6.15 pm

Lord Wigley: My Lords, I am very pleased to follow the noble Baroness, Lady Grey-Thompson, and to indicate that there is all-party support for the amendments. Noble Lords will be aware of the letter which has been circulated by Bite the Ballot, signed by all four party leaders in Wales and pressing the importance of the matter.

We have heard in several debates about the degree of consensus in Wales, and this is another example of it. Where there is such consensus, we should build on it. The fact that education is a fully devolved matter and that it will now be possible, as the Minister indicated earlier, for those aged 16 and 17 to take part in the referendum on income tax, when it comes, underlines the need for us to maximise registration.

I very much hope that the Government will be able to respond to the points made and look forward to hearing the Minister’s response.

The Lord Bishop of Coventry: My Lords, it is 94 years since the voice of the bishops in Wales has been heard in this House but, as my noble Lord Roberts implied, I thought it right to consult the Church in Wales, and the Archbishop of Wales in particular, about the amendments, which seem to me to have a great deal of merit, to see whether their voice might be heard today indirectly, as it were. As a result, I can say that the Archbishop of Wales has asked me to convey to your Lordships’ House that the bishops of the Church in Wales are very supportive of the amendments. Indeed, I understand that they also support the extension of the franchise, as was proposed and discussed earlier, but I chose to concentrate my consultations on these amendments.

As are Members of your Lordships’ House, the bishops in Wales are very conscious of and concerned about low levels of political engagement in Wales. The Church in Wales has been working hard on its own structures to increase participation in its governance, especially among young people, so it is very glad to give its backing to the amendments as practical steps in national government both to encourage a higher level of voter registration, especially among young people, and, as a necessary corollary, to further political education in the schools and colleges of Wales.

On a more personal level, I believe that the bishops of the Church in Wales are right to support the amendments. I hope that what is done in Wales will model ways forward—somewhat along the lines described by the noble Lord, Lord Howarth—as laboratories of best electoral processes for the whole of the UK, as was underlined by the noble Baroness, Lady Grey-Thompson. We need ways to improve levels of voter

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registration and to educate and, moreover, inspire young people in the responsibilities and opportunities of political engagement.

The amendments seem to me to be of great help in hooking young people into the political process, so that when they are entitled, they are primed and ready to go.

Lord Tyler: My Lords, I am delighted to be a cosignatory of Amendment 15 in the name of my noble friend and others. I want to take issue to a very limited extent with both my noble friend and the noble Baroness, Lady Grey-Thompson, who I think are being slightly too pessimistic about the level of interest of young people in registration. The Scottish example is wonderful in that respect, but it is also true that Bite the Ballot, to which reference has been made, has made some real progress this year. It has been by making sure that it there is peer-to-peer encouragement—I do not mean Peer in the sense of Members in this House, I mean the real reference of young people to young people of the issues that are at stake. I have today had an Answer to a Question from the Minister for the Cabinet Office. My Question was:

“To ask Her Majesty’s Government what action they are taking to improve electoral registration rates among those attaining the age of 18”.

I will not read the whole Answer because it is substantial, but just two important paragraphs:

“To support the transition to Individual Electoral Registration, the Government has invested £4.2 million in 2013/14 shared across every ERO in Great Britain and 5 national organisations to support the costs of activities aimed at increasing the rate of voter registration.

The Government has also introduced online registration in Great Britain. As of midnight 28 October, 478,177 16-24 year olds had registered online”.—[Official Report, 10/11/14; col. WA4.]

In a relatively short period this is a success story. I do not think that we should be too depressed or pessimistic about this problem.

As the Minister will know, I have sat for some time on a small cross-party informal group advising the Electoral Commission. Therefore I take very seriously indeed the guidance it gives us. In its note on this part of the Bill and the amendments to the Bill, it says:

“We strongly support the principle of EROs—

that is obviously electoral registration officers—

“visiting schools and talking to young people about democratic participation. This should form part of their local strategies to promote electoral registration generally and to target those groups who are least likely to be registered to vote … All 22 EROs in Wales have specific plans in place highlighting how they will work with schools and the further education sector in order to engage with attainers and young people”.

