FUNDING DEVOLUTION …

18 July 2012

… and other devolutionary issues

The other day I put up the post Who pays for Cornwall? asking nationalists how an autonomous Cornwall would be funded.

Two thousand people in Wales have been polled for the Commission on devolution in Wales. The questions were about what additional financial powers the Welsh assembly should have. You can read the entire questionnaire and responses here (Opinion research on financial powers for the national assembly for Wales, July 2012). There’s much interesting information there such as people’s view of their identity and their large opposition to independence outside the UK and positive support for a more financially empowered assembly.

However, having asked Who pays for Cornwall? I shall focus on those questions and responses around the issue of Who pays for Wales?

At present public spending in Wales is greater than revenue raised in Wales; the shortfall is made up by taxes from the rest of the UK (including Cornwall).

A decisive majority agreed that “public spending must not exceed revenue raised in Wales”.

That seems straightforward and economically sensible, but how should the shortfall be made up in an empowered Wales?

From Wales itself? No. 49 percent disagreed that taxes in Wales should be raised so that public spending in Wales was wholly paid for by money raised in Wales. Where and whom from then? 57 percent thought that funds should be redistributed from the prosperous parts of the UK to Wales. As the title of chart on page 29 bluntly put it: “The books should be balanced but not by higher Welsh taxes, England can pay”. Of course, “England” includes Welsh people living there. About 84 percent of UK income taxpayers are in England (HMRC table 2.20 for 2009/10 and about 88 percent of income tax payments are made from England ( HMRC table 3.11 for 2009/10): see the tables for what income tax comprises; it is not only tax on employment income. HMRC points out that its tax statistics for sub-UK areas should be treated with caution.

Devolution in the UK, underpinned by redistributed UK/England taxpayer money, has gone on so far without any UK government asking people in England how they think the four countries of the UK should be funded and whether they want autonomy for England. That is unacceptable and undemocratic; though there have been some surveys about governance in England, none of the three major UK parties plans to consult people there.

I am happy to see power go to devolved countries and to see UK/England tax revenue spread around according to need. I wonder, however, whether the present disposition of funds is equitable and thereby causes tensions, worry about the consequences of getting to a position where the people spending the money are not the people raising the money, and think England is short changed in governance; and I certainly think people in England should have a chance to consider these matters with their own representatives.

Now back to Cornwall. Let me ask again, Who pays for an autonomous Cornwall?

Note

HMRC table 3.14 shows that for 2009/10 256 000 individual income taxpayers in Cornwall unitary authority area paid a total of £804 million. Remember the HMRC caution about sub-UK tax statistics.


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