The next item on our agenda is a statement by the Cabinet Secretary for Finance and Local Government on innovative finance: the mutual investment model. I call on the Cabinet Secretary to make the statement. Mark Drakeford.

Llywydd, thank you very much. The Welsh Government has a long track record of funding infrastructure investment in Wales through our capital budget. Targeted investment in infrastructure is amongst the most important interventions a Government can make to support sustainable growth and job creation. In addition to increasing economic output and promoting higher levels of employment, investment in infrastructure also improves the efficiency of public services. Since devolution, we have invested in a new generation of hospitals, schools, housing and public infrastructure, and we will continue to do so.

In October, in the draft budget, I was able to lay out four-year capital spending plans. We have ambitious plans to build a metro system for south Wales, to create 20,000 more affordable homes, to upgrade our road network and to complete our programme of modernising our school estate. We will do this at a time when our capital budget has been cut as a result of the UK Government’s ongoing programme of austerity. By the end of this decade, we will have 21 per cent less funding available for infrastructure, in real terms, than we had in 2009. This means that we need other sources of funding to support our capital programme.

Yn y cyd-destun hwnnw, Lywydd, y nododd Llywodraeth flaenorol Cymru ei hymrwymiad i archwilio ffyrdd arloesol o gyllido seilwaith cyhoeddus. Ers hynny, mae offerynnau ariannol arloesol eisoes wedi’u defnyddio i gynyddu buddsoddiad mewn trafnidiaeth, tai ac addysg o £0.5 biliwn. Un o'r rhesymau ein bod ni wedi gallu ariannu'r buddsoddiad ychwanegol hwn yw oherwydd nad yw Cymru wedi cael ei hamlygu i gynlluniau Menter Cyllid Preifat ar raddfa fawr. Mae ein hamlygiad i gost cynlluniau o'r fath yn llai nag 1 y cant o'n cyllideb refeniw—swm cymharol fach o'i gymharu â rhannau eraill o'r Deyrnas Unedig.

Lywydd, cyn canolbwyntio ar y model buddsoddi cydfuddiannol, hoffwn roi’r model hwnnw yng nghyd-destun camau arloesol eraill, a fydd yn galluogi gwerth £1.5 biliwn o fuddsoddiad ychwanegol i gael ei wneud yn seilwaith cymdeithasol ac economaidd Cymru yn ystod y chwe blynedd nesaf. I ddechrau, bydd y Llywodraeth yn gwneud defnydd llawn o'n pwerau benthyca cyfalaf newydd. Ar ôl pennu ein gallu i fenthyca fel £500 miliwn yn wreiddiol o dan Ddeddf Cymru 2014, bydd yn codi i £1 biliwn o dan delerau'r fframwaith cyllidol, y cytunwyd arno gyda Llywodraeth y DU ym mis Rhagfyr. Byddwn hefyd yn darparu cynlluniau cyllid arloesol pellach mewn partneriaeth â rhannau eraill o'r sector cyhoeddus yng Nghymru. Yn y gyllideb derfynol, roeddwn yn gallu dyrannu gwerth £3.6 miliwn o refeniw i ymestyn y grant cyllid tai llwyddiannus. Bydd y dyraniad newydd, rheolaidd hwn yn codi i £9 miliwn yn 2019, gan arwain at werth oddeutu £250 miliwn o fuddsoddiad ychwanegol mewn tai cymdeithasol a fforddiadwy, gan gynhyrchu o leiaf 1,500 o gartrefi tuag at darged uchelgeisiol y Llywodraeth hon o adeiladu 20,000 o gartrefi fforddiadwy yn ystod tymor y Cynulliad hwn. Yn ogystal â darparu refeniw i gynorthwyo landlordiaid cofrestredig yn y modd hwn, rydym hefyd yn dod â nhw at ei gilydd i wella eu grym benthyca. Gallaf gadarnhau heddiw fod cais am fenthyciad wedi cael ei wneud ar ran landlordiaid cymdeithasol cofrestredig i Fanc Buddsoddi Ewrop. Mae hyn yn dilyn cyfarfodydd a gynhaliwyd gydag is-lywydd y banc, yma yng Nghaerdydd ddechrau mis Chwefror, i drafod y cais hwn. Rydym yn disgwyl penderfyniad terfynol gan y banc ym mis Mehefin eleni.

