Wales offered tax raising powers

 

David Cameron and Nick Clegg made the announcement in Cardiff Bay

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The Welsh government will be offered some control over income tax subject to a referendum, Prime Minister David Cameron has said.

Speaking in Cardiff Bay, he and deputy PM Nick Clegg announced new financial powers for the devolved administration.

They include control of the stamp duty paid by house buyers and powers to finance upgrades on the M4.

It follows the publication of a report last year which said the Welsh government should have new tax powers.

At present Wales' devolved administration cannot vary taxes or borrow money, and gets its budget in a grant from the Treasury.

Last November the Silk Commission, set up by the Westminster coalition, said the Welsh government should be responsible for raising some of the money it spends.

'Opportunity to decide'

It included a recommendation to devolve powers to vary a portion of income tax by 2020, following a referendum.

Nick Clegg and Kirsty Williams Deputy PM Nick Clegg with Kirsty Williams AM at a new sustainable community in Newport

Mr Cameron said Wales will be given borrowing powers, control of landfill tax and stamp duty, and a House of Commons bill giving permission to hold a referendum on the devolution of income tax.

"Today is about a strong and responsible future for Wales," he announced at the Senedd in Cardiff Bay.

"Today we are announcing more power for the Welsh people and the Welsh government.

"Power that's about building this country up, power that's about making sure we have real accountable government here in Wales.

EFFECTS OF ANNOUNCEMENT

  • A Welsh treasury
  • Presiding Officer Rosemary Butler has repeated a call to increase the number of AMs from 60 to 80 to reflect the "increasing workload"
  • The First Minister Carwyn Jones wants a new Menai Bridge, financed by the fresh borrowing powers
  • Improvements to the A55 in north Wales
  • Upgrade the M4
  • Major hospital developments

"And power that's about ensuring what I want and what I know what the deputy prime minister wants and the first minister wants, which is a strong Wales inside a strong United Kingdom."

Mr Cameron said the decision will give new borrowing powers to make improvements of the M4 which, is a "foot in the windpipe of the Welsh economy".

Land tax and stamp duty will also be devolved.

"I think it is good for a government to be responsible for raising some of the money it spends," Mr Cameron said.

Mr Clegg said it was a "significant" moment for Wales and "further conversations" could be had in the future about more devolution powers.

"It is not the end, we look forward to seeing the recommendations in the second part of Silk," he added.

Mr Cameron went on: "We are going to put forward a bill in the House of Commons for a referendum. It will be their (Welsh government) decision whether to trigger the referendum.

ANALYSIS

The debate in Wales has been about how strengthen devolution and make the system work a bit better.

The most significant development is Wales would have the power to vary income tax, subject to a referendum.

David Cameron says it is all about Wales taking responsibility.

There are some politicians already talking about cutting taxes in Wales, but that is still 10 years away.

"If they do, it will be for the Welsh people to decide if they want these new powers."

Mr Cameron also announced the Nato summit will be held in Wales in 2014.

'Showcase modern Wales'

"There will be as many as 60 heads of state and government coming to this important Nato conference, it will be the first time since 1990 that the United Kingdom has hosted this conference - the most important defence alliance that we have," he said.

"I'm delighted we're going to be doing it right here in Wales. I think it will be an excellent opportunity to showcase the best of what modern Wales has to offer the whole world.

"It'll be good for jobs, it'll be good for investment, it'll be good for business. It'll be a great advertisement for the success that Wales and the Welsh economy is."

Mr Cameron went on: "Scotland has got the Commonwealth Games, London had the Olympics, Northern Ireland the G8, now it's Wales' turn."

Mr Cameron said he looked forward to campaigning in Wales as a 'low tax Conservative'

First Minister Carwyn Jones said he was "delighted" at the announcement of the Nato conference.

"Dozens of heads of government will attend the Nato Summit," said Mr Jones.

"Obviously these will include the Heads from Nato's Member States in Europe and North America but also, I understand, delegates from many countries beyond Nato's borders.

"This is a brilliant chance to showcase Wales," he said.

