Stan Senior explores the political opportunities of a federal model for Wales.
Australia. Canada. USA. India.
No, this is not just a roll-call of former British colonies that all end in ‘A’, but also a list of countries with constitutions that implement federal systems for their states and territories. It’s about time the UK – and Wales – give extensive thoughts to joining the list.
In my role I’ve spent copious amounts of time reading and listening to the constraints and drawbacks of Wales’s current devolution settlement. One of the leading conclusions of the Independent Commission on the Constitutional Future of Wales ratified these thoughts with its final report in 2024, which stressed that the “current settlement cannot be taken for granted” and needs “new devolved powers” to protect it. YouGov’s most recent opinion polling also suggests the Welsh public are, at least, in favour of the maintenance of devolution in its current form. 46% of respondents opposed the abolition of the Senedd, compared to 31% that supported it. 52% also opposed a devolved Senedd with fewer powers than at present, with 40% supporting more powers.
So Wales’s devolution settlement needs improving, and as the Independent Commission concluded, it needs to be placed on a “stable and secure footing.” How do we do this, I wonder. Ah, of course, via the system favoured by the world’s leading economic, sporting and cultural powers. This can include Germany, but it didn’t really fit with my metaphor at the beginning.
Despite clear constitutional challenges in Wales and across the UK, arguments in favour of a federal UK structure are far from mainstream discussions, particularly at a UK-level. Welsh Labour’s 2021 Senedd election manifesto explicitly supported a federal approach, with page 68 promising to work for a successful United Kingdom based on a “far-reaching federalism.” However, the UK party’s Welsh general election (GE) manifesto doesn’t promise any such changes to the Welsh devolution settlement.
Despite clear constitutional challenges in Wales and across the UK, arguments in favour of a federal UK structure are far from mainstream discussions, particularly at a UK-level.
The Welsh Conservatives, whilst slightly confused about their position on devolution as a party, are generally friendly to devolution but not to the expansion in either the size of the Senedd, nor its legislative powers. The ultimate constitutional aim for both Plaid Cymru and the Welsh Green Party is to see Wales as an independent nation.
Despite 61% of Welsh Reform voters (in the 2024 General Election, according to YouGov’s 2024 poll), supporting the abolition of the Senedd, Nigel Farage has been clear the party would not support such a policy. The party’s manifesto-style contract last year also suggests a progressive nature to constitutional policy, supporting both democratic reform to the House of Lords and a PR voting system for the House of Commons. Whilst the party has been quiet on any plans for constitutional reform relating to the Senedd, this contract suggests there could be room for Reform to support some form of progressive changes to the Senedd. As leader of UKIP in 2014, Farage also supported the idea of a devolution settlement for England.
It’s only the Liberal Democrats, at both a Welsh and UK level, that are clear in their support for a federal United Kingdom.
The standout reason why more left and centrist parties would, and do, support such a change is the promise of increased Welsh powers, and perhaps more significantly, drastically needed changes to the ever-flawed Barnett Formula, which acts to allocate funding to Wales based on English need. With federalism, Welsh Labour may finally be able to achieve its dreams of devolving powers over Justice, Policing and the Crown Estate. There’s potential as well to increase taxation and borrowing powers, as well as devolve heavy rail infrastructure.
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Whilst the leadership of the Welsh Conservatives and Reform UK are adamant in their support for a Welsh devolution settlement, their support base is not. According to YouGov polling in September 2024, 66% of Conservative voters in Wales and 61% of Reform UK voters at the 2024 General Election supported the abolition of the Senedd. In contrast, Scottish Conservative voters in the 2024 General Election were 39% against the abolition of Holyrood, compared to only 24% of Welsh Conservative voters opposing abolition of the Senedd.
This may well be a reflection of a much weaker civic identity in Wales compared to Scotland. In 2021, 63.5% of the Scottish electorate voted in the Holyrood elections. The Senedd turnout figure has never breached 50%, even despite increased awareness of devolution post-Covid.
Here lies the opportunity for a federal United Kingdom to strengthen Welsh civic identity, particularly among those on the political right. A codified written constitution would clearly delineate powers between central and state governments, entrenching Welsh powers and improving accountability. An English legislature could prove to benefit the understanding of Welsh political powers, by providing a direct comparison and contrast with our immediate neighbours. This would improve the connection of the devo-sceptic part of our society to Welsh political institutions by normalising the concept of devolution to England. Staunch unionist parties could also utilise a move to a federal structure to appease secessionist movements across the UK.
A codified written constitution would clearly delineate powers between central and state governments, entrenching Welsh powers and improving accountability.
Despite this, Plaid Cymru and the Wales Green Party could also use a move to federalism to legitimise independence movements. Whilst these parties may reject the notion of being treated as a ‘state’ or ‘province’ within a UK nation, there has been acceptance, specifically by Rhun ap Iorwerth, that the only way for Wales to realise its potential is by “redesigning the relationship” between the UK’s nations. Whilst rejecting the idea he was shying away from the independence debate, he argued people still need to be convinced to “engage with that discussion.”
Pro-indy parties can argue increased autonomy under a federal UK will prove to be the real-world example needed to convince those questioning independence to fully support the cause. They can take solace from the experience of Canadian federalism in ultimately failing to quell Quebec’s secession movement, partially due to its strong identity and deep historical grievances.
Taking a more holistic approach, a federal UK could answer the question of how to implement House of Lords reform, through the introduction of an English or English regional chamber and a codified written constitution. Taking Germany’s example, the House of Lords could be replaced by an upper house that contains members directly appointed by each state government. It would prevent the need to introduce more elections in a UK which is experiencing dramatic drops in electoral turnout, whilst simultaneously improving democratic representation.
The question of how the UK funds itself, and the state units, in a federal system could be a 100+ page report, and I certainly don’t command the expertise to be able to provide a detailed analysis of how it may work. Options range from full state unit power over income and VAT, to centralising everything at federal level.
Devolved powers over income tax and VAT could provide yet more accountability and control within the Welsh Government and the Senedd. But if such powers were to remain under central power, then the distribution back to state units would have to be a de-politicised process that happens independently of the government. An example that could be followed is Australia’s Commonwealth Grants Commission, which advises the Australian Government on how to best distribute VAT revenue to each state.
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Other options which allow for the devolution of VAT and further income tax powers, are used in Germany. The country’s constitution codifies into law for richer states to directly transfer money to poorer ones. Whilst transparent, this system would likely mean London and the southeast of England directly funding the Welsh Government. Whilst based on a strong solidarity principle, the system could also lead to resentment amongst more prosperous regions.
In Canada, the central government uses federal taxes to implement ‘equalization payments’ to ensure countries with higher fiscal needs don’t lose out. This system is not as transparent, with questions remaining about who is financing who.
Any fiscal framework reform in the United Kingdom, under the current system or indeed under a federal system, will be extremely difficult to negotiate. There will be winners and losers, and the sheer size of England in the simplest terms make it difficult to calculate. One solution could be to break up England into regions that have their own regional parliaments, but, alas, English regional identity is much weaker compared to regional identity in countries like Canada, the USA and Germany. Additionally, devolved parties may also reject the notion of being treated the same as an English region, rather than as a constituent nation within the United Kingdom.
A federal United Kingdom certainly won’t solve every problem, but since 1999 Wales has certainly outgrown the piecemeal devolution settlement. Wales and the UK deserve a system that is modern and properly lays the foundation to meet the challenges that lie ahead. If we are to realise the potential of our civic identity, Wales needs to be given a clear, secure and accountable structure. Making the case for federalism is a case for good government.
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