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Senedd calls for flexibility to Welsh Government financial rules

A RARE cross-party consensus emerged as the Senedd united in raising concerns that some community councils have more financial flexibility than the Welsh Government.

Senedd members unanimously backed a motion calling on the UK Government to ease limits on the budget levers available to Welsh ministers.

Rebecca Evans, Wales’ finance minister, warned that the Welsh Government has faced significant financial constraints and uncertainty in managing its budget.

She said the Welsh Government’s reserve and borrowing limits remain the same as when they were set in 2016, hampering its ability to plan and respond to changing circumstances.

Ms Evans told MSs that reserve and borrowing limits will be worth almost a quarter less in real terms in 2024-25 than in 2018-19.

She called for limits on the amount that can be accessed from reserves in a given year – currently £125 million for day-to-day spending and £50 million for longer-term capital – to be abolished.

The finance minister explained additional flexibility was provided to the Scottish Government in August, arguing the changes should equally apply in Wales.

Stressing it is a practical issue rather than a political one, Ms Evans added: “This motion is not about asking for more money from the UK Government.

“It’s about recognising the challenges that the Welsh Government faces due to the limited fiscal levers we have at our disposal.”

Adam Price, moving Plaid Cymru’s amendments, criticised the “deep financial injustice” of the Barnett formula, the mechanism used by the Treasury to calculate funding.

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Peter Fox, the Conservatives’ shadow finance minister, recognised the Welsh Government has limited levers, describing current arrangements as insufficient.

Mr Fox said while Wales’ reserve and borrowing limits have remained the same since 2016, the global economic outlook has changed drastically.

He said: “It is important that the Welsh Government has greater predictability and certainty regarding its spending and funding arrangements to support its budget planning.”

The former leader of Monmouthshire County Council added: “It seems peculiar that local authorities have more flexibility when it comes to borrowing and reserves ….

“The Welsh Government is responsible for far more powers, and far more people, than any individual local authority, so as such ought to have that greater flexibility.”

Mike Hedges, a Labour backbencher who represents Swansea East, argued there is no good reason to limit movement into and out of Welsh reserves.

He said: “As far as the Treasury should be concerned, if it is spent or saved should not matter as it has already been given to the Welsh Government.

“Every council in Wales, including community councils, can move money into and out of reserves with no external control.

“The Welsh Government cannot. Does that make sense to anybody?”

The Welsh Government motion, which was co-submitted by the Tories, Plaid Cymru and Liberal Democrats, was agreed 51-0 after the debate on February 27. Plaid Cymru’s amendments fell.