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The current financial arrangements between the UK Government and the devolved administrations are not fit for purpose, finance ministers from Wales and Scotland have said.

First published:
29 August 2019
Last updated:

This was published under the 2016 to 2021 administration of the Welsh Government

Following a meeting with Chief Secretary to the Treasury Rishi Sunak, Finance Minister Rebecca Evans and Scotland’s Finance Secretary Derek Mackay said that Wales and Scotland did not have the necessary financial arrangements to deal with the economic consequences facing both countries as a result of the UK Government’s chaotic management of the UK’s EU exit.

Ms Evans and Mr Mackay have called for new arrangements to ensure that devolved administrations have clarity, honesty and commitment on future UK spending decisions in order to plan for their budgets.

Ms Evans said:

“I am disappointed that the Chief Secretary failed to provide us with the clarity, honesty and commitment that we have repeatedly called for from the UK Government.

“Despite being promised a three-year Comprehensive Spending Review at our last Finance Ministers meeting, we now face a one-year spending round next week. That review cannot leave us short-changed again. After nine years of austerity our Welsh Government budget is 5% lower in real terms than it was back in 2010.

“We currently face the prospect of a no deal Brexit, and in those circumstances we know that the economy in Wales is likely to be around 10 per cent smaller in the long term. This would be reflected in real incomes that, in today’s terms, would be up to £2,000 lower per person than otherwise. There was little comfort in today’s meeting in helping us deal with that.”

Mr Mackay said:

“The actions of the UK Government in attempting to shut down Parliament to force through a no deal outcome means that the UK stands on the cusp of an economic crisis.

“Alongside my Welsh counterpart, I made it abundantly clear to the Chief Secretary to the Treasury the impact that a no deal Brexit will have on Scotland’s economy and jobs. I also urged him to provide a cast-iron guarantee that all lost EU funding will be replaced in full by the UK Government.

“The Chief Secretary failed to provide those assurances and so I challenged him to work with us to agree a new framework for future funding allocations. With a no deal scenario looking increasingly more likely, the current financial arrangements are not fit for purpose. We need a new agreement to ensure that the Scottish and Welsh Governments have the necessary powers to help mitigate, as best we can, the damage caused by the UK Government’s no deal actions.

“The decision to only part-fund additional costs resulting from changes to public sector pensions further demonstrates the need for a new framework so that the UK Government fairly respects devolved administrations.”