. It therefore surprises me that, when the lock-step was proposed, the Labour Party did not make clear that it was totally opposed to the devolution of income tax, rather than simply opposed to the lock-step.

I want to take up a few issues that the noble Baroness, Lady Morgan, raised. She referred to the serious erosion of local accountability. That may be the case in Wales and, if so, it is down to the Welsh Government, because they have devolved responsibility for local government. However, looking at the pattern in England, there has been a big increase in the amount

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of local power and local discretion for local authorities and councils in England. I agree with the noble Baroness that there has been a contrast between the two countries. In Wales, there has been a process of centralisation; in England, there has been a process of decentralisation.

5.30 pm

I regret to say that the views expressed by the noble Baroness and the noble Lord, Lord Howarth, indicate that Labour is still wedded to the idea of being a high-tax party. It still does not take on board the basic economic fact that if you cut taxes, you stimulate the economy. I give the noble Baroness an example of something that I am hugely proud of as a member of the Government—the fact that we have raised the income tax threshold to £10,500. That means that the lowest paid in society are keeping much more of what they earn. It is an issue of social justice of which I am tremendously proud. The sooner the Labour Party accepts that that is of great benefit to the lowest paid, the better it will be for its stewardship of the Welsh Government. I give way to the noble Lord.

Lord Howarth of Newport: I am grateful to the Minister but does she recognise that, in the context of an unfair funding formula which simply fails to address the reality of the needs of Wales, Wales has less scope to cut taxes than other parts of the United Kingdom?

Baroness Randerson: I recognise that there is an issue with the funding formula but I think it is also possible to overestimate the level of unfairness. I believe that this week the honourable Owen Smith suggested that the gap in funding for Wales was £150 million per annum. That is a significant amount of money but in a budget of more than £15 billion it would not offer a total revolution for Wales. Nevertheless, I recognise that it is an issue that needs to be looked at in the context of other devolution discussions at the moment.

I turn to the questions asked by the noble Baroness. An impact assessment of the costs was published alongside the Wales Bill. It indicated that the estimated cost of setting up the income tax changes in Scotland was £40 million to £45 million. An updated estimate is now available of £35 million to £40 million, which is rather less than we initially thought. There has also been an updated impact assessment. The estimate of the annual running costs is £4.2 million, and that will be updated in due course.

The noble Baroness also asked whether we would agree to a Treasury impact assessment of the taxes on either side of the border. The key thing is that there are provisions in the Bill on the transparency of the whole thing and of the discussions between the parties. A joint Treasury committee has been established between the Welsh Government and the UK Government, and it is already in discussions. Welsh Ministers and UK Ministers are discussing these matters. That is the kind of detail that would flow from those discussions.

I turn now to the Labour amendment. Forgive me, but I find it quite difficult to understand the intellectual inconsistency of arguing against the removal of the lock-step, while at the same time arguing for an increase in the amount of devolved income tax from 10p to

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15p. I remind noble Lords that the First Minister said on several occasions that the lock-step was an inappropriate method of dealing with income tax devolution, and that this was unusable and unworkable. He did not say that he was opposed to income tax devolution. Now, apparently, it is dangerous as a mechanism to devolve income tax and, at the same time, it is also all right to devolve 15p but not 10p.

I believe that noble Lords will be surprised that the Labour Party is having so much difficulty in coming to a firm position on this. The noble Lord, Lord Howarth, exposed one interesting piece of inside information with his use of the phrase “poisoned chalice”. He said that the devolution of income tax could be a poisoned chalice for the Labour Party in Wales. It is called “government”. I leave you with that thought.

Amendment 24 agreed.

Amendments 25 to 30 agreed.

Amendment 31

Moved by Lord Rowlands

31: Clause 8, page 10, line 20, leave out from beginning to end of line 15 on page 11.

Lord Rowlands: My Lords, like many Members of this House, for a number of years I have had to read through Bills. In doing so, I eventually developed a habit that I cannot kick, namely that if I come to a clause or part of a clause that I cannot fully understand or appreciate and translate into the language of a lay man, I table amendments to delete those particular elements in the clause. I do this in the hope and the expectation that when Ministers reply they will tell me what it really means, and it will become crystal clear. I have to say that there have been occasions in the past when that has not happened, but I am sure that it will happen tonight and that we will have a clear view of what some parts of this clause are saying.

