While I was speaking in Cardiff last Thursday, Jane Hutt was giving a speech to the Bevan Foundation about the Welsh Government’s approach to the finance debates. The Bevan Foundation’s report of the speech is here, and there’s a news release from the Welsh Government here. There’s also some discussion here by Victoria Winckler, the Foundation’s director.
What Hutt outlined is a two-track strategy, with intergovernmental discussions about ‘fair funding’ and reform of the block grant, and other issues including tax powers to be left to the (still-unannounced) ‘Ap Calman’ commission.
This clearly further diminishes the role of ‘Ap Calman’ in the Welsh Government’s eyes. It’s long been clear that the government’s real priorities were block grant reform and borrowing powers (see, for example, my discussion HERE), and that it had very limited interest in fiscal powers or more structural change. This latest speech suggests the government is now happy for a relatively low-key commission to consider such issues further, knowing that it won’t make any recommendations for some time and that whether these will be implemented, and when, mean there is no urgency about them. Meanwhile, the ‘grown-ups’ will press on with addressing the government’s more pressing priorities. This position isn’t entirely new, but does suggest a bit of zigging and zagging by the Welsh Government, given what this story from the Western Mail in August had to say.
One effect of this approach is to downgrade the impact Ap Calman might have. It’s easy to understand the Welsh Government’s unease about the commission – it’s an idea from the UK Coalition, never clearly understood or communicated, which the Welsh Government doesn’t support. However, as I argued in my talk in Cardiff last week, we’re now at the point where there’s a serious mismatch between devolved functions in Wales and the institutional framework for Welsh devolution. That merits serious inquiry, as does the question of financing powers. The UK Coalition is seeking to reshape the state in ways that will alter significantly how much is spent on education, health and other public services in England. The idea that problems will go away if Wales gets ‘fair funding’ dependent on a consequential share of spending on ‘comparable functions’ in England is optimistic at best; Wales will need to raise substantial amounts of its own revenue if it wants to build the sort of social democratic system to which most parties in Wales aspire.
Moreover, there is a serious flaw in the Welsh Government’s tactics. What clout will it carry in bilateral intergovernmental talks with the UK Government about borrowing and fair funding? As I’ve argued before (see HERE), the Welsh Government has the problem that it carries relatively little weight, and needs to find support from somewhere. That’s unlikely in general to come from the Scottish or Northern Ireland governments, especially on financial matters where its interests are so much at odds with theirs. It’s not making any noticeable efforts to recruit support from other quarters either. The politics of this may be attractive within Wales, but their impact further afield is much more questionable. The Welsh Government’s tactics mean it starts with a weak hand in a game where it has few cards to play. It’s hard to regard that as a formula likely to help it win.