While reading this story about the proposed Scottish Oil Fund that will be established when Scotland becomes independent, I noticed that HM Revenue and Customs had only yesterday published, for the first time, a set of "experimental" figures which estimate the tax take from the four nations/regions of the UK. The links to the documents are on this page.
For Wales this is a major first, and its importance cannot be overestimated. This information has been produced for some time for Scotland in the form of GERS (Government Expenditure and Revenue Scotland) and for the Six Counties in the form of NINFBR (Northern Ireland Net Fiscal Balance Reports) but the Welsh Government has never asked for or itself produced an official equivalent for Wales ... although estimates have been produced by Oxford Economics and by the Holtham Commission.
I know Gerry Holtham has urged the Welsh Government to follow the example of both Scotland and the Six Counties, and he believes they have not done so because the situation is so serious in Wales that they think it would be better not to tell the patient exactly how bad things are. That's one way of looking at it. The less charitable explanation for their refusal to do so is that no government would want to draw attention to how bad things are because it would only increase public pressure on them to do something about it.
For me, it is only by finding out exactly how bad the economic situation is in Wales that we will be able to properly direct our efforts to improve it. And indeed this is reflected in Plaid Cymru's renewed emphasis on our economic performance in launching Offa's Gap last year. Owen Donovan did a comprehensive analysis of the situation here.
This is what HMRC say about the information they've now published:
This publication apportions total UK tax receipts, tax credits and benefit payments administered by HM Revenue and Customs to England, Wales, Scotland and Northern Ireland.
It attempts to measure the true economic incidence of taxation, based on the underlying activity, which can often differ from how or where the tax receipts are collected. Actual administrative data is available for capital gains tax, inheritance tax, stamp duty land tax, child and working tax credits and child benefit; for the others, the estimates are arrived at using best available data and statistical techniques, including assumptions and adjustments where necessary. The numbers in this publication do not represent an estimate of the tax revenue that would be raised if each tax was set at the devolved level.
All statistical methodologies have an inherent degree of uncertainty and, for this publication, a variety of alternate methodologies could justifiably be applied, each leading to a different estimate.
The full data are available on the page I linked to above, but I have extracted the cash and percentage figures for Wales for 2012-13. Wales has 4.8% of the UK population.
Based on actual administrative data
Capital Gains Tax ... £64m ... 1.6%
Inheritance Tax ... £83m ... 2.7%
Stamp Duty Land Tax ... £139m ... 2.0%
Child and Working Tax Credits ... £1,545m ... 5.2%
Child Benefit ... £573m ... 4.7%
Based on estimates
Total Income Tax (Gross of Negative Tax Credits) ... £4,763m ... 3.1%
National Insurance Contributions ... £3,689m ... 3.6%
VAT ... £4,170 ... 4.1%
Corporation Tax (onshore) ... £830m ... 2.4%
Bank Levy ... £30m ... 1.9%
Bank Payroll Tax ... £0m ... 1.9%
Fuel Duties ... £1,311m ... 4.9%
Stamp Tax on Shares ... £4m ... 0.2%
Tobacco Duties ... £451m ... 4.7%
Spirits Duty ... £143m ... 4.9%
Beer Duty ... £183m ... 5.4%
Wine Duties ... £139m ... 3.9%
Cider Duties ... £27m ... 8.4%
Betting and Gaming ... £68m ... 4.1%
Air Passenger Duty ... £8m ... 0.3%
Insurance Premium Tax ... £124m ... 4.1%
Landfill Tax ... £50m ... 4.5%
Climate Change Levy ... £35m ... 5.5%
Aggregates Levy ... £22m ... 8.2%
Customs Duties ... £103m ... 3.6%
Other Taxes ... £17m ... 4.8%
Total ... £16,337m ... 3.5%
It's not a pretty picture. We have 4.8% of the UK population, but generate only 3.5% of the UK's tax receipts. In terms of the big taxes, we generate only 3.1% of income tax, 3.6% of NI contributions, 4.1% of VAT and 2.4% of corporation tax.
However it must be emphasized that many of these figures are based on estimates, that these estimates are each based on a particular methodology, and that different methodologies might result in different figures. This why, for example, the Scottish Government produces GERS instead of relying entirely on UK Government figures. It is now open to the Welsh Government to do the same thing if it believes that using different methodologies will present our fiscal situation in a better light.
In terms of political reality, the publication of these figures is almost guaranteed to spur the Welsh Government into producing a GERW because they no longer have the option to hide how bad the situation is from the Welsh people, and will now have to spend effort trying to make the situation appear less bleak in order to lessen the pressure on them to improve things. Some of it will be justified (for the UK Government has no incentive to make things look good for Wales, and may well have made wrong assumptions that need to be corrected) but some of it will be spin. We will have to decide which is which, in just the same way as people in Scotland have to decide between differing interpretations of Scotland's overall fiscal situation. That's politics.
However the importance of the publication of this data by the UK Government (and the intention is to publish them every year) is that official figures are now in the public domain to be analysed, discussed and argued over. It is only by facing up to how bad things are—and what, in particular, is bad—that we can target our efforts towards making things better.