Independent Commission On Funding and Finance For Wales - Findings and Recommendations

Findings and Recommendations

The Commission began its work in autumn 2008 and published its first report in July 2009. 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.

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;
• the Assembly Government should acquire limited powers to vary income tax rates in Wales;
• the Assembly Government should seek a discussion with the UK Government about the feasibility of devolving corporation tax;
• 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;
• landfill tax, air passenger duty and aggregates levy should be devolved to Wales if deemed useful;
• a procedure should be created to enable Parliament to confer power on the National Assembly to introduce new taxes in Wales when requested; and,
• the Assembly Government should receive limited powers to borrow in order to finance capital expenditure;