Devolving National Insurance and VAT to Wales

On Thursday, there was a lengthy debate in the Commons about the Silk Commission. While waiting for some paint to dry, I caught up with it on Democracy Live, and thought that people would like to see this short exchange from it:

     

Here we can see Huw Irranca-Davies and Peter Hain making a strong case for varying the rates of two different taxes because it would have a significant and positive impact on jobs in Wales.

But look at the context in which they are doing it. They have to ask the Tories and LibDems in the UK government to do it, because they are in opposition and therefore can't do it themselves. And the UK government will of course refuse, because they have their own ideas of what is good for the economy of the UK as a whole, and aren't going to change those ideas because people in Wales think differently.

Yet why should it be this way? If these tax changes are good for the economy and job prospects in Wales, why shouldn't the Welsh government have the power to do in Wales what the UK government refuses to do in the remainder of the UK?

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Now of course it might just be that Labour are proposing this because they are in opposition, because it makes a good sound bite, and because they know full well that the UK government won't do it. That's the luxury of not being in power.

But let's assume that they are in fact being sincere, and genuinely believe that these tax changes would benefit the Welsh economy in these difficult times. We'd have to do the sums, of course: working out how much revenue will be lost because of these tax cuts; but balancing this against fewer people out of work, and fewer building firms with not enough work on their books to keep them going ... but if the calculation was positive, why shouldn't we be able to go ahead and do it?

That's what devolution of taxation powers to Wales would mean for Wales. Instead of pleading with the Tories in Westminster to do something for Wales, and then blaming them for not doing it, we would be taking some responsibility for ourselves.

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It's ironic. Here was a debate in which Welsh Labour MPs queued up to say how much they were reticent about—or completely hostile to—the Silk Commission looking into taxation powers for Wales, suggesting that it was all a sinister Tory plot. But in it, they inadvertently gave us a perfect example of how useful these powers would be to provide more jobs and boost the Welsh economy.

Huw Irranca-Davies

I want to comment on a speech that Huw Irranca-Davies made last night about the referendum on primary lawmaking powers, at least in so far as it was reported in today's Western Mail:

I don’t think we can have just a sterile passage of time where we entirely park the results of the Convention. This is why the Labour Party will be expected to take a lead in describing the process that needs to be taken forward.

The most essential part of that process is finding a plan to engage with the wider public in Wales and ask their views on these issues, not to launch into some sort of Yes campaign solely driven by the political elite.

Labour must lead on powers referendum - Western Mail, 19 November 2009

Huw is a Labour MP who I have some time for, and I believe I can understand the concerns he expressed about what Labour's response to Sir Emyr's report should be. There is no doubt in my mind that Labour need to reach a common position in the next few weeks, and then come out firmly on one side of the fence or the other.

What concerns me is the phrase "finding a plan to engage with the wider public in Wales and ask their views on these issues". It concerns me because that seems to be a very good description of what the All Wales Convention has spent the last year-and-a-half doing.

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That is how most people will understand his speech, yet I wonder if that is what he in fact means. From my perspective, the publication of the AWC's report has already set out the case for a referendum in clear and decisive terms. But the way that referendum campaign is now fought is another matter entirely. This is what we need to concentrate our minds on.

Daran Hill wrote what I thought was an excellent piece about it yesterday. This is an extract of what he said:

... there remains a degree of disconnect between the Assembly and the population of Wales – who also happen to be the Welsh electorate.

This should worry everyone who supports more powers for the Assembly. Because in as much as yesterday’s report from the All Wales Convention provides a solid evidence base on which to build, it also illustrates the huge knowledge gap that still exists. The worry – and it is the same worry as in 1997 – is that, come a referendum, lack of knowledge will lead too many people into the camp of resisting change. When in doubt, stay at home or stay with what you know – or don’t know, actually.

When we move to referendum, which looks and feels increasingly like Autumn 2010, our actions and strategy need to reflect what has gone before.