Ar yr un pryd, rydym hefyd yn cwblhau trefniadau ar gyfer y rhaglen rheoli risg arfordirol. Bydd cyllid refeniw rheolaidd gwerth mwy na £7 miliwn y flwyddyn yn arwain, erbyn 2020, at werth tua £150 miliwn o fuddsoddiad ychwanegol mewn mesurau atal llifogydd, gan amddiffyn busnesau a chartrefi yng Nghymru. Bydd y rhaglen newydd yn ategu'r £33 miliwn ychwanegol o gyfalaf confensiynol a ddyrannwyd ar gyfer gweithgareddau amddiffyn rhag llifogydd yn y gyllideb derfynol a gyhoeddwyd ym mis Rhagfyr.

Nawr, Lywydd, er bod yr holl ymdrech hon yn gwneud gwahaniaeth gwirioneddol ym mhob rhan o Gymru, ceir set o ddibenion cyhoeddus hanfodol sydd angen ymateb ychwanegol o hyd. Mae datganiad heddiw felly yn nodi sut y caiff tri phrosiect cyfalaf mawr eu cyflwyno trwy fath newydd o bartneriaeth cyhoeddus-preifat, y model buddsoddi cydfuddiannol, wedi’i lunio yma yng Nghymru. A gaf i hefyd gydnabod y cyfle i drafod y syniadau hyn yn y pwyllgor cyswllt ar gyllid rhwng y Llywodraeth a Phlaid Cymru, ac ychwanegu at y gronfa o syniadau sydd ar gael i ni yng Nghymru yn y modd hwnnw?

Bydd y tri chynllun—cwblhau’r gwaith o ddeuoli’r A465 o Ddowlais Top i Hirwaun, canolfan ganser newydd Felindre, a darparu cyfran sylweddol o fuddsoddiad yng ngham nesaf rhaglen ysgolion yr unfed ganrif ar hugain—gyda'i gilydd, yn gyfystyr â gwerth tua £1 biliwn o fuddsoddiad newydd. Cynlluniwyd y model buddsoddi cydfuddiannol yn ofalus i hybu budd y cyhoedd ac i amddiffyn y bunt gyhoeddus. Rydym ni wedi gweithio'n agos gydag ystadegwyr yn Eurostat a'r Swyddfa Ystadegau Gwladol, a chydag arbenigwyr ym Manc Buddsoddi Ewrop, ers dros flwyddyn i sicrhau’r model hwn ac i wneud yn siŵr ei fod yn cyflawni buddion i Gymru. O dan ei delerau, bydd partneriaid sector preifat yn wynebu risgiau yn gysylltiedig ag adeiladu, cyllido a chynnal seilwaith cyhoeddus, ond yn wahanol i gytundebau Menter Cyllid Preifat hanesyddol, mae ein model ni yn caniatáu i'r sector cyhoeddus rannu unrhyw elw, yn eithrio’r ddarpariaeth o wasanaethau fel gwasanaethau glanhau ac arlwyo o’r contract, yn eithrio gwaith cynnal a chadw gwerth isel ac yn sicrhau’r tryloywder sydd ei angen arnom ynghylch costau a pherfformiad.

Mae'r model buddsoddi cydfuddiannol yn cynnwys darpariaethau hirdymor gorfodol pwysig i sicrhau buddiannau cymunedol, er mwyn creu prentisiaethau a lleoedd hyfforddi ar gyfer gweithwyr yng Nghymru ac ar gyfer datblygu cynaliadwy, lle mae'r partner sector preifat yn cynorthwyo’r ddarpariaeth o Ddeddf llesiant cenedlaethau’r dyfodol. Mae'n ymgorffori ein hymrwymiad i god cyflogaeth moesegol ac yn ein galluogi i sicrhau cymaint o fanteision â phosibl o’n harferion caffael cynaliadwy. Mae'r model hefyd yn galluogi'r llywodraeth i ddylanwadu ar y partner preifat dethol er mwyn sicrhau bod budd y cyhoedd yn cael ei warchod. Pan fyddwn yn buddsoddi mewn cynlluniau, bydd y dylanwad hwn yn cael ei arfer gan gyfarwyddwr budd y cyhoedd, ac mae hyn yn ddatblygiad pwysig ar yr hyn a sicrhawyd mewn modelau partneriaeth cyhoeddus-preifat eraill mewn rhannau eraill o'r Deyrnas Unedig. Mae hyn yn sicrhau tryloywder cadarn o ran cael gafael ar wybodaeth ar lefel bwrdd, ochr yn ochr ag amrywiaeth o faterion a gedwir yn ôl i ddiogelu arian cyhoeddus a budd y cyhoedd.

