PUTTING Wales and Scotland on an equal footing in terms of tax powers would benefit the Welsh Government's budget to the tune of £200 million a year, a report has said.

Wales has the power to set and vary rates of stamp duty - and has replaced it with a new Land Transaction Tax - as well as landfill tax, business rates and council tax. And, as of the start of this month, the Welsh Government also has limited control over Income Tax.

But the Scottish Government has historically had greater tax powers - in 1999 it was given limited control over Income Tax, and these powers were increased in 2016, when it was also handed control of 11 welfare benefits. Scotland also has the power to create new benefits in devolved areas, as well as control over Air Passenger Duty. Repeated calls by the Welsh Government to follow suit in Wales have gone unheeded.

But now a report by Cardiff University's Wales Governance Centre has found handing control over these areas to the Welsh Government would prove financially beneficial to Wales.

Guto Ifan, Wales fiscal analysis research associate, said: “Because of the higher prevalence of poverty and disability in Wales, it is often assumed any form of welfare devolution would be detrimental to Wales and the Welsh budget.

“But we have researched a number of potential outcomes of an agreed deal with Westminster and found no evidence to suggest devolving benefits to Wales would be financially unsustainable. In fact, if the same benefits as Scotland were governed in Wales, along with a similar funding formula, it could actually lead to a positive financial outcome.”

He added: “Our research doesn’t focus on the wider arguments for and against the devolution of welfare. But it does suggest that it shouldn’t be dismissed on financial grounds.”

Currently funding given to Wales is calculated under the Barnett Formula, which adjusts the amount of funding the Welsh Government is given according to cuts and investments in England. But the research has argued this should be replaced by the method used to determine how much Scotland is given, called the Indexed Per Capita method. According to the Wales Governance Centre Report, using this method would result in a budget surplus of £200 million a year by the end of the 2023-24 financial year.

Cian Siôn, Wales fiscal analysis research assistant, said: “The formula used for Scotland, or a variation of the UK Treasury’s formula currently used for tax devolution for Wales, would represent the least risky and potentially beneficial options for Wales.

"Even if the simple Barnett Formula was used, we find that Wales would not be systemically worse-off as a result of welfare devolution.

“The huge differences between each scenario show that much would hinge on negotiations with Westminster to ensure that Wales was given the best settlement. The precedent set by Scotland could form a key part of those discussions.”

This month also saw the Welsh Government's borrowing powers for major projects such as building and infrastructure double to £1 billion.