Wales: Current devolution proposals 2014-15

Standard Note: SN/PC/07066

Last updated: 3 March 2015

Author: Hazel Armstrong

Section Parliament & Constitution Centre

The independence referendum in Scotland raised interest in aspects of devolution and

increased the pace of change throughout the UK. In Wales there are also significant

changes in progress and new proposals which have been announced.

This note traces proposals for further devolution, including a change to a reserved powers

model, which has been agreed, following the second report of the Silk Committee. A

commitment was announced by the UK Government in November 2014.

On 27 February 2015 the UK government published proposals for further devolution to

Wales. The package formed part of the St David’s Day Agreement between the main political

parties in Wales. The full proposals were published as Powers for a purpose: towards a

lasting devolution settlement for Wales.

The Wales Act 2014 received Royal Assent on 17 December 2014, and once brought into

force, will bring enhanced powers to the Welsh Assembly and Welsh Government over

elections and taxation. Further details can be found in a number of House of Commons

Library publications including:

Paul Bowers et al, Wales Bill 2013-14 , Research Paper 14/19, 27 March 2014

Further details on devolution proposals for Scotland and on the way the UK Parliament

legislates for England can be found in House of Commons Library publications including:

Hazel Armstrong, Paul Bowers, Scotland: Devolution proposals, Standard Note SN/PC/6987,

27 November 2014

Paul Bowers, Richard Kelly, The English Question, Standard Note SN/PC/7027, 18

November 2014.

Richard Keen, England, Scotland and Wales: MPs & voting in the House of Commons,

Standard Note SN/SG/7048, 5 December 2014.

This information is provided to Members of Parliament in support of their parliamentary duties

and is not intended to address the specific circumstances of any particular individual. It should

not be relied upon as being up to date; the law or policies may have changed since it was last

updated; and it should not be relied upon as legal or professional advice or as a substitute for

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This information is provided subject to our general terms and conditions which are available

online or may be provided on request in hard copy. Authors are available to discuss the

content of this briefing with Members and their staff, but not with the general public.

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Contents

1 Background: what is devolved and what might further devolution include? 4

2 Silk Commission 6

2.1 The Silk Commission: First report 6

2.2 The Silk Commission: Second report 7

3 Developments in Scotland 10

4 Political parties’ positions 2014 12

5 Government proposals, November 2014 16

6 St David’s Day Agreement, February 2015 18

7 Academic and other commentary 21

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1 Background: what is devolved and what might further devolution include?

Matters are devolved in Wales by virtue of being specified in legislation. This is sometimes

referred to as a conferred powers model of devolution.

The Government of Wales Act 1998 created the National Assembly as a corporate body –

with the executive (the government) and the legislature (the Assembly itself) operating as

one. The areas devolved to the Welsh Government included health, education, language and

culture and public services.

In contrast to the primary law-making powers given to the Scottish Parliament, the Act limited

the National Assembly to the making of secondary legislation only when authorised by the

UK Parliament. Such powers were broadly equivalent to those previously held by the

Secretary of State for Wales.

Further powers were devolved in the Government of Wales Act 2006, which also separated

the National Assembly and the Welsh Government. The 2006 Act gave the National

Assembly powers to make laws for Wales on specified matters within 20 broad subject areas,

known as “fields”. At first the fields contained relatively few matters. Under the provisos ot the

Act a referendum was held in March 2011 to take on primary law making powers over a

greater number of matters, still grouped within 20 fields.

Since 2012, several instances of dispute on the scope of these devolved powers have led

the UK Government to refer Welsh legislation to the UK Supreme Court for a ruling. In

particular the Judgement of the Supreme Court delivered in July 2014, relating to the

Agricultural Sector (Wales) Bill, made it clear the current model might confer considerably

wider powers than the UK Government had intended in the 2006 Act. The Presiding Officer

of the National Assembly is required to rule on whether each new piece of Welsh draft

legislation is within the competence of the National Assembly. This series of referals to the

Supreme Court has led the current Presiding Officer, Dame Rosemary Butler, to express her

frustration with the current model of devolution. She stated that a lack of clarity on what is or

is not within competence was an issue of democracy because it makes it difficult for voters to

understand their constitution.

In 2012 the UK government set up The Commission on Devolution in Wales to review the

operation of devolution and make recommendations for development. The first set of

recommendations provided the basis of a Bill presented to Parliament in 2013, which will

empower the National Assembly to raise some of its own finance for the first time. Stamp

duty land tax and landfill tax are to be devolved. The possibility is created of devolving or

introducing new taxes. The potential is also created to devolve some powers over income

tax, if Wales were to vote in favour of this in a referendum. The Bill does not call a

referendum itself: this would be done subject to approval by both Houses of Parliament and a

two-thirds majority in the Assembly. The Bill would also give the Assembly greater borrowing

powers, including for capital expenditure. The financial measures introduced by the Wales

Bill were broadly similar to those introduced for Scotland in the Scotland Act 2012. The

Wales Bill 2013-14 received Royal Assent on 17 December 2014. For further information see

Library Research Paper RP14/19, 27 March 2014. …

The Commission on Devolution went on to consider the constitutional aspects of the

settlement and in 2014 made a recommendation to change from a conferred powers model

to a reserved powers model, as used for Scotland. That would mean that all matters would

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be devolved to the Welsh Assembly and Government unless specifically listed and reserved

to the UK Parliament in future legislation.

For Scotland the reserved matters include constitutional issues such as the Crown, the Union

of Scotland and England and the UK Parliament, foreign affairs and related fields such as

defence, regulation of international trade, and international aid, and economic matters such

as currency, most aspects of fiscal and monetary policy, financial services regulation and

action against money laundering. National security, ownership of oil and natural gas, nuclear

energy, social security and pensions, and immigration and nationality are reserved, as are

most aspects of data protection and freedom of information, and bioethical issues such as

abortion, embryology and xenotransplantation.

