Independent Commission on Funding and Finance for Wales

The Independent Commission on Funding and Finance for Wales, also known as The Holtham Commission, was established by Rhodri Morgan (First Minister for Wales), Ieuan Wyn Jones (Deputy First Minister for Wales) and Andrew Davies (Minister for Finance and Public Service Delivery), of the Welsh Assembly Government.^[1] The establishment of the Commission was a commitment in the One Wales coalition agreement between Labour and Plaid Cymru in June 2007.^[2] Based in Cathays Park, Cardiff, the Commission completed its work in July 2010, publishing its findings in a final report: Fairness and accountability: a new funding settlement for Wales.^[3]

Remit

The remit of the Commission was to look at the pros and cons of the present formula-based approach to the distribution of public expenditure resources to the Welsh Assembly Government; and identify possible alternative funding mechanisms including the scope for the Welsh Assembly Government to have tax varying powers as well as greater powers to borrow.^[4]

Members

The Commission comprised:

Gerald Holtham (Chair), Managing Partner of Cadwyn Capital LLP and a visiting Professor at Cardiff Business School.
David Miles, Member of the Bank of England's Monetary Policy Committee and visiting Professor of Financial Economics at Imperial College London.
Paul Bernd Spahn, Professor Emeritus of Goethe University, Frankfurt am Main, Germany, and macro fiscal advisor to governments across the world.

Findings and recommendations

The Commission began its work in autumn 2008 and published its first report in July 2009.^[5] In its first report, the Commission concluded that the Barnett Formula lacked any objective justification and had survived for reasons of political and administrative convenience. The Commission argued that the formula has caused relative funding per capita for devolved activities in Wales to converge towards the average level of funding in England (the “Barnett squeeze”) despite relatively higher Welsh needs. The Commission recommended that in the future funding arrangements for Wales should be based on relative needs. As an interim measure, it recommended a modification to the existing formula that would place a “floor” under the block grant, preventing any further convergence towards the average English level of funding per capita.^[6]

In its final report, published in July 2010, the Commission recommended that:

the Assembly Government should pursue the introduction of a needs-based formula for determining the Welsh block grant;^[7]
the Assembly Government should acquire limited powers to vary income tax rates in Wales;^[8]
the Assembly Government should seek a discussion with the UK Government about the feasibility of devolving corporation tax;^[9]
stamp duty should be devolved to Wales;
capital gains tax on property and land should be devolved to Wales, if the administrative costs are not prohibitive;
the Assembly Government should consider the reform of Council Tax;
local authorities should be given discretion to levy a higher council tax on second homes;^[10]
landfill tax, air passenger duty and aggregates levy should be devolved to Wales if deemed useful;^[11]
a procedure should be created to enable Parliament to confer power on the National Assembly to introduce new taxes in Wales when requested;^[12] and,
the Assembly Government should receive limited powers to borrow in order to finance capital expenditure;^[13]

Reception

Public Finance magazine reported that the Holtham Commission's final report was welcomed by Labour, Conservative and Plaid Cymru politicians - although Welsh Business and Budget Minister Jane Hutt was said to have given a more "muted" response to Holtham's recommendation that the Assembly Government should gain tax-varying powers.^[14] Former First Minister Rhodri Morgan opposed this idea, arguing that there was "no mandate" for tax-varying powers in the 1997 devolution referendum.^[15]

James Mitchell of Strathclyde University called the Holtham Commission's conclusions "remarkably bold... its proposals on income tax are, in important respects, bolder than those proposed by Calman" (the commission created in 2007 to review Scottish devolution). Mitchell noted that Holtham's critique of the Barnett formula, which he regards as advantageous to Scotland, "ought to be a wake-up call".^[16]

