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| Wales' funding 'unfair' say Lords | Wales' funding 'unfair' say Lords |
| (9 minutes later) | |
| Welsh Secretary Peter Hain said a formula which decides how much money Wales receives from the UK government needs to be re-examined. | Welsh Secretary Peter Hain said a formula which decides how much money Wales receives from the UK government needs to be re-examined. |
| It follows a House of Lords select committee report which said the 30-year-old Barnett formula was "arbitrary and unfair" and should be scrapped. | It follows a House of Lords select committee report which said the 30-year-old Barnett formula was "arbitrary and unfair" and should be scrapped. |
| Mr Hain said it was "more or less fair" but said "we've got to make sure that Wales get a fair deal in the future." | Mr Hain said it was "more or less fair" but said "we've got to make sure that Wales get a fair deal in the future." |
| The Lords report wants money allocated to areas of the UK based on need. | The Lords report wants money allocated to areas of the UK based on need. |
| It follows a report for Welsh ministers last week, which warned Wales could lose up to £8.5bn in a decade under the Barnett formula. | |
| The system does not consider factors such as the health, age and wealth of people in different parts of the UK. | The system does not consider factors such as the health, age and wealth of people in different parts of the UK. |
| Mr Hain told Good Morning Wales that the UK government needed to revisit the formula. | Mr Hain told Good Morning Wales that the UK government needed to revisit the formula. |
| "Everybody agrees it's more or less fair at the present time but that could depart in the future and although this is highly complex as an issue what I'm determined to ensure is that Wales isn't short changed." he said. | "Everybody agrees it's more or less fair at the present time but that could depart in the future and although this is highly complex as an issue what I'm determined to ensure is that Wales isn't short changed." he said. |
| He said he hadn't changed his mind but that there was now "compelling pressure" from two reports. | He said he hadn't changed his mind but that there was now "compelling pressure" from two reports. |
| But he urged caution in changing the balance of spending between Wales, England, Scotland and Ireland. | But he urged caution in changing the balance of spending between Wales, England, Scotland and Ireland. |
| When the UK government increases funding for departments such as health and education in England, the Barnett formula is used to decide how much money devolved governments in Cardiff, Edinburgh and Belfast receive. | When the UK government increases funding for departments such as health and education in England, the Barnett formula is used to decide how much money devolved governments in Cardiff, Edinburgh and Belfast receive. |
| The formula, named after former Labour Chief Secretary to the Treasury Joel Barnett, was introduced in the late 1970s. | The formula, named after former Labour Chief Secretary to the Treasury Joel Barnett, was introduced in the late 1970s. |
| any opposition to scrapping it would be irresponsible and an insult to the people of Wales Adam Price, Plaid Cymru MP | any opposition to scrapping it would be irresponsible and an insult to the people of Wales Adam Price, Plaid Cymru MP |
| It was intended as a short-term fix but has lasted more than thirty years and the new report puts pressure on the government for change. | It was intended as a short-term fix but has lasted more than thirty years and the new report puts pressure on the government for change. |
| The Lords select committee report concludes: "The Barnett formula should no longer be used to determine annual increases in the block grant for the United Kingdom's devolved administrations." | The Lords select committee report concludes: "The Barnett formula should no longer be used to determine annual increases in the block grant for the United Kingdom's devolved administrations." |
| It argues a new system should be introduced where the devolved governments with greater needs receive more funding, per head of population, than those with lesser needs. | It argues a new system should be introduced where the devolved governments with greater needs receive more funding, per head of population, than those with lesser needs. |
| The committee recommends an independent expert body be set up to devise a new formula and review its progress. | The committee recommends an independent expert body be set up to devise a new formula and review its progress. |
| New grants could be introduced within three years, with any reduction in funding phased in over a longer period, "preferably not exceeding seven years", the report recommends. | New grants could be introduced within three years, with any reduction in funding phased in over a longer period, "preferably not exceeding seven years", the report recommends. |
| 'Populations changed' | 'Populations changed' |
| The committee says it is not able to reach a conclusion about the precise relative needs across the UK. | The committee says it is not able to reach a conclusion about the precise relative needs across the UK. |
| But it suggests, on the basis of an initial analysis, "we believe that Scotland now has markedly lower overall need than Wales and Northern Ireland in comparison to England". | But it suggests, on the basis of an initial analysis, "we believe that Scotland now has markedly lower overall need than Wales and Northern Ireland in comparison to England". |
| John Osmond, the director of the Institute of Welsh Affairs (IWA), who gave evidence to the committee, said he believed the system had not been changed for so long because of politics - and would probably remain the same until at least a general election is held. | John Osmond, the director of the Institute of Welsh Affairs (IWA), who gave evidence to the committee, said he believed the system had not been changed for so long because of politics - and would probably remain the same until at least a general election is held. |
| "The population base [of the formula] was decided back in the 1970s which is a very long time ago and populations have changed," he said. | "The population base [of the formula] was decided back in the 1970s which is a very long time ago and populations have changed," he said. |
| "And even a small change in the population can make a big difference to the way the formula works. | "And even a small change in the population can make a big difference to the way the formula works. |
| "Basically what's happened is that the Scottish population has declined a bit but none the less the formula has remained the same so the Scots have done particularly well out of it. | "Basically what's happened is that the Scottish population has declined a bit but none the less the formula has remained the same so the Scots have done particularly well out of it. |
| "And that's one reason in fact why the formula has remained unchanged all these years because to unpick it would provoke all kinds of arguments." | "And that's one reason in fact why the formula has remained unchanged all these years because to unpick it would provoke all kinds of arguments." |
| Last week the Holtham Commission, established by the assembly government, also concluded Barnett was "arbitrary" and in "urgent need of reform". | Last week the Holtham Commission, established by the assembly government, also concluded Barnett was "arbitrary" and in "urgent need of reform". |
| Commission chair economist Gerald Holtham warned the underfunding of Wales could reach £8.5bn over the next decade, or £2,900 for every man, woman and child. | Commission chair economist Gerald Holtham warned the underfunding of Wales could reach £8.5bn over the next decade, or £2,900 for every man, woman and child. |
| He called for a new funding formula to reflect the actual cost of providing services. | He called for a new funding formula to reflect the actual cost of providing services. |
| 'Irresponsible insult' | 'Irresponsible insult' |
| Responding to the latest report from the Lords, Plaid Cymru said the Barnett formula should be scrapped "as a matter of urgency". | Responding to the latest report from the Lords, Plaid Cymru said the Barnett formula should be scrapped "as a matter of urgency". |
| Adam Price MP said "all the evidence now points towards the need for change". | Adam Price MP said "all the evidence now points towards the need for change". |
| "As this report clearly shows, the Barnett formula was only ever designed as a short-term quick fix. | "As this report clearly shows, the Barnett formula was only ever designed as a short-term quick fix. |
| "It is now so outdated that any opposition to scrapping it would be irresponsible and an insult to the people of Wales," he added. | "It is now so outdated that any opposition to scrapping it would be irresponsible and an insult to the people of Wales," he added. |