Welsh and Scottish governments claim no extra money for council tax rebate equivalents

The Welsh and Scottish governments said on 9 February 2022 that they would receive no extra funding to match the £150 council tax rebate announced for England, while the UK government said money had been allocated through the Barnett formula¹.

On 3 February 2022 the UK government announced it would fund a £150 rebate on council tax for homes in England in bands A to D, covering around 80% of homes in England, to help with the rising cost of living¹. Council tax is devolved, so alongside the English plans the UK government announced that about £565 million would go to the devolved governments as Barnett consequentials, which they could use for similar policies or other spending¹.

The Treasury said Wales would receive £175 million from the English council tax rebate plan¹. The Welsh government said this was offset: ITV News reported that a downward revision in health-related Barnett consequentials for Wales amounted to £178 million, almost exactly the sum Wales gains from the rebate plans¹. The revision followed lower than forecast health spending in England this year, which the Treasury attributed to the Omicron variant of Covid-19 having less impact than expected¹.

Scottish Finance Secretary Kate Forbes told the Scottish Parliament that the funding position had changed "not by increasing the expected consequentials but by decreasing the funding", and said the Scottish government would honour a commitment to allocate £290 million to deal with the cost of living crisis in Scotland¹.

Under the Barnett formula, changes to spending on devolved areas in England change funding for the other nations in proportion to their populations. The Institute for Government gives the example that if healthcare spending in England rises by £100 million, the Scottish government's budget would rise by £9.7 million, the Welsh government's by £5.6 million and the Northern Ireland Executive's by £3.4 million¹.

Full Fact noted that the comparison is between what the devolved governments expected for this year a few weeks earlier and what they now expect, not between last year's funding and this year's¹. A Treasury spokesperson said it regularly shares estimates of funding due to the devolved governments, that these are estimates, and that final allocations are confirmed in February¹. Full Fact also noted that if Scotland and Wales are said to be receiving no more money because the rebate is funded from previously assumed health spending, the same logic would apply to England, and that neither is relatively worse off than England as a result of the changes¹.

Why it matters for households

The £150 rebate applies to council tax bills in England for homes in bands A to D, announced on 3 February 2022¹. Council tax is devolved, so households in Scotland, Wales and Northern Ireland are not covered by that scheme; any equivalent support depends on decisions by the devolved administrations, which receive block grants from the UK government¹. The dispute concerns government funding totals rather than the amount any individual household receives, and the sums involved are estimates until final allocations are confirmed in February¹. Because the rebate is a one-off payment rather than a change to income tax or council tax rates, it does not alter the rates or bands households pay¹.

What happens next

The Treasury said final allocations to the devolved governments would be confirmed in February 2022¹. The Scottish government said details of its £290 million cost of living allocation would be announced the day after the 9 February statement, and that it would require revising the budget position set out to the Scottish Parliament the previous week¹.