Written questions by Lake.

With reference her Department's policy paper entitled Finance: Interministerial Standing Committee – 17 October 2025, what options were discussed for enhancing the fiscal flexibilities available to devolved Governments; what elements of the operation of the Barnett formula were identified as areas which could be improved; and whether a formal review of (a) Wales's fiscal framework and (b) the operation of the Barnett Formula in Wales were discussed.

It is important that the Finance: Interministerial Standing Committee remains a space for confidential discussions between governments, so it would not be appropriate to comment on the detail of those discussions. I look forward to continued engagement with devolved government finance ministers on a wide range of topics.

Pursuant to the Answer of 9 April 2025 to Question 43325 on Deposit Return Schemes: VAT, for what reason her Department is considering applying VAT to unredeemed deposits in the deposit return scheme in the context of HMRC expecting the impact on exchequer receipts to be negligible.

The Deposit Returns Scheme (DRS) will launch in the UK in October 2027, introducing mandatory refundable deposits on drinks containers with the aim of increasing recycling. VAT is a broad-based tax on consumption, and the 20 per cent standard rate applies to most goods and services. VAT is the UK’s third largest tax, forecast to raise £180 billion in 2025/26. Exceptions to the standard rate have always been limited and balanced against affordability considerations. The previous administration legislated for a simplification to the normal VAT rules so that VAT will only be accounted for on unredeemed deposits rather than on a deposit at the point of sale. We remain committed to supporting the circular economy through successful implementation of the DRS, and we are keen to ensure that VAT is not a barrier to its effective operation. We are continuing to consider how best to achieve this while maintaining the integrity of the tax and will provide clarity on the VAT treatment of unreturned deposits as soon as possible.

What assessment she has made of the potential merits of increasing the level of the Digital Services Tax.

Decisions on tax are a matter for the Chancellor and any changes will be announced at the budget in the usual way. The Digital Services Tax is an interim solution to widely held concerns with the international corporate tax framework, and the UK remains committed to remove it once a global solution on the reallocation of taxing rights is in place.

Whether future compensation funding provided to the Welsh Government for increased National Insurance contributions costs for the public sector in Wales will cover this cost in full.

The Welsh Government’s budget is growing in real terms between 2024-25 and 2028-29 and their Spending Review settlement is the largest in real terms since devolution in 1998. At Autumn Budget 2024, the Chancellor agreed to provide funding to the public sector to support with the changes to employer National Insurance. The devolved governments received funding through the Barnett formula in 2025-26, including on this support. This is the normal operation of the funding arrangements as set out in the Statement of Funding Policy.The current Welsh Government Spending Review settlement is the largest settlement in real terms of any since devolution.

Innovation and Technology, pursuant to the Answer of 22 October to Question 82973 on Broadband: Rural Areas, if she will make her policy to include direction to Ofcom on revising the Physical Infrastructure Access pricing model to ensure consistent competitive conditions in the forthcoming Statement of Strategic Priorities.

In July, DSIT published a consultation on the draft Statement of Strategic Priorities for telecommunications, the management of radio spectrum, and postal services that sets out the Government’s view on infrastructure sharing in the fixed telecoms sector. The draft Statement sets out the government’s view on the importance of competition to promote investment in broadband deployment across the UK, including in rural areas.We are currently reviewing responses to the consultation and will publish our response in due course.

What recent assessment she made has made of the potential impact of providing compensation to local authorities in Wales via the Barnett Formula on the adequacy of funding to cover the additional Employer National Insurance costs announced at the Autumn Budget 2024 incurred by Local Authorities in Wales.

At Autumn Budget 2024, the Chancellor agreed to provide funding to the public sector to support with the changes to employer National Insurance.The devolved governments received funding through the Barnett formula in 2025-26, including on this support. This is the normal operation of the funding arrangements as set out in the Statement of Funding Policy.The current Welsh Government Spending Review settlement is the largest settlement in real terms of any since devolution.

What estimate she has made of the total amount of funding to be allocated to the Welsh Government through the Barnett Formula following the the full rollout of free childcare in England.

The Barnett formula is applied when departmental budgets change – not when departments announce how they are spending their budgets or when policy is delivered. The Barnett formula was applied in the usual way following Spending Review 2025The published Block Grant Transparency document provides a detailed breakdown and the most recent iteration was published on October 2025: Block Grant Transparency: October 2025 - GOV.UK

What assessment she has made of the potential impact of reducing VAT on domestic energy bills on fuel poverty in Wales.

