Holtham and Hain

Here is a clip from Dragon's Eye last night including interviews with Gerald Holtham and Peter Hain:

     

Gerald Holtham repeated the key point from his Commission's findings: namely that if Wales' devolved public services were funded on the same needs-based formulas the UK spending departments apply to the English regions, we would get 114% of average English spending.

It's good to hear it from the man himself.

But Peter Hain's response ... well that's something else entirely. Let's start with these two quotes:

"Barnett has got Wales to a roughly fair position at the present time."

"I'm persuaded that Wales' funding is pretty well fair now ... but it could deteriorate."

Really? Why not take another look at this chart?
 

     

So what is Peter Hain saying? If he thinks that 112% is just about fair now what he's really saying is that Wales was vastly overfunded when relative spending was roughly 125%. Therefore in the twelve years that Labour has been in power, it has been the conscious policy of the Labour government in Westminster to drive down public spending in Wales relative to England.

Is that something for Labour in Wales to be proud of? As Adrian Masters said, it's Peter Hain's job to get a better deal for Wales. But his response was,

"I do precisely that."

No, Peter. You're letting your vanity get the better of you again. That's precisely what you didn't do. Relative spending has dropped from 125% to 112%. Under Labour's stewardship, the relative difference has been cut to less than half what it used to be.

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Now of course it could be claimed that it was wrong for Wales to have had such high relative spending back in the 90s. It might be unpopular but, in intellectual terms at least, it's semi-cogent.

But only semi-cogent. Because if you want to argue that it is right for public spending per head in Wales to be driven down, then it must be right that public spending in Scotland—where the differential is very much greater—is brought down too.
 

    

If you click on the table above, you will be able to see that this simply hasn't happened. The PESA figures show that over the past six years relative spending (the UK as a whole is 100) in Wales has gone down from 114 in 2002-03 to 110 in 2007-08. But for the same period relative spending in Scotland has in fact gone up from 117 to 118.

So the Secretaries of State for Scotland have obviously been fighting Scotland's corner well enough. It's only in Wales that the Secretary of State hasn't been doing his job!

So what does Hain do next? He wanders off into a fantasy world and says:

"Is Rhodri Morgan going to go to Alex Salmond and demand a bit of Scottish money from Edinburgh?"

No, Peter. It's your job to demand the money. But you don't have to go to Scotland for it. The people you need to deal with are all in London. Alex Salmond doesn't decide how much money Scotland gets ... the Labour government in London decides how much both Wales and Scotland get. You need to be fighting Gordon Brown and Alistair Darling to make sure Wales gets its fair share.

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I was at this point going to launch into Peter Hain's hypocrisy. But I thought better of it. Peter Hain is what Peter Hain is. His political priority is London. That's his main home, that's where his bread is buttered, that's where his shadowy think tank, the Progress Peter Forum, is based. Neath was just a safe seat for him to be parachuted into.

Wales has 28 other Labour MPs and, addressing you directly, nearly all of you have a closer association with Wales. If Peter Hain won't fight for Wales, then you must. Your party is in government, your party can do something about it.

What you can do is simple and straightforward: insist that the "Holtham Correction" is applied now. I won't repeat what I said before, I'll just quote verbatim from the Holtham report:

The immediate priority

6.7 We are realistic about the scale of the political challenge and are aware that developing and implementing the new system may take some time. However, the arbitrary and obsolete nature of the formula requires some immediate changes that follow from already agreed principles and can be implemented without any radical innovations in practice.

6.8 Our analysis has shown that Wales currently receives less than it would were it to be funded by the UK Government using the formulae it applies to England. In the absence of reform, the gap between Welsh relative needs as assessed on the UK Government’s criteria and the level of funding provided by that same Government, will increase. This situation cannot be left unresolved until political agreement is secured on more substantive reform.

6.9 As a matter of principle, Barnett-driven convergence should cease when a devolved administration’s budget is no larger than it would be were it funded as an English region. In the case of Wales this point has already been reached; our analysis has demonstrated that Wales would receive £114 to spend on devolved activities for every £100 spent in England if its budget were determined by English funding formulae.

At a minimum, no further convergence in relative funding per head should occur in Wales until a new funding system is in place. A straightforward remedy would be to simply multiply any positive increments allocated to Wales by 114 per cent. This small adjustment to current arrangements would place a floor under the funding provided to Wales, and would prevent any further convergence until such time as more comprehensive reform has been agreed.