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05.12.16

Wales ‘on track’ for fiscal devolution, says auditor general

The Welsh government is hitting its targets as it prepares to assume devolved responsibilities for taxation, but the project will require careful supervision, the Welsh government auditor has said.

The auditor general for Wales, Huw Vaughan Thomas, has said that while plans for the transition are going smoothly, there are still “significant challenges” in forming more detailed plans and delivering key elements such as the formation of the Welsh Revenue Authority (WRA).

Vaughan Thomas made his comments in a report released by the Wales Audit office, which assessed how the Welsh government is approaching fiscal devolution. The report comes as Wales gets set to assume responsibility for raising part of its own tax revenues for the first time from April 2018.

Commenting on the report, Thomas underlined the “huge significance” of the transfer of tax powers to Wales, adding: “Handling this transfer effectively is crucial if the next phase of devolution is to be smooth and a success.”

While acknowledging the outstanding challenges faced by the Welsh government, Thomas said that he was “encouraged… to see that preparations are on track”.

The report concluded that the fiscal reform agenda was “well structured, has been appropriately resourced, and is making generally good progress”, with staff sufficiently experienced and skilled in assisting the process.

It also found that the Welsh government has made good progress in developing the legislative and tax framework for Wales. However, auditors identified a potential challenge in agreeing a timely fiscal framework which will strike the balance between “preparing forecasts as late as possible to ensure accuracy” and allowing the Assembly enough time to consider its 2018-19 budget.

Implementation of the WRA has been well structured and well-staffed, with applications for chair and member positions now open and set to close early in the New Year.

Welsh finance secretary Mark Drakeford said that the WRA will need to “establish itself quickly” and encouraged anyone with the necessary experience, qualities and skills to apply.

“The chair and non-executive members will be critical in ensuring the WRA has the capability to collect tax revenues to fund our public services while making sure this is done to the highest possible standards,” Drakeford added.

The Wales Act 2014, the legislation through which powers will be passed to the Assembly, paves the way for the future devolution of income tax-raising powers to Wales. It also allows Welsh ministers greater powers to lend in order to manage the Welsh budget or to pay for capital expenditure.

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