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Written Statement - Intergovernmental assessment of Welsh relative funding in 2015-16

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Jane Hutt, Minister for Finance

As agreed by the terms of the October 2012 joint statement on funding reform, the Welsh Government and UK Government completed a joint review of the pattern of convergence in Welsh relative funding in advance of the 2015-16 Spending Round.

In the run up to the Spending Round, Welsh Government and Treasury officials tested alternative spending scenarios for 2015-16 which were then assessed for their impact on Welsh relative funding levels.  Based on this analysis, both Governments were able to conclude that no convergence is forecast during the 2015-16 spending period.  That conclusion was formally recorded in an exchange of letters, between the Chief Secretary to the Treasury and me, that took place ahead of the Spending Round announcement.

Following publication of the Spending Round data by the UK Government yesterday, I am now able to confirm the relative funding trend for Wales up to 2015-16.  There will be a small degree of divergence in Welsh relative funding during 2015-16, as shown on the chart attached to this statement.

While further convergence was unlikely on this occasion given the continued absence of budgetary increases, I welcome this demonstration of inter-governmental working.  It was the first test of the commitments made in the October joint statement on funding reform, and the process operated smoothly.  It will be important to ensure that it continues to do so in the future and that, if convergence is forecast to resume in the future, then discussions begin to address this issue.