Moving to a reserved powers model has been the stated preference of the current Labour

Party Government of Wales for some time. On 11 November 2014 a Minister from the Wales

Office announced in the Lords, during debate on The Wales Bill 2013, that the UK

government had accepted the recommendation to change to a reserved powers model and

that it was intended to produce a framework and set of commitments agreed by all political

parties by St David’s Day (1 March) 2015.

That commitment was further announced by the Prime Minister, David Cameron, in Cardiff

on 27 February 2015. He referred to a new model of devolution described as:

In Scotland – where there is a so-called Reserved Powers model. The default

position is that everything is devolved except those things that are reserved by

Westminster.

But in Wales it has been the reverse. Nothing has been devolved except those

specific things which Westminster legislates to let go of.

Now, today’s agreement will change this.

Introducing the Reserved Powers model to Wales will mean much greater

clarity about the responsibilities of each Parliament and each government

respectively, bringing more transparency to the operations of government.1

The Command Paper2 published with the Parties agreements and proposed way ahead, also

contained an Annex giving a checklist of issues to be considered as part of the process of

moving to a new model.

Issues to be Considered in moving from a Conferred to a Reserved Powers

Model

This checklist sets out what needs to be considered in preparing a reserved powers

model for Wales. This is not an exhaustive list.

What subjects need to be delivered on a UK-wide basis to ensure that citizens

throughout the UK are subject to the same obligations and receive the same rights and

protections?

What subjects are listed as conferred in Schedule 7 to GoWA? What are the

exceptions to those subjects reserved to the UK Parliament? Does the drafting of the

1 Welsh devolution, St David’s Day Agreement, News Release, Prime Minister’s Office, 27 February 2015. 2 Powers for a purpose: towards a lasting devolution settlement for Wales, Cm 9020, February 2015.

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reservation need to take account of developments in these areas since they were first

drafted?

What other subjects are considered to be the sole responsibility of the UK Parliament,

even if not listed as an exception in GoWA? (the “silent” subjects)?

What exceptions are needed within the reservations to reflect any overlap between the

Assembly’s legislative competence set out in Schedule 7 and subjects which are

otherwise reserved?

Are any “carve-outs” needed from those exceptions to accurately reflect the scope of

the reservation?

What are the Minister of the Crown functions in devolved areas which have not been

transferred to Welsh Ministers? Should these be set out in a reservation?

What statutory evidence is there (in parliamentary and Assembly Acts, and Assembly

Measures) to support a subject being reserved or devolved?

What other evidence is there from each legislature in support of a subject being

reserved or devolved?

How does the interpretation of legal judgements have an impact on the boundary of the

devolution settlement?

How will the interactions between devolved and reserved functions work in reality? Is

the boundary coherent and workable?

Is there reasonable alignment between legislative competence and executive

competence in any subject area?

What are the views of interested parties (including the UK Government, the Welsh

Government and the Assembly Commission) about whether a subject should be

devolved or reserved? 3

2 Silk Commission

2.1 The Silk Commission: First report

The Commission on Devolution in Wales, chaired by Paul Silk, published its first report,

Empowerment and Responsibility: Financial powers to strengthen Wales, on 19 November

2012. The report made 33 recommendations to increase the financial accountability of the

National Assembly for Wales and make it responsible for determining a proportion of its own

budget for the first time. The UK Government took these forward in the Wales Bill 2014,

which was published as a draft Bill in November 2013 and presented as a Bill in March 2014.

For further details and information about the Bill’s provisions see Library Research Paper

14/19 and the SN…

The Wales Bill 2014 has completed consideration at Westminster and received Royal Assent

on 17 December 2014. The Welsh Government has opened a consultation on the collection

and management of devolved taxes in Wales, to implement new powers contained in the Bill.

A White Paper4 was published on 23 September 2014 and the consultation closed on 15

December 2014. This includes details on the devolved taxes Stamp Duty Land Tax and

3 Ibid, Annexe D. 4 Welsh Government, Collection and management of devolved taxes in Wales, WG22945, 23 September 2014.

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Landfill Tax, proposals for the establishment of a Wales Revenue Authority, plus measures

to encourage tax compliance and address tax avoidance.

2.2 The Silk Commission: Second report

The Commission published its second report, Empowerment and Responsibility: Legislative

powers to strengthen Wales on 3 March 2014. The Commission made 61 recommendations

to alter the devolution settlement for Wales. The most far-reaching of these would be a three

phase set of changes to move closer to a Scottish style arrangement:

Chapter 15 – Implementation

R.60 On implementation, we recommend a ten year programme of reform with

three phases:

a. implementation of administrative recommendations before the next United

Kingdom general election;

b. subject to endorsement through election manifestos, introduction through a

Wales Bill of a reserved powers model including the transfers of powers

recommended in this report; and

c. completion and implementation of the review of legislative devolution of other

aspects of the justice system by 2025.

Chapter 16 – Overall impact and looking to the future

R.61 On costs, we recommend:

a. transfers of powers should be accompanied by (and be conditional on)

transfers of funding being fully agreed between the two Governments in each

case, and by agreed changes to the Barnett formula comparability factors;

b. any additional costs to the Welsh Government, for example arising from

diseconomies of scale or transitional costs, should be kept to a minimum and to

levels which are absorbable within the Welsh Government’s budget; where

costs are particularly problematic to identify there should be further work by the

two Governments before devolution is agreed;

In its Press Statement launching the report the Commission gave support to the reserved

powers model and outlined possible new devolved matters:

Following a year-long review of the powers of the National Assembly for Wales,

the Commission found that the current settlement was overly complex; that

there was a need for Governments and institutions to work together better; and

that there was broad support for further devolved powers….

