Devolved governments demand action from Treasury on ‘cost of living crisis’

Finance ministers in Wales, Northern Ireland and Scotland have jointly called on the Treasury to guarantee that money allocated to support Covid responses will be provided in full, following a meeting with the Chief Secretary to the Treasury on Wednesday.

They are also calling for action to tackle the cost of living crisis and help households with rising bills.

Last month, as a result of spending in England, the Treasury announced it would provide additional funding to tackle Covid, with the Scottish Government allocated £440 million, the Welsh Government £270 million, and the Northern Ireland Executive £150 million.

Devolved governments are concerned they may not be granted permission to carry over into next year’s budgets any late consequential payments – despite this flexibility being provided in 2021/22.

The finance ministers re-iterated a request for the Treasury to provide support to Scotland, Wales and Northern Ireland if the public health situation in each nation demands it, not just when the assistance is applied in England.

They are also urging the Treasury to do more to support households facing a cost-of-living crisis.

In October, the UK government withdrew the £20-a-week uplift to Universal Credit, a cut that was opposed by all three devolved nations.

Last month it was confirmed that inflation had risen to 5.1% – the highest rate in a decade – with increasingly expensive food, transport and clothing contributing to higher household bills.

Powers to help households meet the cost of living lie mainly with the UK government, and the 3 finance ministers in the devolved nations are calling on the Treasury to step up and deliver more support to households.

Rebecca Evans, Welsh Government Finance Minister, said:

“We need to see urgent action from the Treasury to help people with rising bills and living costs.”

“Domestic energy prices are of particular concern at the moment with more and more people living in fuel poverty.”

“This winter the Welsh Government invested £51 million in our Household Support Fund to help households, but most of the powers and the fiscal resources needed to address the cost-of-living crisis are in the UK government’s hands.”

“The Treasury must step up. Additional support through targeted UK-wide schemes such as the Warm Home Discount and other winter fuel payments would lessen the burden on hard pressed households.”

“Arrangements for Covid funding also need to change. Last month, as the omicron variant took hold, the Treasury hesitated before providing Wales with funding to meet the challenges.”

“When funding did come, we received no guarantee that it would not need to be returned. The Treasury must recognise the importance of fully supporting devolved nations to help protect our businesses and protect our populations.”

Scottish Government Finance and Economy Secretary Kate Forbes said that “along with the other devolved administrations, the Scottish Government remains concerned that the additional funding we have received to mitigate the impact of the Omicron variant may be subject to future deductions.”

“Without the ability to borrow, the continuing uncertainty could have a substantial damaging impact on our COVID response and impact our ability to support public services in Scotland.”

“More fundamentally, the situation highlights once again that it is not tenable for funding only to be triggered by public health decisions in England. A system is required that supports the decisions of each devolved administration and is not beholden to the decisions of one part of the UK.”

“The Scottish Government has set out a range of ambitious actions – within our limited resources, to support households and reduce inequalities, including our commitment to double the game-changing Scottish Child Payment to £20 per child per week.”

“But we are facing a cost of living crisis and the UK Government, which reduced the lifeline Universal Credit uplift in October despite our representations, must now urgently intervene.”

Conor Murphy, Minister of Finance, Northern Ireland Executive said:

As we continue to deal with the challenges posed by Omicron the uncertainty surrounding the Covid funding provided by Treasury is unhelpful. It is also hugely concerning that Treasury may not permit funding to be carried into next year even if additional funding is confirmed at such a late stage that it prevents it being used most effectively. We have been calling on Treasury to reinstate the Self Employed Income Support Scheme and furlough scheme on a targeted basis where necessary. It is disappointing that Treasury is unwilling to provide support to workers and their families. We would ask Treasury to urgently reconsider this position.

The cost of living crisis is causing hardship for families and businesses. I’ve been calling on Treasury to suspend VAT on energy bills temporarily to provide reprieve during the difficult winter period. It is time for Treasury to act now.