Constitution Finance

The draft Wales Bill: The Presiding Officer and First Minister give evidence

30 January 2014

Article written by Alys Thomas, National Assembly for Wales Research Service

Image from Pixabay.  Licensed under the Creative Commons.
Image from Pixabay. Licensed under the Creative Commons.

The draft Wales Bill (“the draft Bill”) was laid in Parliament by the UK Government on 18 December 2013. A summary of the draft Bill can be seen here.

The House of Commons Select Committee on Welsh Affairs (“Welsh Affairs Committee”) is conducting pre-legislative scrutiny of the Bill. Interested parties were invited to consider:

  • Are the Government’s proposals, as set out in the draft Bill, in respect of both financial devolution and the National Assembly’s electoral arrangements sound? If not, how could the draft Bill be improved?
  • Do the provisions of the draft Wales Bill deliver the policy intentions of the UK Government? Could the wording of the draft Bill be improved or changed?

The Welsh Affairs Committee began taking oral evidence on Tuesday 14 January 2014 and intends to report in late March 2014.

On Monday 20 January the Welsh Affairs Committee sat in the Senedd and took evidence from  the Presiding Officer, Dame Rosemary Butler AM, the Chair of the Finance Committee,  Jocelyn Davies AM and the First Minister, the Rt. Hon. Carwyn Jones AM, and the Minister for Finance, Jane Hutt AM. A transcript of the uncorrected evidence can be seen here.

The Presiding Officer  welcomed the draft Bill and made some key points:

  • that it would be an anomaly for the Assembly to be given the powers over taxation and borrowing, but not the legal control to decide the process by which such powers are used;
  • that the draft Wales Bill should be amended to give the National Assembly for Wales legislative control to amend its own budgetary processes.
  • In light of the additional responsibilities that would be conferred by the draft Bill, it would also be appropriate for the Wales Bill to increase the number of Assembly Members to 80, as recommended by the Richard Commission in 2004.

The Presiding Officer welcomed the provision in the Bill that changed the official name to ‘Welsh Government’ and also expressed the view that the Government of Wales Act 2006 was too prescriptive and suggested changes to it, including:

  • the Assembly to be referred to as a Parliament (reflects its law-making powers) and the title of Presiding Officer to ‘Speaker’;
  • the Bill to be amended so that the Assembly is required to meet within 14 days, rather than 7 as it is at present, of an Assembly election to reflect the likelihood that the result may not deliver a majority for one party and to allow more time for coalition negotiations;
  • the Bill to reconsider the duties of the Secretary of State for Wales, many of which now appear outdated, and amend the Secretary of State’s power in relation to the Assembly such as:

– the duty to participate in Assembly proceedings as part of the consultation on the UK   Government’s legislative programme;

  • the Bill to remove the constraints on the composition of Assembly committees, which should be decided by the Assembly itself through its Standing Orders.

The First Minister said that the Welsh Government is generally welcoming of the draft Bill, although it identified the need for further discussion with the UK Government on some issues.

The First Minister noted that the maximum borrowing limit for capital is set at £500 million in the draft Bill, which compares unfavourably with Northern Ireland, at £2.2 billion, and Scotland, which is at the same amount. Furthermore, Northern Ireland has no power to raise revenue.

The First Minister said he was not minded to seek income tax powers until the question of fair funding was addressed. He referred to the work of the Holtham Commission which found that Wales is underfunded to the tune of £300 million.  He added that the report itself has never been in dispute, and the basis of the report had never been questioned.

In regard to the issue of the lockstep approach to income tax devolution (i.e. the lack of the power to vary income tax rates), the First Minister said he did not believe it will provide the Welsh Government with enough flexibility in the future. He concurred with Gerald Holtham’s evidence to the Welsh Affairs Committee which deemed it “unusable”. The First Minister said that the problem with a lockstep approach is that, if income tax is to be used as a fiscal tool, it is an immense straightjacket on the ability to exercise powers flexibly. He said:

‘I just do not believe that it would be the sort of power in its present form that would do any good, as far as the people of Wales are concerned. If there were to be more flexibility, and if the issue of fair funding were to be addressed, the debate changes, but we are not at that stage yet.’

Jane Hutt, the Finance Minister said that there was a broad party consensus in Wales which was reflected in the Silk Commission Report. In terms of those issues that the Welsh Government feel can be improved upon in the Bill: borrowing limits, Air Passenger Duty  and the lockstep, she said that discussions were on going with the Chief Secretary to the Treasury, Danny Alexander MP.

The First Minister was opposed to lifting the ban on dual candidacy, he felt the situation where it existed was confusing for the public. He also questioned why, if ‘double jobbing’, is an issue, why it is not being applied across the board (for example to MPs and MEPs).

The Chair of the Finance Committee, Jocelyn Davies AM, also gave evidence. She said:

‘I suppose that the budget process is a concern for us. The Welsh Government must be accountable to the Assembly and must need the approval of the Assembly for its borrowing. We expected to see inter-governmental negotiations respecting both constitutional responsibilities in terms of the limits and we wanted to see the prudential framework for borrowing. Of course, we also made a recommendation that the Government here should be allowed to issue bonds.’

The Welsh Affairs Committee has held further evidence sessions. The transcripts may be viewed here.

Other Assembly party leaders will be giving evidence at Westminster on Thursday 30 January 2014.

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