Press release

A Spending Review that delivers for Wales

Stephen Crabb: "Today's announcement contains a bold package of measures that delivers on our manifesto commitments to strengthen the Welsh economy"

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The Chancellor George Osborne used his Spending Review and Autumn Statement today to set out how he will deliver economic security, national security and opportunity for families in Wales.

The Government’s economic plan is continuing to work for the people of Wales. Employment in Wales grew by almost 43,600 over the last year, the joint fastest rate in the UK, and unemployment has fallen by almost 26% since 2010.

The Welsh Government’s block grant will reach almost £15 billion by 2019-20.

The Spending Review announced that there will be an increase in capital funding for the Welsh Government of over £900 million over 5 years, an increase of over 16% in real terms to support investment in projects that matter to the Welsh economy.

The Government has already published a draft legislation that will move Wales to a new model of devolution. On St David’s Day this year the Government made a landmark commitment to deliver additional powers over energy, transport, the environment and elections to the Welsh Assembly.

Wales will benefit from major investments in devolution deals, and infrastructure funding including:

  • The central funding measure of the St David’s Day package – the introduction of a new ‘Funding Floor’ set at 115% for this parliament. This is within the Holtham Commission’s “fair funding” range. Due to the floor, the Welsh Government will continue to benefit if the relative level of funding they receive is higher than 115% per head and also benefit from the certainty that it won’t fall below that level.
  • The Autumn Statement announces that the Government will also legislate to remove the need for a referendum to introduce Welsh Rates of Income Tax, meaning the Welsh government can take on more responsibility for how they raise money as well as how they spend it.
  • The decision to protect the Police in real terms will mean that forces across Wales will have the money they need to protect the public.
  • We are also reaffirming that the Welsh Government will also be able to borrow up to £500 million for capital spending, starting in 2018, with early access to these borrowing powers where this is to support the delivery of the M4 relief road.
  • Alongside this the Spending Review announces the Government’s in principle commitment to support a new infrastructure fund for the Cardiff Capital Region.
  • The people of Wales will also benefit directly from measures in this Spending Review and Autumn Statement to take an average of £30 off projected energy bills for around 1 million households in Wales from 2017/18 through a new, cheaper domestic supplier obligation and proposed reforms to support schemes for low carbon electricity

The Chancellor said:

My Spending Review today puts security first. It delivers economic security so Britain lives within its means, financial security for families in Wales, and national security for all.

We are delivering our commitment to introduce a funding floor this Spending Review which provides a guaranteed level of funding per head in Wales. Alongside this the Spending review includes a real terms increase in the Welsh Government’s capital budget. The debate can now move on to the issue of how the Welsh Government use their powers to deliver better services for the people of Wales.

I am also today confirming our in principle agreement to support a new infrastructure fund for the Cardiff City Region. I look forward to receiving firm proposals from Cardiff and the Welsh Government that will help to secure the economic future of one of the UK’s great cities.

The Secretary of State for Wales, Stephen Crabb, said:

This is a landmark Spending Review for Wales.

There is now nothing to stop the Welsh Government from pressing ahead and using the important new fiscal levers we have devolved to it to grow the Welsh economy and improve public services. By removing the need for a referendum on income tax, the Welsh Assembly will finally take its place alongside other mature legislatures by being accountable to the people it serves.

By delivering on our commitment to introduce a historic funding floor for Wales whilst at the same time increasing the Welsh Government’s capital budget, we are providing the Welsh Government with the tools it needs to deliver important projects for Wales.

Today’s announcement contains a bold package of measures that delivers on our manifesto commitments to strengthen the Welsh economy and create stronger, more accountable Government in Wales.

The Welsh Government benefits from HS2 spending through the Barnett formula. Because rail infrastructure is not fully devolved in Wales, the comparability factor outlined in HMT documents is zero. However, Welsh Government still benefits from HS2 spending in England as the Barnett formula is applied at a departmental not programme level.

The Welsh Government have over £900 million extra available for infrastructure investment over the next 5 years, compared to if spending had been held at 2015-16 levels. Over the period in question HS2 is a significant part of this. In addition, DfT continues to invest in rail infrastructure in Wales.

Published 25 November 2015