A NEW financial arrangement between the Welsh and UK Governments could benefit Wales’ economy to the tune of £600 million over the next ten years, a report has found.

Under a new arrangement between the two governments the amount of money handed over to Wales from Westminster will be cut by about £2.5 billion when control over income tax, stamp duty and landfill tax are devolved.

But a report by Cardiff University’s Wales Governance Centre and the Institute for Fiscal Studies has said the greater control over its own finances, as well as other elements in the agreement, will benefit Wales.

The agreement also includes a means-based element which is believed will mean a five per cent increase in the overall amount of money handed over from Westminster.

The report’s co-author Guto Ifan, of the Wales Governance Centre, said: “In purely financial terms, the agreement represents a good deal for the Welsh Government, with more funding available as a result of changes to its block grant funding and extra capital spending as a result of increased borrowing powers.

“However, as the Welsh Government will lose out if its revenues grow more slowly because of slower population growth, it will be harder to assess its relative performance in managing tax revenues.”

But David Phillips, of the Institute of Fiscal Studies, said it was important the way in which funding is calculated is under constant review to ensure Wales does not lose out.

“Looking across the UK as a whole, devolved funding arrangements look increasingly asymmetric and ad hoc,” he said. He added: “There will now be significant differences in the scale and composition of devolved and reserved taxes across each country, in how their block grants are determined and adjusted over time and in the borrowing and budget management capacity of each devolved government.”