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Lords Chamber

Volume 776: debated on Monday 7 November 2016

House of Lords

Monday 7 November 2016

Prayers—read by the Lord Bishop of Salisbury.

NHS: Primary and Community Services


Asked by

To ask Her Majesty’s Government what is their response to the Carers UK report Pressure Points: carers and the NHS, concerning problems faced by carers in accessing primary and community support services for the people they care for.

My Lords, we recognise that far too many people who could be treated at home or in their communities attend A&E. Sustainability and transformation plans are bringing together commissioners and providers to deliver the five-year forward view locally and will include radically improved out-of-hospital care through stronger integration and improved access to primary care.

My Lords, I thank the Minister for his response. The report identifies major problems for carers accessing primary and community support services for the people they care for, and who therefore have no real option but to take them to A&E. Many of these emergency hospital admissions could have been avoided with adequate social care support at home, better access to a district nurse or essential local support for carers themselves. On carers’ support, councils across the country are having to cut back on vital services. My own council in Surrey has a programme of cuts of 33% over three years. With the CQC’s dire warning that social care is at a tipping point, is it not time for the Government finally to acknowledge this and use the Autumn Statement to provide the increased funding and investment that is urgently needed for carers and the people they care for to get the support they deserve?

My Lords, I acknowledge that there is tremendous pressure in the social care system. Looking back over the last 20 years, not enough support has gone into primary, community and social care relative to what has gone into acute care. The sustainability and transformation plans are designed to bring together social care and healthcare. They are being published intermittently as I speak.

My Lords, the country owes so many carers an enormous debt of gratitude for what amounts to unpaid work they are doing on behalf of the state. The NHS website says to carers:

“If someone you know is in hospital and about to be discharged, you should not be put under pressure to accept a caring role”,

or to take one if you are already doing this as their carer. It continues:

“You should be given adequate time to consider whether or not this is what you want … to do”.

The carers report has found that three out of five carers say they felt they had no choice, and of those not consulted four out of five carers said it was way too early and that there were readmissions as a result. What will the Government do to ensure effective communication between hospitals and carers truly happens, so that there are no more unprepared discharges and carers get the support they need?

My Lords, delayed and inappropriate discharges are clearly a huge issue for the whole health and care system. Again, this is something the STPs are designed to address. The five-year forward view is explicit in saying that there are 5.5 million carers in England and their continuation goes to the very sustainability of the NHS. The importance of care is not in dispute. The Care Act, which the noble Baroness’s party and mine put through in the last Government, recognised that so as to give them parity of esteem with those they care for. There is no question but that better communication with carers would go a long way to improving the problems we have with inappropriate discharges.

My Lords, the Minister has acknowledged that discharge from hospital is an important time for carers. You can literally become a carer overnight when your relative is discharged without warning. The carers strategy is currently being refreshed. Would the Minister consider an input into the carers strategy that meant it was incumbent on the National Health Service to consult carers and get their agreement before discharges are made?

My Lords, I am not sure we could go so far as to say that one should always have their agreement—sometimes, discharges from hospital are incredibly complex and difficult—but there is no doubt, arising from the Carers UK report, that where there is proper communication with carers, the discharge procedure is much better for everyone, from the point of view of the carer, the patient and the hospital. If proper arrangements are not put in place, delays arise long after the patient should have been discharged home. It could be to do, for example, with a care package or altering the patient’s home.

My Lords, I have recently become a carer myself and therefore have experience of a number of hospitals. Why is there such a postcode lottery in terms of where one finds oneself? West Suffolk Hospital, where my partner found herself, has given excellent service and—we must not run it all down—we have had fantastic aftercare in that area, whereas the London hospital does not even answer the telephone. Why is there such a difference? She was also in a mixed ward, the use of which I thought had already stopped.

My Lords, I am surprised that the noble Baroness’s friend was in a mixed ward because their use is supposed to have stopped unless there is an absolute emergency when only one bed is free. Unless there were exceptional circumstances, it is very disappointing to hear that that happened. Perhaps the noble Baroness would like to write to me about it. On her first point, there is variation in pretty much every aspect of health and social care around the country, which is inevitable. To some extent, it is not a bad thing, because it drives up standards if those who are not delivering great care can see how best it can be done. The STP process is designed to build in best practice, but I am afraid that a degree of variation is inevitable.

My Lords, following the question asked by the noble Baroness, Lady Brinton, will my noble friend clarify whether everybody in need of care is the responsibility of the Government?

The thrust of the Carers UK report is that 5.5 million carers take huge responsibility for their loved ones and that the primary responsibility often falls—I think, rightly—on carers and families rather than on the Government.

My Lords, would the Minister care to join me in condemning Members of Parliament who have voted nationally to force local authorities to reduce services but have then attacked the local authorities because they wanted the libraries kept open, the bus services run and the care packages maintained—all of those things—while washing their hands of any responsibility?

I think the noble Baroness will agree with me that there are very difficult choices to be made when it comes to public spending. Sometimes, there is perhaps not always a high degree of consistency from our colleagues in the House of Commons.

The Minister mentioned discharge procedures. Unfortunately, carers often do not know about plans for discharge early in the period during which the one they care for is in hospital. As has been said previously, surely the discharge process should start at admission. If the carer is brought in at that point and works with people to make the discharge process work, it will be better. This has never happened. Does the Minister agree that it really must?

I entirely agree with the noble Baroness. Good practice means that as soon as a patient comes into a hospital, an estimated date for discharge should be agreed then with the carer, which would enable all the services to come together at the point of discharge. Where that does not happen, one can have long delays.

Japanese Knotweed


Asked by

To ask Her Majesty’s Government what progress they have made in controlling the spread of Japanese knotweed.

My Lords, we continue to explore bio-control options through the controlled release of the psyllid insect Aphalara itadori. Releases have been carried out at 18 sites this year using improved methods to increase the chances of establishment. Local action groups, some established with Defra support, continue to reduce or eradicate Japanese knotweed in several places in England. Community protection notices are starting to be used by local authorities to address the nuisance this plant causes.

I thank my noble friend for that reply. Is he aware that I first asked this Question nearly 30 years ago? There has not been a great deal of progress. Is he aware of the man who killed his wife and committed suicide as he could not sell his property because of knotweed? Also, many people cannot get mortgages on their houses because of knotweed.

My Lords, first, I acknowledge my noble friend’s tenacity in seeking to deal with this brute of a plant. On mortgages, the Royal Institution of Chartered Surveyors published an information paper only last year that aims to help valuers and mortgage lenders better understand the implications of this plant for residential properties. We anticipate that this will lead to a more pragmatic approach between all parties in dealing with it. On what my noble friend said about the tragedy, this invasive species of plant is of great concern and we need to deal with it where we can.

My Lords, while the Minister’s work with the psyllid, the jumping plant louse, gets going, will he encourage local action groups around the country to tackle this dreadful plant in the ways it can already be tackled—though that needs a lot of work? Is he aware of the good work being done in my own borough of Pendle by an organisation called the Environmental Action Group? It employs young people who might otherwise have difficulty getting jobs, trains them and does good local environmental work. Along with the Ribble Rivers Trust, it has set about the task of eliminating Japanese knotweed from our borough.

My Lords, I certainly acknowledge what is happening in the noble Lord’s part of the world and I am well aware of the group in Pendle. Many local action groups are working to treat this problem and there is very good national coverage. As examples of where, with tenacity, we can deal with this, the Norfolk local action group eradicated all Japanese knotweed on the River Wensum special area of conservation, while in Bristol Japanese knotweed on all publicly owned land is now 95% under management. There are a number of good stories to tell. My view is that wherever people are determined to deal with this, it can be dealt with.

My Lords, the Minister recently wrote to me confirming that Defra has a list of non-native species on its national eradication programme but that Japanese knotweed is not on it. Is that not evidence that the Government have rather given up on trying to eradicate it from our shores?

My Lords, I must be clear: this plant has been in the country since the 19th century and is very widespread—unfortunately, we sent it from Kew up to Edinburgh, thinking it was interesting. The prospect of eradicating every bit of Japanese knotweed is, alas, not viable at the moment but we hope the psyllid will, if successful, weaken the plant. That is the whole purpose of it. Certainly, where we have had species such as the Asian hornet, we acted immediately to deal with it. There are a number of species on the list that we want to eradicate immediately but I am afraid that a plant such as Japanese knotweed has been here rather too long.

I thought one of the Bishops might have come in on this Question to help us. However, since we have experts such as the noble Baroness, Lady Sharples, and the noble Lord, Lord Greaves, in the House, have the Government thought of appointing one of them as a knotweed tsar to get rid of all this?

My noble friend would make an excellent tsarina. The noble Lord will be pleased to hear that we constantly update officials in the Scottish Government because, as I say, this occurs across our nation. We need to deal with it, which is why where local action groups work together, they have been successful. They use herbicides, injections, glyphosate and all sorts of things, and they are making a difference where they want to.

We could do what Dame Roddick did; when she went to Nepal and noticed that all the cyclamen were stopping water from flowing, she bought them and turned them into paper. If we could find a use for knotweed, all the Boy Scouts in the world could rush around to get it, raising money for our local charities.

I am all for raising money for local charities but, ideally, I would much prefer to have our native species than this invasive species, which is harming our natural environment.

Is the Minister aware that our noble friend Lady Sharples is somewhat of a patron saint among gardeners for her sustained attack on Japanese knotweed and for telling Ministers to get knotted every so often when they give excuses?

I know that my noble friend is tenacious and persistent. I very much hope she will continue to keep Defra and me on our guard, making sure that we do all the things, such as the Check, Clean, Dry and Be Plant Wise campaigns, that we need to make ourselves ever more biosecure.

Children: Local Authority Care


Asked by

To ask Her Majesty’s Government what steps they are taking to ensure that children in local authority care are placed in a location close to their extended family and current school.

My Lords, the Children Act 1989 requires local authorities to take account of wider family and school networks when placing children. At 31 March 2015, 77% of placements were within 20 miles of the child’s home. However, all decisions are subject to the placement being the most appropriate way to safeguard and promote the child’s welfare. Ofsted inspects how well local authorities perform in this area, and where there are inadequacies, we will intervene.

My Lords, I am grateful to the noble Lord. He and indeed the whole House will understand that when the services of the state remove a child from its immediate family, that can be extremely distressing. It can be made worse if the child loses contact with its extended family, school, friends and familiar places. It can be made even worse when the local authority that places the child at a distance does not want its social workers to traipse up and down the country, and therefore contact is lost, and the local authority in whose area the child is placed will not know of its existence. This is an illustration of the saying, “Out of sight, out of mind”. Will the Minister remind local authorities that being a good parent to these vulnerable children is about more than just putting a roof over their head?

The noble Lord raises an extremely good point; I know he is very experienced in this area. Local authorities must notify each other when placing children out of area, and a placing local authority has a duty to visit looked-after children to supervise arrangements and to promote their welfare. Every child should be visited within the first week, and thereafter children must be visited at intervals of no more than six weeks for the first year, and in subsequent years visits must also take place at intervals of not more than six weeks unless it is a permanent placement, in which case it is every three months. The IRO must monitor the performance of the local authority, as does Ofsted. However, I will take back his concerns to make sure that local authorities are completely aware of their duties in this regard.

My Lords, will the Minister acknowledge that, for every child who goes into care, their trauma is added to because they want to know and understand what has gone wrong, and they want help to find the way forward? The more work is done with the family they have come from, the better the outcome will be. Some of the best outcomes come when children are placed in kinship care. Will the Government work hard to open up opportunities for social workers to learn more about who might be considered a kinship carer and make sure that that is the first option for children who come within the local authority sphere?

The noble Baroness makes a very good point. It is of course appropriate that children are placed with families and friends where possible. We have done a great deal of work in this area: the adoption support fund can help in this area and help the special guardians. The Family Rights Group and Grandparents Plus have also been funded in this area and we will continue to push in this regard.

My Lords, while I recognise the important steps that the Government have taken to improve the welfare of young people in care, will the Minister look at whether more could be done to stop children coming into care, as they increasingly do year on year? This makes it so hard to place them locally. For instance, will he look at the lowering today of the caps on benefits to families to see whether that has any impact on the numbers of children coming into care? To look globally, how do we help local authorities by strengthening families so that children do not come into care?

The noble Earl makes a very good point. I will certainly look at this and I am very happy to discuss it with him further.

My Lords, the noble Lord, Lord Laming, highlighted the potential implications of out-of-area care placements on young people’s sense of stability and belonging. Can my noble friend explain to the House how decisions about out-of-area placements are made and how rigorous the sign-off process is?

Yes, there is a very clear process for out-of-area placements. They have to be approved by a nominated officer and if the placement is a distant one, which means not in its local authority or a local authority adjoining, it has to be approved by the director of children’s services. Local authorities must consult with the authority in which children are placed and the independent reviewing officer—IRO—has a role as well. Ofsted will inspect local authorities for how well they are performing in this regard.

My Lords, does the Minister agree that children who are placed a longish way from home are more likely to run away to get home, and in the process they may be subjected to further abuse given their vulnerability on their travels home?

I am not sure whether we have evidence of that, but I certainly agree that, intuitively, it seems likely that that is the case. We are using the innovation fund to see whether we can encourage local authorities to have a more strategic view of where they place children, to be more aware of their particular needs and to try to ensure that they have a more joined-up approach to sourcing suitable placements for them.

My Lords, what are the Government doing about young people and children who are often difficult to place and end up in more than one kind of care? They very often end up in different schools and are not really being monitored throughout the system. Can he say what the Government are doing about monitoring these young people? Can he also say what opportunities for different kinds of care are being offered to many of these troubled young people?

The noble Baroness makes a very good point. It is well known that children in care quite often have a depressing number of placements. We are very well aware of this: in schools, we now have the concept of a virtual school head to take responsibility and a designated teacher in each school. There are often mental health issues as well concerning these kind of pupils. Where the child requires specialist services such as CAMHS, the local clinical commissioning group has a clear role. The noble Baroness will be aware of our strategy Future in Mind, which focuses on that area as well.

My Lords, the Education Select Committee’s report on the mental health of looked-after children, published in April this year, echoed the view of NICE that:

“Children and young people placed out of the local authority area are less likely to receive services from CAMHS in their new location”.

Matching children and young people to suitable fostering and residential settings, including the kinship settings that my noble friend Lady Armstrong mentioned, is crucial to providing stability and longevity in a placement and happiness for the child. Will the Government revisit the advice that they give to local authorities to ensure that the mental health needs of a child or young person are properly considered when deciding where they are placed?

We are looking at this. We have an expert working group co-chaired by Peter Fonagy and Alison O’Sullivan, which is looking at the current arrangements. Sir Martin Narey has also reported so, yes, we will certainly look at this.

Does the Minister agree that children’s social workers do a fantastically good job, but one of the difficulties they face is their sheer workload, which means that their monitoring of children in care is not as adequate as it is should be?

I entirely agree that social workers have this challenge. It is one of the reasons why we are looking at bringing in the ability to innovate to have more flexible arrangements. We are doing a great deal of work with the chief social worker to improve the arrangements for social workers and their training.

HMS “Ocean”


Asked by

To ask Her Majesty’s Government how the amphibious helicopter lift capability provided by HMS Ocean will be provided after she is paid off.

My Lords, following the decommissioning of HMS “Ocean” and prior to the Queen Elizabeth-class aircraft carriers being brought into service, a combination of the existing amphibious ships of the Royal Navy and the Royal Fleet Auxiliary will provide the lift capability for our amphibious forces.

My Lords, I thank the Minister for that Answer, which I find very disappointing. I have commanded task groups and amphibious assault groups, and it is clear and well known that the only way of providing simultaneous two-company lift is to have a large deck with at least six spots that can be operated simultaneously and a hangar that can carry up to 12 or 14 helicopters. Anything else will not achieve the amphibious capability that is laid out clearly in our doctrine. What worries me is that this is yet another cut to our Navy. There seems to be cut after cut. Some £65 million has just been spent on refitting this ship in order to run it until 2025, and it is suddenly being laid up in 2018. “Diligence” has just been laid up. Saying we are ordering eight frigates—which I am sure is the sort of response we will get—is great, but they are years late, and there are eight rather than 13. In this highly dangerous world, the most chaotic I have known in 50 years on the active list, can we not put “Ocean” into reserve status, as we will with HMS “Bulwark” next year, and keep her until 2025 when the carriers are online and she can be replaced, and therefore have that capability if it is needed?

My Lords, as the noble Lord knows, the specified service life for HMS “Ocean” was 20 years as from 1998, and we announced in the SDSR 2015 that she would be taken out of service in 2018. The Royal Navy has been clear that, following the decommissioning of HMS “Ocean”, its priority was to maintain surface lift capability using “Albion” and “Bulwark” while preparing to bring the carriers into service with a smooth sequencing programme. I do not share the noble Lord’s perception of the Royal Navy as suffering cuts; if anything, it is very much on the up. We have the arrival of the two Queen Elizabeth-class carriers to look forward to, which will provide immensely greater capability than we have at the moment.

My Lords, I am afraid that I do not find the Minister’s Answer to the Question asked by the noble Lord, Lord West, particularly convincing. Does the Minister agree that paying off “Ocean” makes no strategic sense and that, despite what he said, it has been done because defence is badly underfunded and, in the Royal Navy’s case, badly underresourced in people as well? Does he agree that it was a mistake to impose an unrealistically low manpower ceiling in the 2010 defence review and to compound that mistake by not addressing it properly in the 2015 defence review, and that the current underfunding of defence resources, which is requiring the services to make cuts of some 10%, is having a very bad effect on training and the quality of life of our soldiers, sailors and airmen?

