On Tuesday, the National Assembly debated the draft Wales Bill - I outline what the Bill itself proposes here.
Although many parts of the draft Wales Bill should proceed without a hitch, senior figures in Welsh politics have been critical of aspects surrounding the potential partial devolution of income tax, which has - subsequently - had knock-on political consequences.
What the Assembly Said
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| The Assembly debate was dry, but became interesting for events outside the Siambr. (Pic : indymedia.co.uk) |
The First Minister started by saying the Silk I recommendations should've been enacted in full, expressing regret at the absence of powers over air passenger duty. He also criticised the "lockstep" on income tax powers - tax rises/falls have to be set in all income tax bands at the same time. He described it as a "significant restraint" that "ties the hands of the Welsh Government".
He ended by saying the Leader of the Opposition Andrew Davies's (Con, South Wales Central) view - who's spoken out against the lockstep - was closer to his own than that of the Welsh Secretary, David Jones (who supports the lockstep and who introduced the draft Bill).
Leanne Wood (Plaid, South Wales Central) argued that the lockstep prevents Wales from becoming competitive with the rest of the UK. She said the Silk Commission members, Welsh Government and all opposition parties opposed the "lockstep", but the UK Government are pursuing it anyway.
David Melding AM (Con, South Wales Central) broadly supported the draft Bill's provisions, but called for the Assembly to decide its own electoral arrangements and for a name change to Welsh Parliament. He also called for the Assembly to have powers to amend its budgetary procedures, which be believes will be essential should there be fiscal devolution.
Lib Dem Leader, Kirsty Williams (Lib Dem, Brecon & Radnor), welcomed the non-fiscal measures in the draft Bill, supporting a shared income tax arrangement between the Welsh and UK Governments....though saying the lockstep was unnecessary.
As you can tell, there's a running theme developing here.
Shadow Finance Minister, Paul Davies (Con, Preseli Pembrokeshire), said he was "proud" of the UK Government's record on devolution, citing the 2011 referendum, saying these proposed powers would "provide more financial accountability" to the Welsh Government. He said although he supports a referendum on income tax powers he - surprise,surprise - opposes the "lockstep".
Then things started to get "interesting".
Antoinette Sandbach AM (Con, North Wales) argued with Mick Antoniw AM (Lab, Pontypridd) that the Treasury said there could be no devolved income tax powers without the lockstep. Mick continued by saying the income tax powers (as they are currently) were "worthless", and also outlined his opposition to the removal of a ban on dual candidacy.
Nick Ramsay AM (Con, Monmouth) then described the lockstep argument as "one rather minor aspect". Antoinette Sandbach asked if Nick agreed it were better there were some fiscal devolution – even with the lockstep – than none at all? Nick said yes, saying he "had no issue with the lockstep". Uh oh.
Carwyn Jones was presented with an open goal - considering his own party has been split on the issue - finishing by saying he "did not think Nick Ramsay would so publicly disagree with his own leader", cheekily suggesting that what Nick said was a leadership speech. Andrew Davies tried to drag Owen Smith's own embarrassing contributions into it, but it was too late.
Although both the debate motion, and Plaid Cymru amendment criticising the "lockstep", were passed with no votes against or abstentions, four Conservative AMs refused to join their party colleagues in voting on the amendment at all.
Bull Lets Whip
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| After being undermined publicly on party policy, Andrew Davies was left with no option but to sack four of his Shadow Cabinet. (Pic : Click on Wales) |
The party you would expect to benefit most from fiscal devolution would be the Welsh Conservatives. When the powers were first announced, it was clear their (Welsh) policy would be to cut the top rate of income tax to encourage wealthy people from the rest of the UK to move here.
The lockstep (UK Government policy) prevents them from doing that because cuts to the top rate have to be matched by cuts to the basic rate – making tax cuts (or, indeed, tax rises) more expensive. This has led to a very public spat between Andrew Davies and David Jones over who speaks for the Welsh party and membership, and who decides policy in Wales.
So, as a sort of distraction, the Welsh Conservatives have since switched their public attentions from income tax to cuts to stamp duty – the latter of which would come regardless of a referendum and without any conditions attached.
Following the events of the debate and vote, news broke Wednesday night that four Shadow Cabinet members – the four who refused to vote on the lockstep amendment - had been sacked.
It's a big public slap-down, though I've always questioned why every single opposition AM needs a portfolio responsibility in the first place (Lib Dems aside for obvious reasons).
