David Melding calls on Welsh Conservatives to show the courage of their Scottish counterparts
The Scottish Conservatives have had their Disraeli moment. Just as the great Victorian prime minister embraced the democratic principle in 1867 and made the Tory party a powerful electoral force, Lord Strathclyde has now dispelled decades of Tory scepticism towards devolution. His report calls for greater income tax powers for the Scottish Parliament than those proposed in the Scotland Act 2012. This means being able to set income tax rates without the paralysis of the lockstep measure. Labour have also put forward their proposals for greater Scottish powers in the case of a ‘No’ vote in September, but it is the Conservatives that have broken into new ground. In time it could transform Tory futures in Scotland and be a singular service to the people of Scotland.
Right-wing papers have on the whole shown support for the proposals in the Strathclyde Commission’s report. The Daily Mail called the move by the Scottish Conservatives and David Cameron “shrewd” and suggested that these calls could save the Union. The Prime Minister wrote a piece for the Scottish Daily Mail, in which he says that the “Strathclyde Report is a clear, coherent and Conservative blueprint for the next stage of Scotland’s devolutionary journey.” The Times echoed these sentiments, also stating that these proposals offer the “best of both worlds” and could “strengthen not just the Scottish Parliament but the Tartan Tories” too. The Telegraph was not quite so enthusiastic, positing that a debate should be held first as this would be the fairest course of action. This was, however, offset by the mighty Financial Times, which said that this new Conservative offer “deserves wide political support.”
The report has gained immediate traction. Tax is the core fiscal responsibility, and it is time for the devolved institutions to stop being “pocket-money” parliaments and accept such responsibility, as Ruth Davidson – the Scottish Conservatives’ leader – so aptly put it. This follows a core Conservative principle: those in charge of spending public money should also at least raise some of it. By generating its own revenue, a nation’s decision-makers are more accountable for the public services that they provide. Greater income tax powers could also allow Scotland to think entrepreneurially, in that they could be used to attract people to live and work in Scotland – a by-product of this being an increase in tax revenues. This should not be viewed as a threat to England, but as a way of increasing economic vitality. Competition is good, after all.
And to fully secure a new fiscal age for the UK, Wales needs to respond. Now that the Scottish Conservatives have received the blessings of the Prime Minister, Welsh Conservatives must likewise push for the ability to set income tax rates and bands with greater flexibility. It is particularly important that changes to the Wales Bill are made if Scotland receives these new tax freedoms, as failing to do so would leave Wales disadvantaged in what would be a more competitive tax environment. The UK Government has moved on from the Scotland Act 2012 – it should likewise amend the Wales Bill.
This may be hard for many Welsh Conservatives to accept. It takes courage to propose a major reform one originally opposed. But the Scottish Conservatives have boldly placed themselves ahead of the game. We must do likewise in Wales. The lockstep measure was always a clumsy device designed to make tax powers inflexible and difficult to use in an enterprising fashion. Let us not forget the device was invented by Labour! The strongest safeguard in the Wales Bill is that a referendum is required to activate the tax powers. That safeguard enhances Welsh democracy whereas the lockstep compromises it.
Occasionally politics raises to statecraft. Such an opportunity has now arrived in Wales. Welsh Conservatives need the vision to see a balanced and strengthened Union. And a Union in which the Conservatives could hope to govern in Wales and Scotland.
It pains me to disagree with David Melding who is normally a thoughtful voice of reason in constitutional matters. The Conservative proposals for Scottish income tax could not be part of a sensible federal structure. On the contrary, they are destructive of union in any form. They are not the result of dispassionate thinking but an attempt to recover from a ruinously misconceived ‘no’ campaign by offering the Scots Danegeld to stay in the union. They would permit unbridled tax competition on behalf of a relatively wealthy part of the UK at the expense of the north of England which is much poorer.
Contrary to Treasury orthodoxy, taxes like the higher rates of income tax and corporation tax can be devolved but only within a framework that limits the extent of tax competition. In particular any fair system would allow poorer parts of the union to claim a bigger tax advantage than richer parts. Wales and Northern Ireland would get more latitude but Scotland would get relatively little. There is no reason not to let Scotland keep all its own income tax receipts if it wishes in lieu of some of its block grant but there must be quantitative restrictions on its ability to cut top rates of tax if the union is to mean anything at all. The Scots are already over-privileged by the Barnett formula. These latest proposals will intensify unfairness and are a panicky wheeze to buy off a immediate problem without thinking through the long- term implications.
Further evidence the Conservative and Unionist Party is actually the Conservative and dis-Unionist Party and has been since the days of Macmillan – although Heath tends to get most of the blame because it was Heath who broke the UK into ‘new’ administrative Regions for the benefit of an alien government in Brussels.
They continue to speak with forked tongues – creating more and more dis-unity while pretending to defend unity. I have nothing but contempt for this party – nothing!
