The people of Wales will be offered some control of powers over income tax in a referendum, the Prime Minister has announced.
The Prime Minister and his Deputy Nick Clegg said Wales would have the ability to borrow and take control over stamp duty revenues as part of a framework giving more responsibility to Cardiff Bay.
Decisions about Wales' future had been taken by Whitehall bureaucrats for too long and Wales had suffered as a result, they added.
Speaking at Cardiff Bay, Mr Cameron and Mr Clegg said change would give more responsibility to the Welsh Assembly, to create “a strong Wales inside a strong United Kingdom”.
“Today we are announcing new powers for the Welsh people and the Welsh government,” Mr Cameron told a packed press conference at the Senedd in Cardiff Bay.
“Power that is about building this country up. Power that's about ensuring what I want and what I know the Deputy Prime Minister wants and the First Minister wants, which is a strong Wales inside a strong United Kingdom.”
A referendum will allow the Welsh to decide on whether to take up some powers over income tax, as Scotland has under the new measures.
Under the Scottish system, due to come into force in April 2016, the UK Treasury will deduct 10p from income tax and give MSPs the power to decide how to raise the shortfall, creating the possibility of lower or higher rates in different parts of the UK.
The PM and his Deputy, who met Welsh First Minister Carwyn Jones to discuss the new devolution settlement, said borrowing powers would help the Welsh government finance improvements to the M4.
“This is like a foot on the windpipe of the Welsh Assembly,” Mr Cameron said. “We want to encourage the Welsh Assembly government to take action as soon as possible.”
The new package builds upon recommendations made by the Silk Commission, which suggested a series of tax and spending powers should be devolved.
Promising the “devolution of some finance raising powers” the coalition Government leaders said it would allow Mr Jones' administration to begin work on upgrading the M4 - replacing a “road network from a bygone age”.
Wales will be given some control over stamp duty “bringing in money that can be spent on big Welsh priorities like much needed affordable homes”.
Mr Clegg added: “This is a milestone in the devolution of power to Wales and a big step forward.
“This package puts the Welsh people in the driving seat on jobs, transport, infrastructure and housing as well.
“The referendum on power in income tax is entirely a matter for the Welsh people.
“I am an advocate on further devolution with what I think has been a very centralised tax system in the UK as well.”
The Prime Minister said certain parts of the Silk Commission, such as handing air passenger duty to Wales, would not be implemented.
Mr Cameron and Mr Clegg also announced that the Nato summit will be held in Wales in 2014.
Responding to the announcement, the Party of Wales leader Leanne Wood said:"Plaid Cymru broadly welcomes the announcements made this morning on financial powers for the National Assembly for Wales, albeit we would have preferred them to have gone further.
“The Party of Wales has pushed for the implementation of the Silk recommendations from the very beginning, and it is good to see that the UK Government has finally made some progress, even though they have fallen short of the full implementation."
Additional reporting by Press AssociationReuse content