Fiscal Policy

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Funding deal can end threat of the “Barnett Squeeze”

The UK Government and the Welsh Government are currently discussing the future of a ‘funding floor’ for Wales, designed to protect the relative level of government spending per head in Wales. A new report by researchers from Cardiff University’s Wales Governance Centre and the Institute for Fiscal Studies assesses three options for the floor, and considers how such a floor might interact with the Welsh block grant after taxes are devolved to Wales from April 2018.

A landmark new report by the Wales Governance Centre (WGC) at the University of Cardiff, Government Expenditure and Revenue Wales 2016, gives the clearest picture yet of the state of welsh public finances. Guto Ifan and Ed Poole at the WGC, explain that the report shows that public sector expenditure for Wales exceeded public sector revenues by £14.7 billion in 2014-15.
 
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The suggestion that an increase in the additional rate would lead to a mass migration of wealthy Scots has been widely - and rightly - criticised, says David Eiser. However, the likelihood of widespread tax avoidance by higher earners is a very real one. 
 
The SNP has been taking a lot of criticism for its failure to support a rise in the Additional Rate to 50p. 
 
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Does Nicola Sturgeon’s refusal to increase the Additional Rate of Income Tax to 50p unless it is increased in the rest of the UK undermine the case for tax devolution? David Eiser argues that there were always going to be constraints on the exercise of devolved powers and incumbent governments have to decide how these relate to the wider policy context.
 
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Latest blogs

  • 19th February 2019

    Over the course of the UK’s preparations for withdrawing from the EU, the issue of the UK’s own internal market has emerged as an issue of concern, and one that has the potentially significant consequences for devolution. Dr Jo Hunt of Cardiff University examines the implications.

  • 12th February 2019

    CCC Fellow Professor Daniel Wincott of Cardiff University examines how Brexit processes have already reshaped territorial politics in the UK and changed its territorial constitution.

  • 7th February 2019

    The future of agriculture policy across the United Kingdom after Brexit is uncertain and risky, according to a new paper by Professor Michael Keating of the Centre on Constitutional Change. Reforms of the EU’s Common Agricultural Policy over recent years have shifted the emphasis from farming to the broader concept of rural policy. As member states have gained more discretion in applying policy, the nations of the UK have also diverged, according to local conditions and preferences.

  • 4th February 2019

    In our latest report for the "Repatriation of Competences: Implications for Devolution" project, Professor Nicola McEwen and Dr Alexandra Remond examine how, in the longer term, Brexit poses significant risks for the climate and energy ambitions of the devolved nations. These include the loss of European Structural and Investment Funds targeted at climate and low carbon energy policies, from which the devolved territories have benefited disproportionately. European Investment Bank loan funding, which has financed high risk renewables projects, especially in Scotland, may also no longer be as accessible, while future access to research and innovation funding remains uncertain. The removal of the EU policy framework, which has incentivised the low carbon ambitions of the devolved nations may also result in lost opportunities.

  • 1st February 2019

    The outcome of the various Commons votes this week left certain only that the Government would either secure an amended deal and put it to a meaningful vote on Wednesday 13 February, or in the overwhelmingly likely absence of this make a further statement that day and table another amendable motion for the following day, the Groundhog Day that may lead to a ‘St Valentine’s Day Massacre’ for one side or the other. Richard Parry assesses the further two-week pause in parliamentary action on Brexit

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