I must confess that I struggled with much of Clause 8. It is a very long clause; it rambles on for four and a half pages of the Bill. However, I was okay and I was getting there, until I hit new Section 116F on page 10. I was particularly intrigued by its subtitle, “Welsh taxpayers: Scottish parliamentarians”. I was intrigued to find out how this clause—presumably—seeks to define those Scottish parliamentarians who may end up paying Welsh income tax. I immediately seized the text to find out who these unfortunate—or fortunate—Scottish parliamentarians would be who could become liable to pay a Welsh income tax. I went through the text of new Section 116F from line 20 on page 10. We find in this new section that the Scottish parliamentarian is:

“An individual (T) who is a Scottish parliamentarian for the whole or any part of a tax year is a Welsh taxpayer for that tax year if—

(a) T is resident in the UK for income tax purposes for that year (see Schedule 45 to the Finance Act 2013),

(b) T meets condition C in section 116E for that year, and

(c) T meets either of the following conditions for that year.

(2) T meets the first condition if—

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(a) the number of days in that year on which T is a member as described in any of paragraphs (a) to (c) of section 116E(4), exceeds

(b) the number of days in that year on which T is a Scottish parliamentarian.

(3) T meets the second condition if—

(a) the number of days in that year mentioned in paragraphs (a) and (b) of subsection (2) are the same, and

(b) T meets condition A or B in section 116E for that year”.

I am sure now that every Member of the Committee who is here will know exactly who the Scottish parliamentarians are who are liable for tax.

I am quite good at the TimesCodeword, but I have not decoded this particular new section at all. I immediately seized the opportunity to read the usually helpful Explanatory Note on this particular new section. It should be illuminating and answer all my queries. It states:

“Section 116F(1) sets out that if an individual has been a Scottish parliamentarian in a tax year, they will be a Welsh taxpayer if they are UK resident for the tax year, have also been a Welsh parliamentarian in that tax year and can meet one of the two conditions set out in the section. Taken with section 116E(5) this means that, if an individual is a Scottish parliamentarian for part of the year, but not a Welsh parliamentarian in that tax year, they will be a Scottish (rather than Welsh) taxpayer, even if, for example, they also have a close connection with Wales”.

Did I read that right? Are we talking about a Scottish parliamentarian who would be liable if he or she was also a Welsh parliamentarian in the same tax year? Who is this amazing creature? Who has this amazing electoral capacity to serve in one tax year both as a Welsh parliamentarian and a Scottish parliamentarian so that he or she would then be liable to pay tax in Wales? I find it difficult to envisage such a person ever existing. Everyone talks about belt-and-braces draftsmanship and this must surely be it. I would be grateful, when the Minister comes to reply, if he or she will tell me whether they know of anyone who is likely ever to be a Welsh parliamentarian and a Scottish parliamentarian in the same tax year so that we might then know which Scottish parliamentarian may be liable for Welsh income tax.

I use this as an illustration because I sometimes find that in this House—and I was a strong campaigner in the other House—I occasionally rebel against parliamentary draftsmanship of this kind. All these cross-references make it almost impossible to read. Even an intelligent person who is used to reading legislation should not be faced with drafting of this kind. It would be a good idea, once in a while, for the House to say to the Government, “Take this back, not because we do not agree with the intent but because it is drafted in such a way that it is almost incomprehensible”. If we started doing that, maybe we would have Bills better drafted than this one is.

The Deputy Chairman of Committees (Lord Geddes) (Con): Having posed such a fascinating question, would the noble Lord like to move his amendment?

Lord Rowlands: I beg to move.

5.45 pm

Lord Richard: My Lords, I support my noble friend on this. I am not a tax lawyer and I have given thanks for that ever since I was called to the Bar. I am bound

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to say that I read this new section with incredulity. It is designed to cover a Scottish parliamentarian as well as a Welsh parliamentarian—Mr Mac ap Jones, I suppose we can call him. That individual is covered here in such a way that it is a masterpiece of almost Proustian complexity. Even for one who is reasonably familiar with looking at legislation, I found it almost impossible to understand. I did what my noble friend did and went to the Explanatory Notes, but they are almost impossible to understand, too. Why on earth are we legislating in this way? Some 40 years ago, I was a member of a committee presided over by the late Lord Renton on the drafting of legislation. It was an interesting committee and we said that the practice of legislating by cross-reference meant that you had to have half a dozen books open at the same time to get even a glimmer of understanding of the subject. We said that that was bad and something should be done about it. Of course, successive Governments said, “Yes, we agree entirely that it should be changed”, but it never is. It just seems to get worse as time goes on—until we arrive at the nonsensical drafting that appears in this Bill.

