UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE
To be published as HC 533 -i

House of COMMONS

Oral EVIDENCE

TAKEN BEFORE the

Welsh Affairs Committee

Responsibilities of the Secretary of State for Wales

Wednesday 10 July 2013

Rt Hon david Jones mp and Glynne Jones

Evidence heard in Public Questions 1- 95

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Oral Evidence

Taken before the Welsh Affairs Committee

on Wednesday 10 July 2013

Members present:

David T. C. Davies (Chair)

Guto Bebb

Geraint Davies

Glyn Davies

Stephen Doughty

Jonathan Edwards

Nia Griffith

Simon Hart

Jessica Morden

Mr Mark Williams

________________

Examination of Witnesses

Witnesses: Rt Hon. David Jones MP, Secretary of State for Wales, and Glynne Jones, Director, Wales Office, gave evidence.

Chair: Good morning, Secretary of State for Wales. Thank you very much for coming along this morning. As we all know each other very well, I do not see any point in going through introductions, so I ask Geraint Davies to put the first question.

Q1 Geraint Davies: Secretary of State, you will know that Swansea bay has been shortlisted-it is one of four places-for the City of Culture 2017, and I am sure that you welcome this. I wonder what you thought you could do, and what you have done, to support the bid. The last references to the bid will be in September and it will be announced in November. What can you do to support the only Welsh bid?

Mr David Jones: It is to be welcomed. Clearly, Swansea will have the attention of the world focused on it in the Dylan Thomas centenary, which is coming up shortly and the Wales Office is very happy to do whatever it can to support it. To that extent, we will probably get in touch with Swansea city council and see how it feels we can be most helpful.

Geraint Davies: And me.

Mr David Jones: And certainly you too, Mr Davies.

Q2 Jonathan Edwards: Being an experienced Minister and now Secretary of State, how do you think prudent Ministers should respond when they have a project in their in tray that has a benefit-cost ratio of only £1 for £1-in other words, no multiplier?

Mr David Jones: Is that a hypothetical question?

Jonathan Edwards: It is a hypothetical question.

Mr David Jones: Would you like to be a bit more specific, Mr Edwards, and I can then give your question due attention.

Jonathan Edwards: Do you think that £1 for £1 would be good value for an infrastructure project investment?

Mr David Jones: I would certainly like to see a better return, with more bang for the buck.

Q3 Jonathan Edwards: How would you respond, hypothetically, if the costs of a project were escalating severely? The London Mayor this week is saying that the cost of HS2, for instance, could now be up to about £70 billion, with the architect of the project saying that the whole project was written on the back of a packet of cigarettes.

Mr David Jones: That, of course, is the view of the Mayor of London. I was wondering how long it would take us to get around to HS2, Mr Edwards, but I personally think that HS2 has tremendous benefits for the United Kingdom as a whole, not least for Wales, because of the improvements in travel times.

Q4 Jonathan Edwards: What analysis have you done of the impact of HS2 on the south Wales economy? Surely a major infrastructure rail line, making travel between the north of England and London far shorter, is going to have a huge impact on the south Wales economy.

Mr David Jones: I think that the south Wales economy will take cheer from the announcement that we made in July last year that we will be electrifying the Great Western line to Swansea, which will significantly improve journey times. In respect of Cardiff, which of course is Wales’s capital, it will bring it within the magic two-hour isochrone of London.

Q5 Jonathan Edwards: Is it not really the case, based on the benefit-cost ratio and the huge escalating costs, that HS2 is the biggest white elephant in the history of white elephants?

Mr David Jones: I would not accept that.

Q6 Mr Williams: I turn now to the Silk commission. When do you expect to be able to publish a response? I appreciate that it is a complicated matter, with lots of discussions within Government, but when do you expect to publish? We talked in the last Welsh Grand about the elastic definition of the term "spring". You added a new definition to "spring" in your response to the question, yet we are still waiting.

Mr David Jones: I think that it was an accurate definition of spring, but I am quite happy to concede that spring has now sprung and we have not published our response to the Silk recommendations. You are quite right that discussions are continuing within Government. We have a position on most of the 33 recommendations, but there are a few on which we have yet to strike agreement and we hope that we will be publishing our response very soon.

Q7 Mr Williams: There was some speculation in the press this morning-indeed, it responded to what was in our coalition Government document-about the English question and some suggestions of what the Government could bring forward in the autumn to deal with that. Is there any risk that the formulation and delivery of those policies could delay our push for the Silk proposals any further?

Mr David Jones: Are you talking about the McKay recommendations?

Q8 Mr Williams: Indeed.

Mr David Jones: The McKay recommendations are extremely important. As you know, Chairman, they address issues that have been raised by you on many occasions. That is the West Lothian question. We regard it as an important piece of work and we are considering Sir William McKay’s report seriously. Again, we hope to respond to that shortly.

Q9 Mr Williams: While our coalition Government can quite rightly be very proud of what we are achieving in terms of the Scotland Bill and what I hope we will see coming from the Silk commission-your predecessor established the Silk commission and you hope to pursue that agenda-it is very much a package, but there is nothing to impede a Wales Bill and the implementation of Silk before the work of the McKay commission.

Mr David Jones: No. The Silk recommendations are discrete proposals and they are being considered as discrete proposals.

Q10 Nia Griffith: Secretary of State, if I may, I shall press you further on that point. Newspaper reports this morning imply that the borrowing powers of the Welsh Government might be tied up in the same package as the idea of Fourth Reading procedures for English MPs. Are you saying that what we are doing about English MPs would, in your mind, be completely separate from what would be contingent on Parliament-the talks that were held last October with the Welsh Government about borrowing powers, which we understand are in the pipeline? Are these things completely separate, or are they integrally linked in your mind?

