Governments reach new agreement on Welsh funding

In a joint announcement today, the Welsh and UK Governments have announced progress on the future funding of Wales.

Both Governments have commied to negotiating to achieve a sustainable arrangement for Welsh devolved funding and the UK public finances, that each can accept as being fair and affordable.

The Welsh Government believes that a mutually acceptable outcome to those discussions is an essential precondition for any significant devolution of taxes and the UK Government will only implement such changes with the consent of the National Assembly for Wales.

In principle, the UK Government accepts the case for the Welsh Government to have access to borrowing powers in order to finance infrastructure projects, subject to an appropriate independent stream of revenue being in place to support it. Decisions on the devolution of taxes – which could provide an appropriate revenue stream – will be made after the Silk Commission reports.

Community Housing Cymru Group Chief Executive Nick Bennett welcomed today''s announcement, saying: "Wales, Northern Ireland and many English regions have been badly affected by 30 years of failure in regional policy across the UK. We need to be taking more responsibility for funding our infrastructure - but with 40% capital cuts over next few years, limited borrowing powers for welsh government will not be enough - housing and local government borrowing will continue to be needed, to bridge the social infrastructure gap."

Commenting on the announcement, Chief Secretary to the Treasury Danny Alexander said: “Today’s announcement agrees in-principle to devolved capital borrowing powers for the Welsh Government. This is an important step forward on the devolution journey for Welsh people, and will bring them significant benefits. I am delighted that the two Governments have worked closely together to deliver this good outcome for Wales.”