There are good people still in the Conservative Party but there has never been a better time for them to leave. The Party is beyond redemption…
At last in Gerald Holtham’s comments we have some common sense from someone who actually does know want he is talking about. Rather than speculating about the future it would be far more sensible for politicians to wait for the result of the September referendum. All the polls and the European result suggest that the yes vote doesn’t have the momentum. The Tories are not interested in devolution. The name of the game is holding on to power where it really matters namely Westminster. Despite there being no demand in Wales for independence, however, some people still seem determined to clutch at anything to try to achieve the independence lite federal solution. Many of us already live in one of the poorest parts of Europe. The last thing that ordinary voters want is to see policies adopted which could make matters worse. Those on the left who believe that the proposals from the Scottish Tories are wonderful should look at some of the keenest advocates of full income tax devolution. Look for a start at this week’s Telegraph article by Daniel Hannan the very right wing Tory MEP or read anything by Alister Heath. They would love to see a race to the bottom in the UK as devolved administrations and city states such as London compete for the low tax crown.
Why the parochialism? The unwritten assumption seems to be that the British State is a ‘good thing’, and never mind about illegal invasions, Trident missiles, MPs’ expenses scandals and all the rest. Why not a better model, one that actually works very well for Denmark, Finland, Luxembourg etc.? Or is Wales doomed to be stuck as a third-rate province for ever?
How are we going to get to a better model when the Welsh electorate returns a Labour administration however incompetent and ineffective it has been? We have to develop an adult political culture before we can get anywhere. How do you suggest we do that?
Independence will mean we will no longer blame others for our problems, exactly what is needed to secure an adult political culture. No more hiding place for ineffective Labour politicians.
There is no sign and no realistic prospect that the Welsh electorate are prepared to pay the huge short-term cost for this learning experience. That is not surprising when no politician favouring independence has explained which of the powers we would gain are important and what (s)he would do with them. Plaid has no credible programme for prosperity, the immediate cost would be great so you can’t blame the electorate for not fancying a leap in the dark.
@R Tredwyn
“That is not surprising when no politician favouring independence has explained which of the powers we would gain are important and what (s)he would do with them.”
Quite agree.
Leanne Wood committed to a detailed ‘blueprint for independence” after she was elected leader which would articulate the constitutional and economic case for independence. I’ve seen no reference to it since.
It baffles me that with Adam Price and Eurfyl ap Gwilym in the background the party couldn’t put together a 6-month research programme with some of the bright new things (and no doubt one or two older heads would be willing to contribute) which would nail that argument once and for all. The argument that is that is no intelligent and reasoned argument for independence… whether people agree with it is entirely another matter.
The case for independence is academic, that is, it is based on hypotheses. A successful independent Wales is both possible and impossible depending on a subjective forecasting of a multitude of unknown outcomes. But you can’t have a debate about the merits or otherwise of those hypotheses until you have laid them out.
A major failing on the part of Plaid Cymru in the last 2 or 3 years in my opinion.
Incidently Mr. Tredwyn, your “huge short-term cost” is simply one of those hypotheses that needs to be explored. Your assumption is based on a hypothesis which forecasts an inability to grow the Welsh economy sufficiently quickly to offset the kind of deficit we are told that would exist in the ‘Day 1’ Welsh public finances. It is a fair assumption, but it is not without its potential challenges: no one has really analysed what a post-independence Welsh P&L and balance sheet would look like in the first place [and I mean ‘really’], no one has projected what share of London (and European) wealth might toddle off down the M4 if the tax regime were attractive enough, no one’s calculated where the marginal point of Welsh public spending actually would be and therefore if a smaller-state Wales might be an attractive proposition for many individuals and parties as a “short-term cost” which could lead to greater overall prosperity in the future. They’re just conversations that nobody is having…
My own comment of June 9th:
“Leanne Wood committed to a detailed ‘blueprint for independence” after she was elected leader which would articulate the constitutional and economic case for independence. I’ve seen no reference to it since […] A major failing on the part of Plaid Cymru in the last 2 or 3 years in my opinion.”
I understand that a major white paper is due to be published shortly. Hints at the direction of travel of which were given by Leanne Wood at a lecture in London last week (see link below).
I retract my criticism…
http://www.partyofwales.org/the-slate/2014/06/12/what-of-wales-putting-wales-at-the-heart-of-the-constitutional-debate-in-britain/
Well, I await the plan with interest. Meanwhile there is no serious dispute that the Welsh budget deficit is over one third of Welsh GDP. To close such a deficit through economic growth without severe spending cuts or tax increases would require GDP to more than double! Imagining any policy will achieve that in much less than 20 years is to indulge in fantasy. Getting the Welsh economy to the state where it could support the current population at current levels of welfare is a much longer job than most people realise – even if the plan existed to achieve it at all. I must confess though that if Plaid come up with a credible plan they will be in a unique position. There is no sign of Labour doing so.