Draft Government of Wales Act 2006 (Variation of Borrowing Power) Order 2018

Chris Ruane Excerpts

Tuesday 27th November 2018 General Committees

[Chris Ruane (Vale of Clwyd) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Sharma. I welcome the Minister again; this is the second time in two weeks that we have met in a Committee on a statutory instrument that devolves additional powers to Wales, and long may that continue. Once again I welcome the devolution of additional powers, but once again—with your permission, Mr Sharma—I must issue my own warnings and express my own concerns about power going the other way, should Brexit go forward, with respect to additional finance to Wales from Europe and the additional powers that we had under the previous system.

These powers for Welsh Government were set out as part of the St David’s Day agreement and the Wales Act 2017. Unfortunately I was not here then, because I was on an enforced two-year sabbatical—the public had spoken—but I was here last year when the amounts for borrowing were increased from £500 million to £1 billion, which I welcome.

The order will enable Welsh Ministers to issue bonds for capital investment infrastructure, and it will come into force on 1 December, subject to its approval today. It is good to see that the relevant Treasury Ministers have already given that approval. For the first time, the Welsh Government will have the full suite of borrowing options at their disposal, which is an extremely important step towards ensuring that ambitious infrastructure plans can continue to be invested in and delivered on, even as capital budgets in Wales decline—they have declined massively since 2010. At a time of historically low interest rates, these additional borrowing powers are very timely.

As with all forms of borrowing, bonds must naturally be repaid, and will ultimately have an impact on the revenue available to the Welsh Government to fund day-to-day services. It is important to note that the Cabinet Secretary for Finance, Mark Drakeford, has already stated in the Assembly that, in line with the Welsh Government’s approach to capital, they will always exhaust the least expensive forms of capital before using other sources of repayable capital.

The Welsh Government’s capital spending plans, as set out in their draft Budget 2019-20, which was published in October, are based on £250 million of capital borrowing over the next two years, so plans are already afoot, showing that the Welsh Government have been proactive and visionary in knowing that they would get the additional funding. That level of borrowing will help Welsh Labour to deliver the priorities set out in the Wales infrastructure investment plan midpoint review. I therefore welcome these measures.