Spending Review and Autumn Statement: Wales

Huw Irranca-Davies Excerpts

Tuesday 15th December 2015 Westminster Hall

[Alun Cairns]

The surveyor and architect of fair funding for Wales, Gerry Holtham, analysed the position and came up with a range of solutions. After the autumn statement, he said that it was a fair settlement. That is the fundamental point. There will be political commentary from all around, but the person commissioned by the Welsh Government to provide the assessment and establish the financial relationship between the UK Government and the Welsh Government has said that it is a fair settlement, and that is testament to the strength of the Administration in Westminster, which has delivered on something that has been talked about, but never delivered, by the Opposition.

[Huw Irranca-Davies (Ogmore) (Lab)]

My apologies, Mr Hollobone, for arriving a minute into the debate. On the 115% Barnett floor, why is it only for the term of the Parliament? What is the Government’s thinking behind that? The Minister will be aware of the worry that there is no long-term commitment. I am sure he will say, “Governments can only bind one Parliament”, but what is his thinking, long term?

[Alun Cairns]

Having been a Minister, the hon. Gentleman will know that no Government can bind another Government, though I would largely welcome a Government that could bind a Labour Administration, hopefully in the long-term future, to prevent them from pursuing the sorts of policies that they would want to introduce. Clearly, that is not how democracy works. It is obvious that this Administration can only plan for this Administration, and it would be wholly wrong and inappropriate to come up with commitments that bind any future Administration. The hon. Gentleman tried hard to draw something from me, but I hope he will respect the argument that he would be making, were he standing in my position.

I hope that Opposition Members recognise the commitment. The surveyor and architect of fair funding said that this was a “very reasonable” and fair settlement. Any political rhetoric on the issue needs to recognise the comments of that independent commentator.

Another element of the autumn statement enabled the Welsh Government to alter Welsh rates of income tax without a referendum. That offers exciting opportunities to attract new investors, and tax powers to reform the Welsh economy. The Welsh Government can take on more responsibility for how they raise money, as well as how they spend it. The National Assembly will finally take its place alongside other mature legislatures by being accountable to the people it serves. The new tax-raising powers put important fiscal levers in the hands of the Welsh Government, which they can use to grow the Welsh economy, to deliver new opportunities and to attract new investment.

Silk estimated that a 1p cut in the higher rate of tax would equate to a drop in revenue of £12 million. That is only a little more than the Welsh Government reportedly lost selling land in Monmouthshire, for example. Think of the opportunities that the cut of one penny could create: tens of millions of pounds might be spent on business support, or other discrete areas of the Welsh Government. People can now make a comparison: should they pursue one policy, given its cost to the taxpayer, or another, such as reducing the rate of income tax to attract investors and entrepreneurs to Wales?

[Huw Irranca-Davies]

The leader of the Conservative party in Wales has opened up the front on this matter by proposing a 5p drop in the top rate of income tax. That would equate to £40 million or £50 million, which is not a drop in the ocean in terms of the Welsh budget. It is curious that the leader of the Conservative party in Wales thinks that that is the best way to incentivise entrepreneurship, rather than investment in infrastructure, the innovation funds and everything else. Why does it have to be a cut in the top rate of tax? How many people on the frontline of our public services, including nurses and the police, have already been cut? Have the Conservatives made those calculations when committing to a 5p cut in the top rate of income tax?

[Alun Cairns]

The hon. Gentleman is demonstrating his misunderstanding, because he compares capital projects with revenue projects. The rate of income tax would affect revenue projects only. These are the sorts of policies that could be presented in a manifesto. People can choose whether they want to see money spent on pet projects of the Welsh Government or a cut in income tax. People will make their choices according to their objectives, but it is up to each political party to make its case. The whole point about the autumn statement is that it empowers the Welsh Government to make the case on whether it should be spending more or less.