Welsh Affairs Committee Report on the Draft Wales Bill

5 March 2014

 Article by Alys Thomas, National Assembly for Wales Research Service

The draft Wales Bill was published on 18 December 2013 and the House of Commons Select Committee on Welsh Affairs (“the Committee”) began pre-legislative scrutiny of it in January 2014. It held six evidence sessions at the Assembly and at Westminster and took written evidence. The Report was published on 28 February 2014. It notes that:

as a Committee, we have different views both about the principle of devolution in general and, more specifically, the devolution of financial powers. Our aim in conducting our pre-legislative scrutiny is to make specific improvements to the draft Wales Bill prior to its introduction as a Bill.

The main findings are summarised below.

Electoral Arrangements

The Report recommends that clause 1of the draft Bill, relating to the frequency of Assembly ordinary general elections, be removed from the Bill and replaced with provisions that give the National Assembly the powers to determine the length of its own electoral term.

There was a general consensus amongst witnesses that double jobbing is not ideal. The Report recommended that the UK Government amend clause 3 of the draft Bill to extend the exception period where an AM can simultaneously sit as an MP from six months to twelve months.

The Report states that the draft Wales Bill provides an opportunity, through amending the Government of Wales Act 2006, to update some National Assembly processes and procedures, as suggested in the Presiding Officer’s evidence. Prior to the introduction of the Bill, the Wales Office and the National Assembly for Wales should work together to identify areas of common agreement and to include these in the Bill.

The Committee did not reach a conclusion on the merits of the proposal on dual candidacy in the draft Bill.

Financial Provisions

The Report agrees with the provision in the draft Wales Bill to make the partial devolution of income tax to the Welsh Government contingent on a ‘yes’ vote by the people of Wales in a referendum. Tax devolution is an important constitutional change and one that requires a principle to be established by the electorate before commencement.

Although the issue of fair funding was outside the scope of the inquiry, the Report expresses sympathy with the argument that the issue should be resolved before income tax powers are devolved, so that Wales is not unfairly disadvantaged by the proposals in the draft Bill. The Committee believes that the issue of fair funding should be examined and do not see the need to postpone this until after the 2015 General Election.

The Report recommends that, by the time of the introduction of the Bill, the UK Government sets out its preferred method to adjust the block grant in respect of stamp duty land tax and landfill tax.

The Report states that it remains unclear how the Government came to the borrowing limit figures set out in the draft Bill. It noted the arguments in favour of borrowing limits being set by negotiation between the UK and Welsh Governments rather than a figure being written on the face of the Bill.

The Report states that the UK Government’s position that Wales should not have the power to issue bonds because it may be a more expensive form of finance than the alternatives is an argument against exercising the power, not having the power. Provided that restrictions were in place to ensure the overall borrowing limit would remain unchanged and that bonds would count towards that limit, there are arguments in favour of providing the Welsh Government with the ability to issue bonds. The Report also noted that Scotland had been granted bond issuing powers on 19 February 2014.

The Report recommends that the UK Government considers amending the draft Bill to give the Assembly legislative control over its budgetary procedures.

The Report identified several areas where the UK Government ought to provide further information by the time the Bill is introduced, for instance relating to block grant. adjustment mechanisms, how the proposed borrowing limits were calculated and the full devolution of business rates.

The Committee made no recommendations in regard to the “lockstep” provision in the draft Bill which would mean that the tax rates on each tax band have to be changed together, by the same number of pence in the pound. The three different rates cannot be altered independently. The Report states that although most witnesses favoured a removal of the lockstep, the Committee itself has a “diverse range of views”.

Presiding Officer’s Statement

The Presiding Officer, Dame Rosemary Butler AM, issued a statement in response to the Report in which she said:

I welcome the recommendation by the Welsh Affairs Committee that the National Assembly should have control over its budgetary processes, something I called for in my submission of evidence.

I believe this will allow the Assembly to change its budgetary procedures, so that they don’t just focus on how the Welsh Government spends public money, but also enables us to scrutinise its decisions in raising such funds.

I also welcome the recommendation that the Wales Office works with the Assembly to identify areas where the Wales Bill could appropriately include mutually agreed amendments to the Government of Wales Act.

This could be an opportunity for serious discussions about some of the anomalies contained in the Act which should better reflect the Assembly’s position as a mature parliamentary body. For example, it would now be more appropriate for the Assembly to be referred to as a Parliament, in recognition of its law making powers.

Finally, I believe it is only right that a mature parliamentary body should be able to set its own term lengths and I welcome the Committee’s view in this area.