Mr David Jones: I saw the reports in the Daily Mail and The Independent this morning. I would remark immediately that they are speculative and are not attributed. Certainly, there are constitutional issues that the Government have to consider, but in so far as Silk is concerned, certainly we are dealing with them as discrete proposals.

In terms of the announcement last October, as you know, that was a commitment to consider convergence at the time of the spending review. That was considered at the time of this spending review; there was an exchange of correspondence between the Chief Secretary and the Welsh Finance Minister agreeing that convergence had not taken place. The announcement in October also made a commitment to borrowing powers for the Welsh Assembly Government, subject of course to there being an income stream. One of the potential income streams could arise from the recommendations of the Silk commission.

Q11 Glyn Davies: I want to ask an associated question about the Silk recommendation for a referendum before going ahead with the Silk 1 proposals. I must admit that I have never been very keen on referendums. I feel that Governments should stand behind their policies. The Wales Office and the Government are very keen to give fiscal responsibility to the Assembly, which I think would transform it as a responsible body of government. Is there any possibility of the Silk 1 recommendations going ahead with a firm recommendation from the Government, which would then mean that it was not necessary to have yet another referendum on the devolution of powers?

Mr David Jones: Clearly, in due course, we will be announcing our response to Silk, but I would say that similar powers in Scotland were the subject of a separate question in the referendum back in 1997. It is fair to say that this is something that the Government will have very much in mind when formulating their response.

Q12 Guto Bebb: May I take you back to the issue of the McKay report and the press’s attention this morning? I respect the comments that you made, saying that the information in the papers today is speculative and that the comments that have been made are not attributed. In view of the Prime Minister’s comments when he went to Scotland that, if the Scots voted no to independence, further powers would be devolved, and in view of the McKay report’s view that there is a need to deal with the West Lothian question, is it not the case that it is difficult to separate the Silk commission’s recommendations from any further attempt to deal with the impact of devolution on the way in which this country is governed?

Mr David Jones: I can only repeat that the Wales Office is treating the Silk recommendations as an entirely discrete issue. The reports this morning, I repeat, are speculative and I cannot comment more on them.

Chairman, the air conditioning unit is making quite a lot of noise and it is quite difficult to hear the questions.

Q13 Chair: I suggest that the matter gets dealt with. The acoustics are quite bad in this room.

I think Ron Davies described devolution as a journey, but my concern is that it seems to be a journey with no reverse gear. How far along the road towards independence can we go without undermining the United Kingdom? Are there a lot more powers that we can devolve to Wales but still be certain that Wales remains part of the United Kingdom?

Mr David Jones: You are quite right. Theoretically, of course, if you were to continue devolving you would arrive at the point where there would be no such thing as Wales within the Union. However, my perception is that there is very little appetite for independence in Wales. Historically, support for it has always been less than 10%. Lord Elis-Thomas recently acknowledged that there had never really been any appetite in Plaid Cymru for independence, although Mr Edwards might take issue with that.

The terms of reference of the Silk commission are very clear. They are to recommend modifications to the present constitutional arrangements that would enable the United Kingdom Parliament and the National Assembly to better serve the people of Wales.

Q14 Chair: The First Minister is on record as saying that anything that affects Wales should be decided in Wales. Virtually everything affects Wales in some way: defence, foreign affairs and HS2 affect Wales. Is he not making an argument, perhaps inadvertently, that virtually everything should be decided in Wales and that Wales should be independent?

Mr David Jones: If that is what the First Minister said, I suggest that he was not giving the question sufficient attention. It seems to me, as you rightly say, that if everything affecting Wales were to be determined in Wales, then Wales would be an independent state.

Q15 Chair: I do not want to hog this and abuse my position, but do you not worry, as I do, that every couple of years another tranche of powers gets devolved to the Welsh Assembly but that there seems to be no way back from it once they have gone and that, because this is only going in one direction, Wales will inevitably end up semi-independent?

Mr David Jones: You have to bear it in mind that, when the coalition agreement was made, the Silk process, as it has become, was being described as a Calman-like process. You will recall that the Calman commission in fact made recommendations that were for further devolution to Scotland but also for the repatriation of further powers from Scotland. It is entirely a matter for the Silk commission, when considering the matters under its remit, to decide where it thinks powers best lie. It may well think, for example, that some powers that have already been devolved to Wales best lie with Westminster, but that is entirely a matter for the commission and I am not disposed to second-guess what its findings may be.

Chair: Shall we seek an alternative view?

Q16 Jonathan Edwards: Going back to the point raised earlier by Guto, if the reports today are correct, is it not true that we would have to move quickly to a symmetrical devolution settlement? Otherwise, you would have four tiers of MPs. For instance, if there was a Fourth Reading vote on a matter relating to policing, English and Welsh MPs, based on the current devolution settlement, would vote on that, but Northern Irish and Scottish MPs would be excluded. Obviously, that is quite a simple one, but I imagine that a number of Bills would be very complicated and it would be far simpler to have that symmetrical devolution when moving towards a federal settlement.

Mr David Jones: That, of course, is predicated on the reports today being correct, but they may well not be correct. Indeed, being speculative reports, they probably are not correct-at least not entirely. My own view, as I said in Cardiff a couple of weeks ago, is that asymmetric devolution is a model that works pretty well in the United Kingdom because it respects the history of the various nations within the Union. These are matters that we will no doubt debate extensively in due course when the McKay report recommendations fall to be considered by the House.

