19 November 2012 Last updated at 09:23 ET

Silk report: UK government to 'seriously consider' tax proposals

Welsh Secretary David Jones (l) said the report from Paul Silk (r) would be taken 'very seriously indeed' by the UK government

Serious consideration will be given to a report calling for Wales to have its own tax system, the UK government says.

The Silk Commission's report says a referendum should be held on allowing the Welsh government to vary income tax.

Welsh Secretary David Jones said work would begin straight away to decide which, if any, of the report's proposals are introduced.

But he denied it was part of a slide towards ever greater devolution.

He said an analysis of the Silk report would start immediately and that his department had already spoken to the Treasury and First Minister Carwyn Jones.

The report says the Welsh and UK governments should share responsibility for income tax rates, but only if voters consent to the changes in a referendum.

The Conservative-Liberal Democrat coalition in Westminster promised to set up an inquiry into how the Welsh government is funded.

The Silk Commission began its work following the Yes vote in the referendum in March last year to give the assembly more law-making powers.

David Jones was asked if it was part of a "slippery slope" towards ever greater devolution.

But he said: "I don't think it can be suggested that there is anything that has been sprung upon the Welsh people. They were always aware that this was part of the process."

He hailed a "very thorough piece of work" from the all-party Silk Commission. Whitehall and Cardiff would look at the proposals "to decide which if any are appropriate to take forward", he said.

"We are taking it very seriously indeed," he added.

"It's a powerful piece of work which we will be giving very careful scrutiny to."

The Welsh government welcomed a recommendation to give it powers to borrow money.

First Minister Carwyn Jones said: "I have long argued that there would need to be a referendum before powers to vary income tax rates were devolved and I am glad to see that the commission has endorsed this view.

"We will look carefully at the proposal to move towards devolution of some powers over income tax - provided the people of Wales have the final say."

'Balanced'

At a press conference in Cardiff Bay, commission members repeatedly stressed they had produced a "balanced" report.

The commission's Labour member Sue Essex, a former Welsh finance minister, said: "This is not a pie in the sky thing we are talking about. It's possible, it's doable in Wales."

Her party's shadow Welsh secretary Owen Smith recently said that income tax powers "probably oughtn't be devolved right now" and warned they could leave Wales worse off.

After the report was published on Monday, he said it was right to recommend a referendum.

"In assessing those recommendations, we will need to test not only whether the proposals are in the financial interest of the Welsh people but also whether they pass the test of enabling an equitable and sustainable financial settlement for the whole of the UK," Mr Smith said.

Nick Bourne, the former leader of the Conservatives in the assembly who sits on the commission, said his party would get on board with the proposals.

"It's good for Wales, it's good for the United Kingdom. Why wouldn't they be comfortable with this?" he said.

Tory finance spokesman in the assembly, Paul Davies, said: "We believe that this5 is a comprehensive package of reforms to make the Welsh government more accountable for its decisions."

Welsh Liberal Democrat leader Kirsty Williams said: "We have been arguing for greater devolution for over a century. This is the latest step in our long campaign for a federal UK.

"It will strengthen Wales and help make a real difference to the lives of people across the country."

Plaid Cymru said the report does not go far enough.

Party finance spokesman Ieuan Wyn Jones said corporation tax should also be devolved - something the commission rejected unless the tax was devolved to Scotland and Northern Ireland.

"Currently we have little or no room to manoeuvre within the straightjacket of a block grant," Mr Jones said.

'Bureaucracy'

David Lermon, director of the Institute of Chartered Accountants in England and Wales, said: "We are more cautious about the recommendations relating to the partial devolution of income tax.

A referendum is recommended before income tax varying powers are devolved to the assembly

"They will inevitably introduce greater complexity and bureaucracy into the UK tax system, two qualities that the tax system already has in abundance."

The Federation of Small Businesses (FSB) applauded a call for the full devolution of business rates.

FSB Wales head of external affairs Iestyn Davies said: "It is now imperative that this recommendation is acted upon to pave the way for a fairer, more progressive and wide-reaching change for the business community in Wales."

The Electoral Reform Society suggested the current 60 assembly members might not be enough to scrutinise the Welsh government if it got tax powers.

Steve Brooks, Director of the Electoral Reform Society Wales, said: "We need a strong National Assembly that's able to hold the government's feet to the fire, and scrutinise how taxes are raised, public money is spent, and laws made."

Spencer Birns, head of commercial operations at Cardiff Airport, said: "The ability to control long haul air passenger duty rates is just one tool in the armoury we have to improve air passenger services to and from Wales and increase passenger traffic."

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19 November 2012 Last updated at 04:59 ET

Commission calls for Welsh government income tax powers

Paul Silk's commission says the Welsh government should control some taxes

The Welsh government should have the power to vary income tax by 2020, an influential report on the future of devolution has said.

