I thank my right hon. Friend for that answer, and I welcome his welcome for the work of the Silk commission. We have an opportunity to enable our Assembly to be truly accountable—not just for the money that it spends by way of the block grant, but for the money that it raises through taxes, through a partial devolution of income tax. Surely that would be an important facet of a strengthened and accountable
National Assembly. Will my right hon. Friend guarantee that part 1 of the Silk recommendations will be enacted in legislation during this Parliament?
I can certainly confirm that we will respond in full well before part 2 of the Silk commission proceedings is concluded. We aim to provide our full response to part 1, about the fiscal aspects of further devolution to Wales, by spring this year.
I strongly agree with my hon. Friend’s praise for the report, which is thorough and thoughtful. It is radical; it suggests devolving up to about a quarter of total money spent in Wales to the Welsh Assembly itself. It actually goes further in important respects, notably on varying income tax rates, than the Calman-like process on which it was modelled.
The Silk commission recommended that the National Assembly for Wales should become more financially accountable through being given responsibility for raising tax. Does my right hon. Friend believe that this can happen only after a referendum takes place to secure the support of the Welsh people, even if a firm commitment is made in the manifesto of the party or parties that form the next Government?
As my hon. Friend knows, the Silk commission has on it representatives of all four parties in the Assembly, and it was a unanimously supported recommendation that the change in income tax recommended in part 1 should be implemented only once a referendum had taken place. Obviously, we will look at this very closely. We are acutely aware that it represents a cross-party approach within Wales itself.
As the hon. Gentleman may know, back in October the Chief Secretary to the Treasury made it clear that we would work with the Welsh Administration to look at the convergence or, as is the case at the moment, divergence of funding in Wales and elsewhere in the United Kingdom. We have also made it clear that while there is a legitimate debate around the future of the Barnett formula, our priority remains the stabilisation of the public finances.
Given the need for change, supported by all parties on the Silk commission, and the Deputy Prime Minister’s enthusiasm, together with that of his party, will he make every effort to ensure that part 1 of Silk is legislated on during this Parliament?
As I said, we all need to take a careful look at part 1 and take a collective decision within the coalition Government on how we respond to it. As Ministers in all parts of the coalition have said, it is an extremely thorough and thoughtful piece of work representing a cross-party approach in Wales, and we will respond to it with similar seriousness before the spring of this year.
Has my right hon. Friend given any consideration to communities that straddle the Anglo-Welsh border—for instance, the Chester economic sub-region, including north Wales and Chester—and the impact that this will have on people who live and work on both sides of the border?
My hon. Friend has identified one of the issues that makes some of the tax recommendations in part 1 of the Silk commission slightly more complicated in certain respects than the devolved tax arrangements in Scotland, principally because the border area between England and Wales is more populous than the border areas between Scotland and England. That is one of the things that we are seeking to address right now in our internal deliberations.
In the very slim mid- term review, a commitment is given to the Government’s responding to the Silk commission, as the Deputy Prime Minister has confirmed this morning. Will he give a commitment that there will be no unilateral reduction in the block grant to Wales?
I think we have done better than that. As the hon. Gentleman knows, back in October the Chief Secretary to the Treasury made it clear that we would work with the Administration in Cardiff before each public spending review to monitor the convergence or divergence between the funding settlements in both places. This commitment has not been made by previous Governments here in Westminster. That is a demonstration of our willingness to respond to some of the concerns about the future funding arrangements within the United Kingdom, particularly as they affect Wales.