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Written Statement - Resolution of Olympics funding dispute

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Jane Hutt, Minister for Finance and Leader of the House

In the 2007 Spending Review, the UK Government decided that the new Departmental Expenditure Limit established at that time to fund delivery of the Olympic games in London in 2012 would be non-comparable.  As a result, no Barnett consequentials were allocated in relation to the more than £7bn of public spending allocated to deliver the games, despite the fact that a substantial proportion of this spending was to be used to fund regeneration and transport infrastructure in the east London area.

The Welsh Government disputed this decision from the outset.  Discussions reached the point in 2010 where the matter was recorded formally as an inter-governmental dispute.  This was discussed by the Joint Ministerial Committee (JMC) on 8 June of this year and that helped to clarify unresolved issues in the dispute.  It also confirmed the administrations’ shared interest in resolving those issues creatively and constructively with a view to ensuring the success of the 2012 Olympic Games. 

Following further consideration, the administrations have now agreed:

  • to reaffirm their shared commitment to the success of the 2012 Olympics and other major sporting events in the UK;
  • to reaffirm their shared commitment to the principles of good communication, close cooperation and mutual respect as the means of avoiding and resolving disputes, and to the use and benefit of the JMC’s dispute-resolution protocol as set out in the Memorandum of Understanding between the UK Government and the devolved administrations;
  • the importance of learning lessons from all disputes in order to make them less likely to arise in the future.  In this instance, they noted the agreement reached in earlier discussions of this dispute that decisions on the application of the Barnett formula should “always be evidence based, be undertaken in a timely manner and in consultation with the devolved administrations”.  This wording was agreed previously and is now included in HM Treasury’s Statement of Funding Policy which was published alongside the UK Spending Review in autumn 2010;
  • that there have been significant changes in public finances since this dispute first arose and that they should therefore not revisit decisions on the Olympics budget first made by the previous UK Government; 
  • that the Welsh Government, the Scottish Government and the Northern Ireland Executive will receive a one-off sum equivalent to the Barnett consequentials of relevant changes to Olympics funding since the present UK Government took office in May 2010.  These sums amount to £30.2m, of which the Welsh Government will receive £8.9m, the Scottish Government £16m and the Northern Ireland Executive £5.4m (rounded to the nearest £100,000).  These sums will be added to the budgets of the devolved administrations so as to be available for spending in 2011-12; and
  • the importance, firstly, of reviewing thoroughly the costs and benefits of the 2012 Olympic Games and other major sporting events in the UK and, secondly, of Governments co-operating on and sharing such studies.

The agreement set out above represents a final settlement to the Olympics dispute, subject to existing agreements that UK Government operations and specific legacy project costs, funded by individual UK Departments, attract Barnett consequentials in the usual way. 

This statement is being issued during recess in order to keep members informed. Should members wish me to make a further statement or to answer questions on this when the Assembly returns I would be happy to do so.