I think there is a consensus across the House—certainly among all those who have already spoken—that this is an important issue. Maybe, however, the concern some of us have is whether it is appropriate for statute. Is it appropriate to be in the Bill to this extent and in this detail? Hence the very brief amendment that I endorse.

I accept, however, that my noble friend the Minister may well feel that the Government are already committed —in supporting the Electoral Commission financially, and in terms of guidance and instruction where that is appropriate—to make sure that what we are seeking

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will happen with or without this amendment. I therefore look forward with interest to hearing how the Minister feels that we can best achieve the objectives which I think we share throughout the House.

Lord Howarth of Newport: My Lords, is it not a principal purpose of education to enable young people to think for themselves, to form views on informed and discerning bases and to take good decisions? In no sphere of life is this more important than democracy. Education should be a preparation for democracy. That is why I support these amendments, and very particularly Amendment 14.

Lord Bew: My Lords, I support Amendment 13 very much in the spirit of the noble Lord, Lord Lexden, who has already explained the successes in electoral registration which have characterised the situation in Northern Ireland. I add one word of caution: in the last general election, 14 of the 20 constituencies with the lowest turnout were in Northern Ireland. There is still plenty of work to be done. The Assembly, I am glad to say, now has a good outreach programme. Only yesterday my colleague at Queen’s University, Belfast, Professor Rick Wilford, spoke to representatives of 50 schools in Stormont itself. The Electoral Commission is attempting to engage radically with young people.

The noble Lord, Lord Tyler, will not be surprised to learn that there was a great spike in the interest of young people in response to the Electoral Commission’s efforts after the decision was announced that votes would be available to those aged 16 in Scotland—a very obvious and clear spike of interest.

Broadly speaking, the noble Lord, Lord Lexden, is correct. There have been successes in the registration programme in Northern Ireland which are quite remarkable. I can see no reason why similar methods cannot work in Wales. I simply add that in struggling against the alienation of young people, a number of approaches will be necessary.

Baroness Gale: My Lords, I am again pleased to take part in this debate and it seems that, once again, consensus reigns across your Lordships’ House. I support these provisions because the idea is to empower our citizens to register to vote. We know that turnout in Welsh elections has been lower than we would like it to be, especially among younger voters in Wales. Anything that can be done to increase participation, especially among our younger people, is to be welcomed. We know of the success in Northern Ireland, which is a great example of how it can be done. We have seen how the young people of Scotland were enthused by the referendum. Obviously, they all had to register to vote and they took part in that referendum because they were excited by it.

I am pleased to say that the Labour Party will have a manifesto commitment at the general election on voter registration and that we will be putting forward measures to encourage young people to vote. The noble Baroness, Lady Grey-Thompson, made out a very good case for taking active steps and engaging at the school and further education level. If action were

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taken as set out in the amendments, it would mean that young people, people with disabilities and ethnic minority groups—those who are consistently underrepresented in Wales’s democratic processes and, at present, the least likely to take an active part in democratic life—could be registered to vote and, by voter engagement sessions, be encouraged to use their vote. We need to get those at schools and further education colleges to understand how important it is for them to register and to vote.

The four Welsh party leaders have signed a letter to the Prime Minister, the Deputy Prime Minister, the Secretary of State for Wales, and the Wales Office Ministers showing their support for these moves. We know that in a letter today, which other noble Lords have mentioned, they again urge your Lordships’ House to support these amendments. I will not read out the whole letter but it says that, “We the undersigned”—that is, the four leaders—are supporters of these voter registration amendments and therefore,

“ask you to incorporate this important provision into the Wales Bill”,

to set in train,

“easier, engaging and accessible voter registration for the people of Wales”.

If the Minister will take all these views into account, as I know she will, we could move forward on this and encourage our younger people and the underrepresented groups to register and vote.

Baroness Randerson: My Lords, I start by paying tribute to my noble friend’s very energetic campaign on this issue, which has certainly helped to raise awareness of the problem. Knowing about the problem is part of the way to solving it. This is a complex issue so, while I know that it is late in the day, I hope the House will forgive me if I take some time to explain why these amendments would not in themselves solve the problem. That is not the Government being complacent—far from it. We all agree that there is a problem that has to be solved but registration alone will not solve it. An answer has to lie in civic engagement and education as well as in a vigorous programme to increase voter registration. I want to explain the programme that the Government are undertaking.

