8. What assessment has the Welsh Government made of the impact of the UK financial crisis on its current plans for the use of its borrowing powers? OQ58592

Llywydd, the Welsh Government’s borrowing powers remain unchanged since 2016. Our annual and aggregate borrowing limits should be updated now in line with subsequent inflation, as recommended by the Institute for Fiscal Studies. In the meantime, the revenue cost of borrowing has risen sharply, caused by the damage inflicted by the Prime Minister.

Thank you, First Minister. In terms of borrowing powers, I wanted to ask for your reflections on the Institute of Welsh Affairs's latest publication, 'Fiscal Firepower: Effective Policy-Making in Wales', which calls for reform of the Welsh Government's borrowing powers. In addition, in view of the Prime Minister's well publicised refusal to engage with you as First Minister of Wales, and the revolving-door policy seemingly in place at the Treasury, how is your administration trying to engage with the UK Government to ensure that we have the financial powers that we need to fund the public services on which we all rely?

Well, Llywydd, I was glad that there was a telephone call from the Chief Secretary to the Treasury to our finance Minister earlier this week, explaining the series of changes that the Chancellor has made to the things that we were being told would happen only last week. And I'm told that the Finance: Interministerial Standing Committee—the meeting of finance Ministers—planned for 20 October, is going to go ahead. So, I think that is a good sign of a more positive approach to engagement by the new team at the Treasury. Where we're able to, we will, of course, go on making the case that we've made for some time. I was responsible for the negotiation of the fiscal framework with the then Chief Secretary to the Treasury, David Gauke. Since then, the cash in the Welsh Government's budget has gone up by 40 per cent, but all the figures that were negotiated in 2016 have remained fixed where they were then. So, they were designed to enable the Welsh Government to handle better the fiscal responsibilities that they have—it's the annual borrowing limit, it's the aggregate borrowing limit, it's the amount of money we can put into and take out of the Welsh reserve. These are absolutely practical things designed to make best use of public money, and yet, we are stuck with figures that were right over five years ago, but certainly, are not right for the budget that we have today.

The IWA's publication draws attention to all of that and suggests a different basis for Welsh Government borrowing. Our ability to borrow is capped on an annual basis and on an aggregate basis by the UK Government. The IWA paper suggests a prudential borrowing approach for the Welsh Government, which would mean that we would be in the same place as Blaenau Gwent County Borough Council—it doesn't have an artificial limit on the amount of capital that it can borrow; it has to demonstrate that its borrowing is affordable and prudent, and then it's allowed to borrow what it can afford. It just doesn't seem sensible that that ability is there for local authorities but denied to the Welsh Government, and we go on making the case for reform, and we'll do it with the latest set of Ministers at the Treasury.

I thank the First Minister.