:00:07. > :00:13.Tonight, a special edition of The Wales Report. For a leading
:00:14. > :00:19.politicians debate the latest step on the evolution journey. Powers to
:00:20. > :00:30.borrow, powers were some taxes. Does Wales have the appetite for a
:00:31. > :00:35.significant change? Stay with us. Good evening, welcome to The Wales
:00:36. > :00:41.Report. It is just five days since David Cameron and Nick Clegg visited
:00:42. > :00:45.Cardiff Bay and unveiled their proposals were putting the Welsh
:00:46. > :00:49.people in the driving seat on jobs, transport, infrastructure and
:00:50. > :00:54.housing. They were talking about new financial powers for the Welsh
:00:55. > :00:58.government. Control of stamp duty, landfill taxation, powers to borrow
:00:59. > :01:03.money and even powers to set income tax if the people of Wales are
:01:04. > :01:07.proved that in a referendum. It was the long-awaited response to the
:01:08. > :01:14.silk commission, which caused -- Coleford evolving powers. To what
:01:15. > :01:20.extent do the four main parties agree on the way ahead? First, some
:01:21. > :01:22.food for thought on with the journey of the past 16 years has brought us.
:01:23. > :01:41.Here is Professor Wynne Jones. No .3% nationwide in Wales...
:01:42. > :01:46.The people of Wales have given their support to a strong Welsh boys.
:01:47. > :01:52.Voters want the Assembly to have the powers to make its own laws without
:01:53. > :02:01.Parliament having any say. We have the same powers as Northern Ireland
:02:02. > :02:04.and Scotland. We are announcing more power for the Welsh people and the
:02:05. > :02:09.Welsh government. Power that is about building this country up,
:02:10. > :02:15.power that is about making sure we have real accountable government
:02:16. > :02:18.here in Wales. The powers they are talking about are important powers.
:02:19. > :02:27.Borrowing powers, tax varying powers. Local government can do it,
:02:28. > :02:33.the parish council can do it. It has always been an anomaly that this is
:02:34. > :02:38.not possible at a devolved level. This is now changing. It is
:02:39. > :02:43.important. We cannot have properly accountable governments unless the
:02:44. > :02:47.devolved level has some responsibility for raising the money
:02:48. > :02:52.it spends. Otherwise you will not be seriously responsible in terms of
:02:53. > :02:55.how you use that money. All of the parties have accepted that in
:02:56. > :03:00.principle. The fact of the matter is the minor taxes they are talking
:03:01. > :03:06.about are peanuts. The amount of money they raise is very small.
:03:07. > :03:14.Income tax is the only thing that gives you any real financial cloud,
:03:15. > :03:20.raises any real money. People will begin on the basis of believing in a
:03:21. > :03:23.referendum. Let's be honest with ourselves in this regard. That any
:03:24. > :03:29.referendum on the devolution of income tax would be to them a way of
:03:30. > :03:34.paying more tax. Whether it is true or not is a different issue. That is
:03:35. > :03:38.what their default position will be. It may be possible at some point to
:03:39. > :03:42.make an argument that overcomes that. I don't believe that point is
:03:43. > :03:45.reached. The Welsh government is running away from a referendum on
:03:46. > :03:49.that particular issue. They are talking the language of
:03:50. > :03:56.accountability, but they are resigning from embracing it. The UK
:03:57. > :04:00.Government is saying we're living in the best of both possible worlds and
:04:01. > :04:05.that nothing much needs to change. The Welsh government has asked for
:04:06. > :04:11.radical changes, moving to a reserved powers model, devolving
:04:12. > :04:15.police, justice etc. These are incommensurate positions. There is
:04:16. > :04:23.no compromise possible. They have to jump one way or the other.
