a Welsh treasury

As taxation and borrowing powers are devolved to the Welsh Government then we will obviously need a Welsh Treasury to deal with these changes, but what will it actually do.

There are two distinct types of public sector treasury that we have in Britain, the treasury at Westminster and the treasuries at Local authorities.

The treasury at Westminster carries out 5 main functions, central co-ordinating and accounting department, a ministry of finance, economics department, foreign economic policy agent and a policy driver.

Local authority treasuries act as tax collectors, control borrowing including debt management, manage expenditure and invest reserves. Effectively they fulfil the first two functions listed above of the Westminster Treasury.

Currently the Finance Department in the National Assembly acts as a central co-ordinating and accounting department where it distributes the money received from the Treasury at the beginning of the financial year and via a series of supplementary budgets allocates additional funding during the year. What it effectively does is receive income from the treasury and distribute it between the different assembly directorates for them to spend.

What a Welsh Treasury will not become is a foreign economic policy agent because that will be still be carried out by the Westminster Treasury or an economics department because the main macro economic policy will also still be set at Westminster. What we do not want it to be is a policy driver, with Treasury policies over riding departmental policies as appears to happen at Westminster.

It will have more similarities with the treasury function of a Council than it will with the Treasury functions at Westminster. It will continue to manage expenditure but will have added to that raising part of the income and managing debt. Also it is inevitable that investing and managing any reserves will become part of the duties of a Welsh Treasury.

Whilst initially the amount of money raised via taxation by the Welsh Government, outside of the block grant, will be relatively small if income tax is either wholly or partly devolved that will lead to a far larger proportion of the Welsh Government income being raised in Wales.

I believe there is a definite requirement for a Welsh Treasury to control debt including debt management, manage investments and income as well as distribute money. What we need to avoid is a Treasury that also wants to be a policy driver setting its own policies and driving Government policy.