Q17 Geraint Davies: Do you accept that, when the Welsh Government successfully invest money in new jobs in Wales, the cost of unemployment benefit goes down and tax revenue to the Exchequer goes up and, therefore, that the Welsh Government should get some money back from that investment? Have you factored that thinking into your response?

Mr David Jones: Are you talking about Jobs Growth Wales?

Q18 Geraint Davies: No, I am talking theoretically and generally. When Wales spends money on jobs, the Exchequer saves money in benefits and gets tax. However, Wales does not get a return on the money that it is spending; instead of spending it on health, education or on jobs, the money ends up in the Exchequer. Should Wales not get some of that return? You are the Secretary of State for Wales, so don’t you think that is reasonable?

Mr David Jones: In response to that, I point out that every penny that Wales spends-to be more accurate, that the Welsh Government spend-is money from the Exchequer.

Geraint Davies: I know that.

Mr David Jones: Your question appears to be that the more Wales spends of Exchequer money, the more money it is entitled to get back, which I think is an unusual policy.

Q19 Geraint Davies: No; but if it makes money for the Exchequer, should it get a share?

Mr David Jones: I would like further details of your proposition, but it seems to me to be unusual.

Q20 Mr Williams: This relates to my earlier question on the timetable. I know that I speak for my colleagues in looking forward to the draft Wales Bill coming before this Committee for us to undertake pre-legislative scrutiny of it. How likely is it that the draft Wales Bill will include provisions related to devolving financial powers?

Mr David Jones: It depends entirely on the Government’s response to the Silk commission’s recommendations. In fact, if it were necessary for primary legislation in respect of that response, it seems to me that the Wales Bill would offer a useful vehicle to incorporate that into law.

Q21 Chair: Minister, when the former Welsh Assembly Education Minister decided, unilaterally in Wales, to upgrade GCSE results, what conversations did he have with you or his English counterparts before doing so?

Mr David Jones: He certainly had no discussions with me. Whether he had conversations with the Secretary of State for Education I do not know, but I am bound to say that I thought it a rather dangerous move on his part.

Q22 Chair: At the moment, clearly there are plans to change GCSEs in England and some people in the Welsh Assembly and in Wales are concerned about this. Has there been any discussion with those in Wales about the plans that are taking place in England?

Mr David Jones: I know that the Secretary of State for Education regularly speaks to his counterpart in Cardiff, but you are absolutely right that one of the issues that parents and pupils need to be assured about is that the qualifications that they receive, be it in England or in Wales, are readily understandable and are portable. This is a concern that has been expressed to me also by business leaders in Wales who are becoming concerned about the divergence of qualifications.

Q23 Chair: One of the things that surprises me a little is that I hear complaints from the Assembly that nobody in Government is talking to them, yet when the Assembly decides to do something unilaterally on exams in Wales they do not appear to talk to England. Is it not inevitable that England will feel that it has a right to do whatever it wants with its exam qualifications, just as Wales now does with its?

Mr David Jones: Divergence in devolved policy areas is a natural consequence of devolution. However, when one is talking about something as important and fundamental as educational qualifications, it is absolutely necessary for Ministers both in London and in Cardiff to speak to each other and particularly to ensure, as I say, that those qualifications are readily understandable, portable and, perhaps most importantly, are intelligible to prospective employers and further and higher education institutions.

Q24 Chair: Finally, would you encourage the Assembly Minister responsible for education to look carefully at what England is doing and to consider following suit and not try to do something different just for the sake of it, given the relative size of Wales to England?

Mr David Jones: Clearly, I respect the devolution settlement and I respect the fact that the Welsh Education Minister has competence in that particular area. Speaking personally, however, it seems to me that the Secretary of State for Education is proposing improved and more robust qualifications. I am sure that the Welsh Education Minister will pay close attention to what is happening here.

Q25 Jessica Morden: On the general issue of communication, under your predecessor there was a "Devolution Ministers’ Group", but it does not appear in this year’s annual report. Does it exist any more?

Mr David Jones: There are Ministers in each Department who are considering issues of devolution. However, it is fair to say that implanting devolution awareness across Whitehall is challenging. That is one of the reasons why the Wales Office has an important function, and it is a function that we take very seriously. It is, as far as we possibly can-and I think that we are quite successful at it-to devolution-proof legislation that comes from Westminster. Certainly there are officials in each Department who are charged with paying close attention to the devolution settlement and its possible consequences in the devolved Administrations.

Q26 Jessica Morden: On the decision to restructure GCSEs, how much were the Wales Office and you involved with the Department for Education in advance?

Mr David Jones: That is an announcement that was made by the Department for Education. It is something in which the Wales Office would clearly want to become further involved, both with the Department for Education and the devolved Administrations.

Q27 Jessica Morden: Were you consulted in advance?

Mr David Jones: No. The policy formulation was carried out by the Department for Education.

Q28 Nia Griffith: On Whitehall’s understanding of the devolution settlement, I had two responses from a Health Minister about the plain packaging consultation, which was UK-wide. Both times she insisted that it was a matter for the Welsh Government. I responded and asked again and had the same answer back. Finally, she recognised that it had been a UK-wide consultation.

Obviously, consumer legislation is a UK-reserved responsibility. I wonder if there are further steps that you could take to ensure that, throughout Whitehall at all levels, whoever is answering letters, there is an understanding that these things are very complex. You cannot say that all health and education is devolved. There are aspects of almost every Department that are partly reserved and partly devolved.

