Implementing Silk 1

5 November 2013

Article by Owain Roberts, National Assembly for Wales Research Service

On Friday, the Prime Minister and Deputy Prime Minister announced the UK Government’s long anticipated response to the Silk Commission’s first report on fiscal powers. The UK Government claims that its package of reform will be the ‘biggest devolution in decades’, but what are the changes being proposed and when and how will they be implemented?

Clegg and Cameron’s Senedd statements, along with the Secretary of State for Wales’ subsequent written statement, addressed prominent issues recommended by Silk’s first report – mainly the devolution of landfill tax and stamp duty land tax; the giving of new borrowing powers to Welsh Ministers; and the devolution of limited income tax powers, subject to a referendum.

In terms of implementation, the First Minister has indicated that these new powers would be devolved through a new Wales Bill, to be introduced during the final session of the current Parliament, which ends on 31 March 2015, ahead of the UK General Election the following May. The Bill may also be preceded by the publication of a draft Wales Bill, which will contain provisions relating to changes to the Assembly’s electoral arrangements.

However, the details of what exactly will be included in such a Bill seem patchy. Information about the nature of the new borrowing powers given to Welsh Ministers, as well as the processes involved in triggering a future referendum on income tax remains to be seen.

In addition, it is not clear from Friday’s statements what the UK Government’s view is on some of Silk’s other prominent recommendations. In particular, it is silent on whether the Assembly should have powers to introduce new taxes in the future and doesn’t provide any details on whether the Assembly should gain legislative control over its own budgetary procedures. The latter may be of particular significance, as it could provide the Assembly with an opportunity to re-design its approach to financial scrutiny in light of its new powers. The UK Government has stated that it will respond to the remainder of the Silk Commission’s 33 recommendations by the end of the year.

In terms of timescales, the Bill’s introduction during the current Parliament suggests that new powers will be devolved to the Assembly in time for the beginning of the fifth Assembly in May 2016. In practice therefore, it seems likely that the 2017-2018 budget will be the first to take advantage of new borrowing, landfill tax and stamp duty land tax powers, which would be considered in detail by the Assembly six months earlier in October 2016.

In terms of income tax, a Bill passed in the current Parliament would provide an opportunity for a referendum to take place as early as 2017 – which mirrors the Silk Commission’s own suggested referendum date. However, a referendum around this time seems unlikely, particularly given the First Minister’s initial response to the UK Government’s announcement, and in light of a possible referendum on the UK’s EU membership that may take place the same year.

Whatever the Bill’s content, the scrutiny of both the draft and as introduced versions of the Bill over the coming months will provide the Assembly and Welsh stakeholders with real opportunities to rigorously scrutinise the provisions on offer in order to influence the next stage in Wales’ devolutionary journey.