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Posts Tagged ‘Barnett formula’

As I mentioned yesterday, Danny Alexander’s remarks about the way Wales is funded undermine one of Labour’s arguments for a Yes vote in next year’s powers referendum. The Chief Secretary to the Treasury told AMs there’d be no reform of the Barnett formula anytime soon, regardless of the referendum’s outcome.

But at last weekend’s launch of ‘Labour Says Yes’, one of the main selling-points to doubters within the party was the claim that the funding reform had been linked to a Yes vote. You can read Carwyn Jones’ full speech here but this is the relevant section:

“There is now a financial incentive to get a ‘YES’ vote. Thanks to the Holtham Commission, we now know that Wales in underfunded to the tune of £300 million per year.  Bizarrely, the ConDem Government have decided, for some inexplicable reason, to link a successful outcome to the referendum to the reform of how Wales is funded.  In other words, if Wales votes ‘YES’ next March, we could get more money. But, a ‘NO’ vote will mean not just the status quo in legislative terms, but in funding too.”

But in fact Danny Alexander’s remarks make it clear that a Yes vote WON’T mean more money. Actually Mr Alexander said that what’s more likely after the referendum is that he would look favourably on any bid for borrowing and taxraising powers.

As my colleague Gareth Hughes tweeted yesterday, these two statements taken together actually help the No campaigners in their arguments.

Perhaps they’re following Gareth on Twitter, because on cue, the True Wales group has said today that the Yes camp’s case has been “demolished” adding that,

“True Wales would like to challenge the ‘Yes’ parties to let us know whether they will now quietly drop their line that voting  ‘Yes’ will mean more money for Wales now that in fact it means more taxes. “

You haven’t heard the last of this.

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At Welsh Labour’s special policy conference which was held at the weekend, the party launched its own Yes campaign for next year’s powers referendum. One of the main messages used to win over doubters within Labour was that the UK government would only look at reforming the way Wales is funded – the notorious Barnett formula – once a Yes vote had been secured.

But using that tactic has become a lot more difficult today after the Chief Secretary to the Treasury, Danny Alexander, effectively ruled out any change to the formula even after the referendum.

Questioned repeatedly on this by AMs on the Finance Committee, Mr Alexander said ‘At a time when our most pressing priority is to sort out the deficit, this is not the time to start opening up debate on reform of the Barnett formula.’

What, asked Plaid’s Janet Ryder, even if there’s a Yes vote? Once again the reply was that all of (the UK government’s ) attention had to be devoted to the problem of getting the public finances under control, not opening up discussion on a funding formula.

Some of the committee members noted that Mr Alexander is a Scot representing a marginal Scottish constituency and that any change would hit funding to Scotland.

But the Chief Secretary stuck to his insistence that getting out of the deficit came first.

A few other snippets. Plaid’s Chris Franks claimed that all the big spending projects seemed to start or end in London. In response Danny Alexander listed other projects outside of London, but which were all in England.

‘You’ll mention Wales in a minute,’ Chris Franks interrupted.

And get ready to hear a lot about End of Year Flexibility. It’s a technical bit of financial jargon but former finance minister Andrew Davies knows a thing or two about that. He struck home a fair few times, accusing the Treasury of seizing for itself money that had been voted by parliament to go to Wales.

Tense and heated in some parts then, but when I grabbed a word with Danny Alexander on his departure he still said he’d found it a ‘positive discussion.’

 

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