Questions now from the party spokespeople. UKIP’s spokesperson, Neil Hamilton.

Diolch, Llywydd. I wonder if the Cabinet Secretary will agree with me that Theresa May has performed a minor miracle in this election campaign by making Jeremy Corbyn look half electable. If he does pull it off tomorrow and Labour is elected on their platform of increasing corporation tax from its current 19 per cent to 26 per cent, that’s bound to have an adverse economic impact in Wales. Has he done any assessment of the impact on business confidence, business investment and, indeed, wages of such a marked increase in corporation tax?

Well, I would agree with him to the extent that the Conservative election campaign seems to me to be the worst led campaign since the charge of the Light Brigade, and we’re hoping to see the results of that tomorrow. I think he’s quite wrong in trying to draw a direct line between rises in particular forms of taxation and their impact here in Wales. What I am confident of is that a Labour Government elected across the United Kingdom, determined to create the conditions of economic success, determined to invest in the conditions that will lead to economic growth and fair economic growth shared by everybody, can only be to the benefit of people right across Wales.

I can’t believe that the finance Secretary seriously believes that such a staggering increase in corporation tax would have no effect on business confidence, business investment and, indeed, the capacity of companies to pay wages, and therefore the implication is bound to be that the true cost of such increases in business taxes are ultimately felt by ordinary people, both in forms of restrictions in wage increases or, indeed, actual wage decreases and, indeed, in unemployment. In 2009, the Oxford University Centre for Business Taxation published a major economic study that concluded that a rise of £100 in corporation tax would reduce wages by £75 through a combination of lower wages and fewer jobs. Does he really believe that that’s in the interests of working people?

Week after week here in the Assembly, Llywydd, we hear the Member offer us his version of supply side economics. He is addicted to the Laffer curve, to which he made indirect reference there. I can’t remember which economist it was—it may have been J.K. Galbraith who said that the real explanatory power of the Laffer curve was that you could describe it to a congressman in six minutes, and you could go on repeating it for six months, and we’ve heard it repeated here for months on end. [Interruption.] Yes, coming up now for years. I simply reject the basic supply side approach that the Member takes. It is his belief that tax cuts lead to economic growth and tax rises lead to economic decline. I simply don’t think that that is borne out by the empirical evidence when these things have been put into practice.

There is massive empirical evidence that proves the opposite of what the finance Secretary is asserting. It’s not my study that I referred to a moment ago; that’s an academic study performed by the wholly independent Oxford University Centre for Business Taxation. It must be obvious that if you put up taxes, therefore that has some economic impact, whether through reductions or increases. And given that business taxes reduce the amount of money that companies have available for investment and, indeed, for distribution to shareholders and to employees in the form of wages, there are bound to be very significant repercussions of such a dramatic increase in taxes as Labour is proposing. In those circumstances, it’s bound to have an impact upon Wales in particular. And, as we have only 75 per cent of the average gross value added in the United Kingdom in Wales—we’re the poorest part of the United Kingdom—it’s the poorest people in the poorest part of the United Kingdom who are going to suffer most from a Labour Government.

Llywydd, Bill Clinton raised taxes. Tax take went up and public debt went down. His successor, George W. Bush, cut taxes. Tax take went down and he left office with public debt of 101 per cent of the level that Clinton had bequeathed to him in the final year of his presidency. It’s simply untrue to assert, as the Member does time after time, that there is only one direction in which economies can move, and his prescription, which is to cut taxes, give money to wealthy people, and take it away from people who otherwise would be spending it and creating economic activity, simply would be very damaging to the way we do business in Wales.

Plaid Cymru spokesperson, Adam Price.

I was wondering if we could return to the demise of the Barnett formula, rumours of which may have been exaggerated. We heard earlier in the week from the First Minister for Wales that it was going to be scrapped. Kezia Dugdale, the leader of the Scottish Labour Party, as we know, is on the record as saying,

‘I’ll keep the Barnett formula today, tomorrow and forever’, which sounds pretty definitive to me. Now, the First Minister said that he has spoken to Kezia Dugdale. Well, on rare occasions, he even speaks to me, but that doesn’t mean that we necessarily agree. So, I was wondering if the Cabinet Secretary could bring his usual calm rigour to this question, and tell us what is meant by the long-term reform of how the UK allocates public expenditure that is set out in the Labour manifesto. Does it necessarily mean removing and replacing the Barnett formula? What’s the timescale of that reform, and when would its effects begin to be felt here in Wales if there is a change of Government at Westminster?

