Speech to Senedd Barnett Debate 14
July 2015
Thank you
Presiding Officer
The motion
is a simple one
And one I
hope all members can support
Believes
that as long as the Barnett formula continues then expenditure on developments
that only benefit England, such as HS2, should produce the full Barnett
consequential for Wales; and
Further believes that, when the UK Government
and Welsh Government are in dispute over whether expenditure should produce a
Barnett consequential for Wales, there is a need for an independent body to
arbitrate.
I am not
trying to make any party political points here
Just get
Wales its fair share of resources under the current system
The Barnett
formula has been used since the late 70s
A formula
for allocating funds between the Countries of the union goes back to the
Goschen formula introduced in the 1880s
The Barnett
formulas great strength as far as the treasury is concerned it is simple to
calculate and the treasury decides if expenditure is inside or outside the
formula
The Barnett
formula generates a change by multiplying the increase or decrease of Spending
by Government Department*% devolved* relative population
The treasury
decides what % is devolved
There is
also a problem of relative population change but that is beyond the scope of
this debate
More important
the Treasury decides what is excluded or included
Crossrail
was included so I am told
High Speed
rail is not
Purely a
treasury decision
London
Olympics was excluded then partly included on appeal
There is no independent
appeal method
There is no
independent arbitration
Firstly I am
going to examine the London Olympics
The Olympics
are given to a city not a country
Expenditure
on the Olympics was almost all spent in London
Some team
sports like Football were played all over Britain and shooting for historical
reasons was held at Bisley
The big
stadium development and the regeneration took place in London
One of the
selling points of the London Olympics was that it would regenerate a part of
East London
Both
regeneration and sport are substantially devolved
Under our
current devolution settlement I am afraid to describe anything as wholly
devolved
Whilst on
the face of it this should be a simple process that should have taken up very
little time
This was a
prolonged & lengthy matter, starting under one Government of one colour in
2007/8, passing through a number of discussions and finishing in a dispute
brought by the three devolved Nations against the Treasury ruling, with a Government
of another colour.
Essentially, at the outset the Treasury had some 4 or 5 different budget lines
for the Olympics
Some were
recognised as UK orientated and some as falling into the Barnett remit, ie
those related to infrastructure & regeneration spending & on which
there should be a consequential generated.
However, before anything happened, the Treasury collapsed the spending into a
couple of lines & ruled that they were both UK orientated & hence no
consequential would be provided.
Wales and the other devolved Governments challenged this ruling, initially at
officials, then at Ministerial level. However the Treasury were judge and jury
on these matters and would not budge, but the Ministers argued strongly,
persevered & then entered into the JMC dispute mechanism.
After several rounds, the matter was eventually referred to a meeting chaired
by the UK Cabinet Office Minister
He determined that there should be a settlement ; which after considerable
deliberation, was accepted.
The process took over 4 years and as far as I know it is the only matter which
has gone through to the end and the first time Treasury were instructed to make
payments.
What Wales received
was £8.8m in 2011-12 as a one-off settlement. It was allocated to reserves
and supported the allocations that year.
It was received as £8.622m revenue, £0.241m capital.
The Olympics cost has been declared at £9 Billion
5.4% of £9billion
Is about £480Million
£8.62
Million is less than Swansea East should have had
Decision
made and no appeal
We have
budget decisions made and then the negative or positive Barnett consequential
is announced.
If the
system worked correctly the positive or negative amounts could be calculated
and more importantly checked
In today’s budget
there will inevitably be positive and negative Barnett consequential
It is not
possible to sit down and calculate it and be certain of being accurate even
within the 5% you would expect.
The Treasury
still seems to treat the devolved administrations in Wales, Scotland and
Northern Ireland as if they were Government Departments.
I would like
to see the calculations that indicate how much more or less that the Welsh
Government gets following each spending review.
If it is
possible for the Welsh Government to publish the local government formula then
it should be possible, if there is the political will, to produce the same for
funding of Wales, Northern Ireland and
Scotland
It is the
big schemes that cause me the most concern
I have
discussed the London Olympics now I want to turn to Crossrail and HS2.
Wales is
alleged to have had the full Barnett consequential of the Crossrail 1 development
in London
Crossrail is classified as a "local transport
project", hence generates a Barnettt consequential.
We'll need to watch carefully of course that future Crossrail projects are similarly
classified because a change in classification could mean no consequential
Currently there is a Barnett consequential
for Scotland and Northern Ireland from spending on Network Rail and Capital
Rail Projects, but not for Wales.
However, there is a consequential for Wales
from spending on Crossrail in England, and Wales will hope to benefit from up
to £1bn extra from a proposed Crossrail 2 scheme.
There are
two ways that Wales can be excluded from any Barnett consequential of HS2
Firstly HS2
is an investment that will benefit all of the UK, the current plans will
benefit England more than other countries but if an investment is deemed to
benefit all of Britain then it does not provide a Barnett consequential for
Wales.
Also rail is
not devolved but transport is partly devolved.
So if a rail scheme is defined as a rail scheme there is no consequential but
under the local Transport heading there is.
What I hope
I have argued successfully, although I expect I will discover whether that is
true later this afternoon, is the need for transparency and an independent
appeal mechanism.
If we are
going to continue with the Barnett formula then we should have openness and
fairness in its distribution
For that
reason I urge members to support this motion today