Holtham wary of ad hoc Barnett fix

28 Jan 10
UK government assurances on funding levels in Wales are unsatisfactory, according to the chair of the review of the country’s finances.

By Paul Dicken

28 January 2010

UK government assurances on funding levels in Wales are unsatisfactory, according to the chair of the review of the country’s finances.

In November last year, the Wales Office said the Treasury had agreed to ‘take action’ if Wales became disproportionately disadvantaged by the Barnett Formula, which sets the relative funding levels for the UK nations.

But Gerald Holtham, chair of the Independent Commission for Funding and Finance in Wales, told the Commons Welsh affairs select committee that ‘an ad hoc fix [to the formula] if Wales moans enough is not the way to go’.

Giving evidence to the committee’s inquiry into Wales and Whitehall on January 26, Holtham said the UK government seemed to be saying: ‘Wales is poor, and Wales is moaning, so we’ll look after it’.

He added: ‘That’s the opposite of the claim they made for Barnett, that because it’s a rule, you avoid horse trading; it’s all very simple, cut and dried, and principled.’

Holtham said it was better if the government either refuted the commission’s argument that Barnett be replaced by a new, needs-based rule or accepted it and replaced the formula with a new funding principle.

The Holtham Commission published a report in July last year calling for a needs-based formula to be introduced and in December published a working paper setting out a replacement formula.

The commission’s proposal is that a small set of formulas be used to calculate funding for the devolved administration along the same lines as the current model used to fund the English regions.

Holtham said coming public spending constraints would not make the introduction of a new formula any more costly.

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