Rise in loan interest rate expected to “cause difficulty” for Welsh councils

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Here’s a summary of this afternoon’s question to the Finance Minister, Rebecca Evans (Lab, Gower).

A familiar refrain

Shadow Finance Minister, Nick Ramsay AM (Con, Monmouth), turned once again to how the Welsh Government intends to spend additional money allocated by the UK Government spending review.

The Minister repeated what she’s said in previous sessions – that the NHS was a top priority and local authorities will be towards the front of the queue too. Nick Ramsay pressed further:

“….when you tell us you’re looking to put money into social services and money into local authorities in the future, can you guarantee that there will be an even spread of that cake and that local authority budgets across Wales, in rural areas, will also get a better deal than they have in the past, so that in future, the Welsh budgets for local authorities are fairer than they have been in the past?”
– Shadow Finance Minister, Nick Ramsay AM

The Minister again repeated what’s been said by herself and others previously – if councils want their funding formula to change they’re welcome to come up with their own ideas and present them to the government.

People-centred budgeting

Rhun ap Iorwerth AM (Plaid, Ynys Môn) asked a question along similar lines to Nick Ramsay and got a similar answer. However, he brought up an idea from New Zealand on placing the wellbeing of the population as the main focus when drafting budgets. With Scotland looking at the idea, would the Welsh Government consider something similar, or become part of an international wellbeing network?

The Minister said she was keen to learn from other governments:

“Welsh Government is particularly keen to engage in networks and learn from others, especially now in the context of Brexit of course, because our international relationships are as important as they’ve ever been now in terms of being able to demonstrate what we are doing in Wales and the values that we have here in Wales, which I think are shared by many across the world, and in terms of also learning from others, because we certainly don’t have the monopoly on good ideas.”
– Finance Minister, Rebecca Evans

Local borrowing interest rate rise “to reign in councils”

Mark Reckless AM (BXP, South Wales East) raised the matter of a recent increase in the interest rate of the public works loan board set by the UK Treasury. He believes the move was to “reign in” a number of local authorities who’ve built up large commercial property portfolios. In a Welsh context that includes Monmouthshire Council, who’ve spent a combined £28million to buy commercial properties, including the Newport Leisure Park which is outside their area.

The Minister believed that while individual councils have to justify spending decisions to their local electorates, the interest rate rise will have a general impact on local authority capital spending:

“….the interest rate changed without notice from 1.8% to 2.8% with immediate effect last week. And that does cause difficulty for local authorities in Wales, of course, because they will have to reassess all of their borrowing plans and the plans that they have for strategic investment in social housing particularly, but also in schools and other capital projects particularly in Wales.”
– Finance Minister, Rebecca Evans

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