Perhaps I may make a simple suggestion to the Minister. It is obviously designed to deal with a person who may be working in one jurisdiction and has residency in another. It is meant to make sure that the person does not pay two lots of tax in two different jurisdictions. Why can we not have a simple residence test? I would suggest tentatively that the Minister should look at proposed new Section 116E, which states at the end of page 9:

“For any year, a Welsh taxpayer is an individual”,

and thereafter it sets out an enormously complicated structure. Why can we not say that in any tax year, a Welsh taxpayer is an individual who is resident in Wales? We could have similar rules for Scotland, England and Northern Ireland. With any luck, Mr Mac ap Jones would be successively reinterred and we need not bother about him again. Really, the way this has been drafted is too much. I agree totally with my noble friend that perhaps it is time for this Committee to say, “We do not like this drafting. We don’t understand the purpose of it, and we think it could be simplified so that people can understand it. The Government should take it away and try again”.

Lord Wigley: I want to join briefly with colleagues who have raised these points. Over many years I have often heard the argument made that matters of substance are passed through Parliament by order—by secondary legislation and so on. Here we have the reverse position, where there are matters that should surely be set out in orders. Ministers should be empowered to introduce orders to deal with a variety of circumstances that certainly do not warrant taking up the face of the Bill. If that were the case, there would be flexibility within the orders to deal with other cases which possibly have not been thought of. Putting this in the Bill in this way is surely a nonsense.

Lord Thomas of Gresford: My Lords, I am most grateful to the noble Lord, Lord Rowlands, for drawing my attention to these new sections, in particular new

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Sections 116G and 116H. I spend around 140 days of the year here, about 60 days in my family home in Scotland and the rest of the time in Wales. On these formulae, I am not liable to pay income tax in Wales, certainly not in Scotland, and possibly not in England, if we have similar provisions. Thank you very much. Devolve away.

Baroness Randerson: My Lords, I understand that this new chapter is not the easiest read. In fact, I found it quite good for getting to sleep on one occasion. However, it is important to recognise that this is a complex issue and has a direct relationship with things such as tax law, and when you get an indirect relationship with tax law. When you get into these things, the more you think about it, the more exceptions that occur to you to be considered.

The clauses in this Bill are very closely based on those in the Scotland Act and have been subject to the whole scrutiny process in that respect. I suggest that noble Lords think about how to deal with somebody who is a lorry driver or a shift worker. Every time you set a test, you can think of exceptions. Before the noble Lord, Lord Rowlands, thinks that being a Scottish parliamentarian and a Welsh parliamentarian in the same year is unusual, may I remind him that I call this the “Keith Raffan clause”? Keith Raffan was an MP in north Wales and then almost immediately an MSP in Scotland. He moved from Wales to Scotland.

Lord Anderson of Swansea (Lab): Did he hold both positions in the same tax year?

Baroness Randerson: We are talking about the situation in the past. Keith Raffan moved from Wales to Scotland; he also moved from the Conservative Party to the Liberal Democrats. The whole thing is a relevant example: the thing you would imagine would never happen has already happened.

Lord Rowlands: I am sorry; I do not know Mr Raffan’s parliamentary history? Was Mr Raffan both a European Member and a Member of the Commons in the same tax year?

Baroness Randerson: He was an MP and an MSP in the same tax year. I am pretty certain I am right, but the principle is that he moved from Wales to Scotland, straight from one job to the other.

Lord Richard: Is it not absurd that we should be legislating in this way for one person? Is it not absolutely ludicrous? Has there been a flow of parliamentarians across the borders in this way, or is it just this one individual? The Minister, with great respect, should take these measures back and look at them again and, if she wants to, simplify them and bring them back.

Baroness Randerson: This has been through the whole scrutiny process in relation to Scotland. If noble Lords wish to blame someone, I suggest they blame the Scots. They sat in here and in the other place and thought up a lot of complexities that had to be answered in the case of both this Bill and the Scotland Act. Just for the sake of clarification—

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Lord Anderson of Swansea:What is the answer to the good point made by the noble Lord, Lord Wigley, that this is appropriate for an order, rather than for the face of the Bill?

Baroness Randerson: That is a perfectly valid point, but we have it here in the Bill. I am also very conscious of the fact that noble Lords constantly complain that there is not enough in the Bill and that there should be more on its face and less in orders for the sake of transparency. On this occasion, you have total transparency. There is also, of course, the argument that we are talking about tax rules for individuals. In fact, if you have more on the face of the Bill, that could be said to be easier for individual taxpayers to follow.