Llywydd, I listened carefully to what the First Minister said yesterday. I thought he was very clear in the position that the Barnett formula will remain in the short and probably into the medium term while its replacement is sought. That replacement will be a fair funding formula for the whole of the United Kingdom, and it will have relative need at its heart.

Let’s look at the short to medium term, then. The Welsh Government signed recently, in January this year, a fiscal framework with the Westminster Government. Would it be the intention of the Welsh Government, if there was a change of Government at Westminster, to revisit that agreement and to renegotiate some aspects of it—for example, the population related revenue risk that is an element within that, the limit on current borrowing and the fact, of course, that the needs assessment with that fiscal framework is already out of date? So, could we have a commitment from the Welsh Government that there will be an immediate renegotiation of that fiscal framework if the political weather in Westminster changes?

Llywydd, the fiscal framework already allows for it to be revisited. There is a mechanism within it that allows both the Welsh Government and the UK Government to require a relook at its terms. A new Government at Westminster will change many things in the relationship between ourselves and the Government that will be formed there. If a Labour Government is formed tomorrow, as we hope it will, then that fiscal framework will be part of that new relationship.

On the wider question of the Barnett formula, could I ask the Cabinet Secretary about something that I find very curious in the Labour manifesto? It sets out the creation of a national investment bank—I absolutely support that principle—a national investment bank with £250 billion of investment, of which £10 billion is to be apportioned to Wales and the development bank that’s being created here. Now, by my calculation, that’s around about 4 per cent of the total for the national investment bank, i.e. Wales is not even getting its population share, let alone a Barnett consequential, effectively, from that investment. And yet, we’re told that this is the tool that is going to reduce the disparity in prosperity across the UK.

Finally, as well, the commitment on structural funds only runs to 2019-20. There is no commitment, actually, beyond that, to creating a long-term cohesion fund as part of a wider regional economic policy. On these two points, why, actually, is the Labour manifesto so incredibly weak in setting out real levers that can actually begin the work of lowering the disparity in wealth that we see across the UK?

Well, I was glad to hear the Member welcome the action that the Labour manifesto sets out to make sure that there will be a major investment in the sort of infrastructure that will be so important to the UK economy and to the Welsh economy. Our manifesto makes it clear that there will be a direct Welsh share in the investment that a new Labour Government will make, and I can say to him that, as far as the continuation of cohesion funds are concerned, my party is committed to the principle that the investment that Wales has been able to draw down from the European Union, based on our relative needs, will continue to be available to Wales post our membership of the European Union.

Conservative spokesperson, Nick Ramsay.

Cabinet Secretary, yesterday, the Welsh Government didn’t move the motion to agree the financial resolution in respect of the Additional Learning Needs and Education Tribunal (Wales) Bill—the first time, I believe, that this has happened, although there have been issues with previous costings for legislation. As Cabinet Secretary for finance, are you concerned that the costings associated with legislation that the Government brings forward seem to be often—at best—woolly, or as was the case yesterday, completely misleading?

Chair, I saw the letter that Alun Davies sent to all Assembly Members explaining why he wasn’t going to move the financial resolution yesterday and giving a very firm commitment to moving such a resolution in September, at which point Members will have an updated regulatory impact assessment. That will give Members the figures that I hope will give them confidence to support that financial resolution.

The general point that Nick Ramsay makes is one to which I would respond by saying that I think it is very important that Welsh Government proposals come forward with as reliable an RIA as is possible. There are circumstances in which assumptions have to be made, and where you have to be able to make the best provision of information that you can in the circumstances, but it is the responsibility of Ministers bringing forward those pieces of legislation to make sure that we have done everything we can to make that information as reliable as it can be, and then for that to be tested by Members here. I know the Finance Committee is doing a piece of work looking at this aspect of the way that the system here in the Assembly works. I look forward to giving evidence to that inquiry, and I’m sure that there will be things that we will be able to take from it that will help us to strengthen the system to provide the sort of reassurances that Nick Ramsay was looking for.

