Mesur Cyllid – Treth Teithwyr Awyr

Jonathan Edwards:
It is with pleasure that I introduce my new clause 4 and new schedule 1; I hope to press the new clause to the vote at the appropriate time.

The UK Government’s Commission on Devolution in Wales, headed by Sir Paul Silk, published the first phase of its report in November 2012. This phase concentrated solely on fiscal powers. Here we are, five months later, still waiting for the UK Government response, which was originally said to be due this spring. In a matter of a few weeks, the cricket season will be upon us and it will be summer, yet we are none the wiser about the intentions of the UK Government.

In short, the Silk commission recommended that powers over stamp duty land tax, the aggregates levy, air passenger duty for long haul, landfill tax and business rates be devolved in their entirety and as soon as possible. It also advocated a sharing arrangement for income tax. In addition, it argued—importantly—that should corporation tax be devolved to Northern Ireland, Wales should not be left behind. I reiterate the point that I made on the closing day of the Budget debate—that we are very interested to see the strong lobby, led by the CBI, coming from Northern Ireland. In total, the fiscal powers advocated by Silk for immediate devolution—the minor taxes—together account for about £1.2 billion of the Welsh Government’s budget.

Hywel Williams (Arfon) (PC):
Does my hon. Friend find it strange, as I do, that no one representing the Labour party in Wales is present to back the policy of the Labour Government down in Cardiff?

Jonathan Edwards:
I am extremely grateful for my hon. Friend’s intervention, as we had a debate in the Welsh Grand Committee on this issue, and Labour speaker after Labour speaker lined up to say that they not only were in favour of the Silk recommendations on minor taxes, but wanted them devolved immediately. They went even further, saying that the Finance Bill was the appropriate vehicle for achieving that.

Mr MacNeil:
I have a certain understanding of the word “immediately”, and I am sure that my hon. Friend does, too. Does he think that that understanding of the word is shared by Labour in Wales?

Jonathan Edwards:
That is the exact point. This was said to be the appropriate legislative vehicle for devolving airport duty to Northern Ireland, and if it is good enough for Northern Ireland, it is certainly good enough for Scotland and Wales.

Needless to say, the proposed powers fell far short of what Plaid Cymru was advocating as a party. We wanted a more comprehensive list of job-creating and economy-boosting powers, including VAT, corporation tax, resource taxes and capital gains tax. In the interest of compromise, however, and not second-guessing Silk, we are happy to proceed as the commission recommended—not least because the fiscal powers recommended by Paul Silk and his team in the commission’s report are desperately needed for the sake of the Welsh economy. The minor tax powers, the income tax sharing arrangement and the borrowing powers that would be triggered as a result would enable us in Wales better to deliver job-creating and economy-boosting measures and policies to help turn around the continuing dire state of the economy.

Yesterday’s unemployment figures showed a small drop in unemployment in Wales, but the number of economically inactive people went up by 7,000. The rate is still 0.4% higher than in the UK, and there are still nearly 50,000 more people unemployed in Wales than there were before the recession began, and another 50,000 more people who are under-employed. That is on top of the extra 50,000 public sector jobs we expect to be lost in the coming years on top of the 24,000 that have already been lost.

Last week’s research by Sheffield Hallam university and the Financial Times, to which my hon. Friend the Member for Na h-Eileanan an Iar (Mr MacNeil) referred, highlighted that more than £1 billion is due to be taken out of the Welsh economy over the next year by cuts to social security. This will have a devastating human cost, which is becoming all too clear.

The private sector is already on its knees in Wales due to the depression caused by the disastrous economic policies pursued by both Labour and Conservative Westminster Governments, which have destroyed the productive economies within the British state. It will deteriorate further as money is sucked out of local economies through further austerity. We are yet to see any realistic plan of how jobs and growth will come about in these depressed areas or any effort to counterbalance the austerity cuts, despite the high rhetoric of geographical rebalancing.

There are three important reasons why the Welsh Government should be empowered with fiscal powers as advocated by the Silk commission and as proposed in my new clause. First, it would make the Welsh Government more accountable. Secondly, it would incentivise the Welsh Government to concentrate on developing the economy to raise the necessary revenue to invest in public services. Lastly, an independent fiscal stream would enable the Welsh Government to access the borrowing powers they have agreed with the UK Government.

