Page last updated at 14:36 GMT, Thursday, 26 November 2009

'Extra public money' in new deal

Gerald Holtham
Gerald Holtham welcomed a promise to reconsider the Barnett formula

Wales will receive more public money if its funding falls behind England in future under a new agreement, says Welsh Secretary Peter Hain.

But opposition parties say the deal with Chancellor Alistair Darling falls short of recommendations by an independent inquiry into Welsh funding.

Gerry Holtham's commission called for a fairer system than the Barnett formula.

The UK government said it welcomed many aspects of the Holtham report, but it was still studying its details.

The report said that without reform Wales could lose out by as much as £8.5bn by the end of the next decade - equivalent to £2,900 per Welsh resident.

This commitment is a major breakthrough for Wales
Welsh Secretary Peter Hain

It called for a change to a needs-based formula to work out funding from Westminster.

The UK government has not yet responded to key elements of the report, but there have been negotiations between Mr Hain and the Treasury.

Mr Hain said he wanted to ensure funding did not fall below Wales' future needs.

"This commitment is a major breakthrough for Wales," he said.

"The Barnett formula has served Wales well over the years but the evidence showed that action was needed to ensure that funding did not fall below Wales' future needs.

"The House of Lords report on the Barnett formula, the Holtham report and the response to the Calman commission for Scotland all made it essential to reform the Welsh funding mechanism as Wales could lose out.

Financial situation

"Although the financial situation is tough right now Wales must be funded fairly," he said.

The UK government has agreed to make a full assessment of how Wales is funded compared with other parts of Britain.

After this assessment the UK government has said it would be prepared to take action "if appropriate" to ensure Wales is not disproportionately disadvantaged.

It doesn't address the massive underfunding we've had in Wales for the last 30 years
Kirsty Williams, leader, Welsh Liberal Democrats

Mr Holtham welcomed the promise to "reconsider convergence under the Barnett formula" and to take steps to ensure that Wales was not "disproportionately disadvantaged" in future.

"Evidently there is work to be done to make the pledges operational, and also to consider the other recommendations that are not covered by the UK government's statement."

Welsh Conservative finance spokesman Nick Ramsay said the UK government statement did not say anything that was not known already and called it "very disappointing."

Plaid Cymru spokesperson on treasury affairs Adam Price MP described the announcement as a "betrayal of the people of Wales".

"The government in London must recognise that the Barnett formula does not meet the needs of the people of Wales and must be replaced," he said.

Welsh Liberal Democrat leader Kirsty Williams said Labour had "given in and recognised that the system is unfair to Wales, but the solution Peter Hain has come up with is only a half-baked one to the problem we have".

She said: "It doesn't address the massive underfunding we've had in Wales for the last 30 years and it doesn't address the issue at the heart of the Holtham Commission, which is that Wales wants and deserves a needs-based formula".

Ministers examine Wales funding
23 Jul 09 |  Wales politics
Hain urges Wales funding rethink
17 Jul 09 |  Wales politics
Wales 'could lose out on 8.5bn'
07 Jul 09 |  Wales politics
Tax and budget review for Wales
20 Jun 07 |  Wales

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