Part of the debate – in the Senedd at 3:45 pm on 5 December 2017.
In light of the changes to the stamp duty rates announced by the UK Government, the Cabinet Secretary said that he would consider changes to the proposed rates in Wales. I was half thinking that we might have an announcement from him today, but not quite. We'll hear in due course, it seems. What is important is that we give appropriate scrutiny to the final recommendations by the Government. We also said in our report that these changes at the UK level could lead to pressure to rush through transactions in Wales to completion, which could lead to compensation for the Government. We’ve just heard confirmation from the Government that that compensation from the fiscal framework will happen. And, as he said, that will be a one-off, and we don’t expect to see it in years to come.
In considering the Government’s plans for taxation over the next 12 months, we considered the forecasts used to predict tax returns in Wales. Evidence has shown that there is limited Wales-specific data, and there was mixed evidence as to how vital this is to producing accurate forecasts. As a committee, we recognise that there is a case for ensuring that Wales-specific data is available, and that it is appropriate and gives additional value.
Additional funding was allocated to Wales as part of the UK budget, but a great deal of this was actually in the form of financial transactions capital—and this is the first time those words have been used in Welsh; cyfalaf trafodion ariannol, that is, apparently. Financial transactions capital is something that the committee will look into over the year to come to see how effective it is and to see how much use can be made of it, given that the Cabinet Secretary has suggested that this kind of funding can be restricted in terms of its use in Wales.
Two themes that emerged during our scrutiny last year have also been raised again this year. First of all, health funding continues to be prioritised, although this doesn’t seem to be resulting in service improvement or better financial planning, and often it is at the expense of other areas, notably local government. I was interested to note that the reports from the health committee and the local government committee have both raised similar issues.
The other theme relates to the Well-being of Future Generations (Wales) Act 2015. Last year, we found that limited progress had been made in demonstrating how the Act is embedded in the draft budget, and we heard from the Cabinet Secretary how the Government had tried to align the draft budget and the Act during this year’s process. We appreciate that it will take time to fully embed this approach. However, we were disappointed that there was no further evidence of the improvements that we’d hoped to see. Nevertheless, we can see that efforts are being made, particularly by working with the Future Generations Commissioner for Wales in the area of procurement, decarbonisation and participatory budgeting, and we would hope to see more improvements going forward.
We also considered the financial preparations under way with regard to Brexit, and we are concerned that the uncertainty in terms of Brexit is impacting on the decisions being made by businesses in terms of investment. We are keen to see more efforts on the financial preparedness for Brexit in Wales and we will be looking to hold an inquiry into this area going forward. It’s also an area, of course, where the Government has just outlined some of the funding that has come in the budget that can be a priority, possibly, for preparing the economy and communities in Wales for Brexit.
Finally, we looked briefly at proposals for new taxes and we believe that this is an exciting new stage of fiscal devolution in Wales. We look forward to working with the Cabinet Secretary over the next year in bringing forward a new devolved tax, and we agree that the UK Government’s role in the consideration of new taxes should be limited to issues of competence and the impact on UK revenues. As a committee, we are interested in how the new process will work and I’ve written to the Business Committee asking that we be consulted on the new procedures for bringing forward new taxes in Wales.
This is the first year where our scrutiny of the draft Budget has focused on the strategic details, whilst the policy committees were able to report in their own right to the Assembly. Prior to the final budget debate we will be considering those reports, and I also hope to discuss the new process with other Members in order to consider whether improvements can be made for next year, and I would welcome any comments from Members on the way in which we have scrutinised the budget this year and the way of improving that for the future.
Finally, of course, I'd like to thank everyone who has contributed to this year’s scrutiny. As a committee, we are very grateful to all of the people who contribute to the work of the committee and who have assisted us in terms of drawing up our findings, which will be the basis of your discussion this afternoon.