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The Welsh Government has previously acknowledged that the Barnett Formula is outdated has called for a needs based formula instead.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."