Evidence to the Silk Commission

Introduction

1.1 Public Finance for Wales should be based on three elements. Tax raising powers, a needs based UK equalisation grant (to replace the current block grant administered as per the Barnett formula) and powers to raise funds through borrowing. More detail on each of these proposals follows below. In bullet point form the answer to the commissions principal questions are as follows:

I. What, if any, tax powers including possible new taxes and levies should be transferred to Wales?

1. The power to set income tax levels including both rates and entitlement thresholds (tax bands).

2. The power to set corporation tax rates

3. The power to replace the Council Tax with an alternative local tax in Welsh local authorities

4. The power to control stamp duty, land tax and landfill tax.

5. The general power to introduce new taxes, including a wealth tax and windfall taxes on particular industry profits

II. What, if any, borrowing powers should be devolved to Wales?

6. The Welsh Government should be granted the necessary powers to enable it to raise its own funds on capital markets and should itself be accountable for and in control of the safeguards and prudential measures it sees fit to introduce.

III. Do you have any other proposals for improving the financial accountability and empowerment of the Welsh Government?

7. The starting point for public finance in Wales should be the tax take in Wales with an agreed amount reserved to the UK treasury to pay for non-devolved services and a equalization grant provided to the Welsh Government from the UK treasury to promote convergence in living standards across UK regions and nations.

The relationship between block grant and tax raising powers
2.1 While we are aware that the commission is not examining the Barnett formula, we believe it is necessary to view the extension of greater financial accountability in the context of the continued existence of block grant funding for Wales for the foreseeable future.

2.2 In 2.2 iv of Fairness and accountability: a new funding settlement for Wales full text (Holtham full text) the Independent Commission on Funding & Finance for Wales set out a system of finance which could:

‘..involve a range of possible transactions between the Assembly Government and the UK. There would be a transfer between Wales and the UK Government, being the net of a payment by Wales for non-devolved government services, like defence and social security, and the payment to Wales of an equalisation grant to bring its per capita tax receipts or public expenditure to an appropriate union-wide level.’

2.3 It is a variant of this approach which we advocate here. It is necessary first, however, to point out a particular anomaly which would also need to be resolved. Paragraph 1.10 of Holtham full text sets out the approximate percentages of public expenditure in Wales dealt with within and outside of the Barnett formula. The majority of expenditure dealt with outside of the Barnett formula related to spending on policy areas which are not devolved to Wales and should be dealt with in accordance with the system described above.

2.4 The exception is an amount of Annual Managed Expenditure raised by local authorities via council tax. An anomaly needs to be addressed in respect of this area of expenditure. Local Government in Wales is administered by the National Assembly and funding channelled through the Assembly makes up the bulk of local public expenditure. The power to control the tax system which makes up the other element of local authority funding should be devolved allowing the Welsh Government to establish a replacement to Council Tax. This would simply tidy up the devolution settlement in relation to local government.

2.5 Like Holtham full text we believe that combination of block grant and some tax raising powers will continue to apply for the foreseeable future. Unlike Holtham full text we do not believe it is necessary to restrict the options for tax powers based on the then political situation (which has already moved on) or the current range of devolved policy areas. We believe in the concept of ‘devolution as a process rather than and event’. Consequently we believe that the balance between the block grant element and devolved tax raising element should be allowed (and expected) to alter over time and should mirror the development of demands for political devolution of further policy areas. This may well lead to a change in the nature or structure of the Union but we believe this should be allowed to proceed on a democratic basis.

2.6 Furthermore, although we recognise that the commission is not going to examine the nature of the block grant it is necessary that this issue be addressed. The needs based block grant is necessary to support living standards and economic development in Wales because UK economic policies have actively deconstructed Welsh industry and have allowed Wales to develop at a slower rate than other areas of the UK. As a consequence Wales is not currently able to maintain or extend the level public expenditure from its tax take alone. This needs to be corrected by a block grant allocation aimed at equalising living standards across the UK nations and regions and at promoting the economic growth in Wales which will allow it to overcome the current deficit between tax take and public expenditure.