My Lords, I always listen carefully to the noble and gallant Lord, as I do to the noble Lord, Lord West. There are always difficult choices to be made within a fixed budget, and that applies to any government department. However, last year’s strategic defence and security review announced an increase in the size of the Royal Navy of 400 personnel—to 30,600—by 2025. That represents an uplift of 1,600 over the 2010 SDSR position. Of course, there are manning pinch points; we acknowledge that and the Royal Navy is addressing them. But we have to live within the means that we have and address the capabilities we need, and I believe the Navy is doing that.

Will my noble friend confirm that one of the pressures on the naval procurement budget results from the ordering of two aircraft carriers by the noble Lord, Lord West, which still do not have enough aircraft—the F35, at £100 million apiece—to fly off them?

I am sure my noble friend will be pleased to know we have already taken delivery of five of the F35s and have announced an accelerated buying programme to allow us to embark up to 24 of these fantastic fifth-generation aircraft by 2023. When my noble friend sees the “Queen Elizabeth” coming into Portsmouth, as it will next year, he will be very proud of the capability that this country can offer in terms of naval power.

My Lords, the role of HMS “Ocean” has been to provide the marines with a capability to deploy on land using landing craft and helicopters, and I understand that in future this will be provided by modifying one of the new Elizabeth-class carriers. Can the Minister say what these modifications will entail and how much they will cost? As has already been said, the Government have spent £65 million on refitting “Ocean” only to decommission it. They also spent £16 million on refitting RFA “Diligence”, our only at-sea repair ship, only to put it up for sale. That means they have spent £81 million refitting two ships in order to scrap them. What does this tell us about the Government’s long-term naval planning—that there is no long-term planning, but simply an endless waste of taxpayers’ money?

I can reassure the noble Lord there is a great deal of long-term planning, as I witnessed myself at last week’s Admiralty board. He asked about the sequence of programming for the new carriers. The first of the carriers, HMS “Queen Elizabeth”, will enter service in 2018, after which she will conduct flying trials, initially with helicopters and then with the F35B Lightning II aircraft. We will deliver an initial carrier strike capability by 2020, but in parallel we will be developing our carriers to deliver amphibious assaults with Royal Marines and battlefield helicopters as well as to mount global counterterrorism strikes. I hope the noble Lord will agree that there is a logical sequencing programme in train.

Modern Slavery (Transparency in Supply Chains) Bill [HL]

Order of Commitment Discharged

Moved by

My Lords, I understand that no amendments have been set down to this Bill and that no noble Lord has indicated a wish to move a manuscript amendment or to speak in Committee. Unless, therefore, any noble Lord objects, I beg to move that the order of commitment be discharged.

Motion agreed.

Wales Bill

Committee (2nd Day)

Relevant document: 5th Report from the Delegated Powers Committee

Amendment 23

Moved by

23: After Clause 13, insert the following new Clause—

“Apprenticeship levy

(1) In Part 4A of the Government of Wales Act 2006, after Chapter 4 insert—“CHAPTER 5Apprenticeship levy116O Apprenticeship levy(1) The Treasury must make separate provision in regulations for apprenticeship levy charged to a person in Wales with a pay bill.(2) The Treasury must lay an annual report before the Assembly and the House of Commons on the amount of apprenticeship levy raised in each tax year from persons in Wales.(3) The Treasury must consult the Assembly before setting a levy allowance or a relevant percentage applicable to persons in Wales.””

My Lords, after that rush of enthusiasm for the Wales Bill, I rise to move Amendment 23, which stands in my name and the name of the noble Lord, Lord Rowlands. It relates to the devolution of the funds generated through the apprenticeship levy. The issue has been raised with me because of the uncertainty experienced by employers based in Wales regarding this matter. The Government’s rather chaotic and haphazard approach to the apprenticeship levy has left all the devolved Administrations scratching their heads. Although the specifics are clear for businesses in England, the way in which businesses and organisations in Wales will be able to access and benefit from the money generated by the levy remains completely opaque.

Of the projected £3 billion in the 2015 Autumn Statement, the Treasury specified that £2.5 billion would be spent exclusively on England while the remaining £500 million would be divided among Wales, Scotland and Northern Ireland. We were told we would have our fair share. Despite the fact that this levy is due to be introduced in April, just five months away, we are left facing more questions than answers on the matter. What is our fair share? Are the receipts going to be Barnettised? What happens if the levy yields less money than projected? Will England’s funding be prioritised at the expense of that which is promised for Wales? The lack of transparency in the Treasury’s funding formula for Wales, Northern Ireland and Scotland is creating practical hurdles for those Governments as they prepare for their own apprenticeship schemes.

Apprenticeships are a devolved matter. So are education and training. Operating at a UK level a levy that is meant to directly fund the devolved function has every potential to cause confusion. I am told that an employer-led institute of apprenticeships is to be set up in April 2017 to advise the Department for Business, Energy and Industrial Strategy on the administration of funding and apprenticeship standards in England. Is this institute specifically for England? If so, where does that leave Wales? Surely a similar institution for each of the devolved areas should have a parallel role in advising the Secretary of State. Are the devolved Governments expected to set up their own bodies analogous to the institute or are they expected to relate directly to an institute whose remit extends only to England?

Online services will apparently be provided to employers in England but will not be available to Welsh employers. Another issue that remains unclear is how the levy will work in relation to companies that have headquarters situated in one country but employ people across the border in the territory of a devolved Administration. Plaid Cymru MPs were given assurances in the other place that the Treasury is working in co-operation with the Welsh Government to determine the implementation of the levy. We are yet to see any development on that front.

The apprenticeship levy status in Wales is reduced to a mere link on the UK Government website directing readers to a nondescript Welsh Government webpage that provides no clarity to those in Wales seeking information. What discussions took place between the UK Government and the Government of Wales before that link was advertised? With apprenticeships and businesses keen to take advantage of the levy in Wales in the immediate future, it is not right that they are left guessing while their English counterparts are able to plan in advance.

The UK Government are introducing legislation that pays no regard to the specific needs of the corresponding system in the devolved Governments. They are England-centric in their planning and implementation and appear to be progressing the matter without any co-ordination with the devolved Governments. More broadly, the patchwork devolution settlement being offered to Wales in the Bill will result in confusion and mismanagement. One solution to this problem, as my amendment today sets out, would be to devolve the apprenticeships levy in its entirety to Wales. This would allow the Welsh Government to administer and control the money raised and to align it with apprenticeship policies. Put simply, it would clarify any doubts over Wales’s fair share of the money raised, and would enable employers and apprenticeships to plan their programmes in a co-ordinated fashion. This is a constructive proposal to address a very real problem. I appeal to noble Lords on all sides to indicate their support for the amendment and I appeal to the Government either to accept it today or to undertake to return on Report with their own amendment to answer these very real difficulties. I beg to move.

My Lords, I declare an interest as honorary president of the National Training Federation for Wales, and in its early years I was one of its advisers. The federation brings together many or most of the training providers that deliver the apprenticeship and skills policies and funding from the Welsh Assembly Government. I am grateful to the noble Lord, Lord Wigley, for tabling this amendment and bringing to our attention the peculiar and now very difficult situation that has arisen as a result of the introduction of the levy.

I say nothing about the merits of the levy. Frankly, it is a fascinating piece of interventionist politics in the labour and employment market. In fact, it reminded me—although I make no direct comparison—of when I was first in the other place in 1966 and a Chancellor of the Exchequer introduced something called the selective employment tax. I am not sure how many Members still remember that or it its fate. It was a novel tax which did not last; I wonder how long this novel levy will last.

The heart of the problem, as the noble Lord, Lord Wigley, pointed out, is that the conception and launch of the apprenticeship levy completely ignored the fact that in three of the four nations of the United Kingdom, the whole policy is devolved. Policy, funding and operation of all forms of training, including apprenticeships, has been devolved. There was no real consultation on how the levy would apply to or could be accommodated within the policies and processes that have developed to deliver apprenticeship and training programmes in Wales, Scotland and Northern Ireland.

I continue to be amazed that there are still corners of Whitehall and the Treasury where people have not realised that devolution has happened. This is an extreme example of just that point. I hope that when the Minister replies he will promise that something like the process that has happened in this case—when a Treasury or a Chancellor decides to do something that may have a profound impact on the policy and processes of the devolved Administrations—will not happen again.

Ever since the announcement of the levy and its operation, there have been attempts to understand how one can accommodate it within the terms, policies and processes that I know have been well developed within the Welsh Government and Welsh Assembly. To go further than the noble Lord, Lord Wigley, we have now reached the bizarre situation where a UK-wide levy may be impossible for any Welsh company or organisation to access. I will explain why in a minute.

Let us remind ourselves where the levy applies. It applies not only to companies but to all public bodies, third-party bodies and organisations with a payroll of more than £3 million. Therefore, the Welsh Government and Welsh health authorities will pay the levy, but I see no means by which they could access it to promote their training. In fact, they do not need to because, as a result of the extremely positive and forward-looking policies of the Welsh Government and Welsh Assembly, we have a system to develop apprenticeships, skills and training in Wales that is working very satisfactorily and requires no levy of any kind. It is therefore unnecessary.

Perhaps the Minister can confirm this, but I gather that in England, it is to be delivered by something called a digital voucher. We have had voucher systems in training levies before, and they have invariably failed. This has all the hallmarks of being an unnecessary bureaucratic nightmare. As a result, as I understand it, the Welsh Government and the Welsh Assembly have decided that they will not take part. They will not implement the digital voucher system. I hope that I have got that right; if not, the Minister can disabuse me. I gather that that is true of the other Administrations as well. So the means by which Welsh companies or organisations could access the levy money—the digital voucher—will not be put in place in Wales or the other devolved Administrations.

The Welsh Assembly and the Welsh Government already have a very well established programme and process. They have identified their priority areas. This has always been a major part of its budget. I think I am right in saying that in the most recent budget, it was agreed that £111 million would fund the whole apprenticeship and skills programmes. Welsh companies and organisations can access those skills and apprenticeship schemes through the process of going through the training provider network that has been created. In other words, there is no room for a levy, as far as I can see. I do not know how it can be inserted into this process. Again, as the noble Lord, Lord Wigley, said, this is so opaque and confused that I am not sure that I have got it right, so I hope the Minister will help us to understand it

As the noble Lord, Lord Wigley, pointed out, there are a lot of cross-border issues. For example, can a company, operating across both borders draw down the English voucher system to be used in Wales? I do not think that it can. So again, I cannot understand how it would be possible for Welsh companies and organisations to tap into the potential resources raised by the levy. Secondly—the amendment presses this point—we should have transparency. At present, HMRC, which is the means of collecting it, does not plan to identify the Welsh contribution. It does not intend to identify how much of the levy has been raised in Wales, so I cannot understand how it can be operated.

I hear that somehow the problem will be solved by the Barnett formula. We all know that its sell-by date has long gone. To and use the Barnett formula, which even Lord Barnett disowned some time ago, is preposterous. If it is to be used, how will it be done? How will companies and organisations which pay the levy be able to access it to service Welsh apprenticeships and training, through the Barnett formula, if that is the process planned? How will that happen? I understand that the Barnett formula is not priority- allocated. It is just a general pool, which does not mean that it will go into training or apprenticeships.

I am grateful to the noble Lord, Lord Wigley, for introducing this amendment because it has raised very serious issues in an area of policy on development and training on which I want to compliment the Welsh Government and the Welsh Assembly. The Minister will know that. I believe that this levy has added confusion and uncertainty, and sadly is a terrible example of a non-consultation with devolved Administrations on issues that are fundamental to such Administrations.

My Lords, we have had a very interesting debate. The noble Lord, Lord Wigley, and my noble friend Lord Rowlands have spelled out the difficulties of the apprenticeship levy. I believe that the noble Lord, Lord Wigley, is proposing that it should be a Wales apprenticeship levy, devolved to Wales in its entirety, and that it should be collected and administered in Wales. My noble friend Lord Rowlands pointed out quite a lot of the difficulties and the lack of transparency around this issue.

The UK Government have said that the new apprenticeship levy, when it is implemented in April 2017, will apply to all UK employers and that the levy will be charged on those employers with a pay bill of more than £3 million, with a levy set at 0.5% of the pay bill. The Welsh Government have rightly raised concern about the introduction of the levy, and noble Lords have spelled that out today. I understand that the Welsh Government were not consulted about this, and perhaps they should have been before the initial announcement was made, bearing in mind that the apprenticeship levy funding policy is devolved and it will be for the Welsh Government to decide how they use it.

Last year, the Welsh Government consulted extensively on aligning their apprenticeship model to the needs of the economy in Wales and the wider UK. They published consultation responses in July 2015 and, since that time, have delayed publishing their apprenticeship implementation plan, as they want to have the opportunity to properly consider the impact of the UK Government’s proposals for the operation of the apprenticeship levy in England and the associated changes in apprenticeship standard.

We are several months away from the levy being implemented, and there is a lot of confusion and a lack of transparency. Can the Minister ensure that the UK Government will continue to work with the Welsh Government on the implementation of the levy? The Government should ensure that Wales receives a fair share of the revenue raised by it so that it can continue with its very successful apprenticeship programme. At present, it is funded by the Welsh Government with the support of the European Social Fund, which will probably disappear in a few years’ time.

Can we get a much clearer picture than we have at the moment so that there is transparency and the Welsh Government will know how this is going to operate? It seems that they are a bit on hold at the moment, as other noble Lords have pointed out. I am sure that the Minister will be able to clarify the position.

My Lords, I thank noble Lords who have participated in the debate on the amendment. I thank the noble Lord, Lord Wigley, for moving it.

To fund the step change needed to achieve 3 million apprenticeship starts across the country by 2020 and to improve their quality, the Government are introducing an apprenticeship levy so that spending on apprenticeships will be double the level that it was in 2010-11 in cash terms. I think that that is something that noble Lords across the House will welcome. I recognise that some employers have concerns over the design of the levy. Following the announcement at the summer Budget of 2015, the Government consulted on its design; the consultation that took place during the autumn of that year revealed overwhelming support for the levy to be as simple as possible to operate across the United Kingdom. For this reason, it was decided that the apprenticeship levy would be based on the UK-wide definition of earnings as used for class 1 secondary employer national insurance contributions. Not only is the definition one that employers are familiar with but it is applied consistently to employers wherever they operate within the United Kingdom’s single market and is information they readily have available in their payroll. The definition also avoids considerable practical difficulties that would arise if there were different rates and thresholds of the apprenticeship levy in different parts of the United Kingdom, which appears to be the purpose of this amendment—or at least a consequence of it. However, because the charge is on the employer, it would be necessary to determine how such a system would operate for organisations working across borders or with plants in different parts of the country, such as Toyota. This would create additional and significant administrative burdens for businesses that we believe are best avoided.

That said, I can recognise the points that are being made by the noble Lords, Lord Wigley and Lord Rowlands, and the noble Baroness, Lady Gale. I thank her for her comments. It is certainly the intention for work between the Treasury and the Welsh Government to continue, as she suggested. Policy on apprenticeships is devolved to the Welsh Government; once there has been a discussion on how we ensure that Wales has a fair share of the money, it does not necessarily follow that it will be Barnettised. I rather suspect that it will not, and presumably they will look at the number of employees in different parts of the country. I am not sure that Barnett would present the right answer. But once it has been done, it is a matter for the devolved Governments of Scotland, Northern Ireland and Wales as to how they operate the apprenticeship policy. They could presumably add more money in if they wanted to, or put in a smaller amount—that is a matter for them.

I have heard the contributions to this debate, and I understand that noble Lords want to ensure that Wales’s corner is being protected; I do too. I will ensure that a note is sent round to noble Lords who have participated in the debate so that they can see the state of play as things stand at the moment.

My understanding is that the way it is going to be delivered in England is through this so-called digital voucher. First, can the Minister confirm that that is the case? Secondly, is it also the case that Wales and other Administrations have all rejected that process? If it is not going to be that, what will the process be by which Welsh companies can claim on the levy?

The noble Lord is right in the sense that the essence of devolution is that if the policy is devolved to Scotland, Northern Ireland and Wales it is a matter for those Administrations as to how the apprenticeship policy is rolled out. The apprenticeship levy discussion will be happening between the Treasury and the devolved Administrations. I will get noble Lords an update on how that is progressing. It will then be for them to decide how the money is spent. The discussion on how the cake is being divided up will be led by the Treasury with the devolved Administrations. That is my understanding of how it will operate.

My Lords, I will press the Minister further on this. Does he accept that, for the Welsh Government—or, for that matter, the Scottish or Northern Ireland Governments—to roll this out they need to know how much money they are getting; the mechanism for delivering it; the timing of it and the conditions that may be placed on it? It is now over 12 months since this thing was kicked off. Without knowing those details they cannot, with all the good will in the world, meet what is required. Inevitably, companies in Wales are going to be in an inferior position to those in England. Will the Minister also clarify the position of those who are employing people across the border: companies which may be based in England but employing in Wales, or vice versa?

My Lords, this was precisely the point that I was dealing with. As I said, I will get a note round about how the discussion is going on how the policy will be rolled out in terms of the amount of money that will be given to the devolved Administrations. The discussion will go on at that level on how that is being sorted out. As I understand it, the basis on which the policy is rolled out is that the place of employment will be where the policy applies. If a business is in Wales it will be a matter for the Welsh Government to decide a policy which is relevant to it. All the Administrations will want to bear in mind businesses which are on both sides of the border and ensure that there is some consistency in approach. However, that is a matter for them.