May I finally make it absolutely clear to noble Lords that the noble Lord’s amendment would, in fact, mean taking away the simple test—which is the test, if you have only one home, of where your closest connection is—and replacing it with everyone counting days? Counting days is one way of dealing with it but not the simplest one. For most people, the simple thing is to ask, “Where is your home?” and, “Where do you spend most of your time?”. Taking away that option and leaving everyone counting days would possibly make life much more complex.

The noble Lord, Lord Richard, asked why not just say “resident in Wales”? I think noble Lords are well aware that the concept of where your residence is has caused a number of people a lot of trouble over the years. It is really important that we have clarity and absolute rules. There should be no doubt in people’s minds as to which rules they need apply.

Lord Richard: With the greatest respect to the noble Baroness, residence is a very well known concept in tax law. If you talk to taxpayers, particularly in areas such as the City of London, they know what their residence qualification is. They know that they have to establish a certain residence and that it is on the basis of where that residence is that they pay their tax. That is a much simpler concept than this.

Baroness Randerson: These rules flesh out what the term “residence” means in tax rules in relation to Wales. I hope noble Lords will accept that although the rules may not make pretty reading, they are workmanlike and, despite their complexity, they are clear, unambiguous and easy for people to follow.

Lord Rowlands: I find it difficult to believe that they are very easy to follow. I also do not believe that there is clarity here: there is a lot of confusion. I am delighted that the noble Lord, Lord Thomas, will become completely tax-free as a result of the other provisions in the Bill. What we are trying to show and expose is that we are getting fed up with the way in which Bills are drafted in this kind of way. The constant cross-referencing makes it almost impossible for a Member of Parliament or Member of this House to follow the Bill as closely as he or she would want. This amendment was tabled to cause this debate and I have no intention of forcing it to a vote because, of course, in the process I would

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take out other parts of the Bill that I would support. I hope that, if nothing else, when Ministers go away and talk to parliamentary draftsmen, they will say that there is great and bitter agitation against this type of drafting and legislation. If nothing else, this debate would then have served a purpose. I beg leave to withdraw my amendment.

Amendment 31 withdrawn.

Amendments 32 to 35

Moved by Baroness Randerson

32: Clause 8, page 12, line 1, leave out first “the” and insert “a”

33: Clause 8, page 12, line 1, after “year” insert “for the purpose of calculating the Welsh basic rate, Welsh higher rate or Welsh additional rate”

34: Clause 8, page 12, line 2, leave out second “the” and insert “a”

35: Clause 8, page 12, line 2, leave out “so set for a tax year” and insert “set by the Assembly for a tax year for any one or more of those purposes”

Amendments 32 to 35 agreed.

Amendment 36 not moved.

Clause 8, as amended, agreed.

Clause 9: Welsh basic, higher and additional rates of income tax

Amendments 37 and 38 not moved.

Amendments 39 and 40

Moved by Baroness Randerson

39: Clause 9, page 13, line 36, at end insert “for the purpose of calculating the Welsh basic rate, the Welsh higher rate or the Welsh additional rate (as the case may be)”

40: Clause 9, page 13, line 37, leave out “rate” and insert “rates”

Amendments 39 and 40 agreed.

Clause 9, as amended, agreed.

Clauses 10 and 11 agreed.

6 pm

Clause 12: Referendum about commencement of income tax provisions

Amendment 41

Moved by Lord Wigley

41: Clause 12, page 18, line 5, at end insert—

“(3A) The Secretary of State must lay a draft statutory instrument containing an Order under subsection (1) before each House of Parliament and the Assembly if—

(a) the First Minister or a Welsh Minister appointed under section 48 of GOWA 2006 moves a resolution in the Assembly that, in the Assembly’s opinion, a recommendation should be made to Her Majesty to make an Order under section 12(1), and

(b) the Assembly passes a resolution on a vote in which the number of Assembly members voting in favour of it is not less than two-thirds of the total number of Assembly seats.

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(3B) The Secretary of State must lay the draft statutory instrument specified in subsection (3A) within the period of 30 days beginning immediately after the day on which the resolution under that subsection is passed.”

Lord Wigley: My Lords, this amendment stands in my name and that of my noble friend Lord Elis-Thomas. I will also speak to the associated group of amendments on the Marshalled List. In doing so, I suspect that there may be differences of opinion across the Chamber on some of the matters involved in these amendments.

