The Labour in Wales Government’s reaction to the report of the Silk Commission, which recommended limited tax varying powers be devolved to Wales, is somewhat subtle, if not unexpected. Carwyn Jones, First Minister, has said that there should be no question of the raising (or perhaps using) the power to vary tax rates being devolved until the unfair funding formula which ‘robs’ Wales of some £350 million pounds a year is reformed.
Oddly enough when in government from 1997 until 2010 the Labour Party (whether in Wales or Westminster) consistently refused to accept that Wales was underfunded and that there was any problem with the Barnet funding formula. Now in opposition and (despite the surface gloss) fairly hostile to the idea of devolving further powers to Wales (if not to the concept of Wales itself) things have somewhat unsubtly changed.
Sleeping soundly for Wales, because of the financial disaster left by the last Labour in Westminster Government, Carwyn can safely call for fair funding, in the knowledge that he won’t get it. Loudly calling for something he knows Wales won’t get he can safely ignore the recommendations of the Silk Commission and focus our attentions on the fair funding issue. All well and good, save for the fact that Labour in Wales (and London) did precisely nothing to fix the problem of fair funding in Wales when they had both the power and the opportunity.
The Commission has recommended that control a number of smaller taxes be devolved to Wales including air passenger duty on long haul flights (a reduction of which could benefit Cardiff-Wales airport); stamp duty, the aggregates levy, landfill tax, and the full devolution of business rates, etc. I have no problem with any of that at all, or the devolution of the power to vary income tax by up to ten pence in the pound.
The failure to consider the devolution of corporation tax (unless it is devolved to Scotland and Northern Ireland) is in my opinion a missed opportunity. I welcome the proposed if limited devolution of borrowing powers for capital projects, current spending and tax revenue variation. The proposal to create a Welsh Treasury function for better financial accountability should also be welcomed if a little belated.
As for the referendum, Wales only got one last time because Labour in Wales had to pay that price to be in government. I have no doubt that whatever the Labour in Wales National Assembly manifesto includes for 2016 it won’t include any reference to the Silk Commission’s findings or another referendum. Labour has been consistently ambivalent on further powers and remains (however well camouflaged) decidedly ambivalent on the issue of devolution project.
The Commissioners, who have hitched the whole financial package to a further referendum, may have potentially brought the whole devolutionary process to a grinding halt. Any referendum cannot be held until it gets the support of a Welsh Government, two thirds of elected AM’s and the support of the Secretary of State – who may well be a Labour Party selectee by 2016
By 2016 the political landscape in Westminster may have changed - we could be a good year into another Labour in Westminster government who would by fairly indifferent to making parliamentary time for Wales related issues in their first year of office. By way of comparison, Peter Hain’s delaying tactics prior to the last referendum on legislative powers might pale into insignificance when compared to what the self-interested Labour in Wales parliamentary representatives might accomplish.
Yet perhaps if Labour in Wales found itself faced with the prospects of no majority (and no trimmings) in Cardiff Bay after May 2016 it would either be forced to choose between forming a minority government or going into coalition with Plaid of the Lib Dems (if there are any left by then). Post 2016 the political situation in the bay could be much more complicated with Conservative AM’s and a smattering of UKIP AM’s. So any chance of a rainbow coalition and a referendum will be entirely dependent (no pressure) on Plaid’s performance, with a new Leader and the desire to stand up for Wales – so there is everything to play for over the next three years.