Based on my assurances that I will write to noble Lords on how the discussion is going now and that it is a matter for the devolved Administrations to decide the relevant policy—

My Lords, I am sorry to interrupt. It is, of course, satisfactory that the Minister will write to noble Lords, but this is yet another example of where discussions have been going on for some time since the Bill passed in another place and yet the up-to-date position on them has not been presented to this Committee. Like the noble Lord, Lord Deben, who made the point in an earlier sitting, I do think this is very unsatisfactory. We really should be updated in adequate time on all these discussions and not told that we will be given the information at some stage, perhaps before Report.

My Lords, I am not quite sure what my noble friend wants me to say, other than that, as I have just said, I will endeavour to ensure that noble Lords will have the information that is being requested ahead of Report. With that, I ask the noble Lords to withdraw the amendment.

My Lords, I am grateful to the noble Lord, Lord Bourne, for his response, but he must be feeling a little uneasy with the quality of the brief that he has been given on this. It is recognised the length and breadth of Wales that this is a totally unsatisfactory position which is causing problems for employers and those employees who are hoping to gain benefit from apprenticeship schemes. It is causing problems for the Welsh Government as they forward plan their budget for the coming year. We are talking of a sum of money that may be, let us say for argument’s sake, in the order of £150 million—a significant sum. Whatever the detail on the way in which these schemes are rolled out in Wales, Scotland or Northern Ireland, none the less, if this is the funding arrangement that has been agreed, there should be transparency. We are now in November, and the budget will be coming in April. It is totally unsatisfactory for the UK Treasury and Government to place the devolved Administrations in this position. Whereas the note that no doubt will be sent round will give the fullest information that the Treasury is willing to make available, it none the less may well not answer the serious questions that have been raised.

I am grateful for the contribution of the noble Lord, Lord Rowlands, with his expert knowledge in this area, and to the noble Lord, Lord Crickhowell, for intervening. We need to know. I realise that it is not the tradition to divide the House in Committee. However, if there is not a satisfactory answer from the Treasury and the Minister, I most certainly intend to come back to this on Report and, at that point, to press it. It is just not acceptable that we in Wales are placed in this position. It is not the fault of the Minister personally, but it is certainly the responsibility of the Government and the Treasury. I hope that between now and Report the Minister will have serious discussions with the Treasury, and that if he in his heart recognises that there is a serious problem here, he himself might choose to come back on this. On that basis, however, I beg leave to withdraw the amendment.

Amendment 23 withdrawn.

Clauses 14 to 16 agreed.

Clause 17: Welsh rates of income tax: removal of referendum requirement

Debate on whether Clause 17 should stand part of the Bill.

My Lords, I beg to move that Clause 17 does not stand part of the Bill and in so doing apologise for the absence of my noble friend Lord Hain, who is unable to be with us today. I am glad to say that my noble friend Lord Kinnock, who has also signed this Motion, is with us this afternoon.

It is just over 20 years ago now that the people of Wales voted in the referendum to establish a Welsh Assembly. It is just over 20 years ago that the people of Scotland voted to establish a Scottish Parliament. It was at that point, two decades ago, that the people of both countries were asked about the nature of the devolution that they wanted. In Wales, income tax was not an issue. In 1997, when the people of Wales voted, as they did, narrowly for an Assembly, it was not to have a system of income tax. On the other hand, the people of Scotland voted in favour not just of a Scottish Parliament but also of powers to vary income tax in that country, even though they have never done that.

The purpose of this probing amendment—and it is a big probe—is to find out why the Government have changed their mind since the previous Wales Bill. That Bill, just a couple of years ago, said that if income tax powers were to be introduced in Wales then the people of Wales would be asked their views. I suppose, in a way, we have had a lot of referenda of late, which have caused all sorts of difficulties and problems. Nevertheless, the principle of asking the people of Wales whether they want income tax powers for Wales is no different from what was asked in 1997 of the people of Scotland. Now, however, we have a proposal in this Bill to abolish that question. The people of Wales will not in fact be asked to decide whether they want income tax powers for their Assembly or whether they want the Assembly itself to agree to the principle of income tax raising powers for the Welsh Government and Assembly. I want to find out from the Minister why this change took place and, indeed, what mandate there is for this change to occur.

The second reason why this issue is important is that there is a good, sound economic and financial reason why the people of Wales should not be burdened by an extra income tax. I understand the issues of accountability, and that was the main principle that the Government and others have argued: that there should be this income tax provision. However, given the Minister’s vast experience in this area, I am sure he will understand that Wales is not a wealthy country by comparison with England. Probably thousands more wealthy people live in the county of Surrey than in the whole of Wales. Therefore, the resource base in Wales for income tax is very low indeed, but the burden upon the people would be high were an income tax to be raised in Wales alone.

My noble friend Lord Hain is keen to expostulate that, if income tax is levied at a United Kingdom level, it is properly and fairly distributed among the less wealthy parts of our country. Therefore, Wales benefits from that fair distribution because we are not as wealthy as the south-east of England. That is an important issue to consider when we look at whether income tax should be devolved. Also, if income tax were to be raised in Wales—whatever the levy, be it 2p or 3p in the pound—if all that did was plug a gap because the block grant had been reduced, that, too, would be pointless. If income tax is to be raised, it should be extra and above the block grant allocation—the Barnett formula, flawed as it is—as my noble friend Lord Rowlands indicated.

The third and final reason why the Government should say why this change has been introduced is that they are in the middle of negotiations with the Welsh Government on a fiscal framework for Wales. That is a vital discussion and an important negotiation. If income tax is to be partly devolved to Wales, the onus lies on the Government to ensure that the fiscal framework is so devised that that inequality between Wales and the rest of the United Kingdom is recognised and any block grant or Barnett formula ensures that Wales has a fair deal. For those reasons, I ask the Government to rethink this measure and I shall be interested to hear the Minister’s reply.

My Lords, before contributing to this Clause 17 stand part debate, I apologise to the Committee, and to the Minister in particular, for not having taken part in the debate at Second Reading.

I welcome the Government’s decision to remove the requirement for a referendum before devolving powers over income tax to the National Assembly for Wales. I am afraid that I have to take issue with the noble Lord on the Labour Benches, who still sees the need for a referendum.

Our democratic institution, the National Assembly, commenced 19 years ago and successive Bills have conferred increasing powers on it. The aim of this Bill should surely be to further build that democratic institution by providing it with the powers it needs to do its job. Along with those powers, there must also be a means of providing the Assembly’s electorate with the opportunity to hold the institution to account. For me, these two factors—power and accountability—are the basis of democracy. Providing the Assembly with powers over partial income tax devolution, which brings with it the opportunity for transparency and accountability without holding a referendum, should be a mark of the confidence of this House in the Welsh Government’s ability to carry out their functions. The Bill should be about indicating a clear way ahead for the Assembly to provide the people of Wales with the mature and confident democracy we want and deserve, not about placing further obstacles in the path of their progress.

I am tired of living in a country which has had to hold out the begging bowl to the Treasury to enable it to receive funding via its annual block grant. I am tired of hearing Welsh Ministers blame the UK Government for every shortfall in funding. But, most of all, I am tired of there being no means by which I, as a Welsh elector, am able to hold the Government of my country to account for the way they raise and spend their revenue.

I welcome last year’s devolution of powers over business rates to the Assembly and I look forward to stamp duty land tax and landfill tax being transferred in 2018. The addition of a £1.9 billion share of income tax, partially devolved to the Welsh Government, would form the basis of a system the Welsh electorate could scrutinise and on which they could hold the Government to account.

However, I agree with the noble Lord who spoke about the possible difficulties of devolving powers. In their joint report, the Wales Governance Centre and the Institute for Fiscal Studies urge caution in the choice of funding mechanism we employ and note two material considerations: Wales’s,

“relatively slower rate of population growth”,


“the size and distribution of the Welsh tax base”,

which is,

“significantly divergent to that of the rest of the UK, with far more lower-income earners”.

These are issues that we should take seriously. The prospect of these two factors having an adverse impact on the funding available to the Welsh Government in future years needs to be fully understood by Members of this House and mitigated against in the fiscal framework now under discussion. I would therefore be grateful if the Minister updated the Committee on the progress of the negotiations on the fiscal framework associated with the Bill. I also seek his assurance that a document will be in the hands of noble Lords before Report, enabling us to come to final decisions on a number of issues based on the evidence in the framework.

Finally, as we debate further amendments in Committee, I will certainly be listening very carefully to the Minister as he seeks to explain the Government’s justification for the inclusion of many reservations to the UK Government. However, on the devolution of income tax powers to the National Assembly without the need for a referendum, I am happy to lend the Government my support.

My Lords, I am grateful for this opportunity to speak on Clause 17, which the noble Lord, Lord Murphy, opposes. On many matters concerning devolution, the noble Lord, Lord Hain, were he here, would accept that we are usually in agreement. I was a great admirer of the way that he succeeded in getting the 2006 Act on to the statute book, notwithstanding its shortcomings.

Tomorrow is election day in the USA. “No taxation without representation” was the phrase coined in 18th-century colonial America. Today, in 21st-century Wales, we have representation but we do not have powers over taxation. We need both.

As the noble Baroness said a moment ago, the devolution of fiscal powers to Wales establishes an intrinsic democratic link between citizens and the policymakers they elect. Devolving income tax means that we can create better Welsh solutions to the challenges faced by Wales, in both the economy and the delivery of public services.

Although I understand the background to the wishes of the noble Lord, Lord Hain, described by the noble Lord, Lord Murphy, for a referendum on income tax powers, I suspect that another referendum is not really what either of them dreams about at night. Indeed, if they do, they probably have nightmares about the use of this ostensibly democratic tool of government. They both know, as I do, how easily a referendum can transpose itself into a verdict on anything but the issue on the ballot paper. It should be used for only the most clear-cut matters, which the electorate clearly understand and know what the consequences would be. It may be fine for deciding locally whether pubs open or close on a Sunday but it is not an appropriate tool for deciding on taxation policy.

From what the noble Lord, Lord Murphy, said, I think he agrees with me on the need for the Assembly to have some tax-varying powers at the appropriate time for reasons that are becoming increasingly apparent. One of the major challenges for the Welsh Government now is to trigger a substantial capital expenditure programme to develop our industrial infrastructure. Plaid Cymru has called for a national infrastructure commission for Wales, which would enable the Welsh Government to borrow up to £7.5 billion over a 10-year period, and we need a tax-raising facility to fund such a programme. It does not have to be income tax—it could be other taxes, which we will discuss later—but income tax should be available for the Welsh Government, in their wisdom, to decide whether or not to use it.

It has been estimated that the servicing cost of that £7.5 billion would amount to £165 million a year, and it is unrealistic to believe that such a sum could be funded from the minor taxes alone. This is why the devolution of income tax is essential. We cannot call for an expenditure programme without accepting the need to fund it. The two go hand in hand and are essential to build a new forward-looking economy for Wales.

Income tax devolution will be the dawn of a new era of accountability for the National Assembly, reflecting the need for a mature public policy to balance the requirement for resources with the practicality of raising them. It is all too easy—and politically far too facile—for politicians of any party to call for greater spending on this or that element of public services without saying how the money is to be raised. It is equally irresponsible for politicians on the right to call for lower taxes without explaining which public services would lose funding. The acceptance of both as obverse sides of the same coin is a reflection of political maturity. Giving tax-varying powers to the Assembly represents another step to it becoming a genuine home of Welsh democracy. For that reason, I support Clause 17 remaining part of the Bill.

My Lords, I had not intended to intervene in this debate but I should like to make two points. First, I am not persuaded, after what we have experienced in the past few months, that referendums are a source of clear, unambiguous decision. They are disastrous. We have seen that in connection with larger matters than Wales. To have a referendum on the deeply technical issue of the relationships of finance between local and central authorities—a very complicated matter—would resolve into the popular papers of the Welsh press, such as we have, debating whether it would mean income tax going up or down. The idea that fiscal principles would be subject to deep and profound scrutiny is not credible. We have had quite enough referendums as a substitute for democratic decision. They are a bogus form of democracy for the reasons we have seen and I would not want one for this.

Apart from a referendum being an unsatisfactory source of clarity and wisdom, as has been said by other noble Lords, it is an imperative of devolution that the Welsh Government should have some fiscal powers. The Scottish Government have had them since 1997, although they have not used them, and that is perhaps significant for whether the Welsh Government would use them. We do not know.

A devolved democracy that depends on handouts from somewhere else inevitably provokes complaints—as it has done in the history of Wales for decades; Westminster never offers or does enough—and will produce unsatisfactory responses. On the references to the American revolution, the reverse of what was said is profoundly true: if you do not have tax powers or the ability to raise your own revenue, you are not really a democracy because you are in a position of subservience. The whole history of Welsh devolution and other parts of the Bill show—in spite of the excellent intentions of the Minister and others on the Conservative side—that Wales has been treated in an inferior sense. Its status has not matched that of Scotland or Northern Ireland. That is riddled throughout the Bill, nullifying its good and noble purposes. So it is with regard to taxation.

It has been said that we should wait until things sort themselves out and the Barnett formula is removed. Let us wait. It is a temporary stop-gap, as we were correctly told by the noble Baroness. Lord Barnett himself explained what a very bad idea it was, because it was designed to plug what was thought a short-term problem in, I think, 1978, when the distinguished noble and learned Lord, Lord Morris of Aberavon, who is sitting in front of me, was in Cabinet—if I am wrong he can contradict me. Like other stop-gaps, it has survived the decades. It looks remarkably healthy for a stop-gap. A proposal to wait until the Barnett formula is resolved is a way to put off a decision completely. I very much hope we will not have a referendum and that we will bring to further completion the process of democracy in Wales.

My Lords, I find myself agreeing with the noble Lord, Lord Morgan, on the subject of referendums and, indeed, with the noble Lord, Lord Wigley. I hope Clause 17 will stay part of the Bill. It would be particularly unfortunate to remove it when, as I pointed out at earlier stages, we still do not know what the financial arrangements will be. My noble friend has helpfully pointed out that we hope to know more about that before Report. In all the circumstances, it seems an extraordinary proposal that we should remove Clause 17. I hope very much, for the reasons given by the noble Lords, Lord Wigley and Lord Morgan, that it stays as it is.

My Lords, the powers on income tax are one of the most important aspects of the Bill. As the Minister knows better than I, the Silk report recommended a referendum as a compromise on income tax. There were those members of the commission who were very keen for the Welsh Government to have those powers and those who were not keen at all. The compromise position was that they should have the powers, but only after a referendum. I am sure the Minister will correct me if I am wrong—otherwise, I am equally sure, he will remain discreetly silent on the issue.

However, the devolution story has moved on a very long way since that recommendation. We have had the Scottish referendum, the St David’s Day agreement, and, as the noble Lord, Lord Murphy, reminded us, the previous Wales Act, which I took through this place. So a referendum requirement is well out of kilter with the times. Forgive me: along with several other noble Lords who have already expressed their views, I am a little out of love with referenda. They do not always answer the question on the ballot paper.

I also remind the noble Lord, Lord Murphy, that powers over income tax could possibly mean that income tax could go down as well as up, or that the Welsh Government could choose to do as the Scottish Government have done for nearly 20 years: to have that power but not to vary the rate of income tax. But there are many reasons associated with the principle of powers over income tax that make it essential that the Welsh Government are given those powers.

There are reasons associated with certainty and transparency. The Welsh Government have evolved from being a purely executive body within the Assembly to being a full legislative body. As those powers have developed, they have lacked the right to levy taxes generally. Gradually, in the previous Wales Act, they were given some of those powers. Clause 17 would increase them.

Along with many noble Lords here, I hope that the Assembly will exercise the power that the Bill gives it to call itself by whatever name it wants and will choose to call itself the Welsh Parliament. I very much want a Welsh Parliament—but a Parliament has to have tax-raising powers alongside its executive and legislative powers.

In the next group of amendments, we will look at greater borrowing powers. In life, in order to borrow money, one has to have a way of paying it back. It is therefore only logical that the Welsh Government and the Assembly are given the power to vary income tax. It is essential that the Welsh Government stop shying away from responsibility for their income and from full-blown power and control over its activities. We have to come to the day when the Welsh Government no longer blame the UK Government for everything.

My Lords, in a tiny way this is a historic occasion: it is the first time in my recall that I diverge ever so slightly from the view of my noble friend Lord Morgan, and it is on the issue of the relevance and applicability of referendums. It is clear from what several noble Lords have said that bruises are borne as a result of the fact that we in this country having recently been through a referendum—indeed, I have not only bruises but scars to show for the experience. Nevertheless, the reality is that in a parliamentary democracy referendums are justifiable when there is a proposal to change the way in which we are governed.

That was the basis for the justification of the 23 June referendum, just as it was for those of us who campaigned for a referendum on entry to the European Communities and those of us who campaigned for referendums on Scottish and Welsh devolution back in 1979 and greeted with satisfaction the proposal in the 1990s that referendums should determine whether a Welsh Assembly and a Scottish Parliament were introduced. The same joy stirred our hearts when we saw an enacted proposal for referendums to determine whether major conurbations in England should have elected mayors. I use these references only to demonstrate the realism and the relevance of using referendums when there is a proposal to change the way in which a democracy or part of a democracy is governed.

