Tory questions extra borrowing powers for the Welsh Government

Martin Shipton

The Conservatives’ Shadow Welsh Secretary has questioned whether the Welsh Government can be trusted to use its newly acquired additional borrowing powers wisely.

Mims Davies, the MP for East Grinstead and Uckfield in Sussex, raised concerns during a Commons committee hearing that ratified an increased borrowing limit.

Moving the increase, Wales Office Minister Anna McMorrin said: “The government was elected on a manifesto commitment to work in partnership with the Welsh Government to ensure that the Welsh fiscal framework delivers value for money.

“It was as a result of joint working between both governments that the Chancellor [Rachel Reeves] announced as part of the autumn budget last year some fiscal flexibilities for the Welsh Government’s budget to enable it to better support businesses and public services in Wales.

“This included increasing the Welsh Government’s annual and cumulative capital borrowing limits, its overall reserve limit and its annual drawdown limits by 10%. Each of those limits will be uprated annually in line with inflation.”

Ms McMorrin said the borrowing limit, which had been fixed at £1bn in 2006, would rise to £1.1bn. She added: The Welsh Government remains accountable to the Senedd for how it uses these increased borrowing powers. The Wales Office will bring forward further orders annually to further increase this limit in line with inflation, as is the current process in respect of the Welsh Government’s borrowing limits.

“These changes to the fiscal framework, together with additional funding through Barnett [the formula that determines how much money the Treasury allocates to the devolved nations] and the largest settlement in the history of devolution, means that the UK Government is providing the Welsh Government with nearly £6.5bn in additional spending power.”

Accountability 

Asked by a Conservative MP what impact assessment had been done to look at the Welsh Government’s ability to service the additional borrowing. Ms McMorrin said: “To be clear, the accountability lies with the Senedd. They will be holding the Welsh Government to account.”

Ms Davies said: “I think there are issues that deserve our attention to look at. I think it would be very easy for me to stand here and just dismiss any debate outright. Also, for us to just wave it through without looking more roundly.

“It is Parliament’s responsibility not simply just to approve, but to fundamentally, provide real scrutiny. Nobody disputes that Wales needs further investment on the ground after 27 years of Labour in the Senedd, wasting money on schemes that have very little value or outcome to communities. I think it is very important that we look at the question of whether it’s currently just in terms of increasing the Welsh Government’s borrowing limit in this way, if it’s the right way to achieve change on the ground, and whether truly there is a convincing case that has been brought forward.”

Ms Davies said that in her Shadow Ministerial role, she travelled the length and breadth of Wales, meeting people from across business sectors and communities.

She added: “What greatly pains me is the continuing feel that there is, despite more money and support and more local devolution and decision making, a sense of continued deprivation, dilapidation and deterioration, particularly around infrastructure, that it is hitting communities too hard and that what has long been promised through investment, through devolution into the Welsh Government is simply not landing on the ground.”

NHS waiting lists

Ms Davies said: “Everyone, including me, knows somebody in Wales who’s waiting in pain and vain when it comes to never-ending Welsh NHS waiting lists, and despite ongoing promises of change, that better days lie ahead under the Senedd, things have not changed.

“Both Plaid and Labour have been broken records in making the claim that they haven’t got the money to fix Wales’s problems. So the truth is, after years of the Welsh Government benefiting from substantial increases in funding, what has happened?

“In 2021 alone, the then chancellor, Rishi Sunak, announced the Welsh block grant, which would rise to around £18bn a year, an increase of roughly £2.5bn a year.

“That naturally raises three important questions. Firstly, if additional funding had been made available, then why do so many structural problems continue to be unresolved? Secondly, before the government agrees to increase the level of borrowing, surely Ministers in the Wales Office should ask how previous resources have been prioritised. Thirdly, what are the actual outcomes? For too long, the Welsh Government who were aided and abetted by Plaid Cymru, have decided to prioritise the wrong things.”

She went on to list a number of items ranging from expanding the Senedd to wasting £150m on plans for an M4 relief road that was abandoned, saying in conclusion: “Public borrowing and more of it today is not an end in itself and it must be justified with a clear and credible plan.”

Ms McMorrin repeated that scrutinising the spending decisions of the Welsh Government was the responsibility of the Senedd. Ms Davies did not press her opposition further and the extra borrowing powers were approved.