6.30 pm

Amendments 13 and 14 are complex, detailed amendments but Amendment 15 provides that registration officers in Wales must arrange a voter registration session in each school and FE college in each academic year. It is similar to Amendment 14 but is very much simpler. I welcome the fact that my noble friend put down that amendment in the interest of simplifying this debate down to the core issues.

The problem of under-registration did not happen overnight and it will not be solved overnight. Its causes are varied and complex and it is linked both to increased population mobility and disengagement from traditional party politics. The most recent research by the Electoral Commission shows that levels of electoral registration have stabilised since 2011 following a decade of decline, but while the decline in the completeness of the register has been arrested, I want to make it clear today that the Government accept that this is not enough. That is why we have taken a number of vital

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and novel steps to transform electoral registration in this country. I set these out in great detail in Committee and I do not wish to take up the House’s time by repeating myself today but there are some additional things that I need to say.

In Committee I also committed to raising the concerns of noble Lords with colleagues in Government and more widely. Since then I have discussed them with the Minister for the Constitution, the Minister for Public Services in the Welsh Government and the Electoral Commission. In my meeting with the Electoral Commission it confirmed that the amendments tabled by noble Lords would be unhelpful in the case of data sharing, which I will explain in due course, and unnecessary in the case of registering young people. Indeed, it has provided additional briefing from which my noble friend Lord Tyler quoted.

In short, Amendment 13 could see EROs inundated by duplicate data from a range of sources held in different formats which crucially do not differentiate between those who are already on the register and those who are not. Dealing with the fallout from this would distract EROs from the important work they are already undertaking. They would simply be besieged by massive amounts of data. Those of us who have looked at electoral registers and delivered leaflets to houses—I suspect there are quite a few of us in the House today—will know that a slight variation in an address can occur. As an individual you know very well that the house is there and it is just a slight mistake but every mistake will be magnified within that data-matching process.

Amendments 14 and 15 were said in a recent Bite The Ballot briefing to empower EROs into going to schools. I want to clarify that EROs already have the power to go into schools. Indeed, as required by the Electoral Commission as part of the transition to IER registration, all 22 EROs in Wales have specific plans in place for working with schools. They all have engagement plans and they all include schools and the further education sector. EROs also now have access to ward-level data which are provided by local authorities to their EROs as part of local-level data matching. All EROs use the most appropriate data for their area. For example, in Cardiff, they might use parking permits. They would not be appropriate to use in Powys, where you would chose different data. Among the data that they use are education data. They are already looking at those issues. That allows them to focus their efforts on problem areas rather than using a blanket approach, as envisaged in the amendment. They also have access to demographic data which they can cross-reference with the ward-level data further to pinpoint those areas which require additional work.

Several noble Lords referred to the excellent progress made in Northern Ireland. I remind the House that there is no legal duty on EROs in Northern Ireland to go into schools, but they do it. The scheme was developed in Northern Ireland to tackle a specific issue, as the registration rate for that age group had plummeted to 8% in the middle of the last decade. This was in large part because the annual canvass was stopped in Northern Ireland. We have learnt from that mistake and we are not repeating it in Wales. The registration figure in Wales is more than 50%. This

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amendment would impose a specific statutory duty on the 22 EROs in Wales that they would have to fulfil, even if there was not a low registration rate in their area among this group. The EROs might have a different priority or a different group where registration rates were particularly low.

Electoral registration activities in Wales, as elsewhere, are funded by local authorities. Local authorities in Wales are part of the Welsh Assembly’s devolved responsibilities. As has been said, the leaders of the four main parties in the Assembly have indicated that they support this amendment, but I am not aware that they have committed the additional funding that it would require to make it workable. Without additional funding, this amendment would simply divert EROs from something else, as they have finite resources. This point was made strongly by the Electoral Commission in its briefing.