Mr David Jones: You are absolutely right. I am sure that my predecessor, her predecessor and his predecessor understood that trying to implant devolution awareness across Whitehall is not always easy. But the example that you have given is a stark one. You might like to write to me further about that and we will certainly pursue the matter.

Nia Griffith: Thank you.

Q29 Simon Hart: On that point, which is important, I add to your list of concerns. Business rates is something that you and I have talked about privately. We probably all possess letters from Cardiff, as I do, saying that business rates is a matter for Westminster, with Westminster saying that it is a matter for Cardiff. Leaving aside the frustration that that causes us, there are plenty of businesses around Wales, and particularly in my part of Wales, for which all it achieves is a frustration that we are all incompetent and that none of us knows one part of our body from another. Therefore, the whole reputation not only of Cardiff but of Westminster is damaged in the process. Anything that you can do to make that simpler would be appreciated.

Mr David Jones: It is a bit like painting the Forth bridge, Chairman.

Q30 Stephen Doughty: Secretary of State, were you satisfied with the Government’s infrastructure announcement as it relates to Wales?

Mr David Jones: Do you mean in the spending review?

Q31 Stephen Doughty: Yes, the Chief Secretary’s announcement.

Mr David Jones: Yes. I thought that there were some very good announcements for Wales. I was particularly pleased with the announcement of a proposed prison in north Wales. That is long overdue. In fact, I remember that when I was a member of this Committee we had an inquiry into the Welsh prison estate and it was identified then as a need. That is a very important piece of infrastructure; it will benefit north Wales prisoners, their families and their legal advisers.

Q32 Stephen Doughty: With the exception of the prison, is it not the case that most of the things that were announced as big infrastructure projects had already been announced, such as electrification, the M4 and so on? Apart from the prison, what was in there for Wales?

Mr David Jones: Actually, there was not an announcement on the M4 but there were certainly very warm words from the Chancellor. Given that the upgrade of the M4 at Newport would be a project the value of which is estimated at something like £800 million and given that the prison is worth another £250 million, we already have £1 billion of infrastructure-ignoring, as you invite me to do, the upgrade of the Great Western line and the Valleys lines, which will be of tremendous benefit to south Wales.

Q33 Stephen Doughty: Obviously, Wales has benefited a lot from European structural funds over the years, particularly in infrastructure investment, yet you described Europe recently as a basket case.

Mr David Jones: I described the eurozone as a basket case.

Q34 Stephen Doughty: Not the European Union as a whole?

Mr David Jones: I described the eurozone as a basket case.

Q35 Stephen Doughty: Which way would you vote in a referendum?

Mr David Jones: That is a hypothetical question because there is no referendum.

Q36 Stephen Doughty: But if there was?

Mr David Jones: If I may finish my answer, I think that the people of this country have a right to a referendum. I find it interesting that the Labour party seeks to deny them that right. Certainly, before any referendum takes place there will first be a negotiation, which the Prime Minister will conduct-if he is still Prime Minister, but I have no doubt that he will be-in 2017. At that stage, based upon the outcome of that negotiation, the people of Britain will make their minds up. At that stage, I shall be delighted to tell you which way I shall vote, but given that it is wholly hypothetical, I shall not tell you now.

Q37 Stephen Doughty: I have one last point. Would you accept, Secretary of State-particularly in the area of infrastructure-that Wales has significantly benefited from its membership of the European Union?

Mr David Jones: Do you mean to the extent that Wales has been the recipient of structural funding?

Stephen Doughty: Yes, and in many other ways.

Mr David Jones: In terms of structural funding, it is quite clear that Wales has been the recipient of many hundreds of millions, if not billions, of pounds of structural funding. That, I suppose, is beneficial to Wales, although-

Q38 Stephen Doughty: You would suppose it was beneficial?

Mr David Jones: I was going to add that, in some cases, it is really quite hard to discern the benefit. I would also gently remind you, as I am sure others will in due course, that Britain is a net contributor to the European Union. Therefore, the money that flows from the European Union at the moment could conceivably flow from a Britain outside the European Union. That is not to say that I am indicating one way or another.

Q39 Stephen Doughty: That sounds like a strong indication to me, Secretary of State.

Mr David Jones: The point is that you were positing an argument that was based, it seemed to me, on the fallacy that the money that has come to south Wales, primarily from European structural funds, would not have come in if Britain had been outside the European Union. That is a fallacy and I am sure that others will make that argument strongly.

I think that the Chairman wants to intervene.

Chair: I am tempted to let this carry on and to join in on a particular side, but we are getting a little bit far from your responsibilities in Wales.

Q40 Geraint Davies: Very briefly on the last question, Secretary of State, you will be aware that 150,000 jobs in Wales rely on Europe. If the next four years consist of arguing about whether we are in or out, would you not expect that a lot of prospective investors from emerging markets who want access to the biggest market in the world, namely Europe, would to choose to go for a safe option within Europe rather than in Wales? That would be completely against our interests.

Mr David Jones: I do not accept that at all. The Prime Minister has made his position very clear. He recognises that the European Union is an important free trade area, if nothing else. He has acknowledged that he would like Britain to remain within a reformed EU and he is seeking to renegotiate Britain’s place within Europe so as to create that reformed EU. I do not accept at all that investors would be put off by the Prime Minister’s stance. The Prime Minister has in fact made it absolutely clear that his preference is for Britain to remain within the EU.

Q41 Geraint Davies: If you are Toyota or Tata, or whoever it happens to be, and you say, "Either we get four years of big arguments about, ‘Are we in or out, shake it all about,’" and the Secretary of State says, "I prefer to be out than in"-

Mr David Jones: Forgive me, but may I correct you? I did not say that.

