7. What representations has the Cabinet Secretary made to the UK Government regarding increasing prudential borrowing powers for Wales? OQ61280

I continue to make the case to the UK Government for increased borrowing powers for Wales. The Welsh Government has long supported a move to prudential borrowing. This would provide a more appropriate level of flexibility and enable this Senedd to approve the Welsh Government's borrowing levels, rather than HM Treasury.

Thank you for your response. The amount of capital borrowing devolved was last increased in 2019, which is a long time ago. Public services such as health, housing, education and public transport are the building blocks of our economy, and there is no way to grow the economy without providing proper investment in these. Gross domestic product debt after world war two was actually double what is now, yet the Attlee Government borrowed thousands—well, hundreds and thousands of pounds to invest; millions—to build hundreds and thousands of houses, to invest in housing and health, and they actually transformed the country, and we're still reaping the benefits today with our NHS service and our council housing programme. Wales desperately needs increased prudential borrowing powers to make transformational investments in these areas. With this in mind, Minister—Cabinet Secretary—would you commit to requesting full prudential borrowing powers of any incoming UK Labour—Labour Government—any incoming UK Government? Sorry, I was being presumptuous there.

Yes. So, we continue to make the case for prudential borrowing. We think it's not only important to give us the flexibility that we need to invest in infrastructure, but also to give this Senedd the opportunity to take a view and to vote through and to agree those borrowing plans as well. So, I think that there's an important point there. We're also really keen, at least in the first instance, to make some progress on ensuring that the borrowing powers that we do have are up to date at least. So, at the moment, we would like to see our borrowing powers increased in line with inflation since the time that they were set and then to continue to increase in line with inflation every year, because they're worth 23 per cent less this year than they were at the time that they were set.

Crucially, if we don't have the kind of general capital that we need to invest, then borrowing is really important in order to enable us to make the kind of investment that we would want to make, and capital is very, very much in short supply at the moment. Our budget is 8 per cent lower this year in terms of capital funding, and that's starting from a very low point in any case. That's one of the reasons why we have looked to innovative funding models; the mutual investment model, for example, has enabled us to undertake capital investment or infrastructure investment when we wouldn't have been able to before. So, I think that combination of trying to be as innovative as we can but then also having the tools that we need will stand us in good stead.

Just to finish by saying that I'm really pleased that the UK Labour Party has in its manifesto a 10-year infrastructure strategy aligned with the industrial strategy and regional development priorities. I think that discussions about that will be really important to understand what that might mean for consequential funding for us here in Wales.