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Understanding devolution in Wales
Understanding devolution in Wales

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1 Funding

The devolved government needs money to fund the services it controls such as the NHS in Wales through health boards and education through local authorities.

In 2019/20, the Welsh Government planned to spend about £18bn.

This funding was drawn from three main sources:

  • money allocated by the UK Government
  • money raised in Wales by means of taxation and other charges
  • borrowing
This diagram is headed 'Welsh Government Funding 2020-2021', and shows a breakdown of various funding sources. The largest is 'Funding from UK Government' at £14.7 billion* or 80%. The asterisk marks this footnote: '*Does not include annually managed expenditure (AME) or non-fiscal DEL'. The next largest funding segment is 'Welsh Rates of Income Tax' at £2.2 billion or 12%. Next is 'Non-Domestic Rates' at £1.1 billion or 6%. And finally 'Fully Devolved Taxes' at £281 million or 2% – this is broken down into 'Land Transaction Tax' at £245m, and 'Landfill Disposals Tax' at £36m. Underneath this diagram is the text 'Capital borrowing by Welsh Government: £125m / Planned repayment of capital borrowing: £6m. Planned use of Wales' revenue reserves: £125m.'
Figure 1 Where does Wales get its money from?
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This diagram is headed 'Welsh Government Funding 2020-2021', and shows a breakdown of various funding sources. The largest is 'Funding from UK Government' at £14.7 billion* or 80%. The asterisk marks this footnote: '*Does not include annually managed expenditure (AME) or non-fiscal DEL'. The next largest funding segment is 'Welsh Rates of Income Tax' at £2.2 billion or 12%. Next is 'Non-Domestic Rates' at £1.1 billion or 6%. And finally 'Fully Devolved Taxes' at £281 million or 2% – this is broken down into 'Land Transaction Tax' at £245m, and 'Landfill Disposals Tax' at £36m. Underneath this diagram is the text 'Capital borrowing by Welsh Government: £125m / Planned repayment of capital borrowing: £6m. Planned use of Wales' revenue reserves: £125m.'

Figure 1 Where does Wales get its money from?

Funding presents two major challenges: ensuring accountability and ensuring fairness.