The South Wales Argus reported Nick Ramsay will also lose his role as chair of the Business and Enterprise Committee as a result. That's a shame because, as regular readers will know, I believe he's done an outstanding job there. Nick described the move as an "old fashioned coup", but last time I checked coups happened against leaders.
Andrew Davies hasn't set the world alight as Leader of the Opposition, but - in my opinion - he was left with no choice after such an open rebellion and challenge to his authority.
It's been said elsewhere that there was, slightly bizarrely, a three-line whip on this vote, which is very unusual for such a technical matter, and shows Andrew wanted his party to back both himself in his tussle with David Jones and his opposition to the lockstep. So I doubt any of the four can have grounds for complaint other than the method by which they were sacked, which seemed hamfisted.
Serves them right.
Andrew's shown decisive leadership, but this will have hurt. These things rarely have happy endings, and the early signs were matters could take a turn for the worse. Since then, it appears he's been given the equivalent of a "vote of confidence". Politics isn't football, but....
Useless
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| The "lockstep" is a political and fiscal hazard, and another depressing indication of Westminster's patronising views towards Welsh devolution. (Pic : via wordpress) |
We also have three other party leaders in Wales to flag up Welsh issues. We don't need MPs yapping like chihuahuas over them to give themselves work. At least some MPs know their place.
There are two main reasons why the income tax powers are useless. Firstly, the "lockstep".
The reason Welsh devolution doesn't work properly, and why we have all these tiresome constitutional arguments, is because powers have been incrementally transferred on a piecemeal basis. If we're going to have devolved powers, those powers should be devolved in their entirety – as happens to a great extent in Scotland and Northern Ireland.
That's one of the main reasons I've come round to supporting independence, as promising to give us "tools to do the job", then instead giving us parts of tools, is an insult.
In terms of income tax, that should include the powers :
- To set the rates in their entirety – not just 10p in the pound.
- To create, merge or scrap tax bands.
- To set income tax rates in each tax band independently of each other.
The block grant would be then adjusted accordingly. Wales gets a "grown-up responsible government", parties in Wales would have the freedom to come up with income tax policies in their entirety, and the Welsh Government would be responsible for raising a fair chunk (about a quarter) of its current income.
We're not getting any of that. Instead we could be, effectively, getting income tax powers in name only as no party would want to hike or lower taxes across the board at the same time.
Secondly, there's the referendum.
A referendum on a general principle that the National Assembly should have tax-varying powers would be a referendum worth getting out of bed and voting in. Any tax powers could then be granted after negotiation between the two governments – with or without a fair funding formula in place.
It would also make it easier to devolve other taxes (like corporation tax and air passenger duty) in future, because a referendum yes vote would've given the two governments a mandate to transfer any tax powers at their convenience.
However, a referendum on whether the National Assembly should have the specific power to vary income tax by 10p in the pound in each tax band at the same ti....
I challenge anyone to explain to me how they would campaign in favour of the income tax powers as they are on the table, and how they would explain it to the man or woman in the street?
Why stop there? Why not have a referendum on landfill tax powers? Or business rates? Should we have a referendum on every single legislative consent motion proposed by Westminster in devolved areas?
The First Minister and others are right to say the lockstep renders the powers useless. Welsh Labour have confused things by saying they don't want income tax powers at present, even though they support the implementation of Silk I in full....which would bring income tax powers, subject to a referendum.
Wanting to tax gravel and rubbish, but not incomes (in principle), and using relative underfunding that amounts to around 2% of the block grant as an excuse not to pursue income tax varying powers, verges on the ridiculous.
Whether they like it or not, it underlines an inherent lack of ambition – not necessarily anti-devolutionism - on Welsh Labour's part. You wonder if they're really up to the rigours of running a country, and if instead they should retreat to their comfort zone of local government and move aside for the big boys and girls.
Roger Scully and Richard Wyn Jones warned of this back in November 2012 as Silk Commission Part 1 was reporting back. Richard has since been kind enough to provide a link to the Wales Governance Centre's detailed submission on the draft Wales Bill, and argument against a referendum, here (pdf).
I warned of it too, saying the whole exercise was "pissing into the wind", but what do I know?
If even people like me could see these problems coming 14 months ago, and nobody else foresaw this outcome, then we should all be worried. Some senior personalities in Welsh politics clearly have an excessively idealistic view of how Welsh devolution works. This isn't a union of equals, everyone. Get it into your heads. It never will be.
Bring on the jam. Income tax powers are toast.
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