Lending Powers
3.1 An essential element of the economic growth package, which is required in Wales, must come form public investment, particularly in infrastructure. The Welsh Government should be accountable for the economic growth package and infrastructure investment which is required and so must be able to raise its own funds via borrowing. In order for it to be fully and democratically accountable it needs to be fully in control of borrowing policy, including prudential measures, rules and controls.

Specific Tax Proposals
4.1 Holtham full text (4.23) has argued that ‘If income tax could be partially or wholly devolved to Wales, the accountability deficit in the current funding settlement would be largely resolved’. We believe that in order the accountability deficit to be fully resolved then income tax must be fully devolved.

4.2 The Scotland Bill outlines the arguments for devolution of stamp duty, land tax and landfill tax to the Scottish Government. We accept the different legal framework in Scotland but believe the same general principles apply in Wales, particularly in respect of the capacity for such taxes to operate as policy instruments.

4.3 We recognise the business migration and tax avoidance dangers which can be presented by differential Corporation Tax rates within the UK. However, we also believe these dangers are well understood by politicians within Wales and that a ‘race to the bottom’ is not seen as a desirable outcome of Corporation Tax policy. Given full control over Corporation tax would provide the Welsh Government a powerful tool with which to influence the make up of the economy and relative strength of different industrial sectors in Wales.

4.4 We believe that evidence of Holtham full text chapter 4, of specific devolved taxes levied on wealth, profits and capital gains, and in diverse state structures across the OECD demonstrate the possibility for devolving the power to introduce new taxes to Wales. Once again we disagree with Holtham full text on the political point of democratic accountability. We believe that the appropriate political forum to determine whether new taxes are introduced is the National Assembly. We understand the possibility of such decisions having an impact on other nations of the Union and that ultimately this may have an impact on the structure of the Union but we believe this should be allowed to proceed on a democratic basis.

Executive Committee
Welsh Communist Party

(Nation Section of the Communist Party of Britain)

* Publication of notice of election not later that 27th March
* Delivery of nomination papers (from the date stated on the election papers)
* Deadline for delivery of nomination papers 4th April 2012
* Publication of statement of persons nominated 10th April 2012
* Deadline for withdrawals 11Th April 2012

These are the provisional dates set out by the Electoral Commission.

John Morrissey will be the Party’s election agent to enable the ball to get rolling as quickly as possible.

As well as putting across our programme for Wales the Party will also need to concentrate on immediate local issues if we are going to attract votes, branches are therefore being asked to supply John with a list of local issues we can look at for leafleting.

Members sit in a semicircle and discuss in a rather downbeat fashion the burning issues of the day. Though not all minsters go as far as Business Minister Edwina Hart, who remains seated when answering questions.

In 1999 the first gift of power to Wales gave it limited options, but enough to allow the Labour Party, in the words of its leader Rhodri Morgan, to put "clear red water" between Labour in Wales and the Blairite administration, and so refusing the introduction of academies that undermine comprehensive education, foundation hospitals, GP funding and limiting the private finance initiative and other regressive measures.

A Welsh devolved administration is now sparing its electorate the worst excesses of the Con-Dem alliance attacks, such as those of Tory Michael Gove in education, taking apart the education of the masses to ensure the path for the rich is kept clear.

In health, Andrew Lansley's attacks on the NHS - in the rush to sell off medical care for all to the highest bidder - have not taken root here.

The Con-Dem economic policies now make the fight against poverty even harder, hampering a continuing fight to erase the legacies of yesteryear with their severe exploitation of its working people alongside disease, poor diet and bad housing that is endemic among families in industrial and rural poor areas.

But the setting of Wales is surely a blessing, so well formed is it that it needs little help to make the place attractive to visitors, with its natives in closely knit communities which, given a chance, are better able to work together for their own good and for the nation's prosperity.

In Cardiff Bay all the political parties are to the left of their colleagues in Westminster, showing little sympathy for most of what passes for political thinking in London, with a willingness to sit down with trade unions to find the best way forward for the country.

An urban myth paints many Welsh people as looking on the dark side of life.

Merthyr Tydfil - used frequently in the media as an illustration of Welsh progress, or lack of it - recently led the news positively as public investment attracts private cash, with local people and councillors portraying a community building in confidence.

