Tax Advisory Group meeting: 13 February 2017

Tax Advisory Group

• Chair: Mark Drakeford AM, Cabinet Secretary for Finance and Local Government
• Andrew Evans, Partner, Geldards LLP
• Frank Haskew, Head of the Tax Faculty, Institute of Chartered Accountants in England and Wales
• Alun Jones, Manager, Social Investment Cymru, Wales Council for Voluntary Action (representing Ruth Marks)
• Janet Jones, Chair, Wales Policy Unit, Federation of Small Businesses
• Robert Lloyd Griffiths, Regional Director, Institute of Directors Wales
• David Phillips, Senior Research Economist, Institute for Fiscal Studies
• Kay Powell, Policy Adviser, The Law Society
• Martin Warren, Wales Director, Institute of Chartered Accountants in England and Wales

Officials in attendance

• Andrew Jeffreys, Director, Welsh Treasury
• Dyfed Alsop, Director, Welsh Revenue Authority Implementation Programme
• Georgina Haarhoff, Head of Tax Policy and Legislation Management, Welsh Treasury
• Ed Sherriff, Head of Fiscal Strategy, Welsh Treasury
• Jo Ryder, WRA People Project Manager, Welsh Treasury
• Clare Blake, Policy and Project Lead, Local Government Finance Policy Division
• Ruth Leggett, Strategic Engagement and Communications Manager, Welsh Treasury
• Lu Toscano-Davies, Policy and Operations Officer, Welsh Treasury (secretariat)
• Rod Hough, Fiscal Analysis and Strategy, Welsh Treasury (observer)

Apologies

• Martin Mansfield, General Secretary, Wales TUC
• Ruth Marks, Chief Executive, Wales Council for Voluntary Action
• Ian Price, Director, CBI Cymru/Wales
• Councillor Aaron Shotton, Deputy Leader, Welsh Local Government Association
• Dr Victoria Winckler, Director, the Bevan Foundation

1. The Cabinet Secretary for Finance and Local Government welcomed attendees to the 10th meeting of the Tax Advisory Group (TAG) for Wales. Apologies had been received from Martin Mansfield, Ruth Marks, Ian Price, Councillor Aaron Shotton, and Dr Victoria Winckler.

2. The note of the previous meeting (14 November) had been circulated to members prior to the meeting. All actions had been completed. The group confirmed the note was an accurate summary of the discussion.

3. In December, the Cabinet Secretary reached agreement with the Chief Secretary to the Treasury on a fiscal framework for Wales. This addressed all the issues which the Cabinet Secretary had been pursuing, and established arrangements which would ensure funding for Wales was put on a stable footing for the long term.

4. Ed Sherriff summarised the main features of the agreement:

• long term reform of the Barnett formula
• methodology for calculating the block grant offset following tax devolution
• doubling of the Welsh Government’s capital borrowing limit to £1 billion
• new Wales Reserve
• role for bodies independent of government in the event of dispute.

5. The group discussed the agreement, focusing on the block grant adjustment,including the treatment of spill over effects.

6. Ed Sherriff confirmed that data on the operation of the adjustment to the Barnett formula and the block grant offset would be published.

7. Georgina Haarhoff outlined the progress being made towards developing land transaction tax and landfill disposals tax. Bills on both taxes were currently undergoing scrutiny by the Assembly's Finance Committee.

8. Georgina and Ed Sherriff explained how the draft tax policy framework had been revised following the group's feedback at the last meeting. The current draft of the tax policy framework would be circulated to members for final comments and views.They set out the main features of a draft work plan to support the future development of tax policy. This would include short, mid and long term objectives, with public engagement being an important element. The work plan would include existing policy commitments for devolved taxes (including setting rates and bands) and for local government taxes.

9. Members were invited to indicate areas of the work plan where they would like to contribute to policy development over the coming months. An update on the workplan would be brought to the next TAG meeting.

10. Dyfed Alsop, WRA Implementation Director, provided a progress report on the Welsh Revenue Authority (WRA), including governance, location, digital services, and the transitional arrangements between HMRC and WRA. Jo Ryder provided an update on the process to appoint the Chairman - the preferred candidate, Kathryn Bishop,had just been announced, prior to a Finance Committee pre-appointment hearing on16 February.

11. Members discussed the skills and expertise that would be required by the WRA. There was interest in establishing a digital service but recognition that more traditional alternatives would also be required. Approaches to developing guidance in English and Welsh were considered.

12. No items were raised under AOB.

13. The Cabinet Secretary thanked the attendees for their helpful and constructive contributions.

14. The next meeting would take place in the summer.