A National Assembly fit for purpose

Wales has been fortunate in the last decade in having had three fundamental examinations of the devolution settlement: the Richard Commission that reviewed the capacity and powers of the National Assembly in 2004, the Holtham Commission that looked into ways of funding the Assembly and the Welsh Government in 2009, and now the Silk Commission, whose Phase 1 report has dealt with the devolution of powers over taxation. The first two provided bodies of evidence that have stood the test of time and sets of recommendations firmly based on that evidence. The Silk Commission’s first report, published in November, is in the same mould.

Devolution special: the Silk agenda Tomorrow: Mike Hedges sets out the case for Wales to enjoy the same legislative architecture as Scotland and Northern Ireland. On Friday Joshua Miles says a treasury function within Welsh Government would strengthen decision making.

Taken together, implementation of the recommendations of all three would provide us with a robust settlement. We would have greater clarity in relation to powers, and a larger, fairly elected, fit-for-purpose Assembly (pace Richard), a Welsh Government fairly funded according to its need (pace Holtham) and (pace Silk) a Welsh Government responsible for a set of taxation and borrowing tools that would move it, and Welsh politics as a whole, from an adolescent to an adult phase of their existence.

The problem has been summoning the will for implementation amidst common calculations of party advantage and not a few fissures. The move to law-making powers, post the Richard Commission, was initially crab-like, creating Legislative Competence Orders by which the National Assembly sought endless permissions to legislate from Westminster. Thankfully, the 2011 referendum consigned these to a glass case in the constitutional museum. However, Richard’s other recommendations to increase the size of the Assembly, widen its powers and change its method of election remain on the table.

Similarly with the Holtham Commission report, whose methodologies and conclusions were not only robust enough to withstand UK Treasury scrutiny, but also sensible enough to merit amending the proposals for taxation powers for Scotland first advanced by its own Calman Commission. Those Holtham amendments are now embodied in the Scotland Act 2012. Yet a rational, needs-based reform of the Barnett formula, that was central to Holtham, has run into a combination of post-recession austerity that has intensified normal Treasury instincts, and a Scottish roadblock to change that many believe will survive even after the 2014 referendum on independence.

Holtham and the Silk Commission’s report on taxation and borrowing powers deserve better. Silk has relied heavily on the Holtham Commission’s work, but Silk’s more political composition has grafted on a degree of pre-emptive political compromise that, in a rational world, should increase the chances of implementation. There is nothing in it that should frighten the horses. On income tax the sharing of power between Cardiff and Westminster (and the devolution of other minor taxes) would still see the Welsh Government covering only 25 per cent of its expenditure, at best, from this source. There is an argument that it should cover at least a third of its expenditure in this way for the improvement in accountability to bite.

In addition, the recommendations for improved economic and taxation statistics for Wales and for the creation of a robust Treasury function within Welsh Government would also be big gains in themselves. Wales need these tools both to make its case and to introduce more rigour into its own government.

Unfortunately, the chances of a foot-dragging response are high. Labour is nervous of giving the Conservative Party in Wales a taxation story with which to beguile the Welsh public. The First Minister has made his response conditional on Barnett reform – or ‘fair funding’, as it is now referred to – safe in the knowledge that that is a long way from being on Mr. Osborne’s ‘to do’ list. The Conservative Party itself will be torn between an instinctive belief that there is a relationship between taxation powers and proper accountability and, on the other hand, its own ‘slippery-slopers’ who believe that devolution is getting out of hand. Even the Liberal Democrats and Plaid Cymru, who ought to be fully supportive of these changes, may fear the practicalities of a referendum on taxation powers not to mention how this will play in an Assembly election in 2016.

The job of civil society in Wales in the coming years must be to ensure that any incipient timidity on the part of our politicians, from whatever party, is exposed and challenged. It will not be long before the parties start thinking of their manifestoes for the 2015 General Election. Those manifestoes will have to take account of the result of the Scottish referendum on independence, whatever that may be. They must not be silent on this agenda for Wales. We have too much to lose.