Economic development - what is devolved?

Legislative competence 

Since the passing of the Wales Act 2017, Wales has now moved to a reserved powers model of devolution which means that Senedd Cymru is able to pass laws on any subject unless it is specifically stated to be reserved to the UK Parliament. 
Senedd Cymru has a high degree of legislative competence with regard to economic development. This competence has been further extended by the Wales Act 2014, with the introduction of Part 4A Government of Wales Act 2006. Part A4 allows Senedd Cymru to legislate in relation to devolved taxes and provides for the creation of new devolved taxes through an Order in Council which must be agreed by the UK Parliament and Senedd Cymru. Part 4A also allows Senedd Cymru to set the Welsh rates of income tax to be paid by Welsh taxpayers.

Reserved matters relating to economic development  

Whilst Senedd Cymru enjoys broad competence over the overarching area of economic development, there are some specific subject areas which remain reserved to the UK Parliament. These are detailed below:

Head A – Financial and economic matters 

Under this heading of Part 2, Schedule 7A to GoWA 2006 the following subject areas are reserved matters (i.e. matters which Senedd Cymru do not have legislative competence over): fiscal, economic and monetary policy (such as the exchange rate and the issue and circulation of money); the currency; financial services (such as banking and deposit-taking); financial markets; and dormant accounts. 

However, there are some notable exceptions to this reservation, for example, Senedd Cymru does have competence to legislate on matters involving devolved taxes and local taxes to fund local authority spending (such as council tax). 

Head C – Trade and industry  

The most notable reservations in relation to economic development under this heading include: competition; import and export control; consumer protection; and industrial development. However, in order to fully ascertain and understand Senedd Cymru's legislative competence under this heading, it is important to also consider the exceptions to the reservations listed. 

For example, ‘import and export control’ is listed as a reserved matter. However, it is specifically stated that Senedd Cymru can legislate in this area with regards to;

  • The prohibition and regulation of movement into and out of Wales of food, plants, animals and related things for the purposes of protecting human, animal or plant health, animal welfare or the environment, or observing or implementing obligations under the Common Agricultural Policy. 
  • The prohibition and regulation of movement into and out of Wales of animal feeding stuffs, fertilisers or pesticides (or things treated by virtue of an enactment as pesticides) for the purposes of protecting human, animal or plant health or the environment. 

However, prohibition and regulation for the purposes of protecting endangered species of plants and animals is not excepted from the reservation.

Head H – Employment 

Employment is generally an area where Senedd Cymru cannot legislate as there are reservations listed under this heading of Part 2, Schedule 7A to GoWA 2006. 

However, as discussed above, there are also exceptions to the reservations under this heading and they must also be considered. The main areas within this heading are as follows;

  • Employment and industrial relations; this specifically reserves employment rights and duties and industrial relations to the UK Parliament. There is also a list of legislation provided under this heading whose subject matter is specifically reserved. However, the subject matter of the Agricultural Sector (Wales) Act 2014 is excluded from this list and is specifically within the competence of Senedd Cymru.
  • Industrial training boards; this heading specifically reserves competence over the following training boards - the Construction Industry Training Board; the Engineering Construction Industry Training Board; the Film Industry Training Board for England and Wales.
  • Job search and support; this heading states that Senedd Cymru does not have competence to legislate on arrangements for assisting persons to select, train for, obtain and retain employment, and to obtain suitable employees. However, the exceptions to this reservation mean that Senedd Cymru can legislate in relation to education; vocational, social and physical training; and careers services.

General reservations affecting the economic development 

There are other sector-specific reservations which mean that Senedd Cymru cannot, in some circumstances, legislate on matters such as telecommunications, postal services, electricity, coal and oil and gas. However, as mentioned above, consideration of the exceptions to the reservations is essential to fully ascertain and understand Senedd Cymru's legislative competence in a particular subject area. 

Executive competence 

The Welsh Ministers have a number of executive functions, which are the powers used by the Welsh Ministers on a day to day basis to ensure the smooth running of the country. These powers stem from various different sources. The main executive functions concerning economic development are set out below. 

The Welsh Development Agency Act 1975 

The Welsh Development Agency was abolished on 1 April 2006 and the powers that were conferred on it under the Welsh Development Agency Act 1975 (WDAA 1975) were transferred to, and are now exercisable by, the Welsh Ministers. WDAA 1975 is the principal legal basis for intervention and support by the Welsh Government in relation to economic development. The Welsh Ministers have powers:

  • to promote Wales as a location for businesses;
  • to provide finance for persons carrying on or intending to carry on business;
  • to carry on industrial undertakings and to establish and carry on new businesses;
  • otherwise to promote or assist the establishment, growth, modernisation or development of business;
  • to make land available for development;
  • to provide sites, premises, services and facilities for businesses;
  • to manage sites and premises for businesses;
  • to bring derelict land into use or improve its appearance;
  • to undertake the development and redevelopment of the environment; and
  • to promote the private ownership of interests in businesses by the disposal of securities and other property.

Provided that it is for one of the following purposes:

  • to further the economic and social development of Wales or any part of Wales, and in that connection to provide, maintain or safeguard employment;
  • to promote efficiency in business and international competitiveness in Wales; and
  • to further the improvement of the environment in Wales (having regard to existing amenity).

In addition to these general functions the Welsh Ministers are able to exercise a number of other functions under the WDAA 1975:

  • to acquire, hold and dispose of securities;
  • to form bodies corporate;
  • to form partnerships with other persons;
  • to make loans;
  • to guarantee obligations (arising out of loans or otherwise) incurred by other persons;
  • to make grants;
  • to act as agent for other persons;
  • to acquire and dispose of land, plant, machinery and equipment and other property;
  • to manage land, and to develop land and carry out works on land, and to maintain works or assist in their maintenance;
  • to make land, plant, machinery and equipment and other property available for use by other persons;
  • to provide advisory or other services or facilities in relation to any of their functions, or assist in their provision; and
  • to promote or assist in the promotion of publicity relating to any of their functions under WDAA 1975.

again, providing that it is for one of the purposes listed above.

Government of Wales Act 2006 

  • Section 58A of GoWA 2006 confers executive ministerial functions on the Welsh Ministers, which are exercisable in line with devolved competence. 
  • Section 60 of GoWA 2006 allows Welsh Ministers to do anything which they consider appropriate to achieve the promotion or improvement of the economic well-being of Wales.
  • Section 70 of GoWA 2006 allows the First Minister and the Counsel General to provide financial assistance to persons engaged in activities that the First Minister or Counsel General considers will help achieve an objective of the Welsh Government. 
  • Section 71 of GoWA 2006 allows the First Minister and the Counsel General to do anything which will assist them in carrying out any of their other functions. This includes the power to acquire or dispose of any property or rights. 

Housing, Grants, Construction and Regeneration Act 1996 

Published on
10 March 2020
Last updated
09 June 2021