BEFORE ANY READER JUMPS TO CONCLUSIONS THIS IS NOT A WELSH ASSEMBLY ISSUE.  ANY CHANGES TO THE BARNETT FORMULA WILL BE MADE AT WESTMINSTER BY THE NEXT GOVERNMENT

I was on a panel at the University of Bangor last night with, among others;

• Gerald Holtham, Chair of the Independent Commission on the Funding of the Welsh Assembly
• Professor John Thornton, Bangor Business School and former member of the IMF
• Dafydd Wigley, Honorary President of Plaid Cymru
• Rob Irvine, Editor of the Daily Post

The presentation given by Gerald Holtham was superb.  Concise, analytical and detailed it was delivered with no prompts and no need for the support of a power point presentationdespite the detail and scope of his presentation.

The first report produced by the Holtham Committee looked at the way in which the Barnett Formula impacts upon Wales.  The Barnett Formula is, as many readers understand, a mechanism by which funding for Wales, Scotland and Northern Ireland was adjusted back in the late 1970’s (as a temporary measure) to account for the different needs of the four constituent parts of the UK.  It is, as has been recognised by all four parties in the Assembly, in need of an overhaul and being brought up to date in order to reflect the current position in terms of the ‘needs’ of the four countries of the UK.

The problem with Barnett, as highlighted by the Holtham Committee, is the fact that it is now less equitable than it should be but not to the degree claimed by Plaid Cymru (I will come back to this).  What the Holtham Committee did was to examine the needs based adjustment utilised by the Treasury in England in order to assess funding support for the English regions and then apply the same principles in the context of Wales, Scotland and Northern Ireland.  This is what they found;

•  Wales should get £114 for every £100 spent in England.  Under Barnett we get £112
•  Scotland should get £105 for every £100 spent in England.  Under Barnett they get £120
•  Northern Ireland should get £121 for every £100 spent in England.  Under Barnett they get £125

Whilst the Welsh shortfall is significantly less than the absurd and dishonest claims made by Plaid Cymru, most recently by my opponent here in Aberconwy, there is a shortfall which accounts for about £350m of expenditure each year.  Why has this position been allowed to continue under the current Labour administration? 

According to Mr Holtham the main reason is the fact that the Labour Party, knowing that their only chance of success at the forthcoming General Election is to retain the large majority of the 59 Scottish seats , have decided to ignore the issue.  Changes to Barnett would be damaging to Scotland and with the Labour Party under threat from the SNP they have decided to allow the status quo to continue because their own electoral prospects are more important than the principle of equity between the nations of the UK.      

A final point about Barnett.  It is, for all the flaws highlighted above, a fundamentally UNIONIST formula.  The only reason you can argue for changes and revisions to the Barnett Formula is if you believe in the United Kingdom.  The whole concept of Barnett and the debate that surrounds the issue is that funding from the UK Treasury should be distributed to the English regions, Wales, Scotland and Northern Ireland on the basis of need in order to try and create an equitable distribution of spending based on need throughout the UK.  The fundamental dishonesty of the debate surrounding Barnett in Wales is the fact that Plaid Cymru continually make wildly exaggerated claims about the unfairness of the current formula without ever attempting to explain what would happen if their stated aim of an Independent Wales was to be achieved. 

Think about it.  No Union = No Barnett Formula.  Plaid Cymru claim that the current shortfall is hugely unfair to Wales.  The current shortfall has been identified by Holtham as spending of £112 per head via the Assembly block grant rather than the £114 per head which Holtham thinks it should be if the needs based analysis used to distribute money to the English regions was utilised here in Wales.  What would be the shortfall if the stated Plaid Cymru aim of independence was achieved?  They never seem to be willing to respond to that question and their Honorary President conspicuously failed to address the issue last night when I made these very points.

The lesson is clear.  When Plaid talk about Barnett ask them what they would do to make-up the shortfall if Barnett did not exist because that is the ultimate aim of their policy of independence.

I will blog on tax and borrowing issues as discussed last night in due course.

Guto

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