Devolving Brexit: A real gift for Welsh Devolution
Wales can take back control, but it also must take responsibility
Benjamin Mackenzie discusses devolving Brexit and argues that if the Welsh people are prepared to take responsibility, they have a real opportunity for a serious, authoritative devolution settlement.
While much of the Brexit discussion has centred around the British Government and the on-going negotiations of its future relationship with the EU, little has been written about how our divorce impacts Welsh Devolution and the amazing opportunity to devolve Brexit in Wales.
Welsh Devolution has taken on a very different form than its equivalent in Scotland and for specific reasons; Wales had already rejected devolution in the 1970s and only marginally supported it in 1997, thus there has always been a sense in Wales that the jury is still out and that the future of the Welsh Assembly may be a short one. This explains the equivalent weakness of devolution in Wales compared with Scotland, where 45% of the population opted for Scotland to break-away from the United Kingdom in the 2014 Scottish Independence Referendum. The unique position of the Welsh Devolution settlement has been well documented by Daniel Greenberg whose 2013 article on the Welsh experience of Devolution is far more technically intricate than I could muster.
No longer can it be said, however, that Welsh Devolution hangs by a thread. Its operation since 1998 and its incremental development has established the Welsh Assembly as a permanent fixture of Welsh political life. This is why Brexit provides advocates of devolution with a unique opportunity to recalibrate the UK into a fully-fledged federal system. But what exactly are the problems that Brexit throws up?
Current Problems in Devolving Brexit
Before we can consider devolving Brexit, we must first tackle the somewhat bizarre attempts by the Welsh Assembly and especially the First Minister Carwyn Jones at undermining the UK’s negotiating position and purposely placing unnecessary obstacles in Theresa May’s way. Now, before I face accusations of partisanship; I have no fondness for Theresa May whatever; I view her as yet the same reconstituted Blairite which has so consistently undermined genuine conservative thought in this country. But I certainly do see it as necessary for the devolved administrations to refrain from attempts to undermine the British state, which is after all the only body responsible for withdrawing the United Kingdom from the EU.
It’s not that the Welsh Assembly is entirely unjustified in its concern; there are 64 areas of competence which theoretically lye with the Welsh Assembly, but in practice are controlled by the EU. The objection by the Welsh Assembly is that when the EU Withdrawal Bill comes into effect and Britain departs the EU, those competences will be transferred back to the UK Parliament who will then have the discretion to either pass them directly to the Welsh Assembly or hold onto them.
The response from the Welsh Assembly has been to introduce what has been called a ‘Continuity Bill’, effectively granting Welsh Government Ministers the power to amend existing legislation upon Britain’s EU departure. But there is a lot of confusion over whether this is even legal. The Presiding officer in the Scottish Parliament objected to the Continuity Bill in Scotland on grounds that the Scottish Government does not have the competence. This was disputed by the Welsh Assembly’s presiding officer, though I would at this point like to note that Elin Jones is a controversial figure in the Welsh Assembly who has, in my view, consistently failed to uphold the power of the Welsh Assembly in the face of the Welsh Government. When Carwyn Jones was prevented from forming a minority Labour Government it was believed that for the first time in the Welsh Assembly’s history Labour would be kicked out of office, were it not for Elin Jones who effectively made-up new rules and allowed the withdrawal of Leanne Wood, something which there is no provision for whatever. Then there’s the awful case of Elin Jones’ failure to uphold free speech in what is supposed to be Wales’ main forum for political debate by banning Ukip AM Gareth Bennett from speaking until he apologised for holding opinions she disagreed with.
Unfortunately, these objections from the Welsh and Scottish Government’s don’t, in my view, hold much sway. They are predicated on the idea that Westminster will, presumably because they’re evil Tories, pointlessly hold these powers for the sake of it. This is a debate surrounding trust and while it’s perfectly acceptable for the Welsh Government not to trust the British Government, the actions of the First Minister give more than ample reason for the UK Government to be cynical of his motives.
Not content with seeking to undermine the Welsh vote, which as a whole voted leave, by trying to tie Wales to the Customs Union and Single Market, thus imposing open borders and an inability to strike free trade deals, the First Minister seems intent on undermining the United Kingdom by going to Brussels to discuss Brexit, despite having no competence to do so.