Notes

↑ Welsh Assembly Government press notice announcing the Commission
↑ "One Wales agreement" (PDF). BBC News. Retrieved 14 July 2010.
↑ "Final report Fairness and accountability: a new funding settlement for Wales" (pdf). Independent Commission on Funding and Finance for Wales website. July 2010. Retrieved 16 July 2010.
↑ "Independent Commission on Funding & Finance for Wales - About us". Welsh Assembly Government. Retrieved 27 July 2010.
↑ Press notice announcing the first report
↑ Final Report Summary, page 5
↑ Final Report Summary, page 20
↑ Final Report Summary, page 32
↑ Final Report Summary, page 35
↑ Final Report Summary, page 39
↑ Final Report Summary, page 40
↑ Final Report Summary, page 41
↑ Final Report Summary, page 45
↑ Dicken, Paul (15 July 2010). "Holtham review calls for Welsh tax powers". Public Finance. Retrieved 22 July 2010.
↑ "Rhodri Morgan opposes tax-varying powers for assembly". BBC News. 7 July 2010. Retrieved 22 July 2010.
↑ Mitchell, James (9 July 2010). "A perfect example of how devolution should operate". Herald Scotland. Retrieved 23 July 2010.

References

""Fairness and accountability: a new funding settlement for Wales", final report by the Independent Commission on Funding and Finance for Wales" (PDF). Welsh Assembly Government. Retrieved 12 July 2010.

External links

Devolution in the United Kingdom

Devolved areas

National level	Northern Ireland Scotland Wales

Regional level (in England)	Combined authorities Directly elected mayoralties Greater London Authority

Referendums¹

English mayoral referendums
- London, 1998
- 2012
North East England
- 2004
Northern Ireland
- 1998
Scotland
- 1979
- 1997
Wales
- 1979
- 1997
- 2011

Heads of devolved governments

Devolved legislatures²

Devolved administrations³

Organisations and laws of the
legislatures and governments
of the UK and the devolved areas

Commissions (UK Parliament)	Kilbrandon Commission Holtham Commission Silk Commission McKay Commission

Commissions (devolved legislatures)	National Assembly for Wales Richard Commission Holtham Commission Scottish Parliament Calman Commission Smith Commission

Devolution acts	Greater London Authority Acts 1999 2007 Northern Ireland Acts 1998 2006 Wales Acts 1998 2006 2014 Scotland Acts 1998 2012 2016

Select committees	Northern Ireland Affairs Scottish Affairs Welsh Affairs

Grand committees	England Northern Ireland Scottish Welsh

Departments and Territorial Offices (MOJ)	Cabinet Office - Devolution Secretariat Ministry of Justice - Devolution Directorate-General Office of the Advocate General for Scotland Northern Ireland Office Scotland Office Wales Office

Elections

Current	Agreements/Treaties Anglo-Irish Treaty Good Friday Agreement Budget Barnett formula Block grant Constitution of the United Kingdom Reserved and excepted matters West Lothian question

Proposals	Cornwall Cornish Assembly Cornish Constitutional Convention Mebyon Kernow Revived Cornish Stannary Parliament Devolved English parliament Campaign for an English Parliament Northern England Campaign for the North Yorkshire First Other parts of Southern England Wessex Regionalist Party Scotland Full fiscal autonomy

Historical	Administrations of England English Regional Assemblies, 1998-2010 Administrations of London London County Council Greater London Council Administrations of Northern Ireland 1922–72 1974 Legislatures of Northern Ireland 1922–72 1973–74 1982–86 Northern Ireland-related legislation of the UK Parliament Ireland, 1886 Ireland, 1893 Ireland, 1914 Ireland, 1920 Irish Free State, 1922 Northern Ireland, 1974 Irish Home Rule movement Prime Minister of Northern Ireland Scotland Act 1978 Scottish Office Sunningdale Agreement Wales Act 1978 Welsh Office

1. Rejected referendums are italicised. The others were fully or partially approved.
2. There is no law-making body for any regionally devolved area.
3. Administrations of regionally devolved areas are omitted.

Category

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