Beware the entitlement to rule - WalesHome, 18 November 2009

As National Organizer of the 1997 Yes Campaign, Daran probably has a better idea than anybody about what will we need to do in order to win this referendum. For even though lots of people have talked about it, we do not yet have any sort of Yes Campaign for this referendum.

We must not fall into the trap of thinking that we have to wait for public opinion to come round, nor that we should fight the referendum only when we know that the outcome is a foregone conclusion. We have to make the case for a Yes vote.

This is not something that can be done by another few years of consultation. Consultations are neutral, but the time for neutrality has passed. It is now time to unashamedly move on.

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Now of course this will involve engagement with the public, as Huw I-D rightly said. We need to know exactly what people think and why they think it. The most fundamental part of trying to persude or convince anybody to vote Yes is to listen to them, to understand them and to and respect them. Without that, we do not have a hope of convincing them.

We know, from what the GfK NOP Social Research Report tells us, that a very substantial part of the public have a basic understanding of the issues involved, and that more people will vote Yes than vote No, by a margin of some 10%. But those same surveys reveal that a very significant number do not understand the issues. Here is an extract from their report:

The research demonstrated that there was a poor understanding of a number of the terms surrounding the debate on increased powers. Critically, the term ‘full law-making powers’ was not well understood.

• Findings from the second wave of quantitative research suggested that understanding of the concept of ‘full law-making powers’ has not increased since Wave 1. The majority of respondents recognised that full law-making powers mean that the Assembly “will have more powers in certain areas of Welsh life such as health, education, housing and tourism” (80% in Wave 1, 81% in Wave 2);

• Confusion was evident over whether the Assembly “will have law-making powers in all areas of Welsh life”, 48% of respondents in Wave 1 and 49% in Wave 2 incorrectly thought this was true;

• Three in ten respondents incorrectly thought it was true that the Assembly “will be able to change the basic rate of income tax” (30% in Wave 1, 28% in Wave 2);

• A quarter of respondents seemed to equate full law-making powers with independence. Twenty six per cent of respondents in both waves incorrectly believed it was true that “Wales will be independent of the UK”.

The qualitative research also shed light on the effects of poor understanding of ‘full law-making powers’, which was frequently misinterpreted as meaning that the Assembly would be able to make decisions in all areas of Welsh life. This could result in an impression that the debate on increasing law-making powers was one of independence, a less popular option. In this sense, poor understanding hindered the debate on increased powers.

Executive Summary
Full Social Research Report

To repeat:

     28% think that voting Yes will give the Assembly tax setting powers
     26% think that voting Yes equates with independence

Personally, I can't blame people for this "misunderstanding" of what "full lawmaking powers" means. It was always the wrong way of putting it, and this goes a long way to explain why the final poll showed a margin of 47% to 37% in favour, but that when YouGov asked the question in terms of "increased" rather than "full" powers this week for ITV Wales the margin was 51% to 31% in favour.

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What is now different is that it's no longer up to the AWC, or any similar neutral body, to present the options. The AWC have taken things as far as they can. It is now up to us, as non-neutrals, to present our respective cases either to vote Yes or to keep things the way they are. As these polls show, the way we present our arguments when we set up the Yes Campaign will make all the difference. The ball is in our court.

There is no room for politicians to play some sort of role as an "honest broker" as another Huw, Huw Lewis, said yesterday. An honest broker is by definition on neither side of the argument ... and anyway, who would trust any politician who set himself up as being "neutral" on this issue? Not least someone who hopes to become the leader of his party.

To make a case, you have to take sides. Any politician in Wales who claims that he hasn't got an opinion one way or the other simply cannot be taken seriously. Like Peter Hain, to pretend to be in favour of the Assembly getting primary lawmaking powers in those areas for which it already has devolved responsibility, yet to qualify it by always saying " ... but only in a few more years" is not going to fool anyone.