Jane Hutt AM, Minister for Finance and Government Business
I am pleased to publish a joint statement following my meeting with Scotland’s Cabinet Secretary for Finance, Constitution and Economy John Swinney MSP and Northern Ireland’s Minister for Finance and Personnel Arlene Foster MLA. The statement that has been jointly agreed with the Scottish Government and the Northern Ireland Executive calls on the UK Government to clarify how certain measures announced in the Summer Budget will operate in the Devolved territories.
The statement also calls for early engagement from the UK Government on the implications of the Spending Review on the funding settlements for the Devolved Administrations. There was also joint agreement for the correct application of the Barnett formula to ensure that the Devolved Administrations are awarded their fair share of consequential funding from infrastructure investment in England, including that relating to HS2.
John Swinney MSP, Deputy First Minister and Cabinet Secretary for Finance, Constitution and the Economy (Scotland); Jane Hutt AM, Minister for Finance and Government Business (Wales) and Arlene Foster MLA, Minister for Finance and Personnel (Northern Ireland) met in Edinburgh today, Thursday 6 August, to discuss matters of common financial interest to the Devolved Administrations. The agenda included working with the UK Government on follow-up to the Summer Budget and in the lead up to the Spending Review; constitutional developments; and investment in infrastructure.
Summer Budget 2015
The Devolved Administrations have been disappointed by the lack of communication and engagement by the UK Government in respect of its recent fiscal announcements, particularly in respect of the in-year cuts announced on 4 June as a result of the UK Government’s on-going austerity plans and measures announced in the Chancellor’s Summer Budget on 8 July. There was agreement that the cuts were too deep and too fast. There appeared to be neither advance notice nor consideration of the implications for the Devolved Administrations.
While the Finance Ministers welcome the UK Government’s commitment to engaging on certain measures announced in the Summer Budget, such as the use of the Vehicle Excise Duty to fund road investment, they agreed that urgent clarification is required on how these initiatives will operate in the Devolved territories, including the proposed Apprenticeship Levy.
Spending Review 2015
The Devolved Administrations noted that the planned Spending Review outcome date of 25 November left very little time for setting of their own budgets before the beginning of 2016-17, with potential negative consequences for delivery partners. They therefore called on the UK Government for as much early engagement as possible during the Spending Review process on the implications of likely funding settlements for the Devolved Administrations.
The Finance Ministers proposed that, as part of the Spending Review, the inter-governmental fiscal arrangements should be updated. The Statement of Funding Policy was last updated in 2010, and significant policy changes have happened since then, including devolution of taxes and borrowing powers.
The Finance Ministers also noted that they would expect HM Treasury to apply the Barnett formula fairly, consistently and correctly, helping to ensure that the Devolved Administrations budgets receive their fair share of consequential funding from comparable spending in England. This should include infrastructure investment relating to HS2.
For the Welsh Government, there will be the particular need to specify the funding floor mechanism that has been promised by the UK Government.
The Finance Ministers discussed a range of matters of common interest, including the scale and timing of proposed further fiscal devolution to Wales, Northern Ireland and Scotland; and agreed to maintain regular contact at Ministerial and official level to share experience and ensure a consistent approach.
Sustainable Economic Growth
The Finance Ministers also discussed the importance of maintaining investment in vital infrastructure in the face of financial austerity, to maintain and develop economic capacity, productivity and living standards. The Finance Ministers also discussed the growing pressures facing the agricultural sector.
Finance Ministers’ Quadrilateral
The last Finance Quadrilateral took place in November 2013 and the Finance Ministers agreed that it is important that another Quadrilateral takes place in advance of the UK Government’s Spending Review in November. The Devolved Administrations agreed to seek an early meeting with the Chief Secretary to the Treasury with a view to discussing the matters arising in advance of the Spending Review.
6 August 2015