Devolved Public Services: Funding

Lord Evans of Rainow Excerpts

Monday 1st June 2026 Lords Chamber

[Lord Katz (Lab)]

My Lords, I wondered how quickly we might divert away from the question relating to Wales. I salute the noble Baroness’s ingenuity in talking about proportional representation. We have other devolved settlements with mayoral authorities to introduce more proportional ways of voting, but I point out that not that long ago, we had a national referendum on moving to a more proportional way of voting for general elections and an alternative to first past the post—I see some close observers of electoral systems are dissenting from my observations, so I will say “moving away from” first past the post—and that was resoundingly rejected by the British public.

[Lord Evans of Rainow (Con)]

My Lords, Lord Barnett was an outstanding public servant as a Manchester Member of Parliament and a Treasury Minister under the Callaghan Government, and he was given the task to come up with this formula in 1978 to placate the Scottish nationalists. I had the good fortune to spend some time on trains from Manchester to Parliament, and I remember that about 10 or 15 years ago he expressed his surprise that that formula was still in place with his name on it. He said that it was past its sell-by date, was unfair to British taxpayers and should be abolished or reformed. What plans do this Government have in mind to reform the Barnett formula now that we have a nationalist Government in Wales?

[Lord Katz (Lab)]

I say to the noble Lord that just because something has been in existence for a long time does not mean that one necessarily has to think about reforming it as a matter of course. I inform the noble Lord, though, that the fiscal framework that has already been agreed between the UK and the Welsh Government added a needs-based factor into the Barnett formula to ensure that Wales receives fairer funding. As a result, the Welsh Government are receiving over 20% more per person than equivalent UK Government spending across the rest of the UK. The Institute for Fiscal Studies, no less, suggests that moving towards a different system, such as a needs-based system, could see the Welsh Government losing out on funding.