Warning that Wales funding change is too big a risk

Former Labour minister Joel Barnett, who died earlier this month, is credited with creating the formula used to share public spending Credit: PA/PA Wire

The method of deciding how much money Wales gets from the UK Government, should continue even though it's unfair, according to a former adviser to the Blair government. But, writing in the new issue of Prospect magazine, John McTernan predicts that, anyway, the Barnett formula will 'gradually be eroded ... over time.'

The formula has been the focus of renewed interest since Scotland's independence referendum when David Cameron, Nick Clegg and Ed Miliband made their 'vow' to Scottish voters which included pledging to continue with the current funding arrangements.

Those arrangements are generally agreed to have been over-generous to Scotland while leading to a shortfall in the money Wales could expect to have seen if funding were shared according to the different needs of each of the UK's nations. Politicians from all parties have committed to finding a way to deal with the perceived unfairness to Wales.

Calls for change received perhaps surprising support from Joel Barnett, the former Labour cabinet minister who was credited with inventing the formula and who died earlier this month at the age of 91.

He'd repeatedly said it was a short-term, political solution to the particular financial circumstances of the late 1970s and not intended to become a 'formula' nor to last nearly four decades.

In his Prospect article, however, John McTernan, warns that 'the system in which Wales is trapped is not...easily changed.' He acknowledges that the Barnett Formula was developed to deal with political difficulties:

It’s not a needs-based formula, it’s not scientific, it was just a blunt instrument to help with managing the spending round.

John McTernan

McTernan sees that as proving to have been the strength though, not the failing of the Barnett Formula. He writes that Joel Barnett's 'unacknowledged genius' was to solve a political problem by 'avoiding the fundamental question' and contrasts it with the damage done in other areas, such as pensions, which politicians repeatedly try, and fail, to improve.

But he predicts that the end of the formula is in sight and that, as power is devolved to English regions and revenue-raising powers are devolved to the nations, 'Barnett will gradually be eroded - pragmatically and over time.'

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