Carwyn Jones: 'No income tax vote before funding reform'

By Daniel Davies
BBC Wales political reporter

image captionDavid Cameron and Nick Clegg announced new funding powers on Friday

A referendum on devolving income tax must not happen until the Treasury changes the way it funds the UK's nations and regions, First Minister Carwyn Jones has said.

He said the Barnett formula - which determines how much the Welsh government gets from the Treasury - should be reformed first.

Mr Jones was responding to new funding powers announced by the UK government.

David Cameron said he wanted to ensure a "strong Wales inside a strong UK".

At the Welsh assembly on Friday, Mr Cameron and deputy PM Nick Clegg announced that the Welsh government would also get borrowing powers.

The devolved administration has been calling for borrowing powers so it can raise money to pay for work on the M4 motorway in south Wales.

It will also have control over stamp duty and landfill tax.

But the power to vary a portion of income tax and keep the proceeds would require a referendum.

The timing of when the vote is held would be up to the Welsh government and the assembly.

But Mr Jones said it would not happen before the next assembly election in 2016 and the Barnett formula would have to be reformed "before that could even be considered".

"It does show that it is possible for devolution to be flexible and that is a message that I think is important across the whole of the UK not just in Wales," he said.

"We welcome the fact that there will be a mechanism in place to devolve income tax in the future, that's important.

media captionMr Jones said he did not expect the Welsh government to have the new powers until 2015

"As a government however we are not pursuing the devolution of income tax, certainly not at this time.

"The reason for that is we believe that income tax devolution cannot come unless there is reform of the Barnett formula.

"The funding basis for Wales must be solid first before we can consider whether income tax devolution would be appropriate and right for the people of Wales."

In an interview with BBC Wales, Mr Jones said Wales was funded entirely by a block grant from London through the Barnett formula.

"We're not funded by enough - we're £300 million down on where we should be," he said.

"That's got to be addressed first before we look at income tax.

"Further on down the line that's a matter after the next assembly election in my view. It's up to each party then to decide what it does but it's absolutely crucial we get the funding right first before we even consider taking on board income tax varying powers."

He added that he was disappointed that air passenger duty on long-haul flights will not be devolved - something recommended by the Silk Commission inquiry into the way Wales is funded.

Acquiring borrowing powers means the Welsh government "will be able to consider the option of the M4 relief road" as well as other infrastructure projects, the first minister said.

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