Speaking with one voice Wales gets her way

It is highly significant that in her statement to the House of Commons on Tuesday, about the Commission to review the National Assembly’s funding and the “wider constitutional settlement in Wales”, Secretary of State Cheryl Gillan closely followed a brief handed to her by the four party leaders a week ago.

In a rare demonstration of political solidarity the four leaders in the Senedd signed a letter setting out their proposed ‘Headline Terms of Reference for the Commission’. It was significant, too, that though the existence of the letter immediately became known, its contents did not. The party leaders were anxious to give the Secretary of State space and time to make an announcement to the House of Commons, as though it were entirely in her own dispensation.

In fact, in this matter – and although the commitment to establish the Commission was contained in the Conservative Liberal Democrat coalition agreement in May last year – the dispensation has moved from Westminster to Cardiff Bay.

The four leaders’ suggested outline terms of reference, put forward by Labour’s First Minister Carwyn Jones, Plaid Cymru’s leader Ieuan Wyn Jones, the Liberal Democrat leader Kirsty Williams, and the Conservatives’ Paul Davies who was at the time still standing as leader prior to the election of Andrew R.T. Davies, are published for the first time in the box below. In their covering letter to the Secretary of State, dated 14 July, they wrote:

“You will note that our suggested Terms [of Reference] envisage a two-stage process. The first stage should focus on fiscal devolution. This needs to proceed in parallel with inter-governmental discussions on fair funding and borrowing to which both Governments are committed. We have set out a time-table for both strands of this work which we hope the UK Government can agree to. The second stage would enable the Commission to look at the current constitutional settlement in the light of experience and to consider recommendations that might benefit the people of Wales… We all agree that the Commission needs to begin its work in September and to drive forward with momentum.”

Headline Terms of Reference for Commission In parallel with the Commission, but separate from it, borrowing powers and ensuring fairer funding for Wales should be addressed through inter-governmental discussions. Borrowing powers should be for capital expenditure only; fairer funding should be addressed through revision of the block arrangements currently delivered through the Barnett formula. These discussions have already begun and should conclude no later than September 2012 at which point they should form part of a coherent package of reform along with the Commission report. The Commission is asked to undertake its work in two parts. In the first part, the Commission should consider options for fiscal devolution, taking into account the work already done by the Holtham Commission. This work would include identifying the practical and legal issues to be resolved before any agreed proposals could be implemented. The Commission should commence its work in September 2011 and report, with recommendations, no later than September 2012. Secondly, and after Part One of the Commission has reported, Part Two of the Commission should look at the current constitutional settlement in the light of experience and recommend changes that would enable the National Assembly for Wales, and Welsh Government, to better serve the people of Wales. The Commission is asked to report on this aspect of its remit, with recommendations as it considers appropriate, by March 2013. The Commission should aim to reflect a consensual view. The Chair should have the confidence of the main Welsh political parties and both the Welsh and UK Governments.

In his speech – some described it as a lecture – to the National Assembly on Tuesday last week, Prime Minister Cameron said he was seeking a consensus across the parties on how a Commission should work. When presented with one a couple of days later, including from his own Group in the Assembly, he could hardly ignore it. This is a demonstration that, on the rare occasions when it can speak with one voice, Wales can get its way.

Up to the middle of last week it appeared that the Westminster government had not come to any firm conclusions about how the Commission should operate. A number of observers who came away from meetings with Cheryl Gillan reported that nothing appeared to have been decided.

However, it is now plain that both Labour and Conservatives have made concessions. Carwyn Jones has accepted fiscal devolution which means that the National Assembly must have a tax varying role if it is to be financially accountable. This is how Cheryl Gillan put it on Tuesday:

“It is only right that the Welsh Government is accountable for the money it spends. We are only at the beginning of the process, but I believe that by working together across parties, between governments and institutions, we can reach an agreement that will deliver fiscal accountability to the Assembly.”

For their part the Conservative-led coalition in London has accepted that fairer funding – which means reform of the Barnett formula, so that it reflects need rather than a crude population count, has to be on the table as well. Both Labour and the Conservatives have ceded to demands from Plaid Cymru and the Liberal Democrats that over and above this the whole constitutional settlement has to be reviewed. This means returning to the Richard Commission report of 2004, signed off by all four parties at the time. This said that as well as full legislative powers:

1. Wales should follow the Scottish model in which all powers are devolved except those explicitly reserved to Westminster – rather than the present arrangement in which nothing is devolved except those specifically conferred, which constrains the Welsh Government’s scope for legislating effectively.
2. The National Assembly’s membership should be expanded from 60 to 80 and all should be elected by the STV system of proportional representation.

The first opens up devolving criminal justice powers and creating a distinctive legal jurisdiction for Wales. The second holds out the prospect for a completely different political dynamic in Welsh politics and new relationships between the parties. Both will be regarded as opening a Pandora’s box by many in the Labour and Conservative parties. But as Ron Davies famously put it in 1999, in his IWA paper Devolution – A Process Not an Event:

“Let no-one think that now the devolution genie is out of his bottle he can be forced back in or that he won’t want to stretch his muscles.”