The Commission recommends moving from the current conferred powers

model of devolution to a reserved powers model. A reserved powers model,

which sets out the powers which are not devolved rather than the powers that

are, would clarify responsibilities and allow more effective, confident

governance. It would also bring Wales into line with the other devolved

administrations of the United Kingdom.

The Commission considered whether the National Assembly has the powers it

ought to have. While the report proposes no reduction in the existing powers of

the Assembly and no change in the majority of powers currently held by

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Westminster, it recommends the devolution of further powers in a number of

areas, including:

devolving most aspects of policing ensuring effective cooperation continues;

a phased approach to the devolution of the justice system, devolving the youth

justice system immediately with a feasibility study for the devolution of prisons

and probation to follow;

completion and implementation of a review of other aspects of the justice

system by 2025;

increasing the threshold for devolved consents for all energy generation from

50MW to 350MW;

aligning the devolved competence for water to the national boundary,

recognising the need for further consideration of the practical implications;

devolving powers in relation to ports, rail, bus and taxi regulation, speed and

drink drive limits;

strengthening the Welsh dimension of BBC governance within the UK Trust

framework and transferring the direct government funding of S4C from the UK

Government to the Welsh Government; and

specific recommendations on a range of other subjects such as the devolution

of teachers pay.

The Commission also makes a number of recommendations to promote more

effective scrutiny and performance within the National Assembly, including:

short term improvements, such as greater flexibility on the number and size of

committees, increased numbers of research staff and better use of Assembly

Members’ time; and

more backbench Members of the National Assembly.

To improve the way devolution works, the Commission recommends more

effective relations between legislatures and Governments. As far as

Governments are concerned, the Commission recommends a Welsh

Intergovernmental Committee which would oversee the Welsh devolution

settlement. It would play an important role in taking forward the move to a

reserved powers model; considering proposals for changes to devolved

responsibility raised in the future; resolving disagreements without invoking the

full dispute resolution process; monitoring EU developments impacting Wales;

and resolving cross-border issues. The Commission recommends a number of

ways in which the National Assembly and the Houses of Parliament can work

more efficiently together.5

The Welsh Government welcomed the report. Carwyn Jones stated:

The Commission endorse our view that the Welsh devolution settlement should

be enhanced and restructured to a reserved powers model. This will strengthen

accountability, and reduce the scope for conflict between the Welsh and UK

Governments.

5 Clear and stable powers for Wales, Commission recommends. Press release, 3 March 2014.

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“The report also endorses our view that matters only affecting Wales should be

decided in Wales – and that for a clear purpose, to enable the democratically

elected devolved institutions to improve the quality of life of people in Wales.

The report has struck a workable balance between Wales and London.

“I’m therefore delighted the Commission agrees with us that powers over large

scale energy consents and policing should be devolved to Wales.

“Devolving new energy powers to Wales will ensure decisions on

developments which affect Wales are made in Wales. This will allow us to

maximise the economic potential of renewable energy power generation, as

well as enabling locally sensitive decision making.

“Devolving powers over policing, community safety and crime prevention will

allow us to strengthen joint working with the public and emergency services

already devolved and help reduce offending. New powers over road safety and

public transport – including powers over speed and drink driving limits, bus and

taxi regulation – will also help us make a real difference to people’s daily lives.

“I’m also very pleased the Commission has rejected the idea of transferring any

of the Welsh Government’s existing powers to Westminster.6

The UK Government also welcomed the report. The Secretary of State, David Jones, made a

written statement on 3 March 2014. He indicated that the Government was not willing to add

any items to the Wales Bill then proceeding through Parliament and that implementation of

recommendations which required legislation would be for the next Parliament. The

Government did undertake to look at any recommendations which would not require

legislation to see if those could be carried out before the General Election:

I warmly welcome publication of the report, which provides a comprehensive

analysis of devolution in Wales and makes recommendations for change which

are thought provoking and thoroughly researched. The Government will now

carefully consider in full each of the recommendations and their implications…..

There is now a little over twelve months remaining of this Parliament. This is

insufficient time for the Government to implement any changes that would

require primary legislation, given the degree of consideration that the Silk

Commission's recommendations demand.

Given the significant extent of the work now needed to be done, I do not

consider the Wales Bill to be a suitable vehicle to implement the

recommendations made in today’s report….

These will therefore be matters for the next Government and Parliament, and it

will be for political parties to set out their proposals and intentions to the

electorate. However, I can say now that we in Government will be taking a very

positive approach to the Silk Commission’s work, in keeping with our proud

record on devolution.

For those recommendations that will not require primary legislation, we will

consider early implementation during this Parliament if, after due consideration,

6 First Minister welcomes Silk report on the future of Welsh devolution, Welsh Government Press Release, 3

March 2014.

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we are satisfied that the case for the change is clearly made, there is a broad

consensus in favour and it can be implemented quickly and easily.7

3 Developments in Scotland

In the last two weeks before the Scottish independence referendum on 18 September 2012,

the three main Unionist parties made commitments to further devolution in Scotland, in the

event of a No vote.8 Independence in Scotland was rejected. These commitments made to

look at the devolution settlement have also involved consideration of the position in Wales.

UK party leaders’ “vow” On Tuesday 16 September the leaders of the UK political parties issued a joint signed

statement of undertakings, which was published in the Daily Record, under the headline,

“The Vow”. The statement included:

The Scottish Parliament is permanent and extensive new powers for the

Parliament will be delivered by the process and to the timetable signed and

announced by our three parties, starting on 19 September….

We agree that the UK exists to ensure opportunity and security for all by

sharing the resources equitably across all four nations to secure the defence,

prosperity and welfare of every citizen.

And because of the continuation of the Barnett allocation for resources, and the

powers of the Scottish Parliament to raise revenue, we can state categorically

that the final say on how much is spent on the NHS will be a matter for the

Scottish Parliament….