No matter how much he claims to be ‘standing up for Wales’, Wales has not asked him to and the result of the referendum clearly shows the Welsh people don’t agree with him. The only effect of his going to Brussels and making excuses for so-called ‘trade talks’, another competence that the Welsh Government does not have, is to undermine the UK, and by extension the Welsh negotiating position. He is also undermining the United Kingdom, which is strange considering Welsh Labour’s so-called support for Unionism.
The introduction of a Continuity Bill was a big mistake by both the Scottish and Welsh Government’s, who would, in my view, lose were it ever taken to court. It’s ironic that Welsh Labour and the SNP are suddenly so intent on making sure these powers do not end up in the hands of Westminster, despite having no problems with Eurocrats controlling them. One can only assume the Welsh Labour Government trusts the EU more than the UK, which is hardly surprising but really is an indictment of any claim of Welsh Labour Unionism.
But putting these technical issues aside – devolving Brexit does not have to be a difficult or painstaking process and could, if followed sensibly and with goodwill by both the Welsh and UK Governments set the trend for a successful devolution in Wales that does not fundamentally undermine the Union.
Devolving Brexit starts with taxation
If devolving Brexit is to be a success we must begin by discussing the current tax arrangements which result in the Welsh Assembly being little more than a County Council. Despite new tax-altering powers (which with Socialists in government are only destined to go one way) coming into effect in 2018 over Stamp Duty and new Income Tax powers coming in 2019, the Welsh Assembly is still funded by a budget set at Westminster through the Barnett Formula. This is the single biggest obstacle to successfully devolving Brexit.
The link between the taxed and the taxers is an integral element of authority and legitimacy. A report from Cardiff University illustrated the dire financial situation Wales faces, with the country in 2014-15 spending a massive £15Bn more that the Welsh taxpayer raised. A parliament which does not raise its own capital is content in the knowledge that the repercussions of its actions will have no recourse. Could you imagine for a second the Welsh budget being reduced by Westminster on grounds of incompetent spending? Suddenly, what appeared a settlement between nations on finance begins to resemble a foreign aid package, squandered by self-indulgent dictats.
The Welsh Labour Government have long been able to get away with wasting tax payers money, whether on spurious trips abroad or on pie-in-the-sky infrastructure schemes. Just imagine how much less the Welsh Government would be able to get away with this sort of self-indulgence if the Welsh taxpayer had to foot the bill instead. When Welsh income taxes have to be raised substantially to cover the Welsh Government’s exuberance, the Welsh will for the first time feel the negative consequence of big government; the crippling cost.
The Welsh Assembly will never be a proper parliament until the entirety of its spending is raised in Wales. At present the Welsh Government is banking on their spending being covered by those without a vote. Removing this convenient loophole would act as the single greatest act of consolidating devolution and why not tie it to Brexit?
Sure, £15Bn is not an easy number, so it makes sense for this process to be incremental. Now conservatives may be instinctively opposed, wondering whether this undermines the idea that the United Kingdom helps its member countries when they fall on hard times. But it is my contention that this settlement will ensure that Wales remains permanently on hard times, living far beyond its means in a financial dream world.
Devolution has happened and cannot be undone. Conservatives must acknowledge this and work to find a settlement that does not undermine the Union but enforces it. Complete devolution of tax raising and altering powers, combined with an incremental fall in subsidy over a 5 or 10-year period would grant the Welsh Government far more power, more commensurate to a Parliament, but would also force it to take on a whole lot more responsibility, responsibility I do not believe the current government could handle.
Is it any wonder that conservative voices are a minority in the Welsh Assembly when Socialists can count on subsidies and conservatives have no power to cut taxes? How can the Welsh Conservatives go to the Welsh people and argue for cuts in government spending when they know full well that the only result will be of benefit to the UK Treasury? It’s a completely uneven playing field and anyone with sense can see it.
By ensuring that Welsh Assembly spending is directly linked with what the Welsh taxpayer raises, we can finally ensure that it receives the scrutiny it so desperately needs and that the Welsh people will, for the first time, be offered a taste of what it is truly like to be sovereign over your own destiny.
What does devolving Brexit mean for the UK Government?
I mentioned taxation on its own simply because I cannot see how anyone could refer to the Welsh Assembly as an authoritative and legitimate government while it continues to spend money derived from an outside source. I could now discuss all areas over which I believe the Welsh Government should have control, though I fear it would turn this piece into a book rather than something I hope will be easy to read and useful to the Welsh people. Therefore, instead I want to outline what a federal UK government would look like and what its competence should be moving into the post-Brexit world. These competences should be limited to trade, defence of the realm and borders.