Amendments 41 to 48 are drafted to ensure that only the National Assembly can begin the process of calling a referendum on the commencement of the income tax provisions in the Bill. Amendment 41 would ensure that a referendum might be called if a two-thirds supermajority of Assembly Members approved it—and that, this being the case, the Secretary of State would be required to make the order within 30 days of it being approved. This is evidently a change from the 180 days in the Bill, which we believe to be an unnecessary delay.

Amendments 42, 43 and 44 are consequential and ensure that although an order would still need to be laid before each House of Parliament, only the Assembly would need to approve the referendum order. We believe that the responsibility should be fairly and squarely on the shoulders of the Assembly in this matter, as in other matters which we debated earlier.

Amendment 45 similarly ensures that there is no unnecessary delay in the proceedings. As currently drafted, Clause 12(6) allows the Secretary of State to consult on the draft order until whatever time he or she considers appropriate. Amendment 45 would remove that provision.

We have laid an amendment arguing that Clause 13 should not stand part of the Bill for the reason that, were our other amendments in this group carried, the provisions in this clause would no longer be necessary. It should be for the Assembly to determine whether a referendum is needed. This decision should not be subject to the approval of the Secretary of State.

Amendments 47 and 48 allow for a supermajority of the National Assembly to decide whether there should be a referendum on transferring income tax powers or whether—I emphasise this—simply to commence the provisions. We believe that if a cross-party consensus were reached in the Assembly, which would be needed in order to achieve a supermajority of Members, that institution should not be compelled to put it out to a referendum. If all the parties agree on these matters, why on earth go to the expense of holding a referendum? Scotland is apparently going to be given far-reaching new taxation powers without such a referendum. Why should we in Wales have one forced on us?

On Monday, I argued that the Assembly should have the power to hold a binding referendum on matters which are already within its competence. A referendum on tax matters should be an available option if the Assembly deems it necessary. That would be for the Assembly to determine. The principle contained in this group of amendments is the same: if the Assembly should determine for itself whether to put a

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question to the electorate, it should have the power to commence that process itself. Similarly, if it agrees that a referendum on a technical issue such as this should not be necessary, it should be within its power to commence the provisions itself and, at election time, to be held accountable to the Welsh electorate on that basis. I beg to move.

Lord Elis-Thomas: My Lords, this amendment follows the amendments to Part 1 that were debated on Monday. The intention is to establish the constitutional principle that it is by requiring a threshold of a two-thirds majority of Members of the National Assembly present and voting that we can maintain the checks and balances brought about by the change in devolution. Since we debated these matters on Monday there has been rapid movement in the interparty discussions both here in Westminster between the political leaders and, equally importantly—I was about to say more importantly—in Cardiff. Those discussions have resulted in the Motion on the Assembly’s Order Paper which will be debated on Tuesday. It will clearly set out the view of the four party leaders in the Assembly in relation to negotiating with the United Kingdom Government and to the interparliamentary negotiations on some aspects of the procedure that will be required to take these matters further.

The principle of interparty agreement in Cardiff leading to a request to the UK Government, and to the UK Parliament where relevant, should generally be welcome in this place and throughout the United Kingdom levels of government in response to the new times that we are in as regards devolution.

Interparty agreement has been the route that we have taken for the development of devolution in Wales since the conversion of the Welsh Conservatives—I see my friend from the Assembly, the noble Lord, Lord Bourne, sitting on the Front Bench—to a position of embracing devolution. My intention has always been that, regardless of what happened in Scotland or Northern Ireland, that should be the route followed in Wales. Therefore, when there are contentious matters, it is the Assembly, on a supermajority, that should decide these things. It does not need to have it imposed on it by Parliament or, indeed, by political parties outwith the Assembly.

I therefore ask the Minister to consider this amendment in a spirit of agreeing to serious discussions. The Prime Minister has said—we do not need to quote this continually—that Wales should be at the heart of the debate on devolution. If the Assembly’s making a request to the UK Government and Parliament is not the people of Wales speaking through their elected representatives and asking to be part of the discussion on equal terms, what is? How are we to express that will? The expression of that will is essential to the spirit of the new union, as the First Minister of Wales called it today in this city. In that spirit, I ask the Government seriously to consider the direction of our amendment.

