Scottish and Welsh governments trigger ‘formal dispute’ process over £1bn Tory-DUP deal

DUP deal - credit Daniel Leal-Olivas/PA Wire

The devolved governments in Scotland and Wales have launched a formal dispute process over the post-election deal struck between the Conservatives and the DUP.

They claim that both of their administrations should also have enjoyed a funding boost after the two parties agreed the pact, which will see an extra £1bn of public money spent in Northern Ireland.

In a letter to the Treasury, they said that under the terms of the Barnett Formula, Scotland should be in line for an additional £2.9bn, while Wales should claim an extra £1.67bn.

However, the Government insists the formula does not apply as the Tory-DUP agreement will not involve any extra spending in England. They have also pointed to city deals in Scotland and Wales, which have not led to knock-on funding boosts for other parts of the UK.

The formal dispute resolution process involves a meeting of the Joint Ministerial Committee, with representatives from the UK government and the devolved administrations.

In the open letter, Scottish Finance Minister Derek Mackay said Scotland and Wales had been “short changed”.

“Any suggestion that this funding arrangement is similar to previous funding for city deals in Scotland is wrong and not in any way comparable,” he said. 

“City deal funding is conditional on match funding from the devolved administrations’ own budgets and also requires contributions from local authorities and other regional partners.

“In addition, the UK Government has promised city deals for Northern Ireland on top of this £1 billion of additional expenditure.

“It remains my hope that we will be able to reach a satisfactory resolution to this situation which results in a funding allocation across Scotland, Wales and England that is fair and reasonable for all – but in order to reach such a solution we now need to pursue the formal dispute resolution process.”

Welsh finance secretary, Mark Drakeford, said the UK was abandoning “well-established arrangements” and that the extra funding to Northern Ireland would impact on services in Wales.

“By operating in this way, the UK Government has failed to provide Wales with the resources we need to invest in infrastructure, the NHS and the education system – depriving Wales of an additional £1.67bn,” he said.

“At a time when public services in Wales are under pressure as a result of the UK Government’s damaging and ongoing policy of austerity, it is only right that Wales gets its fair share of funding through the established rules of the Barnett formula. 

“For all its faults the Barnett formula is supposed to be clear and rules based. It is simply inexcusable that the UK Government is willing to “bypass” those rules.