The noble Lord said that engaging young people early means that they are more likely to be engaged for life. I agree, but just registering does not provide that engagement. I am afraid that despite the success that is quoted in Northern Ireland, the figures do not bear out that story of ongoing engagement. In Northern Ireland, registration rates dropped dramatically by 15 percentage points to just 51% among 18 and 19 year-olds. That is sharply lower than in Wales and the rest of Great Britain, where 76% of 18 to 19 year-olds are registered. The schools initiative also appears to have had no discernable impact on turnout rates among young people in elections in Northern Ireland, an issue to which the noble Lord, Lord Bew, referred. Although the Northern Ireland situation has been successful in one aspect of this hugely complex problem, it has not followed through. Older young people, if I can put it that way—people in the next age group up—are not continuing to register and at the earliest age they are registered but they are not voting.

The Government have also provided additional funding to maximise registration in this financial year. Each of the 22 EROs in Wales received a share of this funding. Not all of them will have spent it on young people, but they are not the only group that the EROs need to target. Ministers are currently considering a further package of measures to maximise completeness among underregistered groups in the coming months. I hope that my colleagues will be in a position to make an announcement on this in the near future, which I hope will please my noble friend and provide confidence that the Government are determined to do even more.

While it is certainly for Parliament to legislate on issues surrounding electoral registration, education and schools are a devolved matter, as I have said. I urge the Assembly to consider what more can be done to use the school and college environment to educate, enthuse and engage young people in registering and voting. Citizenship education, which is on the curriculum in England but not currently in Wales, can play a vital role in preparing young people for the exercise of their democratic rights. In my discussions with the Welsh Minister for Public Services, I made it clear that I would be happy to ensure that we work closely together to facilitate this approach, but we do not feel that it is right to impose this on the Welsh Government—as this amendment would do—as this issue is devolved.

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However, I can undertake to discuss the issue again with the Minister when I meet him, which will be in the very near future.

I conclude by saying that I cannot imagine an electoral returning officer who, on being approached by a school or college, or a student council, to assist with this important task, would decline to do so. But that is only part of solving the problem and the Government are determined to look at the big picture. I hope that I have been able to explain satisfactorily to my noble friend why the Government resist his amendments and I hope that he is sufficiently reassured by what I have said about the positive steps that the Government are taking. We are continuing to tackle low registration rates among young people and other groups and I urge the noble Lord to withdraw his amendment.

Lord Roberts of Llandudno: My Lords, I thank the Minister for her reassurance. I now know that we can go ahead with the discussions between the Electoral Commission and the Welsh Assembly. Together they will make sure that every one of the 22 EROs in Wales fulfils that empowerment—I would call it an obligation—to enter schools to make sure that the numbers registering are far better than they have been in the past. In saying that, I pay tribute to Bite the Ballot and other organisations that have woken us up to the importance, not only in Wales but throughout the UK, of re-engaging young people with politics and life generally in the community. I look forward to Third Reading, when we might even hear some more from the Minister. I hope that we have, with this amendment, at least made an important intervention. Some might remember that I have put forward a Private Member’s Bill, also in the same direction. In 1911, there was a stand-off between another Welshman and this House; that was David Lloyd George. I do not compare myself at all with him, but at least we have today had a new approach. I hope that it will be of benefit not only to Wales—and we are going to keep an eye on this one—but also to the whole United Kingdom. I thank all noble Lords who have taken part in the debate and I beg leave to withdraw the amendment.

Amendment 13 withdrawn.

Amendments 14 and 15 not moved.

6.45 pm

Clause 6: Taxation: introductory

Amendment 16

Moved by Baroness Morgan of Ely

16: Clause 6, page 7, line 13, at end insert—

“(10) In the event that the power to add new devolved taxes under section 116C of GOWA 2006, or the power to add new devolved taxes under section 80B of the Scotland Act 1998, is used, the Chancellor of the Exchequer must undertake a review of the benefits of symmetry in the devolution of taxes between Wales and Scotland.”