We will honour these principles and values not only before the referendum but

after.9

The commitment to the continuation of Barnett Formula, for funding devolved

administrations, caused some consternation in Wales, because this would potentially lock in

a lower level of funding for Wales. But at First Minster’s questions in the National Assembly,

Carwyn Jones stated:

I remind the Member that Ed Miliband has made it clear—and this is something

that I agreed with him—that Wales’s underfunding will be addressed with the

election of a Labour Government. He has made that quite clear, Barnett or not.

That is something that will be delivered by a Labour Government, elected in

May—something that Plaid Cymru can never deliver. 10

Smith Commission

On 19 September 2014 the Prime Minister announced the establishment of the Smith

Commission, to consult with the political parties and others and take forward the devolution

commitments in Scotland. The Prime Minister also stated:

It is absolutely right that a new and fair settlement for Scotland should be

accompanied by a new and fair settlement that applies to all parts of our United

7 HC Deb 3 March 2014, col 42WS 8 See Commons Library Standard Note 6987, Scotland: devolution proposals, 27 November 2014. 9 Three leaders sign promise to Scotland, Daily Record, 15 September 2014. 10 National Assembly for Wales, Oral questions in plenary, 16 September 2014.

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Kingdom. In Wales, there are proposals to give the Welsh government and

Assembly more powers. And I want Wales to be at the heart of the debate on

how to make our United Kingdom work for all our nations…..

So, just as Scotland will vote separately in the Scottish Parliament on their

issues of tax, spending and welfare, so too England, as well as Wales and

Northern Ireland, should be able to vote on these issues and all this must take

place in tandem with, and at the same pace as, the settlement for Scotland.

I hope that is going to take place on a cross-party basis. I have asked William

Hague to draw up these plans. We will set up a Cabinet Committee right away

and proposals will also be ready to the same timetable. I hope the Labour Party

and other parties will contribute.11

The Cabinet Committee has the following terms of reference:

To consider matters relating to the devolution of powers within the United Kingdom.12

The Cabinet Committee met for the first time on 25 September. The Secretary of State for

Wales, Stephen Crabb, is a member of the Committee and other Wales Office ministers may

be called to join meetings.13

In a House of Commons debate following the Scottish referendum, William Hague

made these statements on Wales:

As in Scotland, the Government have been making good on our promise to

deliver further devolution to Wales, with the referendum on law-making powers,

setting up the Silk commission and introducing the Wales Bill. The Bill takes

forward almost all the recommendations of the Silk commission’s part I report

and devolves a significant combination of tax and borrowing powers to the

Assembly and to Welsh Ministers. It is important that Wales, too, is at the heart

of the debate on how to make the United Kingdom work for all nations….

The structure of the devolution settlement in Wales is an important matter for

our consideration, particularly as the Silk commission recommended a move to

a reserved powers model in its part II report, partly for the reasons that my right

hon. and learned Friend gives. It will fall to the next Parliament to introduce

legislation to make that change, but my right hon. Friend the Wales Secretary

has made it clear that he wants to hear views from across the political

spectrum in Wales. He has invited the leaders of the Welsh parties to discuss

the way forward, and I believe he held a productive meeting yesterday. As he

has announced, the first step in giving further devolution to Wales is to amend

the Wales Bill by scrapping the lockstep and allowing the Welsh Assembly the

power to vary income tax rates. The new income tax powers are a tool to help

the Welsh economy potentially to become more dynamic and to make the

Government in Wales more accountable.14

The Smith Commission published a Report 15on 27 November 2014, containing

agreements for further devolution made by the political parties. This included a 11 Scottish independence referendum: statement by the Prime Minister, Press release, 19 September 2014. 12 Cabinet Office, Devolution Committee (membership) 13 Cabinet Committee for devolved powers: statement on its first meeting, Press release, Cabinet Office, 25

September 2014. 14 HC Deb 14 October 2014, col 172 15 Report of the Smith Commission for further devolution of powers to the Scottish Parliament, 27 November

2014

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recommendation for a significant amount of income to be raised from setting rates

and bands for income tax in Scotland. In announcing the report to the House of

Commons the Secretary of State for Scotland, Alistair Carmichael, stated:

Mr Carmichael: The Barnett formula remains in operation, but only for the portion of

the budget going to the Scottish Parliament that is not accounted for by the taxes that

are currently reserved here and are going to be devolved. Detailed technical work is

currently under way on this between the Treasury and the Scottish Government.

Announcements will be made on its practical application in relation to the 2012 powers

in fairly short order.16

Responding to the Smith Commission report, Carwyn Jones stated:

Whatever has been offered to Scotland today must be also offered to Wales, so we

can better determine our own preferences for the future. However, we have

consistently said that before any consideration can be given to income tax we must

see fair funding delivered. It would completely irresponsible to lock in underfunding.

We would certainly expect to be offered full control over our electoral arrangements

and Air Passenger Duty, in common with Scotland. It would unfairly discriminate

against Wales if these were not on the table, and I would expect the UK Government to

make this clear in the coming days.17

4 Political parties’ positions 2014

As the Silk Commission had only presented its final report in March, no equivalent of The

Smith Commission was set up in Wales. But the Wales Secretary, Stephen Crabb, met with

the Westminster leaders of the three main Welsh political parties, on 13 October 2014, to

explore common positions on the devolution settlement for Wales.18

On 14 October the leaders of the four main parties in the National Assembly for Wales

(Labour, Conservative, Lib Dem and Plaid Cymru) tabled a combined motion for debate in

the Assembly, on the future of devolution for Wales.

Motion NDM5605 Jane Hutt, Paul Davies, Elin Jones, Aled Roberts

To propose that the National Assembly for Wales:

1. Welcomes the Prime Minister’s commitment that Wales will be at the heart of the

debate on the future of the United Kingdom.