Q42 Geraint Davies: There is a mixed view. If there was a chance of being out or in, would you put your bet on a long-term investment in that sort of country or on a stable country within the EU if you wanted access to the EU? Surely, you would go for the latter, Secretary of State, but that must be bad for Wales.

Mr David Jones: You are citing Tata. I have had no such representation from Tata. Have you?

Geraint Davies: I am talking generally. They are very concerned about the issue.

Chair: Order. This is a bit beyond us.

Q43 Geraint Davies: I turn to the infrastructure, Chair.

In the Chief Secretary’s statement on infrastructure, you will know that 90% of the transport infrastructure and 80% of the overall infrastructure is in London and the south-east, let alone England, with virtually nothing for Wales other than a prison. Why are you not arguing for a high-speed link with Wales?

Mr David Jones: I am sorry, but that is manifestly and palpably not true.

Geraint Davies: It is.

Chair: Order. Please let the Minister answer.

Mr David Jones: You mentioned the prison, and I am glad that you welcome it, but in addition to that we have the announcement of improved rail infrastructure in south Wales and the announcement of additional money for broadband. Generally, I think that Wales has had an extremely good deal. By the way, I remind you that national spending, such as on the prison, is over and above what is delivered to Wales under the block grant.

Q44 Geraint Davies: Jonathan Edwards mentioned the white elephant of HS2, but isn’t it more of a red and white elephant? It is an English elephant and we should have our share of it. That would be about £2.5 billion, but we are getting only £1.5 billion overall. Aren’t we just being short changed and you are not standing up for Wales?

Mr David Jones: Clearly you do not agree with your colleague Mr Albert Owen, who thinks that HS2 is absolutely wonderful because it will cut the journey time considerably from Holyhead, where he lives, to London. You probably do not agree with Mr Mark Williams, who I am sure is looking forward to vastly improved journey times via Birmingham. To suggest that it does not benefit north Wales, again, is palpably untrue.

Chair: That is probably enough on HS2. I bring in Guto Bebb.

Q45 Guto Bebb: It is fair to say that most people in north Wales, and certainly local authorities and elected representatives, acknowledge the work of the Wales Office on the announcement about the prison. The one thing on which we would like to have confirmation is whether the announcement is significantly different from the one that we had in 2009.

Mr David Jones: Do you mean the one that did not go ahead?

Guto Bebb: Absolutely.

Mr David Jones: It is significantly different because it will go ahead. You are quite right that it has been widely welcomed in north Wales. I had a very nice note from Councillor Dyfed Edwards of Gwynedd council, Mr Edwards’s colleague, who commended the Wales Office for the work that it had done. We also had some nice press releases last week from Councillor Dilwyn Roberts, another of Mr Edwards’s colleagues, from Conwy.

You are quite right. I am delighted at the response that we have had from north Walians of all parties to the announcement. It certainly will go ahead. Like you, I was deeply disappointed that the one at Griffiths Crossing did not go ahead; I was never persuaded about the grounds for not going ahead with that prison.

Q46 Guto Bebb: In view of your comments in relation to the congratulatory notes from various council leaders, what sort of approaches have you had from local authorities in north Wales that are willing to offer sites for this proposed prison? What sort of involvement have you had from local authorities?

Mr David Jones: There has been huge engagement. For example, Denbighshire was very anxious to be considered. Wrexham, too, is anxious to be considered. A couple of the sites that we are considering are in Wrexham. Councillor Neil Rogers, the Labour leader of Wrexham council, has been extremely supportive. Generally, it is welcomed and north-Wales authorities are quite willing to see the prison accommodated in their area.

Q47 Guto Bebb: In view of the fact that the prison will probably accommodate 2,000 inmates, will the catchment area be north Wales, south Wales or will it also include the north-west of England?

Mr David Jones: It will also comprehend the north-west of England. I have to say that we have had extremely strong support from Cheshire West and Chester council and also from Shropshire council. I think that there is general recognition in the area, on both sides of the England-Wales border, that this is an important development for the region.

Q48 Guto Bebb: My final question is what assessment have you made of the economic impact of this prison when it finally gets built? What is the actual value to the local economy?

Mr David Jones: The building cost alone is going to be about £250 million. In addition, there will probably be up to 1,000 permanent jobs on the site. An estimate of something in the region of £23 million of positive impact on the local economy has been made.

Q49 Jonathan Edwards: I have a quick question, Secretary of State. Do you have any figures on the number of prisoners from north Wales currently housed in prisons in England?

Mr David Jones: It varies, but I think that I am right in saying that about 700 or 800 prisoners on average from north Wales are accommodated outside north Wales, but not necessarily in England; for example, they may be in south Wales.

Q50 Jessica Morden: What are your plans for improvements on the M4?

Mr David Jones: The Chancellor, of course, described it as an impressive project. The UK Government are in discussions with the Welsh Government on this issue. As you probably know, Edwina Hart, the Business Minister, has ordered preparatory work to be done in scoping the project. We are actively engaged both with the Welsh Government-I spoke to the First Minister about this issue on Monday-and with the Department for Transport and HM Treasury.

Q51 Jessica Morden: When are we likely to know how it will be funded?

Mr David Jones: I think that the response to the Silk commission would probably be the appropriate time.

Q52 Jessica Morden: If the Government suggested the devolution of financial powers to help with the improvements on the M4, would that delay any improvements?

Mr David Jones: I cannot see that it would. The M4 is very important, a strategic route not just for Wales but for the UK as a whole. There is keenness not only in Cardiff but also in the Department for Transport to see it upgraded.