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Baroness Morgan of Ely: My Lords, it is getting late, but I want to move this amendment, in which we seek to future-proof the legislation before us. It is clear that constitutional reform north of the border will move forward apace now that commitments have been made in the referendum—and, of course, these commitments must be respected. However, we need to understand that reforms of Scotland are likely to have an impact on Wales. In this amendment, we are asking the Government to undertake a commitment promising that if new taxes are introduced in Scotland we will need a review of the impacts on Wales and to probe whether there will be any benefits from introducing such measures in Wales.

I will give noble Lords the example of corporation tax, to which I am sure the noble Lord, Lord Wigley, will refer. If corporation tax were to be introduced in Scotland, there would undoubtedly be an impact on Wales. Let me be clear—the Labour Party does not want to see devolution of corporation tax to Scotland. It is hard enough to get large corporations to pay the tax that is owed already and the last thing that we want to see is a race to the bottom in terms of taxation across the UK with the consequent knock-on effect on the limited pot available for public expenditure. But the reality is that Labour is not currently in the driving seat in Scotland, and we are not sure what is going to come out of the Smith commission, so if corporation tax is introduced in Scotland and if it were to undercut corporation tax in Wales, or if we were to see a similar kind of thing being introduced on air passenger duty in Scotland, and being introduced and then reduced in Wales, it would be more difficult to attract inward investment into Wales.

We are asking for a degree of flexibility to be able to respond to whatever is introduced in Scotland. If we do not write that into the Bill, we could be waiting for a wholesale constitutional reform debate to be settled but, in the intervening period, Scotland may have started off that process of undercutting us on corporation tax, for example. Scotland may have whipped in and claimed advantage over other parts of the UK, and I do not think that we should allow that to happen.

We do not know where we are heading in terms of direction of travel on devolution. We do not know what the timetable is for constitutional reform, and we need this amendment as a belt and braces approach to protect Wales from the possible introduction of taxes that could be damaging. If the Minister is not going to accept this amendment, I would like to know how she proposes to protect Wales if the situation were to arise.

Lord Wigley: My Lords, I have listened to the noble Baroness, Lady Morgan of Ely, with interest. There are certainly arguments in support of symmetry in constitutional terms; they usually lead to various forms of federalism. If the Labour Party is indeed moving towards a federal approach, that is certainly an important development.

I wish to address Amendment 20 in my name, which would provide that, if corporation tax were devolved to Scotland it should certainly be devolved to Wales or be available. Noble Lords may recall that I tabled an amendment in Committee proposing that if corporation tax were devolved to either Scotland or

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Northern Ireland, it should also be devolved to Wales. I based that on the fact that all four parties in the Assembly had agreed that this was needed, and that the Silk commission said that corporation tax should be devolved to Wales if it was devolved to Northern Ireland. The response that I elicited from the Minister, Lord Newby, on that occasion, was entirely centred on the comparison with Northern Ireland, not with Scotland. He based his argument on two factors: first, that Northern Ireland has to compete with the lower corporation tax in the Irish Republic. Wales also has to compete with Ireland for footloose inward investment projects, tourism businesses that cross the sea, and in the agricultural food sector, for example, in cheese manufacture. We share a maritime border with Ireland so I refute his argument on that count.

Secondly, the Minister argued on the basis that the tax devolution to Northern Ireland is in order to help it to rebalance its economy, with the implication that Wales does not need to rebalance its economy. That is absolute poppycock. Wales has the lowest GVA per head of any nation or region in the UK, following the rundown of coal, steel and slate. We desperately need to rebalance our economy. I am seriously concerned that a Treasury Minister, for whom I have very great respect, should have been advised by Treasury officials that Wales does not need economic rebalancing.

The Government do not recognise Wales’s needs vis-à-vis Northern Ireland. Be that as it may, the Minister did not try to defend not devolving corporation tax to Wales if it was, indeed, devolved to Scotland. I understand that this has been raised in the context of the Smith commission that corporation tax should be devolved to Scotland. Certainly, in the pre-referendum pledge the impression was given that the devo-max model being touted would include fiscal autonomy, and that certainly includes corporation tax.

In tabling the amendment I am seeking an assurance that if Scotland gets control over corporation tax the question should be firmly on the agenda of similar provision for Wales. I hope that on this occasion I get a more conciliatory response from the Minister, not just for me but for all four parties of the National Assembly that seek such powers.

