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.

 
David Cornock, Parliamentary correspondent, Wales Article written by David Cornock David Cornock Parliamentary correspondent, Wales

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  • rate this
    -4

    Comment number 74.

    @71 Also, if you agree with me that there is no innate inadequacy on the part of the Welsh then I would suggest that advocating abolition isn't the best way forward. As I have said previously, why not vote and campaign for a political party that matches your political preferences and if none do, set up your own!

  • rate this
    -3

    Comment number 6.

    As incompetent valleyswelshlabour are, it is even more of a reason to increase the size of the Assembly - it's tiny - even NI assembly is bigger for just 1m people. There is on hope of full scrutiny with only 60 AM's on a shoestring, and no hope of attracting any decent ones.

  • rate this
    -3

    Comment number 20.

    The poll I'm referring to is the one on the bottom of P11 and top of P12 just to make clear.

  • rate this
    -2

    Comment number 14.

    @2 Where do you get the idea that the "resounding answer from most of Wales is NO" when it comes to the devolution of income tax varying powers? There were 3 polls conducted in 2013 focusing on this issue with two showing support for its devolution and one opposed. Do you have some other, more powerful, data or were you just making an unsubstantiated assertion?

  • rate this
    -2

    Comment number 78.

    @77 And what exactly is the flawed premise that underpins the report?
    @75 You refer to Holtham as an "insignificant economist" and his report as reading "like a course on creative accounting." I look forward to hearing your credentials and reading any document that you've produced that contains a greater level of intellectual rigour.

 

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