Devolved nations call on coalition to act on funding and economic strategy

Left Foot Forward's Devolution Correspondent Ed Jacobs reports on the devolved nations' call for the coalition to act on funding and economic strategy.

Welsh first minister Carwyn Jones has used the opportunity of the first Joint Ministerial Council (JMC) since the devolved elections to argue for funding reform.


In 2009, the Independent Commission on Funding and Finance for Wales, chaired by Gerald Holtham, used its interim report to outline how Wales was underfunded to the tune of £300 million a year under the Barnett Formula which Holtham described as “arbitrary” and in “urgent need of reform”. While In February, Left Foot Forward reported the Institute for Fiscal Studies’s conclusions that Wales is losing out under the formula.   

In light of this, Welsh Labour, the party now governing alone in Cardiff Bay, used its manifesto (pdf) for the elections last month to pledge (page 23) that it would:

“Continue to press the UK Government for reform of the Barnett Formula to ensure fairer funding for Wales.”

As such, Carwyn Jones used this week’s meeting of the leaders of the devolved bodies and the UK government to make his case for reform, arguing:

“This was a constructive meeting, but again I raised the issue of the unfair funding for Wales. It is imperative that we have a better deal for the way our public services are funded. With Wales losing up to £300 million a year, the time has long passed for this to be looked at.

“I made it clear that the current system is out of date and reiterated the need for a fairer funding package. The UK government must urgently address this issue and come up with an alternative. However, they can only do this by working with us.

“I have an open mind on what a new settlement might look like, but let me be clear, the Welsh government will not accept a deal that simply entrenches the current underfunding and puts Wales once again at a disadvantage.”

However, despite the need for a fairer system, the coalition government’s position on Barnett remains confused.

Though Lord Barnett, the man who established the formula himself, argues it is “vital” to the future of the UK that the funding system be reformed, the coalition’s official policy remains to do little until the public finances are sorted. In May this year, however, Welsh secretary Cheryl Gillian argued that the formula was “coming to the end of its life”.

It remains to be seen what the immediate future of the Barnett Formula holds. However, if David Cameron really is to practice the policy of “respect” he has called for when dealing with the devolved administrations, allowing an unfair and discredited funding system – which even its creator argues is time to abandon – to continue for long will simply serve to fuel a sense of grievance and growing unfairness at a time when we are supposedly all in it together.

Meanwhile, following George Osborne’s repeated assurances on the Today programme earlier this week that the coalition’s economic plans provide “flexibility”, the JMC provided Scotland’s emboldened first minister, Alex Salmond, with an opportunity to call on the UK government to address the need for either a Plan B on the economy or greater flexibility in its existing plans.

Following the meeting, Mr Salmond said:

“Maybe I’m just an optimist about these things, but there was certainly an interest in flexibility, if not on the name Plan B. I’m hoping that the government realises that flexibility is going to be important in getting the economy moving and keeping people in jobs over the next few months.”

Adding:

“The Scottish Government, along with the other devolved administrations, has consistently argued that the Coalition’s plans to cut public spending too far and too fast runs the risk of stalling the economic recovery.

“While it is vital that the public finances are returned to a sustainable footing, the best way to achieve this is by promoting economic growth. There are three key priorities which would promote economic recovery for little cost to the UK Exchequer and it is imperative that the UK Government takes urgent action in these areas.”

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8 Responses to “Devolved nations call on coalition to act on funding and economic strategy”

  1. Clive Burgess

    Devolved nations call on coalition to act on funding and economic strategy: http://bit.ly/jo6jvA reports @EdJacobs1985

  2. Selohesra

    Carwyn Jones has an open mind as to what new settlement might look like – but you can guarantee it involves more tax revenue generated in London/SE being transferred to Wales

  3. Abominominable

    Selohesra’s comments are exactly the problem. I always hear the right complaining about the Barnett formula like it favours Scotland and Wales, but they’ve got it completely the wrong way round. There isn’t a formula, mechanism or secret slush fund for Scotland of any kind that transfers money from England to Wales. It just isn’t there.

    What actually happens simple – The tax system redistributes from rich to poor and that’s all there is to it. Scotland is poorer than England and Wales is poorer than England. Unemployment is higher in Scotland and Wales on average, so they get more dole spending on average. There’s no secret EU conspiracy, they’ve ‘earned’ it. I remember when the Economist whined about transfers from the South East to the North – of course there is, the north is poorer. There’s a transfer from England to Scotland, from South England to North, from London to not-london, from the City of London to Brixton, from people like David Cameron to people who are not Etonian millionaires like David Cameron. That’s it. There’s probably a transfer from Scotland’s Oil to Humberside.

    It was great fun watching Paxo get told off saying Wales is more subsidised than London, and he was rightly put in his place for this nonsense. No celtic subsidy, just equality.

    But outrage of outrages, you even hear the right complaining the Barnett Formula is biased against England, but it’s biased against Scotland. It makes spending follow population numbers – but as long Scotland has higher unemployment, it is completely entitled to more unemployment benefit – but the Barnett Formula completely and arbitrarily says NO.

    Imagine if Osbourne said “Gloucestershire and Brixton have just as many people, so they get the same dole money”. Madness.

  4. Glyn Davies

    The real debate should be about the raping of Mid Wales and the ridiculous plans to erect massive pylons…

  5. Ken Clarke

    Glyn – do you mean proper rape?

  6. paulstpancras

    Devolved nations call for reform of funding and economic development http://bit.ly/jOmKKR

  7. UKFreeNews

    Devolved nations call for reform of funding and economic development http://bit.ly/jOmKKR

  8. Welsh first minister praises “very constructive” and “refreshing” Osborne | Left Foot Forward

    […] Following discussions at the treasury yesterday, Welsh first minister Carwyn Jones has praised UK chancellor George Osborne for a “refreshing approach” to the thorny issue of how Wales is funded. […]

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