The Government believes that we need to support households who are struggling with energy bills now whilst we transition to cheaper clean power by 2030. We are providing targeted support that reaches low income households directly across Great Britain, including Wales.This winter, 2.7 million extra households will receive £150 off their energy bills as the Warm Home Discount is expanded - putting money directly into people’s pockets. This increases the number of households who are eligible to over six million in total - including 900,000 families with children and a total of 1.8 million households in fuel poverty.More widely, gas and electricity are subject to a reduced rate of VAT at five per cent, rather than the standard 20 per cent. The reduced rate for domestic fuel and power cost the Exchequer £8 billion in 2023-24, and going further would come at a significant additional cost.

What recent assessment he has made of the potential impact of the freeze on local housing allowance on levels of homelessness in Wales.

The causes of homelessness are multi-faceted and often complex; they interact dynamically making it very difficult to isolate the relative importance of individual factors. Responsibility for housing and homelessness is devolved to the Welsh Government, while social security is reserved to the UK Government. In April 2024, Local Housing Allowance (LHA) was increased to the 30th percentile of local market rents, including across Wales, costing an additional £1.2bn in 2024/25 and approximately £7bn over 5 years. The Secretary of State reviews LHA rates annually in the Autumn, this includes consideration of latest rental data, stakeholder evidence from organisations across GB, including in Wales, homelessness levels and the current challenging fiscal environment. Future funding decisions will be taken in the context of Government priorities. For those who need further support, Discretionary Housing Payments (DHPs) are available from local authorities.

Whether he has received representations from the Welsh Government on the amount of funding to allocated to Wales from the steel fund.

The UK Government has committed up to £2.5 billion to support the steel industry, which is being delivered in part through the National Wealth Fund. This is in addition to £500 million towards Tata’s transformation of Port Talbot steelworks. The National Wealth Fund, which is operationally independent, is already engaging with companies across the UK on projects that meet its investment principles.The Welsh Government is represented on the Steel Council, which is a key body for developing our Steel Strategy, to be published later this year.

What recent discussions her Department has had with the Welsh Government on (a) Wales’s comparability factor for transport and (b) the impact of that factor on funding for the Welsh Government.

HM Treasury ministers and officials regularly engage with Welsh Government counterparts, including through forums such as the Finance: Interministerial Standing Committee (F:ISC), to discuss a range of issues affecting Wales. The most recent F:ISC was on 17 October.

What recent discussions she has had with the Welsh Government on a formal review of Wales’s fiscal framework.

We have ongoing discussions with the Welsh Government about funding flexibilities and updating their Fiscal Framework and remain committed to working in partnership to ensure the smooth delivery of their funding settlement.HM Treasury ministers regularly engage with Welsh Government counterparts, including through forums such as the Finance: Interministerial Standing Committee (F:ISC), to discuss a range of issues affecting Wales, including funding arrangements. The most recent F:ISC was on 17 October.

What assessment she has made of the adequacy of levels of UK Research and Innovation funding allocated to Wales.

This Government is investing in Wales to help create jobs and drive economic growth. UKRI has recently launched the Local Innovation Partnerships Fund (LIPF) - a new programme that will empower innovation leadership through local ‘triple helix’ partnerships between civic institutions, business and universities, delivering impact, at scale. This Fund has earmarked £30 million for the Cardiff Capital Region [1]. [1] Cardiff Capital Region backed by £30m to unlock innovation and growth - GOV.UK

What recent discussions she has had with the Welsh Government on the Autumn Budget 2025.

There have been regular discussions with the Welsh Government on the Budget. This ensures that we are taking account of their views to ensure that we are delivering for the people of Wales. The Chancellor met with the First Minister for Wales on the 7th of August in Wales. I also met with the Welsh Government’s Finance Minister on the 17th of October at the Finance: Interministerial Standing Committee (F:ISC), to discuss a range of issues affecting Wales, including funding arrangements and his priorities for the Autumn Budget .

Communities and Local Government, what assessment he has made of the potential merits of lowering the population thresholds of the Pride in Place programme to include smaller rural communities in the eligibility criteria.

