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Senedd Members unanimously called for a fairer funding formula for Wales.

Rhun ap Iorwerth led a debate calling for the “outdated and unfair” Barnett formula to be scrapped, warning Wales gets a “poor deal”.

The population-based Barnett formula – which was devised as a temporary measure in the late 1970s by Labour’s Joel Barnett – is used by the Treasury in Westminster to set public spending in Wales, Scotland and Northern Ireland.

Mr ap Iorwerth told the Senedd: “The inadequacy of the Barnett formula has been apparent ever since its inception, which, of course, way predates the devolution era.”

The Plaid Cymru leader pointed out Wales faced a £72m shortfall from Westminster to cover the increased cost of national insurance in the public sector due to the “flawed” formula.

‘Contempt’

Mr ap Iorwerth argued Wales is owed around £5bn from rail projects across the border being classified as “England-and-Wales”, denying the Welsh Government consequential funding.

He criticised Darren Jones, chief secretary to the Treasury, for telling a Welsh MP he should be “more grateful” for rail cash,  which “typifies the contempt shown by the UK Government”.

The former broadcast journalist described the Welsh Government’s approach as trying to squeeze fairness from a fundamentally unfair system.

Sam Rowlands, for the Conservatives, called for a review of the fiscal framework – a 2016 agreement between the Welsh and UK Governments on funding and tax powers.

He said: “In simple terms, the Welsh Government receives £1.20 from the UK Government for every £1 spent on public services in England.”

‘Needs-based’

Mr Rowlands said Scotland has had two such reviews since 2015, increasing a cap on borrowing powers which now rises in line with inflation unlike in Wales.

He added: “Our friends in Northern Ireland have benefited from recent reviews too. Their most recent review, published in 2024, provides a Barnett needs assessment of a 24% increase against Wales’ 20%. So, it doesn’t seem right to me.”

Labour’s Mike Hedges said the Barnett formula evolved from the Goschen formula, which was used to allocate funds to Scotland and Ireland relative to England and Wales.

“The formula was thus never designed with Wales in mind,” he told the Senedd.

Rhys ab Owen, an independent, warned that the Barnett formula works on an annual basis, making it difficult to plan for the longer term.

Calling for a needs-based formula, he said: “Funding is linked to specific changes in public spending in England and is fundamentally responsive to English… rather than Welsh need.”

‘Bung’

Pointing out that Scotland and Northern Ireland can borrow £3bn compared with £1bn in Wales, Mr ab Owen said: “County councils, in proportion to the population they represent, also have more borrowing powers than the Welsh Government.”

Responding to the debate on June 25, Mark Drakeford backed the motion which is “nothing more than a restatement of the long-standing policy of successive Welsh Governments”.

He agreed with Lord Barnett who himself described the formula as grossly unfair in 2003.

Warning that the formula is often bypassed, Wales’ finance secretary told the Senedd: “Funding is not allocated fairly and systematically across the devolved countries.

“A good example is the Theresa May bung of £1bn to Northern Ireland following the 2017 election, purely driven by the need to prop up a minority Conservative UK Government.”

The former First Minister vowed to make the case for replacement of the Barnett formula at a meeting of finance ministers from the four nations in London the following day.