Speaking about the announcement of the tax raising powers, Mr Jones, who had previously criticised the delay in the announcement from the UK government, said: "Today is an important day for Wales. We are now being treated like equals in the UK.

"We are not in favour of devolution of income tax until the Barnett formula is reformed to provide fairer funding for Wales.

"We need to be able to borrow to improve our infrastructure, such as the M4 around Newport as well as the A55 in north Wales.

"This announcement today goes a long way to show devolution works and further strengthens the UK."

Mr Jones later told BBC Wales that the M4 relief road proposal was still out to consultation and there had been "no final decision".

"We know there's an issue surrounding the traffic flows around the Brynglas tunnels that will need to be addressed somehow but, of course, that consultation is still ongoing," he added.

Welsh Secretary David Jones said on Twitter the UK government is committed to giving the Welsh government "tools it needs to renew" its infrastructure.

"These measures will make the Assembly & the Welsh Government more accountable to the people of Wales who elect them," he added.

WHAT THIS MEANS

Having more powers is one thing but, of course, it is how you use them that really matters.

The Welsh government will now be able to borrow money, like other devolved administrations.

Ministers have already indicated that this will fund the M4 relief road around Newport.

Business leaders, including the CBI Wales, have welcomed this as a vital improvement that will benefit the economy.

The Federation of Small Businesses disagrees. It says small and micro businesses would benefit more if the expected £1bn that is planned for the M4 was spent on other projects including road improvements across Wales rather than in one area.

Stamp duty will also be devolved. At the moment house buyers start paying it at £125,000. If that was increased, it could give a boost to the housing market.

While the Welsh government got most of the smaller taxes it wanted. It did not get the power to vary long haul air passenger duty that was recommended by Silk.

It had hoped to use this to attract airlines offering transatlantic flights from Cardiff Airport.

While it is certainly a historic day, it is worth remembering - taxes can go up as well as down.

Following the announcement, Finance Minister Jane Hutt revealed a new Welsh treasury will be established.

"We've always said we want these powers for a purpose. We now have the tools we need to boost the Welsh economy.

'Significant step forward'

"This is a step forward for a maturing democracy. We will now press ahead with establishing a Welsh treasury.

"Powers for a purpose. Borrowing for a purpose. We now need to get on and improve our infrastructure and boost our economy."

After the announcement, Presiding Officer Rosemary Butler repeated her call for more AMs.

"This is a significant step forward in our growing institutional maturity as a fully fledged legislature," she said.

"This announcement today reaffirms, in my view, the need for an assembly with greater capacity and with more AMs to robustly scrutinise the Welsh government on what will be important and difficult decisions around Welsh taxation and borrowing."

After the press conference, Mr Cameron and the Welsh secretary visited Owens Logistics, in Newport, to discuss the importance of the M4 upgrade. Meanwhile Mr Clegg visited a £1bn sustainable community called Glan Llyn being built on the former Llanwern steelworks site.

 

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  • rate this
    +4

    Comment number 130.

    "They include control of the stamp duty paid by house buyers and powers to finance upgrades on the M4."

    What's wrong with the M4? I dove from Putney to Cardiff on it the other day and it was absolutley fine.

  • rate this
    +4

    Comment number 129.

    Would be good to have an objective analysis of how Wales has prospered so far with the National Assembly - a critical and objective analysis identifying how they have secured long lasting change from all the EU economic programmes and in their schools, health services, social care now that they've had control of these areas for so long and how many policy commitments have been carried through

  • rate this
    +2

    Comment number 128.

    20.
    McDange
    Sums up Westminster thinking exactly. London is not a country. You need English devolution for equal representation through these isles.
    ...
    Could have easily said Cardiff, Belfast and Edinburgh, your gripe fails as according to my simple knowledge of geography that London is in fact in England.

  • rate this
    +4

    Comment number 127.

    If Wales had democracy and equality of opportunity I would have understood granting of additional powers but Wales is run for the benefit of 10% of population (Welsh speakers) who control public services and education Current WAG proposals are to remove English medium primary education throughout Wales!

  • rate this
    +2

    Comment number 126.

