Saturday, 20 February 2010

Gerry puts out the candles

Posted on This is My Truth on 20 February

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 effeciveness 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...

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