I hope that I’ll be forgiven for being brief on the trade front. It’s by no means impossible for the Welsh Government to control trade, though it would make little sense to abandon a union that has free-trade and commerce in its DNA. The British Government has long spearheaded free-trade and despite opting to surrender that competence to Brussels in 1975 there is no doubt that the world is eager to do business with a newly, independent Britain, despite what some of the most outlandish Remainers would have us believe.
In Wales there appears to be little debate over the idea of the UK retaining control over trade agreements. Despite the First Minister wasting tax-payer’s money on his ‘trade trips’ – ultimately, whether we reduce tariffs and allow our citizens cheaper goods will be down to the UK government and that should remain. I see of no conceivable reason why there would be any significant diversion on standards, policy or direction between the countries of the UK, though I do foresee a large, immediate issue for a Welsh trade policy, when Wales only exports around £12Bn of goods.
With regards to defence of the realm, the UK should retain the sole responsibility for the Armed Forces, war and international diplomacy. The single most damaging element of devolution to Unionism is the insistence on having 4 different voices on the world stage for what is effectively one nation. There has never been an official Welsh Army, though Welsh Regiments of course exist in the British Army.
What must be made clear within the devolved administrations is that they are solely domestic institutions, where the UK Parliament is not. We should not be seeing the First Minister of Wales anywhere near international diplomacy. The only result of this is to give an opportunity to other countries to undermine the UK. For too long we have been watching as Carwyn Jones, usually on tax-payer’s money, takes liberties in talking for the Welsh people when he has no mandate to do so.
Nobody reading this should be under any illusion why borders should fundamentally remain a UK competence, but I will be brief anyway. Borders represent the territory under which we are governed. One of the reasons the United Kingdom has been so successful as an identity is because migration has allowed the 4 countries that make it to interact and blend with each other. Thus, while there remains a very strong sense of Welsh and Scottish identity, (England not so much as the multicultural experiment continues) there is also a strong sense of British identity also.
This is precisely why the EU has insisted on open borders and the free movement of people. By encouraging massive migrations between the countries of Europe, the EU has been able to diminish the strength of identity within each nation, thus undermining the unique claim of such a nation to its unique prejudice, territory, culture and identity. This has not occurred in the UK largely because this Island has, throughout its entire history, maintained a relatively homogenous group of people whose divergence on culture is not fundamental but almost aesthetic.
Within this however there is plenty of room for compromise. One policy I have pushed for a number of years now as a counterbalance to the large influx of English people to Wales are residents’ permits. This would ensure that no borders were necessary, while each country could retain some control over who they allow to reside there. This, I would argue, is increasingly necessary for Wales as England continues to pursue a destructive mass-migration and multicultural experiment which, if left unchecked, could well spill over into Wales.
Now is the perfect opportunity for devolving Brexit and working towards a federal system for the UK. For no country is this more important than Wales, which has consistently suffered from being a quieter voice on devolution, dwarfed by Scotland.
Let’s not allow powers to fester in Westminster, but let us also take responsibility. The Welsh Assembly will remain a County Council until the entirety of its spending is raised in Wales, everything else must follow afterwards. Only when we are prepared to pay our own way can we realistically demand the responsibility that comes with it. Let us hope that our leaders are up to the challenge, I know the Welsh people are.
 Greenberg, D. (2013) “Welsh Devolution,” Legal Information Management. Cambridge University Press, 13(3), pp. 134–138
NB: I’ve recently made a few slight changes to this to be a little more accurate. I’d like to thank Dan Pryce Lawrence for pointing them out and offering some sound constructive criticism. I’ve removed the phrase ‘English subsidy’, it was a bit over the top and doesn’t fully reflect the situation.
I’ve opted against altering a few of the points regarding the £15bn deficit in Welsh spending. The £15Bn represents the deficit between the entirety of Welsh spending (including the 47% by the UK Government) which stands at £38Bn compared with the £23Bn approximately raised from Welsh taxpayers. My assumption is that the 47% of UK Government spending would be spent no better if it were controlled in Wales, thus even if the Welsh Government spent 100% this would still represent a shortfall of £15bn. With regards to Daniel’s point about the deficit, statistics from the Office for Budget Responsibility for March show a current account deficit of £1.6Bn which when adjusted for the size of the British economy and its tax receipts is miniscule. Capital deficit yes, but it’s the current account that really hurts debt levels.