This agreement implements the powers in the Wales Act 2014. It supports the devolution of stamp duty land tax and landfill tax. It also supports the creation of Welsh rates of income tax.
The arrangements include:
- changes to the Barnett formula with a new needs-based factor set at 115%. This was recommended by the Holtham Commission to reflect the characteristics of the population in Wales.
- the National Assembly to be able to set Welsh rates of income tax from April 2019
- a block grant adjustment that reflects the income tax base in Wales.
- Increased capital borrowing powers. The Welsh Government’s capital borrowing limit will be increased to £1 billion and the annual limit to £150 million.
- creation of a new Welsh cash reserve. This will act as a 'savings account' to help the Welsh Government manage budget fluctuations as a result of tax devolution.
- Independent oversight. Independent bodies to have a role in helping resolve disputes on matters relating to the fiscal framework.