New financial powers for Wales: “Devolution can thrive in a spirit of genuine partnership” – Jane Hutt

Government announces a new package of financial powers to help Wales compete in the global race.

Details of the new  financial powers for Wales have been published today.

The powers, which could see the Welsh government in control of £3 billion of tax revenue, include control of business rates, the ability to create new taxes and some borrowing powers.

The UK government today published full details in its response to the Silk Commission’s recommendations on financial devolution.

Danny Alexander, Chief Secretary to the Treasury, and David Jones, Secretary of State for Wales, formally presented the UK response to Jane Hutt, the Welsh government Finance Minister, in Cardiff today.

Wales’ Finance Minister, Jane Hutt

Thirty of the thirty one recommendations for the UK government, made by the Silk Commission, have been accepted in full or in part.

This will result in the devolution of many new financial powers as well as giving borrowing powers to the Welsh government.

The new financial powers announced in today’s publication are:

• fully devolving non-domestic business rates raised in Wales, so that the Welsh government budget benefits more directly from growth in Wales
• ability to create new taxes with the UK government’s agreement
• tools to manage these new tax powers:
  • creation of a cash reserve that the Welsh government can add to when revenues are high, and utilise when revenues are below forecast;
  • limited current borrowing powers if there is insufficient funding in the cash reserve to deal with revenue shortfalls

This follows on from devolved financial powers announced by the Prime Minister and Deputy Prime Minister, earlier this month:

• borrowing powers for Welsh Ministers
• landfill Tax and Stamp Duty Land Tax in Wales devolved to ensure the Welsh government has an independent funding stream to pay back the money it borrows
• Assembly will be able to hold a referendum so that the people of Wales can decide whether some of their income tax should be devolved;
• prior to the tax raising powers coming on-stream, the Welsh government will have early access to existing limited borrowing powers to use for M4 improvements

The Secretary of State for Wales, David Jones said:

“Through this package of powers we are announcing today, we are giving the Welsh government the tools to make the right investments in Wales”.

“Infrastructure investment is vitally important to delivering long-term, balanced economic growth across the UK. This package of powers will enable the Welsh government to invest immediately in the areas of infrastructure it leads on, such as the key routes on the trans-European road network – the M4 and the North Wales Expressway”.

Jane Hutt said:

“Today’s announcement represents a good deal for Wales, and a big step forward for devolution.

“It is an important milestone on a journey that begun back in 2008, when we established the Holtham Commission to review our funding and fiscal levers.

“Last year, our two Governments agreed a Joint Statement on financial reform, which was an important stride forward towards securing a fairer funding settlement. I am glad that today’s publication by the UK Government reiterates its support for that process.

“Over the coming weeks, we will need to clarify the details of how the full package will be implemented, and I look forward to working with the Chief Secretary on this.”