Q53 Jessica Morden: It is obviously an important strategic route, but the M4 relief road might go slap-bang through the middle of my constituency, so would you also think it right that any consultation that the Assembly undertakes should take full account of the environmental and local impact that any improvements may have?

Mr David Jones: I am aware of the sensitivity of the proposed route. I do not know where you stand on that, Ms Morden, but I am sure that environmental issues will be a prime concern. Clearly this is going to be a matter for the Welsh Government, who have responsibility for highways in Wales.

Q54 Jessica Morden: Will you assure me that any money given for improvements for the M4 will be substantial enough to take all those factors into account?

Mr David Jones: I reiterate that it is a matter for the Welsh Government, but we intend to ensure that sufficient support is given to secure the project and the upgrade of the road.

Q55 Chair: Minister, what discussions will you have about the future of tolls on the Severn bridge with your counterpart in the UK Government in the Transport Ministry?

Mr David Jones: I see he appeared before you fairly recently.

Q56 Chair: We will be seeing him again later this morning.

Mr David Jones: You will have every opportunity to ask him again, but I have discussed this with him and with the Secretary of State for Transport.

Q57 Chair: Would you agree, hypothetically, that if we could remove the VAT charges on the tolls it would be a good thing to do?

Mr David Jones: I saw his reply to that question last time around and I can only suggest that you ask him the same question again.

Q58 Chair: What was your thought on his answer?

Mr David Jones: I thought that your proposition was ingenious and I thought that he gave a very good answer.

Q59 Chair: Okay. In general terms, would you say that it would be a good or a bad thing if the toll could be reduced in some way?

Mr David Jones: Clearly a reduction in the toll is something that would be beneficial not just to south Wales but to the whole of the United Kingdom. However, we have to have regard to the fact that the two crossings are important pieces of national infrastructure. I am sure that we would all agree that it is far better to have the bridges than not to have them and that they have to be paid for somehow. Clearly, as a proposition, reducing the toll would be desirable and it is a matter for the Department for Transport to decide how that should be done in due course.

Q60 Chair: If it were possible to reduce the toll but to maintain it at a level that covered the costs of maintaining the two crossings, it would be a desirable thing to do; provided that we maintain the costs of maintaining the two crossings, that would be fine?

Mr David Jones: That would be desirable, but you need to speak to an expert such as the Transport Minister, who I am sure will be able to give you a very good and comprehensive answer to that question.

Q61 Chair: Do you think that it would be undesirable if any proportion of the tolls being paid in future were simply to go back to the Treasury to create a profit for HM Government?

Mr David Jones: Speaking as a Welshman, I would agree with that proposition. I would like to see the tolls as low as possible. Equally, speaking as someone who uses that road from time to time-in fact, more often than I used to-I am mostly anxious to ensure that the crossings are properly maintained.

Chair: Absolutely.

Mr David Jones: I think that everybody would agree that a fair toll is probably necessary to maintain those bridges.

Chair: A few people want to come in on this. I shall work my way around from Geraint Davies.

Q62 Geraint Davies: We obviously know the history of the toll operation and how it is paying for the bridge and so on. That being said, in the case of the latest infrastructure plans, including HS2, the Government are obviously paying for the infrastructure with no requirement for a payback from the consumer. Yet in the case of the Severn bridges-and we understand the lessons of history-Welsh and English commuters or visitors are paying towards that infrastructure. Given that we face difficult times and we need our infrastructure, do you not think that there is a case to be made for some of the infrastructure spend being used to bring down the tolls?

Mr David Jones: Again, we are rehearsing what you are obviously very well aware of. Severn River Crossings is entitled to tolls until 2018.

Geraint Davies: I know the background.

Mr David Jones: Whichever way you look at it, the Transport Minister has indicated that it will be at least the summer of 2018 before they are paid off. There are also ongoing charges on the bridges, which he indicated to you, that have to be repaid to the Government. Although one clearly would like the tolls to be relieved-and, in an ideal world, to be removed altogether-we have to face the reality that these two important pieces of infrastructure, the second one in particular, have to be paid for before we can arrive at the point that you mention.

Q63 Geraint Davies: On timing and infrastructure, do you accept- given previous comments like, "We are not getting our fair share of the overall infrastructure spend," alongside the issue that Silk, it appears, is delaying a capital settlement for Wales-that, not only is there discussion about whether we get a fair share, but about the timing of investment that we desperately need now, which is being pushed into the future by Silk? Wouldn’t you accept that is a problem for Wales?

Mr David Jones: No, I do not accept that at all. In the context of the time span that we are talking about-after all, it is 25 years-a few more weeks while Silk is considered is not really going to add anything to the equation one way or the other. In any event, I am not entirely sure of the correlation between our response to the Silk commission and the terms on the Severn bridge.

Q64 Geraint Davies: Will you confirm that you are consistently fighting for Wales to have a fair share of capital, alongside Silk, and not holding back? When I put the question to the Chief Secretary to the Treasury about the failure to provide enough infrastructure investment in Wales, he said, "Don’t worry, we’re waiting for Silk." We could wait forever for Silk, but we need the money now. We are in desperate straits.

Mr David Jones: We have to have regard to the fact that, since the last spending review, Wales has had £850 million-plus of capital over and above the block grant. In terms of Wales’s benefit from being part of the UK and the extent to which the UK is having regard to Welsh interests, that speaks for itself.

Q65 Geraint Davies: But it is a very small share of the overall spend. It is much less proportional. The capital spend that we get in Wales is a small fraction of the 5% of the population that we have.

Mr David Jones: No. Wales has done extremely well, I think.

