Gerald Holtham has a forensic mind. The former IPPR head who came close to heading the WDA in the early days of the Labour Government has established his effectiveness in distilling a complex argument in his Commission’s first report on funding. Today he used the same skill to gently, but brutally, unpick some of the loose thinking around the replacing the Barnett formula.
At a meeting in Plaid Cymru’s conference in Cardiff Holtham disarmingly pulled apart many of the assumptions of his hosts. Every time Helen Mary Jones or Dafydd Wigley lit a flame of hope, Holtham gently placed his fingers on the wick and extinguished it.
A fair share for Wales? You’ll be lucky. Though Wales is £300m under-funded by his calculations the Treasury say that’s within the margin of error and would quickly disappear with a different set of assumptions. But the real problem is that using the same calulation Scotland gets £4.2bn-a-year more than it would if every part of the UK was treated the same as an English region. With the SNP running strong the Treasury won’t consider change: ”If you think they’re going to change that, forget it” (quotes courtesy of Tom Bodden).
A fairer income tax regime in Wales? Not on your nelly. The high earners would flee across the border: ”You would get virtually no revenue from the upper rate of income tax and if you raise it too far you would probably lose it…If you want to maximise revenue you would cut the upper rate of income tax, [and] put a penny on basic rate…How you explain that to the Welsh electorate I don’t know.”
How about a tax on natural resources then? Small change. Even if you could overcome the barriers a tax on water exported from Wales would only raise about £30 Million a year – and the Treasury would probably deduct it from the Welsh block in any event. Not worth the grief.
But Helen Mary Jones refused to be sidetracked, this simply confirms that Wales needs to flex our muscles more she said. The Scots have shown that extra support for the SNP gives the country greater leverage (though Plaid’s affection for the SNP may not last long if there’s a hung Parliament. Dafydd Wigley said they’d be working at cross purposes and should hold separate negotiations with the Tories).
Helen Mary went on to say that the Conservatives might not mind “annoying the voters of Scotland” because they have so few votes there. But I don’t buy that. My reading of the Conservatives is that they see the generous Barnett settlement for Scotland as a price worth paying for keeping the Union together.
But Gerald Holtham did give leave his audience with some cause for hope. The Calman Commission in Scotland suggested extending the tax-raising powers on the grounds of accountability. Without a stake in revenue raising the Executive will have too easy an excuse to blame London for not providing sufficient funds. The UK Treasury have accepted his argument. “That’s boxed me in” Holtham explained. ‘How can I not recommend tax raising powers now’ he mused…
Jeff Jones 9:28 am on 21 February, 2010 Permalink
What’s new Lee? Gerry Holtham only spelt out what some of us have been saying for years. It will be interesting to see what ‘horse trading’ you get when the SNP will be arguing that any minority government should not touch Barnett. Just imagine the effect on voters in the key marginals of the sight of a minority Labour or Tory adminstration dancing to the nationalist tune. Both Brown and Cameron will just tell the nationalists to do what they like and take the consequences of voting down the government. If today’s papers are to believed Brown’s comments will be accompanied by a fair bit of Anglo Saxon. Gerry Holtham has well and truly shot the Plaid fox. In fact he should be reported to the League against Cruel Sports. This is not a rerun of the 1970s I’m afraid. Plaid might as well get use to the fact that if their figures are right then the Assembly has to start to plan to reduce its budget by £2.8 billion by 2014.
Lee 10:38 am on 21 February, 2010 Permalink
Yes Jeff but Holtham has said it with authority. You seem to have missed his final piece of his analysis, the Treasury have conceeded a key principle with the Calman Commission. On the grounds of accountability there is an unanswarable case for a body that spends money to be resonsible for raising some of it too. I wouldn’t say the fox is dead…
Jeff Jones 4:18 pm on 21 February, 2010 Permalink
If you read some of my comments on a number of blogs you will see that I’ve been arging for months that any democratic institution has to have tax raising powers. To turn the American 18th century slogan on its head ” No representation without taxation”
Although misinterpreted at the time this is exactly the point that Blair was arguing when defending the Scottish parliament’s power to vary taxation. He pointed out that even the smallest community council has the power to tax. It is absurd that I pay taxes to the UK government, the local unitary authority , the local community council and even the local police authority but not to a body that wants to create legally binding laws. It’s one of the reason why I believe that any referendum that merely moves Part 3 of the 2006 Act to Part 4 is not the solution. Both the 1998 and 2006 legislation are seriously flawed in my opinion in a number of ways including the way in which one third of the those given the power to legislate are not directly accountable to the electorate. I want the power to directly remove legislators if I disagree with any of the laws that they propose to control the way in which I Iead my life.
What we need is a real debate about the future of governance in the UK in the 21st century. I an ideal world we would be electing in May not the next government but a Constituent Assembly to draw up a constitution fit for the present day. The way in which traditional British liberties have been attacked over the past 13 years shows as Lord Bingham argues in one of the most important books written in the last few years that we can no longer rely on the consequences of political events from the 17th century
Lee 8:19 pm on 21 February, 2010 Permalink
I agree, except for the PR bit. I would personally prefer a referendum on a Scottish Parliamentary model. But we find ourselves boxed into a settlement devised by Peter Hain and now a keystone of the coalition. Untidy and unsatisfactory as it is, its what we’ve got.
simon 3:20 am on 27 February, 2010 Permalink
Re. a fairer income tax regime in wales..
I am not politically educated but this simplistic approach to taxation is deeply frustrating.. those on higher incomes must pay more! If the richest in our society are unwilling to pay their ‘fair share’ let them leave, welsh society would be better off without these selfish individuals.