    Mr Cameron said he looked forward to campaigning in Wales as a 'low tax Conservative'
    __
    And some are 'lower tax' than others, of course.....
    Perhaps this is at the route of our problems; poor examples being set at the top, vast sums made, leaving resentment simmering at all other levels

  • rate this
    +7

    Comment number 125.

    Re 114.
    “Plain daft. Wales has been part of England for most of recorded history”

    Wales has never been part of England?

  • rate this
    +5

    Comment number 124.

    107.Ocssor

    S&W do *not* have 'more power than England' what do you even mean by that? The government in Westminster deals with every issue to do with England AND has power over Scotland and Wales."

    No! The UK government based in Westminster includes Scottish and Welsh MPs. They decide on English health and education matters but the English MPs have no say in S & W. That is the unfairness.

  • rate this
    +2

    Comment number 123.

    An absolute tragedy. Welsh Labour Party don't have the political nous to be put in charge of a parish council never mind a small country like Wales. Sure to waste any money they do raise, much as they are wasting that being allocated by Westminster at present. Heath & education are suffering & they are also now standing by & giving tacit approval to library closures. They are an absolute disgrace!

  • rate this
    +7

    Comment number 122.

    @99. CSMT
    it always seems that Scotland, Wales and NI get concessions and benefits that are just not allowed to us in England- we are just expected to keep paying the bills.
    --
    Rather than complain about how others spend their budgets why not ask your English MP to spend your money better. I mean if they choose to give £60 million to West Ham rather than free dinners to school kids not our fault

  • rate this
    +4

    Comment number 121.

    'Tax raising powers for wales'

    - translation

    "The Welsh are going to have to pay for themselves'.

  • rate this
    +5

    Comment number 120.

    "48.BeesAreTrendy
    29 Minutes ago
    And we get an English Government when exactly ?"

    Never if the Labour Party have anything to do with it! They need Scotland and Wales to get a majority!

  • rate this
    +2

    Comment number 119.

    A new relief road for Newport I'd prefer the current uk roads to be sorted out before waisting money on a new road.

  • rate this
    +5

    Comment number 118.

    Why don't we just get on with it and break up the union? You can't have a union where the majority has no say in what the minority do but the minority has full say in what the majority do.

  • rate this
    +2

    Comment number 117.

    This proposal was not part of either the Conservative or Lib Dem manifestos and so they should not be allowed to instigate such a change. I dare say that their Westminster, Welsh Assembly and local council votes would have been far fewer if they had proposed this. Most politicians are untrustworthy.

  • rate this
    +2

    Comment number 116.

    Andrew is right for Stamp Duty and Landfill tax BUT both of these will go up forthwith (in addition to the maxing out of the credit card using these as collateral). Income tax is different, it will go up MASSIVELy because otherwise, once the block grant is cut off, there is a huge gap.

  • rate this
    +38

    Comment number 115.

    All we in wales will end up with is more higher taxes and far more politicians and civil servants
    Politicians only ever want more of our money for themselves and their friends.

  • rate this
    +2

    Comment number 114.

    Plain daft. Wales has been part of England for most of recorded history; it is simply not in the same position as Scotland where there was a specific act of union when they required bailing out after the Darien scheme. If this were copied on the continent, Germany would be numerous small principalities and France would lose vast tracts of its land.

  • rate this
    0

    Comment number 113.

    "More pertinently, is it right Welsh/ Scottish students get a better deal than English and this is funded by English taxes."

    Not True. Just because Scottish and Welsh taxes go to London and then some of it comes back as pocket money does not mean its suddenly English taxes.

  • rate this
    +2

    Comment number 112.

    This tax is currently collected by the UK treasury. What I can't see in any of the arguments is what happens to the current settlement? There only seems to be thoughts of the extra stamp duty tax etc flowing in but we won't get this for free. They will surely reduce it somewhere else..... what's the deal on the table or have I missed something here

  • rate this
    -6

    Comment number 111.

    Re - 20.
    McDange
    44 Minutes ago

    Independence for Wales!

    you are having a laugh!!

    You would not last 5 years before coming back to England with a begging bowl!

 

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