Moves to create new borrowing power for Wales

WALES could soon have borrowing powers bringing it more in line with Scotland and Northern Ireland.

The UK and Welsh Governments have announced an "historic" agreement in the nation being able to loan cash to pay for major schemes.

At present, the Labour administration in Cardiff Bay cannot borrow money for large projects and relies entirely on Whitehall for funds via an annual grant.

Welsh ministers said the powers, which local and community councils currently had, were long overdue and would give them the "tools to do the job".

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The UK and Welsh Govern- ments have announced they had "agreed in principle" Wales should be able to borrow funds.

Questions remain as to when such a change would take place – and whether it would be a good idea.

But Finance Minister Jane Hutt insisted it would prove beneficial to Wales.

She said: "I welcome the principle devolution of capital borrowing powers, which should give the Welsh Government an additional lever to generate economic growth.''

Chief Secretary to the Treasury Danny Alexander said: "The announcement agrees in principle to devolved capital borrowing powers for the Welsh Government.

"This is an important step forward on the devolution journey for Welsh people, and will bring them significant benefits. I am delighted that the two Governments have worked closely together to deliver this good outcome for Wales."

And Secretary of State for Wales David Jones said: "I hope that today's announcement will reassure the people in Wales of the progress both Governments have been making on Welsh funding arrangements.

"In addition to the, in principle, capital borrowing powers, the UK Government has recognised the concern in Wales about long-term convergence and is committed to investigating options to address it once it resumes. The commitments made today establish a strong basis from which to work with the Welsh Government after the Silk Commission reports to me next month."

The response from opposition parties in the National Assembly has been mixed.

Tory members said the funding reform was a positive step, with Shadow Minister for Finance, AM Paul Davies, adding: "While it is clear there is much more work to do, this puts Welsh funding on the right track. It provides the reassurance we have sought and goes much further than anything Labour did in 13 years in power.

"The detail here shows what can be done when the UK and Welsh Governments work together. It is crucial that this continues for the benefit of Wales."

Peter Black, Lib Dem Shadow Minister for Finance, said it was a significant step towards putting the system right.

However, Plaid's Ieuan Wyn Jones said the agreement lacked a clear commitment to change the Barnett formula, which is how funding for the devolved nations is currently calculated.