And Jones has declared himself open to discussions on how to spend the extra £38.9m generated as a result of the British government's decision to freeze council tax.

A north Wales newspaper, not known for its positive outlook on Welsh life, last week headlined the need to "make the most of what we have got" over its opinion column.

But to do so will need something of an increase of dynamism at the top and sharp and persistent encouragement from those of us at the bottom to keep them on their toes.

By Roy Jones

(First published in the Morning Star 18.1.12)

Welsh committee agenda 4.1.12

1. Attendance & apologies

2. Elections:

a.
Chairperson (Responsible for: setting meeting agenda with secretary and convening meetings with administrative secretary; a key spokesperson for the Party)
Secretary (Leader of, and main spokesperson for, the Party in Wales)
Administrative secretary (Responsible for: taking minutes; internal Party communications and issuing press releases)
Treasurer (Responsible for: drafting the Welsh committee budget, maintaining the Party’s accounts and membership secretary)
Industrial Organiser (Responsible for: co-ordinating the Party’s trade union work; convening industrial aggregate meetings and recruiting & encouraging the development of our industrial cadres)
Morning Star & Propaganda Organiser (Responsible for: the promotion of the Morning Star within the Party; the convening of the annual Wales Morning Star conference and the development and take up of Party literature)
Culture Organiser/Cymdaithas Niclas & Eisteddfod Co-ordinator (Responsible for: the Party’s work within Cymdaithas Niclas; the Party’s presence at the Eisteddfod and developing the cultural work of the Party)
Campaign Organiser/People’s Charter & election co-ordinator (Responsible for the development of the Peoples Charter in Wales and the Party’s electoral work)
Other dual posts: Vice Chairperson, Website/Twitter administrator

b.
Secretariat (4 person)

3. Welsh congress business including: The revision and up dating of the Party Programme and remitted motions

4. 2012 work programme discussion

5. Finance report

6. Schedule of 2012 Welsh committee meetings

Delegates from across the country slammed the Westminster government's wide-ranging assault on workers' living standards and pledged to work for a popular fightback.

"None of these cuts are necessary - they're being made to enable big business and the banks to increase their already bloated share of the national wealth," said Communist Party Welsh secretary Rick Newnham.

Delegates also demanded immediate action to allow local authorities to build socially affordable housing to alleviate the critical housing shortage affecting young people.

"The current situation is a national scandal that could easily be resolved," said Cardiff delegate Fran Rawlings, moving the resolution.

The congress also discussed revisions to the Welsh Communist Party's programme 'Real Power for the People of Wales' with an updated version being published in the new year.

A new 8 person executive committee was elected to run the Party for the next two years and, in recognition of the vital role played by the only English language socialist daily newspaper in the world, over £700.00 was collected in aid of the Morning Star Lifeline Appeal.

But the assembly erupted as the £14.4bn pittance offered up by the Westminster coalition plunged Welsh political parties into deadlock.

Jones's proposed budget was savaged by the three other parties and voted down.

Labour's three opponents all had different spending plan priorities, though the Tories wanted more spent on health, the Lib Dems called for increased spending on education and Plaid Cymru wanted cash spent on promoting growth. No-one was that clear publicly on where the extra money would come from, not least since Wales is unable to raise cash itself.

Amid the haggling, Labour demanded more than it got from Plaid when they were in coalition before May.

But Plaid played hard to get and lost out. It could live to regret it unless something comes of Leanne Wood's bid for the leadership.

In the end it was the Lib Dems who broke the deadlock with leader Kirsty Williams sealing a £20 million increase to the schools budget.

So education will gain and so will Welsh Labour, which will now have the able Williams as an ally.

Crisis over - for now.

But the coming period will be interesting for Wales watchers. The budget cuts will create problems, but there will also be greater opportunities since the nation voted Yes in April to shift law-making powers in 20 areas from Westminster to Cardiff.

By Roy Jones

(First published in the Morning Star 8.12.11)

It raises the prospect of a truly left-wing politician seeking a position of power - something not seen in British politics for a long time.

It would obviously be a great test for her that would require her to adopt a position different from the more socialist than nationalist one she has played in politics until now.

