Eurfyl ap Gwilym looks at the Strathclyde Commission and asks what it means for Wales.
The Conservative Party in Scotland established in 2013 a commission under the chairmanship of Lord Strathclyde to consider which further devolutionary steps, if any, it should take if there is a No vote in the Scottish referendum in September of this year. In its recommendations published on 2 June the Strathclyde Commission has sought to strike a new balance between the devolution of additional powers to the Scottish Parliament whilst maintaining the union.
Under the Commission’s proposals the Scottish Parliament would have greatly enhanced powers over income tax. With the exception of the personal allowance threshold and income tax on dividends and interest payments, the Scottish Parliament would have power to set both the thresholds and the rates of income tax. There would be no sharing of income tax with the UK Government and there would be no lock-step. Thus Scotland would gain the ability to implement an income tax system best suited to the needs of the people of Scotland and one which is much more far-reaching and flexible than the system introduced under the Scotland Act 2012 or that proposed for Wales under the current Wales Bill going through Parliament.
The Commission’s proposals in the case of income tax are a marked departure from current arrangements in Scotland which were only enacted in 2012 following the Calman Commission (yet another commission). The Conservative proposals for income tax compare favourably with the half baked proposals of Labour which promises, in the event of a No vote, that the Scottish Parliament could raise higher income tax rates but not reduce them unless it reduced the standard rate by the same amount as well. Such a model would ensure the continuation of the discredited lock step albeit in a more limited form. To make matters worse under Labour’s proposals the tax thresholds would still be determined in London. As the Conservatives have claimed under Labour’s proposals the Scottish Parliament would still be a ‘pocket money parliament’.
The Strathclyde Commission also recommends that serious consideration be given to revenue from Value Added Tax being partly devolved on an assigned basis. The Commission notes that it would have favoured the devolution of VAT but that such a move is outlawed by the EU. The Commission recommends the devolution of Air Passenger Duty: this follows the recommendation of the Silk Commission in the case of Wales but does not limit such a change to long haul flights. The Commission was against the devolution of national insurance, capital gains tax, corporation tax and inheritance tax.
No mention is made of the way in which the block grant and changes to it are determined. Given that the Holtham Commission estimated that Scotland was over-funded to the tune of £4,000 million a year perhaps this is not surprising. The Labour Party’s commitment to retain the Barnett formula will also have encouraged the Strathclyde Commission to leave the subject well alone.
In another move the Strathclyde Commission recommends the devolution of housing benefit, attendance allowances and possibly in the future other supplementary welfare benefits closely related to devolved policy areas.
The Commission recommends the establishment of a Committee representing the parliaments and assemblies of the UK ‘to consider the evolving role of the United Kingdom, its parliaments and assemblies and their respective powers, representation and financing’. Although the Commission notes the McKay Commission which was established by the UK Government to address the ‘West Lothian question’ and urges that all MPs, wherever they are drawn from, be treated as equal, the Commission fails to address the question of whether it is acceptable for MPs from countries with devolved administrations to be able to vote on matters to do exclusively with England. This issue will continue to fester.
In a swipe at the current Scottish Government the Commission recommends that ‘the centralisation of powers from local to central government should be reversed and real devolution should be given to individuals with a greater role for civic society and local government’.
Where does this leave Wales? As was pointed out when the Silk Commission published its first and second reports Wales is once again in danger of being left behind and disadvantaged. The current Conservative-LibDem coalition has weakened the Silk Commission’s income tax proposals by insisting on the lock step which makes the income tax sharing powers proposed by the Silk Commission of very limited value. Given the Conservatives change of heart in the case of Scotland is it too late for the coalition in Westminster to amend the current Wales Bill to remove the lock step?
At the same time Labour is running scared of devolving income tax powers to Wales and is insisting on reforming the way Wales is funded as a precondition knowing full well that this is unlikely to happen. While Labour has committed to retaining the current funding formula in the case of Scotland which according to calculations by the Holtham Commission results in an over-funding of ~£4,000 million or £750 per person per year it has resolutely failed to commit to any reform of funding in the case of Wales which according to the same commission results in an underfunding of ~£400 million or £130 per person per year.
The conclusions that can be drawn from the manoeuvrings of the unionist parties in the run-up to the Scottish referendum are that if there is a No vote in September then if the Conservatives win the 2015 UK General Election there will be further, substantial fiscal devolution to Scotland. If Labour wins then there may be further fiscal devolution in terms of legislation but in practice it will be worth little. The Conservatives in their fiscal proposals for Scotland have displayed a much more far-reaching, pragmatic and realistic approach to devolution within the union compared with Labour’s ideological approach which still hankers after its last century model of a centralised, UK state.
If the Conservatives amend the Wales Bill now, to remove the lockstep, that could send a strong signal to Scottish voters that they are committed to the income tax proposals put forward for Scotland by the Strathclyde Commission today. Lack of trust in what a future UK Government will do in the event of a No vote in the Scottish referendum is an issue that the unionist parties need to address.
This is yet another step towards devolution by default – good news for Dr ap Gwilym and his party, bad news for the Conservatives themselves.
