Feeds:
Posts
Comments

Archive for the ‘Welsh Government’ Category

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.

Read Full Post »

Now that the Welsh election and the powers referendum are behind us, thoughts are turning to what change is next for Wales.

Top of the list (for some) will be the much-anticipated ‘Calman-style process.’

Much-anticipated, that is, by  UK Government ministers ,  Conservatives and Liberal Democrat AMs but not much-anticipated by those in Labour and Plaid.

The coalition agreement between the Conservatives and Lib Dems states,

Depending on the outcome of the forthcoming referendum, we will establish a process similar to the Calman Commission for the Welsh Assembly.

It’s one of three specific promises to do with Welsh devolution in the coalition agreement, the other two being to introduce a referendum and to take forward the controversial bid for housing powers.

Back in March I said that there wasn’t much detail about what it would entail and there still isn’t. But here’s what I know:

1. It’s being driven by the UK Government.

A source close to the Welsh government told me: ‘We never asked for it, we were never consulted on it, we’ve never seen any detail about it.’

I understand though that it’ll be one of the first items on the agenda when the Secretary of State meets the First Minister shortly.

The Welsh Secretary is also due to meet the Treasury in coming weeks.

2. It will focus on ‘financial accountability’ and not funding reform.

A Labour source said ‘The important thing for us is fair funding for Wales. That’s the first stepping stone.’ Plaid figures have said much the same thing in the past.

But the wording in the UK coalition agreement is

We recognise the concerns expressed by the Holtham Commission on the system of devolution funding. However, at this time, the priority must be to reduce the deficit and therefore any change to the system must await the stabilisation of the public finances.

And nothing has changed since. Although not ruling it out, government sources are pouring cold water on the idea that reform of the Barnett formula will be included in this review.

‘There are things that can be done around Barnett,’ is what I’ve been told.

3. ‘Financial accountability’ hasn’t been defined yet.

The Calman commission is being used by the UK Government to change the way Scotland is funded, reducing its block grant and giving the Scottish government more responsibility for the tax raised in Scotland to plug the gap.

It’s not yet clear what it could mean for Wales. Gerry Holtham, who’s led an in-depth Commission into Welsh public finances has some interesting thoughts here as does Plaid’s economic adviser Eurfyl ap Gwilym.

4. It’s unlikely to consider any other devolution of powers.

The Government has said that any further transfer of power, such as criminal justice or the Crown Estates, is not a good idea so soon after a referendum which has introduced direct lawmaking power to Cardiff Bay.

5. It may not be a Commission.

Before the election, Carwyn Jones said that he felt a full Commission wasn’t needed because of the amount of work already done in this area by Gerry Holtham.

Although a decision on what form this process takes hasn’t yet been made, I gather the Wales Office feels similarly and recognises that a lot of evidence has already been gathered.

It’s also not been decided yet how long it will take.

6. No-one’s been chosen to lead it yet.

I gather possible names have been discussed informally but no more than that. Sources within Whitehall say it should be someone who understands devolution, finance and who understands Wales.

Anyone have Gerry Holtham’s number?

7. There will be a row over it.

It’s interesting that the original Calman commission was imposed on the SNP Scottish Government by Labour, Conservatives and Lib Dems.

Political dividing lines on the Welsh Calman have already been drawn. Labour and Plaid (even if they’re not in government together) will portray it as an imposition particularly without  The Conservatives and the Lib Dems will see it as an opportunity for further devolution.

Read Full Post »