After several months of negotiations, on 19 December 2016 the UK and Welsh governments announced that they had reached agreement on a new set of rules governing the funding and fiscal powers of the Welsh Government. This ‘Fiscal Framework’ will have far-reaching implications for the future funding of Wales and was prompted by the need to consider how previously-announced tax devolution would be implemented.
This report, the third and final joint report in a series by researchers at the Wales Governance Centre and the Institute for Fiscal Studies, aims to shed light on the agreement by explaining the deal and assessing its likely consequences for Wales’ funding.
It describes and analyses the agreed block grant funding arrangements, and provides projections of the likely financial impact on the Welsh budget and relative spending per person in Wales. It also discusses the agreed changes to the Welsh Government’s borrowing and budget management tools, and evaluates how policy spill-overs and disputes will be dealt with under the agreement, and the new institutional arrangements that will be established.