06/11/2013 The Wales Report


Huw Edwards is joined by the Welsh government finance minister and the three opposition party leaders, to discuss the announcement on new financial powers for the Welsh Assembly.

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Tonight, a special edition of The Wales Report. For a leading


politicians debate the latest step on the evolution journey. Powers to


borrow, powers were some taxes. Does Wales have the appetite for a


significant change? Stay with us. Good evening, welcome to The Wales


Report. It is just five days since David Cameron and Nick Clegg visited


Cardiff Bay and unveiled their proposals were putting the Welsh


people in the driving seat on jobs, transport, infrastructure and


housing. They were talking about new financial powers for the Welsh


government. Control of stamp duty, landfill taxation, powers to borrow


money and even powers to set income tax if the people of Wales are


proved that in a referendum. It was the long-awaited response to the


silk commission, which caused -- Coleford evolving powers. To what


extent do the four main parties agree on the way ahead? First, some


food for thought on with the journey of the past 16 years has brought us.


Here is Professor Wynne Jones. No .3% nationwide in Wales...


The people of Wales have given their support to a strong Welsh boys.


Voters want the Assembly to have the powers to make its own laws without


Parliament having any say. We have the same powers as Northern Ireland


and Scotland. We are announcing more power for the Welsh people and the


Welsh government. Power that is about building this country up,


power that is about making sure we have real accountable government


here in Wales. The powers they are talking about are important powers.


Borrowing powers, tax varying powers. Local government can do it,


the parish council can do it. It has always been an anomaly that this is


not possible at a devolved level. This is now changing. It is


important. We cannot have properly accountable governments unless the


devolved level has some responsibility for raising the money


it spends. Otherwise you will not be seriously responsible in terms of


how you use that money. All of the parties have accepted that in


principle. The fact of the matter is the minor taxes they are talking


about are peanuts. The amount of money they raise is very small.


Income tax is the only thing that gives you any real financial cloud,


raises any real money. People will begin on the basis of believing in a


referendum. Let's be honest with ourselves in this regard. That any


referendum on the devolution of income tax would be to them a way of


paying more tax. Whether it is true or not is a different issue. That is


what their default position will be. It may be possible at some point to


make an argument that overcomes that. I don't believe that point is


reached. The Welsh government is running away from a referendum on


that particular issue. They are talking the language of


accountability, but they are resigning from embracing it. The UK


Government is saying we're living in the best of both possible worlds and


that nothing much needs to change. The Welsh government has asked for


radical changes, moving to a reserved powers model, devolving


police, justice etc. These are incommensurate positions. There is


no compromise possible. They have to jump one way or the other.


Some thoughts from Professor Richard Wyn Jones. With me, the leader of


the Welsh Conservatives, Andrew RT Davies, Leanne Wood of Plaid Cymru


and Kirsty Williams of the Liberal Democrats. And we have the finance


minister for Wales, Jane Hutt. We did ask the First Minister, Carwyn


Jones, to take part but he was unavailable. Thankfully, Jane is


representing the Government. Andrew, your colleague, David Cameron,


making this announcement with Nick Clegg last week. The principle was,


no government should be in a position where it is spending money


when it is not responsible for raising some of that money. Is that


an argument that holds water? I think it does. On the front page of


the silk report, empowerment and responsibility. That is what these


proposals are about. It is about giving empowerment so the Welsh


comment can do the things it wants to do, but having the responsibility


to raise the money it needs. -- Welsh government. We all have a


responsibility. If we spend more money than we earn, we are in


difficulty. David Jones, the Secretary of State for Wales, has


been pretty lukewarm about this. Your party colleague. Are you very


enthusiastic about it? Are you saying that varying powers for


income tax for the Welsh government would be a good thing? I disagree


what you said about the Secretary of State. I was with him on Monday.


Lots of people will smile at that. David was very enthuse about the


announcements made on Friday. I believe passionately that


politicians need to have responsibility and accountability.


At the moment we have through the Welsh Assembly and the Government


that flows from it is a spending agency. The money comes down the M4.


