We have too rather seductive, ostensibly competing, phrases from the First Minister: we should use the cheapest funding first—sounds very sensible—and then the committee says that we should match funding sources to projects, which also seems very sensible. But, usually, in the private sector, when people talk about matching funding to projects, they match high-risk, high-return funding to projects where the risk is high, and, similarly, with low-return low funding. But, actually, in the evidence our committee took, what was proposed to us was the reverse. Gerry Holtham was saying that it was very important that if there was a high-risk project, you borrowed for it, effectively, through gilts because you'd pay very little for covering a high risk. If you were to go to alternative sources—potentially the private sector, whether MIM or otherwise—you should do it where the private sector would have relatively low rates compared to other projects it might fund.

In that scenario, the Government accepts our recommendation, but I'm not really sure that this issue has been resolved, because, at the moment, there's no real requirement for it to be, because there's no sign that we're pushing up against these borrowing limits of £150 million a year or £1 billion in total, despite them being relatively low as a proportion of Welsh Government revenue at 1 per cent and a little less than 7 per cent.

So, when we talk about MIM and compare it to PFI, I think what's important is that we don't use MIM in the way that PFI was used, at least at some points in the past, essentially to disguise borrowing and push Government borrowing off balance sheets in order to get around Treasury rules to have capital things, which you wouldn't otherwise have, when the cost of that is much worse because, effectively, you're paying the private sector to borrow for you at significantly higher rates and then paying them back with a profit margin. That doesn't make any sense.

We should go to the private sector when they have an expertise or they're better at doing something than the public sector would be directly, or, in some cases, we may want to have a partnership consortium approach, where the public and private sectors bring different skills and abilities. If the public sector's there and owns part of a project, the private sector will be much more reassured of the public sector's commitment to it, particularly in things like planning and regulation, where having the understanding and support of the public sector can be very important to the private sector.

I think, in some circumstances, it would be good for the Government to have a seat on the board, possibly a shareholding in a project—it may get more information flow and that's a positive. Sometimes, when you're combining skills and talents that's definitely the way you'd want to go, but it's no silver bullet when you're just contracting with the private sector because you want something and you're paying the private sector for it.

If you're a shareholder in it, you'll mitigate those conflicts a bit, but you don't resolve the issue that the public sector is paying for something it wants and the private sector is providing it in order to make a profit—you just mitigate that at the margin and there'll still be conflicts we have to be very careful in managing. What I think is very important is to have someone who's responsible within the public sector, whether a Minister or a named official, for a long, complex project, who has ownership of it and understands that contract management throughout the project's length.

Now, when we did this report, we talked about prudential borrowing and supporting that, but I was concerned that prudential borrowing meant limitless borrowing, at least potentially. The finance Minister said in evidence for this report that

'it should be for us to set that limit, but we would do so in discussion with the National Assembly.'

I'm concerned that that's an extraordinarily radical demand that we, in Wales, should be able to borrow as much as we want and it's nothing to do with the UK Government. Any US state has to have a balanced budget. In the European Union, we see—whether it's Italy, Germany or Spain, they have to agree their borrowing with the European Commission and can have enforcement action or fines if they borrow more than EU law allows. Similarly, here, I don't think it's realistic for the Welsh Government to be able to borrow whatever it wants whilst sharing a polity and a currency in the UK. Even when the Scottish Government—[Interruption.]—I'd like to continue, as I have very little time—was trying to go for independence, it, then, had to resolve the issue of how you agree borrowing while sharing a currency. Either it's the currency board, and you've no lender of last resort, or you need to deal with the remainder of the UK.

So, in this case, I was encouraged by the Minister's evidence this morning, where the priority of the Welsh Government seems to be to negotiate a higher limit on the borrowing and the debt with the UK Government. Given how low the limits are now, that's something I would support, and I would hope to see support across the Chamber, and that's a realistic objective, whereas having limitless borrowing with absolutely no control is not a realistic objective. Thank you.