The consequences for Wales will probably be the last thing on Scottish voters’ minds when they cast their ballot for or against independence in 2014. Nevertheless there are huge implications for the rest of the UK flowing from any Yes vote north of the border. It would halve the size of Britain’s Celtic fringe from 10m to 5m people. Consider the political implications for the right-left balance in “Rump-UK.” What about the ability of Wales and Northern Ireland to get their voices heard within that Rump country—would it be sustainable?
The November release of the Scottish National Party’s White Paper, in which it presented its case for independence, generated a great ballyhoo. In comparison, little attention was paid to another announcement made a week earlier. Its subject was the devolution of tax and borrowing powers to Wales.
The British and Welsh governments revealed the decision jointly, to show that full independence is not necessary in order to win more devolved powers. All that is needed is for governments to negotiate.
The muted response was down to confusion. The Welsh Assembly had asked to be given the power to set borrowing levels, landfill tax, stamp duty and business rates. However, the right to vary income tax by up to 10p in the pound is being imposed by the UK government on a somewhat reluctant Welsh government. The latter is quietly pleased that full income tax powers can’t be handed over without a referendum.
If that referendum were ever to take place it would be the fourth on devolution in Wales. The reason for the Welsh government’s reluctance to take on the power to vary income tax is that it would lock in place the current mechanism by which Wales is funded. Present arrangements underfund Wales by £300m a year. Correct the underfunding, says the Welsh First Minister Carwyn Jones and we’ll go for the income tax referendum.
But no one will contemplate a major reform of the Barnett Formula, which determines the level of funding to Wales, Northern Ireland and Scotland. No income tax referendum without reform of the Barnett Formula for Wales. No reform to the Barnett Formula until after the Scottish referendum.
Scotland has just over five million people, Wales just over three million and Northern Ireland 1.8m. England has an overwhelming 53.5m out of the UK’s 64m population—more than 83 per cent of the total. Were Scots to…