A long term vision on devolution

Good morning. Thank you for your kind welcome.
I would like to start by thanking our hosts Acuity Law and the Institute of Welsh Affairs for inviting me to speak. The Institute has done so much since it was founded 27 years ago to promote debate about Wales’s future and I have a great respect for its work.

Today on ClickonWales This morning Secretary of State for Wales, Stephen Crabb MP, made a significant speech at an IWA event in Cardiff. The speech set out his long term vision for devolution in Wales, and a timetable of his next steps. You can listen to the speech on our audiboom page (below) and also hear IWA Director, Lee Waters’ analysis here.

I am delighted to have this opportunity to outline my vision for the next steps in Welsh devolution and the programme of work I have started to deliver this vision.

Firstly, I would like to set out a bit of personal context.

I hail from Pembrokeshire – geographically out on the periphery of Wales, closer to Ireland than to Cardiff, culturally and linguistically divided, and known for centuries as “Little England Beyond Wales”.

My formative years were spent principally in Haverfordwest, in the heart of Pembrokeshire, but also in the shipyard town of Greenock on the banks of the Clyde in Scotland.

I grew up fiercely proud of my shared Welsh and Scottish roots and fiercely proud of the Union, understanding from a young age that to be British is to be a bit of a mixture really; knowing that the United Kingdom is a family of distinctive nations bound together by virtue of sharing the same islands and because the benefits of unity far outweigh the costs of division; and believing that the Union has been in many ways been a stunning success story in terms of European and world history.

I was – and I remain to my core – a Unionist.

Like the City of Cardiff, Pembrokeshire voted against the creation of the National Assembly in 1997 in a very finely balanced referendum. It was left to our neighbours in Carmarthenshire to tip the scales.

So when it comes to devolution, I guess you could say we were ‘late starters’.

And for my own political party too, for reasons of our own history and outlook, devolution seemed an alien concept back in 1997. So we came out fighting for the status quo.

But Conservatives are nothing if not pragmatic and since then we have begun to help build and shape the new politics of Wales, rediscovering in the process values and ideas in our own traditions which are entirely consistent with decentralised decision-making and the building of strong institutions closer to the public.

We have all come to understand that, far from being an enemy of the Union, devolution – if done properly – can breathe new life into the Union.

And this is the point we are at again today. When the Union needs to be reshaped if it is to survive through this century.

During the summer I visited Scotland three times to campaign alongside Conservative, Labour and Liberal Democrat activists to defend the Union. But I was reminded again on those visits just how far away Westminster is from the lives of most Scots.

I stood inside the empty Parliament at Holyrood one afternoon with Ruth Davidson and it struck me that this is no mere shadow of the Westminster Parliament; this is a full legislature in its own right; it is where Scots increasingly look for answers on so many of the issues they care about; and this Parliament is here to stay.

And this growth in legitimacy and competence and authority is now unquestionably the path of our own Assembly – because the people of Wales have destined it to be so.

I came away from Scotland on that Wednesday night before the Referendum absolutely certain that whatever the outcome the following night, nothing would ever be the same again in terms of our constitution.

And so Scotland’s decision to remain part of the UK presented a unique opportunity to reshape the future of our Union. To make our United Kingdom work for all our nations. And to fulfil the aspirations of the people of these islands who want a stronger voice over their own affairs and institutions.

And on the steps of Downing Street on the Friday morning the Prime Minister made clear that he wants to see Wales at the heart of this new phase of thinking and debate about the constitution of the United Kingdom.

Today, I want to explain how we will fulfil that pledge, and the Wales I would like to see as a result.

This Government already has a strong track record on devolution to Wales.

In 2011 we delivered the referendum on full law making powers for the Assembly, which resulted in the Assembly being able to legislate across the full range of its devolved policy areas.

The same year we established the Commission on Devolution in Wales, the “Silk” Commission, to look at the case for devolving tax and borrowing powers to Wales and whether any changes were needed to the Assembly’s powers.

