Losing out to Barnett

John Osmond looks at the way Labour Secretaries of State have been promoting Welsh interests in Whitehall

The mounting reports all agreeing that the Barnett system for calculating the Assembly Government’s block grant has been short-changing Wales, and should be scrapped and replaced with a system that recognises need, is proving embarrassing for the most recent Secretaries of State for Wales.

They are wriggling on a hook of the question, if the 30-year-old Barnett has been so bad for Wales, especially over the last 12 years of Labour in office at Westminster, why haven’t they been more pro-active in pressing for a change to the system?

The present Secretary of State for Wales, Peter Hain, responded to this question over the weekend by denying that Wales had lost out. He claimed last week’s report by the expert Holtham Commission, set up by the Assembly Government, had concluded that up to now the system had been broadly fair to Wales. At the same time he agreed that it looked as though Wales would lose out in future and that, as a result, the Barnett formula, which crudely allocates money on the basis of a head count, would have to be “revisited”.

Yet this response, given in an interview with Radio Wales, simply ignored that the Holtham Commission calculated that Wales was currently losing out by £300 million a year and many observers believe that the figure is much higher.

Meanwhile, the minutes of evidence of last week’s high-powered report into the Barnett formula by the House of Lords Committee chaired by Lord Richard, finds his predecessor as Secretary of State for Wales, Paul Murphy, having a tough time claiming that the Barnett formula was actually the best solution for Wales. On 1 April this year, responding to a question from Lord Richard, he declared:

“Over 12 years on and off I have lived with this Formula and, although there have been ups and downs, I cannot think of a better one.. I suppose we will come later on to the detailed question of needs formula, but I think it has met the needs, certainly in terms of the country I represent around the Cabinet table … My job is to ensure we get the best possible deal for those territories and countries that we represent around the table [he was accompanied by the Secretaries of State for Scotland and Northern Ireland], and certainly from the Devolved Administrations’ point of view, they have done pretty well out of the system.”

To this Lord Richard responded:

“I do not think that is the view of the administration in Cardiff, if I may say so. We went to Cardiff and took some evidence down there. It was very difficult to find anybody saying an enthusiastic word for the existing Barnett formula and the general feeling there seemed to be that a fairer system was capable of being developed and it would be more equitable were it to be introduced.”

John Osmond is Director of the IWA.

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