Draft Government of Wales Act 2006 (Increase of Capital Borrowing Limits) Order 2026

The Committee consisted of the following Members:

Chair: † Carolyn Harris

† Asato, Jess (Lowestoft) (Lab)

† Bance, Antonia (Tipton and Wednesbury) (Lab)

† Bedford, Mr Peter (Mid Leicestershire) (Con)

† Campbell, Juliet (Broxtowe) (Lab)

Chadwick, David (Brecon, Radnor and Cwm Tawe) (LD)

† Cross, Harriet (Gordon and Buchan) (Con)

† Davies, Mims (East Grinstead and Uckfield) (Con)

† Edwards, Sarah (Tamworth) (Lab)

† Fenton Glynn, Josh (Calder Valley) (Lab)

† Fortune, Peter (Bromley and Biggin Hill) (Con)

† German, Gill (Clwyd North) (Lab)

† Hughes, Claire (Parliamentary Under Secretary of State for Wales)

† MacDonald, Mr Angus (Inverness, Skye and West Ross shire) (LD)

† McDonald, Andy (Middlesbrough and Thornaby East) (Lab)

† McMorrin, Anna (Parliamentary Under Secretary of State for Wales)

† Myer, Luke (Middlesbrough South and East Cleveland) (Lab)

† Yasin, Mohammad (Bedford) (Lab)

Sara Elkhawad, Committee Clerk

† attended the Committee

Eighth Delegated Legislation Committee

Wednesday 1 July 2026

[Carolyn Harris in the Chair]

Draft Government of Wales Act 2006 (Increase of Capital Borrowing Limits) Order 2026

I beg to move, That the Committee has considered the draft Government of Wales Act 2006 (Increase of Capital Borrowing Limits) Order 2026.

It is a pleasure to serve under your chairship, Mrs Harris. I am grateful for the opportunity to debate this draft order today. The Government were elected on a manifesto commitment to work in partnership with the Welsh Government to ensure that the Welsh fiscal framework delivers value for money.

It was as a result of joint working between both Governments that my right hon. Friend the Chancellor announced, as part of the autumn Budget last year, some fiscal flexibilities for the Welsh Government’s budget to enable them to better support businesses and public services in Wales. That included increasing the Welsh Government’s annual and cumulative capital borrowing limits, their overall reserve limit and their annual RDEL and CDEL drawdown limits by 10% this year. From next year, each of those limits will be uprated annually in line with inflation.

Only one of those limits has a legislative basis: the Welsh Government’s cumulative capital borrowing limit. Section 122A(1) of the Government of Wales Act 2006 currently sets this limit at £1 billion. Section 122A(2) of that Act enables the Secretary of State to vary this limit with the consent of the Treasury. The order before the Committee this afternoon, made under section 122A(2), will increase the Welsh Government’s cumulative capital borrowing limit by £100 million, in line with that autumn Budget commitment.

The Welsh Government remain accountable to the Senedd for how they use these increased borrowing powers. The Wales Office will bring forward further orders annually to further increase this limit in line with inflation, as is the current process in respect of the Scottish Government’s borrowing limits.

In summary, this order will increase the Welsh Government’s cumulative capital borrowing limit to £1.1 billion, in line with the commitment made at the autumn Budget last year. The changes to the fiscal framework, together with additional funding through Barnett consequentials and the largest settlement in the history of devolution, mean that the UK Government are providing the Welsh Government with nearly £6.5 billion in additional spending power.

What impact assessment has been done to look at the Welsh Government’s ability to service the additional borrowing?

To be clear, that accountability is with the Senedd; its Members will be holding the Welsh Government to account. I commend this draft order to the Committee.

It is a pleasure to serve under your chairmanship this afternoon, Mrs Harris, and a privilege to respond on behalf of His Majesty’s loyal Opposition on a subject that could hardly be more timely and important.

There are a few issues; I am conscious that I am delaying people on a warm afternoon, with football around the corner for some, but I think that they deserve our attention. It would be very easy for me to stand here this afternoon and dismiss any debate outright, and for hon. Members to just wave this order through without looking more broadly—although I am impressed with the Minister’s speed in opening this debate; it is clear she is going in one direction. Parliament’s responsibility is not simply to approve; it is, as my hon. Friend the Member for Bromley and Biggin Hill pointed out, to provide real scrutiny.

Nobody disputes that Wales needs further investment on the ground, but after 27 years of Labour in the Senedd wasting money on schemes that have produced very little in the way of value or outcomes for communities, it is important that we question whether just increasing the Welsh Government’s borrowing limit is the right way to achieve change on the ground, and whether the case that has been brought forward is truly convincing.

In my shadow ministerial role, I have the joy of travelling the length and breadth of Wales—as you know, Mrs Harris, because I am often in your constituency area—and that gives me the opportunity to meet people from across businesses, sectors and communities. It greatly pains me that despite more money, support and local devolution and decision making, there is a continuing sense of deprivation, dilapidation and deterioration, particularly around infrastructure, that is hitting communities too hard, and a sense that what has long been promised through investment and devolution into the Welsh Government has simply not landed on the ground.

The Brynglas tunnels, for example, have descended into being a continued stranglehold on the economies of Newport, Monmouthshire, Cardiff and Swansea. How has the M4 been improved? It simply has not. Unemployment in Wales has hit the highest levels in the whole United Kingdom and is continuing to dash young people’s aspirations. It pains me that too many young people feel they need to leave Wales to find the opportunities that they want. Everyone, including me, knows somebody in Wales who is waiting in pain and in vain on never ending Welsh NHS waiting lists. Despite ongoing promises of change and of better days ahead from the Senedd, that has not changed.

