Tory animal reveals its spots

It’s always pleasing when a creature that normally goes about in disguise hiding its true intentions, suddenly reveals itself for what it really is. That’s what happened with the Welsh Conservative Party last week.

You may not have noticed but hidden away in George Osborne’s autumn spending review was a surprise commitment to devolve to the Welsh Government control of some of the income tax levied in Wales, and without a referendum. This sharing of tax powers between ministers in Cardiff and London would mean the Welsh government controlling £3 billion of taxes a year by 2020. It was a surprise because hitherto the Tories have not been in the forefront of advocating more powers for Wales – the reverse, in fact. Moreover, they have always demanded there should be a referendum before the Welsh Government be allowed any control of income tax.

So what, I wondered, was going on? Then all became clear when up popped the Welsh Conservative leader Andrew R.T. Davies. Within a matter of hours of the Chancellor’s statement, he announced he wants to use new income tax powers to take 5p off the higher rate in Wales.

Andrew R.T. Davies - revealing his spots

The higher rate, it will be recalled, is 40p in the pound for those who earn more than £43,000 a year. The Welsh Conservative leader said he wanted to use the new powers over income tax to cut this rate by 5p to 35p.  This, he said, would cost about £75 million in a year. And as an example of those who would benefit he said people earning £50,000 would gain about £400 a year.

So that’s a straight shift of £75 million to the better off, at a time when the Tory government in London is also intending to cut £12 billion from the welfare budget over the next five years, directly hitting the worst off. How can Andrew R.T. Davies possibly justify this blatant transfer of money from the poorest to the richest in Welsh society?

His answer is that cutting the top rate of tax would attract entrepreneurs to Wales and "create quality jobs". And he added,  "Ultimately what we want to do is make sure the entrepreneurial rate is attractive enough to make entrepreneurs stay and come to Wales to create quality jobs that pay increased take-home pay. Five pence seems to be a sensible difference between what Wales would raise and what England would raise. That would offer enough scope to say to businessmen and women 'Wales is open for business'."

This is complete nonsense. A saving of £400 would be a marginal sum for those earning £50,000. It would not be nearly enough to persuade anyone earning that amount to move into Wales to take advantage of it. Of course, as earnings rise so does the amount you gain from a cut in the top rate of tax. For example, those earning £100,000 would gain £2,850. But entrepreneurs earning that kind of money typically make most of their income through shareholdings in their company.

So Andrew R.T. Davies’s argument that cutting the top rate of tax would encourage greater entrepreneurialism doesn’t stack up. Rather, it’s a shameless bid to benefit those who the Conservative Party really represents - the better off. And, as I say, it’s very satisfying because for once it’s the Tories themselves who are revealing their true agenda.