The Conservatives are still trying to pursue the strategy that failed in 2010, of outflanking Labour to the left. Dr ap Gwilym’s praise indicates that they are succeeding, at least tactically, but the problem for the Conservatives remains that there are no actual votes for them there.
After all, Dr ap Gwilym, for all his praise of their latest direction in Scotland, is highly unlikely to vote Conservative, no matter how devolutionist the Conservative Party becomes.
There might, on the other hand, be votes in attacking the Assembly for its truly abysmal record on health and education, but the Conservatives are increasingly out of position to exploit it. Imagine a concerned but uncommitted Welsh voter asking a Conservative canvasser what David Cameron is going to do about his substandard local health service…
“Sorry, he can’t do anything. Health is the Assembly’s responsibility.”
“Well, they’ve made a mess of it. Cameron says so himself. What’s he going to do about it?”
“If you vote Conservative in the Assembly elections…”
“…It’ll make no difference, because the Conservatives can never win a majority there. So if Cameron really cares, why doesn’t he reduce the Assembly’s powers?”
“Er… actually, we’re going to increase them…”
At which point another UKIP voter is born.
The political lesson of this U-turn is all too clear – the way the Tories and other Unionist parties treat Scotland (and Wales) is directly proportional to the strength of the national movements. The momentum of the Yes campaign in Scotland is forcing concessions from London. The motive is blatantly clear – it’s all about heading off a vote for independence in September. Meanwhile Wales is still treated as a third-class country. How can anyone in Wales admit to support either the Tories or Labour or the other London-based parties? They are selling their country down the river.
The only coherent argument in favour of the Welsh ‘lock-step’ put forward by Conservative Treasury ministers and the Secretary of State during the committee stage of the Wales Bill was that it ensured that “progressivity” remained a Westminster competency. It was, apparently, an important “constitutional principle”.
If the Conservative Party endorses Strathclyde’s proposals and adopts them as party policy (which I understand it has already done), David Jones and other Conservative ministers can’t possibly stand at the Dispatch Box during the passage of the Wales Bill in the next session, continue to make that argument and retain any credibility can he?
He is perfectly entitled to argue that Wales is somehow not mature or capable enough to manage thresholds and rates, if he wishes, but he cannot claim that devolving such competencies is contrary to some “constitutional principle” since his own party advocates it in respect to another part of the UK. Wouldn’t that almost be tantamount to holding Parliament in contempt?
Phil, the first two lines of your last paragraph are close to the truth but not quite there. The problem is not with Wales, or the Welsh, but with our underdeveloped business and political leadership class. David Jones would be on solid ground saying as much. Whether the Cameroons would ever let him is another matter!
JWR
“The problem is not with Wales, or the Welsh, but with our underdeveloped business and political leadership class.”
I would politely point out to you John that that is your personal opinion. I do not share your low opinion of either Welsh politicians, administrators or business leaders, mostly because in the broadest sense I suppose I am part of that social grouping and am yet to lose faith in my own wit and reason (there’s plenty of time for that in the future). Call it arrogance, call it the super ego, or conversely just see it as an absence of self-doubt or self-loathing, but I don’t think there is challenge that can’t be overcome with the right application and attitude. If I could run an income tax regime, and I sincerely believe I could, then there is no reason for me to believe that Welsh civil servants can’t. The capabilities of an individual or a group tend to be driven by the requirements forced upon one, not the other way round.
But you are of course entitled to your own opinion. You no doubt have your reasons for doubting the capabilities of the collective ‘us’.
Phil, to say Wales has an underdeveloped political and business leadership class is neither a subjective opinion, nor a personal attack on you or any other individual, but a widely shared conclusion supported by verifiable evidence.
The underdevelopment of the private sector in Wales is well documented. Therefore to say the business leadership class is underdeveloped is not to say the business leaders we have are of low calibre but to acknowledge that there are too few of them.
The business leadership class is also underdeveloped in the sense of lacking influence in public affairs. There was a time in living memory when there was considerable overlap between the political and business leadership classes. That is no longer the case.
This is reflected in the membership of the Assembly and local councils. Having read the curricula vitae of a number of leading Assembly members, the general lack of substantial business and management experience is striking – although it should be noted that there exceptions.
This is reflected in turn in a number of the Assembly’s failures, especially in its management of health and education, and its economic development policy.
Finally, most of us who are not part of the Establishment do not feel that there is such a thing as a collective ‘us’ – just a collective ‘them.’ What we have seen so far of their capabilities is not a matter of doubt – there is no doubt that they have been, to put it politely, extremely unimpressive.
I am in the not-habitual position of agreeing with every word of JWR’s last post. The lack of management experience and competence of the majority of Welsh politicians is striking, obvious and confirmed by outcomes. This does not cause me to lose faith in Welsh democracy or to want to go back to nursey – how pathetic that would be – but one has to acknowledge our democracy is immature. The public does not take enough interest and does not punish inadequate politicians. It will take time and perhaps a crisis for things to improve but the nation has decided not to die and will eventually find its way.