Wales to get increased borrowing powers

The Welsh government has been granted up to £1bn of capital borrowing powers, as well as increased tax raising powers, under a new financial settlement agreed with Westminster.

A new fiscal framework has been agreed from 2019 that sets out how the Welsh Government will be funded following the devolution of stamp duty land tax, landfill tax and Welsh rates of income tax.

Under the plans, the Welsh government’s overall capital borrowing limit will be increased to £1bn, with the annual limit set at £150m.

“This package of measures paves the way for partial income tax devolution in Wales,” said the Welsh government’s finance minister, Mark Drakeford. “But crucially it protects our budget from the range of undue risks that could arise following the devolution of tax powers from 2018 and provides additional flexibility to manage our resources.”

It remains to be seen how the changes might impact infrastructure investment in Wales, after its efforts to develop a PPP model similar to Scotland’s non-profit distributing (NPD) programme were hit by the changes to European accounting rules that meant NPD schemes are treated as on the government’s balance sheet.