Wales to get borrowing powers

Westminster backs Silk Commission; some finance raising powers devolved to deliver M4 upgrade; Wales to control its stamp duty for affordable housing investment; referendum on devolving income tax

The Welsh government will get more finance raising powers to help fund upgrade work on the M4, Prime Minister David Cameron has announced.

Speaking in Cardiff, Cameron and deputy Nick Clegg finally gave their backing to some of the central recommendations of the Silk Commission, which had called for greater devolution of finance to the Welsh Assembly.

They said that devolving some finance raising powers to the Welsh government would allow upgrade work on the M4 to be “started”.

The Welsh government has long called for clarity on funding to enable investment in the motorway near Newport, with a new bypass being considered as an option to relieve congestion.

Cameron and Clegg also announced that the Welsh government will have some control over its stamp duty, allowing the Principality to direct more money into affordable housing.

Finally, the Westminster government has now promised a referendum on whether some income tax powers should be devolved. “We’ll provide for a referendum to take place so that people in Wales can decide whether some of their income tax should be devolved, in the same way as it is in Scotland,” said Cameron and Clegg in an article for the Western Mail.

The pair are meeting Welsh First Minister Carwyn Jones today to discuss this further, although no date for a referendum has yet been set.

It is hoped that an increase in borrowing powers and other finance raising powers will allow the Welsh government to get its infrastructure investment plans off the ground, and could provide the required seed funding for a range of new public-private partnerships.

Last year, the Welsh government launched plans for a non-dividend vehicle to deliver new infrastructure projects in a similar manner to Scotland’s non-profit distributing model, and the Principality has also looked at establishing a framework similar to Scotland’s Hub approach.

For more information on what the Welsh government is planning, see the November issue of
Partnerships Bulletin, which includes an interview with Gerry Holtham, adviser to the Welsh Finance Minister.