06/11/2013 The Wales Report


06/11/2013

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

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

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

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

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

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Cardiff Bay and unveiled their proposals were putting the Welsh

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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power that is about making sure we have real accountable government

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

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

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

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

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important. We cannot have properly accountable governments unless the

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devolved level has some responsibility for raising the money

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

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

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

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

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

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

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

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

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

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

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

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

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that particular issue. They are talking the language of

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

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

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

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radical changes, moving to a reserved powers model, devolving

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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enthusiastic about it? Are you saying that varying powers for

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

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

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

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announcements made on Friday. I believe passionately that

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politicians need to have responsibility and accountability.

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

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

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

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element of accountability and responsibility, and I think

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

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

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

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

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

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

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

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

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announcement. Liberal Democrats have been campaigning for home rule for

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

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

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

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

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

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powers will help the Welsh government to that. This condition

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Government more solvent. It makes other organisations outside look at

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

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

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

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

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

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

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

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conference together. It was a real endorsement about consensus politics

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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hospitals, transport infrastructure that they want in their community.

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

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

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

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

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would be really important is that the Welsh government would be

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

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

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

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

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

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

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

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

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

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

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

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

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commission recommended they should be a referendum. We have accepted

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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depressing about what the First Minister has been saying since

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

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

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

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

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

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

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

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

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

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

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

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

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

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was very frustrating yesterday in questions to the First Minister was

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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lump of money and dispenses it around Wales. Ministers driving

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their black limousines opening and cutting ribbons will stop if the

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

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

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

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important issue of accountability. Is the National Assembly in a

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position to properly scrutinise spending, if we are talking about

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

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

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your view, Kirsty? The Richard commission did recommend more

:23:26.:23:29.

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

:23:30.:23:32.

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

:23:33.:23:36.

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

:23:37.:23:41.

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

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

:23:46.:23:49.

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

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are going to have to acknowledge about whether the balance between

:23:54.:23:55.

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

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

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

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

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

:24:27.:24:30.

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

:24:31.:24:36.

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

:24:37.:24:38.

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

:24:39.:24:43.

arguing for additional expenditure the politicians, given the fuss over

:24:44.:24:49.

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

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

:24:54.:25:02.

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

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

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

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

:25:17.:25:24.

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

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entrepreneurs not politicians. Ultimately we can look at the way

:25:29.:25:37.

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

:25:38.:25:40.

committee deal on Thursday. Constituency work is important but

:25:41.:25:44.

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

:25:45.:25:48.

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

:25:49.:25:52.

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

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

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number of ministers with God in Cardiff Bay.

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

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

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towards accountability. The second Silk Commission will look at whether

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we need to extend our responsibilities and that is the

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

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

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

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

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

:27:17.:27:20.

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

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

:27:28.:27:31.

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

:27:32.:27:37.

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

:27:38.:27:41.

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

:27:42.:27:44.

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

:27:45.:27:49.

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

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

:27:55.:28:01.

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

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

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

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

:28:17.:28:26.

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

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

:28:34.:28:37.

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

:28:38.:28:44.

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

:28:45.:28:48.

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

:28:49.:28:53.

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

:28:54.:28:55.

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

:28:56.:29:03.

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

:29:04.:29:09.

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

:29:10.:29:21.

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

:29:22.:29:24.

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

:29:25.:29:34.

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

:29:35.:29:40.

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

:29:41.:29:46.

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

:29:47.:29:50.

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

:29:51.:29:57.

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

:29:58.:30:04.

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

:30:05.:30:19.

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

:30:20.:30:21.

you for watching and good night.

:30:22.:30:28.

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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