In parallel with the White Paper “Scotland’s Future in the United Kingdom: Building on ten years of Scottish devolution”, I am pleased to inform the House that the Government have agreed new arrangements in relation to future funding in Wales.

These address concerns, expressed by the House of Lords Select Committee report on the Barnett formula, the Independent Commission on Funding and Finance for Wales (chaired by Gerald Holtham), and also by the Welsh Assembly Government, about the continued application of the formula in Wales, in particular whether pressures in the Barnett formula for additional convergence towards the English average could in future disadvantage Wales.

The Government welcome many aspects of the Holtham report, which it continues to study in detail.

The new arrangements are as follows:

the Government agree that the Barnett formula could lead to convergence to an extent that would be regarded as unacceptable although further convergence is not currently expected in the coming years;

the Government will make a full assessment of the extent of convergence with consideration of Wales’ position relative to other parts of the United Kingdom as part of each spending review; and

following this assessment the Government would be prepared to take action if appropriate to ensure Wales is not disproportionately disadvantaged.