Thursday, March 27, 2008

What now for the Barnett Formula.

A few years ago, it wasn't possible to go through a week in the National Assembly for Wales without Plaid Cymru or the Liberal Democrats calling for the end of the Barnett Formula. The mantra was that this formula was being used by the dastardly politicians at Westminster to deprive Wales of shedloads of millions that was rightfully hers. Well, it looks as if these politicians at Westminster might just give them what they've been asking for. Never has the advice 'be careful what you ask for' been more appropriate.

Now the reality is that what members of the National Assembly for Wales think will be nothing to do with any decision at Westminster to review the Barnett Formula, the way that the amount of money going from the Treasury to Cardiff Bay is calculated. The only reason is that the voters and taxpayers of England have had enough of watching all sorts of 'freebies' being handed out by the Scottish Parliament, which are unavailable to them, paid for by money going from the Treasury to Edinburgh. The 'subsidy' which is widely reported to be heading over Hadrian's Wall amounts to about £1,500 per capita more than is being spent on the equivalent services in Wales. The Scottish Parliament was established in 1999, and at last, the English giant is stirring.

I've always warned that there is no guarantee that the Welsh block grant would go up if the Barnett Formula were to be reviewed, so I was always cautious about calling for a review. Well, I'm still cautious, and so is Paul Murphy, the Secretary of State for Wales. The per capita payment coming to the National Assembly is also higher than is spent in England. It was an easy hit to shout that Wales was being robbed when no-one was looking in detail at the reality. I've an idea that all those siren voices in Wales who've been calling for a scrapping of Barnett and a review of funding are now looking nervously over their shoulders.


Steffan said...

Wow, reading this piece I thought I had accidentally hit on the Daily Mail editorial website (just kidding). The Barnett formula was a few calculations done on the back of a fag packet as a short term fix. It wasn’t meant as a long-term system to regulate economic relations between the countries of the UK.

I think you’re guilty of a bit of spinning here, Glyn. Your caricature of those who criticised it doesn’t fit with my recollection. Plaid, for example, amongst a number of reasoned arguments, say the formula should be ‘needs based’ and they are supported in this by regions of England such as the north-east of that country which, I believe, receives lower funding (per person) than that subsidy-junkie, London.

If the economic relationships between ourselves and our neighbours are unfair then they should be re-examined and improved. Surely honesty and openness in these matters is a better hope for good relations between our countries.

penlan said...

I always felt that the Barnett formula would be in trouble once Edinburgh and Westminster were under different party administrations.The Welsh grant was itself never likely to cause the break but any Scottish review would inevitably draw us in.I cannot see any review being good for us.

frsutrated economist said...

'I've always warned that there is no guarantee that the Welsh block grant would go up if the Barnett Formula were to be reviewed, so I was always cautious about calling for a review.'

there are those if us who aren't Nationalists who want greater fiscal authonomy for Wales for a number of reason to boost welsh buisness.

my only concern is that the if the Barnett Formula does decrease, which like you I think it might,
that we have the poliitcal leadership to bring those people in to the fold who can make a difference in real economic and financial terms to our stuttering economy.

Nicky Clarke said...

""What now for the Barnett Formula."

Is it smething to do with hair pieces?
Michael Fabrigant has a good one!
So David Davies says!

Nicky Clarke said...
This comment has been removed by a blog administrator.
Glyn Davies said...

steffan - I don't argue with you about the ridiculous basis on which the Barnett Formula is based. And I cannot disagree that it should be based on need, and I'm sure it was roughly based on need, as need existed 30 years ago. And I didn't so much criticise those who called for a review as take the entirely pragmatic position that it would not automatically benefit Wales. I also take the view that any review which proposed a huge shift of resources from Scotland could be subject to some political horse trading before implematation. Anyway, the review looks as if its going to happen now - so its a case 'Lets wait and see'.

Penlan - sounds as if you take the same pragmatic view of this as I do.

frustrated economist - You make an interesting point, particularly in the light of the Irish experience. This was an issue in last year's Assembly election when Plaid Cymru campaigned on this - quite improperly in my opinion because it was not deliverable. I cannot see the fiscal freedom needed being allowed in the current climate - and there is the added problem that Government is now spending so much, that freedom to stimulate economic activity through a reduction in business taxation (or any other form of taxation) is very limited.

Nicky - I think you'll find that the MP for Lichfield's name in Michael Fabricant - and I have no knowledge whatsoever about his 'barnett'.

Southpaw Grammar said...


I think caution is the correct watchword for all those engaged in the sensible debate around this. Tony Blair's point about the barnett's faults being a small price to pay for the Kingdom i believe are hugely relevant.


"receives lower funding (per person) than that subsidy-junkie, London"

Oh yeah, there are no needy people in London, just fatcats in tophats!

You forget that the minimum wage is nowhere near enough for poor london people in comparison.

All the 'barnett must be scrapped no matter what' brigade, which is mainly the nats, must answer one question...

Do you 100% back the scrapping the formula even if it means Wales ends up poorer from its replacement?

Trevor Sorbie said...

Michael Fabricant
I am sure he wears a barnett, some one should ask David Jones, he was sitting behind him in the house a few weeks ago.

Tom Pugh said...

Not very electable bald men, nor ones with beards on the whole!
Good men of the land like Glyn we need, good clean living sort!
we need to forgive te odd lapse of judgement in his postings.

Glyn Davies said...

Southpaw - The arguements for reviewing the Barnett Formula, which were constantly being made by Plaid and the Lib Dems were based on Wales being short-changed, (according to their research that is). As we all know any conclusion depends on how you ask the question. I always thoughtit was incredibly naive to think that the Westminster Governmnet would conduct a review, which would not be subject to political pressures to avoid great movements in resources - which is why Labour and the Conservatives were wary of it. It is now being driven, at least in part, by England resentment, which is not a promising starting point.