Such is the case if there is a proposal to offer to the Welsh Assembly the power to levy income tax. That would profoundly change the way in which Wales was governed. It is on that basis that there is a straightforward justification for a referendum on such a fundamental constitutional and economic decision that has immense social, commercial and personal implications for every family, every community, every business and every employee in the whole of Wales.

Left at that, it could be dismissed as an academic, almost arcane argument—but it is not. It is much more prosaic than that. I join with my noble friends in objecting to the removal of the undertaking to give a referendum on the issue of the introduction of income tax-raising powers for the Welsh Assembly. That undertaking was not only given by several political parties representative of and represented in Wales, it was the subject of statute. It remains the subject of statute unless and until this Bill is enacted. For many years—indeed, decades—most political parties offered to the people of Wales the utter reassurance that they would have the final determining word on whether the elected Welsh Assembly is to have the power to levy income tax. Clause 17 should be removed from the Bill to ensure the continuity and integrity of those previous, voluntarily offered undertakings to the people of Wales.

There is a further consideration: we have a model to consider. It has been referred to already. It is, of course, the fact that the Scottish Parliament, from its inception, has had the power to vary income taxation in Scotland and has never seriously considered—let alone debated or proposed—in any formal manner such a variation. Why is that? Because of the utter unacceptability and impracticality of such an idea, even for a substantially devolved institution in a unitary state. I will certainly give way in a moment but will just finish this particular reference. The proposal that the Welsh Assembly should have this additional power in the absolutely certain and cynical knowledge that it would not be exercised is like offering me a car with the capacity to travel at 200 miles per hour and I buy it in the knowledge that the speed limit in the United Kingdom is 70 miles per hour.

It might be helpful to recollect that when the referendum on devolution took place in Scotland, there were two questions. One was on the principle of devolution but the other was whether a devolved Assembly, as it was called in those days, should have tax-varying powers. That was separated out in the case of Wales but in Scotland, where I was, we had a vote on both at the same time. On exactly the point that the noble Lord was making, we had the democratic decision with a substantial majority that the Assembly, as it was then called, should have tax-varying powers. We got it all achieved in one.

I am grateful to the noble and learned Lord. At the time, I almost rejoiced in the full implementation of the long-standing Labour Party policy—developed under my leadership, as it happens, on the basis of continued representation from my comrades in Scotland—that a specific opportunity should be given to the people of Scotland to decide on that issue. Equally, and with substantial force, there were representations from Wales that that offer should not be made. Influences, parties and opinions in Wales suggested that that should not be the case. But their views were set aside—while undoubtedly being recognised and respected, as is our manner in Wales—and the issue was never put, and it never generated the merest scintilla of a spasm of objection.

Almost on the contrary, at that time in the 1990s and at this time in the second decade of the 21st century, there was and is no evident support among the public for the idea of income tax-raising or income tax-varying powers to be allocated to the Welsh Assembly. In this era, when all of us, if we have any sense at all, must be aware of the feeling of distance that exists between the general electorate and those who are elected to govern them, we should be sensitive to the idea that when there is no measurable support for a proposition that is as significant as the varying of taxation powers, and yet the recognised elected authority and the Executive go ahead and grant that power, on the best day it will be greeted as an irrelevance. On a less good day, it will be greeted with cynical dismissal.

The noble Lord said that it was a great constitutional change and dismissed the argument advanced—I thought very convincingly—by his noble friend Lord Morgan about the unsuitability of the question to be put in a referendum. However, will not the Welsh Government, or parties in the Welsh Assembly, have to put before the electorate the proposal in their manifesto that they will introduce or intend to introduce or change taxation? If they do so, will they not afterwards face the judgment of the Welsh electorate if the electorate disagree with what they have done and the way they have done it? Surely, therefore, we have a constitutional arrangement that allows the Welsh electorate to make their judgment both before and after a general election.

I agree with the noble Lord. Certainly we have not only a constitutional but an electoral arrangement, which is of at least equal relevance. We speak of course in 2016, the year in which—indeed, just a few months after—an election of a new Assembly took place in Wales. I do not recall any proposition from any party—outside Plaid Cymru, which has been entirely and honourably consistent in its proposals—that said, “If you elect us, we will work to ensure that the United Kingdom, in a change of legislation, will allocate to us the power to vary income taxation in Wales”. I know that that is a political point, but it is worth taking into account. On this central issue of accountability, I noted what the noble Lord, Lord Wigley, said when he advanced the idea that the allocation of powers to the Welsh Assembly to levy and vary income tax would enrich accountability in Wales. I say to him, and in part I respond to the noble Lord, Lord Crickhowell, that accountability must relate not to abstract, desirable, mooted, arguable or deluded powers, but to exercisable powers. What we see in Scotland is a myth of accountability. When they have the power to vary taxation, as they have had for the best part of 20 years, and have not even begun to consider the implementation of such powers I simply do not see how accountability—the central principle of democracy—is enhanced by having a power but never exercising it, and never daring to exercise it. Where is the enhancement of accountability there?

Perhaps I might correct the noble Lord on a point of slight detail. The Scottish National Party, which is the governing party in Scotland, has made it clear that it intends not to follow the Chancellor of the Exchequer in England on the level at which the 40% tax rate comes in. I think that the proposal in England, and indeed in Wales for the moment, is that there should be a rise of that level at which 40% becomes payable. The Scottish Government have said that they are not prepared to go along with that, so for the Scots the level will remain as it is at present. I grant the noble Lord that this is under a different power which has been given in a later enactment but to say that there is no desire by the governing party to make changes is a little excessive, with great respect.

I accept the point entirely. I can respond to it only by saying that I await, without bating my breath, for the implementation of this proposition. I can see the attractiveness of it, especially to a party which is self-confessedly populist and has gained great strength by means of offering simple answers to complex questions. That has served that party well for several years—astoundingly well. I await that exercise of the variation under the supplementary powers granted to them and on that occasion, I will withdraw all speculation about Scottish inclinations to vary taxation powers.

The noble Lord very kindly talked of our consistency on these matters; I also respect his consistency on them from 1979 onwards. Can I press him on the point that he made about exercisable powers? The next bank of amendments will talk about a new exercisable power to have a capital investment fund. Without some ability to vary taxation, how does the noble Lord square that circle or does he not support the demand for a greater capital expenditure fund?

I say to the noble Lord, Lord Wigley, who I respect greatly, that it would be—without oversimplifying this—on the same basis as borrowings are undertaken now. He will know of the generous and immensely useful support given to a variety of projects in Wales by the European Investment Bank. Nobody has required the allocation of tax-varying or tax-raising powers to the Welsh Assembly to enable that support. Since there is also a guaranteed income for the Welsh Assembly—inadequate and stunted by the application of the Barnett formula, as he and I would agree—but nevertheless significant, as he and I would agree, nobody lending money for major capital investment projects in Wales, within reasonable limits and according to the required fiscal disciplines, should worry about it because they will be guaranteed a return on their investment. It is not necessary to add to the obligations of the Welsh Assembly to facilitate that—within limited confines, as I say. I will give him an example, which I will pluck out of the air.

If, for instance, a sensible proposal was made for establishing a link between Rhoose international airport and the main train line from London to Swansea, I would certainly support it, or, indeed a spur road from the M4 or even a direct road from the A48 into Rhoose airport in order to enhance the attractiveness of this major infrastructure advantage, substantially, and rightly, supported by the Welsh Government. There is no reason why a guarantee of return on the investment should not be made by the imposition of a small toll on the road or the railway line. It is not unprecedented across continental Europe. If we want to know how successful such arrangements can be, the noble Lord only has to look that the second Severn crossing. A huge capital sum, vastly in excess of anything that would be needed to link Rhoose airport, has been paid off with, in my view, excessive and unfair impositions—I am speaking of the degree, not the principle. The same thing could be done elsewhere. I am not advocating it; I am simply saying that there is a variety of ways of guaranteeing a reasonable return on long-term capital investment without requiring the allocation of fund raising through income tax-raising powers for the Welsh Assembly.

If this removal of a requirement for a referendum is to have a real justification, it has to have evident support from people across Wales. They have expressed no significant demand for, or preference for, the further allocation of such a power to the Welsh Assembly. The maxim employed earlier by the noble Lord, Lord Wigley, which was coined by a Welshman at the time of the American Revolution, “No taxation without representation”, bears an addition in this century. It is: “No further allocated powers of taxation without at least consultation, without at least deliberation, without at least endorsement and, finally, without at least agreement”. That brings us back to the referendum because where there is an absence of demand for this change in the way in which the people of Wales are governed, there has to be a supreme additional justification for allocating a power that is not only not demanded but that we have every reason to assume would not be exercised, a power that would not lend itself to extra accountability or enhance transparency or enrich democracy. I wait to hear from the Minister a justification of the dismantling of the undertakings previously given by all parties and enacted for a referendum as a prerequisite of the allocation of income tax-raising powers to the Welsh Assembly.

My Lords, I wonder whether I can assist the noble Lord, Lord Kinnock, in his final question by telling your Lordships about my brother-in-law, who is Welsh, but who has lived in Aberdeenshire since the 1970s. In 1979, like the noble Lord, Lord Kinnock, he was wholly against devolution to Scotland. In 1998, he had not changed his mind, unlike the noble Lord, Lord Kinnock, and in the referendum he voted no to devolution to Scotland, but yes to tax-raising powers if a Parliament should be formed. At the time, we thought this was slightly odd. But what he was saying was that you should not have a parliament unless it is accountable—fully accountable. That is the point.

A lot of water has flowed under the bridge since the Welsh Assembly was constituted, and the Labour Party has, one way or the other, exercised power in Cardiff since its inception—it still does. The purpose of a proper Government is to raise taxes and to spend them, and to be accountable to the people from whom they raise those taxes as to how they handle their money. It is a perfectly simple proposition, but for the last 20 years, we have heard from the Labour Government in Cardiff that if they are incapable of providing adequate services in Wales—for example, in the health service or in education—it is because they do not have enough money sent to them from Westminster.

It does not require a referendum now. The reason why a referendum was provided for in the last Bill and why it appeared to be a good idea was that we were following the Scottish practice of 1998. But we moved on; devolution has moved on. We were tired, as my noble friend Lady Humphreys said, of the excuse that we are failing as a Government because Westminster does not give us enough money. It is time that income tax is devolved to Wales and that proper accountability should occur.

My Lords, I will briefly emphasise a point strongly implied by my noble friend Lord Kinnock but perhaps not yet made fully explicit in this debate, which is that there is an issue here about trust between people and their politicians. As has been noted, the Labour Party, the Conservative Party and others have promised a referendum on this question of income tax-varying powers over many years. Indeed, if I am not mistaken, it was a manifesto pledge by the Conservative Party at the last general election, and we need to look at that question of whether it is acceptable and politically prudent for a Government to slide away from a manifesto commitment that was so very clearly made.

I understand, and in large measure agree with, the point made by my noble friend Lord Morgan about the unsuitability of the referendum as a device for resolving technical and complex political issues. I also accept what has been said about income tax-varying powers being a mark of the maturity of the Welsh Assembly, which may call itself a Welsh Parliament. It is desirable in principle that a parliament should have those powers and be held accountable to the people on whom it would propose to levy income tax. It is perhaps desirable that these powers should be created, but one must also recognise that if the people of Wales are asked in a referendum whether they favour the introduction of powers that they would anticipate will be used to raise income tax, they might well say no. Taxable capacity in Wales is decidedly limited, and people on the whole do not vote for higher taxes. But none the less, if they have been offered the opportunity to make that choice for themselves, it may well be rash and improper to take that choice away from them.

The alternative will be that this legislature will impose on Wales an income tax-varying power for the Welsh Assembly. It has been assumed in this debate that that power to raise income tax would be most unlikely to be used in the foreseeable future. But I do not entirely share that confidence, because we have no long-term fiscal framework and no settlement. The Barnett formula has not been reformed, and I agree with those who have said that to wait to move on this until that formula is fully and satisfactorily reformed is to wait for ever. It is not beyond the bounds of possibility that, after 2020, we could see a future Government of the UK reducing the block grant for Wales—indeed, if the Government have their way in this Bill, we will see borrowing powers for Wales very severely curtailed—and in those circumstances Wales would need to increase the proceeds of income tax and to use those powers.

We should come clean to the people of Wales. They should be offered a package. They need to know what the future fiscal framework will be. We need to see the reform of Barnett, and to see the structures of funding and transfer payments across the UK clarified and in place. We need to know what the scope for borrowing will be, taking into account the possibility that interest rates will be higher and that it may not be at all easy to service that borrowing. In that context, the people of Wales should be allowed to take the decision about whether or not they wish to be made subject to an income tax-varying power exercised by their own legislature within Wales.

My Lords, I was 12 in 1979 when we had the first referendum on whether we wanted devolution to come to Wales, and I have had a little taster this afternoon of what it must have been like during that campaign. But we have had a different result from that in 1979; the Assembly has been established for 19 years and it is maturing and developing.

I thank my noble friends Lord Murphy and Lord Hain for tabling this amendment because this issue is worthy of debate. I am afraid the people of Wales were told when we established the Assembly that we would put the issue of income tax-varying powers to them in a referendum. We have heard today what a risky business referendums are; I concur—I also have the scars from the recent referendum—and, let me tell you, I am no longer a fan of referendums.

It is worth repeating the question asked by my noble friend Lord Murphy: what has changed since the last Bill that the noble Baroness, Lady Randerson, brought through the House, and what is the difference between that Bill and this one? What has made the Government change their mind on this issue? It is worth drawing attention to the fact that Wales is not a rich country. My understanding is that only about 6,000 people in Wales pay the highest rate of income tax, those who earn over £150,000, while only one in 16 pay the 40p higher rate of income tax. We are not talking about people that it is easy to tax, so it is worth remembering and understanding that this is not going to be a power that is easily exercisable.

However, I beg to differ with my colleagues on this issue, because times have changed. As the noble Baroness, Lady Randerson, said, the Assembly has moved a long way during those 19 years. On top of that, we have the issue of austerity. The IFS said recently that, by 2020, there will have been an 11% cut since 2010 in funding coming to Wales. That is hitting some of the poorest members of our society. Austerity is hitting not only our revenue budgets but our capital budgets. It is all very well to talk about borrowing money from the European Investment Bank, but we do not even know whether we will be able to access that kind of funding in future.

Why do I support the amendment? I support the amendment because, at this difficult time, borrowing against this income stream will be essential if we want to invest in our infrastructure in Wales. There is demand for better infrastructure. People want improvements in Wales. That demand is there. However, it is important to understand—we will come to this in the next amendment—

I am grateful to the noble Baroness for giving way. I do not think that she is speaking in favour of the amendment; she might want to clarify that.

I am not speaking in favour of the amendment because of the next amendment. We need an increase in the borrowing powers because of the funding stream and the devolution of taxation. That is critical to investment in Wales.

We know that the Welsh Government and the UK Government have an understanding and that there will be an agreement on the fiscal framework before we enter the next phase of the Bill. It is important that, in that fiscal framework, we have an offset to the block grant in return for that tax revenue. We need to see how that offset will interact with the Barnett formula, and we need the funding floor to be made permanent. It is critical that we should not accept a situation where Wales will be materially worse off as a consequence of devolving taxation. That would not be good for the people of Wales?

We expect the Minister to negotiate that with the Finance Minister in the Assembly, but can he can assure us that that fiscal framework will be resolved before we have an understanding? We will come in the next amendment to the amount that may be borrowed, but can he assure us that we will be able to have an increase in borrowing powers as a result of the fiscal autonomy that will be coming to Wales?

My Lords, I thank noble Lords who have participated in this debate. For the sake of clarity—I correct myself as well—this is a clause stand part debate rather than a debate on an amendment to Clause 17.

I thank the noble Lords, Lord Murphy and Lord Kinnock, for moving and speaking to the Motion that the clause do not stand part. I disagree with their intent. As the noble Lord, Lord Murphy, said, we have been here for nearly 20 years since the first successful referendum in 1997. Circumstances massively changed in that time, as the noble Baroness, Lady Morgan of Ely, said.

Let me try to deal with some of the points. Circumstances have changed since the Silk commission’s first report. The noble Lord, Lord Wigley, has been consistent on this topic, as has the noble Lord, Lord Kinnock. I confess that I have not. I am more like the brother-in-law of the noble Lord, Lord Thomas of Gresford: I have changed my mind on some of these issues. I should set that out first. In the Silk commission, all four parties recognised the need for income tax powers for the National Assembly for Wales. If it was to become a full legislature in the proper sense, it was accepted that it needed income tax powers. Some noble Lords have used the phrase as if it meant all income tax powers; of course, it does not; some income tax powers remain with the United Kingdom. We should make it clear that this is not transferring all income tax powers; it is transferring some. It is a significant change, I agree, but the suggestion made by the noble Lord, Lord Kinnock, for example, that it is a fundamental, apocalyptic change to the way things happen but that it will not be exercised is somewhat inconsistent. It cannot be both apocalyptic and not be used.

I very much hope that it will be used. We cannot necessarily draw conclusions from what has been happening in Scotland. I hope that the National Assembly for Wales will be more imaginative. I was there for 12 years, and there was evidence of a lot of free thinking on many issues, not least in this area, so I do not accept that the power will not be used. We must realise that it is a limited power; it is not transferring all income tax powers to Wales.

