The Wales Act 2014

18 December 2014

Article written by Steve Boyce , National Assembly for Wales Research Service

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Image from Flickr by NAfW

Last week the Wales Bill completed its passage through Parliament and this week it has received Royal Assent, completing a process that began with First Reading in the House of Commons on 20 March 2014.

The Act gives effect to some of the recommendations of the Silk Commission’s first report, including giving new powers to the Assembly around tax raising and other financial issues, and borrowing powers to Welsh Ministers. It also makes some changes to the rules about Assembly elections and “double jobbing” by Assembly Members.

Main provisions of the Act

The Act allows the Assembly to hold a referendum on whether it should be able to vary the rate of income tax in Wales by up to 10 percentage points. In its original form the Bill only allowed the Assembly to vary income tax by the same number of percentage points for the basic, higher and additional rates of tax: the “lock step”. This was removed by UK Government amendment in the House of Lords.

The Act also gives the Assembly powers over stamp duty, land tax and landfill tax, and it provides the Welsh Government with wider short term borrowing powers and new powers to borrow for capital expenditure.

Secretary of State for Wales, Stephen Crabb said in the House of Commons debate on 10 December:

Subject to a referendum, all three income tax rates would be reduced by 10p, and the Assembly would decide a separate Welsh rate for each band. Those Welsh rates would be added to the reduced UK rates.

[…]

Given the other financial provisions in the Bill and the full devolution of business rates, […] the Assembly would become responsible for raising around a quarter of the money that it spends.

The UK Office for Budget Responsibility estimates that 10p of income tax in Wales would yield the Welsh Government approximately £2bn in 2014-15.

Following UK Government amendments in the House of Lords, the Act allows the Assembly to lower the voting age to 16 years for a Welsh referendum on tax raising powers, although any changes to voting age would apply only to the referendum.

The Act extends Assembly terms permanently from four to five years, making it less likely that Assembly elections will coincide with Westminster parliamentary elections in future.

It also removes the prohibition on candidates in Assembly elections standing in a constituency and on a regional list and it prohibits “double jobbing”, by preventing MPs from also being Assembly Members.