:04:24. > :04:28.Some thoughts from Professor Richard Wyn Jones. With me, the leader of
:04:29. > :04:33.the Welsh Conservatives, Andrew RT Davies, Leanne Wood of Plaid Cymru
:04:34. > :04:38.and Kirsty Williams of the Liberal Democrats. And we have the finance
:04:39. > :04:42.minister for Wales, Jane Hutt. We did ask the First Minister, Carwyn
:04:43. > :04:47.Jones, to take part but he was unavailable. Thankfully, Jane is
:04:48. > :04:50.representing the Government. Andrew, your colleague, David Cameron,
:04:51. > :04:54.making this announcement with Nick Clegg last week. The principle was,
:04:55. > :04:58.no government should be in a position where it is spending money
:04:59. > :05:04.when it is not responsible for raising some of that money. Is that
:05:05. > :05:10.an argument that holds water? I think it does. On the front page of
:05:11. > :05:15.the silk report, empowerment and responsibility. That is what these
:05:16. > :05:17.proposals are about. It is about giving empowerment so the Welsh
:05:18. > :05:25.comment can do the things it wants to do, but having the responsibility
:05:26. > :05:29.to raise the money it needs. -- Welsh government. We all have a
:05:30. > :05:35.responsibility. If we spend more money than we earn, we are in
:05:36. > :05:39.difficulty. David Jones, the Secretary of State for Wales, has
:05:40. > :05:45.been pretty lukewarm about this. Your party colleague. Are you very
:05:46. > :05:47.enthusiastic about it? Are you saying that varying powers for
:05:48. > :05:53.income tax for the Welsh government would be a good thing? I disagree
:05:54. > :05:59.what you said about the Secretary of State. I was with him on Monday.
:06:00. > :06:04.Lots of people will smile at that. David was very enthuse about the
:06:05. > :06:07.announcements made on Friday. I believe passionately that
:06:08. > :06:11.politicians need to have responsibility and accountability.
:06:12. > :06:14.At the moment we have through the Welsh Assembly and the Government
:06:15. > :06:24.that flows from it is a spending agency. The money comes down the M4.
:06:25. > :06:27.You cannot run a democracy on those principles. You have to have an
:06:28. > :06:33.element of accountability and responsibility, and I think
:06:34. > :06:40.everybody understands that. You have got to have that ability to spend
:06:41. > :06:45.and raise. Kirsty, what was the Liberal Democrat role in this? I
:06:46. > :06:49.don't think the commission would have happened if the Liberal
:06:50. > :06:51.Democrats have not been part of the Coalition Government. We insisted
:06:52. > :06:55.that was written into the agreement, that the process will be
:06:56. > :06:59.set up. There were people in London who did not want the commission
:07:00. > :07:04.established. Working together with party leaders in Wales we were able
:07:05. > :07:07.to establish the commission. I was delighted on Friday to have the
:07:08. > :07:14.announcement. Liberal Democrats have been campaigning for home rule for
:07:15. > :07:19.more than 100 years. This is a very important step towards that
:07:20. > :07:23.announcement -- that, the announcement on Friday. It is powers
:07:24. > :07:28.with a purpose. If devolution is going to be successful, we need the
:07:29. > :07:33.Welsh government and the National Assembly to have the widest range of
:07:34. > :07:36.powers to build a strong economy and fairer society in Wales. These
:07:37. > :07:42.powers will help the Welsh government to that. This condition
:07:43. > :07:47.of a referendum, do you think that is right? And do you think Carwyn
:07:48. > :07:52.Jones is right when he says people may fear the plan is to increase
:07:53. > :07:58.income tax, and for that reason they may not vote for it? Taxes could
:07:59. > :08:05.increase with this change, but taxes could come down as well. The point
:08:06. > :08:08.is that if a government has got the flexibility to use taxation as a
:08:09. > :08:14.tool, then that has to be helpful for the Government. A future
:08:15. > :08:19.government may want to say, for example, put the creation of jobs at
:08:20. > :08:22.the top of its agenda. At the moment there is no incentive on the part of
:08:23. > :08:26.the Welsh government to create jobs because the money raised by the
:08:27. > :08:33.taxation from these jobs doesn't come into a Welsh Treasury. If you
:08:34. > :08:40.had income tax raising powers, there is a direct reason, a direct
:08:41. > :08:44.incentives, to create jobs. A future Plaid Cymru government would relish
:08:45. > :08:49.the opportunity to use these powers. It unlocks other powers as well.