I agree with the points made by the noble Baroness, Lady Humphreys, and the noble Lords, Lord Wigley, Lord Crickhowell and Lord Morgan, about circumstances having changed, that perhaps we make use of referendums too freely, and that they are not always appropriate. I feel that if we were to insist on a referendum, it is arguable that we would be holding Wales back. In some quarters—I certainly exempt the noble Lord, Lord Kinnock, from this—it is being put forward as a means of trying to defeat the proposal or slow things down. We would not be doing Wales a great service if we did that. This is a power for a purpose, as was identified by the Silk commission. It is bringing in accountability. It is making what I hope becomes the Welsh Parliament, in name as well as reality, a real Parliament with this element of tax-raising power on income tax.

I asked the noble Lord for justification of the change in the law that would be implied by the enactment of the Bill, and he seems to suggest that times have changed and that the Silk commission has made recommendations. Does he believe that times have changed enough to give the Welsh people a real appetite for their Assembly to have the power to impose income tax additions? Does he think the Silk commission was really so conscious of the true economic condition of Wales and the distribution of incomes, referred to by my noble friend Lady Morgan, that it would permit a change that altered the law, removed the requirement for a pre-income tax allocation referendum and justified the introduction of new law? I do not think times have changed that much.

My Lords, I disagree with the noble Lord on this point. I remember the same argument being put forward when we had the 2011 referendum. People were saying that it would not pass and that opinions had not changed in Wales. I remember people on my own side arguing that it would be defeated in all parts of Wales, up and down the country. That did not happen. It was won decisively in every local authority bar one—Monmouthshire, where it was marginally defeated. Do I think that circumstances have changed so that we do not need a referendum? Yes, I do. The noble Baroness speaking for the Labour Party thinks similarly, as do the other political parties. There is probably one political party that does not think that—UKIP—but I disagree with it. Opinion has changed and we would be doing Wales a massive disservice by having a referendum that I do not believe is necessary in the changed circumstances of devolution in 2016.

Does the noble Lord recognise that to justify his contention about the movement of opinion in Wales, he referred to the 2011 referendum? Does he not consider that that makes my point for me?

No, it does not. Rather the reverse, it showed that opinion in Wales had changed much more than people thought. The noble Lord put a fair question to me: whether I thought that opinion had changed in Wales such that we did not need a referendum. I hope I have given a very fair answer. It is a truthful one—I think opinion in Wales has changed to that degree.

Arguments were put on various issues in relation to this, not least in the area of borrowing. I agree again that, to have significant borrowing powers, there has to be a separate stream of revenue. This would present a separate stream of revenue, and even if the income tax rates were retained exactly as they are in England, it would give that separate rate of revenue. So, there is that as well. I know that we are coming on to a subsequent amendment on this issue. In view of the fact that I do not believe that this change is necessary and the strength of opinion from noble Lords around the Chamber, I urge the noble Lord to withdraw the amendment.

On a point of detail, it was suggested that there was a Welsh Conservative manifesto commitment. I have taken the trouble during the debate to read the Welsh Conservative manifesto, which I confess I had never read before, and there is no such commitment.

My Lords, I am most grateful for that clarification. I do not think I had read it either. It is always useful to hear these things from someone who speaks with authority, and I thank my noble friend very much. Of course, I am not urging noble Lords to withdraw the amendment; I am just urging that the clause stand part of the Bill.

Obviously, I shall not oppose the clause standing part, but I shall make two points in response to the debate. First, I have never felt particularly deprived as a Welsh taxpayer and citizen by not having extra income tax for Wales. In the 30 years that I represented a Welsh constituency, not a single representation was made to me about this issue. In the five years when I was Secretary of State for Wales, not one Welsh Minister ever made representations to me about the need for income tax. However, the issue is not about the need for income tax—it is about the need for a referendum. That is what this resolution is about.

The noble Lord seems to think that this is about additional income tax but we are talking about tax-varying powers. They could go up or down or they could stay the same, but they would give a separate stream to the income of the Welsh Assembly, which would assist in borrowing. What disappoints me in the Minister’s reply is not to hear some idea of the fiscal framework. I wonder whether the Welsh Government have ever put forward a variation on the Barnett formula. We all oppose the Barnett formula in one way or another, but I have never heard the Welsh Government suggest an alternative way in which to raise money, other than the Barnett formula. Can the Minister say something about the broader picture?

I had not quite finished my remarks—I thought the noble Lord was intervening on me. The issue is about the principle of a referendum. Right from 1997, the people of Wales agreed on a devolution settlement. In 1979, my noble friend Lord Kinnock and I disagreed with the idea of a Welsh Assembly. Twenty years later, we agreed with it—and, as the Minister himself said, in 2011 there was a referendum to change that settlement. I approved of it, I agreed with it and I supported it. That gave legitimacy to the change, because at the end of the day the people of Wales agreed.

I suspect there has been a change in the past 18 months because, after all, this is about a change in the current law. It is not about introducing something but about abolishing something: the right of the people of Wales to have a referendum on income tax. My guess is that it has nothing to do with the spread of devolution or the other issues to which the Minister referred; it is about their thinking that they would not win it. But the principle of the referendum would give it that legitimacy. Indeed, if the Government and others thought it would be hugely popular, what is wrong with a referendum on it? If we had one on the powers, we can have one on income tax. The Minister has not explained why the Government have changed their mind about the principle of a referendum in under two years. That is a pretty rapid change, and there must be other reasons lying behind the Government’s views. At the end of the day, if the people of Wales want income tax variation—and, by the way, it is not extra money. I reject that idea; I do not think for one second that any income tax powers will produce a penny more for the people of Wales, because the block grant will be reduced. That imposition has been put on a country that is poorer than England. Having said all that, I shall not push this to a vote this evening.

In Committee, I think I am entitled to speak as many times as I wish. I apologise to the noble Lord, Lord Murphy, for interrupting him in full flow, but I still look to the Minister to give us some idea at this stage of how he sees it. What is the future fiscal framework? What does he have in mind? Will it be a deduction from the block grant, as the noble Lord, Lord Murphy, suggests, or will it not?

My Lords, I am very happy to supply the information that I gave previously at Second Reading, when I said that I would update noble Lords, before Report, on the progress of the fiscal negotiations that are going on between the Welsh and United Kingdom Governments. As I indicated then, the discussions are progressing well. The ministerial Joint Exchequer Committee has met twice and, according to reports I have had from both the Welsh and UK Governments, it is going well. I am not all over the detail; it would be unwise to be so until they are nearer to a conclusion. There will obviously be a reduction in the block grant because 10p income tax will be raised at the Welsh level. So the discussion is about exactly how we do what is right for Wales and for the United Kingdom within that context. It is good news that progress is being made.

I will press the Minister for clarification. Of course, if 10p is transferred over there will be a netting off, but if there is an increase of 1p in income tax there would not be a reduction in the block grant because of that.

That is absolutely right. The National Assembly for Wales doing something imaginative to raise income will be to the benefit of the Assembly and of Wales. That is the whole point of what is going on. I take issue with the noble Lord, Lord Murphy, in suggesting that there is something sinister in the change of heart here. Other parties have had this change of heart; it is a recognition that we do not need a referendum. I suspect that many of the people urging it are hoping to delay things—I exempt the noble Lord from this—or, indeed, defeat it. That should not be the aim. The aim should be to do what is right for Wales. I strongly and sincerely believe that if we were to have a referendum, it would be carried.

On the issue of taxation levied on the people of Wales, will the Minister spend a moment explaining the logic, or lack of it, of a fiscal regime that has ensured, as he will acknowledge from his own experience, huge reductions in the public resources available to local authorities throughout Wales, with awkward consequences for some services and tragic ones for others? These include adult social care and post-16 educational opportunity. Where is the rationality in imposing such a fiscal regime nationally—for purposes I disagree with, but nevertheless that is the law of the land—and simultaneously introducing legislation that would, without a referendum, or further ado, allocate to the Welsh Assembly the power to vary, including raising, income taxes?

My Lords, we are being taken in a direction completely off the particular provision in the Bill. As I made clear before, this is a power which, as the noble Lord has just indicated, would enable the National Assembly for Wales to vary income tax up or down, or to ensure that it stays the same if that is what it wants to do. I myself dislike the word “imposing” on the National Assembly or people of Wales. Discussions are going on between the Finance Minister and his team in the National Assembly for Wales—for whom I have the greatest respect—and the Chief Secretary to the Treasury and his officials. I believe that an agreement will be reached. If it is not, we do not get the legislation, because the LCM will only come forward if an agreement is reached to the satisfaction of the National Assembly for Wales, and presumably the Welsh Government as part of that. That will carry things through. I do not see that the local government position is anything to do with this.

Clause 17 agreed.

Amendment 24

Moved by

24: After Clause 17, insert the following new Clause—

“Lending for capital expenditure

(1) In section 122A of the Government of Wales Act 2006 (lending for capital expenditure), in subsections (1) and (3), for “£500 million” substitute “£2 billion”.(2) In section 161(2) of the Government of Wales Act 2006 (commencement), after “120(3) and (7)” insert —“section 122A(1) and (3),”.”

My Lords, to me this is one of the key clauses in the whole Bill. I have made no secret of my lack of enthusiasm for the way the Bill has been written, but we are now living in very difficult financial times. The IFS has claimed that there will be a 3.2% cut, in real terms, in the Welsh budget over the next three years. We have little confidence that the UK Government are going to make up the losses that Wales will face as a result of Brexit. The IFS has said that if they do not make up the losses, that will lead to a doubling of those cuts if EU aid is not replaced after Brexit. I am aware that there has been a promise until 2020, but nothing beyond that.

The devolution of tax powers through the Wales Act 2014 will also enable the Welsh Government to borrow in order to invest in capital infrastructure. That will benefit the economy and communities across Wales. The current level of capital borrowing permitted to the Welsh Government is £500 million. That is based on the devolution of two fairly minor taxes: stamp duty land tax and landfill tax. In the Command Paper published alongside the Wales Bill in March 2014, the UK Government committed to reviewing the level of capital borrowing available to Wales if income tax is partially devolved. This Wales Bill will result in the transfer of an additional £2 billion in tax revenue to the Welsh Government, and so will significantly increase the size of the independent revenue stream available to the Welsh Government. In line with the commitment given in 2014, the Bill provides an opportunity to give Welsh Ministers a more meaningful degree of borrowing power to reflect the significant increase in devolved tax revenues under their control.

The Silk commission, of which the noble Lord, Lord Bourne, was a member, recommended that the Welsh Government’s capital borrowing limit should be at least proportionate to the limit agreed for Scotland, taking into consideration the relative lack of exposure to PFI in Wales. With comparable devolved tax powers, the UK Government agreed a capital borrowing limit of £2.2 billion in the Scotland Act 2012. In line with the recommendation from the Silk commission, a capital borrowing limit of £2 billion would therefore be proportionate to that agreed for the Scottish Government, after taking into account the Welsh Government’s lower exposure to PFI. The UK Government’s position that a limit of £500 million is appropriate, as set out in the Government of Wales Act, is contradictory to the approach taken for the Scottish Government in the Scotland Act. At a time when there are significant economic uncertainties, the ability to bring forward additional capital investment would provide a much needed economic stimulus to Wales. With a capital borrowing limit of £2 billion, the Welsh Government would have the fiscal tools available to support the level of investment needed in Wales.

The Welsh Government and Assembly are anxious to grow up, but it is as if the UK Government still want to treat them like children, telling them how much money they can spend and that they are allowed to borrow only if they tell “daddy” what they are going to spend the money on. An increase in the Welsh Government’s borrowing capacity is absolutely critical, and I for one would find it very difficult to support the Bill without that increase. We understand that this will form part of the discussions on the financial framework, but we strongly recommend that both the Welsh Government and the UK Government come to an agreement on this critical area. I ask the Minister to give a commitment that there will be a revision of the amount that is currently in the Government of Wales Act.

My Lords, I will speak briefly to Amendment 24 moved by the noble Baroness, Lady Morgan of Ely, which seeks to raise the limit on capital expenditure lending from £500 million to £2 billion. We touched on this issue in our debate on the previous group of amendments.

In the economic climate we find ourselves today, with further uncertainties ahead of us, it is more necessary than ever to have available to the Welsh Government a facility to boost jobs and stimulate growth by way of capital investment—in particular, in capital expenditure on infrastructure projects. Many expect the Chancellor to reflect that sentiment in his Autumn Statement later this month. The Bill imposes on capital borrowing the disappointing limit of only £500 million, which is not enough even to pay for the Welsh Government’s M4 relief road scheme—unless they were to adopt a more sensible route than that currently being advocated.

My party colleagues and I may disagree with the Welsh Government’s opinions on how to use capital borrowing, but we do agree that the National Assembly, as the body closest to the people of Wales, not Westminster, should decide how this money is spent.

As Plaid Cymru Leader Leanne Wood set out earlier this year, following the UK’s regrettable decision to leave the European Union, the £500 million limit on capital borrowing powers is much too restrictive. The deal, made almost four years ago, on this element of the Bill does not reflect the new economic context in which we find ourselves. We currently have historically low interests rates and we need to mitigate the impact on jobs and wages of any economic shock brought about by Brexit. Perhaps most critically, we have productivity levels that show no sign of improving. For this to change, most economists believe that we need a major increase in infrastructure investment.

I alluded in earlier debates to Plaid Cymru’s £7.5 billion national infrastructure commission for Wales proposals as a comprehensive and expansive strategy for investing in the infrastructure of Wales. I urge the Minister to read it. Schools, hospitals and vital transport links could all be developed through an effective use of capital borrowing. Therefore, although we would like to see no limit at all on the capital borrowing powers for Wales—that would be a responsibility for a responsible Welsh Government—or, if not that, a substantially higher one, this amendment is a step in the right direction and for that reason I support it.

My Lords, I am not sure that I know what the upper limit should be. However, I sympathise with the view of the noble Baroness who moved the amendment that the present limit seems on the low side. The Treasury has published a very useful paper setting out the allocations in England, Wales and Scotland. The noble Baroness referred to the comparison with Scotland. I would like to know the logic behind the Government’s views in setting this limit and the differences that appear in that Treasury paper. I will withhold my judgment until I have heard the case advanced by the Government.

My Lords, undoubtedly £500 million is an anachronistic figure. As has been said several times this afternoon, devolution has moved on, and time has moved on. However, I draw noble Lords’ attention to another aspect of the Silk recommendations—namely, the fact that the report said that the borrowing limit should be subject to review at each spending review. Therefore, it is my view that, rather than putting a bald figure in the legislation, we need not just a figure but a mechanism in law which requires the regular review of that figure. Further, the Explanatory Notes should at the very least give some kind of rationale for how the figure was arrived at as the appropriate figure. I ask the Minister to address that issue in his reply.

Having said that, the key point is that borrowed money has to be paid back out of future spending—so the more the Welsh Government borrow, the more they eat into their spending capability in future years. I am rather cautious about this figure of £2 billion, because the Scottish Government have a right to borrow £2.2 billion. Therefore, to balance this properly, we need to look in great detail at other borrowing obligations that the Welsh and Scottish Governments have.

Given that the Bill clears the way for income tax powers, it is obvious to me that the £500 million figure needs to be looked at—but we need more clarity on the figure that is there and a proper mechanism for future revision.

My Lords, the figure of £500 million, set as the limit for borrowing by the Welsh Government, is so small as to be well inside the margin of error in any computation of UK Government borrowing. Will the Minister say what £500 million is as a percentage of the UK Government’s present borrowing requirement? To set the figure so low is contemptuous of Wales. With the powers to vary income tax devolved, the Welsh Government will have the capacity to service a higher level of borrowing, even if interest rates rise. I agree with those who have said that it seems very odd to fix a figure in legislation. Will the Minister also explain why that fixed figure of £500 million is in the Bill? I think that the Government should be more generous towards the people of Wales and allow them the opportunity to invest as they need for the future of the economy of Wales.

My Lords, if EU investment in south Wales suffers, as some of us fear it might, we could find ourselves with some very dire unemployment problems. Therefore, we will need every penny possible to reinvest in that area.

My Lords, I thank the noble Lords who have participated in the debate on Amendment 24, and I thank the noble Baroness, Lady Morgan of Ely, for moving it.

The amendment seeks to quadruple the Welsh Government’s capital borrowing limit set in the Wales Act 2014 from £500 million to £2 billion. As the noble Baroness is of course aware, borrowing falls within the scope of the funding discussions between the United Kingdom Government and the Welsh Government that are proceeding alongside the Bill. As we know, the Bill cannot proceed without the legislative consent Motion, which is dependent on those discussions being successful.

I refer noble Lords to the communiqué published following the Joint Exchequer Committee meeting in September. The two Governments discussed the rationale for the existing capital borrowing arrangements and agreed to consider changing them. Therefore, I can give the noble Baroness the undertaking that she seeks, and I think it is consistent with what I said in the previous debate. It is unthinkable that the matter would not be raised. However, I think she will understand that I cannot give a specific figure. Indeed, the comments of the noble Baroness, Lady Randerson, perhaps indicate that we do not want to constrain the figure in case the discussions lead to it going higher than that. I have given noble Lords an undertaking, which I will repeat: ahead of Report I will give a summary of where we are on the fiscal discussions, which are going well—including, as I understand it, in this area.

As noble Lords have indicated, there are two key considerations in relation to the borrowing limit. The first is ensuring that borrowing is affordable for the Welsh Government. Of course, the transfer of the taxation powers that we have just been looking at will certainly help in that regard, as will the smaller taxes that have already been transferred. The second is ensuring that borrowing is appropriate within the funding arrangements for the United Kingdom as a whole. I am sure that those two points are being borne in mind during the discussions—which, as I said, seem to be going well.

