I now call on the party spokespeople to ask questions of the Cabinet Secretary. The Conservatives’ spokesperson, Nick Ramsay.

Diolch. Happy new year, Cabinet Secretary.

Thank you.

I am risking repetition, with this morning’s committee, which you’ve already mentioned, but it is fresh in the mind and extremely important: can you update us on your agreement with the UK Government on the much-awaited fiscal framework?

Can I thank the Member for his question and for the persistence with which he has pursued this issue on the floor of the Assembly? So, Members will recall that discussions with the Chief Secretary to the Treasury began as far back as July of last year and came to a conclusion just after the Assembly went into recess before Christmas, with an agreement between the Welsh Government and the United Kingdom Government on the Welsh Government’s fiscal framework. As well as providing evidence to the Finance Committee this morning, I will make an oral statement on the floor of the Assembly on Tuesday next week, because the fiscal framework has been created within the context of the Wales Bill, and I hope to be able to report to Assembly Members and answer any questions in advance of the debate that we will have on the Wales Bill legislative consent motion.

Thank you for your commitment to a statement next week and also for your team’s efforts in this regard. I think it is a good example of what can be achieved when the Welsh Government, the Assembly as a whole, and the UK Government work together. It’s not always happened in the past, but it’s good to see that progress has been made. Can you clarify, as you understand it, the permanence of this new arrangement? Have the UK Government committed to a long-term arrangement rather than the previous Parliament-long commitment that, as I understand, was the case back then?

Yes, Llywydd, it’s an important point to make, isn’t it, that the fiscal framework will only stand if the Wales Bill proceeds on to the statute book. Making that assumption for the moment, if it does, then this is a permanent agreement. There was a great coup in the last Assembly term when my predecessor, Jane Hutt, negotiated a funding floor for Wales. Establishing that as a principle was a very important breakthrough, but it was a temporary funding floor to last for the period of this comprehensive spending review. The funding floor agreed in this fiscal framework is a permanent part of the landscape between the Welsh Government and the UK Government.

That is certainly good news, Cabinet Secretary, and a major plus of the current Wales Bill as it progresses. These are clearly fiscally complex times for the Assembly with the devolution of new taxes, the consequent variance in the block grant, the advent of borrowing powers—I could go on. I understand that the agreement allows for yearly review of arrangements. Can you update us on arrangements for additional mediation between the Governments if there is a future disagreement over sums coming to Wales? How do you intend to safeguard the independence of arrangements on both sides, when those disagreements will ultimately, eventually show themselves to appear?

I thank Nick Ramsay. One of the distinctive features of the agreement is that it allows for both sides to introduce independent analysis and advice if there are disputes between the parties. That is a novel feature of the agreement and not something that the Treasury has historically been keen to sign up to.

So, the fiscal framework sets out a process as to how any disagreements are to be resolved, and allows at each stage in that process both the Treasury and the Welsh Government to deploy independent advice, secured on both sides, to assist in the resolution of those matters. It’s an issue that I will continue to explore over the next few months as to how we can best obtain that independent advice for Wales. There are a number of options available. I’ll want to weigh them up, but the principle is a really important one: in an era in which the Treasury has generally been the judge, the jury, has been able to have a monopoly of evidence on which decisions are made, we will have an independent strand that we will be able to deploy, and that will create a different sort of playing field and a different sort of debate.

Plaid Cymru’s spokesperson, Adam Price.

Diolch, Lywydd. Politicians from the Cabinet Secretary’s party and from mine have long bemoaned the fact that the UK Government’s capital investment has tended to benefit one corner of the country, the south east of England, over all others. Does he think that the Welsh Government has a better record of achieving an even spread of investment across Wales?

Well, the basic premise on which capital investment decisions are made by the Welsh Government is not geographic. Our ambition is to invest in those capital projects that provide the best return for Wales, and it is the quality of the project, rather than their geographical location, that would be the primary determining factor. That said, there are good ideas and good projects in all parts of Wales, and our capital plans, as set out in the budget yesterday, I think demonstrate that, wherever there are important jobs to be done and ideas that merit investment, this Government will pursue them.

Yes, but does that explain the vast gap that we see in the Cabinet Secretary’s own figures—he’s provided them in a written question—between the different regions of Wales? I’ll just give one example, the spend per capita. Welsh Government capital investment over four years, the last four years, in mid and west Wales is half the over £1,000 per head figure for south-east Wales. Next year, it’s projected to fall to 29 per cent. Nothing can justify that level of gap. I have to say, we heard in the Chamber yesterday, I would say, a rather sneering tone of metropolitan provincialism attacking my party for at least trying to get some concession, some investment in the regions and the constituencies that we represent. We make no apology—[Interruption.] We make no apology for equalising the level of investment.

He is a more thoughtful politician than some of his colleagues, and, by the way, those attitudes were present on the Conservative benches as well, also from Members that either represent or live in the most prosperous part of Wales. I would ask him this: will he commit to equalising the level of investment across Wales, so that it’s not left up to my party, year in, year out, to fight for bloody scraps at the bottom of anyone’s pork-barrel?