Both Plaid and Labour have sounded like broken records in claiming that they do not have the money to fix Wales’s problems, but the truth is that the Welsh Government have benefited from substantial funding increases for years, so what has happened? In 2021 alone, the then Chancellor, my right hon. Friend the Member for Richmond and Northallerton (Rishi Sunak), announced that the Welsh block grant would rise to around £18 billion a year—an increase of roughly £2.5 billion a year. That naturally raises three important questions, which are pertinent to think about this afternoon. First, if additional funding has been made available, why have so many structural problems remained unresolved since 1999? Secondly, before the Government agree to increase the level of borrowing, should Ministers in the Wales Office not ask how the previous resources have been prioritised?

Thirdly, what have the actual outcomes been? For too long, the Welsh Government, who were aided and abetted by—let’s be honest—the Labour enablers Plaid Cymru, decided to prioritise the wrong thing. Under the then Labour Welsh Government, more than £100 million of taxpayers’ money was spent on expanding the size of the Senedd with 36 more politicians, and more than £150 million was spent on developing plans for building the M4 relief road, which was cancelled abruptly. Tens of millions were spent on imposing the 20 mph speed limit, which is increasing journey times and creating wider economic costs. Other previous wasteful spending projects at the Senedd include setting up embassies all over the world, the failed Circuit of Wales project and tree planting in Uganda—all of which have cost taxpayers money.

If a decision is made today to increase the Welsh Government’s borrowing powers, it is incumbent on all of us to ensure that the money is not misappropriated again into pursuing Plaid Cymru’s ultimate goal of breaking up our country and setting up an independent country. At a time of wider geopolitical tensions, we need to be serious: we are better together.

To attract more investment into Wales, I encourage the Plaid Cymru Welsh Government to heed the Conservative and Unionist party’s ideals: to get on and build the M4 relief road, to abolish business rates for small and medium sized businesses, to scrap stamp duty in Wales and to scrap glass from the deposit return scheme. Those things, alongside public borrowing, will make a difference, but more public borrowing today is not an end in itself; it must be justified with a clear and credible plan. There are Committee members whose constituents will be directly affected by this measure, so we should be mindful of where the money is going and whether it is making a difference to the people of Wales.

Devolution cannot be a one way road. We cannot devolve powers and hand over more money only for it to be wasted on pointless schemes and for the people of Wales not to see change. We can no longer afford to devolve powers and increase borrowing while hoping for the best—hoping that the people of Wales will get more. They deserve so much more than that; it is about changing lives and supporting people.

How did the Government come to the figure of a 10% increase? I think the Minister covered that to a degree in her opening speech. What will the change of Government and what is going on in the Senedd mean for this important capital funding—taxpayers’ money? What justification have the Welsh Government provided for increasing the grant, and how will they show the impact? I understand from the Minister’s speech that she is comfortable with this being devolved to the Senedd, but we should be holding those 96 politicians to account. I look forward to the Minister’s kind response. If there is anything that she cannot comment on this afternoon, I will be happy to see it in writing.

I do not have anything to add.

I was prepared to allow you to speak because the Liberal Democrat Wales spokesperson is not here, but I call the Minister to wind up.

I thank the hon. Member for East Grinstead and Uckfield for her contribution. The draft order delivers the Government’s autumn Budget commitment to increase the Welsh Government’s cumulative borrowing limit by 10%. I mentioned in my opening remarks how we got to that.

To be clear, this order gives the Welsh Government additional flexibility to manage their own budget; it does not change the overall funding settlement or the Barnett formula. It was agreed at the last Budget and announced by the Chancellor then. The Welsh Government are accountable to the Senedd for how they use these borrowing powers. From Westminster, we will be looking to our colleagues in the Senedd to scrutinise how the Welsh Government use the additional powers.

The Welsh Government are accountable for ensuring that this extra borrowing—indeed, the whole borrowing—delivers value for money for the people of Wales and all our constituents. I am very proud to be part of a UK Labour Government who have delivered the biggest settlement in the history of devolution. It will be a game changer, and it will make a difference to people on the ground.

I am aware that many Members are trying to get to the football. If there is anything further that the hon. Member for East Grinstead and Uckfield would like to raise, I am very willing to have that conversation, but it is the Senedd that scrutinises the Welsh Government. I am proud of the UK Labour Government’s work in enhancing these powers.

I thank the Minister for giving way; she is being very generous to us all. I just want to reiterate the point about accountability. Between the announcement of this measure in the autumn Budget, and its publication on 2 June and the Minister’s presenting it today, the process, group of people and focus in the Senedd have changed. People’s feelings about the lack of accountability and openness, and about the wanton spending of other people’s money, are very acute when they are finding the cost of living so challenging. I offer to work with her if these powers are granted—we will not divide the Committee today—to make sure that we all keep watch equally that they do change lives on the ground, and we are willing to roll up our sleeves if we see that the money is being used wastefully and lives are not changing.

I thank the shadow Minister for her comments. Absolutely; this is about ensuring that all the people of Wales feel the value of these additional spending and borrowing powers. Equally, this Labour Government are proud to ensure that the huge devolution settlement is felt by the people of Wales and in the communities of Wales, not just in one part of the country but across the whole of Wales. As a Wales Office Minister, I am committed to working with my counterparts in the Welsh Government, and with colleagues right across the House, to make sure that happens.

I thank the shadow Minister for her productive approach to the debate, and I am grateful for the way in which the UK and Welsh Governments have worked together very closely to produce the draft order. I commend it to the Committee.

Question put and agreed to.

Committee rose.