The Government’s proposals to give the Welsh Assembly power to vary income tax rates are not worth putting to the people, said the former Secretary of State for Wales Paul Murphy in a meeting of the Welsh Grand Committee.
Describing the Government’s draft Wales Bill as, “seriously and deeply flawed” the Torfaen MP raised concerns that any extra revenue raised from Income Tax would not benefit Wales, as the Treasury would correspondingly reduce Wales’ block grant.
He told the Committee that an important principle of public spending is that wealthier areas should support those relatively worse off, such as Wales. As such, he said it was important the block grant was not jeopardised by changes to Income Tax rates.
Mr Murphy said the people of Wales would think politicians had gone “completely bonkers” if they brought forward a referendum “that costs millions, but ultimately did nothing to improve our schools, hospitals and other vital services”.
He also expressed concerns for the turnout at such a referendum. “Referenda normally deal with weighty matters of state. I think it is going to be very hard to convince people it is worth leaving their homes on a wet and windy Thursday evening to vote for something that has little noticeable impact on their everyday lives.”
“Raising revenue is about providing better services. Unless the people of Wales can see more money and real benefits from changes to income tax, what’s the point?”
He went on to say that though he strongly welcomed extra borrowing powers for Wales, £500 million for capital projects was not nearly enough.
“If Northern Ireland – with a population half our size – can borrow over £2 billion, then a figure of £500 million for Wales seems ludicrous,” said the Torfaen MP. “This would leave a gross disparity of borrowing powers between Scotland, Northern Ireland and Wales when what we need is equality.”
