Rachel Reeves defends way Wales is funded by UK government

The chancellor has defended the way the UK government funds Wales despite calls within her own party for changes.

Welsh Labour Party members voted in June for reform of the system that determines what cash the Welsh government gets from the Treasury.

But Rachel Reeves said the UK government already spends “more per head in Wales than we do in England”.

She said disagreements within Labour were “healthy” for democracy.

Welsh Labour conference agreed in June to calls for the Barnett formula to be overhauled.

The formula determines the cash that the Welsh government receives based mostly on a share of population, and aims to maintain relative spending levels in the different nations of the UK.

Although an element of Wales’ needs are taken into account, critics argue that it does not go far enough.

Delegates at conference agreed a motion calling for a formula to be negotiated “based on fairness and an assessment” of what the country needed. The Welsh government has also long called for the formula to be reformed.

Director of the Welsh Treasury Andrew Jeffreys told a Senedd committee in March “the UK government doesn’t seem interested in any substantial reform to the way that system works”.

Reeves visited a remediation site in Afan valley to promote her government’s £118m spending on making coal tips safe.

Asked whether she was listening to calls for more devolution, she said: “We already spend more per head in Wales than we do in England, and we’ll work with the Welsh Labour government on making sure that we always get that balance right.

“At the Spending Review, just a couple of months ago, we made a record settlement for Wales in that Spending Review.

“But, in addition to that, the UK Labour government is also spending directly here in Wales, with that investment in both rail projects and the remediation of the coal tips.”

The UK government announced £445m for Wales’ railways earlier in June.

When it was put to her that Welsh Labour in government disagreed on funding, she added: “The whole point of devolution is that different parts of the country, even from the same party, can put forward different priorities. That’s healthy in a democracy and healthy under a devolution settlement.

“If we agreed all the time on everything, what would be the point of devolution?

Reeves met Welsh government Finance Minister Mark Drakeford on the site visit, and said she would be meeting First Minister Eluned Morgan later on Thursday.

“If you ask Eluned, or you ask Mark, that in the last 15 years when has Wales been best served, I think both would say today because, for the first time in a decade and a half, we have two governments working together to focus on the priorities of the Welsh people,” the chancellor added.

Drakeford said the “basic responsibility for a Welsh government is to speak up for the things that matter here in Wales and it really doesn’t matter who is in power in Westminster”.

He told BBC Wales that the other UK nations that are subject to the formula would need to be persuaded.

He said it was a two stage process:

“There are things that need to be done to the Barnett formula itself… to make that formula work better and to be fairer.

“We’re having productive discussions, not only with the UK government, but with Scotland and Northern Ireland as well as to how we can make the present system work better for us all.”

Beyond that the Welsh government has an ambition “for a new formula”, the finance secretary said.

“You have to assemble a lot of political support for that, not just from the UK government, but Scotland, which does very well out of the Barnett formula, and Northern Ireland, who’ve done very well out of it in more recent times.

“We’re not going to do that in the short run, I believe. But that doesn’t mean we stop making the case.”

Plaid Cymru spokesperson for finance, Heledd Fychan, said: “Despite the promise of two Labour governments working together – Labour in Wales have failed to use any supposed influence to bring any tangible benefits of this partnership in power as they’d rather save Starmer’s blushes than do what’s right for Wales.”

Welsh Liberal Democrat leader Jane Dodds, said: “The chancellor’s statement today only shows yet again how little influence Welsh Labour have on their colleagues in London.”