Devolution: Where does Wales fit in?

The debate on the constitution of the UK was once the preserve of geeks, anoraks and wonks. Now, energised by events in Scotland, it seems vital. Radical change is on the way and all political parties are rethinking their approach to the UK question. When I spoke about the need for a “New UK” in Cardiff after the Scottish referendum, Sky News were there to do a live brodcast. When I spoke to the Institute for Government on these issues earlier this month, there were media there from across the globe. The constitutional debate is now alive, and to ignore it would be catastrophic for the future of the Union.

After the Scottish vote, we are faced with a fundamental question, which the mainstream parties will be judged on in the years to come: can we meet the challenge of reforming the Union? Or will we do the minimum necessary to honour the pledges given to Scotland and hope the problem goes away. The latter approach would simply repeat the mistakes of the past and reinforce the notion that Westminster simply “doesn’t get” devolution.

Already, we have the Prime Minister moving from a position of saying Wales would be at the centre of constitutional debate, to allowing himself to get bogged down in a farcical debate on “English Votes for English Laws.” The truth is, there is hardly such a thing as an “English Law”—this is a solution looking for a problem, and is designed more to keep Ukip down, than to introduce meaningful devolution to England. My predecessor as First Minister, Rhodri Morgan, recently noted that to try and address a perceived problem on English votes, instead of first reforming the House of Lords, would be to ignore the elephant in the room.

Real devolution, the kind we have seen in Wales, Scotland and Northern Ireland has fundamentally changed the governance of the United Kingdom. Public support for the devolved Parliaments and Assemblies has created a presumption of popular sovereignty in the different parts of the UK, which has challenged assumptions about a centralised British state.  Those challenges must be met with meaningful engagement, a constitutional convention that will bring certainty, stability and fairness to a more federal UK.



So where does Wales fit in? In the short-term, as far as is possible we have tried to present a cross-party approach on these matters, jointly signing up to a two-part Commission on Devolution. The first part on fiscal powers forms the basis of the current Wales Bill going through Parliament. The second, on further powers, is more 2015 manifesto territory—though Ed Miliband has already committed to a new Wales Bill early in the next Parliament, which will move Wales to a Scottish-style reserved powers model.

But, many questions remain. The current debate on the partial devolution of income taxes to Wales for example remains a theoretical one, while the current funding system, the Barnett formula, underfunds Wales by an estimated £300m a year. That formula was disowned by its creator Lord Joel Barnett, as it fails to answer a fundamental question: how much does each nation actually need to deliver its public services?

Distributing billions of public funding in this way is the constitutional equivalent of fixing a hole in the roof with Blu Tack and cardboard.

The best solution from a UK perspective would be for the funding of the devolved administrations (and the regions of England too) to be put on a new basis, with an assessment of needs at its core. That really shouldn’t be controversial. Needs-based funding simply means the distribution of resources across the UK should take account of factors such as demography and health status. It seems straightforward to me.

We are in short supply of some long-term thinking about where we heading as a Union and how we get there. The key issue for me, at this point, is cultural —there has to be a change of mindset at the centre. We have to move from a devolution mindset to a New Union mindset.

A devolution mindset starts with the assumption the Westminster Parliament is sovereign and we are fundamentally a centralised state. A New Union mindset says the UK is a state governed by four representative institutions.

The fundamental underpinning assumptions about the nature of our state have disappeared forever, but have not yet been adequately replaced. Working through the implications for the different legislatures and governments, and their relationships one to another, will not be straightforward. Our best days though can be ahead of us—but only if we accept the need for change and work together to make it happen.