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MP calls for ‘fair funding’ for Wales

PLAID CYMRU Treasury Spokesperson, Jonathan Edwards MP, has called for a radical rethink of how the nations and regions of the UK are funded through the establishment of an independent Office for Fair Funding.

Writing in Wales on Sunday, Mr Edwards said he would propose legislation – in the form of a 10 Minute Rule Bill – in Westminster which would establish the new expert-led, independent body.

The organisation would have a statutory obligation to deliver geographic wealth convergence, as well as for deciding on funding settlements for the devolved nations and regions of the UK.

Recent international data has shown that the largest difference in economic prosperity in Europe was between Inner London, the UK’s richest region (with a regional GDP average of 614% of the EU average), and West Wales and the Valleys, the UK’s poorest (with a regional GDP 68% of the EU average).

Disputes between devolved government and Whitehall relating to how nations are regions were funded could also be resolved by the independent body, Mr Edwards suggested.

For example, the dispute over HS2’s consequences for Welsh funding could be examined by the Office.

The greater the spending on HS2 the greater the proportional fall in funding Wales will receive.

This is due to ‘comparability factors’ – the measure Westminster uses to decide how much spending by a Whitehall Government Department relates to issues that are devolved.

Scotland and Northern Ireland get a score of 100% on the HS2 comparability factor, whereas Wales gets a 0% score (as confirmed in the British Government’s Statement of Funding).

This leads to a counterintuitive scenario where, as the Department for Transport’s budget increases to meet the spending requirement of HS2, Scotland and Northern Ireland will receive corresponding uplifts in the money it receives.

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Whereas Wales’s overall comparability factor will proportionally decrease, meaning Wales will receive a smaller slice of the overall funding.

This will also mean that as spending accelerates on HS2 during the construction of HS2 the proportional disadvantage for Wales increases.
Carmarthen East and Dinefwr MP, Jonathan Edwards said: “For decades, British Governments – red and blue alike – have tinkered around the edges of the broken economic system without challenging its fundamental problems.

“That is why, as a first step in rebalancing things, I am proposing a new law that would establish an independent Office for Fair Funding. The independent, expert-led organisation would be legally bound to deliver a fairer economic balance between the nations and regions of the UK.

“London and the south-east of England continue to act as a black hole, sucking in talent and investment from the rest of the UK. Things have got so bad that recent data has shown that the inequality between London and Wales was the worst in Europe.

“These inequalities have disfigured the UK economy to the point where we no longer have a ‘UK economy’ in any meaningful sense.

“The Office of Fair Funding is not a silver bullet. There is little hope on the horizon of a fundamental shift away from the over-centralised British State, but it could be the first step on the much-needed journey towards a fairer, more equal economy.”

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