Commission on Devolution in Wales

Part of Oral Answers to Questions — Work and Pensions – in the House of Commons at 4:43 pm on 18 November 2013.

Alert me about debates like this

Photo of David Jones David Jones The Secretary of State for Wales 4:43, 18 November 2013

Since the general election, the Wales Office has made investment in infrastructure its No. 1 priority to deliver growth in the Welsh economy. This Government have already committed over £2.25 billion to new infrastructure that will benefit Wales, directly or indirectly. We are spending almost £2 billion to modernise the rail network, including electrifying the Great Western main line to Swansea and the railways serving the south Wales valleys. We are investing £250 million to build a new prison in north Wales that will create up to 1,000 new jobs and require a supply chain that will bring an estimated £28 million a year more into the local economy. We have also committed £57 million to bring superfast broadband to Wales, a key element of a modern infrastructure network. Alongside that, Hitachi’s investment in new nuclear at Wylfa Newydd is a great opportunity to create jobs and drive economic growth across north Wales.

Earlier this month, I confirmed in a written statement to the House that we would enable the Welsh Government to use their existing borrowing powers to start work as soon as possible on the sorely needed upgrade to the M4 around Newport, tackling the congestion that my right hon. Friend the Prime Minister has described as

“a foot on the windpipe of the Welsh economy”.

Today, in making our full response to the Silk commission’s recommendations, the Government are unveiling a new and extensive package of financial powers that will be devolved to the National Assembly for Wales and the Welsh Government. I would like to commend my right hon. Friends the Chancellor and the Chief Secretary to the Treasury, and Jane Hutt, the Welsh Minister for Finance, for the positive and collaborative approach taken in agreeing this package of powers, which demonstrates the strength of the United Kingdom, and the flexibility and adaptability of devolution within our Union.

The Silk commission made 33 recommendations, 31 of which were for the Government to consider. Today we are accepting, in full or in part, all but one. We are devolving many new financial powers to the National Assembly and the Welsh Government, potentially giving the Welsh Government control over more than £3 billion of tax revenue, with commensurate levels of borrowing. We are providing the Welsh Government with additional tools to invest in the areas they are responsible for, to enable them to upgrade Wales’s infrastructure and help to quicken the pace of economic growth. This will facilitate the improvement of Wales’s deteriorating road network—not only the M4, which I have mentioned, but the other key Welsh trans-European route, the north Wales expressway.

The devolution of tax and borrowing powers will also make the Assembly and the Welsh Government more accountable to the people of Wales who elect them. Since devolution, the Assembly and the Welsh Government have been accountable only for how they spend taxpayers’ money; they will now become more accountable for how they raise it. The Government’s response to the Silk commission’s first report builds on the announcement made by the Prime Minister and the

Deputy Prime Minister earlier this month, and sets out in detail the devolved financial powers we are giving to the National Assembly for Wales. We will give Welsh Ministers borrowing powers, so they can invest in the capital infrastructure I have described. We will devolve landfill tax and stamp duty land tax in Wales, ensuring that the Welsh Government have an independent funding stream to pay back the money they borrow.

We will also provide for a referendum to take place, so that people in Wales can decide whether some of their income tax should be devolved to the Welsh Government. Subject to the approval of the people of Wales in a referendum, we will deduct 10p from each of the main UK income tax rates in Wales, with the Welsh Government able to set an unrestricted Welsh rate of income tax for all Welsh taxpayers. This is consistent with the system being introduced in Scotland and will increase the accountability of the Welsh Government, while avoiding significant risks to UK revenues that would result from different Welsh rates for each band.

We will also fully devolve non-domestic business rates raised in Wales, so that the Welsh Government budget benefits more directly from growth in Wales; enable the National Assembly for Wales to create new taxes, with the UK Government’s consent; and devolve the tools to manage these new powers. A cash reserve will be created that the Welsh Government can add to when revenues are high and utilise when they are below forecast. We will also provide the Welsh Government with limited current borrowing powers to deal with shortfalls if their cash reserve is insufficient.

I was pleased that Carwyn Jones, the First Minister of Wales, welcomed the Prime Minister and Deputy Prime Minister’s announcement earlier this month. This package of powers gives the Welsh Government additional tools to invest in Wales to rejuvenate the Welsh economy, which has languished behind the rest of the United Kingdom for far too long. This package will make the Assembly and the Welsh Government more accountable to the people they serve and place important taxation levers in the hands of the Welsh Government, which, if used wisely, can help to make Wales a more prosperous place. This is a once-in-a-generation opportunity for Wales. I hope that the Welsh Government will rise to the challenge and look beyond the M4 to invest wisely and strategically across the whole of Wales. I will place a copy of the response in the Libraries of both Houses, and I commend this statement to the House.