Father Christmas and the Welsh devolution referendum

Do you believe in Father Christmas? Then you're probably looking forward to the next Welsh devolution referendum.

That was the gist of the evidence given to MPs today by Gerald Holtham, economist, Welsh government adviser and chair of the Holtham commission on the funding and finance of the Welsh government.

He told the Welsh affairs committee that the UK government's blueprint for devolving responsibility for a portion of income tax to Cardiff was so limited ministers in Cardiff would be reluctant to take the risk of holding a referendum to gain a power they could not use.

The sticking point is the UK government "lockstep", which would mean the Welsh government could not change one income tax band without changing another by the same amount. So if it wanted to cut the 40% rate by 1%, it would also have to cut the 20% basic rate.

Gerry Holtham said the "lockstep" would make the powers unusable. "Only believers in Father Christmas, he said, would expect Welsh politicians to hold "a politically risky referendum for a power they cannot use".

Professor Richard Wyn Jones doesn't believe in Santa either: he told the committee the powers would be "pretty much unusable".

But income tax (or a portion of it) is just one of the taxes the UK government wants to devolve. Plans to transfer control of stamp duty and landfill tax may be historic to some politicians, but Mr Holtham said the minor taxes would raise sums "verging on the insignificant" and were "not more than a gesture", generating around £200m a year out of an overall budget of £15bn - one third of one per cent.

Those powers will be devolved without a referendum, to the relief, perhaps, of today's witnesses. Both Mr Holtham and Professor Jim Gallagher of the Calman commission, thought Wales had overdone the referendums on devolution, even if another seems inescapable if income tax powers are to be devolved.

Another professor, Roger Scully, thought an income tax referendum turnout could be lower than the 35% who took part in the last referendum on law-making powers. He told the committee: "I suspect that frankly this referendum would make the March 2011 referendum look like a triumph of participatory democracy. I would not be at all surprised if you got turnout levels below 25%."

Some MPs, notably Glyn Davies, thought a referendum unnecessary. For some reason, they seemed less sympathetic to a suggestion from Professor Wyn Jones that Wales needed more Assembly Members - and fewer MPs.