2. Calls for bilateral talks that are informed by the Holtham and Silk 1 Commissions’

findings, including an updated assessment of the current level and likely future

direction of Welsh relative funding.

3. Calls for those talks, which should begin immediately and be completed by January

2015, to have a particular focus on fair funding, with the goal of securing rapid

implementation of a funding floor which both addresses underfunding in a way that is

consistent with Welsh needs and halts future convergence.

4. Calls for the UK Government to:

16 HC Deb 27 November 2014, col 1100 17 First Minister responds to Smith Commission Report, Press Release, Welsh Government, 28 November 2014. 18 Welsh Secretary meets party leaders, Press Release, Wales Office, 13 October 2014.

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a) ensure that the same powers are given to Wales regarding the devolution of

Corporation Tax if they are provided to Northern Ireland and Scotland;

b) devolve Air Passenger Duty for direct long-haul flights;

c) review the level of the borrowing powers afforded to Wales in the Wales Bill; and

d) work with the Welsh Government to enable it to issue its own bonds.

5. Seeks recognition that if a decision is taken to hold a Referendum on tax varying

powers, this should reflect the view of the people of Wales.

6. Seeks confirmation that the Reserved Powers model will be instituted for Wales.

7. Calls on the UK Government to give the National Assembly for Wales the power to

determine its electoral arrangements.

8. Calls on the UK Government to make progress on Silk 2.

9. Affirms that these matters should be taken forward in legislative proposals,

published before the end of the current Westminster parliamentary session.

The motion was debated in the Assembly on 21 October 2014. In his speech moving the

Motion, the First Minister stressed that what had changed in the debate on devolution since

the referendum campaign in Scotland was the question of timing, and the importance of a

timetable for Wales as well:

What has changed, of course, is the timing. There can be no doubt that the Scottish

referendum, regardless of the result, has had an enormous impact on the way that

people perceive the UK. As I have said before, I never thought that I would see the day

when I would hear a Conservative leader, or indeed a Conservative Prime Minister,

saying that the UK is not one nation but four—something that I welcome—and

understanding that we are four nations, looking at a common goal within a common

union.

However, I think it is fair to say that, sometimes, Wales’s voice has struggled to be

heard. It is important now that there is a timetable put in place in order to deal with the

legitimate interests of the people of Wales. We see it, of course, in the motion itself, in

terms of talks, which are required to begin immediately and completed by January of

2015….There is a strong understanding that we must see agreed progress on Wales’s

position by January of 2015. 19

The Motion was agreed without objection by the Assembly.

Labour Party

On 16 October 2014 the First Minister of Wales, Carwyn Jones, made a speech to the

Institute of Government and set out the Welsh Government and Labour Party position. In

this speech he gave a wish-list and some caveats. On independence he stated:

As far as Wales is concerned, we have never been interested in independence.

I have no desire to see a separate Welsh pound. We value Britain’s common

defence and our contribution on the international stage. And events in Scotland

19 National Assembly for Wales, Plenary debate (English), 21 October 2104.

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have emphatically not led to a surge of separatist sentiment west of Offa’s

Dyke. If anything, it appears that people in Wales have seen what was taking

place in Scotland and concluded that we are - in last month’s terminology -

Better Together….

Turning to financial reform his position was:

Financial reform is key to ensuring a stable and lasting Union. The current

funding system that operates in Wales, Scotland and Northern Ireland – the

Barnett formula – makes no attempt to answer that most fundamental question:

how much does each nation actually need to spend in order to deliver its public

services?... By far the best solution from a UK perspective would be for the

funding of the devolved administrations (and the regions of England too) to be

put on a new basis, with an assessment of needs at its core.

On the proposals for welfare, he cautioned:

It remains to be seen whether devolution of welfare powers will be on the table

for Scotland and indeed for Wales. Whatever is on offer, the Welsh

Government will want to weigh up the benefits and risks very carefully. Without

financial reform, and a proper transfer of resources, our room for manoeuvre is

limited…. It remains to be seen whether devolution of welfare powers will be on

the table for Scotland and indeed for Wales. Whatever is on offer, the Welsh

Government will want to weigh up the benefits and risks very carefully. Without

financial reform, and a proper transfer of resources, our room for manoeuvre is

limited….

His described what he called a “New Union”:

We have to move from a devolution mindset to a New Union mindset…. A New

Union mindset, on the other hand, says that the UK is a state governed by four

representative institutions. Those Parliaments and Assemblies embody popular

sovereignty in each part of the country, and yet work with one another for our

mutual benefit…From that standpoint, the focus should then be on a realistic

assessment of the benefits of a New Union, on defining the powers which it is

agreed should be held at the centre. Everything else should be decided locally,

with direct accountability at that level, and transparency of decision making to

the citizen.

And he called again for a constitutional convention:

These are complex issues and that is why, for the last two years, I have been

pushing for a constitutional convention, something I have repeated again to the

Prime Minister in recent days. I have suggested some outline terms of

reference, and stressed the importance of the convention being jointly owned

and supported by all four administrations, and not by the UK Government

alone. I look forward to his reply. Because the work cannot stop there. To have

true relevance, and to break through the anti-politics sentiment that risks

suffocating the old, established parties, we must give ownership of the

Convention to the people of the UK.20

Welsh Conservatives

20 First Minister of Wales-Speech on a New Union at Institute for Government, Press release, Welsh

Government, 16 October 2014.

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On 18 October 2014 Welsh Conservative leader, Andrew R T Davies, commented on moves

for further devolution. He indicated that his party was currently opposed to devolution of

policing powers to the Welsh Government. Andrew Davies also stated:

The issues surrounding future devolution in Wales are hugely important. Of that

there is no doubt. This week’s cross-party agreement on the broad principles to

take forward and collaborate upon reflects that. There is work to do and there

are discussions to take place. But constitutional change doesn’t take place

overnight.