Y mis nesaf, ar 23 Mawrth, ynghyd â chydweithwyr yn y Cabinet, byddwn yn cynnal digwyddiad i lansio’r model buddsoddi cydfuddiannol i ddarpar bartneriaid, y cam pwysig nesaf ymlaen yn natblygiad y rhaglen newydd ac angenrheidiol hon o fuddsoddiad cyfalaf. Lywydd, mae mabwysiadu’r model buddsoddi cydfuddiannol a’n hofferynnau ariannol arloesol eraill yn dangos sut y mae'r llywodraeth hon yn parhau i weithredu'n bendant ac fel catalydd ar gyfer newid o dan amgylchiadau anodd. Bydd y mesurau hyn yn arwain at fuddsoddiad ychwanegol o tua £1.5 biliwn mewn seilwaith cyhoeddus, sy'n cynrychioli cydbwysedd priodol rhwng uchelgais a fforddiadwyedd, na fyddai wedi cael ei wneud fel arall. Cymeradwyaf y model i'r Cynulliad.

I’d like to thank the Cabinet Secretary for his statement this afternoon. I think we are all agreed that the economic realities that we find ourselves in mean that we do need to look at more innovative ways to fund public investment in Wales, and particularly the capital spending that the Cabinet Secretary has spoken of extensively in his statement today.

Can I particularly welcome the commitment to make use of the new capital borrowing powers that are going to be made available to the Assembly and the Welsh Government, and specifically the new limit of £1 billion that was agreed with the UK Government in December as part of the very welcome fiscal framework? That’s good news for the Welsh Government, good news for the Assembly and I think I agree with the Cabinet Secretary—it’s good news for Wales as a whole.

Can I also welcome the news that the Cabinet Secretary announced of the loan application to the European Investment Bank? Not before time, I would say to the Welsh Government. I’ve long called, and in fact made calls to the Cabinet Secretary’s predecessor, for more to be made of the European investment bank—too long a missed opportunity. It’s a particularly useful tool for infrastructure. I would be interested to know—although, of course, there are issues now with us leaving the European Union—whether there are any other proposals to try and access that funding. Other countries in the European Union have long since made use of the European Investment Bank, as the Cabinet Secretary will know, for road projects, rail projects—far more so than the UK has in the past. So I’d be interested to know whether there are any further intentions in the time that we have to make further approaches to the European Investment Bank.

Turning to the substantive part of the statement and the mutual investment model, and the extra funding for the projects outlined, we know that the Scottish Government has tried to develop a similar mutual model and I understand and recognise the Cabinet Secretary’s issues with previous PFI projects, which, as you say, we didn’t have to the same extent in Wales as elsewhere. The Scottish Government has tried to develop their own mutual model, but with little success. What lessons have been learned from the Scottish experience, what were the failings of that model, and how are you planning to safeguard the Welsh model against some of those failings? I appreciate that the model was specific to Scotland and you’ll be developing your own model—I know from my welcome discussion with you about this previously. But there must surely be some lessons that you would hope to learn.

Can you elaborate on the role of the public interest director that you mentioned in your statement? How will that person be selected? What sort of length of time will they be expected to play their role in the new mutual model? I’m trying to weight up the relative powers of the public and private aspects of this. Can you confirm that the public interest director will not have a power of veto? I think that was one of the stumbling blocks with the Scottish model that I think you’re keen to avoid.

In terms of the share that has been agreed from the mutual models in question, can you clarify that this share is instead of a cap on profits and it’s not as well as a cap on profits or a limited cap on profits, but that that part of it has been jettisoned and that this will now be a model that the Welsh Government will receive an ongoing share of, proportionate to the profits as a whole? I think that’s a good idea in principle, so I’ll look forward to hearing you clarify some of those aspects, Cabinet Secretary.