The Silk Commission says a referendum should be held on whether Welsh ministers ought to have new powers over income tax rates.

Control over other smaller taxes should also be devolved, it says.

The changes would make the Welsh government responsible for raising around a quarter of its own budget.

Since 1999, most of the devolved administration's budget has come in an annual block grant from the Treasury, currently worth more than £15bn.

The 33 recommendations of the Silk Commission's first report would change the system dramatically, giving the Welsh government a further stake in the economy.

Referendum

Arguably the biggest change is a call to move to a system where the Welsh and UK governments share the yield from income tax by 2020. It would be conditional on both sides agreeing to changes to the funding system for Wales.

For example, on the 20p basic rate of income tax, 10p would go to the Treasury while the Welsh government would get the other half and would have powers to raise or lower it.

Because it represents such a "major" change, the commission proposes a transitional arrangement. This would "assign" a chunk of income tax receipts to the Welsh government, but without it having the power to vary rates.

Control of other smaller taxes, which Welsh Labour ministers want to see devolved, would also be transferred to Cardiff under the Silk recommendations. They are:

• the aggregates levy, which is a tax on the commercial exploitation of sand, gravel and rock.
• the stamp duty paid by house-buyers.
• landfill tax on licensed waste sites.
• and air passenger duty for long-haul flights.

The commission also recommends giving the Welsh government sole responsibility for business rates.

But it rules out devolving corporation tax unless it is also devolved to Scotland and Northern Ireland, national insurance, capital gains tax, VAT and fuel duty.

The proposal for a referendum on income tax would require legislation in parliament.

Combined with the effect of the smaller taxes, it would make the Welsh government responsible for raising around 25% of its budget. The rest would continue to come for the block grant.

First Minister Carwyn Jones has said powers to change income tax levels should not be devolved without a referendum.

Led by former assembly clerk Paul Silk, the commission was set up as part of the Westminster coalition agreement between the Conservatives and Liberal Democrats.

'Mature democracy'

He said: "Our proposals would provide the Welsh government with an important set of fiscal levers and would enable political parties in Wales to offer people real fiscal choices.

"What we are recommending is significant and historic. It will give Wales its own tax and borrowing system for the first time."

The report also says the Welsh government should have new powers to borrow money. The Treasury has agreed that Welsh minister should have limited borrowing powers.

The assembly is unusual, if not unique, in having law-making and spending powers, but not tax and borrowing powers, according to the commission's report.

It says the current arrangements "do not meet the requirements of a mature democracy and are anomalous in an international context".

Reforming the system would benefit Wales and the UK, it says.

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14 November 2012 Last updated at 19:34 ET

Moderate drinking in pregnancy 'harms IQ'

Current government advice is to avoid drinking alcohol during pregnancy

Drinking one or two glasses of wine a week during pregnancy can have an impact on a child's IQ, a study says.

Researchers from Oxford and Bristol universities looked at the IQ scores of 4,000 children as well as recording the alcohol intake of their mothers.

They found "moderate" alcohol intake of one to six units a week during pregnancy affected IQ.

Experts said the effect was small, but reinforced the need to avoid alcohol in pregnancy.

Previous studies have produced inconsistent and confusing evidence on whether low to moderate levels of alcohol are harmful in pregnancy, largely because it is difficult to separate out other factors that may have an effect such as the mother's age and education.

But this research, published in the PLOS One journal, ruled that out by looking at changes in the genes that are not connected to social or lifestyle effects.

'Why take the risk?'

The study found that four genetic variants in alcohol-metabolising genes in children and their mothers were strongly related to lower IQ at age eight.

On average, the child's IQ was almost two points lower per genetic modification they possessed.

But this effect was only seen among the children of women who drank between one and six drinks a week during pregnancy and not among women who abstained when they were pregnant.

The researchers said although a causal effect could not be proven, the way they had done the study strongly suggested that it was exposure to alcohol in the womb that was responsible for the differences in child IQ.

Dr Ron Gray, from Oxford University, who led the research added that although the differences appeared small, they may well be significant and that lower IQ had been shown to be associated with being socially disadvantaged, having poorer health and even dying younger.

"It is for individual women to decide whether or not to drink during pregnancy, we just want to provide the evidence.

"But I would recommend avoiding alcohol. Why take the risk?"

A Department of Health spokesman said that since 2007 their advice had been that women who are trying to conceive or are pregnant should avoid alcohol.

But Dr Clare Tower, consultant in obstetrics and fetal maternal medicine, at St Mary's Hospital, Manchester, stressed that women who have had the occasional alcoholic drink in pregnancy should not be overly alarmed by the findings.

"Current UK advice is that the safest course of action is abstinence during pregnancy.

"The finding of this study would concur that this is undoubtedly the safest advice."

But she pointed out that another recent study had found no effect on IQ at five years.

"It is likely therefore, that any impact is likely small and not seen in all women."

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