You cannot run a democracy on those principles. You have to have an


element of accountability and responsibility, and I think


everybody understands that. You have got to have that ability to spend


and raise. Kirsty, what was the Liberal Democrat role in this? I


don't think the commission would have happened if the Liberal


Democrats have not been part of the Coalition Government. We insisted


that was written into the agreement, that the process will be


set up. There were people in London who did not want the commission


established. Working together with party leaders in Wales we were able


to establish the commission. I was delighted on Friday to have the


announcement. Liberal Democrats have been campaigning for home rule for


more than 100 years. This is a very important step towards that


announcement -- that, the announcement on Friday. It is powers


with a purpose. If devolution is going to be successful, we need the


Welsh government and the National Assembly to have the widest range of


powers to build a strong economy and fairer society in Wales. These


powers will help the Welsh government to that. This condition


of a referendum, do you think that is right? And do you think Carwyn


Jones is right when he says people may fear the plan is to increase


income tax, and for that reason they may not vote for it? Taxes could


increase with this change, but taxes could come down as well. The point


is that if a government has got the flexibility to use taxation as a


tool, then that has to be helpful for the Government. A future


government may want to say, for example, put the creation of jobs at


the top of its agenda. At the moment there is no incentive on the part of


the Welsh government to create jobs because the money raised by the


taxation from these jobs doesn't come into a Welsh Treasury. If you


had income tax raising powers, there is a direct reason, a direct


incentives, to create jobs. A future Plaid Cymru government would relish


the opportunity to use these powers. It unlocks other powers as well.


More borrowing, for example, would be available. It makes the


Government more solvent. It makes other organisations outside look at


the Government and say, OK, that is a fair bet for us to put our trust


in if it has got the income stream it does not have at the moment. With


those possibilities, Jane, how keen are you to try to access these


powers? I have two say, the vibe from the First Minister has not been


overwhelmingly enthusiastic. It has all been about caution and concern.


Are you keen to get these powers? I would disagree entirely, Hugh. On


Friday the First Minister was delighted. We went to the press


conference together. It was a real endorsement about consensus politics


in Wales. We all came together. The fact we got all the political


parties to back this, and I have to say, business played a huge part.


The first step, as they see it, as -- are those borrowing powers. That


is what the Welsh Labour government has been seeking to do. The First


Minister said he was delighted. We are now equal partners in the United


Kingdom. That is such a strong response. The whole of the silk


commission report we embraced. And very importantly, we recognised this


gives us the first step, with these smaller taxes, let's remember, we're


going to have stamp duty devolved and we know this can help new


house-buyers. There are so many opportunities. Landfill tax.


Eventually... This is a huge step. And who would have thought this,


that we are in this position? It is momentous. It is an historic day.


This is the first step on a very exciting journey in devolution. That


is right, it is a first step. That's why I don't understand why the


Government is putting a brake on these powers. Other parties have


said we should press ahead as soon as possible. With the referendum?


Yes, of course. When you have got a government complaining about the


cuts from Westminster, how on earth would be First Minister preferred to


have the Tories setting the full rate of income tax, when we have an


opportunity to avail of that ourselves? What is your sense of a


referendum at the moment? The four parties campaigned together as we


did in 2007 and 2011, there is a chance we could win the referendum.


What do you think, Kirsty? Do you think the Welsh people would back


these powers today? I think it would be important to explain why these


powers are important and what could be done with them. That is what the


watch people want to know about. Whether the politicians in Cardiff


Bay can use these powers to create more jobs, to make it easier for


people to buy their first home, to be able to invest in schools,


hospitals, transport infrastructure that they want in their community.


These sound like expensive projects. I am not saying they are


not beneficial. The assumption people will make is that you want


those powers to increasing tax to pay for them? , -- of course, people


will be fearful of that. Taxes could go up, they could go down. What


would be really important is that the Welsh government would be


responsible for the success of their policies. It doesn't matter to the


Welsh government weather and a deployment goes up or down. They


just get money from London. They would have to get the economy right.


They would have to build a stronger economy and create jobs, otherwise


it would directly affect their ability. We need to explain to


people why it is important to them and their communities. If


politicians just sit in the bubble of Cardiff Bay, no, we will not win


it. We have to make a case. Like we made a case for the Assembly in the


first place. And why we needed legislative powers. We support the


road mark that was set out for a referendum to be held here in Wales.