Q66 Jonathan Edwards: Following up on that last question, Secretary of State, is it not the case that the Welsh Government have had far less of an increase in capital expenditure in the spending review than both Northern Ireland and Scotland?

Mr David Jones: You have to have regard to the fact that the devolution settlements are different and that more is devolved in Scotland than in Wales. You cannot just pro-rata the calculation. I think that Wales was very fairly treated in the spending review.

Q67 Simon Hart: I have a less miserable outlook than Mr Davies in terms of infrastructure. I emphasise that the value of the M4 improvements are almost as important for west Wales as they are for the Newport and Cardiff area. Businesses largely welcome the comments that have been made and the expectation that something is at long last going to be done. The only thing on which I would ask for your assistance is the business of clarity.

I asked a question yesterday of the Deputy Prime Minister, making a point about what the Chief Secretary to the Treasury had said about the connection with the M4 improvements and the outcome for the Silk negotiations, and his answer was, "It is a very complex issue and we will endeavour to respond as soon as possible." A lot of businesses have been teased and tantalised and they think that something decent is coming down the line. If we are going to get the maximum inward investment, certainty of some sort would be valuable. The lack of certainty is my only criticism.

Mr David Jones: I agree that commuters and business people in your part of the world would like to see the M4 upgraded. I think that the Chancellor gave a very strong indication that the Government are very favourable towards the Newport upgrade of the M4. However, one of the issues that concerns you, Mr Hart, is what happens when you drive west beyond Carmarthen. Ultimately, as you know, the road becomes a dual carriageway, then a single carriageway and by the time it gets to Fishguard it is not a very good single carriageway. But this is an important European route. One of the things that I believe the Silk commission should be looking at is the arrangements for the maintenance and potential upgrade of these important trans-European routes, the M4 being one of the two in Wales.

Q68 Simon Hart: I absolutely agree, but there is a problem when you get as far west as St Clears: your colleague in the Wales Office wants a dual carriageway to Fishguard and I want one to Pembroke Dock, but that probably will not be resolved on any of our watches. The Chancellor’s words were indeed warm and everybody now has a genuine expectation that the Newport upgrade will be done. But if we can narrow it down to which decade it will be done in, that would be of value to people who are looking to invest in west Wales.

Mr David Jones: I would certainly hope that we are not talking about future decades.

Q69 Glyn Davies: This is a linked point, Secretary of State. We know that the south Wales economy is greatly advantaged by the Severn bridge and that a change in the toll regime would make a difference. Exactly the same thing applies to mid-Wales. The mid-Wales economy depends on links to the English market. Devolution has produced a situation-I have raised the matter before-which is devastating for us. Regarding the links on the A458 and the A483, the Welsh Government would be willing to put in the investment on our side of the border, but the Department for Transport have almost no economic benefit at all because they do not have any markets, so they are not willing to do so. What discussions are you having with the Department for Transport to ensure that we have a British response to improving the economy of mid-Wales and not just south Wales?

Mr David Jones: You are absolutely right. The A483 in particular is an important and strategic north-south route in Wales. The problem, as you rightly say, is that on the Welsh side of the border it is a route that is ripe for upgrade, but on the English side of the border it is basically a quiet country road. It was actually worse before we took power. It was then a route that was controlled by an entity called the West Midlands Regional Assembly, which I had never heard of before, and by the time I did hear of it, it had been abolished. At least we have the Department for Transport.

This is another issue that Silk should be giving consideration to. You make the very important point that the devolution settlement did not comprehend these particular issues and it is absolutely essential that the commission should be looking at routes such as the A55, the M4 and the A483 and deciding what arrangements should be put in place. In the meantime, I can confirm that I am speaking to the Department for Transport about that route, but it would be so much better if there were formal arrangements for upgrading and maintaining that route.

Q70 Glyn Davies: The A458 is a key part, as well.

Mr David Jones: Will you remind me which road that is?

Q71 Glyn Davies: That is the road from Shrewsbury to Welshpool. That gives access to Birmingham. The A483 gives access to Manchester, but probably the most significant one is the A458. The contribution from the Department for Transport is a very small proportion of total investment, but there is no capacity for the Welsh Government to spend money on the English side.

Mr David Jones: You are right. I must confess that I had thought more about the A483 because it is a strategic Welsh route from north to south.

Q72 Guto Bebb: I have a quick question. Obviously, as a result of the 2011 Welsh language Measure in the Assembly, the Wales Office has significant responsibilities for providing Welsh language services through the non-devolved Departments. I do not think that anybody doubts the commitment of the Wales Office in this respect.

Mr David Jones: Indeed, we were at pains to appoint an adviser on an unpaid basis.

Q73 Guto Bebb: I should declare an interest. Specifically, it is important to state that the settlement of the continued security of funding for S4C in 2017 illustrates the fact that the Wales Office takes its responsibilities towards the Welsh language very seriously.

Would you advise the Committee about your views on the proposed changes to legal aid and the impact of those changed recommendations in terms of Welsh language provision in parts of Wales?

Mr David Jones: Yes. It was always the case that the Ministry of Justice recognised the importance of Welsh language provision. This was something that I had spoken to the Lord Chancellor about and I am satisfied that he is aware of the importance of Welsh language provision. You will probably know now that he recently indicated that he has acknowledged the importance of choice in terms of legal aid. This, I hope, will give further comfort to those individuals who are concerned about Welsh language provision.

Q74 Jessica Morden: On the annual report, as part of the spending review, you are going to have to find an extra 10% of the administration costs of the Wales Office in 2015-16. Why did you give bonuses to 10 of your staff last year?