Thank you, Cabinet Secretary. I agree totally with the decision yesterday to delay or postpone the financial agreement of this Assembly to that Bill. In asking the question today, I’m in no way blaming you for some of the problems we’ve had around the costings for legislation; I’m purely asking you because, with your role as Cabinet Secretary for finance, you do have an overall view of the way, financially, that this institution and the Welsh Government operates. So, that’s the reason behind it.

You’ve mentioned the Finance Committee. We did consider it this morning, and as a Member of the Finance Committee that considered the Bill’s regulatory impact assessment in the first instance, I share the Chair’s concern that major changes to that assessment were not shared with us until after the Stage 1 report deadline. It transpired that the Bill will cost £8.3 million over the four-year implementation period, rather than saving £4.8 million. So, I hear what you’re saying, Cabinet Secretary, about how this is an art in as many ways as it is a science in terms of predicting costs, and you can’t always be right, but in this particular case with that Bill that we were discussing yesterday, we’re looking at a difference of over £13 million—£13.1 million—between the prediction and what we now can expect that costing to be. So, these aren’t small details that led to the withdrawal of yesterday’s motion. Can I ask you: what input are you having into the timely provision of accurate financial data for new legislation so that these kinds of inaccuracies don’t happen in future?

Well, Chair, the way that the system works in the National Assembly is that each Minister is directly responsible for the production of the explanatory memoranda and the RIAs that go along with them. There is a piece of work that is done form the centre, through the office of the chief economist, to make sure that the methodology deployed in the RIA is one that would stand up to examination. The particular figures that are then used in that method are the responsibility of the individual Cabinet Secretary. The letter that Members received yesterday from the Member in charge of that Bill explained why the figures as originally anticipated have had to be revisited. I think, as Nick Ramsay said, it is the first time that a financial resolution has been postponed in this way. While I’m certain that the Member in charge would have preferred to have been able to move the financial resolution yesterday, the fact that he has a plan to bring it forward in September shows that the checks and balances in our system have successfully identified the need for further work to be done there.

Thank you. I appreciate fully that it’s the initial responsibility of the Member in charge, but you do, Cabinet Secretary, have an overall responsibility for the financial robustness of the Welsh Government—no easy task, I appreciate. And I do appreciate that the whole process with the regulatory impact assessments is a developing process, and I’m sure that the review being carried out by the Finance Committee under the stewardship of the Chair will deliver you some strong recommendations in that regard.

Cabinet Secretary, we know that this Assembly is passing an increasing amount of legislation, and that will increase further in future. The pressure on officials who provide the financial data and the regulatory impact assessments will also increase inevitably, inexorably, so it’s important that we get this right. This whole process relies on accurate costings and transparency. Will you agree to work ever more closely with departments and Members in charge, working on legislation, to ensure that costings are accurate and that we as Assembly Members and, indeed, ultimately, the public can have confidence that we are keeping—all of us, and the Welsh Government and yourself in particular—a tight grip on finances as legislation is developed, so that the public finances in Wales in respect of the legislation that this place passes can be as robust as possible?

Llywydd, can I just make it clear that I agree with the central thrust of the questions that Nick Ramsay has asked this afternoon? It is an important responsibility of Government, in bringing forward legislation, to make sure that the costings that are attached to it are as thoroughly worked out and as reliable as we can make them. The system that we have is a maturing system. As it matures, we should be able to do better at it. The Finance Committee’s inquiry will, I think, be a helpful contribution to that, and it is the ambition of both myself as the finance Minister and all my Cabinet colleagues, I know, that when we bring proposals to the floor of this Assembly, they are as robustly underpinned by analysis and by data as we can possibly make them.

Question 3 [OAQ(5)0137(FLG)] has been withdrawn.