-- road map. The arguments can be held as to what we do with those


powers. We would like a low tax economy. Quite clearly, the silk


commission recommended they should be a referendum. We have accepted


all of the recommendations. Very importantly, they said it is vital


that both governments, the Welsh government and the UK Government, if


there are to be tax varying powers, that we also need a fair funding


base. There is no disagreement here between us all. It is vital that we


have that fair funding base. This is fair funding for Wales in a


strengthened United Kingdom. The fair funding was a big issue when we


invited Jerry Hall fun to come to Wales in 2008 to look at our funding


base. He said we need to do something about this. It is not


conditional, is it? The referendum and the powers are different. The


recommendation says, move to tax varying powers. We all agree that


actually, if we do have these tax varying powers, we still have a lot


of dependence on our block grants. We want to spend the money wisely


for jobs and growth. It is still a block grant. We all agree and we


have all supported the fact that Danny Alexander and I worked hard to


say that yes, we need to stop that kind of unfairness in our funding,


to ensure that when we do move forward, and that is what Carwyn


Jones said yesterday, he would be happy to campaign when we were


clearer. We need that fair funding base. I want to ask the three of you


in opposition to tackle that point. There will be viewers watching who


say that if you accept we do not have fair funding, if that is not


right now, surely it is right to try to get that changed before you go on


to talk about things? Isn't Carwyn Jones right to say, hang on a


second, we want it referendum -- we don't want a referendum? We need to


reform Barnett. The first priority is to settle the deficit issues. We


need to have a proper funding formula for the nations and regions


of the whole of the UK. And we need to get it right. What is so


depressing about what the First Minister has been saying since


Friday is that even if Barnett was reformed, he even then won't say


whether he would call a referendum and whether he would campaign for a


yes vote. We cannot afford the Welsh nation to be held back by divisions


within the Labour Party and eight committee on the part of the First


Minister. Is it unfair that the First Minister is taking a


common-sense approach? He is saying that we do not have a fair funding


bases at the moment. We must fix that before we put anything to


people in a referendum. Is that not something people will understand?


