Welsh Finance Minister to demand review of funding deal with UK Government

Nation.Cymru staff

Wales’ Finance Minister will call for a formal review of the way the country is funded when finance ministers from across the UK meet in Cardiff.

Elin Jones will press the UK Government to reopen the Wales Fiscal Framework, seek greater borrowing powers and argue for changes to the Barnett formula at talks on Thursday.

The Welsh Government is hosting the Finance Inter-ministerial Standing Committee, which brings together ministers from the UK Government and the devolved governments to discuss financial and economic issues.

Ms Jones will also hold separate talks with the Chief Secretary to the Treasury focused specifically on Welsh funding.

The Fiscal Framework was agreed by the Welsh and UK governments in 2016 and governs areas including the block grant, devolved taxes, borrowing and the use of reserves.

Ms Jones will tell the Treasury that the agreement needs to be reviewed to ensure Wales’ funding arrangements remain fit for purpose.

She will also seek stronger borrowing powers and greater flexibility over reserves, which the Welsh Government argues would give it more scope to plan long-term investment.

Ms Jones said: “I’ll also be clear about what Wales needs. The way our funding is calculated hasn’t kept up with the real needs of people here. It’s outdated, and it’s not transparent enough. That must change.

“We’re up against a genuinely challenging financial backdrop – so what we’re asking for isn’t about special treatment for Wales but for a system that’s fair, that’s clear, and one that reflects the needs of our communities.

“That’s why today I can confirm the Welsh Government has formally proposed a joint review of the Wales Fiscal Framework, which I’ll be discussing in a one-to-one meeting with the Chief Secretary to the Treasury.”

The Welsh Government will also push for changes to the Barnett formula, the mechanism used to calculate changes in funding for the devolved governments when spending on comparable services changes in England.

The 2016 Fiscal Framework already contains a needs-based adjustment to the Barnett formula, which was agreed following recommendations by the Holtham Commission.

Rail investment will also feature prominently in Thursday’s discussions.

The UK Government announced in February that it would work with the Welsh Government to deliver a long-term programme of rail improvements. Transport for Wales estimates the full pipeline of potential projects could cost up to £14bn.

The Welsh Government says only £302m is allocated during the current UK Spending Review period to 2029-30 and wants a further £1bn brought forward during that period.

Ms Jones said: “Throughout the day, I’ll be pressing the case for greater investment in Welsh rail, and for capital spending and cost of living support to be prioritised in the Autumn Budget.

“Wales and all its communities deserve fairness and equality.”

Other demands being taken to the meeting include increased capital spending in the Autumn Budget for hospitals, affordable housing and infrastructure.

The Welsh Government will also seek additional funding to deal with the legacy of Wales’ industrial past, including the restoration of coal tips and remediation of contaminated land, as well as further UK-wide measures to tackle cost-of-living pressures.

Financial challenges

Ms Jones said the Cardiff meeting would provide an opportunity to work with other governments on shared financial challenges.

“I’m pleased to be able to meet with my counterparts from across the UK in what will be an important chance to work constructively together on the challenges facing all our nations,” she said.

“This Welsh Government set out our expectations on day one that Wales both needs and deserves a fairer settlement on funding and powers.”

Finance ministers from Scotland are expected to attend the Cardiff meeting, while representatives from Northern Ireland will participate remotely.

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