MSs back calls to replace ‘outdated’ Barnett funding formula

Plaid Cymru held a debate in the Senedd yesterday calling for an end to the ‘unfair’ UK Barnett Formula as a means of funding Wales.

The party’s motion called for any future UK Government to commit to a fair funding model for Wales – whatever London party is in charge.

The vote, however, was amended by the Welsh Government, watering down Plaid Cymru’s motion, calling for all UK nations to agree to the change.

The Barnett formula is widely recognised as being controversial because it takes no account of different needs or different costs in different areas.

The formula has no legal standing or democratic justification and being merely a convention, could be changed at will by the Treasury.

Lord Joel Barnett himself eventually came to the view that the formula he had devised was unfair.

Plaid Cymru’s motion proposed to bring the Barnett formula to an end and to fund Wales according to need and not based on population.

However, the Welsh Government proposed this point be deleted.

It was replaced with a proposal to replace the Barnett formula with a new “relative needs-based system agreed by all four nations”.

Fair funding

Opening the debate, Plaid Cymru leader Rhun ap Iorwerth said having to make a case for fair funding speaks volumes about Wales’ status within an unequal union.

He described the funding formula as a weak, short-term solution from the 20th century based on the needs of another country.

He said: “It has become more and more apparent over the years that the Barnett formula is well past its sell-by date.”

Calling out apathy at Westminster, Mr Iorwerth accused the Conservatives of placing barriers before any attempts to reform and he criticised Labour for refusing to promise change.

He urged the new first minister to stand up for Wales, saying: “I want to hear a Labour first minister putting Wales first and not taking ‘no’ for an answer from Keir Starmer.”

Mr Iorwerth told MSs the Barnett formula has been a cornerstone for a broader pattern of unfairness faced by Wales in recent years.

He raised examples such as a lack of powers over the Crown Estate and £4bn in consequential funding for Wales from the HS2 project being withheld.

The Ynys Môn MS said: “This general theme of injustice that flows through all of those cases, and more, all emerge fundamentally from the failure to have fair and appropriate funding arrangements in place, and the Barnett formula is at the heart of that.”

Record funding

Peter Fox said Wales continues to receive record funding, with the largest block grant in the history of devolution supplemented by about £440m of levelling-up funding.

The Conservatives’ shadow finance minister agreed that there needs to be a rethink about how the Barnett formula is calculated to better address Wales’ unique challenges.

Mr Fox said some strides were made to make the settlement fairer, with a 115% funding floor agreed between the Welsh and UK Governments in 2016.

He told the chamber: “That ensures the Welsh settlement will never drop below 115% of the money spent on public services in England. But we know currently that that floor hasn’t had to kick in, as the current settlement is delivering 120%, ie £1.20 for every £1 spent.”

Mr Fox stopped short of calling for the Barnett formula to be scrapped, saying it would be unrealistic in the UK context.

Unnecessary challenges

Minister for Finance and Local Government, Rebecca Evans said: “The Welsh Government remains committed to supporting the people, businesses and communities of Wales, but the problems associated with the current funding model do present us with unnecessary challenges.

“So, I am hopeful that we can agree today that the replacement of the Barnett formula in the way described in ‘Securing Wales’ Future’ is in our nation’s best interest and the collective voice of this Senedd can send a clear message to the UK Government that this would be good for Wales.”

Responding, after the debate, Plaid Cymru’s Social Justice spokesperson, Sioned Williams MS said: “In the Senedd today, Plaid Cymru called for a fair funding system for Wales. In response, the Tories tried to distract attention away from their economic failings, and Labour diluted our calls with a get-out clause for Keir Starmer.

“Wales deserves fair funding deal based on our needs – not the crumbs afforded to us through the outdated Barnett formula.

“The Tories have starved Wales’ finances for decades, while the Labour UK government-in-waiting are sticking to Conservative spending plans and modelling themselves on Margaret Thatcher.

“Only Plaid Cymru are standing up for Wales and demanding fairness for Wales.”

The Plaid Cymru motion and Conservative amendment were defeated following the debate. The motion as amended by the Welsh Government was agreed, 37-15.