That Commission published two unanimous reports recommending significant further devolution to Wales, reports that were informed by wide-ranging public consultation across Wales and the input of political representatives.

We introduced the Wales Bill, that will implement almost all of the Silk Commission’s Part I recommendations, devolving a range of tax and borrowing powers to Wales including landfill tax, stamp duty land tax and, subject to a referendum, some income tax. Since becoming Secretary of State I have amended the Bill to remove the so-called ‘lockstep’ restriction on income tax powers and to devolve to the Assembly the decision on whether to allow 16 and 17 year olds to vote in the tax referendum.

Under this Bill, for the first time, Welsh Government will become accountable for raising a proportion of the money it spends. The Bill is now nearing the end of its parliamentary passage and I would expect it to receive Royal Assent early in the New Year.

I want the Welsh Government to call a referendum as quickly as possible once the Bill is enacted, to deliver the income tax powers. This will provide Welsh Government with a powerful tool to help the Welsh economy become more dynamic. And it will make the Welsh Government more accountable to the people of Wales.

But the Scottish referendum campaign has further energised the debate about how the Union should develop, and crucially, about the further powers that should be devolved to the individual nations of our United Kingdom. We understand that.

And so following the referendum, the Government established a new Cabinet committee, chaired by William Hague, the Leader of the House of Commons, and of course a distinguished former Secretary of State for Wales to oversee this work on the constitution. That committee, on which I sit, is looking at devolved powers for England, Wales and Northern Ireland alongside new powers for Scotland.

We now have a unique opportunity to reshape the future of our Union. Possibly for decades to come. The appetite for change is there. People want a stronger voice over their own affairs. It is unmistakable in Scotland. Discernable in England. And palpable in Wales. And it is a sentiment that cannot, and will not, be ignored.

And I am determined that Wales should not play second fiddle in the current debate on devolution. I want us to use this opportunity, this unique moment in our nation’s history, to look positively at how we secure the best possible devolution settlement for Wales.

I want to move forward in a realistic, open minded and pragmatic way.

And at the end of it I want a devolution settlement for Wales which is stronger and more balanced, which works for the people of Wales. And that includes a Welsh Government which is more accountable to the people who elect it.

In short, I want a clear, robust and lasting devolution settlement for Wales:

• A settlement that ends the constant, tiring debate about powers which has characterised Welsh politics for 15 years but which has so little resonance with Welsh voters, and lets the Assembly and the Welsh Government get on with the job of delivering economic growth and improving public services. Wales has great economic potential – as this week’s UK Investment Summit in Newport will show. So let’s end the arguments about devolution and focus on getting the Welsh economy in gear;

• A settlement that fosters cooperation not conflict between either end of the M4;

• And a settlement that works for the people of Wales, where they understand which decisions are being taken at the UK-level, and which are taken here in Cardiff. And why.

So how will we get there? My goal is to seek a cross-party consensus on a stable long-term settlement for Wales. Sadly, the story of Welsh devolution has long been one of fixes, fudges and political expediency. Of falling short, and thinking short-term.

We need to end the process of constantly tinkering with the devolution settlement. Let’s get devolution right. For the longer-term.

Through this cross-party process I intend to announce, by St David’s Day, a set of commitments, agreed by the four main political parties in Wales, on the way forward for Welsh devolution. Those commitments would form a basis, a “baseline”, for taking forward Welsh devolution after the General Election next May.

This means people in Wales will know, irrespective of which party wins the General Election, that an agreed set of commitments will be taken forward in the next Parliament. I am hopeful that we will be able to reach broad agreement on a way forward for Wales, and set a course which puts Welsh devolution on the right track for the future.

This process is, of course, not without risk. I have been told that my hopes for a consensual approach are “ambitious”. But I am optimistic. I sense that all parties are ready to seize the moment; to put their differences aside

There will, of course, be subjects on which the four political parties will not be able to agree. That is perfectly legitimate in our democracy. And that means, at the ballot box next May, voters will have choice between the political parties on the extent and nature of further devolution to Wales. But a choice underpinned by a solid baseline for change to which all four parties commit.