Finally, I understand that the profit cap was a large part of the reason that the Scottish model was declared invalid, leading to the Scottish Government ultimately covering, if not all the costs, then certainly a large cost of the schemes they embarked on. Clearly, if the Welsh Government ended up in this position, then a lot of the good work that has been done would itself fall and we would end up with the Welsh Government having to shoulder a large chunk of the cost, defeating the whole object of us going down this path.

You have in the past said, Cabinet Secretary, that the Welsh Government does not have access to the river of gold—which I think is how you described it—of funding that often winds its way to the border counties, in the north of England, and the Scottish Government and they have access to. They were able to fill the gaps that appeared when their scheme defaulted. I don’t think that you would be in a position to do that. As I say, this would run counter to the reasons for you bringing forward this mutual model in the first place. So, can you explain a little bit about the safeguards in place there and are you 100 per cent confident that the Welsh mutual model will succeed and that there is no risk that the taxpayer will end up footing a very large bill?

I thank Nick Ramsay for those questions. To start with his first point, I’ve set out in front of the Finance Committee, I think a number of times, my view that there is a hierarchy of how you deploy capital. My first ambition will always be to use whatever conventional capital comes our way. When we’ve deployed all the conventional capital, then we would look to use our borrowing powers, but we know that even when we’ve done all of that, there still will be important public purposes that we need to fund in Wales. Under the models my predecessor Jane Hutt developed, we’ve supported capital spending by housing associations and local authorities with revenue from the Welsh Government. A mutual model takes that the next step forward.

Nick Ramsay is absolutely right to point to the anxieties that hang over our participation in the European Investment Bank as a result of Brexit. I raised this directly with the Chancellor of the Exchequer at the last meeting of the JMC on European negotiations, where I pressed on him the Welsh Government’s view that we should look to remain a subscribing partner of the EIB even after Brexit. There certainly are a range of projects, beyond the ones highlighted in the statement, but certainly including Velindre, where we would hope to interest the European Investment Bank in continuing to provide for projects here in Wales.

The two specific issues that Nick Ramsay raised—the issue of the public interest director and the cap on profits—were, as I understand it, exactly the two central reasons why, in a series of accounting decisions between July 2015 and October of last year, the Office for National Statistics ruled that their model fell foul of the European system of accounts and therefore had to be classified through the public sector books rather than through the private sector.

As far as a cap on profits is concerned, the ONS concluded that having a cap on profits altered the balance of risk and reward in a manner incompatible with a private sector classification, and having a public interest director who is able to exercise a power of veto over any decision of the project company amounted to a degree of state control incompatible with private sector classification.

It’s because of our awareness of that—and I should say that we have had excellent co-operation from the Scottish Government and from the Scottish Futures Trust in helping us to understand the arguments that they had had to mount and helping us to avoid some of the difficulties that they have experienced. It’s as a result of that that we went to the European Investment Bank over the summer to get expert advice on our proposed model. We recalibrated it in the light of some of that advice, and we put it directly to ONS over the autumn so that we could get a classification decision in principle from them.

We had to make two sorts of compromises in order to come within the classification model. Our public interest director will not have a power of veto, but if we take an equity stake in the company, the project company, of between 15 and 20 per cent, then that public interest director will inherit a series of powers that they will be able to exercise on behalf of the public on that board. Now, I expect that we will want to appoint a public interest director at the very least for the Velindre scheme during the period of this Assembly, and I will want to give some thought to the best way in which that can be done. No doubt, this will be discussed, I’m sure, in the Finance Committee on future occasions.

Our model means that the public in Wales will have a share in profits, although we cannot cap profits. By taking a 20 per cent equity stake, for example, in the Velindre scheme, over the 25 years that the scheme is due to run, any profits that accrue we will get a 20 per cent share in them, year on year, returning to the public purse as a return on our investment. I think that securing those two things means that our mutual model can be recommended to the Assembly.

Because we went to the ONS in advance, we know that in principle our scheme meets their classification criteria. They will, nevertheless, want to look at every scheme in its own detail to make sure that they can apply those classification rules, and it will be for the Welsh Government to go on working to make sure that we don’t find ourselves in some of the difficulties that occurred north of the border.

I welcome the Cabinet Secretary’s statement, for the reasons he himself has referred to, namely, of course, the severe reduction in the amounts of capital funding available for investment because of the decline in the funds that we receive from London, and also, of course, the opportunity that capital expenditure on infrastructure represents for building the Wales we want, but also in boosting the economy at a very difficult time.

