Sifting evidence, shifting goals
- 15 February 2012
- From the section Wales politics
Hello all, it's Toby Mason here (or @TobyMasonBBC if you're Twitter-inclined) keeping the blog warm while the boss takes a well earned half term break.
Time for a quick canter through a few of the submissions published today by the Silk Commission examining the future funding of Wales. What cloth does Mr Silk and his fellow commissioners have to cut?
There are 45 submissions published and you can see them all here. The Commission issued a call for evidence to around 450 organisations.
The UK Government say it's not appropriate for them to respond to a Commission that they themselves set up, so we don't have a formal indication of where they stand. However, the Welsh Secretary's indicated very clearly in the past that she sees increased fiscal accountability - being responsible for raising in taxes at least some of the revenue spent on public services - as desirable. On this, at least, the Silk Commission's remit is drawn pretty widely.
The Welsh Government's submission echoes much of what's been said by Carwyn Jones in recent months - that they are keeping an open mind on the case for tax devolution - but, and it's a big but, any substantial move for Wales to vary income tax would mean another referendum. However, they're not ruling it out "in the longer term" and will consider any proposals from the Commission on this.
Their focus is on the taxation levers that already complement devolved areas, for example, stamp duty or air passenger duty where for them, it could enhance policy-making, as well as borrowing powers to enable large capital projects to go ahead.
The political parties have had their say too - or most of them. Labour is keeping its powder dry until it sees the Commission's conclusions.
The Welsh Conservative Assembly group have told Paul Silk and his colleagues there is "considerable merit" in the "devolution of some aspects of income tax, because this could make the National Assembly more accountable to the people it represents for the money it spends." From a party that opposed devolution itself until a decade ago, this is a pretty radical move. Or maybe not. The Welsh Conservative Party itself has also put in a submission which is far more circumspect, confining itself to general principles about accountability for decisions if more powers are granted.
Plaid Cymru, who published their submission in advance of today, are calling for pretty much the full monty when it comes to fiscal powers, with a minimum 50-50 responsibility for raising income tax between the Welsh Government and the UK Government, a similar arrangement for VAT and corporation tax in its entirety as well as resource taxes and income derived from the Crown Estates in Wales. Fiscally at least, it's not far off a Welsh devo-max scenario, and one which they say would lead to a "shift of mindset" for governing in Wales.
The Welsh Lib Dems say in their evidence they support the devolution of both income tax and corporation tax to Wales - however, they recognise the significant legal and technical barriers to be overcome. The caveat is that they say whatever is decided cannot be implemented in isolation from fundamental reform of the Barnett formula - an area that the Commission is prohibited from examining under its remit agreed by the governments at both ends of the M4.
Instead, discussion of Barnett reform, and a possible move to a needs-based formula is taking place in parallel with the Silk process at an intergovernmental level.
The submission from the group Changing Union warns Paul Silk and his colleagues that there is "no possibility of reaching consensus" on the taxation elements of its work without also making recommendations on changes to Barnett. They call the remit "unnecessarily narrow" and ask the Commission to, effectively, override the remit and examine Barnett anyway. Will the Commission go rogue? I doubt it somehow.
Even if Silk and co aren't talking Barnett, the influential ConservativeHome website certainly is. As part of their series looking at which policies might deliver a Conservative majority at the next election this piece is a provocative addition to the current debate.
A choice quote is this: "England is losing up to £4.5 billion every year because a Conservative-led government is sending that money to parts of the UK that stubbornly refuse to vote Conservative AND there is widespread agreement that the system isn't driven by social need.
"So let a Conservative Prime Minister call for the phased ending of the Barnett formula and over, say, five years the savings be poured into a social justice fund. This fund would be available to every part of the UK - including Scotland, Anglesey but also Hackney, and the poorest part of Britain, Jaywick Sands in Essex. It would fund projects that were working with the most disadvantaged people in Britain."
Whatever the merits of that off-limit Barnett debate, the Commission are clearly examining closely whether to recommend the devolution of income tax powers to Wales in some shape or form - even bearing in mind the Welsh Government's insistence that a referendum would be required.
In the minutes of their meeting of December 12, it states:
"It was noted that it would be possible to legislate for income tax devolution subject to a referendum, as in the Government of Wales Act 2006 on primary powers, which could be triggered later by a successful referendum.
"Other measures could be brought forward before this referendum such as tax assignment as a step towards powers to vary the rates if this was agreed following the referendum. HMRC would then be able to make the necessary arrangements to administer tax on a Welsh basis."
Their direction of travel looks interesting - although we'll have to wait until the autumn for their report. If it does recommend significant devolution of taxes, expect to hear much from True Wales, whose submission here makes it clear they feel their "slippery slope" argument, as the No campaign in the powers referendum, has been more than vindicated.