Mr David Jones: The bonuses, in fact, were not provided by the Wales Office, because the Wales Office is not an employer. The bonuses were provided by the paying Department, which is the Ministry of Justice.

Q75 Jessica Morden: What were they for?

Mr David Jones: Good performance.

Q76 Jessica Morden: Do you not think that people might think it a bit strange at a time of pay restraint to see people being given bonuses of between £2,000 and £7,500?

Mr David Jones: It is a question of how good the performance is. For example, in the private sector, if there was outstanding performance, people would recognise that those payments were justified.

Q77 Jessica Morden: So you are not embarrassed about it?

Mr David Jones: As I say, the Wales Office is not actually the paying Department.

Q78 Jessica Morden: It is still public money.

Mr David Jones: Of course it is public money.

Q79 Jessica Morden: There is much in the annual report about co-operative working with the Welsh Government. How is that going?

Mr David Jones: I believe that it goes pretty well. I think that our Office has a good business-like relationship with the Welsh Government. I have regular meetings with the First Minister, and other Ministers in the Wales Office meet other Ministers in the Welsh Government. Given that we have Governments in Whitehall and in Cardiff of different political stamps, the relationship is as good as could be expected. It is a business-like relationship.

Q80 Jessica Morden: How did your butterfly collector speech go down in terms of your relations with the Welsh Government?

Mr David Jones: That was a speech that I made at the invitation of Cardiff university. The speech was certainly a personal speech and I was at pains to say it was a personal speech. Similarly, of course, the First Minister made a speech to the London School of Economics, which I am sure he would acknowledge also was his personal view as to the future of devolution.

Q81 Jessica Morden: I have a last question on welfare reform overall. Obviously, Wales is hit particularly hard by welfare reforms with some of the changes for disabled people in Wales-the bedroom tax hitting 25,000 people, the cuts to DLA hitting 40,000 people and 50,000 having their benefits reduced. Do you agree with Disability Wales that we should have a cumulative assessment of all these changes for disabled people and that that is the very least that we could do just to see what is really happening on the ground?

Mr David Jones: This is something that I know colleagues in the Department for Work and Pensions keep under constant review. I am sure that they will take fully into account any representations that are made by groups such as Disability Wales.

Q82 Jessica Morden: Would you, as the Wales Office, be willing to pull together and present to us some of that Welsh information?

Mr David Jones: I think that Disability Wales is well capable of doing that work. In fact, it has done that work for itself.

Q83 Jessica Morden: But you will not do that yourself?

Mr David Jones: Ultimately, the responsible Department is firmly the Department for Work and Pensions.

Q84 Geraint Davies: Secretary of State, you know that the cuts are being targeted at the number of public sector jobs, public sector pay and welfare and also that Wales has a disproportionate number of people in the public services-in Swansea it is 40%-and a disproportionate number of people with disabilities who are being hit by the cuts that Jessica Morden has mentioned. It has a disproportionate share of the cuts, but it does not have a proportionate share of benefits in terms of investment in infrastructure. Is there anything that you can do to redress that imbalance, or are you just fighting for an unfair share of cuts and not a fair share of investment?

Mr David Jones: I totally reject that proposition. In terms of infrastructure, I have amply answered that point by saying that Wales has had a very good deal in terms of infrastructure investment. In terms of job losses, yes, there have been job reductions in the public sector. Across the country these have been significantly outweighed, almost three to one, by an increased number of jobs in the private sector. Indeed, your colleague Peter Hain has already acknowledged that Wales is too dependent on the public sector and I am sure that you, as he would, will appreciate the increase in private sector jobs that the Government have presided over.

Q85 Geraint Davies: May I ask whether you are actively engaged in helping Welsh companies get contracts for some of these massive procurement opportunities emerging particularly in England from the Government? I know that in the case of the Olympics, Wales had a very poor showing in terms of procurement. For the future, on things that are rolling forward that you are aware of, is there any way that you can help facilitate jobs in Wales being supported?

Mr David Jones: By far the biggest piece of infrastructure that is planned in Wales-

Q86 Geraint Davies: I am thinking about outside Wales.

Mr David Jones: Let us deal with Wales for a start. At Wylfa we will have a £10 billion investment. The Wales Office has already been heavily engaged with both the Department for Business, Innovation and Skills and the Department of Energy and Climate Change in helping to put together a contact point for Welsh businesses to take advantage of that huge infrastructure investment.

In terms of public procurement, we have seen Lord Young’s recent recommendations, which will significantly ease the burden of Welsh SMEs that are seeking to tender for large-scale public contracts in England. For example, we are abolishing the pre-qualification questionnaire for any project up to €200,000. I would like to see the Welsh Government do that, because one of the complaints that I get from my constituents is that the Welsh Government’s procurement process is heavily weighted against SMEs and in favour of large companies. The consequence is frequently that, in Wales, large English companies get the contracts. The Welsh Assembly Government have to play their part in the process.

Q87 Geraint Davies: I think that you will find, Secretary of State, that 65% of procurement in Wales is from SMEs, half of which are in Wales, and that just 6% of procurement is from SMEs in England. May I ask you again, in terms of the new opportunities, will you now actively engage in trying to get Welsh companies to get jobs through English procurement, which tends to be concentrated in big companies, contrary to what you said?

Mr David Jones: I think that Lord Young’s recommendations will go a long way to making life a lot easier for SMEs, Welsh SMEs included.

Chair: Thank you very much indeed, Secretary of State. That brings the session to a close, so I thank you all for taking part today.

Prepared 15th July 2013