In relation to Welsh Government affordability, as I have indicated, we need to ensure that the Welsh Government have sufficient independent revenues to manage their borrowing costs. As I said, the new taxation powers that are being carried forward by the Bill will help in that regard. In relation to the wider United Kingdom funding arrangements, it is important to recognise that, within any given fiscal position, additional Welsh Government borrowing will mean less spending in the rest of the UK, including in relation to some of the issues funded for Wales from United Kingdom taxation.

Those are the issues being looked at, and I can give two undertakings: first, we will not get the legislation without the LCM; and, secondly, I repeat the undertaking that I gave at Second Reading—I appreciate that not all noble Lords were here for that—to give a summary of where we are so that noble Lords will be aware of it ahead of Report.

I understand the points that are being made and I think all noble Lords who have spoken—the noble Lord, Lord Wigley, my noble friend Lord Crickhowell, and the noble Lords, Lord Howarth and Lord Berkeley—recognise the need for these powers in order that the Welsh Government can borrow. Of course, it is then for the Welsh Government to decide how they borrow and how they spend the money—that is within their devolved competence.

Given the undertakings I have given, I ask the noble Baroness to withdraw her amendment.

I thank the noble Lord for those undertakings. I was particularly pleased to hear that the amount could even go above £2 billion. We will certainly underline and take note of that. I beg leave to withdraw the amendment.

Amendment 24 withdrawn.

House resumed. Committee to begin again not before 5.55 pm.

Brexit: Article 50


My Lords, with the leave of the House, I will now repeat a Statement made in the other place earlier today by my right honourable friend the Secretary of State for Exiting the European Union. The Statement is as follows:

“With permission, Mr Speaker, I will now make a Statement on the process for invoking Article 50. The Government’s priority at every stage following the referendum has been to respect the outcome of that referendum and ensure it is delivered on. To leave the EU was the clear decision of the British people. It was taken after a six-to-one vote in this House to put that decision in their hands. As the Government told voters: ‘This is your decision. The Government will implement what you decide’. No ifs, no buts. So there can be no going back. The point of no return was passed on June 23.

Implementing the decision to leave the EU means following the right processes. We must leave in the way agreed in law by the UK and other member states, which means following the process set out in Article 50 of the treaty on the European Union.

We have been clear about the timing. There was good reason why the Government did not take the advice of some in this House and trigger Article 50 immediately. Instead, the Prime Minister was clear that she would not invoke Article 50 before the end of this year. This is giving us the time to develop a detailed negotiating position. But we have also said that the process should not drag on, and that we intend to trigger Article 50 by the end of March next year.

Let me now turn to the issues at hand. Legal action was taken to challenge the Government on the proper process for triggering Article 50. We have always been of the clear view that this is a matter for the Government: that it is constitutionally proper and lawful to begin to give effect to the referendum result by the use of prerogative powers. As I have said, the basis on which the referendum was held was that the Government would give effect to the result of that referendum. This was the basis on which people were asked to vote.

Our argument in the High Court was that decisions on the making and withdrawal from treaties are clear examples of the use of the royal prerogative, and that Parliament—while having a role in this process which I will come on to—has not constrained the use of the prerogative to withdraw from the EU. Our position in the case was therefore that the Government were entitled to invoke the procedure set out in Article 50.

The court has, however, come to a different view, and held that the Government do not have the prerogative power to give notice under Article 50 without legislation authorising them to do so. The court said the starting point was that the Crown does not have power to vary the law of the land using its prerogative powers unless Parliament legislated to the contrary. It held that the European Communities Act 1972 brought rights arising under EU law into the law of the United Kingdom, and that the Crown has no prerogative power to withdraw from the EU because the effect of withdrawal would be to take away those rights.

Let me be clear about this: we believe in and value the independence of our judiciary, the foundation upon which our rule of law is built. We also value the freedom of our press. Both these things underpin our democracy. The Government disagree with the court’s judgment. The country voted to leave the European Union in a referendum approved by an Act of Parliament. Our position remains that the only means of leaving is through the procedure set out in Article 50 and that triggering Article 50 is properly a matter for the Government using their prerogative powers. We will appeal the High Court’s judgment at the Supreme Court.

Given our appeal, it would not be appropriate to comment further on the details of the legal arguments. I hope that the House will understand this, but let me say a brief word about the process of our appeal. We have taken two necessary procedural steps. First, the Government have been granted a certificate to bypass the Court of Appeal and ‘leap-frog’ the case to the Supreme Court. This will ensure that, when we lodge our appeal, it will be heard directly in the Supreme Court without further delay in the courts.

Secondly, we will this week apply for the substantive permission to appeal to the Supreme Court. It is likely that any hearing will be scheduled in the Supreme Court in early December. We would hope the judgment would be provided soon after. This timetable remains consistent with our aim to trigger Article 50 by the end of March next year.

We are now preparing our submissions to the Supreme Court in the usual way. As I have said, it would not be proper to go into those in great detail here today, but the core of our argument will remain that we believe that it is proper and lawful for the Government to trigger Article 50 by the use of prerogative powers.

Of course, there is also litigation under way in Northern Ireland. This is considering a number of specific issues linked to Northern Ireland’s constitutional arrangements. The High Court in Belfast found in the Government’s favour on these points. We welcome that outcome. A hearing in Belfast is being held tomorrow to consider whether an appeal by the claimants in this case should also leap-frog to the UK Supreme Court and whether the issues that overlapped with the English courts should remain stayed, pending the outcome of the Supreme Court.

Again, it would not be appropriate for me to say more on this at this stage, except that in the event of any appeal in the Northern Ireland litigation, the Government will robustly defend their position. For the avoidance of doubt, our view is that the legal timetable in relation to this case in the event of an appeal should also be consistent with our commitment to notifying under Article 50 by the end of March next year.

I have said that, because of our appeal, I will not go into detail here on the points of law that were raised in the High Court’s judgment, but let me set out some fundamental principles for how we move ahead. First of all, our plan remains to invoke Article 50 by the end of March. We believe that the legal timetable should allow for that.

Secondly, the referendum must be respected and delivered. The country voted to leave the European Union, in a referendum provided for by an Act of Parliament. There must be no attempts to remain inside the EU, no attempts to rejoin it through the back door and no second referendum. The country voted to leave the European Union and it is the duty of the Government to make sure we do just that. Parliament had its say in legislating for the referendum, which it did in both Houses, and with overwhelming majorities in this House and cross-party support. The people have spoken and we intend to act on their decision.

Thirdly, irrespective of the ongoing court process, there is an important role for Parliament. Parliament will have a central role in making sure that we find the best way forward and we have been clear that we will be as transparent and open as possible. There have already been a number of debates and parliamentary Statements on Brexit, and the Prime Minister has pledged that that process will continue before Article 50 is invoked.

I informed the House in October that there would be a series of debates on Brexit in government time. The first is this afternoon. This is on top of a number of other debates and opportunities for scrutiny. The new Select Committee on Exiting the EU has been established. This provides another place for parliamentary scrutiny of our withdrawal from the EU and the committee will be visiting my department tomorrow.

The Government will bring forward legislation in the next Session that, when enacted, will repeal the European Communities Act 1972 on the day we leave the EU. This ‘great repeal Bill’ will end the authority of EU law and return power to the UK. We have been clear that EU law will be transposed into UK law at the time we leave, providing certainty for workers, businesses and consumers. This will be an Act of Parliament, which we intend to have in place before the end of the Article 50 process. It is important to remember that Article 50 is the beginning of this process; it is not the end.

As the Prime Minister has made clear, there will be many opportunities for Parliament to continue to engage with the Government once Article 50 has been invoked. When negotiations have concluded we will observe in full all relevant legal and constitutional obligations that apply, but there is a balance to be struck between parliamentary scrutiny and preserving our negotiating position, which is why the House unanimously concluded last month that the process should be undertaken in such a way that respects the decision of the people of the UK when they voted to leave the EU on 23 June and does not undermine the negotiating position of the Government as negotiations are entered into. We will give no quarter to anyone who, while going through the motions of respecting the outcome of the referendum, in fact seeks ways to thwart the decision of the British people.

To conclude: we are disappointed by the court’s judgment in this important case. We will appeal that judgment to the Supreme Court. None of this in any way diminishes our determination to respect and deliver on the outcome of the referendum and to notify under Article 50 by the end of March next year. We are going to get on with delivering on the mandate to leave the European Union in the best way possible for the UK’s national interest—best for jobs, best for growth and best for investment. I commend this Statement to the House”.

My Lords, that concludes the Statement.

I thank the Minister for repeating the Statement, which I feel he had no hand in drafting. My guess is that he would have preferred to get on with allowing Parliament to trigger Article 50. Indeed, how much better it would have been if the Government had listened to the wise words of our Constitution Committee in September, when it said that a parliamentary vote would be needed. It is hard to understand why the Government are getting in such a tizzy about this. Rather like after their tax credit defeat, they overreact when faced by any challenge.

In September, I commented that,

“leaving the EU is not a simple step outside but a journey”.—[Official Report, 8/9/16; col. 1131.]

But will we leave Brussels via Dunkirk or Ostend, by train through Calais, by plane via Dublin or, heaven forfend, by the good ship “Titanic” piloted by Boris Johnson?

These are serious matters. In our economy, highly dependent on services, we have to secure a future for our creative, internet, design, legal, engineering and financial services and for intellectual property. We must be sure that our insolvency practitioners, chasing down funds for UK-based creditors, have access to squirrelled wealth in EU countries—currently allowed for under the mutual recognition of appointments—and that our lawyers retain rights of address and legal privilege. We need to safeguard the future of UK nationals living abroad as they lose their EU citizenship. We have to disentangle our competition law from that of the EU, law developed to protect consumers from monopolies and cartels, while helping our exporters, who will still be subject to EU competition rules.

Until we know the terms on which we will leave the EU and our relationship with the remaining 27 member states after we leave, we cannot negotiate trade deals with the rest of the world, so the terms on which we disengage from the EU and their consequences should be debated in Parliament. Parliament needs to question whether the Prime Minister has the right negotiating objectives for how we leave the EU. What priority will she give to remaining in the single market? Is she safeguarding—indeed, promoting—our regions, which have done less well from globalisation? Is she seeking to enhance consumer, environmental and workplace protections? Are her objectives grounded in security considerations and promoting human rights and are they acceptable to the electorate?

The British people decided that we should leave the EU, but it is for Parliament, not simply Downing Street, to debate the exit details. Whichever route we take, we have a long journey ahead of us. In that time, my fervent hope is that we see no more of the British press, which ought to recognise the sovereignty of Parliament and the independence of our judiciary, printing 72-point headings naming the Master of the Rolls and the Lord Chief Justice as “Enemies of the people” simply for doing their job and pointing out that, constitutionally, the Government,

“does not have power under the Crown’s prerogative to give notice pursuant to Article 50 … for the United Kingdom to withdraw from the European Union”.

The High Court ruling will not derail Brexit. However, given that the Government were caught short by the referendum result and none of the preparatory work was done in the case of a Brexit outcome, can the Minister assure the House that they will not find themselves in the same position this time if the judgment is upheld, and that a Bill is in preparation? Our EU committees have already started work on the myriad issues to be addressed. Could the Minister confirm that the Government will listen to the experience and knowledgeable words of these colleagues as they go forward?

My Lords, I also thank the noble Lord for repeating the Statement. I could not agree more with the assertion in it that implementing the decision to leave the EU means following the right processes, including securing the time to develop a detailed negotiating position. The right processes mean implementing the repeated pledge to honour UK parliamentary sovereignty and seeking parliamentary approval for the negotiating position.

By December, the Government will have lost six months in that process. In fact, they seem to be tying themselves up in knots trying to avoid such parliamentary involvement, getting bogged down in their misguided pursuit of executive autonomy over the Article 50 process in an unnecessary and delay-inducing court case. Their incoherence is displayed in having to offer special comfort deals to particular firms such as Nissan instead of being clear in regard to the single market and the customs union. This is creating destabilising uncertainty for all kinds of economic operators and other bodies. Now we hear the Prime Minister talk about putting on the table more visas for Indian nationals, while apparently immigration is treated as a barrier to the single market. That seems somewhat contradictory.

We must rely on leaks in the press to try and read the Government’s mind—or read the tea leaves. Indeed, there is much speculation about a Bill but no such indication in the Statement today. I join the noble Baroness in asking for clarification on that. We need a respectful relationship between Government and Parliament, one indeed sketched out in several reports of our own EU Select Committee under the chairmanship of the noble Lord, Lord Boswell, and one last month from the Constitution Committee under the chairmanship of the noble Lord, Lord Lang of Monkton. A lot of work and evidence went into those reports but the Government just brushed them aside.

The Government are not only behaving arrogantly towards Parliament when the political constitutional basis for Parliament’s role was in fact clear without the legal process, but also—to the dismay of people across the political spectrum—indulging in populist and xenophobic language, culminating in the failure to properly defend the institution of the judiciary. Freedom of the press may incorporate a freedom to criticise a particular judgment but not to indulge in scurrilous personal and institutional abuse of judges and the judiciary. It is very disappointing that neither in the days since the High Court judgment nor today have the Government rebuked the nature of the press comments notably in the Daily Mail and rather more shockingly in the Daily Telegraph, including the famous “enemies of the people” slogan evocative of Nazi Germany. It would be good to hear from the Government a condemnation of that kind of press coverage, and of the incitement to rioting in the streets from the former leader of UKIP, Mr Farage.

The Government say they intend to act on the decision to leave but it is on the character of that action that we need clarity since there are many different varieties of Brexit—probably more than 57. It is necessary to be respectful to those who voted remain if the Prime Minister genuinely wants to unite the country. The phrase in the Statement about giving no quarter is a rather disturbing signal.

Liberal Democrats in no way seek to undermine the negotiating position of the Government. Parliament having an overview of the objectives would not do so. Indeed, having the backing of Parliament, as was mentioned in our several reports, would strengthen the Government’s hand in those negotiations. We are not asking for details of particular trade-offs or red lines.

Any delay is down to the Government. If they act in good faith, there is no reason not to meet a March timetable. This does not mean a series of interesting but essentially purposeless general debates in which the Government stonewall, but an opportunity to get to grips with a concrete plan and a substantive strategy. Can the Minister therefore tell us whether the Government are planning to inform Parliament about their negotiating objectives in a White Paper, as is rumoured, and what kind of Bill they are planning to produce? The Government need to stop waffling and sidestepping and give us enough meat to be able to vote for the triggering of Article 50.

I thank the noble Baronesses, Lady Hayter and Lady Ludford, for their contributions. I am determined to work constructively with Members of this House who want to make a success of Brexit. I said that at the start, that offer remains, and I am grateful to noble Lords who have spared their time and their expertise to meet me in private. As I say, my door remains open to anyone who wishes to have any conversation with me.

The noble Baroness, Lady Hayter, asked why we are appealing. As I said in the Statement, our position has been and remains that the decision to leave the EU was taken by the people in a referendum and that triggering Article 50, the starting point of the process, is a matter for the Government. That is an important principle, which is why we are appealing the judgment. As regards what would happen were we to lose, we are obviously prepared for all eventualities, but equally obviously, we are focused on the appeal to the Supreme Court. As we said last week, the logical conclusion to draw from the High Court judgment is that legislation would be necessary, but we are appealing the judgment and hope that the Supreme Court will rule differently. In the event that it does not, we will assess what remedy the Supreme Court requires and will set out our approach at that point. Therefore the speculation about a Bill is just that at this juncture—speculation.

The noble Baronesses, Lady Hayter and Lady Ludford, referred to the response to that court ruling. To embellish a little what I said in the Statement, I strongly believe, as the Government do, that one of the basic tenets of a free society is freedom of speech and expression, but so too is the independence of the judiciary, which is clearly a cornerstone of our democracy in maintaining the rule of law. We must observe due process and the independence of the judiciary and abide by its rulings. Meanwhile, however, we must all respect the outcome of the referendum and the wish of 17.4 million people to leave the EU.

On the role of Parliament, the noble Baroness, Lady Ludford, said a fair amount just a moment ago. She also talked about this on the “Today” programme this morning, when I was munching on my cornflakes, saying that the Government were completely excluding Parliament, and she just said that the Government are being arrogant towards Parliament. I will not get into a war of words on this. I will just put on the record what the Government have done so far. They have answered 302 Parliamentary Written Questions, made three Oral Statements, answered seven Oral Parliamentary Questions, given four Ministerial Statements and made 10 Select Committee appearances, and have replied to over half a dozen other debates. Currently there are over 30 Brexit-themed Select Committee inquiries. I make that point to say that we are giving Parliament the chance for scrutiny. On top of that, Parliament will vote to repeal the ECA and, as I said in the Statement, parliamentary procedure will be followed to ratify any treaty.

Furthermore, on the role of Parliament, our key aim in the negotiations will obviously be to deliver the best outcome while protecting the national interest. The Government have said that we will be as open as we possibly can be and we have set out our strategic aims. I argue, as I have done before, that we will not achieve a good outcome if this negotiation is run from the back seat by the House of Commons and this House. No negotiation can possibly be run in that way. Indeed, if Parliament insists that triggering Article 50 should be conditional on us going into this negotiation with all our cards face up for everyone on the other side of the table to see, that detailed minimum negotiating position will quickly become the maximum possible offer from our negotiating partners. Furthermore, the talk of a second referendum from some in this House and elsewhere will simply encourage the EU to impose difficult terms in the hope that the British people will change their minds if only the question is put to them again. To those who argue for certainty I ask: what greater uncertainty can there be than for that to be injected into the system?

