Details of the new and unprecedented package of financial powers to help Wales compete in the global race have been published by the government today (18 November 2013). The powers, which could see the Welsh government in control of £3 billion of tax revenue, include control of business rates, the ability to create new taxes and some borrowing powers.
An outline of the plan to boost growth in Wales was initially announced by the Prime Minister and Deputy Prime Minister earlier this month. The UK government today published full details in its response to the Silk Commission’s recommendations on financial devolution. Danny Alexander, Chief Secretary to the Treasury, and David Jones, Secretary of State for Wales, formally presented the UK response to Jane Hutt, the Welsh government Finance Minister, in Cardiff today.
Thirty of the thirty one recommendations for the UK government, made by the Silk Commission, have been accepted in full or in part. This will result in the devolution of many new financial powers as well as giving borrowing powers to the Welsh government.
The new financial powers announced in today’s publication are:
- fully devolving non-domestic business rates raised in Wales, so that the Welsh government budget benefits more directly from growth in Wales
- ability to create new taxes with the UK government’s agreement
- tools to manage these new tax powers:
- creation of a cash reserve that the Welsh government can add to when revenues are high, and utilise when revenues are below forecast;
- limited current borrowing powers if there is insufficient funding in the cash reserve to deal with revenue shortfalls
This follows on from devolved financial powers announced by the Prime Minister and Deputy Prime Minister, earlier this month:
- borrowing powers for Welsh Ministers
- landfill Tax and Stamp Duty Land Tax in Wales devolved to ensure the Welsh government has an independent funding stream to pay back the money it borrows
- Assembly will be able to hold a referendum so that the people of Wales can decide whether some of their income tax should be devolved;
- prior to the tax raising powers coming on-stream, the Welsh government will have early access to existing limited borrowing powers to use for M4 improvements
The Chief Secretary to the Treasury, Danny Alexander said:
I am delighted that my work with Jane Hutt, the Welsh government Finance Minister, and close cooperation between our two governments has delivered this excellent outcome for Wales.
The package of financial powers we have published today will be a powerful tool, bringing greater financial accountability and transparency to the Welsh government. This is a good outcome for Wales.
The Secretary of State for Wales, David Jones said:
Through this package of powers we are announcing today, we are giving the Welsh government the tools to make the right investments in Wales.
Infrastructure investment is vitally important to delivering long-term, balanced economic growth across the UK. This package of powers will enable the Welsh government to invest immediately in the areas of infrastructure it leads on, such as the key routes on the trans-European road network – the M4 and the North Wales Expressway.
The government believes in devolution and we’re determined to deliver. Accepting the Silk Commission’s key recommendations on financial devolution strikes the right balance and marks an important step in Wales’ devolution journey.
These new powers will make for more accountable government for the Welsh people. It is now up to the Welsh government to seize this once in a generation opportunity – to drive forward Wales’ economic development, and to use this opportunity to secure the growth and prosperity that Wales so desperately needs.
Photo courtesy of Richard Szwejkowski on Flickr, used under Creative Commons.