:08:50. > :08:54.More borrowing, for example, would be available. It makes the
:08:55. > :08:56.Government more solvent. It makes other organisations outside look at
:08:57. > :09:03.the Government and say, OK, that is a fair bet for us to put our trust
:09:04. > :09:11.in if it has got the income stream it does not have at the moment. With
:09:12. > :09:17.those possibilities, Jane, how keen are you to try to access these
:09:18. > :09:21.powers? I have two say, the vibe from the First Minister has not been
:09:22. > :09:29.overwhelmingly enthusiastic. It has all been about caution and concern.
:09:30. > :09:36.Are you keen to get these powers? I would disagree entirely, Hugh. On
:09:37. > :09:41.Friday the First Minister was delighted. We went to the press
:09:42. > :09:45.conference together. It was a real endorsement about consensus politics
:09:46. > :09:49.in Wales. We all came together. The fact we got all the political
:09:50. > :09:56.parties to back this, and I have to say, business played a huge part.
:09:57. > :10:05.The first step, as they see it, as -- are those borrowing powers. That
:10:06. > :10:11.is what the Welsh Labour government has been seeking to do. The First
:10:12. > :10:15.Minister said he was delighted. We are now equal partners in the United
:10:16. > :10:19.Kingdom. That is such a strong response. The whole of the silk
:10:20. > :10:25.commission report we embraced. And very importantly, we recognised this
:10:26. > :10:31.gives us the first step, with these smaller taxes, let's remember, we're
:10:32. > :10:36.going to have stamp duty devolved and we know this can help new
:10:37. > :10:45.house-buyers. There are so many opportunities. Landfill tax.
:10:46. > :10:50.Eventually... This is a huge step. And who would have thought this,
:10:51. > :10:56.that we are in this position? It is momentous. It is an historic day.
:10:57. > :11:04.This is the first step on a very exciting journey in devolution. That
:11:05. > :11:06.is right, it is a first step. That's why I don't understand why the
:11:07. > :11:10.Government is putting a brake on these powers. Other parties have
:11:11. > :11:21.said we should press ahead as soon as possible. With the referendum?
:11:22. > :11:25.Yes, of course. When you have got a government complaining about the
:11:26. > :11:28.cuts from Westminster, how on earth would be First Minister preferred to
:11:29. > :11:33.have the Tories setting the full rate of income tax, when we have an
:11:34. > :11:41.opportunity to avail of that ourselves? What is your sense of a
:11:42. > :11:46.referendum at the moment? The four parties campaigned together as we
:11:47. > :11:56.did in 2007 and 2011, there is a chance we could win the referendum.
:11:57. > :12:01.What do you think, Kirsty? Do you think the Welsh people would back
:12:02. > :12:04.these powers today? I think it would be important to explain why these
:12:05. > :12:09.powers are important and what could be done with them. That is what the
:12:10. > :12:12.watch people want to know about. Whether the politicians in Cardiff
:12:13. > :12:16.Bay can use these powers to create more jobs, to make it easier for
:12:17. > :12:20.people to buy their first home, to be able to invest in schools,
:12:21. > :12:24.hospitals, transport infrastructure that they want in their community.
:12:25. > :12:28.These sound like expensive projects. I am not saying they are
:12:29. > :12:31.not beneficial. The assumption people will make is that you want
:12:32. > :12:38.those powers to increasing tax to pay for them? , -- of course, people
:12:39. > :12:44.will be fearful of that. Taxes could go up, they could go down. What
:12:45. > :12:46.would be really important is that the Welsh government would be
:12:47. > :12:51.responsible for the success of their policies. It doesn't matter to the
:12:52. > :12:55.Welsh government weather and a deployment goes up or down. They
:12:56. > :12:59.just get money from London. They would have to get the economy right.
:13:00. > :13:03.They would have to build a stronger economy and create jobs, otherwise
:13:04. > :13:08.it would directly affect their ability. We need to explain to
:13:09. > :13:11.people why it is important to them and their communities. If
:13:12. > :13:17.politicians just sit in the bubble of Cardiff Bay, no, we will not win
:13:18. > :13:21.it. We have to make a case. Like we made a case for the Assembly in the
:13:22. > :14:48.first place. And why we needed legislative powers. We support the
:14:49. > :14:53.road mark that was set out for a referendum to be held here in Wales.