There are other issues too. Urgent, life-changing issues for Wales. For the child

in school. For the patient in hospital. For the business owner in the

marketplace…

We’ve jumped the first hurdles. We’ve made progress since the Scottish

referendum. Now it’s time to give a voice back to the people. We must turn our

attention to community opinion. Community views.

Carwyn Jones has called for a constitutional inquiry as many times as I’ve

called for an independent NHS inquiry. Those who understand what he means

could debate for hours. But I speak to troubled patients every single week –

and I know which one they’d prefer.21

Welsh Liberal Democrats

On 19 September 2014 the leader of the Welsh Liberal Democrats, Kirsty Williams,

welcomed the result of the referendum in Scotland and called on other political parties in

Wales to follow the Liberal Democrats in fully signing up to the recommendations of the Silk

Committee in its second report.

Labour and the Conservatives need to get their houses in order and make it

clear to the people of Wales about where they stand on devolving powers. I

challenge all parties to fully sign up to the recommendations of the second Silk

commission as the Liberal Democrats have already done.

Wales needs its own say on taxation, policing, rail franchising, large energy

projects and much more. Any further dithering on these powers will cost Wales

dearly.

Liberal Democrats will continue to be the driving force behind bringing power

closer to the people, fighting for a federal UK. We must unite to promote and

build a new Union, not continue to stubbornly defend the old. Wales must have

a properly functioning Parliament of its own, and I will not accept anything less

for our nation.22

Plaid Cymru

Leanne Wood, the leader of Plaid Cymru, addressed the Scottish National Party Conference

on 15 November 2014. In her speech she advocated Wales moving to the reserved powers

model and pressed for future agreements to be made amongst the UK devolved

governments:

21 ‘No’ to devolution of policing, Press release, Welsh Conservatives, 17 October 2014. 22 Wales must unite in call for more powers, Press release, Welsh Liberal Democrats, 19 September 2014.

16

Reserved powers should mean shared powers and let me make clear that a

Plaid Cymru government from 2016 will insist on major decisions at a UK level

requiring consensus between the governments.

The people power that grew from a grass roots movement in Scotland during

the referendum campaign I’m sure will result in power being delivered to the

people.

A new state was not born in September but you’ve built a new democracy and

no party, no government can disestablish that.23

5 Government proposals, November 2014

On 11 November 2014, during debate in the Lords on the Report stage of the Wales Bill

2014, the minister Baroness Randerson announced that the UK government would take

forward work to produce a reserved powers model for Wales, as recommended by the Silk

Commission:

Rather than waiting for Royal Assent of this Bill, the Government intend to take

forward work over the next few months to produce a reserved powers

framework for Wales. Through cross-party discussions and discussions with

the Welsh Government, my right honourable friend the Secretary of State and I

intend to produce that reserved powers framework and a set of commitments to

further devolution agreed by all the parties by St David’s Day 2015. This will be

a comprehensive look at the whole picture. 24

Questions were raised by other Peers on the method of bringing this into operation:

Lord Anderson of Swansea (Lab): The Minister has made a very important

concession. Clearly, the Government have listened very carefully to what was

said in Committee, but the problem remains of what vehicle will be used to

bring this new consensus into operation. The noble Baroness will know how

difficult it is to find a slot in the legislative programme. It is also very difficult,

obviously, for the Government to give any firm undertakings. How does she

respond to that?

Baroness Randerson: The noble Lord makes an important point. By moving

forward on a cross-party basis, it is the intention to ensure that there is

commitment across the four parties in Wales to ensure that the Bill can come

forward in the early stages of the next Parliament.

On 17 November the Secretary of State made a speech at the Institute of Welsh Affairs,

setting out plans for further devolution in Wales.25 He indicated how the process should

progress:

My goal is to seek a cross-party consensus on a stable long-term settlement for

Wales…

Through this cross-party process I intend to announce, by St David’s Day, a set

of commitments, agreed by the four main political parties in Wales, on the way

forward for Welsh devolution. Those commitments would form a basis, a

“baseline”, for taking forward Welsh devolution after the General Election next

May. 23 Powers reserved are powers shared, Press release, Plaid Cymru, 15 November 2014. 24 HL Deb 11 November 2014, col 145 25 Secretary of State sets out long term vision on devolution, Press release, Wales Office, 17 November 2014.

17

This means people in Wales will know, irrespective of which party wins the

General Election, that an agreed set of commitments will be taken forward in

the next Parliament

The Minister set out again the commitment that the Government had accepted the Silk

Commission’s recommendation, to move to a reserved powers model of devolution for

Wales:

I want Welsh devolution to be clear. I want people to be able to understand

who is responsible for what. And I want Welsh laws to be decided by the

people of Wales and their elected representatives, not by lawyers in London.

That is why I have asked my Office to work on a reserved powers framework

for Wales - the model in place in Scotland. It means a different approach for

Welsh devolution. Instead of defining what’s devolved, as the current

settlement does, it would define the powers reserved to the UK Parliament. The

default will be that anything not reserved is devolved.

This is no mere technical change. It is a signal of the trust and the respect we

have for the National Assembly for Wales.

This was a key recommendation in the Silk Commission’s second report, and

there is already clear cross-party support for the change, both at Westminster

and in the Assembly….

By 1 March I will publish what a reserved powers framework for Wales might

look like. That will provide a firm basis to legislate early in the next Parliament

to introduce the model for Wales

The Minister also made commitments to start to work cross-party and with the Welsh

Government to identify other of the Silk Commission’s 61 recommendations where there

might be consensus. Although the Labour Government in Wales had been calling for a

reserved powers model for some time, in light of the Supreme Court Judgment on the

Agricultural Sector (Wales) Bill, by summer 2014 that there was widespread consensus that

this model would be an improvement on the existing settlement. The Silk Commission, the

National Assembly Presiding Officer and many commentators called for this change. The

commitments made to Scotland may have increased the focus on Wales and possibly led to

a specific date for implementation of proposals. This also included a commitment to examine

the Smith Commission’s Heads of Agreement, when published in November, for proposals

which might be implemented in Wales.