Labour’s proposals for substantial cuts in Welsh capital spending in the last Budget that it presented before losing office were supported in the Conservative-Liberal Democrat comprehensive spending review in October 2010, which cut the Welsh capital budget by 42%. Announcements in subsequent UK Budgets or autumn statements have meant that the final cut is about 39%. Although that is admittedly a smaller reduction than the one planned by Labour, it represents a huge hit for economic activity in Wales. The devolution of minor taxes and the triggering of borrowing powers would go some way towards filling the gap, enabling the Welsh Government to invest in infrastructure projects and generate economic momentum.

Hywel Williams:
I thank my hon. Friend for giving way again; he is being very generous. Does he agree that the term “minor taxes” is a misnomer, given that those taxes constitute a key that could unlock substantial moneys which the Welsh Government could invest in dealing with our economic difficulties?

Jonathan Edwards:
That is exactly the point. We have experienced twin processes in Wales. We have had the Silk commission, but there has also been a bilateral negotiation between the United Kingdom and Welsh Governments. The consequence of that negotiation was that the Welsh Government would be given borrowing powers if it had an independent fiscal stream. That is why my new clause is so vital for the Welsh economy.

In January, the Welsh Grand Committee debated the commission’s part II recommendations. Although there was a difference of views over the proposals for income tax-sharing arrangements, it was broadly accepted on all sides that the minor taxes recommendations should be implemented as soon as possible. I must confess that during that debate I became slightly confused. Unionist politicians were in favour of full devolution of some taxes, but opposed to a sharing arrangement between the UK and Welsh Governments in relation to income tax. My natural conclusion following the debate was that as there was a consensus at least in relation to the minor taxes, we ought to get on with devolving them swiftly rather than waiting for what could be years for a new Government of Wales Act.

The most prominent of the minor taxes is covered by the air passenger duty recommendation. It is difficult for us to table amendments relating to the other minor taxes at this stage because consideration in Committee is in the hands of the usual channels, from which my party is excluded, but we are at least able to consider the devolution of air passenger duty. I suggest that that should serve as a spur for the implementation of the other minor tax powers recommended by the commission.

Mr Mark Williams (Ceredigion) (LD):
Does the hon. Gentleman acknowledge that the Silk commission said that his package should be viewed as such—as a package? I share the hon. Gentleman’s impatience as we wait for the Government to respond to part I of the Silk recommendations, but we should nevertheless see them in that light.

Jonathan Edwards:
I think that the question for the hon. Gentleman is this: if he favours the devolution of fiscal powers to Wales, should he not walk through the Lobby with us rather than waiting for another Government of Wales Bill? When will that Bill come before the House? When will the legislative gap arise? If he is promising me that the Bill will be in the Queen’s Speech, we may consider whether or not to press new clause 3 to a vote.

If the Committee supports the new clause, I shall expect the Treasury to include the other minor taxes and business rates as the Bill proceeds, and to implement fully this aspect of the Silk recommendations.

Mr Elfyn Llwyd (Dwyfor Meirionnydd) (PC):
My hon. Friend is making a powerful case. Is it not strange that no Welsh Labour Members are present to debate air passenger duty, given that the Labour First Minister of Wales has spent many millions of pounds of Welsh money on buying an airport in Cardiff?

Jonathan Edwards:
My right hon. Friend makes an excellent point, to which I shall return. Fifty million pounds of Welsh taxpayers’ money has been spent on buying an airport, and no Labour Member from Wales is present this evening to vote for a proposal that would enable the Welsh Government to make the most of that asset. It is a disgrace, and I hope that the Welsh media are listening to the debate and will report on it fully.

Mr MacNeil:
Is the hon. Gentleman actually informing the House that Labour at Westminster does not want to give powers to Labour in Wales because it wants to leave those powers with the Tories in Westminster? Is that the situation with which we are dealing? Does Labour prefer to put power in the hands of the Tories rather than in the hands of Labour? Does Labour trust the Tories more than Labour trusts Labour? This is bizarre.

Jonathan Edwards:
I believe that that is indeed the case.