:14:54. > :14:57.-- road map. The arguments can be held as to what we do with those
:14:58. > :15:04.powers. We would like a low tax economy. Quite clearly, the silk
:15:05. > :15:10.commission recommended they should be a referendum. We have accepted
:15:11. > :15:14.all of the recommendations. Very importantly, they said it is vital
:15:15. > :15:19.that both governments, the Welsh government and the UK Government, if
:15:20. > :15:25.there are to be tax varying powers, that we also need a fair funding
:15:26. > :15:32.base. There is no disagreement here between us all. It is vital that we
:15:33. > :15:35.have that fair funding base. This is fair funding for Wales in a
:15:36. > :15:40.strengthened United Kingdom. The fair funding was a big issue when we
:15:41. > :15:47.invited Jerry Hall fun to come to Wales in 2008 to look at our funding
:15:48. > :15:59.base. He said we need to do something about this. It is not
:16:00. > :16:09.conditional, is it? The referendum and the powers are different. The
:16:10. > :16:13.recommendation says, move to tax varying powers. We all agree that
:16:14. > :16:22.actually, if we do have these tax varying powers, we still have a lot
:16:23. > :16:26.of dependence on our block grants. We want to spend the money wisely
:16:27. > :16:30.for jobs and growth. It is still a block grant. We all agree and we
:16:31. > :16:34.have all supported the fact that Danny Alexander and I worked hard to
:16:35. > :16:39.say that yes, we need to stop that kind of unfairness in our funding,
:16:40. > :16:44.to ensure that when we do move forward, and that is what Carwyn
:16:45. > :16:52.Jones said yesterday, he would be happy to campaign when we were
:16:53. > :17:00.clearer. We need that fair funding base. I want to ask the three of you
:17:01. > :17:05.in opposition to tackle that point. There will be viewers watching who
:17:06. > :17:14.say that if you accept we do not have fair funding, if that is not
:17:15. > :17:19.right now, surely it is right to try to get that changed before you go on
:17:20. > :17:26.to talk about things? Isn't Carwyn Jones right to say, hang on a
:17:27. > :18:01.second, we want it referendum -- we don't want a referendum? We need to
:18:02. > :18:06.reform Barnett. The first priority is to settle the deficit issues. We
:18:07. > :18:12.need to have a proper funding formula for the nations and regions
:18:13. > :18:15.of the whole of the UK. And we need to get it right. What is so
:18:16. > :18:19.depressing about what the First Minister has been saying since
:18:20. > :18:22.Friday is that even if Barnett was reformed, he even then won't say
:18:23. > :18:27.whether he would call a referendum and whether he would campaign for a
:18:28. > :18:31.yes vote. We cannot afford the Welsh nation to be held back by divisions
:18:32. > :18:42.within the Labour Party and eight committee on the part of the First
:18:43. > :18:45.Minister. Is it unfair that the First Minister is taking a
:18:46. > :18:49.common-sense approach? He is saying that we do not have a fair funding
:18:50. > :18:54.bases at the moment. We must fix that before we put anything to
:18:55. > :19:01.people in a referendum. Is that not something people will understand?
