Welsh Conservatives in the European Parliament
Dr Kay Swinburne MEP

Are there lessons for Wales and possible devolution of tax raising and debt raising powers to be learned from the EU?, CPF North Wales, 17.11.12

Are there lessons for Wales and possible devolution of tax raising and debt raising powers to be learned from the EU? While the UK is questioning its relationship with the EU, most Member States have been doing the same thing, all questioning the future federal model the might adopt and what role those who choose not to participate can or should be allowed to play. Eurozone countries have been trying to come up with an institutional framework that they and their constituents can live with while remaining economically viable. Ultimately the answer both for the Eurozone and the UK and the whole future of the EU and Wales can be found when we address three fundamental issues: power, responsibility and obligation.
Next week the Silk Commission will publish its eagerly awaited report into fiscal devolution. We already know that the UK and Welsh Governments have reached a deal on giving ministers in Cardiff limited borrowing powers to finance major schemes. The question which follows – and one Silk will answer next week - is how do we ensure the Welsh Government is more accountable for the money it spends – is more responsible in the way it does so how does Wales  fulfil its wider obligations through our union with the other countries of the United Kingdom?
Welsh Labour has used the fact there is now a government of a different complexion at Westminster to complain London is short-changing Wales. It is a simplistic political argument. Yet it takes no account of the fact that Labour ministers in Cardiff are not accountable for a single penny of the £15bn they spend each year. It is hardly a surprise, therefore, that some in Labour are suspicious at our motives in setting up the Silk Commission.
The referendum in Scotland brings about inevitable questions for Wales. At a time of stretched budgets it is unsurprising the debate has once again turned to how Wales is funded. And with the Silk Commission due to report in the coming days, I think it’s right to draw parallels with experiences elsewhere in the EU - places where power, responsibility and obligation have not been aligned when it comes to government funding, with disastrous results.
Many have commented that one of the fatal flaws in the Euro's creation was a misalignment of power, responsibility and obligation. Monetary policy was given up to the centre - the European Central Bank, while each Member State was given responsibility for obeying the Stability and Growth Pact by keeping their debt and deficits at a manageable level. However, when these were breached - firstly by France and Germany - there were no consequences - until the financial crisis of 2008. Member States couldn't pay back their debts and suddenly, the implicit obligation of all other Member States was called up. Germany, the Netherlands, Finland, the triple A rated Member States were suddenly obliged to bail out weaker more profligate countries.
Current proposals  on the table are supposed to answer this fundamental point - how to align power, responsibility and obligation? And, how to implement these solutions whilst remaining within the legal framework of the Treaties.
Many of you will have read about the concept of a banking union - which will theoretically give the ECB the power to supervise all 6,000 banks in the Eurozone by January 2013... Setting aside the practical difficulties with this, the basic premise is that for EU money to be used to bail out Spanish banks -  those the Spanish government can't afford to bail out itself - supervision of those banks must also be carried out by a central body, following rules written centrally - all of course following democratic procedures involving all Member States concerned. In this way, power for regulating banks, responsibility for supervising banks and the obligation to bail out banks all become aligned - possibly a neat solution, except that not all members of each group of decision makers at each level are the same. The rules governing banks behaviour cover the whole single market, so all 27 Member States. The ECB which would become the banking supervisor is, by treaty, governed by a Council that is made up only of the 17 Eurozone member states. Yet some EU member states who are not yet part of the Euro, either by choice or because they haven't met all of the economic criteria yet, also want to be included in the single supervisor.
This leads to two separate yet connected issues: How do you involve those Member States that opt into the Banking Union yet cannot be given ultimate decision making power within the ECB? And also how do you deal with those who are not part of the single supervisor but are part of the single market? The UK also needs to ensure that if the UK government has ultimate responsibility and obligation for bailing out (or not bailing out) banks, that it also has power over the rule book that governs it and does not feel like it is being dictated to by an entity that will not foot the bill at the end of the day.
In the end we can expect the usual EU compromise - voting rights, opt outs, derogations, Memoranda of Understanding, gentlemen's agreements - yet what ever route is chosen the goal has to be the correct alignment of power, responsibility and obligations.
In Wales there are many in Plaid Cymru who use the Spanish regions as a model for how devolution here should look on the path to independence. The Spanish regions have powers to raise taxes and to borrow money. Interestingly only one Spanish region has used its power to adjust tax rates since the power was devolved - yet their total budget deficits in 2011 were equivalent to 2.9% of Spanish GDP. When times were good and the regions were able to borrow cheaply in the market on speculative future income, yet while via their constitutional arrangement with the central government they were supposedly responsible for their debts, ultimately it is the Spanish government who is obligated to bail out Valencia, Catalonia and most recently, Andalusia, for the amount of 15 billion euros to date. Even since these bailouts, these regions have been living beyond their means and will now have to increase revenue by raising taxes which they are loath to do, or reduce outgoings by cutting public sector services and jobs.
It is the problem of Greece and the EU on a scaled down basis. Greece was given a credit card with a low interest rate when it joined the euro, and the Stability and Growth Pact was the agreement that it wouldn't run up a huge bill. When the markets turned in 2008 and the interest rate went up on the credit card, it wasn't possible to stop the spending, this left the EU - or more accurately the strong EU Member States who weren't in the same financial predicament - an obligation to pay the bill or destabilise their own economics and those of the rest of the Eurozone.
The question for Wales is whether we can learn from this. Is there an institutional framework that means when the Welsh Government borrows money it is only against revenues that are sound, not susceptible to bubbles and truly within its control? Is there a way to make certain that the market does not factor in an implicit obligation for the UK to bail out the Welsh Government if it can't pay back what it has borrowed? I hope that these issues have been at the heart of discussions between the Treasury, the Wales Office and the Welsh Government. Silk has raised the question whether the Welsh Government should take more responsibility for funding. But with that responsibility should come an explicit obligation to take the right decisions for long-term economic growth, not short term political gain.
The Stability and Growth Pact that was a self-policing set of rules did not work, the no-bail-out clause did not work, and the jury is still out on whether the banking union will work.
Yet this is the very dilemma that the Silk Commission will rule on next week, it will be interesting to see what answers they come up with.
Over lunch I will be able to talk a little more about the Eurozone crisis and other EU legislation such as CAP reform, structural funds and the budget, but for now, I leave you to ponder what policy lessons we should learn in Wales from those who have got it so wrong recently across Europe.
Join Our Mailing List Get in Touch
Welsh Conservatives

