The case of the missing millions: Welsh Government and UK Treasury argue over council tax cash

The Welsh Government and the UK Treasury are at odds over extra money that was promised to help households with rising energy prices.An already-simmering argument escalated when the First Minister Mark Drakeford tweeted that ministers in Cardiff had today learned that there would be no extra cash triggered by plans to offer English council taxpayers a rebate although he insisted a package of assistance will be announced. 

The Treasury insisted that Wales would be getting nearly £180m promised as a result of the English rebate, but acknowledged that other expected funding had at the same time been reduced. 

Last week, Chancellor Rishi Sunak announced £350 of support for households across England to deal with rising energy bills over the year from April 2022.Some £150 of the support will take the form of a council tax rebate for many English council tax payers.

Since council tax is devolved, the Treasury also announced that governments in Wales, Scotland and Northern Ireland would be given a total of £565 million extra funding to carry out the same measure. 

This money is known as "Barnett consquentials" after the formula used to work out how much money each of the nations gets from UK Government spending commitments. 

Mark Drakeford wrote " Last week HM Treasury said Wales would receive £175m from its English council tax rebate plan.

"Just as we’re finalising our plans to tackle the #CostofLivingCrisis, we’ve learned there’s no extra money for Wales."We will continue to work to support those who need it the most."In response, Simon Clarke, who's the Chief Secretary to the Treasury, tweeted that "The Welsh Government will receive £180m of Barnett consequentials as a result of the Council Tax rebate announced by the Chancellor.

"Exceptionally, we have given the Welsh Government the flexibility to choose whether they spend this money in this financial year or next in order to make the biggest impact on the cost of living."

In its formal statement, the UK Government said that "The Welsh Government will receive £180 million of Barnett consequentials as a result of the Council Tax rebate announced by the Chancellor. This is new funding for the Welsh Government.

“People in Wales expect both governments to be working together for them, their families and communities so we will continue engage with them on this support."

However the Treasury also acknowledged that other consequential funding would be less than the devolved governments were expecting because, as a result of Omicron having less impact than expected, health spending in England will be lower than previously forecast this year. 

Treasury officials say that "English health services have now agreed updated funding for this year and the estimated Barnett consequentials have fallen as a result – this is entirely unconnected to the Council Tax rebate funding."But the Welsh Government says the reduction in expected consequentials is the same amount - £178m - as it had been promised would be triggered by the English council tax rebate spending. 

The Welsh Government is insisting that the row will not prevent it from announcing a package of assistance measures within the next week.Earlier the UK Government's Welsh Secretary had accused the Welsh Government of leaving people in Wales in the dark over whether or not they would get the rebate. 

Simon Hart agreed with the former Welsh Secretary David Jones who said it was a “matter of regret” that ministers in Cardiff had not announced if they would use the promised £175m to pay for a rebate. 

David Jones had said: "The Chancellor has announced that 80% of English households will receive a council tax rebate of £150 with effect from April this year.

“As a consequence of that, the Welsh Government has received an additional £175 million under the Barnett formula.“Is it a matter of regret to him, as it is to me, that the Welsh Government have not yet announced that that money will be passed on to Welsh council taxpayers who are entitled to precisely the same benefits as their English counterparts?”Mr Hart replied: “He makes a very important point. The Treasury was very explicit in terms of what the Barnett formula consequence was for the Welsh Government.“What I don’t understand is why families in Wales and businesses in Wales are still unclear as to how that money is going to be used.”The Conservative leader in the Senedd, Andrew RT Davies, accused Mark Drakeford of causing "noise and confusion."

“I’m very disappointed to see Labour’s First Minister deliberately whip up noise and confusion relating to funding for Wales.

 “So let me be clear; the Welsh Government will receive £180 million as a result of the Council Tax rebate announced by the Chancellor last week.

“Rather than playing political games with people’s lives, it’s now vital this funding is used by the Labour administration in Cardiff Bay to support Welsh families with the cost of living.”

Meanwhile Plaid Cymru's finance spokesperson, Llŷr Gruffydd said: "The murky waters of the funding arrangement between Westminster and the Welsh Government have been stirred up once again.

"There seems to be constant confusion around consequential funding to Wales, which tells us everything we need to know about the current devolution settlement.“Despite numerous requests for greater transparency around this process, it seems that the Westminster government is content for Wales to have to play a constant guessing game when it comes to funding."When it comes to dealing with the cost of living crisis, the people of Wales deserve better than being caught in the middle of a twitter slanging match between the two governments.”