Kirsty Williams outlines Liberal Democrat proposals for reforms to the way Wales is funded.
Wales has been underfunded for far too long. In 2008 the Holtham Commission was established by the Welsh Government, following a Welsh Liberal Democrat debate in 2007 which secured cross-party support. The Commission reported in 2010 and concluded that Wales loses out to the tune of £300-£400million a year. Our commitment ahead of the general election means that in government, the Liberal Democrats would continue to progress the devolution agenda for Wales by reviewing the Holtham Commission’s findings, to analyse the current funding gap and then address this gap to ensure that Wales receives the money it deserves.
This would mean that, with the Liberal Democrats in government, by the end of the next parliament Wales would be properly funded for the first time in decades. Not only do the Liberal Democrats recognise that Wales is underfunded and that the current funding formula is unsustainable, but unlike the other parties we have outlined a workable solution for a fairer future.
The Welsh Liberal Democrats have long maintained that the Barnett Formula, the basis of allocating money across the UK, is seriously flawed. Its major flaw, as recognised by the Holtham Commission, is that the formula is population-based and does not take into account the differing needs of the parts of the UK in terms of health, rurality or infrastructure challenges.
The Holtham Commission called for the introduction of a needs-based formula for determining the Welsh block grant. However, the reality is that completely re-working the funding system for the whole of the UK is a major task and reaching agreement between all devolved administrations would be an immense challenge. Our priority as a party has been to get the best possible deal for Wales. I am therefore pleased that we are the first party in Westminster to state that we will amend Wales’ funding system. Our proposals are the quickest and easiest way to ensure that Wales will finally achieve fair funding.
For over a decade Labour did nothing with regards to making sure we receive our fair share of funding in Wales. The Coalition Government was the first Westminster government to acknowledge that Wales does not receive the level of funding that we deserve. For this reason Danny Alexander, the Liberal Democrat Chief Secretary to the Treasury, announced that the Coalition would look positively on introducing a mechanism to protect the Welsh Government’s funding by introducing a ‘Barnett floor’. We will enshrine this commitment within our General Election manifesto, to safeguard fair funding for Wales and protect the Welsh budget from being squeezed. This would ensure that as public spending rises, so would the share of funding which comes to Wales; giving us more to spend on vital services. Again, we are the first party to pledge to do such a thing.
In just four years of being in government in Westminster, the Liberal Democrats have been the driving force for more devolution for Wales. Not only did we insist that a cross-party commission should be formed to look at further powers for Wales, but we also acted on the Silk Commission’s recommendations by delivering both tax-varying powers and borrowing powers. We recognise that there is still more to do; Nick Clegg said that the Silk Commission’s second report recommendations will be the blueprint for our 2015 manifesto. This shows far greater resolve than Ed Miliband’s half-baked promise to change the Welsh devolution settlement, missing out a wide range of important recommendations made by Silk.
Our announcement shows that we are not just leading the way on delivering more powers for Wales, but we are also the only party fighting for Wales to get a better financial deal. I call on both the Conservative and Labour parties to do what is right and join us in making a pledge to ensure Wales receives the fair funding it deserves.