Plaid Cymru is hoping to use today's debate on the controversial HS2 rail scheme to ensure extra money is given to Wales as a result. Jonathan Edwards MP has tabled amendments to the legislation paving the way for HS2 which will be voted on in the Commons today.
He says his amendment will be 'the last chance to enshrine in law' the principle that the Welsh Government should be receive funding equivalent to 5% of the cost of the project.
Plaid Cymru has fought a three year long campaign to ensure that Wales receives a fair share from HS2. The cost of the network has doubled over the summer to over £40bn according to the Treasury’s own estimates. Independent assessments by the Institute for Economic Affairs put the cost of HS2 at over £80bn. A fair share for Wales therefore would be between £3bn and £4bn.
Historically, Wales has been poorly served by Westminster Governments when it comes to transport infrastructure in our country – receiving less than half of what our population share would dictate. It’s no wonder that our transport systems are so poor.
The Treasury has issued a further statement on the disagreement between Welsh and UK Governments over extra spending as a result of the HS2 rail scheme. Click here to read the background.
The Treasury now agrees that the Welsh Government HAS received a relatively small amount of extra money (£35m) because the Department for Transport's cash for HS2 came too late to change the formula used to decide how much money Wales gets.
But it's made clear the formula will be changed before there's any major spending on HS2 which means that Wales won't get any extra money if the project finally gets the go-ahead. A Treasury source described the dispute as 'overplayed.'
At the Spending Round in June, the Welsh Govt received a capital consequential of £84.5m. This was based on a £2bn increase in the total DfT capital budget. The Barnett formula calculation used the framework set out at the Spending Review in 2010, which set out 73.1% per cent of changes in DfT spending are subject to Barnett consequential for the Welsh Government. The framework is expected to be updated at the next full Spending Review, as is usual practice, and will reflect the latest information on departmental spending.
Plaid Cymru's Treasury spokesman, Jonathan Edwards MP, says that he hopes Finance Minister Jane Hutt is right in the dispute with the Treasury over extra funding as a share of spending on the HS2 rail project.
A Welsh Government spokesman has further clarified why Finance Minister Jane Hutt is sticking to her guns in a disagreement with the UK Treasury. The dispute is over whether or not Wales has received a share of spending on the controversial HS2 rail scheme.
The Finance Minister's letter to the Assembly's Finance Committee is accurate. At the Spending Round in June, the UK Government allocated funding for HS2 in 2015-16 through the UK Department for Transport capital budget. This contributed to an overall increase in the DfT capital budget from £7.5bn to £9.5bn in 2015-16 - a £2bn increase. This increase includes funding for HS2. The Welsh Government received a capital consequential of £84.5m from the £2bn overall increase in the DfT capital budget.
Finance Minister Jane Hutt is standing by her claim that the Treasury has given the Welsh Government extra money as a result of spending on the controversial HS2 rail scheme.
She'd told the Assembly's Finance Committee that £84m was passed on in the recent Spending Review as a result of Department for Transport capital spending including HS2. The Treasury has disputed that claim.
But in this short interview with Lynn Courtney, Jane Hutt insists that the money - known as Barnett Consequentials after the formula used to work out Wales' share of UK Government funds - does reflect Westminster's spending on HS2.
Money given to Wales as a result of UK Government spending on the HS2 rail project could add up to an extra £5.3bn on the total bill according to opponents of the scheme. Finance Minister Jane Hutt has acknowledged that the Welsh Government has already received a further £84m from the Treasury.
The funding is known as a 'Barnett Consequential' because it's allocated using the Barnett formula for working out the share of UK spending devolved nations should receive. The move has been welcomed by Welsh politicians for setting an important precedent.
But it's also been criticised by opponents of the whole HS2 scheme who say it adds what the call the spiralling costs of the project.
The award for Barnett money to Wales is a clear admission that HS2 doesn’t benefit Wales, it hurts Wales, the same way it hurts many other parts of the country. Northern Ireland is in the same boat and must now be due for a pay out too, and now this precedent has been set we are be talking about another £5.3bn which has to be added to the current £50.1bn costs of HS2.
As we have always said and as keeps being demonstrated, the costs of HS2 will keep going up and the benefits will keep going down. It is time to go back to the drawing board, scrap HS2 and deliver the rail infrastructure improvements the whole country really needs.
The Welsh Government has responded to the news that its share of public spending per head is going up compared to equivalent Whitehall departments. It's issued a graph that shows what's happened over the years since devolution.
As public spending took off in the early years of devolution, the so-called 'Barnett squeeze' meant that Wales slipped from being 25% ahead of England to being 15% ahead. In other words, Wales got a smaller share of a cake that was getting larger.
It had fallen further by 2009 but has gone up again as the system is now limiting Wales' share of cuts, not increases. The fact that Wales gets higher spending per head is usually justified by our relative poverty and greater health needs but those factors aren't actually taken into account.
Figures released by the Treasury show that the process that has given the Welsh Government slightly smaller increases in funds than equivalent Whitehall departments has stopped. In fact it has gone into reverse, putting Wales more than 15% above England in terms of spending per head.
2011/12 15.0% more than in England
2012/13 14.6% more than in England
2013/14 15.1% more than in England
2014/15 15.5% more than in England
2015/16 15.8% more than in England
The Barnett Formula, invented to slowly bring Welsh public spending in line with England's, worked on the assumption that overall expenditure would keep going up. Now instead of restricting the Welsh share of any increase, it will limit the share of cuts.
The figures have been released under an agreement between the Welsh Government and the Treasury to monitor the figures for any return of the 'Barnett squeeze' on Welsh spending.