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Written Statement - Meeting with Chief Secretary to the Treasury

Jane Hutt AM, Minister for Finance and Government Business

On 07 December, I met the Chief Secretary to the Treasury to discuss the next steps on establishing fair funding for Wales.  I outlined that there needs to be an inter-government funding agreement which provides the assurance that the funding floor will remain in place for the long term until there is agreement by both Governments that a floor at 115 per cent of comparable spending per head in England is no longer appropriate. This agreement should include a robust methodology outlining how the funding floor will operate and how it will be reviewed to ensure it remains fair to Wales and the rest of the United Kingdom.

The announcement at the Spending Review committing to ensure relative funding for the Welsh Government will not fall below 115 per cent of comparable spending per head in England is only guaranteed for the term of the Spending Review.  It does not provide any long term assurance that the issue of Barnett convergence has been tackled once and for all.  I welcome the cross-Party support - shown by the unanimous vote in the Assembly on 2 December 2015 - on the need to build on the Spending Review announcement with a long-term inter-government agreement.  

The UK Government has announced it will remove the requirement for a referendum on the devolution of income tax powers as specified in the Wales Act 2014 with an amendment to the Wales Bill as part of an inter-Government funding agreement. I have called on the UK Government to agree the fiscal framework for Wales outlining how the block grant offset should operate for income tax and the other devolved taxes in Wales and how our capital borrowing limit will increase to reflect the increase in the independent revenue stream from devolved taxes.

This needs be agreed before the Wales Bill is debated in the National Assembly next year