Wood told the BBC she would await a review of Plaid's operations due at the end of the year before making a final decision.

However she added that she thought that the internal assessment would recommend a "radical" view that would chime with her own position.

"It's quite an exciting time for Plaid, with lots of people joining the party after looking what is happening in Scotland and seeing there what can happen in Wales."

It could be exciting for all of us.

But she has to stand first - and of course win for maximum effect - but we could still be witnessing the emergence of a new dimension in Welsh politics.

By Roy Jones

(First published in the Morning Star 8.12.11)

Friday 9th December 7.30 pm, Museum, Pontypridd

10th Annual Gwyn Alf Williams’ Memorial Lecture

Saturday 10th December, YMCA, Pontypridd

Welsh Communist Party Congress

Congress Open Session

9.30 Registration

10.00 Chairperson’s opening statement

First Election Preparation Committee Report
Welsh secretary’s report
Introduction to Welsh Party programme

10.30 – 12.00 Workshops

Workshop one:
Cymdaithas Niclas/Eisteddfod (Chair: Catrin Ashton)
Workshop two:
Election work (Chair: Rick Newnham)
Workshop three:
Trade Union work & the Peoples Charter (Chair: Brian Williams)

11.30 Report back from workshops

12.00 – 12.30 CPB Executive Committee speaker

12.30 – 1.30 Lunch (EPC will meet in the break to consider delegate representations)

1.30 Plenary session

Debate and voting on amendments to Party programme and branch resolutions

3.25 Morning Star Fighting Fund collection

Closed Session

Finance Report
Election of new Executive committee

Close

Cardiff: march and rally, organised by the Wales TUC - assemble from 11.30 am outside City Hall, set off at 12.00 noon on a march to the SWALEC stadium, Sophia Gardens, for an indoor rally starting at 1.00 pm

Aberystwyth: march & rally organised by Ceredigion Against the Cuts – assemble at the top of Penglais Hill (by the entrance to the Cwrt Mawr student village, Aberystwyth SY23 3AN) at 11.30 am on Penglais Hill, march to the Morlan Centre, Queen's Road, Aberystwyth SY23 2HH for a rally at 12.30 pm

Bangor: rally will gather at the clock tower (main shopping centre) at 11am.

Carmarthen: assemble outside WH Smith's in Carmarthen at 10.30 am for a march beginning at 11.00 am, ending with a rally in Notts Square at 12.00 noon, or if weather bad, in the Boar’s Head, Lammas Street.

Haverfordwest: assemble 11.00am at County Hall for march to Castle Square.

Llandrindod Wells: march and rally organised by joint trade unions, setting off at 11.00 am from Theatr Powys, Tremont Road, Llandrindod Wells LD1 5EB and marching through the town to the Pavilion, Spa Road, Llandrindod Wells LD1 5EY for a 12.00 noon rally with a soup & roll lunch. Coaches to be provided to transport members to Llandrindod as follows: Coach 1: Welshpool – Pick up at Church Street car park (by Spar) at 10:15 am; Newtown – Pick up at Back Lane car park (by bus station) 10:45am. Coach 2: Brecon – Pick up by Police Station, Cambrian Way at 10:45am; Llyswen – Pick up by Bridge Inn at 11:00am; Builth Wells – Pick up at Groe Car Park at 11:15am. Coaches will depart from Llandrindod around 2:30pm (if only to ensure the speeches aren’t too long)

Merthyr Tydfil: rally organised by Merthyr Trades Council in front of the civic centre at 11.00 am.

Mold: a march starting at 10.30am from the Council Offices to the Kwik Save car park, ending in a rally at 11.00am.

Swansea: march and rally, organised by the '4 in 10' campaign in association with the joint trade unions - assemble 12.00 noon at Guildhall, march either to Castle Square or (if weather bad) to the Unitarian Church in the High Street for a rally;

Wrexham: march and rally – assemble at 12.00 noon in Queens Square for a march around the town centre, finishing at the Miners' statue in Lord Street, then proceed to the Grove Park Little Theatre on Hill Street, Wrexham LL11 1SN (behind Specsavers, towards Island Green) for a rally.

Get in touch on the night for shout outs, dedications and general morale boosting for pickets.

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