It was good to have the opportunity to discuss in general terms, without going into the details that you’ve just heard, with the Cabinet Secretary, and also to go with him to attend a presentation with the vice-president of the European Investment Bank in Velindre—one of the exciting projects that will hopefully be instigated as a result of this.

May I ask him, in terms of the detail, what the difference is between the solution that the Welsh Government has devised to this question of recategorisation through the ONS compared to the solution that the Scottish Government has introduced, namely the hub, which provides 60 per cent of a share for the private sector and then a 40 per cent share between the Scottish Futures Trust, a charity and the public sector? Is there a maximum that he would anticipate for the profit share that the public sector could own in Wales, in light of the fact that Eurostat has set out in some detail what impact various percentages would have in terms of this issue of recategorisation?

Er y croesewir y datganiad hwn yn gyffredinol, dylid croesawu unrhyw symudiad tuag at ehangu ein gallu i fuddsoddi mewn seilwaith ac unrhyw symudiad tuag at arloesi, o ran ein dull o ymdrin â’r cwestiwn hwn. Ond ni fydd Ysgrifennydd y Cabinet yn synnu o wybod y byddwn yn ei annog i fynd ymhellach o lawer na hyn oherwydd iddo gyfeirio at y ffaith, wrth gwrs, yn yr Alban, fod cyfran bresennol y gyllideb a ddyrennir i gyllido refeniw ar gyfer dyledion hirdymor, tua 4.5 y cant o'u cyllideb. Cyfeiriodd at y sefyllfa bresennol, sef 1 y cant yn achos Llywodraeth Cymru. Mae gennym ni lawer mwy o botensial ac mae gennym ni botensial i wneud llawer mwy na’r hyn a gyhoeddwyd heddiw a gallwn wneud hynny trwy fod yn fwy arloesol eto.

Cyfeiriodd at Fanc Buddsoddi Ewrop. Beth am sefydlu un cyfatebol ar gyfer Cymru, a allai ddefnyddio—? Cyfeiriodd at y gwahaniaeth rhwng, wrth gwrs, cyfalaf a dalwyd i mewn a thanysgrifiad, sydd, wrth gwrs, yn caniatáu i'r cyfalaf a dalwyd i mewn, pan fydd wedi cronni, gael ei ddefnyddio i drosoleddu. Dyma mae Banc Buddsoddi Ewrop yn ei wneud—dyna beth mae pob banc buddsoddi yn ei wneud. Beth am ddefnyddio'r dull hwnnw i greu mwy fyth o allu i fuddsoddi? Ac, yn yr un modd, beth am ystyried—? Mae gennym ni’r grym i sefydlu bondiau i Gymru. Mae’r grym hwnnw gan Lywodraeth Cymru ac, yn wir, mae gan Lywodraeth yr Alban hefyd, ac mae awdurdodau lleol, wrth gwrs, yn edrych o ddifrif ar y dull hwn. Felly, a allwn ni fod yn fwy arloesol, Ysgrifennydd y Cabinet, er mwyn gwneud y mwyaf o’r gallu a chael trafodaethau gyda rhai o gronfeydd pensiwn Cymru, er enghraifft, a allai fod yn gwneud mwy i fuddsoddi’n llwyddiannus yn ein cymuned?

Yn olaf, ar y cwestiwn o ddyfodol Banc Buddsoddi Ewrop, sydd dan amheuaeth—wel, os oes corff olynol i fod yn y DU, banc buddsoddi’r Deyrnas Unedig, beth am ddatblygu’r enw da am fod yn rhagorol o ran cyllid seilwaith trwy ddatblygu'r ystod o ddulliau yr wyf newydd gyfeirio atynt, fel y gallwn gyflwyno'r achos y dylai banc buddsoddi’r DU gael ei leoli yma yng Nghymru?

Well, I thank Adam Price for what he said at the outset of his contribution. It was a pleasure for me to go with him to Velindre with the vice-president of the EIB, Jonathan Taylor, and to hear an update about what they’re planning in Velindre.

Mae ansawdd ein syniadau ar gyfer buddsoddi yn bwysig iawn wrth ddenu sylw a diddordeb buddsoddwyr fel Banc Buddsoddi Ewrop, ac roedd yn dda iawn bod yno yn Felindre i glywed y diweddaraf ganddyn nhw.

