Will fiscal autonomy benefit Wales?
Author: Georgia Arlott
Published on Sep 12, 2012
This morning, Welsh Assembly members Leanne Wood and Mike Hedges set out their visions for the future of Wales. As leader of Plaid Cymru, Leanne Wood favours full independence, and certainly greater fiscal autonomy for the Welsh Assembly. However, Hedges has launched a paper outlining the potential pitfalls of such ambitions.
The question that is driving this debate is whether or not fiscal autonomy would benefit Wales, and whether such a move should lead to Plaid Cymru’s cherished plans for full independence.
First of all, it is crucial to note that Wood fully recognises the myriad challenges that Wales faces in order to be able to financially support itself. In today’s Guardian interview, she acknowledged several times that the Welsh economy is in decline. However, Wood is optimistic that with greater financial control, the Welsh Assembly could select which fiscal levers to pull, leading to the creation of desperately needed jobs.
Hedges argues that while tax levying powers may seem to promise a solution to Wales’s employment problems, greater tax control encompasses a great risk. In contrast to the current system of a fixed, yearly grant, tax raising powers will mean that Assembly Members will be less able to plan for the future, since income tax revenue is prone to fluctuate year on year. In a country in which the public sector is large, shortfalls in revenue could lead to major cuts that would be deeper and more damaging even than those that the UK as a whole are imposing.
It is the job of the Welsh people to resolve these disputes, and The Silk Commission’s surveys aim to gauge the public’s desire for fiscal devolution, and for independence. No doubt, Wales’ future will be deeply affected and guided by Scotland’s response to the referendum. However, the two countries are currently in very different situations, both ideologically, and economically. Carwyn Jones’ calls for a constitutional convention are likely only to be fulfilled after the Scotland’s referendum; but that will clearly outline the future relationship of governments within the UK.
Full independence will not be a feasible option for Wales for some time to come; but it is not too early to begin discussing and debating what outcome would be the most profitable for the Welsh people.