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Devolution of Fiscal Policy

Volume 586: debated on Wednesday 22 October 2014

1. What steps he is taking to ensure that the Welsh Government remain fiscally accountable following the next stage of the devolution process. (905488)

May I first pay tribute to my predecessor as Secretary of State, my right hon. Friend the Member for Clwyd West (Mr Jones), who worked tirelessly for Wales, particularly over the past year, working behind the scenes to ensure that last month’s NATO summit was such a success for Wales?

The Wales Bill devolves tax and borrowing powers to the Assembly and the Welsh Government, ensuring that they raise some of the money they spend. The new income tax powers are a tool to help the Welsh economy become more dynamic and make the Welsh Government more accountable. I call on the Labour party today to support holding a referendum as soon as possible.

I congratulate the Secretary of State on his much deserved elevation. Does he agree that the Welsh Government cannot be regarded as a genuinely fiscally accountable governing body until they are responsible for raising public money as well as spending it, and does he accept that this step forward in the devolution process is much more important than devolving power in any other policy areas?

I very much agree with my hon. Friend’s comments on fiscal devolution. I believe that this represents the next step for devolution in Wales. Devolving a portion of tax responsibility to the Welsh Government and the Welsh Assembly will create dynamic opportunities for the people of Wales and the Welsh economy, and I believe that the Welsh Government should seize those opportunities as soon as possible.

When the Welsh Government raise money and spend it, they will potentially be spending some of it on hospital services in Chester, Clatterbridge hospital or the Christie hospital, which are local to me. What does the Secretary of State think about the fact that under his proposals I, as a Welsh Member of Parliament, will have no say about services that affect my constituents?

The right hon. Gentleman is referring to proposals for English votes on English laws. There are important cross-party issues, but they also work in reverse. For example, constituents on this side of the border do not have a say in the Welsh Assembly about policies that affect services they use. He has to recognise that we currently have a hopelessly lop-sided devolution arrangement, as he and I, as Welsh MPs, and also Scottish MPs, have a say on laws affecting schools and hospitals in England, but English MPs have no equivalent say on services in Scotland and Wales. That must be addressed.

I, too, welcome the Secretary of State to his post and look forward to working with him. I also welcome the Government’s concession on the lockstep in the other place. With that in mind, does he agree that every step forward increases the accountability and maturity of the Welsh Assembly?

I agree with my hon. Friend. Giving the Welsh Government fiscal powers for the first time means that they have to raise money as well as spend it, which I think will lead to a much healthier political debate down in Cardiff on real responsibility. It is about not only deciding how to spend the money, but taking responsible decisions on how it is raised, and I think that is a big step forward in the political development of Wales.