The European Commission has today designated European Protected Geographical Indication (PGI) status to the well-known Pembrokeshire Early Potato from West Wales.
The Pembrokeshire Early Potato was one of only three quality farm products whose applications for PGI status were approved today.
The EU PGI schemes protect product names against misuse and under these schemes more than 1200 products are already protected.
Commenting on this announcement from the European Commission today Dr Kay Swinburne MEP – who is from West Wales - said:
"I am delighted to see that this application to have "Pembrokeshire Earlies" added to the register of PGI products has been approved by the European Commission today."

"Achieving this prestigious status is a clear acknowledgment of the high-quality and distinctive produce we continue to deliver in Wales. Pembrokeshire Early Potatoes thoroughly deserve their place alongside the well-known food and drink products from right across the EU which already feature on the PGI register."


Kay was delighted to host an event to celebrate Higher Education, Science and Innovation in Wales last night in the European Parliament.  The event builds on the British Council’s “Strategic Analysis of the Welsh Higher Education Sector, Distinctive Assets”.  A number of experts spoke to share their views of Welsh HE at the event and how it can develop in the future.

In advance of the 'Fox-Hafner Report' vote on the single seat for the European Parliament, Kay and the other UK Conservative MEPs feel it is right to draw attention to the fact that the seven-year cost of the dual-seat arrangement comes to £928,000,000. Since her election to the European Parliament in 2009, Kay has strongly supported bringing the monthly Parliamentary meetings in Strasbourg to an end and therefore saving taxpayers a considerable sum of money.


Kay was delighted to meet Malala Yousafzai, who was awarded the EU's Sakharov Human Rights Prize at the European Parliament today.

Following Malala’s speech to the European Parliament, Kay said, “What an inspirational speech Malala gave to the Members of the European Parliament today. As a mother of young children myself, I hope that they can also aspire to achieve like her. Malala is an exceptional young lady who has overcome adversity by tremendous force of character and a passionate belief in the right of everybody to enjoy and benefit from education.”   


Kay was very pleased to meet with members of the Advanced Manufacturing Research Group at the European Parliament in Brussels, one of four groups set up in key Welsh research strengths to engage with EU research funds. The delegation visiting Brussels included representatives from Cardiff University, Bangor University, Swansea University and Trinity St.Davids University.

In advance of tomorrow's European Council meeting of leaders, Dr Swinburne has echoed the recommendations made in a recent report published by a number of business leaders, which highlights the importance of removing barriers to business competitiveness in Europe and getting rid of burdensome legislation by cutting EU red tape.

Last year Dr Swinburne encouraged businesses in Wales to highlight to the European Commission which over-burdensome regulations they would like to see slashed, by writing to small businesses all over Wales and asking them to tell her their red-tape problems.

Electronic cigarettes no longer face being taken off the shelves by the EU after Conservative MEPs were successful today in amending EU legislation on tobacco labelling.

Conservative MEP's led the amendment to defeat proposals that would have classified e-cigarettes as medicinal products, meaning they would have to undergo an overly burdensome and costly authorisation procedure, which would go beyond the procedures for traditional tobacco products... (Read more under 'Articles')



Welsh Conservative MEP Kay Swinburne has been sitting down with leaders in Europe's biotech field to choose the top five candidates to compete in this year's EuropaBio Most Innovative EU Biotech SME Award.

As a member of this year's judging committee, Kay is once again supporting the EuropaBio award, which has attracted applications from all three sectors of biotechnology - healthcare, industrial and agricultural, from across the EU... (Read more under 'Articles')


WELSH Conservative MEP Dr Kay Swinburne today hailed a vote in the European Parliament as a "wake-up call" in the battle to save Europe's endangered languages.

MEPs meeting in Strasbourg backed a report which calls on governments across the EU to develop action plans to encourage continued linguistic diversity.

The report, written by Corsican MEP François Alfonsi, also says governments should be "more attentive" to threats which may lead to languages becoming extinct.

Dr Swinburne, who was a shadow rapporteur for the report, has argued that Welsh can be seen as a positive example of language revitalisation which communities across the EU should follow... (Read more under 'Articles')

Contact Us
Dr Kay Swinburne MEP
Rhumney House
Copse Walk
Cardiff Gate Business Park
CF23 8RB

Tel: 029 2054 0895

National Political Party: Conservative Party
European Group: European Conservatives and Reformists Group (ECR)

European Conservative and Conformist Group
© Copyright Kay Swinburne 2013 | All rights reserved. | Photographs of the Parliament supplied by Adam Issacs.

Website design in Cardiff by Designer Websites Ltd