The cross-party Committee also has sympathy with the argument that the issue of “fair funding” must be resolved before any income tax powers are devolved so that Wales is not unfairly disadvantaged. The Committee says the issue of fair funding – how the size of the block grant from the UK Government is determined, currently by the Barnett formula which has long been criticised as providing an unfairly low allocation to Wales – needs to be examined and should not wait until after the 2015 General Election.
Assembly term length
The Committee also says the National Assembly for Wales should have power to decide its own Assembly term length, rather than this being decided at Westminster. The Committee recommends the clause in the draft Bill which permanently extends the length of the Assembly from four to five years should be scrapped and replaced with provisions that give the National Assembly the powers to determine the length of its own electoral term.
The Committee is reporting on the draft Wales Bill, which was published following the recommendations of the Silk Commission in November 2012. The Bill sets out to devolve tax and borrowing powers to the Welsh Government and National Assembly for Wales, make changes to the electoral arrangements of the National Assembly for Wales, and clarify and update the devolution settlement. The Government hopes that the provisions in the draft Wales Bill will enable devolved governance in Wales to become more accountable.
The Committee says that, by the time of the publication of the Bill, the Government should fully explain:
- how the block grant provided to the Welsh Government will be adjusted to take account of the new revenue streams from the devolved taxes
- how it aims fully to devolve business rates to Wales
how the borrowing limits set out in the legislation were decided
the rationale for not granting the Welsh Government the power to issue bonds
The Committee says the Government should produce a Command Paper alongside the Wales Bill, as was done for Scotland in the case of the Scotland Act 2012, to include detailed information on these areas, which are crucial to the practical working of the scheme announced by the Government.
While there was general consensus that Members of Parliament should not simultaneously serve as Assembly Members, the Committee believes it may be more practical to extend the exemption period where an AM can simultaneously sit as an MP from six months to twelve months.
David Davies MP, Chair of the Committee, said:
“Any new powers over taxation must be put to the people of Wales in a referendum, and it must be made clear exactly what additional powers could be devolved in future if the referendum is passed, for example if the income tax model was changed. We also think there is a case that taxation powers should not be devolved before the issue of the funding formula used to determine the block grant to Wales is resolved. If the power to collect certain taxes is devolved to Wales, the block grant will be reduced, and this must not unfairly disadvantage Wales, as the current funding formula does.”
Copies of the Report can be ordered from The Stationery Office (Tel: 0845 702 3474) or from the Parliamentary Bookshop (Tel: 020 7219 3890). It can also be viewed on our website from the day of publication at: http://www.parliament.uk/welshcom
Enquiries to Welsh Affairs Select Committee at: [email protected]