Lord Elystan-Morgan (CB): I endorse with very great enthusiasm everything that has been said by my noble friends Lords Wigley and Lord Elis-Thomas,

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particularly on the question of unity. We as a nation have been blighted by disunity for so long. That refrain was taken up over the years by my old and very dear friend Lord Elwyn-Jones: our predilection to fissiparous division. He had a marvellous story, and I hope the House will indulge me for a moment. A shipwrecked sailor was cast on a desert island, the only survivor of the tragedy. He was there for years, but ultimately a ship drew into the bay. A boat came ashore, and there was great jollification all round. Before leaving the island, the sailor showed the boat’s crew where he had been living: his living quarters, where he had kept the animals and a cave with a cross over it. He said, “That is the church in which I worshipped on Sundays”. Somebody among the boat’s crew said, “But there’s another cave with a cross on it”, and he said, “I wouldn’t be seen dead in that place”. That is the sort of people that we have all too often been in Wales, and unity is very greatly to be welcomed. I have already paid tribute to the noble Lord, Lord Bourne. The Silk commission tried to find a reasonable, meaningful, least common multiple. The chairman, the assessors and the four representatives of the various parties succeeded in doing that, and long may that continue.

I turn to the question now of the amendment itself. I accept the principle that it is healthy, proper and courageous for the Welsh people to take on themselves these heavy fiscal responsibilities and that the decision should essentially be theirs alone. On the other hand, I would not wish the situation to develop other than through a referendum because I think that a referendum would clarify the mind—as Dr Johnson might have said—and would allow these issues to be examined in very great detail. I was disappointed in 1997 when the Labour Government, having been elected, made it clear that they would proceed with the issue of some form of Parliament for Wales and then said at the same time that there would be a referendum. I was disappointed but I was enthralled that we managed to carry that referendum, albeit by a slim majority. It gave us a sovereignty and a moral certainty in relation to the matter and I think the same would be true in this connection.

I am sorry that I missed the beginning of this debate—I was upstairs in a sub-committee dealing with European matters and I apologise for that—but I believe I heard the Minister say, with regard to a referendum, that she wished that the matter would be dealt with fairly quickly by the Welsh Assembly. I see that she nods. This is my plea. This is a crucial matter that deals with the very essence of whether a Welsh Parliament can succeed in a credible way. Everything turns in the first place on the validity of that referendum in so far as it reflects the wishes and understanding of the Welsh people. There can be no question of meandering into the dark in this matter, marching possibly to the beat of a distant drum while looking at some faint point of light in the distance. It is the same as a jury contemplating a serious case. There has to be certitude over exactly what the issues are and what the main relevant facts are in relation to them.

Let me come to the point immediately. There are many issues but the most important one is Barnett. The Government have said in relation to Scotland, understandably and perhaps in a mode of panic, that

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they will not touch Barnett at all. Barnett shall be utterly inviolate. Having said that, it means that it is virtually impossible to contemplate a situation where they will be willing to discuss Barnett in the context of Wales. It is one and indivisible—the bubble is either pricked or it is not. As far as the losses under Barnett are concerned, I know that various figures are mooted. The probability is that the annual loss at this stage is of the order of £200 million to £300 million and will increase as prosperity increases. Be that as it may, I ask the Minister to give these undertakings. First, the Government should appreciate that it is the legal right of the Welsh Assembly, and no other body, to decide whether there should be a referendum and when there should be one. Secondly, they should not contemplate bringing any pressure to bear on the Welsh Assembly in that regard—it should have a free, unfettered choice. Thirdly, there should be no question of asking the Welsh people to determine this momentous matter of a referendum without the Barnett matter having being settled fully, comprehensively and once and for all.

Baroness Morgan of Ely: My Lords, the Labour Party in 1997 made a promise in that first referendum which established the Assembly. In that promise we made it clear that we would not introduce income tax variations to Wales unless and until the people of Wales gave us permission to do so. Let us not forget that we won that referendum by a hair’s breadth. It would be a massive political mistake to go against that. I honestly believe that had there been a question about tax in that referendum we would not have an Assembly today. We have to honour that promise we made to the Welsh electorate. The referendum promise to the people of Wales is one of three locks we want to be sure are in place before tax raising or cutting powers can be used in Wales. If we have learnt anything from the Scottish experience it is that the public will get involved if it is something that impacts on them directly. There is nothing that impacts more directly than income tax so they are sure to get involved in this debate. We must do them the honour of respecting their views and we will not know what those views are unless and until we hold that referendum.

6.15 pm