Lord Rowe-Beddoe: My Lords, I support Amendment 16, standing in the name of the noble Baroness, Lady Morgan of Ely. It is very clear what it says, and without trying to rehearse arguments previously made, I want to discuss the devolution of air passenger duty. I refer your Lordships to my register of interests with regard to Cardiff Wales Airport. The Silk 2 implementation stated that long-haul air passenger duty should be devolved. The arguments put forward in Committee have been considerably amplified—perhaps extended—recently by an unlikely ally in Mr Willie Walsh, the chief executive officer of International Airlines Group, which as noble Lords know, incorporates British Airways and Iberia.

In an article in the Times on 30 October—it was after our Committee meeting; it would be flattering to consider that Mr Walsh was actually watching our proceedings—he takes it much further and calls for a total abolition of this tax across the whole of the United Kingdom. It was a stunning headline but when

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analysing what he said, and doing a little more research, it is worth making a mark as to what was behind his statement. He said that this tax, permissions, or whatever it may be,

“should be consigned to the annals of history”.

The argument put forward is that the estimated £3.5 billion that the Treasury receives would be more than offset by a boost of some 0.5% to our GDP and the creation of some 60,000 jobs.

The interesting thing is that it is possible to avoid this tax, and people do. For example, a family of four flying economy to the United States pays £276. A Japanese visitor flying back home from London to Tokyo pays £81. This may well have a connection with the flattening level of Japanese visitors to this country, both business people and tourists, over the last 10 years. This tax is a disincentive. Holland got rid of it after 12 months and has never looked back, so there is something to be said for replacing this tax.

I may be proved wrong but I believe that Scotland could well be getting something out of this. We all know what happened in the Republic of Ireland but what we do not know and do not realise is the damage that is done to Northern Ireland because of the hundreds of thousands of people who start their long-distance flights south of the border as £276 is a lot of money for a family of four flying economy. I support the amendment. I am sorry to bring up air passenger duty again but at present it is, I am afraid, a rather hot subject.

Lord Howarth of Newport: My Lords, these amendments utter an important warning. It is one thing to devolve minor taxes, such as development land tax and landfill tax, it is another to devolve more significant taxes such as air passenger duty, of which the noble Lord, Lord Rowe-Beddoe, has just spoken. But when it comes to the major taxes such as income tax and corporation tax, very deep thought needs to be given to the viability of such devolution if the United Kingdom is still to hang together. It worries me very much that we can toy with such propositions without them having been thought through. My noble friend is absolutely right to insist that, in the event of further proposals for tax devolution being made, deep thought needs to be given to them, led by the Treasury, and there needs to be a responsible debate across the United Kingdom because we risk unravelling if we continue to play these games.

Baroness Randerson: My Lords, the issue underpinning Amendments 16 and 20 is symmetry between devolution settlements. Noble Lords have set out three guiding principles to support tax devolution. We believe that it should have cross-party support, be based on evidence and not be to the detriment of other parts of the UK. Based on the second of these principles, the Government have been consistently clear that decisions on devolution must be treated on their own merits using all the available evidence. This reflects the fact that what is right for one country is not necessarily right for another. The devolved countries are different and so, rather than seeking to achieve symmetry, it is more important that the three devolution settlements work in the best interests of the people of Wales, Northern Ireland and Scotland.

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I point out to noble Lords that there are obvious differences. Reference has been made to the land border between Northern Ireland and the Republic of Ireland. The nature of the border between England and Wales is very different from the nature of the border between Scotland and England. Differences of that nature do affect decisions on devolution. Above all, we are determined to work in the best interests of each of the individual countries. Most recently, for example, we have removed the income tax lockstep from this Bill.

In response to the questions asked by noble Lords, I refer them to the Silk 2 report. Corporation tax was part of those recommendations, so it will be a natural part of those four-party discussions. I stress that both the Prime Minister and the Deputy Prime Minister have pledged to put Welsh devolution at the heart of the debate, and that is what the Secretary of State and I are seeking to do in discussions with the four party leaders. I hope that noble Lords will believe that our timetable for those discussions proves that we are determined to press ahead. I therefore ask the noble Baroness to withdraw the amendment.

