The Wales Act 2014 (Commencement No. 1) Order 2016

Explanatory note

Reproduced verbatim from the instrument as published on legislation.gov.uk (Crown Copyright, Open Government Licence v3.0). The note is prepared by the responsible government department and is not part of the instrument itself.

Article 2 of this Order commences section 20 of the Wales Act 2014 (c. 29) (the “2014 Act”) on 1st January 2017. This section amends sections 121 and 122 of the Government of Wales Act 2006 (c.32) and inserts a new section 121A in that Act. These amendments revise the circumstances under which the Welsh Ministers may borrow and set out the main controls and limits on such borrowing. The amendments enable the Welsh Ministers to borrow - subject to HM Treasury’s controls and limits - for the following purposes:

to meet a ‘temporary excess of sums paid out of the Welsh Consolidated Fund (WCF) over the sums paid into the fund’ – this means that the Welsh Government can borrow to manage excessive in-year volatility of receipts, where actual income differs greatly from the forecast receipts for that month;

to provide a working balance to the WCF, i.e. enough balance to ensure cash-flow;

to meet the differences between forecast and outturn receipts for devolved taxes or from income tax charged by virtue of a Welsh rate resolution; and

to fund capital expenditure.

Section 29(7) of the 2014 Act provides that section 21 of that Act comes into force at the same time as the amendments made by section 20. Section 21 repeals paragraphs 3 (which provides a power for the Welsh Ministers to borrow money) and 6 (which provides a power for the Treasury to guarantee such borrowing) of Schedule 3 to the Welsh Development Agency Act 1975 (c. 70) .