Honeymoon between Andy Burnham and the Welsh Government ‘over already’ in funding row

Martin Shipton

The honeymoon between Andy Burnham and the Welsh Government appears to be over before he has even taken over as Prime Minister.

BBC Wales has been told that the former Mayor of Greater Manchester, who is expected to become leader of the Labour Party following his victory in last week’s Makerfield by-election, has no intention of reforming the controversial Barnett formula.

For nearly 50 years, the formula has been used to decide how much money is allocated by the UK Treasury to Wales, Scotland and Northern Ireland.

Plaid Cymru maintains that the way the formula works – with changes dependent on the size of the populations in the three countries – fails to take account of Wales’ additional needs because it has a higher proportion of sick and older people.

But successive UK governments have been reluctant to scrap Barnett because Scotland is seen as benefitting from the formula, and the belief that any reduction in its allocation would result in a political backlash.

BBC Wales has reported that Burnham is expected to make a speech about devolution and the economy next week, with a spokesperson saying he would put Wales and Scotland “at the centre” of any government he runs.

Comments by Burnham in a book two years ago – in which he said it was time to “tear up” current funding arrangements – have resurfaced this week in The National newspaper in Scotland, which backs the SNP.

However, BBC Wales has been told that the plans would not include changes to the Barnett formula for Wales and Scotland.

Burnham’s spokesperson added: “Andy has spent his whole political career fighting for the nations and regions of the United Kingdom – he will put Wales at the centre of any government he runs, radically pushing power down and out of Westminster and Whitehall.”

In response First Minister Rhun ap Iorwerth said: “This is not a great start even before he starts in the job.

“It does not give me an awful lot of confidence in seeing something that is rather important to Wales being somehow cast aside before Andy Burnham even gets the chance to become prime minister.

“There are real issues that we are facing in Wales, and I am hoping that Andy Burnham’s experience of working in a devolved context in Manchester would help him to understand what those issues are.”

He added that Burnham should not “duck out of” dealing with funding and repeated his calls for more powers over borrowing and taxation to be given to the Welsh Government as well as devolution of rail, policing, justice and the Crown Estate.

Ap Iorwerth said the two men are yet to speak, but that it would need to happen “very soon” if Mr Burnham takes over in Downing Street.

Additional UK government funding for Wales is calculated using the Barnett Formula.

It determines the amount of cash the Welsh government receives, based mainly on share of population.

Critics have long argued that it underfunds Wales, despite Wales receiving more funding per head than England, because the Welsh population is relatively older and more infirm.

An overhaul of the funding formula is also backed by Welsh Labour.

Less than a year ago the Welsh Labour conference passed a motion calling for reform, a call that was rejected two months later by Chancellor Rachel Reeves.

A major assessment of Wales’ needs was last carried out by the economist Gerry Holtham in 2010.

Burnham co-wrote a book in 2024 with Steve Rotheram, the Labour Mayor of the Liverpool City Region, in which they outlined how they would tackle inequality and overhaul the distribution of public money. They wrote that a “new formula covering the whole of the UK and including the English regions as separate entities” was needed, and that funding “would be allocated to the regions and nations based on social factors and levels of need”.

‘Short -changed’

During his 2015 bid for the Labour leadership, Burnham said he had known Wales received an unfairly low share of UK spending when he had been a Treasury minister eight years earlier. He said he had been unable to change government policy but “I believe Wales has been short-changed and as leader I would take steps to correct that”.

Plaid Cymru’s argument that Wales is underfunded is not universally accepted.

Last week an independent body that advises the Northern Ireland Executive claimed that Wales is over-funded by the UK Treasury in terms of the nation’s needs.

The Sustainability Report 2026 from the Northern Ireland Fiscal Council stated: “The First Minister [Sinn Fein’s Michelle O’Neill] and Finance Minister [John O’Dowd, also Sinn Fein] have recently argued that Northern Island is funded less generously than Scotland and Wales, because they receive funding-per-head well above their estimated need while Northern Ireland is funded broadly in line with need.

“They claim that if Northern Ireland was to be funded like Wales it would receive around £1bn more per year, and if like Scotland, around £3bn more per year … Our analysis suggests that these estimates are reasonable.”

According to the report, Scotland is currently funded at a level very close to 20 percentage points above its need (not below 125% [of the funding for England] compared with a needs level of 105%). The situation in Wales is also in line with that asserted by the First Minister and the Finance Minister at around 8 percentage points above need (123% premium compared with a needs level of 115).

Flawed comparisons

A Welsh Government spokesperson responded: “Claims that Wales is ‘overfunded’ are based on flawed comparisons and do not stand up to scrutiny.

“The Barnett formula is outdated and unfair. We will seek to work with the UK Government to devise and implement a new formula that funds Wales according to its genuine needs.”

The spokesperson added: “The level of relative funding per person in Wales is around the same as set out in the Fiscal Framework Agreement in 2016 and is lower than in either Scotland or Northern Ireland.

“Far from having surplus funding, the Welsh Government is facing real terms cuts in its budget in the years ahead.”