Barnett Formula: Wales

Lord Wigley Excerpts

Wednesday 12th November 2025 Lords Chamber

Asked by

[Lord Wigley]

To ask His Majesty’s Government whether they plan to review the Barnett Formula to ensure needs-based funding in Wales.

[Lord in Waiting/Government Whip (Lord Wilson of Sedgefield) (Lab)]

The Barnett formula is a key part of the arrangements for pooling and sharing risk and resources across the UK. It is simple and efficient and provides a clear and certain outcome. The inclusion of a needs-based factor in the Barnett formula ensures that it accounts for the high relative needs of the Welsh Government and funds them above Wales’s independently assessed level of need compared with equivalent UK government spending in England.

[Lord Wigley (PC)]

My Lords, when the Barnett formula was first established, more than 100,000 people worked in coal and steel in Wales; that is now down to under 5,000. Does the Minister recall Lord Barnett admitting that his formula was outdated, with the consequent underfunding of Wales hidden by European regional grants, which have now ended? Has the Minister seen Cardiff University’s recent report stating that Wales receives far less than its population share of funding for reserved functions such as justice and railways, calling for the tripling of the Senedd’s borrowing capacity and for full income tax devolution? If the Minister cannot commit to a needs-based formula, will the Government at least now take the opportunity to give the Senedd parity of financial powers with those that the Scottish Parliament now has?

[Lord Wilson of Sedgefield (Lab)]

I thank the noble Lord for that question. The Barnett formula does reflect the higher level of needs in Wales. A 5% needs-based factor in the formula ensures that Wales receives fair funding. It is the biggest uplift since 1998, when devolution started. As far as the railways are concerned, the UK Government are responsible for heavy railway infrastructure across England and Wales—it is devolved, I believe, to Scotland—so spend money on railways in Wales, rather than funding the Welsh Government to do so. This is consistent with the funding arrangements for all other policy areas reserved in Wales. Wales continues to benefit from rail investment. At the 2025 spending review, the Chancellor announced an investment in Welsh rail of at least £445 million.

Devolved Authorities: Use of Resources

Lord Wigley Excerpts

Wednesday 23rd April 2025 Lords Chamber

[Lord Wilson of Sedgefield (Lab)]

I thank my noble friend for that question. I want to focus on the big issue that is confronting this country—whether it is Ireland, Scotland, Wales or England—which is growth. My noble friend pointed out that the city region and growth deals are funded by the UK Government. The Scottish Government are receiving £119 million in 2025-26 for city and growth deals. The Government confirmed at the Autumn Budget that investment in the Argyll and Bute growth deal will continue to be available and will be supported by a rigorous value-for-money assessment as part of the review. The £25 million Argyll and Bute growth deal was signed in March 2025. There are other elements to growth in Scotland: one of the main ones is that GB Energy will be based in Aberdeen.

[Lord Wigley (PC)]

My Lords, I welcome the statement made by the Minister that it is indeed for the devolved authorities to spend the money that they receive in accordance with their own priorities. He mentioned the Barnett formula; will he admit that whereas it may be working very well for Scotland, it is not working well for Wales, and it certainly needs to be reconsidered? Will the Government please address that?

[Lord Wilson of Sedgefield (Lab)]

Because of the Barnett formula, Wales receives 15% more than the average for the rest of the UK. We also need to point out some of the advantages of the Welsh and UK Governments working together. Under the AI opportunities action plan, Vantage Data Centers, which is working to build one of Europe’s largest data centre campuses in Wales, announced plans to invest £12 billion, providing 11,000 jobs across Wales. There are also expected benefits in direct payments for 150,000 workers in Wales through the minimum wage rise. There are 2.1 million people in Wales who will benefit from the extension of the 5p cut in fuel duty.