The Finance Committee of the National Assembly for Wales has undertaken an inquiry into the capital funding sources available to the Welsh Government and explored the effectiveness of its funding strategy.
In 2014 the Wales Act gave capital borrowing powers to the Welsh Government. This Act, along with the Wales Act 2017 and the fiscal framework, established an annual capital borrowing cap of £150 million for the Welsh Government.
In its inquiry, the Finance Committee wanted to establish how the Welsh Government is using the funding streams now available to it as a result of these fiscal changes and assess the benefits and risks of specific funding models that it uses.
Capital planning
The Committee found that, whilst the Welsh Government was using the new borrowing powers, stakeholders were unclear about how it prioritises projects and plans on a strategic basis. The Committee believe that if the Welsh Government planned on a longer term basis, and matched sources of funding to infrastructure projects, it would be easier to establish how much capital borrowing was required in the future.
Borrowing powers
Funding Models
- The Welsh Government should consider infrastructure investment plans on a longer term basis, which prioritises and allocates funding sources to projects to ensure there is a clear picture of how much borrowing will be required in future years.
- The Committee recognises the case made by the Welsh Government for an increase in borrowing to allow a rational approach to capital borrowing and would support the Welsh Government’s borrowing limits being increased to help deliver investment priorities.. The majority of Members agreed that the Welsh Government should continue to seek prudential borrowing powers.
- The Committee notes the evidence on PFI and MIM, and agrees that MIM represents an improvement on aspects such as community benefits and oversight of project contracts. However, it is difficult to ascertain how MIM substantially differs from PFI. Additionally there was limited evidence presented as to how MIM offers greater value for money than previous PFI models.
Read the full report:
Finance Committee - Inquiry into the Welsh Government’s capital funding sources (PDF, 1009 KB)