Chamber and committees

Culture was mentioned often in your statement. You said:

“we are determined to build a culture in Government in which concerns are addressed early and in which all those who are involved ... have confidence and can engage constructively and fairly in the process.”

What difficulties were there prior to the new process? What changes have been made?

I am sure that colleagues will want to explore in more detail some of the issues that we have touched on. I open up the session to Liz Smith, to be followed by Daniel Johnson.

I will bring in Daniel Johnson.

The procedure will consist of potentially five stages. The first is named “Initial contact and assessment”, the second is named “Investigation” and the third is named “Decision”. Should the decision find against the minister in question, there will be a fourth stage named “Employer Action” and a potential fifth stage named “Appeal”. Given that there would undoubtedly be stress on both sides in such a process, what steps will be taken to ensure that a robust process is carried out timeously? Although each case will be different, what sort of timescale is envisaged for completion of the process?

For our second evidence session, which will focus on the Welsh fiscal framework, we have been joined by Dr Ed Poole and Guto Ifan from Cardiff University. I welcome them both to our meeting. Members have received a written submission from our witnesses.

We will move straight to questions. I remind members and witnesses that our broadcasting team will operate their microphones, so you should pause for a few seconds before speaking to ensure that you are heard. We have about an hour for this session.

I will start by asking about the three separate block grant adjustments for income tax that are a critical element of the Welsh fiscal framework. I understand that they insulate the Welsh Government from UK-wide factors that disproportionately affect one part of income distribution, thereby allowing a fair system to operate in Wales despite its markedly weaker tax base.

We have your submission, but for the record and for people who are listening in, will you talk us through how the system works to benefit Wales?

Thank you—that was very helpful. Your submission is excellent and very readable, so you have already answered many of my questions, but I want to take the discussion to a wider audience of people who will not have seen your submission.

The information that you provide in figures 3.2 and 3.3 and in paragraphs 3.11 and 3.12 is compelling. At the end of paragraph 3.11, you say:

“the overall impact of tax devolution on the Welsh budget is forecast to be a surplus of £252 million a year by 2026-27.”

At the end of paragraph 3.12, you say that in Scotland, by contrast, the

“negative projected effect of tax devolution is estimated to reach £355 million a year by 2026-27.”

You go on to say that if separate block grant adjustments for different income tax bands were implemented in Scotland, although there would still be a deficit, it would be only £271 million. Although that figure is still high, it is £84 million lower than is currently projected.

Are those figures based solely on the type of block grant adjustment that is currently made or do they take account of the impact of economic growth? Are you advocating that Scotland should go down the road of lobbying for block grant adjustment powers for separate tax rates?

Well body-swerved.

Thanks.

That exhausts questions from committee members, but I have one to finish off. Section 2.3 of your paper lists the four taxes that Wales has gained in the past seven years: full devolution of non-domestic, or business, rates, the land transaction tax, the landfill disposals tax and the Welsh rates of income tax. If we look at the entire UK tax structure, a huge amount is still reserved to the United Kingdom, such as savings and dividends, income tax, VAT, national insurance, fuel duty, alcohol and tobacco taxes and inheritance tax. Where does Wales go from here? Is Wales settling in with the taxation that it has and seeing how things progress, or is it looking at whether it can devolve further taxes?

Thank you. I open up the meeting for questions from colleagues.