Silk Part One and All That

Last week, the Prime Minister came to Wales with a veritable bag of Halloween 'goodies'. Firstly, and I put this first because its received nothing like the coverage it merits, is the next Nato Summit coming to Newport in Sept 2014. This is huge for Wales. President Obama walking in the steps of Tiger Woods at Celtic Manor will be beamed across the world. Biggest opportunity for Welsh tourism and recognition since...Ryder Cup. Now I don't expect an invite to the Summit, and no doubt the Welsh Gov't will put on some associated hospitality, but I do hope Welsh MPs, Welsh tourism and Welsh business are in on the act as well. Now the other package of announcements (which pushed the Nato Summit off the Welsh front pages) was what we can describe as an initial response to the Silk Report Part 1. This may well mean nothing whatsoever to you! In essence its about how Wales should be governed in the future - how devolution develops. Paul Silk was asked to produce the Report by the Secretary of State for Wales. It was published a year ago and the response had been long anticipated. Generally to be welcomed (by me anyway) but there remain uncertainties. A full response to the Report will follow in due course. But PM told us that Stamp Duty Land Tax and Landfill Tax are to be devolved to the National Assembly for Wales (as recommended). The Aggregates Levy and Air Passenger Duty are not. Upshot of this is that the Welsh Gov't will now have capacity to raise taxes for the first time. The Welsh Govt will also be able to borrow money, but I am a bit uncertain about what's involved here. My understanding is that some old existing WDA powers are being used to facilitate this. My understanding is also that its only proposed that the borrowing powers can be used for M4 and A55 inprovements. Also I'm not sure whether the tax raising capacity is actually needed to cover the borrowing if existing powers are being used, or if they are whether they are sufficient to finance what will be in excess of a £billion of investment. If its using powers already in existance, and limiting it to what UK Govt approves, not sure how much of a constitutional change this actually is. All will be revealed in due course. The biggie is devolution of income tax - as already happens in Scotland. The position is that legislation will be introduced at Westminster, giving the National Assembly for Wales the power to call a referendum on devolving to the Welsh Government the responsibility for levying half of our income tax bills, together with the power to vary the rate. There seems a view by many that the Silk Commission recommendation that this power to vary should apply to each tax band separately is what's envisaged. I do not believe this is what the Prime Minister said. As in Scotland, its only the power to vary the tax rate across the board. So bang goes the campaigning opportunity for Welsh Conservatives to promise a cut in 40p rate at Assembly Election, a real opportunity to sell Wales as an attractive place to move to. Such a promise in Wales would be wholly financially positive. Again all will be revealed in due course. Anyway, the Labour Party hate the idea of the Welsh Gov't becoming financially accountable. So easy just to blame Westminster Gov't for everything. The co-ordinated message coming out of the First Minister's office and the Shadow Sec of State for Wales is 'no income tax powers til the Barnett Formula is reformed' - in other words 'No Thanks'. Next step is the official response to the Silk Report Part 1 - which seems likely to be tied up with the 'Wales Bill' promised in the Queen's Speech. There is no doubt that the Coalition Gov't moved the devolution process on last week, especially with the granting of borrowing powers. But there's still a bit of water to flow under the bridge until we can be sure where it will lead. All will be revealed in due course.