Mae gennym ni rai atebion gwahanol yng Nghymru i’r atebion a ddatblygwyd ganddynt yn yr Alban, ond rydym ni wedi gallu dysgu oddi wrth ein gilydd. Roedd y ffaith bod y Swyddfa Ystadegau Gwladol wedi dosbarthu gwerth £1 biliwn o fuddsoddiad cyfalaf o'r Alban yn ôl ar y llyfrau cyhoeddus yn wers eithaf anodd i’r Alban ond mae’r Scottish Futures Trust wedi bod yn gweithio ar syniadau yn hynny o beth. Ein syniadau ni, o ran cyfran ecwiti a chyfarwyddwr budd y cyhoedd, gan roi cyfran o’r elw i ni ond mesurau diogelu er budd y cyhoedd, yw'r ffordd yr ydym ni’n credu y bydd y system yn gweithio orau yng Nghymru. Ac mae gan yr Alban rai syniadau eraill y maen nhw’n eu hystyried bellach i geisio cael dosbarthiad yn ôl ar y sector preifat mewn cynlluniau yn y dyfodol.

Ar hyn o bryd, rwy'n gweithio’n dybiannol ar sail y syniad y byddem yn cymryd cyfran ecwiti rhwng 15 a 20 y cant mewn unrhyw gwmni prosiect. Mae'n rhaid i chi gael o leiaf 15 y cant er mwyn caniatáu i'ch cyfarwyddwr budd y cyhoedd allu arfer y 19 mesur diogelwch y gall y cyfarwyddwr hwnnw eu harfer ar ran y cyhoedd. Rwy'n credu y byddai cyfran ecwiti o hyd at 20 y cant, a fyddai’n golygu yn achos Felindre, er enghraifft, ar sail ffigurau cyfredol, buddsoddiad cyfalaf uniongyrchol o £5 miliwn gan Lywodraeth Cymru, a byddai'n ddigonol i sicrhau'r mesurau diogelu yr ydym ni eu heisiau ac i roi llif o gyfran yr elw i ni yn y dyfodol.

Edrychaf ymlaen at drafod gydag Adam Price rai o'r syniadau ehangach hyn ynghylch sut y gallwn ddefnyddio arian cronfa bensiwn Cymru i fuddsoddi yn nyfodol y teuluoedd y bydd y bobl hynny sydd wedi rhoi arian mewn cronfeydd pensiwn yn dymuno eu sicrhau yma yng Nghymru. Pan drafodais ddyfodol Banc Buddsoddi Ewrop gyda Changhellor y Trysorlys, i fod yn deg, dywedodd ei fod yn cydnabod yr achos dros geisio dod o hyd i ffordd o barhau i fod yn gyfranogwr yn y banc, ond dywedodd os nad oedd hynny’n bosibl, yna byddai'n rhaid i ni ddyfeisio llwyfan o’r fath ein hunain yma yn y Deyrnas Unedig. Mae'r ffaith bod gennym ni berthynas mor dda gyda Banc Buddsoddi Ewrop yng Nghymru, rwy’n meddwl, yn ein rhoi mewn sefyllfa gref i allu dadlau o'r profiad hwnnw ac, yn wir, i weld a fydd unrhyw bosibilrwydd i gorff y DU gyfan o'r fath, os oes angen un, ddod yma i Gymru.

Starting with the European Investment Bank, Nick Ramsay said the time we have to make further approaches to the EIB, and I think Adam Price was also perhaps presaging his remarks potentially on our not being part of the EIB. In my party I don’t think we’ve any objection in principle to the EIB. I think there’s a negotiation about how it would work with us outside the European Union, and the European Union member states will clearly have majority ownership of it, but at the moment, if you look at its investment criteria and the way it works, there is at least the theoretical possibility of an agreement in the future, whether by shareholders’ agreement or otherwise, in which case I don’t believe UK participation is being ruled out. And I would just encourage the Minister to perhaps expand on the extent to which Wales benefits from current lending. Nick Ramsay, I think, mentioned perhaps an element of foot-dragging—I don’t know if that’s an over-emphasis on what he said in terms of applications before—and have we seen an upward trajectory in terms of loans being dispersed to Wales. And does the Cabinet Secretary think that a sensible approach is to look at this pragmatically, depending on what can be agreed, given the costs of setting up a new institutional bit? It would be wonderful if that were in Wales.

