The Holtham Commission

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Post  Admin on Thu 4 Dec 2008 - 5:01

The One Wales agreement between Labour and Plaid Cymru included the following commitment:
There will be an independent Commission to review Assembly Funding and Finance, to include a study of the Barnett Formula, of tax-varying powers including borrowing powers and the feasibility of corporation tax rebates in the Convergence Fund region, including the implications of recent European Court of Justice Rulings in this area.
This is formally known as the Independent Commission on Funding and Finance for Wales, and is made up of a small panel of experts, namely:

The Holtham Commission Holtham2 The Holtham Commission Davidmiles2 The Holtham Commission Paulberndspahn2
Gerald Holtham David Miles
Paul Bernd Spahn
The Holtham Commission Icffw

Its terms of reference are to:

• look at the pros and cons of the present formula-based approach to the distribution of public expenditure resources to the Welsh Assembly Government; and

• identify possible alternative funding mechanisms including the scope for the Welsh Assembly Government to have tax varying powers as well as greater powers to borrow.

In order to understand the need for change, it would be useful to look through the UK Treasury's Statement of Funding Policy for the devolved administrations, which explains in detail how the current arrangements work.

Statement of Funding Policy

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Post  Admin on Thu 4 Dec 2008 - 5:04

Syniadau is grateful to have received a copy of one of the submissions to the Holtham Commission. This can be downloaded by clicking the link below:

Submission to the Holtham Commission.pdf

In essence this submission falls into two parts:

• The funding of the Welsh Government
• The expansion of the fiscal and financial powers of the Welsh Government

It has been offered in order to stimulate a general debate on the subject, and perhaps also encourage others to make a submission. It should however be noted that time is limited, as submissions need to be received by 15 December 2008. Details about how to submit evidence are here:

How to submit evidence

If others have made their own submissions they are encouraged to post them here, or perhaps some might want to post a draft for comments before they finalize it.

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Post  MH on Wed 21 Jan 2009 - 1:24

There was an article in the Western Mail today about Plaid's submission to the Holtham Commission.

Plaid borrowing proposals to make up for past underfunding

WALES should in future get more than its fair share of money from the UK Government to make up for underfunding in the past, according to Plaid Cymru. Plaid is also proposing that the Assembly Government should be given tax-varying and borrowing powers.

The plans have been set out by the party’s economics adviser, Dr Eurfyl ap Gwilym, in a submission to the Independent Funding and Finance Commission. The commission, which is due to produce an interim report by the summer, is considering whether suggestions that Wales is losing up to £1bn a year under current arrangements stand up to scrutiny.

The Plaid submission states: “In economic terms Wales has long been a relatively poor country compared with other parts of the UK. The reasons for this are complex. Wales was slow to urbanise; was very dependent on an agricultural sector which suffered from a high proportion of poor quality, low productive land; and when industrialisation came it was concentrated initially on extractive industries with much of the added value being contributed elsewhere.

“Viewed from a UK perspective such specialisation may have made sense but it left Wales with an economy highly dependent on a few business sectors all of which suffered long-term decline over much of the 20th century – agriculture, coal, steel and slate quarrying. Although the Assembly Government is now making considerable efforts to strengthen and diversify the Welsh economy, most of the significant levers remain in the hands of Whitehall.

“Thus Wales has the challenge of dealing with this legacy, but during much of the last 100 years or more UK governments have regarded Wales as being on the periphery and have sought at best to ameliorate economic weakness rather than address the root causes.”

Last night Dr ap Gwilym said: “In Plaid we have long argued that the Barnett formula (the current population-based calculation for allocating money to the devolved nations) does not give weight to the special needs of Wales. But if there is to be a new formula, it won’t be good enough simply to divide the cake on the basis of need at that time. The formula should also take account of the need to remedy the existing disadvantage.”

So far as tax-varying powers are concerned Dr ap Gwilym said: “We would especially like the Assembly Government to be able to decrease the rate of corporation tax. That would be a good way of attracting industry to Wales and encourage new businesses to set up.

“Giving the Assembly Government borrowing powers would enable it to fund big infrastructure projects to help the economy in a way that is not currently possible.”

He added: “One of the disadvantages of the Barnett formula is that the amount of money allocated to Wales is determined to a large extent by decisions made in England about the funding of public services in England.”

Western Mail, 20 Jan 2009
I have been sent a copy of the full submission, which can be downloaded here:

Plaid Cymru's Evidence to the Holtham Commission

The inadequacy of the current fiscal arrangements for the Assembly, and the urgency of finding a solution, has been highlighted by the news yesterday that one of the larger hospitals in the highly regarded Clinical Futures building programme in Gwent has been put on hold, as mentioned in this post.
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