Next steps in Welsh devolution

The eagerly-awaited Commission on Devolution in Wales will get to work in the next few weeks, following the announcement by Secretary of State Cheryl Gillan on 11 October. This development comes at a time when the Scotland Bill, which will transfer further tax-raising and borrowing powers to Edinburgh, is being examined in the House of Lords, and follows on from the recent decision to devolve aspects of the Air Passenger Duty to the Northern Ireland Assembly following the recommendations of the Northern Ireland Affairs Committee. Also on the agenda are the SNP’s plans to hold a referendum on independence and/or “devo-max”, the latter of which would shift the UK’s fiscal constitution closer to a formally federal model.

In Wales, the independent commission (also known as the “Silk Commission”, after its chairman Paul Silk, the former clerk for the National Assembly for Wales) is the most recent development in an ongoing review of the operation of the Welsh devolution settlement. It features six experts, two of whom are independents: Dyfrig John and Professor Noel Lloyd, respectively the chairman of the Principality Building Society and former Vice-Chancellor of Aberystwyth University. All other members of this cross-party body were politically nominated: Professor Nick Bourne (the party’s former leader in Cardiff) will be the Conservatives’ voice in the commission, Sue Essex will represent Labour, Rob Humphreys the Liberal Democrats, while Plaid Cymru will be represented by Dr Eurfyl ap Gwilym.

The “Silk commission” will work in two consecutive phases: the first will focus on further devolution of financial powers to Wales to make the Assembly more accountable, while ensuring consistence with the UK’s financial goals, and should end in autumn 2012. The second phase will look to potential improvements of the constitutional settlement for Wales and is set to end in 2013. Its purpose is to propose solutions that attract wide cross-party agreement, in contrast to previous Welsh devolution developments, which were typically developed by Labour alone. Last week Paul Silk declared that he had an “entirely open mind” on the questions the commission should examine, which could include the creation of a separate Welsh jurisdiction, although Wales’ powers on setting its own income and corporation tax will feature at the top of the agenda. Cheryl Gillan’s announcement comes at a time of growing tensions between the Labour-led Welsh government and the Conservatives in power at Westminster.

At the Conservative Party conference earlier this month, the Secretary of State for Wales criticised the culture of “power without responsibility” in Wales and the weak link between money raised and money spent in the region. Meanwhile, although Labour has welcomed the commission, shadow Welsh Secretary Peter Hain declared himself "suspicious [...] at a time when their savage cuts are hitting Wales so hard [...] about the impact any tinkering in the funding formula will have". Moreover, the commission’s Terms of Reference are more restrictive than the Calman Commission on Scottish Devolution on which this new body was modelled. Its remit does not include reform of the Barnett formula or further borrowing powers – which are instead being discussed separately between the UK and Wales at the ministerial level – and does not encompass reform of the structure of the Welsh Assembly (for instance, the electoral system). Finally, as the Institute for Welsh Affairs’ John Osmond has hinted, the commission faces a time constraint in that it must report before 2014 and the expected Scottish referendum which may pave the way for fundamental reform of the structure of the UK. This will – as Osmond pointed out – prevent the Silk Commission from drawing up potential scenarios on the course of action Wales should take in response to the Scottish developments.