:19:02. > :19:09.Plaid Cymru has been banging the fair funding formula for more than a
:19:10. > :19:12.decade now. I would take the First Minister's line of argument much
:19:13. > :19:17.more seriously if Labour had done something about this when they had
:19:18. > :19:24.the opportunity. You still say he is right? Of course, the Barnett
:19:25. > :19:29.formula needs reforming. I think a referendum could take place. What
:19:30. > :19:33.was very frustrating yesterday in questions to the First Minister was
:19:34. > :19:38.that I asked him if the Barnett formula reform was so important,
:19:39. > :19:42.would he commit his party to including that as a commitment in
:19:43. > :19:50.the 2015 election manifesto? He refused to make that commitment. I
:19:51. > :19:54.then went on to ask him if the Barnett formula was reformed, would
:19:55. > :20:00.he then champion the case for income tax powers and a yes vote in the
:20:01. > :20:06.referendum? He refused to commit to that as well. This suggests to me
:20:07. > :20:11.this has been put up as an obstacle. It is an unnecessary and artificial
:20:12. > :20:16.obstacle. Barnett should be reformed but it should not be conditional. I
:20:17. > :20:23.think it is disappointing to have what I would describe as my
:20:24. > :20:28.colleagues in this, not to recognise the achievement that a Labour First
:20:29. > :20:35.Minister has helped to deliver this historic achievement. We have all
:20:36. > :20:39.delivered it. We did as a government ask Jerry to come in and we agreed
:20:40. > :20:43.that his conclusions were right. It is very important, as the First
:20:44. > :20:47.Minister said yesterday, we have secured a referendum. It is going to
:20:48. > :20:52.be for a future assembly in terms of the timescale. Let's get this into
:20:53. > :20:56.legislation. Let's today recognise the achievements and say, let's get
:20:57. > :21:05.on with our borrowing powers, early access, enhancement of the M4
:21:06. > :21:10.infrastructure. Let's get those smaller taxes devolved. Let's reform
:21:11. > :21:15.stamp duty. Let's unite. Don't let this message go out today that we
:21:16. > :21:23.are not in the Assembly, all of us, determined to make the silk
:21:24. > :21:27.commission. And the important achievement... It is for the people
:21:28. > :21:32.of Wales to decide how we move forward. It is interesting listening
:21:33. > :21:38.to everybody talking about more hand-outs. We understand there is an
:21:39. > :21:43.issue. But if you use taxation levers positively, you can grow your
:21:44. > :21:49.economy. That from the right is what I am all about. It is not... The
:21:50. > :21:59.First Minister is must like the ghost in the room. He didn't bother
:22:00. > :22:08.to turn up. The point I would make is this, ultimately what we need to
:22:09. > :22:14.do if these responsibilities come to the Assembly, income tax powers, all
:22:15. > :22:19.politicians should be thinking about how they grow the economy with those
:22:20. > :22:25.powers. From the Conservative Party point of view we would be a low tax
:22:26. > :22:29.economy. With lower taxation you create more. We have a spending
:22:30. > :22:32.agency at the moment in the guise of the Welsh comment. It receives a
:22:33. > :22:36.lump of money and dispenses it around Wales. Ministers driving
:22:37. > :22:41.their black limousines opening and cutting ribbons will stop if the
:22:42. > :22:47.school is shot, the school is to blame. If it succeeds, the
:22:48. > :22:53.Government takes the credit. That is not sustainable. It does not make
:22:54. > :22:57.for a better government in Wales. I want to talk about the very
:22:58. > :23:02.important issue of accountability. Is the National Assembly in a
:23:03. > :23:09.position to properly scrutinise spending, if we are talking about
:23:10. > :23:15.enhanced powers, varying income tax, is the National Assembly today
:23:16. > :23:25.in a fit state to do that? Are there enough assembly members? What is
:23:26. > :23:29.your view, Kirsty? The Richard commission did recommend more
:23:30. > :23:32.assembly members. I am very aware that going out to the Welsh people
:23:33. > :23:36.and asking for more paid politicians is never going to be a popular thing
:23:37. > :23:41.to do. What we need to look at is how weird is governed. The right
:23:42. > :23:45.number of councillors and assembly members, the right number of MPs. I
:23:46. > :23:49.don't think you can look at one arm of the Government without looking at
:23:50. > :23:53.representation across the piece. As more powers, from Westminster, we
:23:54. > :23:55.are going to have to acknowledge about whether the balance between
:23:56. > :24:14.Welsh MPs and assembly members is right. It is the same point that was
:24:15. > :24:17.just made. Given the austerity, the cats and the squeeze people are
:24:18. > :24:21.feeling at the moment. More money for politicians is not something
:24:22. > :24:26.that will be popular. So I think that argument about taking into
:24:27. > :24:30.account wider governance issues, how many MPs we have, how much we spend
:24:31. > :24:36.on councillors, and if you could increase the number of Assembly
:24:37. > :24:38.Members without spending more money overall on politicians, I think it
:24:39. > :24:43.would be something you could managed to sell to people. If you are
:24:44. > :24:49.arguing for additional expenditure the politicians, given the fuss over
:24:50. > :24:53.energy bills for example over the weekend win many MPs were claiming
:24:54. > :25:02.its Dawson at amount for energy, I think it will be a bitter pill for
:25:03. > :25:06.people to swallow. There was a capable of taking a view on this and
:25:07. > :25:09.making a mature judgement. If you have a governing body and an
:25:10. > :25:16.assembly taking on more powers, clearly that implies more work, it
:25:17. > :25:24.involves more people, scrutinising more thoroughly. So the case could
:25:25. > :25:28.be made for an increase in numbers. In Wales what we need is more
:25:29. > :25:37.entrepreneurs not politicians. Ultimately we can look at the way
:25:38. > :25:40.the assembly works. We only have two plenary sessions a week and the
:25:41. > :25:44.committee deal on Thursday. Constituency work is important but
:25:45. > :25:48.to be relevant what is the point in dealing with events on the Tuesday
:25:49. > :25:52.if they happened on the Thursday of the previous week. It suits the
:25:53. > :26:01.government because they can run wild in their limousines. What we have is
:26:02. > :26:03.a maxed out government and I would like to see a shrinkage in the
:26:04. > :26:18.number of ministers with God in Cardiff Bay.
