The Wales Bill, which is currently making its way through the Houses of Parliament, will, if passed, see borrowing and taxation powers devolved to Wales alongside giving the Assembly the ability to legislate over its own budgetary procedure.
The National Assembly’s Finance Committee has been undertaking an inquiry to identify what changes need to be made to Welsh Budgetary Procedures and how these can be reflected in Wales.
The Committee has recommended that a new budget process should adhere to the ten “Principles of Budgetary Governance” published by the Organisation for Economic Co-operation and Development (OECD), and comply with the current draft OECD Principles of Budgetary Governance once they are ratified.
The Finance Committee wants to see the current arrangement of simple allocations to Ministerial portfolios replaced with more detailed budgeting. It also believes that the budget process should consider multi-year strategic plans and long-term financial forecasts.
One of the main areas of concern was the need to ensure that budgets link to borrowing – the Committee believes that the Assembly should effectively approve not only the capital expenditure proposals, but also how they are financed.
“The Wales Bill will mean, if passed, that the Welsh Government will be responsible for raising part of its own budget through the devolution of some taxation powers. It will also have the ability to borrow funds for the first time,” said Jocelyn Davies AM, Chair of the Finance Committee.
“We believe it is critical that there is a robust and in-depth process for scrutinising Welsh Government spending plans.
“Up until now the Assembly has only been able to approve the total amount the Welsh Government proposes to spend each year and we receive little more detail other than how much will be allocated to each Ministerial portfolio.
“As Wales matures as a democracy it must be able to balance its books and plan for the future, which is why the next part of our inquiry into budget practice will examine how a revised budget process will work.”
Further detail on how budgetary procedures will change in Wales will be considered by the Committee in the autumn term.