The Assembly returned this week from a summer of discontent, as the fallout of the Brexit vote gathered pace and internal battles within the Labour Party resulting in yet another leadership contest, less than a year since the last one. There is no doubt that the UK’s withdrawal from the EU will dominate politics and decision-making in Wales and in Westminster for years to come.
First Minister Carwyn Jones spent the summer reflecting on the result, and he recently travelled to the United States to reiterate the message that Wales is most certainly open for business. In a major speech to the Chicago Council on Global Affairs, he emphasised the need for a dynamic business environment, while delivering strong public services, funded through fair taxation. Keen to promote Wales as an outward facing nation, he stressed his Government’s commitment to continuing Wales’ record as a strong trading partner and a compelling location for inward investment.
While accepting that the majority of people in Wales voted to leave, he has said that they didn’t vote to be ripped off and it would, therefore, be a dereliction of duty not to bat for Wales’ best interests. He will focus his key concerns on tariff-free access to the single market (whichever form that could take), a seat at the table during negotiations for the Welsh Government, and using the significant changes to take a longer-term view of the UK.
The First Minister reiterated this position back at the Assembly this week in evidence to the External Affairs and Additional Legislation Committee and a statement to AMs. He confirmed a number of new channels were being established to take the process forward including a European Advisory Group whose membership has yet to be confirmed and a sub-committee of the Welsh Cabinet to meet monthly.
Reaching a decision on the best way to proceed with Brexit would be “a test of the UK’s current constitutional architecture”, stressing that it should be an agreed four-nations approach and could not be done bilaterally.
There will be intense negotiations between Cardiff and London over this period, in addition to discussions with Brussels. Three main areas of spend that will be repatriated to the UK will be farming subsidies, skills and employment and regional funding for poorer areas. We can expect significant divides between Labour in Cardiff and the Conservatives in London on the extent to which these three areas should be devolved, and how they should be divided. Once that decision is made, the next is whether the funds are ‘Barnetised’ according to population to shared based on need. The First Minister is clear that if it is the former, then Wales could lose out on all three areas.
Meanwhile, discussions continue between Labour and Plaid Cymru over the budget deal. Carwyn Jones knows that he needs one more vote to get his budget through this Autumn. Nathan Gill leaving the UKIP Group is an indication that different deals are possible every year during this Assembly.
Also this week, the Bill for a Land Transaction Tax was introduced to the National Assembly, which is set to replace the current Stamp Duty Land Tax - giving Wales the powers to raise its own taxes for the first time in nearly 800 years. Welsh Ministers are due to set the rates for the tax in the autumn of 2017, raising around £250m a year.
Following scrutiny by AMs, it is expected to receive Royal Assent in spring 2017, and launched in April 2018. Finance Minister Mark Drakeford has said he will not be introducing significant changes right away, to avoid early confusion, and because the previous Chancellor of the Exchequer had already reformed the slab system. Over time, it is likely to change, with a movement towards a more progressive profile.