Uncertainty over whether Welsh Government borrowing powers will be extended

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

Borrowing powers

Rhun ap Iorwerth AM (Plaid, Ynys Môn) asked about the extent of the Welsh Government’s borrowing powers in light of the cancellation of the Newport bypass.

Finance Minister, Rebecca Evans (Lab, Gower), said the government were allowed to borrow £150million a year up to a total maximum of £1billion. There was a request for this to be extended to £300million a year, but because the UK Government’s spending review has been consistently delayed it’s unclear whether that will take place.

The issue was, however, being discussed further:

“I’ll be issuing a written statement later this week, which talks about the statement of funding policy and that’s a discussion that I started ….with other finance ministers, and with the support of the Scottish and Northern Irish administrations, which looks at a much fairer and more transparent allocation of funding from the UK Government to the nations….”
– Finance Minister & Trefnydd, Rebecca Evans

Decarbonisation budgets

The Conservatives are pressing on the potential economic impacts of the climate emergency and, with the Future Generations Commissioner suggesting an additional £1billion was needed, that pressure continued with Shadow Finance Minister, Nick Ramsay AM (Con, Monmouth):

“I appreciate that this is a budget-setting exercise, probably, but in terms of a strategy for deciding those allocations in advance of that process so that departments know that they’re going to get funding specifically to reduce carbonisation, how are we ensuring that that will happen?”
– Shadow Finance Minister, Nick Ramsay AM

The Minister said discussions were starting over the 2020-21 Welsh budget. It’s still in its early stages. The £1billion figure was “a useful starting point”, but it could require difficult discussions on where it would come from and wasn’t guaranteed.

Welsh Government “still supports principle” of a community bank

The Economy & Infrastructure Committee is currently undertaking an inquiry into banking access, and Chair of that committee, Russell George AM (Con, Montgomery), acknowledged that while discussions between the Welsh Government and interested parties were at an early stage, was there any indication of how much public money could be put towards the project?

The Minister said the community bank was still an active priority for the government. They’ve provided advice on what would need to happen for the community bank to access seed capital. It could still be quite some time before anything happens though:

“Officials are now reviewing a specific proposal and a request for seed funding from the Public Bank for Wales Action Group, working in collaboration with the UK-wide Community Savings Bank Association. Seed funding would be used by the Public Bank for Wales Action Group to initiate a phase of work that would include stakeholder engagement, market assessment, and feasibility for a community bank for Wales, which will then progress to a banking licence application. An application for a banking licence can take quite some time – two years or more….”
– Finance Minister & Trefnydd, Rebecca Evans

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