News

UK funding framework

Published: 29 Aug 2019 17:39
Part of:
Brexit, Money and tax

New arrangements needed to deal with EU Exit.

The current financial arrangements between the UK Government and the devolved administrations are not fit for purpose, finance ministers from Scotland and Wales have said. 

Following a meeting with Chief Secretary to the Treasury Rishi Sunak in London today, Mr Mackay and Welsh Finance Minister Rebecca Evans said that Scotland and Wales did not have the necessary financial arrangements to deal with the economic consequences facing both countries as a result of the UK’s EU exit.

Mr Mackay and Ms Evans have called for new arrangements to ensure that devolved administrations have clarity, honesty and commitment on future UK spending decisions in order to plan for their budgets.

Mr Mackay said:

“The actions of the UK Government in attempting to shut down Parliament to force through a ‘no-deal’ outcome means that the UK stands on the cusp of an economic crisis.

“Alongside my Welsh counterpart, I made it abundantly clear to the Chief Secretary to the Treasury the impact that a ‘no-deal’ Brexit will have on Scotland’s economy and jobs. I also urged him to provide a cast-iron guarantee that all lost EU funding will be replaced in full by the UK Government.

“The Chief Secretary failed to provide those assurances and so I challenged him to work with us to agree a new framework for future funding allocations. With a ‘no deal’ scenario looking increasingly more likely, the current financial arrangements are not fit for purpose. We need a new agreement to ensure that the Scottish and Welsh Governments have the necessary powers to help mitigate, as best we can, the damage caused by the UK Government’s ‘no-deal’ actions.

“The decision to only part-fund additional costs resulting from changes to public sector pensions further demonstrates the need for a new framework so that the UK Government fairly respects devolved administrations.”

Ms Evans said:

“I am disappointed that the Chief Secretary failed to provide us with the clarity, honesty and commitment that we have repeatedly called for from the UK Government.

“Despite being promised a three-year Comprehensive Spending Review at our last Finance Ministers meeting, we now face a one-year spending round next week. That review cannot leave us short-changed again. After nine years of austerity our Welsh Government budget is 5% lower in real terms than it was back in 2010. 

“We currently face the prospect of a ‘no deal’ Brexit, and in those circumstances we know that the economy in Wales is likely to be around 10% smaller in the long term. This would be reflected in real incomes that, in today’s terms, would be up to £2,000 lower per person than otherwise. There was little comfort in today’s meeting in helping us deal with that.”