A Welsh answer to the West Lothian question

Gerald Holtham explains why MPs from Wales should continue to vote on English matters at Westminster

Should Welsh MPs at Westminster have a vote on bills whose subject matter is devolved? If the National Assembly legislates in the field of education, health or any other devolved area, evidently no English MP has any direct influence on the legislation. Westminster legislation in the same policy areas will primarily affect England – at least that is the intention – so why should Welsh MPs have a direct influence on it?

If it were indeed true that legislation in Westminster and Cardiff Bay did not interact in any way it would seem to me appropriate to segment the work of legislators accordingly. The Westminster Parliament would then have a dual function. It would be a Union Parliament for undevolved matters and an English Parliament for devolved matters. In a sense there would be an English Parliament within the Union Parliament. MPs for English seats would have a double role as legislators in both, while other MPs would be full members of one legislature only, albeit the superior one because that is the one that controls the extent of devolution. Such an arrangement of overlapping legislatures sharing premises and procedures is no doubt unusual but it does not seem to be unworkable.

Some people regard the arrangement as problematic because a party might have a majority in the English Parliament but not in the Union or vice versa. However, if that happened it would merely reflect a democratic reality. Since Parliament would remain the Union Parliament, the government would be formed by the party or parties with control over non-devolved matters.

In devolved matters affecting England the government would have to adapt its programme accordingly. It would have to form alliances to pass specific legislation. It is possible that bargaining could spill across the England-Union frontier in that, for example, a non-governmental party with votes in England could make stipulations on foreign policy the price for a domestic collaboration but that is the sort of untidiness with which politics is supposed to deal. A more substantial objection is that the majority party in England could be in the minority in the Union as a whole but could still propose and pass legislation in the English Parliament or Grand Committee (however it is styled) that the Union government opposed. De facto, two governments could emerge, broadly one foreign and one domestic.

Such a situation would change the nature of Westminster and indeed of British politics. It would make Parliament a good deal more interesting and require the public to pay a little more attention to understand which parties were responsible for which measures. It would no doubt lead to pressure to formally separate the two Parliaments but that takes us into realms of conjecture. It is in any case not at all inevitable. Generally the same party or coalition has enjoyed a majority in England and the Union as a whole. The opposite situation may remain sufficiently unusual to be treated ad hoc as an anomaly not requiring further constitutional change.

However, all that is to run ahead of the current reality. For the current situation does not conform to the first premise underlying the argument for a dual legislature. That is to say, there are few pieces of ‘English’ legislation that do not have a material effect on the situation in Wales.

A simple example will make the point. If the government decides to increase tuition fees for university students the Welsh government can opt to follow or not since the matter is devolved. However, the UK government may increase student fees as an alternative to increasing direct support from the exchequer to universities. The reduced expenditure on higher education relative to what would have been required without the fee increase would have as a direct consequence a smaller block grant to Wales. The Welsh Government would be compelled to redirect resources from other expenditures if it did not wish to follow the fee increases in England. There is nothing inappropriate about that situation but it can hardly be argued that Wales has no interest in the decision. It is evidently a matter on which Welsh MPs should be able to vote.

This example is not an unusual one and others flow from the way in which devolved finance operates. Wales receives a block grant, which is calculated via the so-called Barnett formula on the basis of expenditures in England on matters that are devolved to Wales. Each line item of a UK government department’s expenditure is assessed for how far it is devolved and a devolution proportion or factor is assigned, ranging from 0 (no devolution) to 1 (full devolution). Those factors are known as Barnett ‘consequentials’. The consequentials are aggregated for each department to give an average figure, weighted by the volume of expenditure corresponding to each line item. The Barnett formula works on annual changes. So the Welsh block grant is what it was in the previous year plus an annual increment (or decrement), determined by the formula.

The Barnett consequential for each department is multiplied by the change in that department’s expenditure. Wales receives its population share of the change in each department’s expenditure multiplied by its average consequential, which is added to the previous block grant. The change could, of course, be positive or negative.

Now macro budgetary decisions – how much to change the budget of each government department – are generally made in the annual Expenditure Review, and Welsh MPs have a vote. But more detailed legislation may have the effect of changing the expenditure of a department. Moreover, even if overall expenditure is not changed, legislation could have the effect of moving expenditure within a department, which may well change that department’s average consequential and therefore alter the Welsh block grant.

In general Welsh finances are affected when expenditure is moved among items that have different consequentials. If expenditure is reallocated between items which are both fully devolved there is no effect. Similarly reallocation among non-devolved items has no effect on the block grant, but movement across the devolution frontier, as it were, has an effect and such movement can occur across or within departments.

That is a much more likely occurrence for Wales than it is for Scotland because the pattern of Scottish devolution is simpler and cleaner.   A number of areas are reserved to the Union Parliament and everything else is within the competence of the Scottish Parliament. Welsh devolution is less extensive and considerably more involved.

The Government of Wales Act of 2006 sets out 20 fields in which the National Assembly for Wales has legislative competence. These fields can be augmented with specific matters conferred by acts of Parliament. Those areas of competence are, however, subject to a number of exceptions. Twelve areas of exemption are mentioned in the Act, with a number of sub-areas. There are also general restrictions concerning functions of Ministers of the Crown, creation of serious criminal offences or altering certain specified Acts of Parliament.

The effect of this approach is not only to make it frequently unclear whether the Welsh government has competence or not (thereby providing employment for lawyers) but also to give Welsh devolution a very ragged edge. In those circumstances the possibility that ‘English’ legislation will have substantial consequences for the Welsh budget and policy is ever-present. Moreover it also means that those implications may not be immediately apparent.

Therefore ‘English’ legislation may well have the consequence of altering the resources available to the Welsh Government. The reverse is not the case. The way that the Welsh government chooses to spend its revenue does not affect the resources available for public expenditure in England. To that extent, a West Lothian question hardly exists for Wales at the present time and there is no justification for restricting the voting powers of MPs for Welsh seats. To be sure, Bills could come before Parliament where there is no conceivable Welsh consequence and it would be right in my view for Welsh MPs to observe a convention not to vote in such cases. But such Bills may well be unusual and no block preclusion would be safe.

Bills dealing with health service reorganisation, for example, are sure to have repercussions in Wales even though the health service there is a devolved matter. The point can be made by an extreme example. If the UK government decided to replace the NHS with an insurance arrangement, the Welsh Government would be under no constitutional obligation to follow suit. But it would have to run its own NHS without the Barnett consequential of public spending on the health service in England – a clear impossibility.

The matter can be summarised as follows: the resources available to the Welsh government for expenditure on public services in Wales depend on the policies and resource allocation of the UK government with respect to England. Any legislation which affects that resource allocation or has the capacity to affect it is of legitimate interest to the constituents of MPs for Welsh seats. That situation would change fundamentally only if the Welsh block grant or Welsh government finances in general were not to depend on policies and expenditures in England.

Gerry Holtham is an IWA trustee and chaired the Commission on Funding and Finance for Wales. This is the evidence he submitted to the Mackay Commission on the consequences of devolution for the House of Commons

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