Stamp duty tax: Consultation due on devolution to Wales

Stamp duty tax could boost Welsh government budgets, if control is devolved

The UK government has confirmed it will consult businesses on whether the Welsh government should get control of stamp duty land tax.

It is one of the key recommendations of the Silk Commission review of further devolved powers for Wales.

The tax is on properties worth over £125,000 - starting at a 1% rate and rising to 7% as the value increases.

The UK government will also consider giving Welsh ministers "early access to borrowing" money for an M4 relief road.

The Welsh government sees control of stamp duty as vital to boost the housing market and the construction industry.

But UK ministers want to assess the likely impact of the change before giving the go-ahead.

The money would also give ministers in Cardiff an income stream - around £200m a year - against which they could exercise new borrowing powers.

Treasury Chief Secretary Danny Alexander confirmed a "short and targeted consultation" with business that is likely to report in the autumn, when the UK government is now due to give its full response to the Silk report.

The UK government set up the commission to examine the future of the Welsh assembly's powers.

Chaired by former assembly clerk Paul Silk, it made its first report in November 2012, making 33 recommendations, including some tax-varying powers.

Arguments

Mr Alexander said: "There is a very strong case for devolving fiscal and economic levers to the Welsh government, but it is right that we fully understand the potential impacts so that we can ensure that the decisions we take are right for Wales and for the UK as a whole."

Welsh Secretary David Jones added: "The recommendations made by the Silk Commission in part one of its work have extensive implications not only for Wales, but for the whole of the UK, so it is essential that we give full consideration to all of its implications."

Ministers at Westminster want to assess possible effects of different rates on businesses either side of the Wales and England border.

Although the tax is being devolved to Scotland, the situation in Wales is seen as different as the border with England is more heavily populated.

Wednesday's announcement followed tensions between Liberal Democrat and Conservative ministers at Westminster.

Arguments over the devolution of stamp duty are said to be one reason why the UK government's response to the Silk commission missed its original deadline of the end of Spring.

MPs rise for their summer break on Thursday and will not return until September, when ministers are also expected to reveal plans to give English MPs more say over new laws that affect England alone.

Earlier this month, Deputy Prime Minister Nick Clegg told MPs that supporters of more devolution would be "pleasantly surprised" by the UK government's "forthcoming and forward-leaning approach".

'Impatient'

Mr Alexander also said UK ministers would consider giving the Welsh government "early" borrowing powers specifically to fund an M4 relief road around Newport, estimated to cost around £1bn.

He said ministers would be "looking at the Welsh government having early access to borrowing, to support a funding solution for the M4 improvement scheme in south Wales".

Welsh Finance Minister Jane Hutt said that was "welcome news" but the Welsh government was "impatient for a full response to Silk which was first due in the spring".

"The issue of stamp duty has been looked at exhaustively - the Holtham Commission, Silk Commission and Calman Commission have all recommended its devolution," she said.

"The Welsh government held an event with the construction industry and business leaders earlier this year to gain their views and there was a clear sense of agreement that stamp duty should be devolved and reformed.

"We need taxes such as stamp duty devolved so we can boost house building, create jobs, backing the Welsh economy and continue to deliver our priorities for Wales."

Shadow Welsh Secretary Owen Smith said the UK government had delivered a "deeply dissatisfactory delaying tactic" to the 33 recommendations of the Silk Commission.

"What we've seen today is a timid non-response to just one of those recommendations," he said.

Plaid Cymru said it meant "no meaningful progress after an eight month wait."

Treasury spokesperson Jonathan Edwards MP said: "It's an insult to the people of Wales that they have only published this vague written response on the eve of the break-up of Parliament."

Mr Edwards said the consultation on stamp duty was unnecessary.