My Lords, I thank the noble Lord, Lord Wigley, for moving Amendment 83, which seeks to assign a share of the VAT revenues generated in Wales to the Welsh Government in the same manner that a share of VAT raised in Scotland will be assigned to the Scottish Government following the Smith commission agreement, given effect through the Scotland Act 2016. In parenthesis, I may be wrong but I do not think that Scotland has the right to vary the rate, so it is possible to protect that element.
It is important to understand the purpose of VAT assignment, which is to increase the link between the Scottish Government’s policy decisions and their budget, and thereby further increase their accountability and give them power for a purpose. While assignment does not, as I said, enable the Scottish Government to change VAT policy in Scotland, they have a wide range of policy levers at their disposal which can affect the performance of the Scottish economy and can therefore impact VAT revenues in Scotland. For example, the Scottish Government’s approach to skills, planning, housing and transport all have an effect on the performance of the economy and therefore on VAT—as, of course, can their approach to taxation. The impact of these decisions on the Scottish economy, and in particular on VAT revenues, will in the future feed through into the Scottish Government’s funding.
Of course, these arguments can also be made in relation to Wales. The Welsh Government have a similar range of economic policy levers and one of the Government’s key aims is to increase their accountability and to give them power for a purpose. However, I share some of the caution urged by the noble Lords, Lord Hain and Lord Rowlands, and by the noble Baroness, Lady Morgan of Ely. The independent, cross-party Silk commission gave full consideration to the case for assigning a share of the VAT receipts generated in Wales and, while it recognised some of the arguments I have set out, it ultimately recommended against VAT assignment in Wales. Unlike in Scotland, there is therefore no clear consensus of support for the proposition. Our focus at this time should be to work with the Welsh Government to implement the Wales Act 2014 and to look at the main thrust of this legislation and take it forward on that basis. I therefore urge the noble Lord to withdraw his amendment.