There are, I think, some sensible things to welcome very much in this statement. Could the Cabinet Secretary explain just a little more about the joint registered social landlords, I think he referred to, and improving their borrowing powers? Clearly, if you’ve a larger group of organisations, you’re going to be able to set off the risk within them, and that will give comfort to lenders who may lend more or at a lower interest rate. But how are the registered social landlords going to, between them, organise things if, in a worst case scenario, one of them were to default on one of these loans?

Could I also ask the Minister about the Velindre Cancer Centre? His party at a UK level, and certainly his leader, has argued quite strongly against privatisation of the NHS and there has been a certain scepticism from many on the left about majority private ownership in this context. Could he just explain why he’s so comfortable with having 80 to 85 per cent private ownership of this organisation, and what processes he has to make sure that it operates in the interests of the patients? I’d also just slightly caution him on the ONS—going and having an agreement with them about what might go on the balance sheet of the public sector and what might not. The UK Government tried this at a far, far larger scale for Network Rail, and then found that that later came unstuck. Is that not also a risk for us? And if that were the case, what impact would that have on the £1 billion borrowing limit that he described?

Could I also just, again, caution slightly in terms of some of the numbers and how he presents this? We’re talking about £1.5 billion potentially of extra investment, but when he talks about the actual public sector contribution of £3.6 million going up to £9 million for the housing finance grant, these sums seem to be leveraged up by quite a large multiple, and I just wonder about the potential risk involved with that. He refers with enthusiasm to the Welsh Government’s other innovative financial instruments. There was quite a lot of that around in the banks before the financial crisis, and I just wonder if there is a risk that we are entering into instruments either that we don’t fully understand, or are leading to a degree of leverage that creates an element of risk for the public purse that we might not perhaps want. He said that there was only 1 per cent PFI, traditionally, in Wales, but my major criticism of PFI is that it was trying to lever everything off the balance sheet and everything was done to that aim. The way he describes the negotiations with the ONS and what he’s doing here, I just wonder, slightly, whether there’s an over-emphasis on getting things off the public balance sheet.

I thank the Member for those questions. We will have to take a pragmatic approach to the EIB in the end. It’s as Nick Ramsay said—we are facing the economic realities of the impact of austerity on our capital budget. The president of the EIB has said that although the technical issues are difficult they are not insurmountable, if the UK were to remain a subscribing partner, but it will need the agreement of all 27 other members of the European Union to that. So, we may have to look in a pragmatic way to our own arrangements.

It is certainly true that our investments from the EIB have been on an upward trajectory over a number of years and it’s not just public investment, for example, the second campus at Swansea, which drew heavily on the EIB, but Welsh Water is a major beneficiary of EIB investment in infrastructure here in Wales, and the Welsh Government has schemes as you’ve heard as well.

In terms of social landlords, the scheme is led by my colleague Carl Sargeant. In the first tranche of housing finance grant, 19 Welsh RSLs took part in it. We were able to provide the revenue funding to support £125 million-worth of capital investment to deliver around 1,000 affordable homes. We hope that, by bringing RSLs together, they will be able to finance a scheme of around £250 million, and that will be a very significant addition.

The Member is right to say that there is no blank cheque here from the ONS. They have given us a go ahead on the model that we have presented to them—it took a 300-page document for them to come to the conclusion that our scheme will be classified in the right way, but we will have to manage the risk in every single scheme that we put forward to make sure it stays that way.

I feel like we’ve had some very different advice across the Chamber here. From a UKIP perspective, an anxiety that we are risking overleveraging on the basis of revenue, while Adam Price suggested that we should go further and find more revenue for capital investment purposes. As the finance Minister, I have to try and strike a balance between those two positions. Revenue is very precious in the current circumstances. Adam will know, when we spent time together earlier in the autumn, looking at our budget, finding small amounts of revenue for very important purposes was a hard job. So, I don’t give away revenue lightly to support capital borrowing. But sometimes, the capital needs are urgent and necessary and have that wider economic benefit, and therefore I’m prepared to do that. I think we’ve taken a prudent course in doing so. I’m confident we don’t run the risk that Mark Reckless suggested. I’m not keen to run some of the risks that I think Adam Price would seek to tempt us to.