Therefore, parliamentary scrutiny? Absolutely. But telling the Prime Minister which cards to play and seeking to force her to disclose her hand to those with whom she will be negotiating? I say no.

My Lords, I entirely agree with my noble friend that the principles of judicial independence and of freedom of the press are fundamental to our constitution. However, my freedom as a citizen does not entitle me to assault my neighbour, and the freedom of the press certainly does not entitle the press to insult, in a vicious and vocal manner, judges who are carrying out their statutory responsibility.

Everybody who took part in the case made it clear that the judges were asked to determine a question of law, which was entirely within their jurisdiction. They made it abundantly clear that they had no views to express on Brexit or anything associated with it except on the question of law which was put to them, which is simply whether the prerogative power enables this triggering to happen. I express no view upon that matter because it has been appealed to the Supreme Court and I verily believe that in due course, it will address it and I await its judgment. In the meantime, however, I am concerned about the reaction of a substantial section of the press, which needs to be dealt with now, which is why I felt it necessary to say what I have said. It is entirely necessary that the independence of the judiciary should be respected, and I believe that all my colleagues in this House are of the same opinion. I hope that the Minister is also of the same opinion.

My Lords, I entirely agree with my noble and learned friend that the independence of the judiciary and the right of the judges to determine without fear or favour the issues before them are absolutely sacrosanct. They are there to use their best endeavours to interpret and apply the law, which is clearly what they have done and will continue to do.

My Lords, I entirely endorse what the noble and learned Lord, Lord Mackay of Clashfern, said. I recognise that the Government cannot and should not try to control the press. I do not read the result of the referendum as throwing away all our constitutional protections. One of those constitutional protections is the rule of law—that depends upon the independence of the judiciary. The judiciary is strong; it is fine as long as it knows that the Government will support it against scurrilous attacks.

What is so disappointing about this Statement and the conduct of the Government since Thursday, when these scurrilous attacks began, is that: first, at no stage have they said that they accept that the three judges acted in accordance with their judicial oath; and secondly, nobody on behalf of the Government has separated themselves from the remarks of Mr Sajid Javid, who described the three judges as thwarting the will of the people. We in this House respect the noble Lord, Lord Bridges of Headley, and we know that he will have prepared properly for this Statement. Can he confirm on behalf of the Government that they accept that the three judges acted entirely in accordance with their judicial oath? Secondly, can he make it clear that the statement of Mr Sajid Javid on Thursday evening did not represent the views of the Government?

I will absolutely answer the first point by saying: yes. Indeed, I read with interest the noble and learned Lord’s article in the Daily Mail over the weekend, in which he made a number of these points. I completely agree that they acted in good faith and according to their oath. We are questioning the judgment and that is why we are appealing but I am certainly not going to stand here and say that they acted in bad faith. As regards what else he had to say, I have nothing further to add.

My Lords, it has been said that 17 million people voted in favour of leaving the EU; that still leaves a very divided country. Not everybody who voted to remain can be assumed to be trying to thwart the decision of the British people simply by asking legitimate questions. The final part of the Statement says:

“We are going to get on with delivering on the mandate to leave the European Union in the best way possible for the UK’s national interest”.

That is defined as,

“best for jobs, best for growth and best for investment”.

Does the Minister agree that we should perhaps have added, “Best for social order and the nature of our public and political discourse”?

The right reverend Prelate makes a good point. He points to a sin of omission here. I totally agree that we need to be looking at what is best for the communities of this country; that is why I am delighted that I have met with representatives of the Church of England to discuss this. Brexit raises a whole range of issues which are posing challenges for communities. I know that is so as regards EU funding. There are concerns across the board on various points. I am happy to discuss those with all faith groups and I am delighted that the Church of England has agreed to do so.

My Lords, will the Minister inform the Prime Minister that she should invite the Minister for Justice to study her constitutional duties under the Constitutional Reform Act—particularly Section 3(1) and 3(6)—to defend the judiciary, in view of her half-hearted and delayed defence of the judiciary and her failure to rebut some of the inflammatory comments in the newspapers, in which she was joined by a senior Minister as well?

I hear what the noble and learned Lord says. I have made my position clear on this and I really do not have very much more to add.

Can the Minister tell us when the Government intend to inform Parliament about the content that they would like to see in the framework for our future relationship with the European Union? The Minister will recognise that I am quoting from the language of clause 2 of Article 50. Also, when will we be told whether leaving the European Union will also mean leaving the EU customs union—a point of some importance to manufacturers with modern, just-in-time supply chains?

The noble Lord makes an extremely good point and speaks from considerable experience. We will be as open and transparent with Parliament and businesses as we possibly can, with the important caveat that I set out: we cannot and must not undermine our negotiating position and the national interest. As the noble Lord understands, we are looking at considerably complex issues right now. That is why we are looking at 51 sectors of the economy and at issues such as the supply chain. As I say, when we are in a position to do so we will be as open and transparent as we can be.

My Lords, we all believe in the freedom of the press and in the independence of the judiciary. But I doubt very much whether there is a single one of your Lordships who does not believe in the supremacy and sovereignty of Parliament. The decision made by the High Court judges underlines and ensures the application of that doctrine. Why, in the four corners of this Statement, is there no reference to the sovereignty of Parliament?

My Lords, the noble Lord asked me last week whether we respect the sovereignty of Parliament. We do. We respect the sovereignty of Parliament and the rule of law, but the sovereignty of Parliament reflects the will of the people—and the people voted for a Government to give them a referendum on leaving the European Union. Parliament passed that legislation and 17.4 million people voted to leave the European Union.

My Lords, in view of all the high feelings which we have just heard, would it not be wiser and better in the interests of a smooth and speedy Brexit, which I certainly want to see, to work with Parliament from now on rather than battling against it? Why can the Government not give us a really detailed Green Paper, outlining and analysing all the complexities of the situation? It would be nothing to do with the negotiating position, which comes quite separately. We could then debate that Green Paper over two or even three days and give the best input of Parliament from both its Houses. The Government could then bring forward a one-clause Bill authorising the Article 50 process to go forward. Is that not a simpler and more constructive way of proceeding than the one we are on now?

I hear what my noble friend has to say but the Prime Minister has made it clear that we are going to appeal this judgment. That is the position we are in. As regards setting out our position on the future negotiations, as I said to the noble Lord, Lord Kerr, we have been clear that we will be as transparent and open with Parliament as we can possibly be, once we have finished our analysis of the options open to us.

My Lords, the Minister rightly celebrates the independence of the judiciary. However, my noble and learned friend Lord Falconer asked him to condemn the words of Sajid Javid, who by his words undermined what the Minister is saying. What the right honourable Minister said was completely unacceptable; indeed, those words corrode the very democracy that the noble Lord seeks to uphold. Please will he condemn the words of the right honourable Sajid Javid?

My Lords, your Constitution Committee did indeed state in its report on the invoking of Article 50 that it was constitutionally appropriate that Parliament should be involved in the various stages of the negotiations, including the triggering of Article 50. I am sure that we would still stand by that view. However, we accept the need to make progress and to make it reasonably rapidly, removing uncertainty not least from the economy and the concerns of the business community, and the possible jeopardising of the future of that economy should matters be drawn out unduly. Does my noble friend agree that the triggering of Article 50 is essentially a matter of timing? It is therefore not an appropriate time for diving into the detailed study of the Government’s negotiating plans, which it might anyway be inappropriate to lay before Parliament in advance and thus declare their position.

However, if it is a matter of timing, would it not be sensible to consider bringing before both Houses of Parliament a short and tightly drawn Bill and seeking the agreement of the various parties involved to achieve rapid progress through the House on a fast-track basis? That would remove the uncertainty that is causing so much concern; proper consideration can then be given to the negotiations. Finally, since this is about the invoking of Article 50 and not about what the Daily Mail said about the judges, could we have a debate on the invoking of Article 50 and the reports of the Constitution Committee and the European Union Committee on that subject?

On the second point, that is a matter for the usual channels. On the first point, I would certainly say that it is a matter of process. The Prime Minister and the Government have made it clear that we are going to appeal this judgment. I very much respect and value the work that the committee of the noble Lord, Lord Lang, does. We have tried to allay uncertainty wherever we can, be it by our approach to repealing the European Communities Act or to European funding. We are certainly doing that and will continue to look for ways in which we can mitigate it elsewhere.

My Lords, is it not the case that the Government have already laid out the basis of their negotiating strategy; namely, that we will insist on taking back control of immigration, that we will take back administration of justice in the UK to the UK courts, and that thereafter we will seek to do as good a deal as we can for trade in goods and services to the benefit of both the UK and our European partners? Given this basis, is there not plenty of time, following what the noble Lord, Lord Howell, said, for the Government to lay a Green Paper with rather more detail and get legislation through in time to meet their deadline of triggering Article 50 by the end of March?

My Lords, once again, I respect what the noble Lord has to say. I have set out as far as possible that we are undertaking that extensive analysis. Clearly he is absolutely right that we have set out the underlying principles of the Government’s negotiating position, and with that in mind, that is the basis upon which our analysis is proceeding. As regards a Green Paper, to which the noble Lord and my noble friend Lord Howell referred, we intend to be as transparent and open as possible in the course of events.

My Lords, to the extent that the Government cannot divulge their full negotiating hand prior to moving Article 50, does that not reinforce and make even more important that 20 months down the road, or whatever it is, when these negotiations have been concluded, the question should be put back to Parliament to take a decisive decision?

My Lords, I am sure the noble Lord will be delighted to hear that there will be considerable opportunities between now and then for us to have many more Statements, debates et cetera. As regards what will happen at the end, we have made it very clear that all treaties arising from the negotiations will be subject to the due process of constitutional precedents. On that, I have nothing further to add.

My Lords, why have the Government ignored the reports of the Constitution Committee referred to by the noble Lord, Lord Lang? Why is Parliament not being given the intentions regarding the presentation of specified information? Why are Ministers in principle not being required to report back to Parliament at all? Why is Parliament not being involved in the negotiation process subsequent to the initial determinations?

My Lords, we have taken the position we do on the court case—if I understand the noble Lord correctly—because we believe that starting the process of triggering Article 50 is a matter for the Government. As regards the negotiation process, I have nothing further to add to my response to the noble Lord, Lord Butler.

My Lords, why is the Minister so reluctant to condemn the scurrilous attacks made in the press on Her Majesty’s judges? Does he not accept that what they were asked to do was to look very carefully, historically and analytically, at the prerogative powers? Those powers started as a monarchical dictatorship and were gallantly challenged in the 17th century in the civil war. Today, the remnant is not sufficient to allow the Government to do anything that would further the process of Article 50. Had the judges done anything different they would have been betraying their oath and would have indeed been unworthy of their position. They have acted in the very best traditions of the British judiciary.

As I said, I am not going to go much beyond what I said before. I totally respect and wish to protect the independence of the judiciary, and I am absolutely sure that those judges acted in good faith.

The Statement seems to imply that the referendum made a decision to leave the European Union. Those of us who served on the Bill setting up the referendum know that that is not so; it was clearly an advisory referendum. It is therefore very important that the Government should not now treat it as a mandatory referendum which would be contrary to and incompatible with our system of representative parliamentary democracy. I think the right thing to do now is to take the advice of the referendum, but it is clear that on the details—the expression “Brexit means Brexit” is totally meaningless—Parliament should be able to take a view on whether to implement Article 50 and go along with the judgment of the High Court.

My Lords, the Government are appealing against the judgment of the High Court and believe that the views of the 17.4 million people who voted to leave should be respected. As regards the position of this House, I repeat all the points I said before about the role it has so far had in setting up the referendum and the role it will have in due course in issues such as repealing the European Communities Act.

Defence Estate


My Lords, with the leave of the House I shall now repeat a Statement made in another place by my right honourable friend the Secretary of State for Defence, “A Better Defence Estate”. The Statement is as follows:

“With permission, Mr Speaker, I would like to make a Statement on our strategy for a better defence estate. Our defence estate is where our people work, live and train, where advanced equipment is maintained and where cutting-edge research is undertaken. It is the place where major exercises are conducted and major operations launched.

Our estate is vital, but it is also vast. We control almost 2% of the United Kingdom’s land mass, an area almost three times the size of Greater London. Yet bigger does not mean better. While the size and structure of our forces have changed to meet different threats, our estate has failed to adapt. It is too inefficient. It costs £2.5 billion a year to maintain, with 40% of our built assets more than 50 years old. And it often fails to meet the needs of our Armed Forces and their families, with capabilities spread across old, small, remote sites, often removed from population centres and job opportunities.

Last year’s strategic defence and security review committed to increase the defence budget in real terms every year of this Parliament, with a £178 billion equipment plan to create a world-class Joint Force 2025, but an ambitious joint force needs an estate to match, so today I set out a long-term strategy to achieve that ambition.

First, we will transform an estate built for previous generations of war-fighting into one that better supports military capability and the needs of our Armed Forces. It will help deliver Joint Force 2025 by bringing people and capabilities into new centres of specialism and clustering units closer to their training estates. Since the beginning of this year, I have announced plans to dispose of 35 of our most costly sites. Today, based on advice from the Chiefs of Staff, we are going further by freeing up a further 56 sites by 2040 and bringing the total of sites released to 91.

I now turn to what this means in practice. It means that the Royal Navy will continue focusing on operating bases and training establishments around port areas and naval stations, with surface ships in Portsmouth and Devonport; all the UK’s submarines on the Clyde; an amphibious centre of specialisation in the south-west, based around Devonport; and helicopters based at Yeovilton and Culdrose. It means the Army having specialised infantry in Aldershot; mechanised, wheeled capability, including two of our new strike brigades, in Catterick; air assault forces in Colchester; armoured and tracked capability around Salisbury Plain; medical services in the West Midlands; and hubs of light infantry battalions in London, Edinburgh, Lisburn, St Athan, Blackpool and Cottesmore. It means the RAF building on its centres of specialism with combat air in Coningsby, Marham and Lossiemouth; intelligence, surveillance and reconnaissance at Waddington; air transport at Brize Norton; force protection at Honington; and support enablers at Wittering and Leeming. Fuller details are published in the strategy, which will be available in the Vote Office.

Secondly, this strategy will deliver a better estate for service families. Over the next decade, we will invest £4 billion in improving our infrastructure and modernising our accommodation, including funding from disposable receipts and the £1 billion secured at the spending review. All savings from running costs will be recycled back into defence. By consolidating our estate and locating our service men and women together with capability, we will provide better employment opportunities for their partners, provide more stable schooling for their families and increase their ability to buy their own home. We have purposely focused on sites that will support recruitment and retention, giving our personnel and their partners greater certainty and confidence to put down roots in local communities.

Finally, a better defence estate will deliver better value for money for taxpayers. By releasing sites we no longer need, we can help build the houses that we do need. I can confirm the MoD has firm plans to achieve its target to release sufficient land to build up to 55,000 houses in this Parliament. My department will now work with industry, local authorities and devolved Administrations, as well as with our personnel, to deliver this—supporting construction and infrastructure jobs and boosting local economies.

This is a strategy that looks ahead to 2040 to provide the defence estate we need to keep Britain safe and promote our prosperity. As we implement it, we will seek to minimise any disruption to the Armed Forces as well as to service personnel, civilians and their families. We will give our people as much notice as possible over planned redeployments, ensuring all are well provided for. As well as the built estate, I am determined to widen our focus and seek better value from our training and reserve establishments as well. We will update Parliament on our progress in our first annual report next October.

These reforms provide a vision of a better defence estate: an estate that supports a more efficient and effective military capability; an estate that gives our Armed Forces a world-class base from which to work; and an estate that helps defence play its part in securing our security and prosperity. I commend it to the House”.

My Lords, that concludes the Statement.

My Lords, I thank the Minister for repeating the Statement, which is an opportunity to pave the way for a more efficiently and better-run defence estate. When I served as Minister with responsibility for the estate, it was worth £15 billion. I understand it is now worth £31 billion. Our first requirement in maintaining a defence estate is to meet the needs of our Armed Forces for bases, for training, for headquarters and operations, and of course for accommodation for service men and women and their families.

In an Answer to a Question in the other place on 12 January this year, the Defence Minister, Mr Lancaster, confirmed that the estate included,

“11 operating golf courses, one pitch and putt centre and one driving range”.

I am not sure how these facilities contribute to our defences but they should at least be earning money for the defence estate, or alternatively be sold off. Perhaps the Minister might have something to say about that. My key point is that the defence estate should be managed by a commercial team of professionals tasked with a duty to meet the demands of the military in the way I have already set out, but also a duty to generate income by the sale of surplus land and facilities or derive an income from them where it is appropriate to do so.

There have been three separate announcements by the Ministry of Defence over the past year regarding the release of more sites where homes can be built. On 18 January, the Defence Minister, Mr Lancaster, said:

“The income generated from the sales will be ploughed back into defence”.

On 24 March he said that,

“every penny generated from the disposal”,

will be,

“ploughed back into defence spending”.

On 6 September, the Defence Secretary, Michael Fallon, said that,

“all of the money generated from land sales will be invested back into meeting the needs of the Armed Forces”.

Today’s Statement does not mention this in the same way, so can the Minister confirm that all money generated by the sale of MoD land will be invested in defence and not taken back by the Treasury? Can the Minister say how much will be raised from the disposal of the surplus sites listed today?

