Wales wins additional powers in latest stage of devolution

The Government is to devolve further powers to Wales – including in relation to a limited number of taxes – after accepting a number of recommendations from the Silk Commission.

The move has, however, stoked demands from the Local Government Association for a power shift away from the centre in England as well.

Last Friday the Wales Office announced that:

• Welsh ministers would be given borrowing powers, “so that they can borrow money to invest in Wales”;
• Landfill Tax and Stamp Duty Land Tax in Wales would be devolved, “ensuring the Welsh Government has an independent funding stream to pay back the money it borrows”;
• A referendum would take place so that the people of Wales could decide whether some of their income tax should be devolved to the Welsh Government – mirroring the position in Scotland.

The Government has committed to legislate on the changes within the lifetime of this Parliament.

The Wales Office said the extension of borrowing powers would enable “badly-needed” improvements to the M4 to get underway as soon as possible.

It also said that arrangements were to be put in place to enable the Welsh government to fund upgrades to the A55 in North Wales.

David Jones, Secretary of State for Wales, said: “The announcement demonstrates the UK government’s commitment to giving the Welsh government the tools it needs to renew Wales’s infrastructure, so that we can continue to build economic recovery and help to get the Welsh economy moving faster. In the short term, we are ensuring that the M4 improvements can go ahead as soon as possible.

“These measures will also make the Assembly and the Welsh government more accountable to the people of Wales who elect them. Since devolution those institutions have been accountable only for how they spend taxpayers’ money. They will now become more accountable for how they raise it.”

Chief Secretary to the Treasury Danny Alexander said: “For the first time ever a Welsh government will have the power to borrow and spend money on projects of its choice, and also the ability to pay for it all using new revenue raising powers. For Wales this is an important step forward on the devolution journey and will bring real benefits.”

Jane Hutt, Finance Minister in the Welsh government, described the move as a “significant milestone” in devolution.

She said: “These changes mean that, in the next few years, Wales will be in a position to tackle the improvements required for the M4, and to shape its own taxes, including the much needed reform of Stamp Duty Land Tax. A future Assembly will also be able to call a referendum on the devolution of rate-varying powers for income tax."

The LGA meanwhile called for further devolution of powers in England as well.

Sir Merrick Cockell, its chairman, said: “Local government leaders in England will be thinking we want some of what they’re having. A lot of places in England have distinct economic and cultural identities as strong as those in Wales and a shift in power away from Whitehall would help them deliver more jobs, faster economic growth and better public services.

“This has huge implications for English communities on the borders of Wales, which now face the prospect of an unfair, two-speed tax regime and an uphill battle to retain and attract businesses and jobs. English regions are in danger of becoming the poor cousins in the Union as devolution hands Scotland and Wales an unfair competitive advantage.”

Cllr Cockell added: “In taking steps to devolve more powers to Wales, the Government has clearly recognised the economic, administrative and cultural benefits of shifting power out of Whitehall and handing it to local communities. This is a policy which shouldn’t stop at the borders but spread out across the UK.”