New financial powers for Wales

The Prime Minister confirms further devolution for Wales, including borrowing powers & referendum on income tax.

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  1. Adrian Masters

Cameron's 'Double Yes' for Welsh income tax

David Cameron and Nick Clegg in the Senedd in November

At a reception for lobby journalists last night, the Prime Minister used a phrase I think you'll hear from Conservative politicians a lot more in 2014. The phrase was 'double yes' and is David Cameron's shorthand for his approach to what should happen next with income tax powers for Wales.

A Wales bill is expected to be published before the end of the year (which only leaves next week) paving the way for a referendum to be held. If there were a Yes vote in that referendum, it would give the Welsh Government partial control over income tax raised in Wales.

When I asked David Cameron about the prospects of a referendum he said he'd be pushing for a 'double yes' and added that meant 'yes' to holding a referendum in the first place and then campaigning for a Yes vote in that referendum. And he's urged Welsh Tories to do the same.

Labour is against getting that power without reform of the way the Welsh Government is funded. Only this week, the First Minister said it would be a Tory 'trap' to transfer income tax control with unfair funding. You can see his comments by clicking here.

Welsh Conservatives in the Assembly are in an awkward position. They back the transfer of income tax powers but remain disappointed by the type of transfer on offer. They want the power, as recommended in the Silk Commission, to alter separate tax bands so that they can cut the middle rate.

But the power that will be set out in the Wales Bill next week is what's known in the jargon as 'lockstep' which means that a future Welsh Government would only be able to vary each of the three income tax bands at the same rate.

Sources close to Welsh Conservative leader Andrew RT Davies says he and Tory AMs will continue to campaign to be able to lower the 40% band 'because it's the only realistic band to reduce.'

They're clinging onto that in the face of the difference of opinion with the London end of the party because there have been some hints that the Treasury might leave open the prospect of future change to the form of income tax power.

Certainly the Welsh Liberal Democrats would want that to be the case because they want to cut the basic rate by 2p. And they, don't forget, boast of a direct line to the Lib Dem Chief Secretary to the Treasury, Danny Alexander.

That's for the longer-term. In the near future, 2014 looks set to be a struggle between Labour's resolute no and David Cameron's 'Double Yes.'

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