Devolving National Insurance and VAT to Wales

On Thursday, there was a lengthy debate in the Commons about the Silk Commission. While waiting for some paint to dry, I caught up with it on Democracy Live, and thought that people would like to see this short exchange from it:

     

Here we can see Huw Irranca-Davies and Peter Hain making a strong case for varying the rates of two different taxes because it would have a significant and positive impact on jobs in Wales.

But look at the context in which they are doing it. They have to ask the Tories and LibDems in the UK government to do it, because they are in opposition and therefore can't do it themselves. And the UK government will of course refuse, because they have their own ideas of what is good for the economy of the UK as a whole, and aren't going to change those ideas because people in Wales think differently.

Yet why should it be this way? If these tax changes are good for the economy and job prospects in Wales, why shouldn't the Welsh government have the power to do in Wales what the UK government refuses to do in the remainder of the UK?

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Now of course it might just be that Labour are proposing this because they are in opposition, because it makes a good sound bite, and because they know full well that the UK government won't do it. That's the luxury of not being in power.

But let's assume that they are in fact being sincere, and genuinely believe that these tax changes would benefit the Welsh economy in these difficult times. We'd have to do the sums, of course: working out how much revenue will be lost because of these tax cuts; but balancing this against fewer people out of work, and fewer building firms with not enough work on their books to keep them going ... but if the calculation was positive, why shouldn't we be able to go ahead and do it?

That's what devolution of taxation powers to Wales would mean for Wales. Instead of pleading with the Tories in Westminster to do something for Wales, and then blaming them for not doing it, we would be taking some responsibility for ourselves.

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It's ironic. Here was a debate in which Welsh Labour MPs queued up to say how much they were reticent about—or completely hostile to—the Silk Commission looking into taxation powers for Wales, suggesting that it was all a sinister Tory plot. But in it, they inadvertently gave us a perfect example of how useful these powers would be to provide more jobs and boost the Welsh economy.