‘New taxes and refined development the future’
How can Wales fix its economy? Political editor-at-large Martin Shipton examines the advice given in a new report from global economic authority the OECD, which calls for a more integrated and streamlined approach
AS THE poorest nation in the UK, Wales needs to find new ways of funding the high-quality public services its citizens expect, according to the Organisation for Economic Co-operation and Development.
A 250-page report from the OECD on the Welsh economy that is due to be published next week suggests a number of ideas for increasing revenue.
It states: “Addressing the design of council tax and non-domestic rates could be part of a comprehensive review of the local government funding system, particularly as adjusting the UK/Welsh devolution settlement may not be a viable option at this time.
“The margin for manoeuvre with council tax is relatively narrow, due to the low tax base in many local authorities, in particular those experiencing population decline or stagnation, and the already high rates in response to the decline in [funding from the Welsh Government].
“Despite this, consideration is being given to several aspects of the council tax to make it more effective, including revaluation and more buoyancy, updating tax bands and the progressivity of the tax rates, and collection efficiency and accountability.
“The design of non-domestic rates (NDR) is also being reconsidered. Currently the system does not provide specific incentives for using NDR to pursue policies supporting businesses or to favour commercial development. This is despite legislation that permits such actions.”
The report says that another option under discussion is diversifying a range of newly devolved taxes to include a vacant land tax, a social care levy, a disposable plastic tax and a tourism tax.
It states: “All of these could help sustain quality local services.
“International experience shows that among these options, tourist taxes are particularly successful at the local level, and tax receipts could directly support the growing tourism business in Wales.
“Over the last 15 years there has been a general increase in the number and scope of tourism-related taxes, fees and charges in OECD [countries] and the EU.”
The report also suggests that funds could be raised by the sale of “green bonds” to investors with a social conscience.
It says: “The green bond market is still young, but it is rapidly gaining traction in financing green projects that deliver environmental benefits.
“Green bonds share the same financial characteristics as conventional bonds, with the exception of the ring-fencing or earmarking of proceeds required for the green label. They are usually issued by large-sized cities or groups of cities that pool together their financing and human capacities, for example in France and the Nordic countries.
“They are complementary to social bonds, intended to finance socially responsible investment.
“However, for green bonds to be successful, governments need to develop a pipeline of quality, bankable projects.
“Participatory budgeting and civic crowd-funding can channel funds towards small-scale projects, and in particular projects that traditional funders will not finance due to their limited profitability.
“These financing mechanisms carry value related to common good and social, cultural or environmental purposes. They are particularly well-suited for lower cash value, short-term projects with high visibility and impact, such as local community projects that would have trouble raising external funding.”
Local infrastructure projects could involve investment for construction and restoration, for creating and improving green or public spaces and providing community infrastructure and equipment.
To maximise the impact of such measures, says the report, local authorities could match the amounts committed through participatory and crowd-funding budgets with a certain share of their own budget, and replicate the exercise on a regular basis.
Explaining why regional development policy in Wales needs to be fine-tuned, the OECD report states: “The current framework that supports decision-making for regional development in Wales is comprehensive, yet it is also fragmented across policy sectors and government departments, putting at risk policy coherence and rendering integrated, cohesive implementation potentially difficult...
“Moving forward, there is value in considering a more integrated, streamlined approach to regional development policy.
“A stand-alone, long-term national regional development policy is not a panacea for low regional growth, but it can be a step to promoting a stable, longterm regional development path for Wales.
“It offers the opportunity to create a truly integrated policy approach and is associated with some distinct advantages. Significantly, it helped coalesce investment priorities, ideally contributing to synergies and complementarities in investment initiatives rather than engendering competition.
“Designing and implementing an integrated national regional development policy, supported by a comprehensive public investment policy, necessarily requires effective collaboration and co-operation among diverse stakeholders across Welsh Government.
“This can help build a stronger sense of ownership for the policy, its objectives and outcomes.
“It can also provide an opportunity for more innovative solutions, and smooth out potential implementation difficulties at the design stage.
“Introducing such a policy could help Wales address the problem of fragmentation in its policy documents for regional development, contribute to a more joined-up approach to policy-making, and most importantly serve as an essential roadmap for sector strategies and policies that contribute to the Welsh regional development agenda of growth plus inclusiveness.”
Although efforts were made to raise the educational standards of schools after the war, it still continues today that the majority of British adults avoid the inspiration of the best, and the media, press and TV sink lower and lower, seeking the lowest common denominator to maximise profit.
Those were the halcyon days of the BBC, with The Ascent of Man, with Jacob Bronowski, and Civilisation with Kenneth Clark, superb TV programmes which are not available to the young of today. That showed the huge benefits which public service broadcasting could bring to the nations of the whole world.
Then came the “dumbing down” of the BBC under successive unprincipled directors-general, and their corrupt standards were revealed in all fields, such as differentiated salaries paid to men and women, or celebrity sports commentators, etc.
Striking evidence of British ethical corruption was shown when Labour concern for the mental health of the elderly in a free TV licence was demolished by a Tory government. Here is cause and effect. Tory destruction of the whole concept of public service has produced a mindless generation of voters. Populism reigns.
CN Westerman Brynna