:26:19. > :26:28.We did win that election and we are in power. We are held to account
:26:29. > :26:40.adequately by our partners but we also work closely together to move
:26:41. > :26:43.towards accountability. The second Silk Commission will look at whether
:26:44. > :26:51.we need to extend our responsibilities and that is the
:26:52. > :26:54.time to think about this. You mentioned the second Silk Commission
:26:55. > :27:04.so let's have a thought on what you hope the second part of the Silk
:27:05. > :27:10.Commission will produce. What are you hoping for? Energy powers are
:27:11. > :27:16.key for Plaid Cymru. The ownership and control of the ability to create
:27:17. > :27:20.and generate energy, we could use those powers to bring money back
:27:21. > :27:27.into the public purse and keep people's energy bills down. Also the
:27:28. > :27:31.Criminal Justice System. In so many areas it is failing people in
:27:32. > :27:37.Wales. There are no facilities for prisoners in the North and if you
:27:38. > :27:41.are young you have to go over the border to prison. There are no
:27:42. > :27:44.facilities for women and we could argue that we want fewer women in
:27:45. > :27:49.prison but it should be the case that women can be incarcerated if
:27:50. > :27:54.they have two the closer to their families. There are a whole lot of
:27:55. > :28:01.ink -- areas we would like to see devolved to Wales. I would like to
:28:02. > :28:05.see criminal just a smart as devolved, police devolved. I would
:28:06. > :28:13.like to see greater clarity of the devolution settlement. There are
:28:14. > :28:16.still too many grey areas. We end up with decisions going to the Supreme
:28:17. > :28:26.Court which is not good for anybody. I would like to see a clear
:28:27. > :28:33.distinction similar to Scotland. We have made a comprehensive solution.
:28:34. > :28:37.We identified we are not going to give a running commentary on the
:28:38. > :28:44.Silk Commission. We're going to allow them space to the evidence
:28:45. > :28:48.forward. I think we've got a first rate Criminal Justice System and
:28:49. > :28:53.policing does not recognise borders. What we have to do is deliver for
:28:54. > :28:55.the people of Wales. We have got the financial package sorted and we now
:28:56. > :29:03.need to focus on getting a better health service, their dedication
:29:04. > :29:09.system and a better economy. It was a very big step last week so when
:29:10. > :29:21.you look at the second Silk Commission, what are you hoping for?
:29:22. > :29:24.There is a measure of consensus. It is going to be tethered to get the
:29:25. > :29:34.kind of consensus with hard in the first silk report. -- Silk
:29:35. > :29:40.Commission. It is important we go for this reserve powers model so we
:29:41. > :29:46.have the powers and we are clear about it like Scotland. Policing is
:29:47. > :29:50.crucial to us and we have to be very careful about taking further steps
:29:51. > :29:57.in terms of criminal justice. That is for the longer term. It is powers
:29:58. > :30:04.for a purpose. Very interesting debate. It is good of you all to
:30:05. > :30:19.come in. That is it for this special edition. If you have any comments,
:30:20. > :30:21.please get in touch. We will be back next Wednesday. Until then, thank
:30:22. > :30:28.you for watching and good night.