I thank the hon. Lady for her question. Her recollection is correct. We have only just received the report, so consideration of it must now take place. It is now with the Wales Office, and, after it has been considered, we will, in the manner described by my right hon. Friend the Secretary of State, discuss the contents of the report with other parties who have an interest in the Wales Bill.
Clause 45 fulfils a St David’s day commitment and a Silk commission recommendation to devolve to Welsh Ministers the power to make building regulations for “excepted energy buildings” such as generating stations and gas storage facilities. Clause 46 formalises the current differing arrangements for consulting the Welsh Ministers on renewable energy incentive schemes.
Amendments 130 to 132, which were submitted by the Opposition, would require the Secretary of State to gain the consent of Welsh Ministers, rather than to consult them. Energy policy is a reserved matter as regards Great Britain. Maintaining consistency provides for workable schemes, certainty to the industry and fairness to consumers. It is right that responsibility for renewable energy incentive schemes should rest with UK Ministers. I hope that that comment has been welcomed by my hon. Friend the Member for Montgomeryshire (Glyn Davies).
Clause 47 implements for Wales the conclusions of the HM Treasury review of the Office for Budget Responsibility, published last year. The OBR has a
statutory duty to carry out a number of core functions, including to produce fiscal and economic forecasts. This clause ensures that it will continue to receive information from Wales as necessary to fulfil that duty. It reflects the increased fiscal devolution to the Assembly, and the Welsh Government’s competence for economic development. These roles mean that the OBR is more likely to require and use information held in Wales to fulfil its remit.
Clause 48 increases the accountability of Ofgem to the Assembly. Clause 49 provides that where a coal operator wants to mine in Wales, it must seek the approval of Welsh Ministers as part of its application for a licence. Clause 50 increases the accountability of Ofcom to the Assembly and Welsh Ministers. It goes further by giving Welsh Ministers the power to appoint one member to the Ofcom board who is capable of representing the interests of Wales.
Clauses 51 and 52 and schedule 5 and 6 make consequential and transitional provision relating to the Bill. Clause 51 allows the Secretary of State to make consequential amendments by regulations in connection with this Bill, and through amendments 82, 144 to 147 and 150 to 154, the Opposition parties are seeking to give the Assembly a role in approving those regulations. Amendments 144 to 147 would require the Assembly also to approve those regulations where such consequential amendments are within the Assembly’s competence or where they alter the Assembly’s competence. Amendments 82 and 150 to 154 would achieve the same with regard to consequential amendments that amend Acts or measures of the Assembly or secondary legislation made by the Welsh Ministers.
Clause 51 is a fairly typical consequential provision that ensures that the Government are able to tidy up the statute book where required in connection with this Bill. Indeed, similar provisions are included in Assembly legislation as well. Giving the Assembly a role in approving the Secretary of State’s regulations made under this clause would be as unjustified as giving Parliament a role in approving Welsh Ministers’ regulations made under Assembly Acts. It would also make the process far more complicated and time consuming than it needs to be. In reality, we would discuss any proposed changes that impacted on the Assembly’s competence with the Welsh Government before regulations were laid.
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Government amendments 50 to 52, 59 and 60 are the result of productive discussions between the Wales Office, the Welsh Government and the Assembly Commission. Paragraph 2(1) of schedule 6 provides that the new reserved powers model will apply only to Assembly Bills that have been introduced, but that have not passed stage 1 in the Assembly’s legislative process before the day on which the reserved powers model comes into force, or that are introduced after that day. Passing stage 1 means that the Assembly has approved the general principles of a Bill.
Paragraph 2(2) of schedule 6 currently provides that an Assembly Bill that has been introduced under the conferred powers model, but that has not passed stage 1 before the day on which the reserved powers model comes into force, would fall. Amendment 59 removes that provision so that a Bill could still proceed under the new reserved powers model, even if it has not passed stage 1.
Amendment 60 introduces tailored transitional provisions into schedule 6 for relevant energy infrastructure applications. Applications that have been formally accepted for examination under the Planning Act 2008 will continue to be determined by the Secretary of State under that Act. Those that have not been formally accepted will be considered by Welsh Ministers under the devolved planning regime.
Amendments 50 to 52 make some sensible and necessary changes to the commencement provisions in clause 53. Let me quickly touch on amendment 52, because the hon. Member for Arfon mentioned it. It ensures that Welsh Ministers’ common law-type powers under clause 17 come into effect at the same time as the new reserved powers model—a change agreed with the Welsh Government.
Clause 53 provides the framework for commencing the provisions of the Bill and for implementing the reserved powers model. Most importantly, subsection (3) provides for the new reserved powers model—at clause 3 and schedules 1 and 2—to come into force on the day appointed by the Secretary of State by regulation. That day is called the “principal appointed day”. The Secretary of State must consult Welsh Ministers and the Presiding Officer before making the regulations that establish the principal appointed day. That is to ensure their views are fully taken into account in determining when the reserved powers model comes into force.
