UK Government promises Welsh Government an extra billion pounds

Rishi Sunak on budget day in March 2020 Credit: PA

The UK Government said it will top up the direct funding it gives to the Welsh Government this year by an £1bn to help it cope with the coronavirus crisis.

According to the Treasury, that would mean it will have given ministers in Cardiff a total of £4bn extra since the pandemic began, adding to the £17bn the Welsh Government had already planned to spend this financial year.

The Welsh Government has welcomed confirmation of its funding but has questioned "how much of this package is wholly new."

The Treasury said it is changing the rules in the way it works out how much funding the devolved governments get to ensure they won't lose any of the money in end of financial year calculations.

The Welsh Secretary said the guarantee of extra money will enable the Welsh Government in its funding of "the front line" in the fight against coronavirus.

"This guarantee from UK Government means that the Welsh Government can invest to protect jobs and plan for Wales’ economic recovery" Simon Hart said.

The move is being presented by the UK Government as more proof of how it is taking the needs of all of the UK seriously even in areas that are the power and responsibility of devolved governments.

Steve Barclay, the Chief Secretary to the Treasury, said, "This is yet another sign of our support for the Union and commitment to securing an economic recovery for the whole of the United Kingdom.”

Officials said they were already expecting substantial amounts from the Welsh Government's share of PPE costs Credit: PA

The Welsh Government says that it welcomes "confirmation of Wales' share of spend in England" but says that "it is not clear how much of this package is wholly new." For instance, officials said they were already expecting substantial amounts from the Welsh Government's share of PPE costs and money triggered by NHS winter funding in England.

A spokesman added that ministers in Cardiff were hoping for news on their calls for greater flexibility with their funding.

The Welsh Government's budget is made up of revenue from Welsh taxes, limited borrowing and direct funding from the UK Government which, in the Chancellor's spring budget, was due to be just under £13bn for 2020/21.

The Treasury says that following today's guarantee and previous announcements that figure will increase by £4bn.

The new total does not include capital spending (for major one-off projects such as road building and other infrastructure schemes). The Welsh Government has asked the Treasury if it can also use some of that money to cope with the pressure that coronavirus has put on its day to day spending. 

Earlier this month the finance ministers of Wales, Scotland and Northern Ireland joined forces to urge the chancellor to include that in sweeping changes to the way devolved governments are funded.

The news has been welcomed by the Welsh Conservative leader Paul Davies.

Plaid Cymru's finance spokesperson Rhun ap Iorwerth said "The union can't be sewn together with a bung where you don't even know what's in the brown envelope, where we're expected to trust that somehow it's a lot of money.

"What we need, and we're in agreement with Welsh Government actually, is we need additional flexibility with the spending powers that we have in Wales.

"This is the time when we need to be making decisions now on how much money to borrow to get us through this incredibly sticky point in our history... rather than expect to be grateful for somebody filling a begging bowl with money that we don't know how much it is anyway."