Admittedly the revenue gathered from the minor taxes, although not insignificant, is relatively small in comparison with the revenue that would be available through the income tax-sharing arrangement recommended by the Silk commission. That would make the Welsh Government responsible for 10p in every pound of income tax raised in Wales. It would enable the Welsh Government to increase their borrowing capacity substantially, and would strengthen the accountability test. My intention is to return to that at a later stage of the Bill’s progress. It would also undoubtedly incentivise the Welsh Government to grow the economy in Wales and provide responsibility for its expenditure. It is also clear that fair funding and the proper resolution of the blatant inadequacies of the Barnett formula, whereby we estimate that Wales loses out on an average of £500 million a year, are desperately needed, but that resolution must not be used to block the partial devolution of income tax or the minor taxes.

4.45 pm

Non-domestic rates, or business rates, are another minor tax that it would have been ideal to devolve to Wales in this Finance Bill, thereby incentivising local authorities in Wales to expand their economic bases. Long-haul air passenger duty was devolved to Northern Ireland in last year’s Finance Bill and the Silk commission has recommended the devolution of long-haul APD to Wales.

Ian Paisley:
I appreciate that the hon. Gentleman is clarifying the matter. The power has been devolved but it has not yet been implemented and, like him, I would urge our Executive to implement it. It will help business and the whole of the United Kingdom could benefit, including Wales, Scotland and England, if they get on with it.

Jonathan Edwards:
The hon. Gentleman makes a powerful point. That is especially the case in Wales, as the Welsh Government own our national airport.

It is clear that the Bill is the appropriate legislative vehicle to move this issue forward. There is a clear precedent and, as I said, I believe the Treasury should accept the amendment, as it includes all the minor taxes recommended by Silk.

The Labour Welsh Government have recently acquired Cardiff airport, and the ability to attract long-haul flights to Cardiff would significantly improve the airport’s competitiveness. Cardiff airport has 1.5 million people in its catchment area and long-haul flights could attract people from even further afield. The development of Cardiff airport could act as a spur to growth in the south Wales economy, bringing in greater foreign direct investment through better business links, in turn bringing jobs and growth.

Quite frankly, I am amazed that the Labour party has not tabled its own amendment. That goes to show that the First Minister has absolutely no influence over his bosses down here. On Tuesday of this week, he stood in the National Assembly telling the Members and the people of Wales that

“the most important thing is to ensure that Silk part 1 is progressed”.

I would expect Labour MPs to file through the Aye Lobby when we vote, or his authority will be fatally undermined—but as the Labour Whips have sent them home, that will not be the case.

The fact that the Treasury has not used the Finance Bill to implement Silk also shows once again that Wales is an afterthought in the machinations of the British state. Those powers should be devolved, yet there is delay even though it is apparent that there is broad consensus among the main parties who represent Welsh constituencies, as evidenced in the Grand Committee debate and despite the fact that the commission received representations from all parties. Each month that passes by without these powers being devolved, the Welsh economy further deteriorates with job and economic prospects diminished, hopes and dreams shattered and lives ruined.

Over Easter, I attended a major forum meeting organised by Carmarthenshire county council to move the proposed Llandeilo bypass project forward. Despite being high up the Welsh Government’s priority list as a transport infrastructure project, it is being held up as a result of the savage cuts to capital budgets in Wales. If the amendment is successful, it will enable the Welsh Government to access borrowing powers to move the scheme and many others like it forward. In Carmarthenshire there is cross-party support for the project, and I would like to close by kindly informing my political opponents that should they fail to support the amendment their grandstanding in supporting projects such as the Llandeilo bypass will be exposed and there will be a heavy political price to pay in my constituency—a constituency I believe the Labour party view as a target seat come the next Westminster election.

Pete Wishart:
No chance, not with you there.

Jonathan Edwards:
Well, I am grateful for that comment.

Plaid Cymru has made jobs and the economy its absolute priority. That is why we have tabled this amendment on air passenger duty. We want to create a modern and prosperous Wales, and unlike our political opponents we have little faith in London Governments of whatever colour achieving that ambition. That is why we want the tools to get on with the job ourselves without delay.

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