Talks between the political parties will underpin this process. I have already begun that dialogue, and had a very productive and constructive discussion last month with the Welsh leaders of the political parties at Westminster. We will be meeting again next week to continue our discussions.

And, of course, I shall be meeting the leaders of the four parties here in the Assembly to hear their views. I know that those leaders have themselves been discussing future devolution and, last month, the Assembly approved a cross-party motion setting out its priorities for the future of devolution in Wales. I look forward to discussing those priorities with the party leaders soon.

I will also be seeking the views of Welsh business and of civic society in Wales on how they see devolution going forward. That does not mean repeating the extensive consultation work that the Silk Commission undertook. But I will build on that. Devolution is too important just to leave to the politicians.

There are a number of distinct elements to this work:

Reserved Powers Framework First, there is the overarching question of which model of devolution is right for Wales. We all know the problems with the current “conferred” model of devolution. It’s complicated. It means the devolution boundary is often blurred and indistinct. And, crucially, it has meant laws that should be decided in Wales being decided instead in the Supreme Court. That cannot be right.

I want Welsh devolution to be clear. I want people to be able to understand who is responsible for what. And I want Welsh laws to be decided by the people of Wales and their elected representatives, not by lawyers in London.

That is why I have asked my Office to work on a reserved powers framework for Wales – the model in place in Scotland. It means a different approach for Welsh devolution. Instead of defining what’s devolved, as the current settlement does, it would define the powers reserved to the UK Parliament. The default will be that anything not reserved is devolved.

This is no mere technical change. It is a signal of the trust and the respect we have for the National Assembly for Wales.

This was a key recommendation in the Silk Commission’s second report, and there is already clear cross-party support for the change, both at Westminster and in the Assembly.

A reserved powers model does not solve all the difficult questions about competency but it will provide a clearer boundary for Welsh devolution, and the right framework within which further devolution can take place.

A reserved powers model will stand the test of time and deliver the stable and lasting settlement that Wales so urgently needs.

And only a reserved powers model will end the absurdity of devolution questions being settled by lawyers in London rather than by the people of Wales and their elected representatives.

By 1 March I will publish what a reserved powers framework for Wales might look like. That will provide a firm basis to legislate early in the next Parliament to introduce the model for Wales.

Further Devolution A remodelling of the current settlement to provide a sharper, clearer and more stable basis for Welsh devolution is a start. But we need to go further. We need to ask ourselves: does the Assembly and the Welsh Government have the right set of powers to help deliver the jobs and economic growth that Wales needs. Or could they do more, with more?

I understand the appetite of people in Wales for a stronger voice over their own affairs. I recognise that each time the people of Wales have been asked they have voted for more devolution. And if further powers are devolved, we should be clear about the purpose for doing so; what would be the benefit to Wales? How would further powers help to deliver jobs and economic growth?

We have unfinished business in the shape of the Silk Commission’s second report. The Commission made 61 recommendations in that report setting out the further powers it thought should be devolved to Wales and how the way in which London and Cardiff do business can be improved.

So, second, I want to work cross-party, and with the Welsh Government, to identify which of those recommendations for further devolution we can reach consensus on. One of those recommendations was of course moving to a reserved powers model, and so our search for consensus has got off to a positive start. I am confident that cross-party agreement can be reached on many more.

I will also be talking to other key players. Next week, for example, I am meeting the Assembly’s Presiding Officer, Dame Rosemary Butler, who has clear views on issues such as the Assembly’s working practices and arrangements for Assembly elections. And I am particularly keen to hear these arguments.

Smith Commission There is of course work going on in Scotland to strengthen the powers of the Scottish Parliament within the UK. A commission, headed by Lord Smith of Kelvin, is leading a cross-party process to agree the detail of what those powers should be.

