Welsh devolution champions sense austerity threat
By politics.co.uk staff
The wider austerity agenda should not stand in the way of reforming the way the Welsh government receives funding from London, a key commission is expected to argue.
An independent set of economists tasked by the Labour-Plaid Cymru coalition in the Welsh Assembly with re-examining the issue reports later.
It is expected to conclude that the Barnett formula, which calculates the block grants received by Scotland, Wales and Northern Ireland, needs urgent revision.
Fairer calculations based on those already used within England could see Scotland getting £4 billion less than it currently does – while Wales could receive around £300 million more.
But writing in the Financial Times newspaper, the commission’s chair Gerald Holtham warned that the argument was in danger of being ignored “at a time of great fiscal strain”.
In a comment piece with commission member David Miles, who is also a member of the Bank of England’s monetary policy committee, Mr Holtham added: “The government might feel such an exercise will lead to more spending for the devolved governments and should not be started when the deficit is so high.
“But in fact, reform of the Barnett formula could make the system fairer – particularly to the English regions – and save the taxpayer more than £3 billion a year.”
Last year the Calman Commission made a similar series of proposals applying to Scotland. It argued the total grant should be reduced but that Scottish ministers should be given more control over it, to improve their accountability to Scottish voters.
“As the government introduces legislation to give effect to the Calman proposals to extend taxation powers to the Scottish parliament, it would be extraordinary if it did not take the opportunity to put the block grant on a rational basis at the same time,” Mr Holtham added.