Plaid Cymru has been banging the fair funding formula for more than a


decade now. I would take the First Minister's line of argument much


more seriously if Labour had done something about this when they had


the opportunity. You still say he is right? Of course, the Barnett


formula needs reforming. I think a referendum could take place. What


was very frustrating yesterday in questions to the First Minister was


that I asked him if the Barnett formula reform was so important,


would he commit his party to including that as a commitment in


the 2015 election manifesto? He refused to make that commitment. I


then went on to ask him if the Barnett formula was reformed, would


he then champion the case for income tax powers and a yes vote in the


referendum? He refused to commit to that as well. This suggests to me


this has been put up as an obstacle. It is an unnecessary and artificial


obstacle. Barnett should be reformed but it should not be conditional. I


think it is disappointing to have what I would describe as my


colleagues in this, not to recognise the achievement that a Labour First


Minister has helped to deliver this historic achievement. We have all


delivered it. We did as a government ask Jerry to come in and we agreed


that his conclusions were right. It is very important, as the First


Minister said yesterday, we have secured a referendum. It is going to


be for a future assembly in terms of the timescale. Let's get this into


legislation. Let's today recognise the achievements and say, let's get


on with our borrowing powers, early access, enhancement of the M4


infrastructure. Let's get those smaller taxes devolved. Let's reform


stamp duty. Let's unite. Don't let this message go out today that we


are not in the Assembly, all of us, determined to make the silk


commission. And the important achievement... It is for the people


of Wales to decide how we move forward. It is interesting listening


to everybody talking about more hand-outs. We understand there is an


issue. But if you use taxation levers positively, you can grow your


economy. That from the right is what I am all about. It is not... The


First Minister is must like the ghost in the room. He didn't bother


to turn up. The point I would make is this, ultimately what we need to


do if these responsibilities come to the Assembly, income tax powers, all


politicians should be thinking about how they grow the economy with those


powers. From the Conservative Party point of view we would be a low tax


economy. With lower taxation you create more. We have a spending


agency at the moment in the guise of the Welsh comment. It receives a


lump of money and dispenses it around Wales. Ministers driving


their black limousines opening and cutting ribbons will stop if the


school is shot, the school is to blame. If it succeeds, the


Government takes the credit. That is not sustainable. It does not make


for a better government in Wales. I want to talk about the very


important issue of accountability. Is the National Assembly in a


position to properly scrutinise spending, if we are talking about


enhanced powers, varying income tax, is the National Assembly today


in a fit state to do that? Are there enough assembly members? What is


your view, Kirsty? The Richard commission did recommend more


assembly members. I am very aware that going out to the Welsh people


and asking for more paid politicians is never going to be a popular thing


to do. What we need to look at is how weird is governed. The right


number of councillors and assembly members, the right number of MPs. I


don't think you can look at one arm of the Government without looking at


representation across the piece. As more powers, from Westminster, we


are going to have to acknowledge about whether the balance between


Welsh MPs and assembly members is right. It is the same point that was


just made. Given the austerity, the cats and the squeeze people are


feeling at the moment. More money for politicians is not something


that will be popular. So I think that argument about taking into


account wider governance issues, how many MPs we have, how much we spend


on councillors, and if you could increase the number of Assembly


Members without spending more money overall on politicians, I think it


would be something you could managed to sell to people. If you are


arguing for additional expenditure the politicians, given the fuss over


energy bills for example over the weekend win many MPs were claiming


its Dawson at amount for energy, I think it will be a bitter pill for


people to swallow. There was a capable of taking a view on this and


making a mature judgement. If you have a governing body and an


assembly taking on more powers, clearly that implies more work, it


involves more people, scrutinising more thoroughly. So the case could


be made for an increase in numbers. In Wales what we need is more


entrepreneurs not politicians. Ultimately we can look at the way


the assembly works. We only have two plenary sessions a week and the


committee deal on Thursday. Constituency work is important but


to be relevant what is the point in dealing with events on the Tuesday


if they happened on the Thursday of the previous week. It suits the


government because they can run wild in their limousines. What we have is


a maxed out government and I would like to see a shrinkage in the


number of ministers with God in Cardiff Bay.


We did win that election and we are in power. We are held to account


adequately by our partners but we also work closely together to move


towards accountability. The second Silk Commission will look at whether


we need to extend our responsibilities and that is the


time to think about this. You mentioned the second Silk Commission


so let's have a thought on what you hope the second part of the Silk


Commission will produce. What are you hoping for? Energy powers are


key for Plaid Cymru. The ownership and control of the ability to create


and generate energy, we could use those powers to bring money back


into the public purse and keep people's energy bills down. Also the


Criminal Justice System. In so many areas it is failing people in


Wales. There are no facilities for prisoners in the North and if you


are young you have to go over the border to prison. There are no


facilities for women and we could argue that we want fewer women in


prison but it should be the case that women can be incarcerated if


they have two the closer to their families. There are a whole lot of


ink -- areas we would like to see devolved to Wales. I would like to


see criminal just a smart as devolved, police devolved. I would


like to see greater clarity of the devolution settlement. There are


still too many grey areas. We end up with decisions going to the Supreme


Court which is not good for anybody. I would like to see a clear


distinction similar to Scotland. We have made a comprehensive solution.


We identified we are not going to give a running commentary on the


Silk Commission. We're going to allow them space to the evidence


forward. I think we've got a first rate Criminal Justice System and


policing does not recognise borders. What we have to do is deliver for


the people of Wales. We have got the financial package sorted and we now


need to focus on getting a better health service, their dedication


system and a better economy. It was a very big step last week so when


you look at the second Silk Commission, what are you hoping for?


There is a measure of consensus. It is going to be tethered to get the


kind of consensus with hard in the first silk report. -- Silk


Commission. It is important we go for this reserve powers model so we


have the powers and we are clear about it like Scotland. Policing is


crucial to us and we have to be very careful about taking further steps


in terms of criminal justice. That is for the longer term. It is powers


for a purpose. Very interesting debate. It is good of you all to


come in. That is it for this special edition. If you have any comments,


please get in touch. We will be back next Wednesday. Until then, thank


you for watching and good night.


In a Wales Report special, Huw Edwards is joined by the Welsh government finance minister and the three opposition party leaders, to discuss the full implications of the announcement on new financial powers for the Welsh Assembly.

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