I also welcome the statement. I think perhaps the first thing we should do is thank Rhodri Morgan who, as First Minister, resisted the temptation to sign what have turned out to be very costly PFI schemes in England and Scotland. I think that we owe him thanks for that because there’s about £400 million, perhaps, of money being spent on services this year, in Wales, which wouldn’t have been available if we’d gone along with the ‘Let’s go PFI, it isn’t going to cost very much. Honest!’

I welcome the commitment to use the new capital borrowing facility. I assume the borrowing will be from the Public Works Loan Board. Following on from what Adam Price raised, as we know, Transport for London raise substantial sums of money by issuing bonds. Adam Price talked about using pension funds—they’re actually selling Government bonds to Welsh local authority pension funds. Is that something that’s been considered? If it hasn’t, is it something that could be considered? Because, you’re re-circling public sector money, but you’re using it in a way that benefits both parts.

Today, I visited Pentre’r Graig Primary School in Morriston, which, whilst not a new-build, has been almost completely remodelled internally. The twenty-first century schools scheme is transforming education buildings and education in my constituency, so I’m really pleased that this is going to continue. It’s making a huge difference and I think if there’s one thing that Welsh Labour Governments of this period of the twenty-first century will be remembered for in 50 years’ time, it will be transforming education with the twenty-first century schools scheme.

Whilst I welcome the mutual investment model—and as some of you are strong supporters of co-operatives, I always like the word ‘mutual’ in there somewhere—how will the public interest be protected by the public interest director? Basically, how much above the base rate does the Cabinet Secretary expect to pay at the cost of borrowing, when it’s all worked out? All borrowing has to be repaid, and this is where I come somewhere between Mark Reckless and Adam Price on this. How much, annually, does the Cabinet Secretary think it is prudent to have to pay back? Forgetting how much you have to borrow, because the amount borrowed will vary, depending on what the interest rates are. Borrowing now is a really good idea, because interest rates are phenomenally low. Nine years ago, I’d have said that they wouldn’t stay at that low level; they have, but at some stage, they are bound to go up, back to what would’ve been the historical norm, so anything being borrowed now and locked in now would be hugely advantageous.

The Deputy Presiding Officer took the Chair.

The other question is: will there be a facility for the future restructuring of payments? I’m not sure, perhaps, if the Cabinet Secretary can tell us now whether these costs will be fixed, or whether they will be variable. If they are variable, will they be able to be restructured?

Well, I’m very grateful to Mike Hedges for reminding us of some of the history of this. I very well remember that first half of the last decade when the Welsh Government here came under enormous pressure, including from some Labour politicians in London, to follow the PFI line and to borrow money in that way. It was resisted—stoutly resisted—by successive Governments in that decade, and we’re very grateful now that we did, because we would have found a large proportion of our revenue being syphoned off into paying back those debts. There are NHS trusts in England where 25 per cent of their revenue goes on servicing PFI debts before a single pound goes on providing services to patients. We avoided that here in Wales, and it’s partly because we did avoid it that we are now in a position to do something in this field without disastrous revenue hits.

I’m very willing to look at some of the points that have been raised in the statement about bonds and pension funds and so on, so, I’m very happy to return to that. The Member is absolutely right about borrowing rates being at a historic low. I’m not going to be tempted into providing specific rates to him, because we will be in confidential discussions, inevitably, with potential lenders, and the event on 23 March, which I hope a number of Assembly Members might be able to attend, will be the start of that negotiating process.

Can I deal with the issue of future restructuring? To begin with, Dirprwy Lywydd, it is very unlikely that there will be restructuring of the sort we saw in original PFI deals, because they were structured at a time when interest rates were high and then interest rates fell, and you were able to restructure to get a set of windfall profits as a result of that. Because interest rates are at a historic low, that doesn’t seem very likely in the future, but we do have, built into this agreement, that if there were to be any restructuring of that sort, and if there were to be windfall profits, the public sector would take a third of them automatically, and then we would get our equity share of the remaining two thirds, as well. So, if we took an equity stake of 20 per cent, you will get 20 per cent of the two-thirds profits as well. So, we have very deliberately designed this model in a way that defends us against some of the less acceptable practices that were there in those original PFI models.

Thank you very much, Cabinet Secretary, for that.