On 25 September, the Government launched its overarching Pride in Place Strategy, committing up to £5 billion in funding and support to 339 communities. The flagship Pride in Place Programme will provide up to £20 million in flexible funding and support to 244 places over the next decade. This will serve as the cornerstone of this Government’s support for communities, incorporating the existing 25 trailblazer areas announced at Spending Review and the 75 Phase 1 Plan for Neighbourhoods programme areas that were announced in March. Neighbourhoods in England were selected through a robust, metric-based methodology, which uses a composite measure of deprivation (Index of Multiple Deprivation (IMD)) and community need (Community Needs Index (CNI)) to identify areas with the poorest social and economic outcomes and create a single index of need. Our allocation methodology targets need everywhere (regardless of type of community) and includes a number of rural communities.We’re working closely with devolved governments to make sure funding supports local priorities everywhere. Further details on our approach in Wales, Scotland and Northern Ireland will follow.The full list of areas and place selection methodology is set out here: Pride in Place Programme Phase 2: Methodology note.

Commonwealth and Development Affairs, whether she has considered the findings of the UN Secretary-General’s report to the UN Security Council entitled Situation concerning Western Sahara, published on September 30 2025, that the Royal Moroccan Army should refrain from building further military infrastructure west of the berm in occupied Western Sahara; and if she will make representations to the UN Security Council on this matter.

The UK Government consistently urges all states to uphold international law, and we continue to encourage constructive engagement with the political process led by the Personal Envoy of the UN Secretary-General Mr Staffan de Mistura in support of finding a just, lasting, and mutually agreed resolution to the Western Sahara dispute. The UK shares a bilateral Human Rights Dialogue with Morocco, the third session of which is due to take place in London by the end of the year and will cover a range of topics.

Commonwealth and Development Affairs, whether she has considered the findings of the UN Secretary-General’s report to the UN Security Council entitled Situation concerning Western Sahara, published on September 30 2025, including the need for independent, impartial, comprehensive and sustained monitoring; and what assessment she has made of the potential merits of (a) establishing an independent human rights body as proposed in the resolution and (b) requiring Morocco to facilitate visits by the OHCHR to occupied Western Sahara.

The UK Government consistently urges all states to uphold international law, and we continue to encourage constructive engagement with the political process led by the Personal Envoy of the UN Secretary-General Mr Staffan de Mistura in support of finding a just, lasting, and mutually agreed resolution to the Western Sahara dispute. The UK shares a bilateral Human Rights Dialogue with Morocco, the third session of which is due to take place in London by the end of the year and will cover a range of topics.

What recent discussions she has had with the Chancellor of the Exchequer on fiscal steps to reduce the cost of living in Wales.

The Welsh and UK Labour Governments are determined to boost living standards for families right across Wales.It’s why we secured a record wage increase to the National Minimum Wage and National Living Wage for up to 160,000 workers.It’s why we are creating thousands of new jobs in our green industries, our freeports and investment zones.And it’s why, just two weeks ago, we confirmed a second year of funding for our three economic inactivity trailblazers across Wales – to help people into good, well-paid jobs.Labour is the only party on the side of working people in Wales and across the UK.

Innovation and Technology, what assessment her Department has made of the potential merits of reforming physical infrastructure access pricing for Project Gigabit to reduce rural build costs for alternative network operators.

As the independent regulator for telecommunications, Ofcom is responsible for making regulatory decisions in the fixed telecoms sector, including on the Physical Infrastructure Access (PIA) product.For this reason, while my officials are engaging with Ofcom on this issue, the Department has not made a formal assessment of the merits of reforming physical infrastructure access pricing for Project Gigabit to reduce rural build costs for alternative network operators.My officials are regularly engaging with Ofcom to ensure that we have the right regulatory environment in place to promote competition and investment in the fibre roll-out across the UK.

Innovation and Technology, whether she has made an assessment of the potential merits of introducing fiscal incentives to support private investment in rural broadband networks, in the context of the Physical Infrastructure Access pricing structure.

As the independent regulator for telecommunications, Ofcom is responsible for making regulatory decisions in the fixed telecoms sector, including on the Physical Infrastructure Access (PIA) product.For this reason, while my officials are engaging with Ofcom on this issue, the Department has not made any specific assessment of the merits of introducing fiscal incentives to reduce how much rural operators pay for PIA.My officials are regularly engaging with Ofcom to ensure that we have the right regulatory environment in place to promote competition and investment in the fibre roll-out.