The effective operation of devolution stands the best chance of success if both the UK and Welsh governments share knowledge and understanding, concludes the Welsh Affairs Committee in this report. The Committee makes a number of recommendations to improve the relationship between Wales and Whitehall. A broad review of how intergovernmental relationships are coordinated is required. The Joint Ministerial Committee should meet on a regular basis and ministers at all levels should be alert to the consequences of policy and legislation on devolved areas. The Cabinet Office should take lead responsibility for devolution strategy in Whitehall. Whitehall has lost a focus on the devolution settlement and too often has displayed poor knowledge and understanding of the specificities of the Welsh settlement. The Civil Service needs more consistent training and clear department-by-department focus on retaining devolution knowledge and understanding. The Welsh Assembly Government should have the confidence to interact with Whitehall and to promote areas of good practice. The Cabinet Secretary and the Permanent Secretary to the Welsh Assembly Government should give evidence annually to the Welsh Affairs Committee. Finally, reform of the Barnett Formula is required. The current financial settlement does not appear sustainable and a new arrangement needs to be built on an agreed and enduring basis which is demonstrably fair and sensitive to the particular circumstances of Wales.