Welsh Government “to look at” disinvesting from fossil fuel companies

(Title Image: Climate Change Commission for Wales)

Here’s a summary of this week’s Finance Questions.

The impact of land transaction tax on businesses

Shadow Finance Minister, Nick Ramsay AM (Con, Monmouth), said a Federation of Small Businesses (FSB) report from last August revealed that 66% of their Welsh members had little knowledge of devolved taxes. There were also concerns raised by solicitors dealing with land transaction tax (the Welsh version of stamp duty) that their clients were considering buying property close to the border to avoid paying higher property taxes.

Finance Minister, Rebecca Evans (Lab, Gower), said the FSB report provided a good baseline from which to work on and inform whatever changes to communication they need to make. On land transaction tax, however:

“I realise your primary concern here relates to non-residential land transaction tax, and of course we have a lower starting rate of tax for the purchase of business premises here in Wales than under stamp duty, and this means that all businesses purchasing premises up to £1.1 million in Wales either pay no tax at all or they pay less than they would under stamp duty land tax. This really does benefit small and medium-sized businesses across the country.”
– Finance Minister, Rebecca Evans

R&D expenditure by universities

Rhun ap Iorwerth AM (Plaid, Ynys Môn) said that with the information economy becoming ever more important, spending on research and development was becoming more important alongside it. In particular, he focused on university spending:

“Recent figures show total UK higher education R&D spend of around £6.5 billion. Break that down, we see spend per person in Wales to be £86. In London and the home counties of England, it’s £275 per head – almost 60% of the total R&D spend in higher education is spent in the south-east of England. Now, universities themselves, of course, draw in that R&D funding themselves, but it would be wrong to suggest that Welsh Government couldn’t be influential in seeing how much more money we could draw into Wales.”
– Rhun ap Iorwerth AM

The Minister promised to provide some “concrete answers” on R&D spending, though around £750million was spent on R&D in Wales during 2017 – an increase of 4.7% compared to 2016. She didn’t think comparing Wales with the south-east of England was a particularly valid comparison, however.

The Minister hoped a new London office for the Welsh Government will help attract further investment, but Brexit will undoubtedly have an impact with around 20% of EU funding in Wales going to research at universities.

Disinvesting from fossil fuels

Llyr Gruffydd AM (Plaid, North Wales) asked about disinvesting from fossil fuels as part of measures to tackle climate change:

“We are falling behind in Wales in this context because the Government in the Republic of Ireland has decided that they will be the first nation in the world to disinvest and to sell all of their investments in fossil fuel companies after a Bill was passed recently, with the support of all parties there. I’m sure we wouldn’t be a long way off achieving that in this Senedd, too, if the Government chose to follow that particular path.”
– Llyr Gruffydd AM

Llyr said that Ireland’s £8billion national investment fund was expected to disinvest from coal, oil, gas and peat within five years. Would the Welsh Government commit to something similar?

The Minister didn’t give that commitment but in response to a follow up from Nick Ramsay cited Monmouthshire Council’s decision to request that the Gwent pension fund disinvest (an estimated £245million) from fossil fuels as something to learn from and monitor.

Local government pensions are, however, an EnglandandWales matter and there was no way for the Welsh Government to directly influence them.

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