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Next Tuesday in the Assembly, the First Minister will set out what his government’s stance will be on which financial powers should be transferred to Wales. We’ll have to wait for the full detail, but it’s now clear that in one significant area – corporation tax –  Carwyn Jones has shifted position.

In today’s Belfast Telegraph, a report on the impassioned debate in Northern Ireland on devolving corporation tax powers to Stormont compares the positions of the other devolved governments including Wales:

A Welsh Government spokesman said: “We are aware that the UK Government is considering devolving powers over corporation tax to Northern Ireland.

“If the UK Government does propose to devolve corporation tax powers to one or more of the devolved administrations, it should make a similar offer to Wales.”

The Welsh Government has confirmed the statement which, although hedged around with caveats, represents a significant development and a change in position by the First Minister who has, until now, resisted opposition calls to demand corporation tax be devolved.

Back in March, before the referendum on further powers he told the BBC,

In order for tax-varying powers to be devolved, particularly income and corporation tax, there would need to be a referendum – no question about that in my mind.

And last week the Western Mail reported how he expressed his concerns to members of the CBI:

Turning to tax, Mr Jones the devolution of corporation tax was “superficially attractive”.

But he added: “We shouldn’t forget the fact that if corporation tax were to be devolved and reduced, there’s a consequential hit on public finances.

“The worry I have is that if England, Scotland, Wales and Northern Ireland can set their own rates, we will then find ourselves in a competitive spiral to the bottom, which will be fine for businesses but not so good for public finances.”

No doubt he would argue that it’s not he that’s changed position but the UK government which is considering changing its position and that his government is simply dealing with a new reality.

And underlining the First Minister’s continued suspicion of the move,  on tonight’s Sharp End Labour AM Keith Davies told me,

We’ve discussed it as a group and one of the issues Carwyn put forward was that if Northern Ireland get it they’ll be competing with southern Ireland and it’ll cost Northern Ireland a large sum of money.

Me: In that case then Wales should have that power?

KD: No because what Carwyn was saying was that it’ll cost Northern Ireland a lot of money and they’ll lose out on it.

But when I published some of this information on Twitter earlier, Plaid tweeters seized on it as evidence of a u-turn and the party has tonight put out this statement:

Plaid Cymru has welcomed the Welsh government’s u-turn on corporation tax and has called on Carwyn Jones to be proactive in making the case for Wales to take responsibility for these powers.  Ieuan Wyn Jones AM, Plaid Cymru’s Finance spokesperson, said it was positive that the argument Plaid had been making for years had brought about a change of position in the government.

UPDATE 17/06/11 16.40

I’ve now had a further statement from a Welsh Government spokesperson :

We are not actively seeking powers to devolve corporation tax. However, if the UK Government is planning to give CT varying powers to one of the devolved administrations, then we would expect this offer to be extended to Wales also.

It has to be said that reducing the rate of CT would leave a large hole in Welsh finances, at a time when a financial squeeze is being imposed by the UK Government.

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