At the end of this month, the Smith Commission will publish a unifying set of proposals, a ‘Heads of Agreement’, with recommendations for further devolution to the Scottish Parliament. This process will result in the UK Government publishing draft clauses by 25 January setting out the further powers to be devolved.

It will be important that we identify the proposals arising from the Smith Commission that warrant further consideration and analysis for Wales. This is the third element of the work we are beginning.

I am certainly not saying that what is right for Scotland will necessarily be right for Wales. Far from it. I believe it is important for each of the devolved settlements to have the right set of powers for that particular nation.

But we should not let the opportunity provided by the Smith Commission slip by without thinking which of its proposals need to be given further thought in a Welsh context.

Funding Fourth, I recognise there are questions about fair funding for Wales.

I know that people are concerned about the levels of funding for Welsh public services. It is a concern I hear often when I speak to business and people right across Wales.

We’ve all heard the figure of £300m a year in underfunding that Professor Gerry Holtham identified back in 2010.

It is true that in the ten years up to 2010 levels of funding for devolved services in Wales got ever closer to the levels for equivalent services in England. But since then the opposite has happened, so that funding for Welsh public services is now around 15% higher than equivalent funding in England. This is around the level that Professor Holtham himself said was acceptable when he did his review.

Back in 2012 we agreed a process with the Welsh Government to keep funding levels under review and work to find a solution if it’s likely that Welsh funding again heads towards the levels spent in England. Building on this, the UK and Welsh Governments have agreed to revisit the arrangements for considering relative funding in light of the powers in the Wales Bill.

But let’s be clear. This issue of funding must not be used as either a road block to further devolution, or as an excuse for poor performance. The margin of difference we are talking about in terms of overall budget levels is tiny – between one and two percent at most. I want to see a Welsh Government that stands up proudly and says “the buck stops here”.

Make no mistake, all this is an ambitious programme of work. But I am ambitious for Wales. I want Welsh devolution to be clearer, stronger and more balanced. And I want Wales to stand proud in a reshaped Union. With a Welsh Government accountable to the people of Wales, clear about its role and responsibilities and focused on the issues that really matter – economic growth, jobs and better public services.

To deliver that it is right for political parties to put aside their differences to deal with the key issue of what the right devolution settlement for Wales should look like.

Only by working together across the political spectrum, across parties and between the two Governments, can we can show the people of Wales ahead of the next election that we’re serious about strengthening devolution and making it work for all the people.

By St David’s Day next year we will publish a blueprint, signed up to by all four main parties in Wales, for taking forward Welsh devolution in the next Parliament.

Parties may go further in their election commitments but my promise to the people of Wales is this – whoever you elect next year, you will know that a baseline set of powers will be coming to Wales and you will know what a reserved powers model will look like.

The next Parliament will be faced with the huge task of reshaping the constitutional settlements of all parts of the United Kingdom, and for Wales I want to be able to hit the ground running.

Finally, I want to present my challenge to the Welsh Government. I want to see further devolution to Wales. But I also want to see devolution within Wales – from Cardiff to all four corners of our nation. I am committed to localism, and I want to see decisions taken at the most local level possible. That should mean more decisions being taken by local authorities and local communities in Wales, and fewer decisions being made centrally, by the Welsh Government. The UK Government has reinvigorated local government in England through our localism agenda and is unfolding an exciting devolution vision for reviving the great northern cities – the Northern Powerhouse – as centres of real economic and civic strength. My message to the Welsh Government is to do the same in Wales.

The 21st century constitution will be about pushing power downwards – decentralised decision-making backed up with real economic and financial powers to harness innovation and growth. This can be an exciting template for Wales too.

I want a new era for devolution in Wales. One which means that political debate evolves from demands for more powers, and more money, to one where the central question becomes “how do we use the powers and resources we have to deliver the best for Wales?”

That is my vision.

Powers for a purpose.

A settlement that delivers for people in Wales.

And a devolved Government accepting responsibility for its failures as well celebrating its successes.

Thank You.