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

Debate between Nigel Adams and Jonathan Edwards

Tuesday 27th November 2018 General Committees

[The Parliamentary Under-Secretary of State for Wales (Nigel Adams)]

I beg to move,

That the Committee has considered the draft Government of Wales Act 2006 (Variation of Borrowing Power) Order 2018.

As always, Mr Sharma, it is a pleasure to serve under your chairmanship. The draft order will deliver on the commitment that the Government made in the St David’s Day agreement to extend the Welsh Government’s borrowing powers to enable Welsh Ministers to issue bonds to borrow for capital expenditure.

The Welsh Government already have extensive capital borrowing powers. The Wales Act 2014 provided that Welsh Ministers may borrow up to £500 million to fund capital investment. Those powers went hand in hand with the tax powers in the Act, which the Assembly has used to establish the land transaction tax and the landfill disposal tax. They placed fiscal responsibility and greater accountability at the heart of the Welsh devolution settlement. Following the historic agreement with the Welsh Government on the fiscal framework for Wales in December 2016, the Wales Act 2017 doubled the borrowing limit to £1 billion, with an annual limit of £150 million, in anticipation of Welsh rates of income tax coming on stream from April next year.

[Jonathan Edwards (Carmarthen East and Dinefwr) (PC)]

I am most grateful to the Minister for giving way so early in his speech. Will he give a categorical assurance that the extended powers under our consideration have nothing to do with the Budget announcement on page 66 of the Red Book that tied extra borrowing powers to a specific project in Wales? Will he reassure me that the Welsh Government will be able to utilise the borrowing capacity that comes with those powers as they so wish?

[Nigel Adams]

I can certainly give the hon. Gentleman those assurances. The draft order is about adapting the means by which the Welsh Government can borrow, whereas what was announced in the Budget was about the additional amount that will be considered during the spending review.

As the hon. Gentleman rightly says, my right hon. Friend the Chancellor announced in the Budget that at the spending review we will undertake a review of the Welsh Government’s capital borrowing powers and consider whether the borrowing cap should be increased by up to £300 million to support the delivery of a new M4 relief road. I know that many people and businesses have called for improvements to that vital artery of Wales; no doubt they welcomed that announcement.

The draft order is not about changing the amount that Welsh Ministers can borrow, but about providing greater flexibility and choice for the Welsh Government over the sources of borrowing that they wish to pursue. To date, Welsh Ministers have been limited to borrowing either from the national loans fund, which is part of the UK Government, or from commercial banks. The draft order, which is made under section 121(4) of the Wales Act 2014, will extend the means by which Ministers in Wales can borrow, to include bond issuance. It is, of course, a matter for Welsh Ministers to decide which source of borrowing provides the best value for money for Welsh taxpayers at any given time.

I am pleased to note that the Cabinet Secretary for Finance and the Chief Secretary to the Treasury have both approved the draft order. I commend it to the Committee.

Draft Tax Collection and Management (Wales) Act 2016 and the Land Transaction Tax and Anti-Avoidance of Devolved Taxes (Wales) Act 2017 (Consequential Amendments) Order 2018

Debate between Nigel Adams and Jonathan Edwards

Wednesday 14th November 2018 General Committees

[Nigel Adams]

It is unlike the hon. Gentleman to raise the European Union withdrawal agreement, but I commend him for his canny ability to weave such remarks into a debate on the Welsh Revenue Authority and its land transaction tax capabilities.

The order, made under powers in section 150 of the Government of Wales Act 2006, makes consequential provisions on the establishment of the Welsh Revenue Authority and the creation of a land transaction tax. It has four provisions. Article 2 inserts the new Welsh Revenue Authority into schedule 1 of the House of Commons Disqualification Act 1975, so as to disqualify the chairperson and non-executive members of the WRA from being Members of this House. That puts the WRA on the same footing as Her Majesty’s Revenue and Customs in that respect. Following the devolution of powers over Assembly elections in the Wales Act 2017, whether the chairperson and non-executive members should also be disqualified from being Members of the National Assembly for Wales is, of course, a matter for the Assembly.

Article 3 inserts the WRA into the list of public bodies in part 6 of schedule 1 to the Freedom of Information Act 2000, thereby providing a right of access to information held by the WRA. In doing so, the order brings the WRA within the definition of “Welsh public authority” under that Act.

Article 4 inserts a reference to the WRA into schedule 1 to the Public Interest Disclosure (Prescribed Persons) Order 2014, ensuring the same protection for whistleblowers who contact the WRA under the Employment Rights Act 1996 as that afforded to whistleblowers who assist HMRC.

Finally, article 5 inserts a reference to the land transaction tax into regulation 45 of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017. Under those regulations, HMRC is required to maintain a register of the beneficial owners of certain trusts. The amendment provides that those reporting requirements apply to trusts that are liable to pay land transaction tax in Wales.

The order demonstrates the Government’s continued commitment to work with the Welsh Government to deliver effective implementation of devolved taxes in Wales. In assuming tax and borrowing powers, devolution in Wales has truly come of age, as the devolved institutions become responsible not only for how money is spent in Wales, but for how it is raised.

[Jonathan Edwards (Carmarthen East and Dinefwr) (PC)]

I welcome the Minister to his post. Before he concludes his remarks, can he reassure the Committee that the Welsh Government are happy with the legislation as drafted?

[Nigel Adams]

I have not had that conversation directly, but I understand that the Welsh Assembly has been very much involved in the drafting of the order, so I will make that assumption. The hon. Gentleman will appreciate that I have not had my feet under the table for very long.

Following the implementation of Welsh rates of income tax, the Assembly will be responsible for raising more than £2 billion in tax revenue, which is around 15% of the Welsh block grant. Those fiscal powers, together with the powers devolved through the Wales Act 2017 and the fiscal framework, pave the way for the Assembly to become a fully fledged Welsh Parliament. I commend the order to the Committee.