Seize the opportunity on tax, Welsh ministers told

Has there been a better time to be a devolution anorak? Scrutiny of UK government plans to give Wales some tax powers offers a daily treat at Westminster and elsewhere.

Today, it was the turn of Graham Allen, who specialises in these things as chair of the political and constitutional reform committee. His advice to Welsh ministers wondering whether to risk a referendum on income tax powers they may not use? "Seize the opportunity".

Mr Allen said the transfer of more powers from Westminster to Wales could lead to devolution in England. He said it was "ridiculous" that a referendum would have to be held before the power to vary income tax rates could be devolved.

"It is ridiculous that technical issues and detailed financial issues are constantly put to referenda." Mr Allen warned that it would lead to Wales tying itself with "neverendums". The MPs are scrutinising the draft Wales Bill, which will give the Welsh government for the first time responsibility for raising some of the cash it spends.

Mr Allen said: "I welcome this Bill very strongly. It is a step, it isn't a leap, in the right direction towards greater devolution not merely for Wales but for the other countries of the Union. I would urge all our friends in Wales to seize that opportunity."

If the Welsh government gets the power to vary income tax rates, it would have to change them in parallel, in "lockstep" with each other rather than change the basic or top rate in isolation. Mr Allen said the draft Wales Bill should be amended to remove the lockstep said it was better to have the power with a lockstep than not to have the power at all.

He thought the power could encourage English local authorities to push for greater financial powers, predicting, "the daily indignity of having their grants cut by central government will push them in that direction".

In written evidence, he told the MPs: "I believe that it is right that England should follow the people of Scotland, and now Wales and have the opportunity to enjoy greater financial devolution. Devolved power in many countries has, as the (political and constitutional reform) committee's local government report noted, been given financial life by the retention of an agreed element of income tax. Whitehall does not always know best. Many decisions are best taken at a devolved level.

"It is hugely encouraging that the devolved parts of the Union have the opportunity to take responsibility for some of their own budgets. The committee worked through in its local government report how the Westminster government could implement such a relationship for England too. Devolution should be regarded as a principle, not a political expedient, and should apply to England, as well as to Wales, Scotland and Northern Ireland. It is important for England and the other nations of the Union that the Wales Bill makes progress and is not delayed by the desire for perfection."