Welsh ministers secure agreement with UK Government to ‘explore’ controversial Barnett Formula
Emily Price
The Welsh Government has secured an agreement with the UK Government to “explore” the controversial Barnett Formula funding arrangement.
The public spending formula has attracted considerable attention and debate in recent years.
It is used by the UK Treasury to calculate the annual block grants for the Welsh, Scottish and Northern Irish governments.
Cash for the three administrations is determined based on whether the UK Government increases or decreases funding for departments that cover areas that are devolved.
For example, if spending on health is increases in England, devolved governments should receive the equivalent amounts.
The formula – named after the former Labour Chief Secretary to the Treasury Joel Barnett – is widely recognised as being controversial because it takes no account of different needs or costs in different areas.
For instance, Wales faces more unique health challenges due to the country’s older and more rural population.
The funding formula has also been deemed to have underfunded Wales on large projects such as HS2.
This is because the high speed rail link was earmarked as an “England and Wales” scheme despite the line not entering Wales.
This designation meant that Wales did not receive appropriate Barnett consequential funding.
HS2
Some politicians believe £4 billion is owed to Wales in rail consequentials through the Barnett Formula for HS2 – although the Welsh Government’s most recent calculation stands at around £400m.
The Welsh Government has previously acknowledged that the Barnett Formula is outdated has called for a needs based formula instead.
In the Senedd on Tuesday (November 4), Deputy First Minister Huw Irranca-Davies told the Chamber that ministers had secured an agreement with the UK Government to “explore” the Barnett Formula.
His comments came following a question from Labour MS Alun Davies who called on the Welsh Government to confirm that reform of the Barnett Formula was on the agenda for the Chancellor’s upcoming Autumn Budget.
‘Head count’
Davies said: “What Wales needs is to be treated according to Wales’ actual needs and not simply a head count.
“Barnett works for Scotland, it didn’t work for Norther Ireland so a needs based formula was introduced.
“Wales needs that same formula as Northern Ireland and it’s time we received it.
“I hope the Welsh Government will be making that case very strongly over the coming weeks.”
Responding, Irranca-Davies said: “Discussions about the Barnett Formula are far more than arcane discussions because it is to do with the quantum of funding that comes here to Wales.
“It’s long been acknowledged by this Welsh Government that it is past it’s sell-by date.
“But I am pleased to tell you that we have secured an agreement with the UK Government to explore the Barnett Formula and how we should take this forward.
“My compliments to our Finance Secretary and the First Minister for actually negotiating that space for us to engage now with the UK Government.
“That is what we mean with actually having a Welsh Government here led by Eluned Morgan working with the UK Government and saying let’s explore these inequalities and sort them out.”
Timescale
Nation.Cymru asked the Welsh Government to put firmly on the record the details of the negotiations and confirm a timescale to deliver the review.
We also asked if it will be independent of the UK Government.
A Welsh Government spokesperson said: “We believe the Barnett Formula needs to be fundamentally reformed and replaced by a needs-based funding system, which works for all parts of the UK – this can only be done with the agreement of all four nations.
“In the meantime, we have suggested some changes to improve how the Barnett Formula currently works.
“Ministers at the four-nations finance meeting in Scotland recently agreed this work would be undertaken.”
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‘EXPLORE’ sayz it all. It will be kicked into the long grass and forgotten about. This sop iz purely aboutwhat happened in Caerffili
The Barnett formula should have been changed years ago – as Lord Barnett himself said when he was still with us. We did not expect any favours from the Tories (and didn’t get any), but I think that many of us hoped for a fair deal from Labour on this and on the HS2 funding. Nothing happened. Labour took the Welsh vote for granted, and so they got a kicking in Caerffili, which was well deserved. Is this closing the stable door…? Time will tell. Anyway, “exploring” isn’t enough: something needs to happen.
Doesn’t sound like something that will
Amount to much. Though As much as anything a more transparent and better articulated framework would be helpful. It’s important to remember that the barnet formula is one aspect of how funding is calculated, it isnt the whole story.
For instance it isn’t strictly true that the current funding formula takes no account of need. Wales does receive a needs based uplift, its smaller than Northern Ireland’s and it’s probably inadequate, but it exists, we wouldn’t need a radical overhaul just to up that percentage as a starting point.
But how was it calculated. Did someone count up all the extra migrant retirees whose healthcare needs can cost seven times as much as an average person? Or was it a made up number, a harmless little bit extra, just to fob off the needs-based mob.
Are you referring to english migrants retirees?
https://nation.cymru/news/telegraph-reports-boom-in-britons-quitting-england-for-wales/
It sounds like a headliner that may have been great to hear but as your sensible questions suggest, Emily, it may be little more than a 10 second soundbite and nothing to hold our breaths over.
That’s why I asked those questions. The answers didn’t have much detail at all.
I agree with the other sceptics. One more question you might ask is what needs based formula do Welsh Government favour? There are numerous permutations, some much better than others and a few worse than the status quo. But I rather doubt you will get an answer.
Your comment is almost the same as mine! You read my mind. I wish someone wanting change would say what their preferred permutation is!
I think we have a long wait for that. As others have said, this is gesture politics by Labour. I’m not even sure Welsh Government has a preferred needs based formula – and if they do they won’t tell and risk a bunch of academics and economists pulling it apart. Plaid in the same boat.
You won’t get an answer from Cardiff until they check with Head Office!
This all sounds similar to the ‘conversations’ Eluned Morgan said she had with people in the uk labour govt on proposed cuts to welfare – conversations which she seemed unable to prove had actually taken place…..she certainly didnt seem able to say who in the uk govt she’d spoken to about it.
My prediction is that we’ll be reminded regularly over the next few months of this exploration and how it’s progressing by explorer in chief Eluned Morgan.
Then in April next year it will be announced by the Labour party’s Welsh branch that it has discovered the source of the Jam and it’s located in a place called Tomorrow.
I thought it was called Malice
It made a change for Huw Day Out to have a day in…
Alice in Wonder Bay’s swan song…
Good name for a hairdressers in North London…
This has been explored time and time again. Just implement it.
Its incredibly difficult to see it changing as it would result in massive public sector cuts to Scotland, which neither labour or the SNP would want. Plaid keep talking about a ‘needs based’ system but there are so many permutations and many of them would reduce per head spending in Wales. Places like the NE of England, both midlands etc are struggling under public service underinvestment as well. My personal feeling is public spending increases are needed right across the UK, no massaging formulas would make a big difference
“Trust us: we are the Labour Party.”