Why the UK’s power lies in a connected union
AT a time when leaked documents on Anglo-American relations have made waves across the Atlantic, questions have been posed on whether relations closer to home are going swimmingly.
It centres on two areas of concern – namely the ‘Barnett formula,’ the UK’s government’s method of calculating its block grant to both Wales and Scotland, and a gap in tax revenues for the latter.
Contradictory statements made over the years by Prime Minister nominee Boris Johnson on the formula’s future have sparked fears of an overhaul at a critical time for Welsh finances – however Mr Johnson’s campaign team has now insisted the formula will remain unchanged should he become PM.
As for tax revenues, this is proving more urgent, most notably in Scotland. Finance Secretary Derek Mackay faced strong questioning on a possible budget shortfall in tax revenues, dubbed ‘the black hole’, of £1bn. This hinges on changes made by Westminster to budgets Holyrood has available from next April.
The matter has quickly reached the Senedd, with Mark Reckless asking Rebecca Evans, Minister for Finance, what lessons can Wales learn from Scotland? Mr Reckless also asked whether contingency and reserves are necessary to mitigate ‘matters potentially outside our control.’
Ms Evans pointed to a key differentiator being the level of powers devolved to Scotland in respect of income tax. However the minister admitted that Wales cannot afford to be in a situation in years to come where it is forced to pay back money not factored into its future budgets.
When talking tax, it is very easy to become entrenched in the devil of the detail. However it is too simplistic to ignore the wider issue of the union, and more specifically it being shrouded in uncertainty.
Earlier this month, the Prime Minister’s de facto deputy, David Lidington, revealed growing concern at the state of the union – most notably on the perception the UK government failed to back Welsh industry. It points to a legitimate concern with Westminster, where relations have been strained at times over culled infrastructure projects such as the M4 relief road, Swansea Bay Tidal Lagoon and rail electrification.
His suggestion, reported in the Financial Times, over ‘improved branding’ on UK government projects would seem somewhat superficial.The primary concern for many is the proposed reallocation of £680m allocated to parts of
Wales each year from EU funds. Post-Brexit, this fund is set to be returned to the shared prosperity fund, to be administered from Westminster.
When pressed on how Wales can get a fair deal in this arrangement, both UK prime ministerial candidates set out different ways they would approach the issue.
Jeremy Hunt promised ‘shared prosperity’, underlining his £6bn show of support for farmers and the fishing community in a probusiness pitch in Wales this month. His rival Boris Johnson echoed the calls on shared prosperity, yet pinpointed infrastructure investment as a priority – reigniting the tidal lagoon and questioning the M4 relief road’s cancellation.
Whether it is through being probusiness, or pro-infrastructure, many point to a union working with clear, coordinated and connected purposes as the priority for Wales’ post-Brexit future.
At ACCA, this quarter sees us focusing on the ‘Power of Connections’, where we celebrate how our unrivalled connections continue to shape the global accountancy profession. Connecting people with fulfilling careers, organisations with the best finance talent, and economies with the ingredients for growth are fundamental areas we focus on. Earlier this month, we held an event at the Management Centre in Bangor which brought together members from ACCA, the Chartered Management Institute (CMI) and the Chartered Institute for Personnel Development (CIPD) to discuss the challenges and opportunities in different sectors – from automation, AI, robotics and machine learning. We also heard from Iwan Trefor Jones, Lead Director of the North Wales Economic Ambition Board about how working in partnership would be delivering the North Wales Growth Deal.
The same rules from the ‘Power of Connections’ can be applied ultimately for a powerful, strong performing, and effective union.
Time will tell just how connected Wales, Scotland, Northern Ireland and England are, at a time where there are growing calls for independence in Scotland and in Wales from some quarters.
Given the likely increased importance of the internal market for many industries after Brexit, the union, and how its members are funded and the powers and levers that they have at their disposal to shape their own futures, will be an important factor in the new government at Westminster’s thinking, as well as in the Welsh and Scottish Assemblies.
■ Lloyd Powell is Head of ACCA Cymru Wales