Well, Llywydd—. Look, there is a serious point in what the Member has to say, which is that we all need to recognise that all parts of Wales need to feel that this National Assembly is attentive to their needs, and that what goes on here results in decisions where they can see the benefit in their lives. Where I think he goes wrong is in trying to portray the decisions we make as not having any interest in that topic. Of course they do. That’s why you see the major investments that you see in all parts of Wales. It isn’t surprising that population makes a difference to investment. The vast bulk of the population of Wales lives in certain parts of Wales, and it’s inevitable that some of the major investments will follow that, but he —[Interruption.] No, no, the per capita figure doesn’t counteract what I just said, because, cumulatively, those per capita expenditures will result in the agglomeration of investment in particular parts. But, if the serious point he is making is do we need to make sure that we invest everywhere where there are important things that need to be done, and that we can demonstrate to people across Wales that we take their needs seriously, then that’s a point on which I would not disagree with him.

The only crumb of comfort that I, as a Welsh nationalist, can take from the kind of figures that I’ve laid out—which show the Cardiff centricity, I think, of the leadership, unfortunately, of the Labour Party—is that at least one region of Wales should be doing well. But we see the same chronic mismanagement here, and I ask him, in his role as local government Minister: is he aware of the fact that the split in the Cardiff Labour group now threatens to endanger the entire £1.2 billion city deal? What does it say for the Cabinet Secretary’s preferred model of regional economic development, the joint committee model? If Labour cannot even work jointly among itself on one authority, how is it going to work cross-party across 10 different authorities as well?

I think the Member’s line of questioning this afternoon rather risks him being less of a Welsh nationalist than a particular fraction of Wales nationalism. I am confident that the votes that are necessary in 10 different local authorities across Wales to secure the governance arrangements that will allow us to move forward with the city deal, that those votes will take place and will take place successfully across south Wales over coming weeks.

UKIP spokesperson, Mark Reckless.

The Cabinet Secretary said this morning that it was not a foregone conclusion that there’d be devolution of income tax-raising powers and that his group would be weighing it up over the weekend and only deciding on the legislative consent motion on Monday. I wonder if he could help me resolve an apparent discrepancy between that statement and the fiscal framework that he has signed on behalf of the Welsh Government, which states at paragraph 14 the Welsh Government’s funding will ultimately comprise two separate funding streams:

Revenues from business rates, devolved taxes (stamp duty land tax and landfill tax) and Welsh rates of income tax;

Adjusted block grant funding from the UK government.’

He told our committee this morning that partial devolution of income tax may not happen. Why, therefore, has he put his signature to a document that says devolution of the Welsh rates of income tax will happen?

Well, Llywydd, the job of work I was given to do in negotiating the fiscal framework was to negotiate a framework that would see us through were partial devolution of income tax to take place. That’s why the whole of this agreement is built around that possibility, but it was clear to the Treasury throughout that process that the final decision on whether the Wales Bill would receive the legislative consent of this Assembly was for this Assembly to make, and, if this Assembly were not to agree to that legislative consent, then this framework would fall as a result and would have to be renegotiated based on the two taxes that would then be devolved. But it’s not a mystery at all. This framework was designed for the world that may take place if the Wales Bill reaches the statute book, and that’s why partial devolution of income tax is referred to throughout it.

I’m not sure if David Gauke, the UK Minister, would be particularly impressed to hear the Cabinet Secretary’s answer, because he, like you, has put his signature to a statement that says that the Welsh Government’s funding will ultimately comprise’ and then lists a series of elements, which include Welsh rates of income tax. There’s no reference to contingency or different conditions. It says very clearly that Welsh rates of income tax will be devolved. Now, we are asked to believe that this decision has not been taken, but isn’t the reality that, even before the First Reading and the publication of the Wales Bill, and, in particular, that clause that removes the legislative requirement for a referendum prior to income tax-raising powers, actually, that was stitched up between a Welsh Labour Government and a Conservative Government in Westminster and that discussions were had between those two parties to come to that conclusion before that process even started?

No, I think the Member is entirely wrong. He really, really just misunderstands the whole process here. Mr Gauke will be surprised at absolutely nothing that I said in my first answer, because, in every discussion that I held with him, he understood that a precondition to this Assembly giving its consent to a legislative consent motion, if that is what it does, would be that there was a satisfactory fiscal framework in front of the Assembly that would convincingly explain to Members here how, if—if—partial devolution of income tax were to go ahead, the relationships between the Welsh Government and UK Government would navigate the fiscal consequences. That’s the absolute basis on which this document was drawn up, and Mr Gauke would understand that and, I think, echo that, if he was standing here this afternoon.

And Members can see that clear statement, as can members of the Welsh public, at paragraph 14 of that document. But the Cabinet Secretary says to me that I’ve misunderstood the whole process, and, yes, I’ve come to this with fresh eyes. And, perhaps because of that, I had to put a certain reliance on public documents and assurances given by the Welsh Government to the Welsh people. One of those assurances was given on the ballot paper, no less, of the 2011 referendum, which said that, if that result was for further devolution—a ‘yes’ vote—that would not lead to the devolution of tax-raising powers. Yet, now, despite that promise, these tax-raising powers are going to be forced on the Welsh public, who have no more desire to pay higher taxes than they have to remain in the European Union. Yet, the result of that referendum in 2011—that assurance given on the ballot paper—will be ignored by his Government to the same degree as they’d wish to ignore the decision of the Welsh people on our membership of the EU.

Well, if the Member has a quarrel, it’s not with me, it’s with the Secretary of State for Wales, because this was a decision by a Conservative administration in Westminster, not by any politician in this Chamber. Nor is he right—[Interruption.] Not is he right to imply that what the Wales Bill provides is for an automatic rise in taxation. It simply provides this National Assembly with new flexibilities to make decisions in that field—decisions that may lead to some taxes going up, but could equally well lead to taxes being reduced. There is no automaticity of taxes rising as a result of the Wales Bill, should that Bill reach the statute book.