7 pm

Baroness Morgan of Ely: I thank the noble Baroness but we must consider and understand that whatever we would like for Wales, it may be influenced by what is happening elsewhere. What the amendment was asking for was simply a report to be written on the benefits of symmetry; we were not necessarily asking for it to happen. We were saying, “Please look at it; would it be an advantage to us?”. I am therefore disappointed that the noble Baroness cannot accept that position but I beg leave to withdraw the amendment.

Amendment 16 withdrawn.

Clause 8: Welsh rates of income tax

Amendment 17 not moved.

Amendment 18

Moved by Baroness Morgan of Ely

18: After Clause 9, insert the following new Clause—

“Review of Welsh funding

Sections 8 and 9 shall not come into force until a Welsh Government Minister has laid a report before the National Assembly for Wales containing a statement to the effect that the Welsh Government, with regard to the Statement of Funding policy, is content with the fairness of the arrangements for allocating funding from the UK Government to Wales.”

Baroness Morgan of Ely: My Lords, I turn now to the issue of fair funding for Wales. The Labour Party is keen for this Bill to pass because, for the first time, the Welsh Government will be allowed to borrow money. That is essential to help kick-start the economy, following years of government cuts, which have impacted in particular on the infrastructure budget—essential for investment and driving the economy of Wales.

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We agree that in order to help leverage this funding, Wales should have landfill tax and stamp duty tax devolved to it. As we suggested in Committee, the Labour Party does not object in principle to income tax devolution to Wales but we have a key concern. Before embarking down this route, which must have the support of the people of Wales—demonstrated in a referendum—we need to be sure that Wales will not be left worse off than it is now.

We have real concerns that the funding issue in Wales has still not been comprehensively addressed. We now know that the Barnett formula will remain in place, but there is widespread acknowledgement that it has done no favours to Wales. It does not reflect the needs of a nation that has an older, sicker population and a more rural make-up, thereby adding to the costs of providing essential services. We accept that negotiations on this issue have been taking place between the UK Government and the Welsh Government and that there is recognition that a floor should be put in place to ensure that Wales does not lose out. That process was started through a statement in 2012, which acknowledged the problem, but we are looking for a more definitive agreement.

The four-party, cross-party agreement that came from the Assembly in the past month asked for,

“an updated assessment of the current level and likely future direction of Welsh relative funding”.

The Assembly asked for those talks to be completed by January 2015, and this seems to be realistic in terms of a timetable, as the Secretary of State for Wales suggested. He wants a devolution settlement by St David’s Day, 1 March. We are therefore happy that we know that something will happen, at least by 1 March, in terms of reserved powers. We are looking ideally for another little present for us for St David’s Day.

The Minister suggested in a recent answer to a question on the Barnett formula in your Lordships’ House that, in terms of funding, Wales now receives 114% of the UK average. This is welcome information but it would be useful for us to have sight of this evidence. Would the noble Baroness or the noble Lord be willing to share the data that demonstrates that 114% has been reached? It is worth noting that the figure quoted by the Minister was at the very bottom of the range that Gerry Holtham, in his report, indicated was an acceptable and fair level of funding, which ran from 114% to 117%.

There were a few factors that determined the lower levels of funding that arose as a result of the funding formula. The 114% could be considered fair only if we did not undertake to include Welsh-language education provision in Wales, for example. They do not do that in England, so it is not included in the Welsh figures. Also, Wales has already made an upwards adjustment on council tax receipts. If England applied the same formula, Wales would be eligible for more money in the block grant. Those two examples alone mean that fair funding should probably be more like 116%, rather than 114%.

We also know that Wales will lose out once public expenditure starts to rise again, which is why we need this sorted once and for all with a long-term commitment. If we can secure a commitment to the floor being in

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place—even if that does not happen in practice until Wales holds a referendum on income tax powers, alongside the outcome of the continuing discussions on the off-set required in Barnett—I believe we will then be well on our way to securing a decent and fair funding outcome. However, we are not there yet, which is why, central to the introduction of income tax powers for Wales, we need to be assured that the Welsh Government are happy with the outcomes of those negotiations. That is why we have tabled the amendment.

