Thank you. I'm pleased to respond to today's debate and I'm very grateful to the Finance Committee for their consideration of this important issue and for their report, and I'm also really pleased, as we've heard, to be able to accept all of the recommendations made by the committee.

I think it's worth beginning by reflecting on the financial context that has shaped our investment plans with regard to capital over the decade. In 2010-11 we were facing significant cuts to our capital budgets as a result of the UK Government's policy of austerity, and while continuing to call on the UK Government to reverse its planned cuts, we did explore every avenue and took every opportunity to maximise our capital spending power to maintain vital capital investment to stimulate and grow the economy and to protect jobs.

In 2012 we published the Wales infrastructure investment plan, which set out our plans to use existing capital resources, secure additional sources of funding, and also use new, innovative forms of finance to increase the level of capital available to us and to make the best use of all of our resources to deliver our infrastructure investment priorities. I'm really proud of what we've achieved so far. So, since we've published the WIIP, we have allocated more than £15 billion, generated a further £2 billion as a result of our innovative finance initiatives, and also, of course, secured those new borrowing powers.

Despite recent steps by the UK Government to increase capital spending, our capital budget on a like-for-like basis in 2021 is still £100 million lower than it was at the start of the decade in real terms, and, of course, the policy landscape is also changing and we can't lose sight of the challenges that we'll need to address and those challenges that will shape our approach to infrastructure investment over the longer term.

So, we face opportunities as well as challenges in terms of the ageing and changing population, the advances in technology impacting on the future of our economy, where we live and how we travel, and we also obviously urgently need to tackle the climate change agenda and the decline in biodiversity, and that does require a new approach.

In the draft budget, I've set out a broad range of measures to respond to the climate emergency, and it's against this backdrop that we're committed to continuing to do all that we can to boost the resources available and maximise our capital levers to support a more equal, more prosperous and greener Wales.

Developing the successive to the WIIP over the coming years provides us with an opportunity to set out the strategic priorities to drive investment decision-making, whilst retaining the flexibility to meet the scale and pace of change that infrastructure investment will require.

A constant tension that we face is between the need to provide that long-term certainty and also the time-limited financial settlements that we receive from the UK Government. But despite the constraints we face, we are providing that longer term certainty where we can, and that, of course, includes our twenty-first century schools and colleges programme, which we started in 2012 and which will see anticipated investment of £2.3 billion across Wales, supporting an estimated 200 projects to rebuild and refurbish schools and colleges.

Capital investments and infrastructure investments in particular by their very nature have comparatively long lead-in times, which does require a great deal of long-term planning. The life span of the assets delivered through infrastructure investment also means that a long-term view of the services they deliver is also crucial, and we have to design those in such a way that maximises their impact over decades. Understanding the need to provide that longer term basis for infrastructure planning, we're exploring opportunities to understand more clearly what our capital requirements could be in future, utilising a range of scenario modelling for our block grant funding to identify the most appropriate opportunities to utilise borrowing and deploy private finance.

We recognise that should there be a need for borrowing beyond the £1 billion currently available, then the matching of funding sources to project risk across a project's life-cycle is a really important factor to consider, and I think the point has been made in the debate that, currently, the cost of finance that we access via the national loans fund currently isn't dependent on project risk. The cost is the same regardless of the project. But as and when more financial levers do become available to us and we have additional sources of funding, there will be opportunities there to maximise the potential mix of funding that we would seek to deploy.

We recognise that, as a rule, our approach has been to use the cheapest sources of funding first, and that does allow us to make significant investment in Wales that could otherwise not be afforded in the current fiscal climate, and we will review this approach as part of the developments on the successor to the current WIIP.

I welcome the committee's recognition of the work that the Welsh Government already undertakes in utilising the financial transactions capital funding, including the £520 million Help to Buy scheme and the range of business funds that are delivered through the Development Bank of Wales.

I've set out in this Chamber before the challenges that we face in effectively deploying this type of funding, but we do remain committed to using every pound available to invest in infrastructure and boost economic growth in the long term. We're working with the UK Government and the other devolved administrations to share best practice and examples of how financial transactions are being utilised. We're also working with our registered social landlord partners to explore the development of schemes providing RSLs with a mix of grant funding and financial transactions capital finance loans, and that will help them reduce the need to access private finance at a higher cost. I think that's a really innovative way of looking at the potential use of financial transactions capital and does very much respond, I think, to one of the areas of interest that the committee had during its inquiry.

Also, on the point of utilising our own assets in a better way, I recognise the importance of that, which is why we've set up the Welsh Government land division. So, in the first instance, we'll be looking at the land that Welsh Government owns and exploring how we can deploy that and use it in a better way in future, in a way that helps us respond to our interests right across Government. So, our particular interest in the first instance is how we can use Welsh Government land with a view to increasing the supply of social housing across Wales. But this is just the start, and I do think there are greater opportunities ahead of us through the land division and the work that that's doing, but also the way in which we can then demonstrate leadership for other parts of the public sector to utilise their assets in a way that looks at the value beyond just the monetary value and looks to see what else they can deliver.

I note and welcome the committee's recommendations concerning our work on the mutual investment model. The Welsh Government shares the committee's recognition of the importance of increasing transparency, and we've developed the MIM with this principle very much in mind. We've ensured that reporting requirements are embedded within the model's design and will be incorporated as contractual commitments into our agreements. The public sector will also be entitled to nominate a director onto the board of the project companies that are delivering those MIM schemes, ensuring that the public interest has influence there.

All MIM schemes will be required to use the five-case model for the development of the requisite business cases, and this means affordability and value for money must be assessed before proceeding with a project. Furthermore, all schemes are subject to a rigorous tier of additional scrutiny using our commercial approval point reviews.

We're also ensuring that efficient contract management is in place to oversee these schemes, and we intend to establish a MIM contract management function prior to the first MIM scheme starting construction in 2020. At that point, I should clarify that the MIM scheme is being used to finance sections 5 and 6 of the A465 and it hasn't been used for previous sections of that road. We would expect or anticipate a successful participant for sections 5 and 6 to be announced in quarter 2 of 2020. This scheme has been prioritised because it promises economic benefits to some of the most deprived parts of Wales.

I can see that I'm running out of time, but I do note the committee's recommendation to continue to use the MIM where appropriate.

Looking to the future, the Chancellor has announced the UK budget will be on 11 March, and we expect the UK Government will publish its national infrastructure strategy, including the finance review, at that time. In the Chamber last week, I committed to reflecting any significant changes in our plans for next year in an early supplementary budget, and I will obviously consider the implications of the strategy in developing our infrastructure investment plan. So, I'm very happy to support the motion this afternoon, and put on record again my thanks to the committee and all Members who've contributed in the debate.