Wales' First Minister has accused the UK Government of short-changing Wales and not providing any extra funding to cover the cost of a £150 energy rebate in England going to people in homes rated Band D or below for council tax.
Mark Drakeford put out a tweet to say that "there's no extra money for Wales" to cover the estimated £175m cost of providing the rebate to homeowners in Wales.
In response the UK government's chief secretary to the Treasury, Simon Clarke, who is effectively Chancellor Rishi Sunak's deputy, flatly denied the Mr Drakeford's allegation.
After contacting Welsh Government and the Treasury for clarification, the Treasury maintains it is giving £180m to Wales to cover the cost of the rebate - which it said is new money not previously announced.
A UK Government spokesperson said: "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."
The argument seems to boil down to the UK government's reallocation of emergency Covid funding that was not needed for Omicron.
The Welsh Government says money has been shifted from Omicron funding by the UK Government to fund the council tax rebate. It says that as a result, there is no additional funding for Wales arising from the council tax rebate over and above what it was already expecting.
However the UK Government effectively appears to be arguing that the emergency Omicron funding was only allocated provisionally if it was needed. It said it provides estimates to devolved administrations of funding they may receive through Barnett to help inform their spending plans but they are estimates and not confirmed until February.
English health services have now agreed updated funding for this year and the estimated Barnett consequentials have fallen as a result – but the UK government says this is unconnected to the Council Tax rebate funding
The extraordinary social media spat comes just a week after Chancellor Rishi Sunak made a statement in the Commons where he said people in homes in council tax bands A-D will get a £150 council tax rebate to help with energy bills. As council tax is devolved, UK Government said it would give £175m to Wales to enable it to run an equivalent scheme.
However, today Mr Drakeford tweeted: "Last week @HMTreasury 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, Mr Clarke tweeted: "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."
Mr Sunak told the Commons last week: "I can confirm that the Welsh administration will receive £175 million or so in Barnett consequentials, which will enable them to provide a similar discount. The Chief Secretary to the Treasury will speak to the Welsh Government later and will very much make the point that we would like to see that happen, to the benefit of all my right hon. Friend’s constituents and people throughout Wales."
In their press release about the scheme, the Treasury said: "The devolved governments will receive total Barnett consequentials of around £565million. This comprises around £290million for the Scottish Government, £175million for the Welsh Government and £100 million for the Northern Ireland Executive. The devolved administrations will be able to choose whether to spend this funding this year or next year."
In the same announcement were details of a second payment which will automatically apply to 28m households, including in Wales, which is an upfront discount on bills worth £200. Energy suppliers will apply the discount to domestic electricity customers from October, with the Government meeting the costs. The discount will then be automatically recovered from people’s bills in equal £40 instalments over the next five years.
This will begin from 2023, when global wholesale gas prices are expected to come down.
On February 3, the day Mr Sunak made his statement to the Commons, Welsh Government said: "The UK Government’s immediate solution appears to be to load even more costs onto consumers’ bills. Its energy bills rebate will provide a £200 discount to electricity bills only from October, which will then be automatically recovered from people’s bills in £40 instalments over the next five years.
"It has also announced a £150 council tax rebate for homes in bands A to D in England from April. Wales will receive a funding consequential as a result of this announcement. We are considering how to target this support at those who need it most. A further announcement will be made in due course."
A week later, no announcement has been made by Welsh Government.
On Tuesday, February 8, Mr Drakeford said in the Senedd: "You cannot draw a direct comparison on council tax between Wales and England. When the Chancellor's £150 reduction in a band D bill in England is applied, a band D council tax in England will still be higher than a band D average council tax in Wales, even after the Chancellor's help has been applied and in Wales, we have the council tax benefit scheme, which was abandoned by his Government in England nearly 10 years ago—£244 million, Llywydd, way above any consequential we will receive, provided every year; 220,000 households in Wales paying no council tax at all.
"What I will say to the Member is this: that if we receive £175 million to help households in Wales with the cost-of-living crisis, that is what the money will be used for, but it will be used in ways that recognise the existing landscape in Wales, the fact that help is already available in Wales that doesn't exist across our border. We will find the most effective ways of getting that money from us to the families who need it, and we'll make those decisions as quickly as we are able."
Then, in Welsh questions on Wednesday, February 9, Clwyd West Conservative MP David Jones said it was a "matter of regret" that "Welsh Government have not yet announced that money will be passed onto Welsh council tax payers who are entitled to exactly the same benefits as their English counterparts."
Wales' secretary of state, Simon Hart said: "My RHF makes a very important point, the Treasury was very explicit in terms of what the Barnett Formula consequential was for WG and frankly I agree with him and I do not understand why families and businesses in Wales are still unclear about how that money is going to be used".
Mr Hart, responding to another question by Brecon and Radnorshire MP Fay Jones, said "This is urgent and I urge colleagues opposite to put as much pressure on their colleagues in Cardiff to make this happen".
Plaid Cymru said people are being "caught in the middle". Plaid Cymru’s spokesperson for finance, Llŷr Gruffydd MS 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."
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