House of Commons Library

Wales Bill 2013-14

Published Thursday, March 27, 2014

The Wales Bill had its first reading in the House of Commons on 20 March 2014; it is due to have its second reading on 31 March 2014. The Bill devolves some tax-raising powers to the National Assembly for Wales. Stamp duty and landfill tax are devolved, while a power is created to reduce income tax by 10 pence in the pound and put a Welsh rate of income tax in its place. The Bill allows these powers over income tax to be devolved only if they are approved in a referendum, the calling of which is subject to parliamentary approval and a two-thirds majority in the Assembly.

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The Wales Bill 2013-14 had its first reading in the House of Commons on 20 March 2014; it is due to have its second reading on 31 March 2014.

The Bill is the latest in a series of adjustments to devolution in Wales. It does not recast the governance structures or the style of legislating, in contrast with the Government of Wales Acts of 1998 and 2006, but it does introduce important new powers, expanding the competence of the Assembly into financial matters, as well as modifying some features of the Assembly.

The Bill comes after a period of discussion by independent commissions: the Holtham Commission, which looked at funding, tax and borrowing, and the Silk Commission, which, in its first report, published in November 2012, also examined the financial powers of the National Assembly for Wales. The Bill follows through the Government’s acceptance of the bulk of the recommendations in the Silk Commission’s first report, which it announced in its response to the report, published in November 2013.

Tax policy, except council tax, is currently outside the legislative competence of the National Assembly for Wales. The Bill changes that competence to include certain taxation matters, which are thereby devolved. Stamp duty land tax and landfill tax are devolved. The possibility is created of devolving or introducing new taxes. The potential is also created to devolve some powers over income tax if Wales voted in favour of this in a referendum. The Bill does not call a referendum itself: this would be done subject to approval by both Houses of Parliament and a two-thirds majority in the Assembly. The Bill would also give the Assembly greater borrowing powers, including for capital expenditure.

The financial measures introduced by the Wales Bill are broadly similar to those introduced for Scotland in the Scotland Act 2012. The Scotland Act 2012 did not require a referendum on devolution of income tax powers as Scotland voted in favour of tax varying powers for the Scottish Parliament in the 1997 referendum. Previous referendums in Wales have been characterised by low turnout, marginal results and/or controversy over the funding of campaign groups.

The Bill makes changes in some other areas, most notably in respect of the Assembly itself:

• it changes the term of the Assembly to five years,

• allows candidates to stand in constituencies and regions at the same time, and

• removes the possibility of sitting both in the Assembly and in the House of Commons

The Bill also makes provision on local housing authorities. This is connected to the abolition of Housing Revenue Account Subsidy (HRAS), including a requirement on Welsh ministers to introduce a borrowing cap on individual local authorities.

Finally, the Bill adjusts the relationship between Welsh ministers and the Law Commission, providing for a protocol between the Law Commission and the Welsh Government in respect of the Commission’s work relating to Welsh devolved matters. This could be seen as partial preparation for moves towards a separate legal jurisdiction.

Commons Briefing papers RP14-19

Authors: Paul Bowers; Oonagh Gay; Antony Seely; Dominic Webb; Isobel White; Wendy Wilson; Mark Sandford

Topics: Devolution, National Assembly for Wales, Taxation

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