On 18 January, we were told the sale of land would provide 15,000 homes and generate £500 million for defence. On 24 March, we learned that the sale of land would provide 7,000 homes and generate £140 million for defence. On 6 September, the Government said the sale of land would provide 17,000 homes and generate £290 million for defence. In total, the Ministry of Defence has freed up land for 39,000 homes, generating £930 million for defence. Can the Minister say what the £930 million from the sale of MoD land will be spent on? Is there a plan to use this money? If the £930 million is to contribute to funding the SDSR, how does the MoD plan to contribute the same amount next year when there may be no more MoD land to sell? His department has committed in its statements to,

“generating £1 billion through land sales during this parliament”,

and providing land for “up to 55,000 homes”.

The amount of land made available so far is sufficient to build 39,000 homes and will raise £930 million. This leaves a shortfall of 16,000 homes and £70 million. How do the Government intend to fill this shortfall?

Today’s Statement locates the places where there will be Ministry of Defence facility closures. The closing of bases affects people’s livelihoods. How many service men and women and their families will be required to move? What civilian staff will face redeployment? Can the Minister say what help and support will be given to civilian employees who are not able to move? How will his department be consulting with all stakeholders concerned? The Government’s Statement indicated that they would seek to minimise disruption by giving,

“as much notice as possible over planned redeployments”.

Where there are intended closures, how do the Government plan on minimising the disruption to those in the Armed Forces, their families and civilians? The Statement tells us that the defence estate,

“costs £2.5bn a year to maintain, with 40 per cent of our built assets more than 50 years old. And it often fails to meet the needs of our Armed Forces and their families, with capabilities spread across small, remote sites, often far removed from population centres and job opportunities”.

One reason for the sale of this land, however, is to contribute to the Government’s target of 160,000 new homes by 2020. Can the Minister explain why they want to build new homes on land that has been described as “small, remote” and “far removed” from population centres and job opportunities?

Finally, the timeframe in this Statement takes us up to 2040. Would it not be a good idea to have a regular review of this policy—say, at least every five years—as circumstances might make changes necessary?

My Lords, I thank the Minister for repeating the Statement. The MoD’s aim is to reduce waste from overcapacity or inefficient use of facilities. That has to be welcomed, but as yet we have not seen the list of estates—if it has been released, I have not yet seen it. We welcome the general thrust of what the MoD wishes to achieve, but, as with all things, the devil is in the detail. The opportunity to improve accommodation for service personnel is long overdue, and their families will welcome that investment.

Times have changed. The noble Lord, Lord Touhig, referred to golf courses and pitch and putts, and I have to confess that over 40 years ago, the father of our best man was known as SHAGO—Security, Horse and Golf Officer—for one of the golf courses and Navy bases near Portsmouth. But several serious issues arise from the Statement.

There are the revenues from the sales, the impact on local communities and the opportunity to rationalise the functions of our Armed Forces geographically. Is this just a short-term attempt to plug the gap in defence accounts? We get capital from this money only once, so why is now the time to sell? Are there buyers for these sites? Will the income from the sales go into MoD or Treasury coffers?

In the Statement the Minister said:

“I can confirm MoD has firm plans to achieve its target to release sufficient land to build up to 55,000 houses in this Parliament”.

This makes no mention of whether the houses are affordable homes, for which there is a very clear need; whether it is housing that will benefit the local communities, meeting their needs; or whether the houses will be expected to have green standards—all of which is the least that a community should expect, given that it will feel it is losing quite a lot. Has any impact assessment been done of the effect on local communities of losing jobs? There is no point in building houses in these places if there are no jobs to attract people.

I ask the House to excuse me: I am not going to refer to the Army or RAF issues as I have not had time to do the research. I know rather more about the Navy, so I would be grateful if the Minister could clarify some issues surrounding the Devonport naval base and the area around it. Would he confirm that the Trafalgar class submarine will move from Devonport to Faslane? Will he comment on whether the rehousing of the Royal Marines from Royal Marines Stonehouse to Royal Marines Tamar is a possibility? The closure and sale of Stonehouse was announced in the previous Statement amid much local sorrow and anguish but it was not clear, and I do not think it is clear yet, where the Marines and their capability and functions will move.

My Lords, I am grateful to both noble Lords for their questions and comments. The noble Lord, Lord Touhig, began with a statement with which I wholly agree. This programme has been built around the needs of the Armed Forces; that is the first requirement that we should always consider. I hope the fact that the Chief of the Defence Staff has put his name to the document alongside that of the Secretary of State demonstrates that the strategy is based closely on advice from front-line command. This is about enabling an infrastructure that better supports military capability and the needs of a modern fighting force. That is its starting point. It will see the defence estate consolidated into fewer centres of gravity and specialisation, with better support capability.

He asked about golf courses, which I can cover quite quickly. The department currently has 11 operational golf courses, five of which are contained in today’s announcement: Molesworth, Abercorn, Condor, Henlow and North Luffenham. While we do not resent our personnel enjoying the odd round of golf, there is perhaps a happy limit to the number of courses that it is proper for the ministry to maintain.

The noble Lord asked an important question about disposal receipts and whether they would be reinvested into defence. I can give him that assurance. It is not a statement that was included in the words that I repeated, but it applies as much to these disposals as those that we have previously announced.

The noble Lord asked how much would be raised. In the nature of this programme, that is not a question that I can answer because we are looking at a disposal programme over the next 25 years. These are sites that we are now signalling our intention to dispose of, but many of them will in fact not be sold for a number of years, for reasons that I will come on to. But I can say that the disposals will contribute significantly towards the MoD’s £1 billion target for land release sales, as set out in last year’s spending review. The money raised will be reinvested in the defence estate, where it is most needed. The strategy will also generate savings of more than £140 million in running costs over 10 years, rising to nearly £3 billion by 2040. Again, all that can be reinvested in defence.

The noble Lord asked how many service families would be required to move. We are closely reviewing how to offer service personnel more choice in their accommodation options in future, and by consolidating the defence estate around capability in regional clusters we are able to provide additional stability to service personnel. We recognise the vital contribution made by the families of our personnel and it is our intention to provide better employment opportunities, particularly spousal employment opportunities, for those who often make great personal sacrifices to support the careers of the men and women of our Armed Forces.

The noble Lord asked about regular reviews of this programme, perhaps every five years. I hope I can reassure him even more firmly than that: where plans are required to change we will inform our personnel and we will update Parliament every year on our progress. This is a matter of continual review, not just review every five years. The annual update that we give to Parliament will include updates to reprovision on a rolling five-year basis.

The noble Baroness, Lady Jolly, asked why now was the time to sell. As I have indicated, we do not anticipate selling these sites now or even next year, but some will be disposed of in this Parliament and some in the next Parliament and the Parliament after that. The key point here is that this is an imperative. We have to grip this. The estate is too large, the cost of maintaining it is spread too thinly and we need to configure the estate, as the Statement makes clear, in accordance with the needs of the Armed Forces and their capabilities.

The noble Baroness asked about affordable homes and green standards. Those are discussions that will need to be had with the relevant local authorities as time goes forward. The whole issue of the disruption to local communities, and indeed the enhancement to some local communities, along with the jobs that will be lost and created will be part of those discussions. Again, though, the important point is that we are giving ourselves enough time to have those discussions with local authorities, and I hope that they will welcome that.

On Devonport and the removal of submarines to Faslane, I can confirm that the plan is to base all our submarines in due course at Faslane. I will have to get back to her about the other question she asked about the rehousing of the Royal Marines, if she will allow.

My Lords, the place for the Royal Navy is at sea, and for that you need ships and submarines. I welcome this rationalisation, but can the Minister confirm that this new money, particularly the capital side of it, will be used to run on ships that have already been refitted, as we have discussed in this House, and maybe to buy new ships, and that it will not be used to disguise what is actually a systematic underfunding of defence for Joint Force 2025 because there is insufficient money there to achieve that?

My Lords, I can confirm that. One of the plus points of the strategic defence and security review, if I can put it that way, was an agreement from Her Majesty’s Treasury that by creating these efficiencies—for that is what they are—we can plough the money back into defence. Some of the money will go back into the defence estate, but in the round it will enable our money to go further. Additionally, we have the promise that during this Parliament the defence budget as a whole will increase by 0.5% in real terms every year. So this is not a plan to somehow secrete money away into areas other than the front line; it will in fact boost the front line.

My Lords, does my noble friend agree that the single largest and most valuable site which could—and, I would argue, should—be released for sale for housing, which would probably meet the £1 billion target on its own, is RAF Northolt? Is that being considered?

Northolt is not being considered at the current time. It is a very valuable facility for the RAF, as well as for the services generally—it is located close to the centre of London—so it is not on the MoD’s list at present. However, I recognise the point that my noble friend makes: it is clearly a valuable site.

Can the noble Earl say a little more about the centres of gravity as they affect the Army in Scotland? He mentioned the position of the light infantry battalion in Edinburgh—3 Rifles is presently stationed there and has been for some time. It is widely rumoured that one place that is to be disposed of is Fort George in Inverness-shire, where one of the battalions of the Royal Regiment of Scotland—the Black Watch—is stationed. That raises a question: if Fort George is closed down, will there be any place for a battalion of the Royal Regiment of Scotland to be stationed in Scotland? If not, what is proposed? There is something to be said for having at least one of the Scottish battalions stationed within Scotland, not some distance south of the border.

I am very grateful to the noble and learned Lord. Fort George is a site of historical importance to the Army; there is no question about that. It is home to the Black Watch, but it has many minus points. It is an isolated site; it is not good for retention for the Army; it is a long way from the training estate; and it costs £1.6 million a year to run. It is therefore on our disposals list, but we are clear that 3 Scots will relocate to an alternative location in Scotland. After all, the origins of 42 Regiment Foot, which is how Black Watch originated, were from the Tay. Although I cannot say that it will move back to the Tay, the fact that it is in Fort George is perhaps a product of history more than anything else. We will engage with the Scottish Government and the local authority to identify the most appropriate combination of development types to maximise the opportunity that Fort George presents. We now have time to engage with local authorities generally about how this is to be managed.

My Lords, will Crichel Down issues apply in the case of selling off of much of the land? Also, in the case of sites contaminated by former MoD activity, will proper evaluation be made of the cost of decontamination to ensure that when they are ultimately sold, they are not sold at deflated prices? Are MoD officials—civil servants—well aware that the National Audit Office will pore over the sales at some stage in future?

As to the last point, yes, we are all too well aware of that. We are anxious at all times to achieve best value for the taxpayer. Crichel Down considerations can and do arise where former owners come forward to claim title. Of course, due process is followed. It is being followed in the case of Southwick Park, for example, which I think was announced as one of our intended disposals in September.

Decontamination is also a live issue on many of the sites. There is no question of disguising contamination where it occurs: environmental assessments always have to be made and are done openly and transparently with potential purchasers.

The noble Earl is quite right to say that the Black Watch traditionally came from north of the Tay—and south, as well—because it has traditionally recruited in Angus, Perthshire and Fife. My question is whether any impact on Reserve units in all three services arises from the Statement he has made today.

There may well be some impact on Reserve units, in so far as where they train and are based when they are called up, but I cannot supply the noble Lord with any detail on that. If I am able to after this, I will happily write to him.

My Lords, I follow that question precisely. My noble friend’s Statement is very welcome, but he knows that in future forces, the Reserve Forces will play an enhanced and important part, so their ability to train on mobilisation is very important. Can he say a bit more about how capacity for their training can be supplied? In particular, Bassingbourn Barracks in my former constituency has lain idle for more than two years, is brilliantly situated and well-equipped to provide Reserve Forces mobilisation training.

I am grateful to my noble friend. In a sense, considerations for the Reserve Forces cannot be separated from those for Regular Forces because, with the whole force concept, training is now taking place with regulars and reservists side by side, which is entirely appropriate. I am aware that Bassingbourn’s future use has been the subject of a great deal of speculation, but I cannot inform my noble friend in detail about the site. Again, if I can enlighten him in writing I am happy to do so.

My Lords, will the Minister confirm that the welcome announcement about the development of an infantry centre in Edinburgh, the improvements at Lossiemouth, his earlier announcement on the Royal Regiment of Scotland and the announcement made last week about the frigates on the Clyde are all possible only because the people of Scotland two years ago rejected separation, and that it is part of the welcome union dividend?

The noble Lord makes a very good point, and I agree. It enables us as a department to commit to an enduring defence presence in Scotland through a number of programmes. As he is aware, we have now committed to building eight type-26 global combat ships on the Clyde. We are investing more than £500 million in the infrastructure and capability of the naval base at Clyde as it becomes the home of all Royal Navy submarines by 2020. We are investing in the expansion of RAF Lossiemouth, so that it will be home to at least one additional Typhoon squadron, as well as the maritime patrol aircraft. We are investing in concentrating some Army capabilities in Leuchars Station. That will improve access to suitable training areas. Across a whole range of projects, Scotland will benefit.

My Lords, I have a couple of questions for the noble Earl. Generally, I welcome the Statement, but in repositioning units and so on considerable capital expenditure is incurred. Is it reasonable to expect that the amount of money from sales will be adequate to meet that expenditure as it occurs, and not fall to the Ministry of Defence to find additional funds early on in the hope of jam tomorrow? Secondly, runways are of course vital to the Royal Air Force and to any flying unit. With the reduction in the number of airfields, will there be sufficient runway availability when some runways have to be repaired and flying from that unit will have to stop? Finally, this presumably refers only to MoD holdings in this country, and not to holdings overseas.

I am grateful to the noble and gallant Lord. I can confirm that this applies only to holdings in this country. As regards runway availability, I will have to write to him as I do not have it in my brief. He makes an important point on the cost of reprovision, but again I come back to what I said earlier: this is being driven primarily by the needs of the Armed Forces. While we may find in some cases that the net receipt from a disposal is of a fairly de minimis nature, nevertheless the reprovision will be the right thing to do for that particular unit or part of the service.

My Lords, we have already heard about the National Audit Office and questions about value for money for the taxpayer. That has so far been on the receipts side, but can the noble Earl tell us what work is being done to ensure that the defence procurement contracts to deliver the better estate for service families, which will be most welcome, and the maintenance contracts for accommodation for services will also deliver value for money for the taxpayer and the best possible outcome for service families?

My Lords, the department takes the provision of good service family accommodation very seriously. We are continuing to manage the improvement of the performance in this area of CarillionAmey, which is the contractor as the noble Baroness knows. At the end of May 2016, following what was called a “Get Well Plan”, CarillionAmey effectively passed with a performance that was markedly better than it had achieved previously: in the next generation estate contract, 29 of 30 KPIs met performance targets; in the national housing prime, six of seven key performance indicators met performance targets. We will continue to monitor closely the company’s delivery performance, working collaboratively with it, of course, to sustain and improve its performance. But the noble Baroness is absolutely right that we need to achieve value for money in this area. I believe that now we are nearly there, but CarillionAmey is under no illusions that it must maintain this rate of improvement.

My Lords, like the noble Lord, Lord Touhig, I too was responsible for the defence estate for a time in the previous Parliament. My question concerns not golf courses but the growing disconnect between the Armed Forces and the people of this country whom they defend. With the reducing footprint that my noble friend the Minister has mentioned, the Armed Forces have a tendency to retreat back into their barracks and away from the people they defend, so there comes a greater disconnect. Can my noble friend reassure me that this will not lead to the civilian population regarding the Armed Forces as a race apart?

My noble friend makes an extremely important point—one that has been very much in our minds as we have taken these ideas forward. I will be quite open with him: it is a risk. The more that personnel are concentrated in fewer centres, the more that the population as a whole will feel disconnected from the armed services. Ways must be found, therefore, to prevent that happening. We can see routes through events such as Remembrance Sunday and the commemorations around that. We can see it through the charitable work of organisations such as Help for Heroes, and so on. It is something that we need to bear in mind as we go forward. As Minister with responsibility for community engagement, I can tell my noble friend that I receive regular advice on this very topic.

My Lords, I follow the point made by the previous noble Lord by asking about recruitment. I notice that Dale Barracks in Chester are on the hit list. That has been a centre of recruitment for the Cheshire regiment over the years. It is hardly a small and remote site, as referred to in the report. Now the 2nd Battalion the Mercian Regiment is pretty much based there. How is recruitment to the Armed Forces likely to be affected by this withdrawal from a large number of sites, where the association with the Army—or the Navy or Air Force, for that matter—goes back a very long way?

The concentration of sites that I have been talking about plays into recruitment in the round because the more stable and confident armed services personnel and their families feel about their roots and where they are, the more we are likely to see a better performance in recruitment and retention. The problem with some of these sites—I do not necessarily include the one referred to by the right reverend Prelate—is that they are remote, do not play into the recruitment agenda very easily, and certainly not the retention agenda, and they are not conducive to spousal employment either. We want a better deal for families in the round, and I hope that over the next few years, as this programme rolls out, the personnel of our Armed Forces will see it in the same way.

My Lords, as there will continue to be an enduring defence presence in Northern Ireland, can the Minister confirm that Ballykinler in County Down will be disposed of, and has Drumadd Barracks in Armagh city already been disposed of?

My Lords, Ballykinler will continue to provide valuable training assets for both the Regular and Reserve forces within Northern Ireland. There are no plans at this stage to reduce the training facilities in either location. I apologise to the noble Lord—he mentioned a second site.

My Lords, anything which improves the morale and efficiency of the Armed Forces is to be welcomed in the face of the rising Russian menace. In that context, and relevant to it, can my noble friend say at some time, if not now, what number of hostile probes there have been in NATO by Russian naval ships and by the Russian air force?

I shall again need to write to my noble friend as this is slightly off the theme of the Statement, but I recognise the importance of the point he raises.