The fourth element of the work to be carried out related to funding:

It is true that in the ten years up to 2010 levels of funding for devolved services

in Wales got ever closer to the levels for equivalent services in England. But

since then the opposite has happened, so that funding for Welsh public

services is now around 15% higher than equivalent funding in England. This is

around the level that Professor Holtham himself said was acceptable when he

did his review.

Back in 2012 we agreed a process with the Welsh Government to keep funding

levels under review and work to find a solution if it’s likely that Welsh funding

again heads towards the levels spent in England. Building on this, the UK and

Welsh Governments have agreed to revisit the arrangements for considering

relative funding in light of the powers in the Wales Bill.

18

But let’s be clear. This issue of funding must not be used as either a road block

to further devolution, or as an excuse for poor performance. The margin of

difference we are talking about in terms of overall budget levels is tiny –

between one and two percent at most. I want to see a Welsh Government that

stands up proudly and says “the buck stops here”.

The UK and Welsh Governments have begun to meet in a Joint Exchequer Committee to

oversee the transfer of the new financial powers in the Wales Bill to Wales. The first meeting

took place on 20 October 2014, chaired by Jane Hutt, Welsh Government Minister for

Finance and Government Business. But there is no agreement between the two

governments on when the required referendum on devolution of income tax powers can be

held. Again in the House of Lords, during debate on the Report stage of the Wales Bill 2014

on 11 November 2014, the Minister Baroness Randerson stated:

In relation to ongoing discussions about the funding situation, following the first

meeting of the Joint Exchequer Committee between the UK and the Welsh

Governments last month, we have now further committed to revisit jointly the

review process in the light of the powers in the Bill. In other words, we have

agreed to find a way of facilitating fair funding. The Government therefore

believe that there is a sound basis for an early referendum to be called and I

urge the Welsh Government and the Assembly to do so as quickly as

possible.26

6 St David’s Day Agreement, February 2015

The main political parties in Wales met with the Secretary of State from November 2014 to

discuss areas of agreement for future devolution. A framework agreement was published on

27 February 2015, as a Command paper entitled Powers for a purpose: Towards a lasting

devolution settlement for Wales.

In this the majority of the 61 recommendations made in the Silk Report were agreed by all

parties (some recommendations involved more than one point). Fourteen recommendations

were noted as “No consensus”, in whole or part. Many of these were related to aspects of

policing and criminal justice.

The Secretary of State, Stephen Crabb, set out the main recommendations in the St David’s

Day Agreement as:

Energy projects up to 350megawatts should be decided by Welsh Ministers.

This would include most onshore wind farms and renewable technologies to

harness tidal power

The National Assembly should have powers over the development of ports to

improve Wales’s transport infrastructure.

The National Assembly should have the power to lower the voting age to 16 for

Assembly elections. The Assembly already has the power to lower the voting

age to 16 for a referendum on devolving income tax powers.

All powers relating to Assembly and local government elections should be

devolved. This includes deciding the electoral system, the number of

constituencies, their boundaries, the timing of elections and the conduct of the

elections themselves.

26 HL Deb 11 November 2014, col 226

19

Welsh Ministers should have the power to appoint one member of the Ofcom

board to represent Welsh interests.

A review should be carried out of Air Passenger Duty which could open the

door for it to be devolved to Wales.

As part of the framework, the UK government has also pledged to examine the

Smith Commission’s recommendations that are relevant for Wales.

This will enable the new government, following the General Election, to take

decisions early in the next Parliament on whether any further Smith

recommendations should be implemented for Wales.27

In constitutional terms the Government agreed that the Welsh Assembly and Welsh

Government should be formally recognised as permanent and that this should be set out in

legislation. The Command paper also goes beyond the Silk recommendations on the way

that the Assembly should be able to take future decisions of constitutional importance. These

will require a two-thirds majority within the Assembly. This super-majority provision echoes a

provision set out in the Draft Scotland Clauses 201528.

The UK government position on these is given in the Agreement as:

2.2.19 To provide an adequate check on Assembly legislation proposing

changes to the franchise for Assembly or local government elections in Wales,

the electoral system or the ratio of constituency and regional Assembly

members, the UK Government’s firm view is that such legislation should be

passed by a two-thirds majority of all Assembly Members. We believe there

would be broad support in Wales for these safeguards, and in the Assembly

itself.

The Assembly Presiding Officer, Dame Rosemary Butler, welcomed the proposals, whilst

expressing some disappointment that the full range of Silk Commission recommendations

would not be implemented.

I am pleased to see a commitment to ensure that the Assembly will:

have the power to increase its capacity to match the size of its task. This will

allow us to fully scrutinise the growing policy and legislative programme of the

Government and its new tax raising powers;

be able to decide its own electoral arrangements as well as important symbolic

and practical matters such as the name of the Assembly itself and its internal

operation;

need to consent formally before the UK Parliament makes laws in areas which

are devolved to the Assembly. The current non-statutory protocol is not a

robust safeguard of the devolution settlement. We need to be treated with

parity with Scotland where the Sewel Convention will in future be enshrined in

law.

I also welcome the transfer of powers to determine the appropriate voting age

for Assembly elections and look forward to sharing and considering the

outcome of the Assembly's votes@16 consultation in July. 27 Landmark funding announcement and new powers for Wales..., News release, Wales Office, 27 February

2015. 28 Scotland in the UK: an enduring settlement, Cm 8990, January 2015.

