Cash deal 'recognises unfairness'

Funded for Wales has been 'unfair' since the late '70s, say ministers

A deal struck over funding for Wales is the first time the Treasury has recognised "unfairness", says Assembly finance minister Andrew Davies.

He said he wanted to know how the deal between Chancellor Alistair Darling and Welsh Secretary Peter Hain would work.

Mr Hain has said it means that Wales will receive more public cash if its funding falls behind England in future.

Opposition parties say the agreement falls short of recommendations by an independent inquiry into Welsh funding.

The Holtham Commission called for a switch to a needs-based formula to work out how much funding Wales should have from Westminster.

The inquiry, chaired by Gerry Holtham and commissioned by the assembly government, argued that the existing arrangement based on population, the Barnett formula, was unfair.

It said 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.

'Inherently unfair'

It estimates that Wales was currently losing out around £300m a year as a result of what it called the "Barnett squeeze".

Mr Davies highlighted Wales' higher unemployment and poorer health as examples of its "relative need".

He said: "The fundamental point that Gerry makes is that the present Barnett formula, which is based effectively on Wales' share of the population of the UK doesn't recognise our relative need - the fact that we've got more people unemployed, higher levels of economic inactivity, poor health, etc.

"We think the formula is unfair.

"We welcome this recognition. Don't forget, this is first time that the UK Treasury has recognised that the Barnett formula is inherently unfair both in the way it's calculated and in the "squeeze".

He added that the recognition was still only "partial".

'Reform'

Mr Holtham has described the details of the Treasury's review of Wales' funding situation as "rather vague."

Mr Davies said the assembly government would "continue to press for details of how this review is going to be undertaken but also the long-term implications.