The Welsh Ministers have a range of functions and powers which enable them to promote and further economic development in Wales, including the ability to promote Wales’ competitiveness on the world stage.
Now that the UK has left the European Union (EU), changes have been made to the existing State aid and procurement rules, which previously derived from the EU. The current position in relation to procurement is that the existing procurement rules, namely the Public Contracts Regulations 2015, continue to apply (albeit with some minor amendments to reflect the UK’s new status outside the EU).
The EU State aid rules have been replaced by a subsidy control regime. The rules of the regime are based upon the World Trade Organisation (WTO) subsidy control rules, The Trade and Co-Operation Agreement between the EU and the UK (TCA), the Northern Ireland Protocol and other Free Trade Agreements that have been made between the UK and non EU countries. The Department for Business, Energy and Industrial Strategy (BEIS) is consulting on whether further domestic legislation is necessary to clarify the rules around subsidy control, and any further legislation in this area will be brought forward by the UK Government as subsidy control is now reserved to the UK Parliament.
Now that the UK has left the EU, the funding that Wales once received from the European Union by way of European Structural and Investment Funds has now ceased, although projects commenced during the 2014-2020 programme will continue to run their course. Replacement funding should be made available by the UK Government, however the detail is still unclear. Initial indications are however that the funding will be centrally administered by the UK Government.
There are a number of areas within economic development which remain reserved and therefore are matters which Senedd Cymru has no power to legislate. These include fiscal and monetary policy (with the exception of devolved taxes), insolvency, anti-competitive practices and consumer protection.
The Wales Act 2014 and Wales Act 2017 devolved certain taxation and borrowing powers to the Welsh Government and Senedd Cymru, enabling the introduction of Land Transaction Tax and Landfill Disposals Tax. In addition, the Welsh Ministers have the power to propose Welsh rates of income tax which must be approved by Senedd Cymru to have effect.
Under the borrowing powers contained in section 121 of Government of Wales Act 2006, the Welsh Ministers may borrow from the Secretary of State:
- any amounts it appears to them are required by them for the purpose of meeting a temporary excess of sums paid out of the Welsh Consolidated Fund over sums paid into that Fund,
- any amounts it appears to them are required by them for the purpose of providing a working balance in the Welsh Consolidated Fund, and
- any amounts which in accordance with rules determined by the Treasury are required by the Welsh Ministers to meet current expenditure because of a shortfall in receipts from devolved taxes, or from income tax charged by virtue of a Welsh rate resolution, against forecast receipts.
In addition, the Welsh Ministers may, with the approval of the Treasury, borrow by way of loan or by the issue of bonds any amounts it appears to them are required by them for the purpose of meeting capital expenditure.