Under subsection (4), the other provisions of the Bill come into force on whatever day the Secretary of State appoints by regulations. That may include the regulations made under subsection (3). Indeed, it is the Government’s intention to bring into force most of the Bill’s provisions devolving further powers to the Assembly and Welsh Ministers at the same time as the reserved powers model—in other words, on the principal appointed day.
Subsection (6) requires the principal appointed day, or a day appointed by regulations made under subsection (4), to be at least four months after the day on which the regulations are made. That is to ensure sufficient time for the Assembly and the Welsh Government to make the appropriate arrangements for the new model. Finally, clause 54 sets out the short title of the Bill as being the Wales Act 2016.
Amendment 12 and new clause 6, which were submitted by the Labour party, seek to quadruple the Welsh Government’s capital borrowing limit, which was set in the Wales Act 2014, from £500 million to £2 billion. There are two considerations in relation to the borrowing limit: ensuring that borrowing is affordable for the Welsh Government and that it is appropriate within the fiscal position of the UK as a whole.
In relation to Welsh Government affordability, it is important to ensure that the Welsh Government have sufficient independent revenues to manage their borrowing costs. We therefore need to consider the balance between devolved tax revenues and borrowing. Had the Wales Act 2014 simply followed the precedent set at the time by the Scotland Act 2012, the Welsh Government would have ended up with a borrowing limit of around £100 million. However, the Government agreed to increase it to £500 million to enable the Welsh Government to proceed with the upgrade to the M4 in Wales—something this Government fully support, although we are still waiting for action from the Government in Cardiff Bay.
The existing borrowing limit is therefore relatively large, compared with the position in the Scotland Act 2012, and I would argue that it goes further. Even taking into account the Welsh rates of income tax, this limit remains relatively large and, therefore, appropriate. The Government do not therefore believe it is right to increase the Welsh Government’s £500 million capital borrowing limit. Even if this position changes in the future, the Wales Act 2014 already provides for the UK Government to increase the Welsh Government’s capital borrowing limit by secondary legislation.
New clause 4, which was spoken to by the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards), seeks to assign a share of the VAT revenues generated in Wales to the Welsh Government in the same manner that a share of Scottish VAT revenues will be assigned to the Scottish Government following the Smith agreement. However, the Silk commission gave full consideration to the case for assigning a share of the VAT receipts generated in Wales, and while it recognised some of the arguments in favour, it ultimately recommended against VAT assignment in Wales. Unlike in Scotland, there is no consensus on this issue. I return to the fact that the Bill is moving through this House on the basis of consensus.
As we committed to do in the St David’s day agreement, the Government are considering the case and options for devolving air passenger duty to the Assembly, informed by a review of options to support English regional airports from the potential impacts of APD devolution. However, it is important to note that, as the hon. Gentleman knows to be true, the Silk commission did not recommend the devolving of APD in full, but the devolving of long haul only. It is important to bear in mind that when legislating on devolving a tax such as APD, we have to take into account the impact on other airports within the United Kingdom. We must also take into account whether, as my right hon. Friend the Member for Clwyd West highlighted, the benefits that might arise for an airport owned by the Welsh Government in south Wales would justify the complexity and difficulties of the devolution process, in the context of the economic development and the transport links of north Wales. I very much doubt that.
We are therefore not of the view that the case has been made for devolving APD at this point, but we will remain open to listening to the arguments in future. I fully understand the importance of the aviation sector for creating jobs and growth in Wales. I think it is fair to say, though, that the hon. Gentleman’s arguments seemed akin to an argument for state aid for a state-owned asset. In the light of the fact that we have just voted to leave the European Union, he seems very keen to adopt the concept of state aid provision. However, the fact that the Welsh Government have decided to buy the airport does not, in itself, make an argument for devolving APD.
New clauses 8 and 9 relate to the devolution of corporation tax. Together, they intend to replicate for Wales the Northern Ireland corporation tax regime, as set out in the Corporation Tax (Northern Ireland) Act 2015, which allows for devolution to the Northern Ireland Assembly of the power to set a Northern Ireland rate of corporation tax for certain trading income. Commencement of this legislation remains dependent on the Executive demonstrating that its finances are on
a sustainable footing. Northern Ireland faces a number of unique challenges that Wales does not. In particular, it has a land border with the very low corporation tax environment in the Republic of Ireland. The Northern Ireland corporation tax model has been specifically designed for Northern Ireland’s economy and needs, and would not be appropriate for Wales. Again, we are saying no to the hon. Gentleman’s claims.
I propose that clauses 22 to 54 and schedules 5 and 6 stand part of the Bill, and that amendments 47 to 52, and 59 and 60 are agreed to. I urge Hon. Members not to press their amendments.
Question put and agreed to.
Clause 22 accordingly ordered to stand part of the Bill.
Clauses 23 to 35 ordered to stand part of the Bill.