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’ competiveness on the world stage.
As with many other areas of law, economic development is in part governed by EU law, for example through the State aid and procurement rules. Significant work has been undertaken to ensure that following the UKs withdrawal from the EU in the event of a no deal scenario there is a fully functioning statute book.
In terms of what this means for the State aid and procurement rules, while the UK remains a member of the European Union, including during any transition period in the event of a deal, the Welsh Ministers’ powers to carry on business or support businesses must be exercised in a way which complies with European Union law (by virtue of section 80 of the Government of Wales Act 2006). When the UK leaves the EU, either by way of a no deal or, where there is a deal, following any agreed implementation period, it is likely that the substantive rules on State aid and procurement will stay the same and will therefore still require compliance.
Much of Wales, predominantly the area known as ‘West Wales and the Valleys’ is an ‘assisted area’. This means that it is below the EU average in terms of its economy and prosperity. As a result, Wales receives generous funding from the European Union Structural Funds. This funding is distributed by the Welsh European Funding Office (“WEFO”), an arm of the Welsh Government, through a range of Operational Programmes. Projects in Wales which have secured funding through EU Structural Funds during the current 2014-2020 programme will continue to be funded for the duration of that programming period, either through those Structural Funds or by the UK government (the latter has been guarantee d even in the event of a no deal scenario).
There are a number of areas within economic development which remain reserved and therefore are matters which the National Assembly 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 taxation and borrowing powers to the Welsh Government and National Assembly for Wales. With regard to Welsh tax powers two devolved taxes have been created to date, namely Landfill Disposals Tax and Land Transaction Tax. In addition, the Welsh Ministers have the power to propose Welsh rates of income tax which must be approved by the Assembly to have effect.
Under the borrowing powers contained in section 121 of GOWA 2006, the Welsh Ministers may borrow from the Secretary of State;
(a) 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,
(b) any amounts it appears to them are required by them for the purpose of providing a working balance in the Welsh Consolidated Fund, and
(c) 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.