20

The devil is, however, in the detail and I look forward to seeing the UK

Government's proposals for implementing the move to a reserved powers

model. In light of the most recent Supreme Court judgement, the clarity of this

model is key if the Assembly is to legislate effectively and the people of Wales

are to understand the powers of the institution

I have made my view known previously that I believe that the recommendations

of the Silk commission should be implemented in full. Like many others today I

am disappointed that it has not proved possible to make greater progress on

the full range of issues set out in the Commission's second report.

But the significance of the Secretary of State's announcement should not be

overlooked. For the first time, there is cross-party consensus both in Cardiff

and Westminster that the Assembly should be a sovereign parliament that

controls for itself how it delivers laws and scrutinises the Welsh Government.29

The UK government set out its position on future funding in the Agreement and statements

made to accompany it. These include the expectation that the Welsh Government will call a

referendum on these powers over income tax in the next Parliament. The timing of such a

referendum remains an issue of contention between the UK and Welsh governments.

Executive summary

Building on this, in order to empower the Welsh Government to deliver for the

people of Wales, the UK Government will introduce a floor in the level of

relative funding it provides to the Welsh Government, in the expectation that

the Welsh Government will call a referendum on income tax powers in the next

Parliament.

Funding arrangements beyond the next Parliament will need to take full

account of the Welsh Government’s new powers and responsibilities, given the

significant impact that tax devolution could have on its funding. The UK

Government will work with the Welsh Government to develop sustainable long

term funding arrangements within a robust fiscal framework that reflects the

changes made.

The First Minister of Wales, Carwyn Jones, has expressed some disappointment with the

content of the proposals published on 27 February 2015. In an interview with Wales Online

he stated:

The Prime Minister hadn’t actually offered anything, with no indication of how

much money the floor would involve, and said Wales isn’t being treated with

the same respect as Scotland.

When asked in interview with Walesonline whether he would hold a referendum

on income tax as the result of Friday’s package, Mr Jones said: “No.”

He said Mr Cameron “hasn’t offered anything. Words but no time scale, no date

as to when this will happen. No time table. No discussion as to how much

money this will involve.”

29 Presiding Officer’s response, News release, Welsh Assembly, 27 February 2015.

21

He alleged that there had been “no negotiation at all on this issue” and that the

first time there was “any kind of discussion was on Tuesday.”30

In an exchange of letters with the Secretary of State, on 3 March 2015, Carwyn Jones is

quoted as saying that the process leading to the Agreement was flawed:

It was slow to start, ad hoc and poorly prepared. I and others, repeatedly asked

for details of your financial proposals and you were unable to provide any at

any stage…

I have no intention of seeking a referendum on partial devolution of income tax

to Wales unless and until the long term funding of Wales has been addressed

satisfactorily.31

7 Academic and other commentary

The attention given to Scotland during the referendum campaign led some commentators to

fear Wales and its interests had been side-lined.32

A BBC/ICM opinion poll in Wales taken the week after the Scottish referendum, on 24

September 2014, found a low level of support for independence but 49% support for more

powers for the National Assembly.33

There has been much discussion of how far the proposals for Scotland constitute “home

rule”, the history of that term and what it might mean in a Welsh context.34

The speech made by Stephen Crabb on 17 November 2014 has been hailed as evidence of

a change of attitude towards devolution in Wales by the Conservative Party.35 But there has

also been concern that the timetable may be too tight for detailed consideration and

involvement of voters, before March 2015.

At Westminster, the Political and Constitutional Reform Select Committee launched an

enquiry on Devolution after the referendum on 19 September 2014. The terms of reference

for the enquiry were:

Should England, Wales and Northern Ireland be offered the level of devolution

that has been discussed in relation to Scotland?

If so, what should be the next stages to take forward devolution in a) Scotland,

b) Wales, c) Northern Ireland, d) England?

To what extent is the Government’s timetable for considering the future of

devolution realistic?

What measures, such as a written constitution, could most effectively entrench

future devolution settlements?

Given that different parties have put forward different proposals for further

devolution to Scotland, what is the best way forward?

30 Income tax referendum call sparks political row between Welsh and UK Governments, Wales Online, 27

February 2015. 31 First Minister’s fresh blast at St David’s Day Agreement, Wales Online, 3 March 2015. 32 John Osmond, Wales sidelined by Scottish referendum debate, IWA Click on Wales blog, 17 September 2014 33 Record low back independence, BBC News, 24 September 2014. 34 Andy Bevan, Home rule all round, IWA Click on Wales blog, 25 October 2014 35 Daran Hill, The significance of Crabb’s speech, IWA Click on Wales blog, 17 November 2014

22

What implications does further devolution to Scotland have for how the House

of Commons should deal with legislation that deals with only part of the UK?

Written and oral evidence has been taken and that process continues. There has been

some comparative comment on the position of Wales, and on 4 December 2014 the

Committee took evidence in Cardiff.

The Institute for Fiscal Studies published a report in November 2014, which outlined the

impact of the Barnett Formula on funding various parts of the UK.36

Gerald Holtham, who chaired the Independent Commission on Funding and Finance for

Wales in 2010, commented on some of the uncertainties raised for Wales by the Smith

Commission Report. He stated:

Welsh politicians will certainly want the recommendations of the second Silk report to

be implemented. They may want more, including many of the extra powers offered to

Scotland, though they will be rightly unsure of their capacity to discharge all the

responsibilities without a substantially larger Assembly. They will also rightly want

Welsh institutions constitutionally entrenched too.

When it comes to responsibility for revenue raising, the Welsh government has always

been more reluctant. The Welsh and English economies are even more intertwined

than the English and Scottish ones so distortions introduced by tax divergences would

be greater in the Welsh case. The “no detriment” clause would be unworkable and if

pushed vigorously would inhibit any move to different tax rates. 37

36 David Phillps, Business as usual?, IFS Briefing Note BN155, November 2014. 37 Gerald Hotham, Holtham on Smith, IWA click on Wales blog, 28 November 2014.