Wednesday, 14 September 2011

Spend and tax

Alex Salmond and his government will have his hands on the controls of £12bn shortly when the Scotland Bill is passed. It’s now with the House of Lords waiting detailed scrutiny at the committee stage. When passed it will be the largest, single transfer of fiscal power from Westminster ever seen in the United Kingdom.
When introducing the bill to Parliament George Osborne, the chancellor said: "I have always believed that devolution brings rights, but also responsibilities. The far-reaching changes we are introducing means the Scottish people and their elected representatives will be much more responsible not just for decisions on public spending in Scotland, but also for the Scottish taxes needed to pay for those decisions."
The Westminster government has shown itself keen to underline the connection between expenditure by the devolved administrations and the taxes raised to pay for them.
What is good for the Scottish goose applies equally to the Welsh gander, hence the announcement by the Westminster government of a Commission to look at these fiscal issues. This has been called Calman Cymru.
In July, when making the announcement Secretary of State Cheryl Gillan made it clear that it would have the widest of terms of reference.
Indeed it would be surprising if it didn’t because the Treasury are pulling the strings on this and they are keen to see Wales step up to the table and like Scotland take some responsibility for raising taxes to finance their expenditure priorities.
Carwyn Jones, The Welsh First Minister has been cautious to embrace new responsibilities in this area. He sees it as a poisonous chalice. Currently, the cash comes straight down from Treasury and all the Welsh Government has to do is spend. No responsibility for raising the money, no nasty voters questioning his tax increases. Bliss for a politician.
OK, there are disputes about the bag of cash handed down by Treasury. The mantra for some years has been that Wales has been short changed by about £300m. Carwyn Jones’s takes the view that until this is put right there can be no consideration of tax raising and other fiscal powers.
Not surprising this is not a view shared by the Treasury. But the whole issue will be kicked to touch whilst the Commission does its work. It is expected that the Westminster government will announce the composition and the terms of reference of the Commission shortly. So watch this space.
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