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Government of Wales Act 2006

The Welsh Consolidated Fund

442.Section 117 establishes a Welsh Consolidated Fund (WCF). The Fund will receive payments from the Secretary of State out of moneys voted by Parliament (section 118). The moneys voted by Parliament to the Secretary of State will be calculated having regard to the “Barnett Formula”, to determine what is known as the “Welsh Block Grant”. The Secretary of State will deduct the administrative expenses of the Wales Office from this, and pay the remainder into the WCF. The Secretary of State will be required, at least four months before the beginning of each financial year, to prepare and lay before the Assembly a written statement with an estimate of payments to be made into the Fund, and to the Welsh Ministers, First Minister and Counsel General, in that financial year (section 119). Under section 120, provision can be made so that certain categories of receipts are to be dealt with other than by payment into the WCF, and section 130 makes provision for receipts paid into the WCF by mistake which need to be recovered.

443.Sections 121 -123 make provision for the Welsh Ministers to borrow from the Secretary of State either to cover any short-term deficit in the Fund or to provide a working balance. The total of such borrowing may not exceed £500m at any given time. The Secretary of State will be required to prepare accounts in respect of loans issued under these powers.

444.Sections 124-129 are the provisions specifying the processes which must be complied with for expenditure out of the Fund to be regular. The norm is that sums may only be paid out of the WCF on the authority of a Budget resolution passed by the Assembly. There will be a small number of instances in which a sum may be paid out of the WCF without the need for a reference to it in a Budget motion, because the sum has been “charged on” the Fund by an enactment (for an example in this Act , see section 20(5)). As stated above, there is also special provision, in section 130, for monies that were paid into the WCF by mistake to be paid out of it without the authority of a Budget resolution. The only other exceptions to the principle that a Budget resolution of the Assembly is required before sums can be spent from the WCF are described in sections 127 and 128 (see below).

445.Section 125 sets out the requirement for an annual Budget motion (which may be moved only by the First Minister or another Welsh Minister) seeking authorisation for:


the amounts of resources that can be used on the “services and purposes” specified in the motion,


the amounts of accruing resources which may be retained (rather than being paid into the Welsh Consolidated Fund), and


the amounts of cash that may be issued from the Fund.

446.Section 126 permits one or more Supplementary Budget motions to be moved to vary the amount of resources that can be used for specified services and purposes in a particular financial year, or to add new services and purposes and allocate resources to them. A Supplementary Budget motion may also vary the amounts of resources that can be retained instead of being paid into the WCF, or authorise new retentions. Once a Budget motion has been approved by the Assembly and becomes a Budget resolution, sums may be paid out of the WCF in support of the services and purposes referred to in the resolution; it will be for the Auditor General for Wales, under section 129, to give approvals for sums to be paid out, if satisfied that the payment out will be in accordance with the relevant Budget resolutions.

447.As mentioned above, sections 127 and 128 provide exceptions to the general principle of no payments out of the Fund without a Budget resolution (or a provision charging the payment in question on the WCF). Section 127 deals with the situation where no Budget resolution has been adopted by the Assembly by the beginning of the relevant financial year. In the absence of such a resolution, resources for services and purposes may be used up to a specified level, determined as a fixed percentage of the preceding financial year’s provision for that service or purpose; in this way, a failure by the Assembly to pass a Budget resolution by the beginning of the financial year will not automatically lead to the public services funded by the Welsh Ministers exhausting their resources within a few days of the beginning of the financial year. Section 128 allows for resources to be used, up to a specified level, in emergency situations where Welsh Ministers consider the expenditure to be in the public interest and it is not reasonably practicable, for reasons of urgency, for a Budget motion to be put down to authorise the expenditure. In such a situation, the Welsh Ministers are required as soon as possible to lay a report before the Assembly explaining why they considered the action they took to be necessary.

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