6. Statement by the Minister for Finance and Trefnydd: Implications for Wales of the UK Government's 2019 Spending Round

Part of the debate – in the Senedd at 4:35 pm on 17 September 2019.

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Photo of Rebecca Evans Rebecca Evans Labour 4:35, 17 September 2019

I thank Mike Hedges for raising those points, and also for pointing out again that austerity is a political choice and nothing more than that. It's certainly not a necessity.

In terms of whether the UK Government share their workings out with us, well, that goes back to those comparability factors that the UK Government uses in order to work out our Barnett share for the various departments, but, as I say, they haven't been updated to reflect the most recent responsibilities of departments, which is hugely disappointing. That piece of work would normally take place over a number of months, with the UK Government and Welsh Government officials working closely together, but that hasn't taken place on this occasion. But there's another interesting point here, because our spending round settlement includes an adjustment for non-domestic rates income, and that's an accepted element of the Barnett formula designed to ensure that devolved administrations who retain their own NDR don't also benefit from increases in departmental expenditure limit spending in England financed from the English NDR. Without such an adjustment, obviously, devolved administrations would in effect be benefiting from both increases in their own NDR revenues and then also increases in English NDR revenues. However, the size of the adjustment in the spending round, which is almost £180 million, was certainly unexpected, I think, in terms of what Welsh Government officials had expected to be the case. So, we're in discussions with HM Treasury about that. And that adjustment largely accounts for why the growth in our Welsh allocation in 2020-1—so, the 2.3 per cent real-terms increase—is actually smaller than the increase in UK departments such as health and education, which are more than 3 per cent higher in real terms. So, there could be a case where we would want to challenge that, and the normal way we would do that would be to appeal via the Joint Ministerial Committee. Now, that is an entirely unsatisfactory way of dealing with disagreements between the UK Government and the devolved nations, so part of the inter-governmental relationship and the infrastructure that supports that in future has to include a more satisfactory way for devolved nations to raise their concerns, particularly when it relates to budget decisions and allocations.

I'm not in a position today to make any announcements because I don't think it would be fair to do so, because I haven't completed the latest round of budget bilaterals with colleagues. I've got lots of stakeholders yet to speak to. I've met several times with the future generations commissioner, but I'm also meeting the older people's commissioner, the Welsh Language Commissioner and others in order to discuss their views on the budget, as well as the Equality and Human Rights Commission. And over the summer I undertook a series of visits, which were really helpful. I visited schemes that fell, if you like, under each of the eight Welsh Government priority areas, to further my thinking, really, about what could be achieved, especially when we work in a cross-Government, collaborative way, bringing to life the future generations Act.