Devolved Authorities: Use of Resources

Question

15:23:00

Asked by

To ask His Majesty’s Government whether they are considering ways to ensure that resources allocated to the devolved authorities are used for the specified purposes.

The UK Government primarily use the Barnett formula to calculate the devolved Governments’ block grant funding. This funding is not ring-fenced, given the devolved Governments’ full flexibility to allocate it across devolved areas according to their own priorities and local circumstances. The devolved Governments are accountable to their parliamentary legislatures and, ultimately, their voters for their decisions. The recent settlement is 20% more funding than equivalent UK government spending in other areas of the UK. These settlements are the largest in real terms since devolution, totalling £86 billion. This Government are securing Britain’s future through the plan for change, which is delivering security and renewal by kick-starting economic growth to put more money into working people’s pockets and the NHS and to secure our borders.

I am grateful to the Minister for a helpful response, but is he aware that the Supreme Court case on the definition of gender is just the latest of 10 court cases which the SNP Scottish Government have taken there, costing over £7 billion? Surely something can be done to make sure that they spend UK taxpayers’ money on things such as the city growth deals and replacing the Grenfell-style cladding on the 5,000 premises in Scotland where people’s lives are still in danger.

I thank my noble friend for that question. I want to focus on the big issue that is confronting this country—whether it is Ireland, Scotland, Wales or England—which is growth. My noble friend pointed out that the city region and growth deals are funded by the UK Government. The Scottish Government are receiving £119 million in 2025-26 for city and growth deals. The Government confirmed at the Autumn Budget that investment in the Argyll and Bute growth deal will continue to be available and will be supported by a rigorous value-for-money assessment as part of the review. The £25 million Argyll and Bute growth deal was signed in March 2025. There are other elements to growth in Scotland: one of the main ones is that GB Energy will be based in Aberdeen.

My Lords, I welcome the statement made by the Minister that it is indeed for the devolved authorities to spend the money that they receive in accordance with their own priorities. He mentioned the Barnett formula; will he admit that whereas it may be working very well for Scotland, it is not working well for Wales, and it certainly needs to be reconsidered? Will the Government please address that?

Because of the Barnett formula, Wales receives 15% more than the average for the rest of the UK. We also need to point out some of the advantages of the Welsh and UK Governments working together. Under the AI opportunities action plan, Vantage Data Centers, which is working to build one of Europe’s largest data centre campuses in Wales, announced plans to invest £12 billion, providing 11,000 jobs across Wales. There are also expected benefits in direct payments for 150,000 workers in Wales through the minimum wage rise. There are 2.1 million people in Wales who will benefit from the extension of the 5p cut in fuel duty.

My Lords, will the noble Lord—I appreciate he is new to his post—take time to read the Select Committee of this House’s report on the Barnett formula? From that he will find that Wales is indeed badly treated, and no Government have actually done anything about it. On the main point of the Question, which is the right of devolved Administrations to spend the money that is allocated to them under the formula as they choose, that is an important part of devolution, which the noble Lord was very keen on. Had it not been for that, the Scottish Government would not have been able to waste tens of millions of pounds on ferries that do not work—money which would otherwise have been spent on the health service.

The Barnett formula does succeed in delivering for our nations around the country. It is fair to say also that the settlement this year is the largest that has been delivered since devolution.

My Lords, since the establishment of the Scottish Parliament, the proportion of income raised from taxes on Scottish citizens has risen from under 10% to around 40%. The Scottish Finance and Public Administration Committee has agreed that accountability and scrutiny need to be improved. I suggest that it might be to great mutual benefit if the Public Accounts Committee in the Commons and the Constitution Committee in this House reach out to relevant committees in the Scottish Parliament and the other devolved assemblies to see how they can improve financial scrutiny and accountability across all our parliaments, because none of it is as good as it should be.

I thank the noble Lord for that question. I think there is nothing wrong and probably everything right with parliaments across the UK working together to deliver better for their citizens. I think that is probably a welcome suggestion.

My Lords, following the question asked by the noble Lord, Lord Wigley, about Wales being short-changed by the Barnett formula, is it not also the case that the north of England is in the same way?

I thank the noble Lord for that question because it gives me the opportunity to talk about the excellent work that the Labour Mayor of the North East is doing, in the form of Kim McGuinness. At the centre of her project for the north-east are growth, delivering better public services and ensuring that the growth that happens in this country and our region where I belong is there for all the people. I lived through the 1980s. I know what happened to areas such as the Durham coalfield. Now that the region is united to speak up as one, that can be only for the benefit of all the people who live there.

My Lords, achieving value for money ought to be a priority for any Government, whether national, regional or local, especially a Government committed to growth. So I come back to the point mentioned by the noble Lord, Lord Foulkes of Cumnock: do the Government consider that the SNP Scottish Government’s actions on trans rights represented a good use of taxpayers’ money?

I appreciate the question that the noble Baroness has asked, but I think that the one thing that should focus our minds, besides the outcome of what the Supreme Court said, is what the Scottish Government should do, and we all should be doing, in the best interests of all the Scottish people. That must be to secure growth to make sure that the support that we have for our cities, our people and the NHS is for all the people in Scotland. It would be great to see the Scottish Government and the UK Government work closely together to ensure that that happens.

My Lords, as the former head of a devolved Government, at a time when co-operation between Governments across this island was rare and when a UK Government towards the end of their life became very fond of imposition through the UK Subsidy Control Act and the UK Internal Market Act, I welcome the new relationship between London and Cardiff. With that in mind, will the Minister outline what the UK Government are doing, working with the Welsh Government, to deliver for the people of Wales?

I thank the noble Lord for that question. I have already mentioned some of the things that the Labour Government have done, but two areas that might be of interest to the House are what is happening in Port Talbot, and the electric arc furnaces. In the Autumn Budget 2024, the UK Government confirmed £80 million funding for the Port Talbot transition board. The funding will support local businesses that are heavily reliant on Tata Steel, and their primary customers. On 11 September last year, this Government announced that they had agreed an improved deal with Tata Steel towards the transformation of Port Talbot steelworks. This improved deal secures 5,000 jobs, ensures that workers have enhanced support during the transition period and delivers a 1.5% reduction in the UK’s greenhouse emissions.

My Lords, I run a charity in Scotland, and if somebody gave me £119 million, I would be expected to account for how I spent that money. So, going back to the Question asked by the noble Lord, Lord Foulkes, can the Government do anything that does not interfere with how the devolved Administrations choose to spend their money but requires them to report transparently on what it is they have spent it on?

The UK Government and the Scottish Government need to work closely together on this issue. Obviously, we cannot get involved in how devolved Barnett money is being used, but there is ring-fenced money that has been allocated to Scotland, I think somewhere in the region of £119 million, and we need to ensure that it is spent properly, at the appropriate time, and gives value for money.