Lord Howarth of Newport: My Lords, I support the amendment that my noble friend has just moved. It is as important as any other that we have debated today. I cannot see a satisfactory future for devolution in Wales until the Barnett nettle has been grasped. It is scandalous that no Government have dealt with this problem since the mid-1970s when the formula was introduced. Cumulatively, since devolution was introduced, Wales has lost out on some £5 billion of funding that it ought to have had, had there been a fair funding formula based on needs rather than on population.

It is true that the gap between what Wales ought to receive and what it does receive has narrowed somewhat in recent years, but we have to anticipate that, as economic growth continues to recover, so the gap in funding and the unfairness of funding will be exacerbated again. It is therefore imperative that there is no further procrastination on this and that the Government agree, with real urgency, to act to secure a just settlement for Wales. The Government were quick to respond to political pressures in Scotland. Political pressures in Wales have been expressed in gentler terms so far, but there will be a continuing sense of injustice that will undermine all the other efforts that we make to establish harmonious and satisfactory political arrangements on devolution for Wales. There are, of course, wider issues affecting the relationships between the nations and regions of the United Kingdom as a whole. I look forward to the Minister giving us a very positive response to the amendment.

Baroness Randerson: My Lords, I always enjoy the conversion of the Labour Party to the idea that the Barnett formula is unfair. The noble Lord, Lord Howarth, made a very important point, which is that it is scandalous that this formula has lasted for so long without anyone inquiring into it. I can assure noble Lords that the Government are aware of the issues and have taken measures to ensure that they are addressed.

This amendment would make the devolution of an element of income tax conditional on changes in funding arrangements. Specifically, the First Minister has raised this issue on numerous occasions, saying that he would not be prepared to recommend devolution of income tax unless fair funding were obtained. The amendment suggests that the Welsh Government have to confirm that they are content with the way in which funds are allocated to Wales from the UK Government before the element of income tax can be devolved.

This Government have already recognised that there has been convergence between the levels of funding in England and Wales since devolution. We took steps in

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the matter just two years after taking office. In October 2012, we set up a joint process with the Welsh Government to review the levels of funding in Wales and England in advance of each spending review. If convergence is forecast to occur over the spending review period, there will be a joint discussion of options to address the issue in a fair and affordable manner. That system worked well in advance of the 2013 spending round and confirmed that spending is not forecast to converge during the period up to 2015-16. It also established that relative funding levels in Wales were within the range that the Welsh Government’s own Holtham commission regarded as fair. In that context, the noble Baroness, Lady Morgan, quoted the 114% figure that my noble friend Lord Newby referred to last week. I am happy to write to her, and to set out further detail on that figure.

In relation to ongoing discussions about the funding situation, following the first meeting of the Joint Exchequer Committee between the UK and the Welsh Governments last month, we have now further committed to revisit jointly the review process in the light of the powers in the Bill. In other words, we have agreed to find a way of facilitating fair funding. The Government therefore believe that there is a sound basis for an early referendum to be called and I urge the Welsh Government and the Assembly to do so as quickly as possible.

I hope that I have assured noble Lords that the Government are aware of the issues on funding and are addressing them in discussions with the Welsh Government, who are fully conversant with our plans. I urge the noble Baroness to withdraw her amendment.

Baroness Morgan of Ely: My Lords, we acknowledge that the Government have taken certain steps to improve the scandal of Barnett in relation to Wales and we acknowledge that discussions are ongoing. We want the Assembly to be happy and comfortable with that funding process and to accept that it is a fair system, so I am a little disappointed that it should be so difficult to accept this amendment because that is what is being worked towards. It is simply saying that, before these things kick in, let us make sure that everybody is happy. I beg leave to withdraw the amendment.

Amendment 18 withdrawn.

Amendments 19 and 20 not moved.

In the Title

Amendment 21 not moved.

National Insurance Contributions Bill

First Reading

7.13 pm

The Bill was brought from the Commons, read a first time and ordered to be printed.

House adjourned at 7.14 pm.