Wales no longer significantly underfunded, Holtham says

Media caption,
Prof Gerry Holtham says Welsh funding has improved but he is not entirely sure why

Wales is no longer "significantly" underfunded compared to England, according to the economist who led a review into the matter.

In 2010, Prof Gerry Holtham said Wales was missing out under the Treasury's Barnett formula for setting grants across the UK nations.

He told AMs on Monday that Welsh public spending had since risen from 112% of the English average to around 116%.

The Welsh Government said it would keep calling for the system's reform.

Claims that Wales has been underfunded by the UK Treasury have long dogged negotiations over the devolution of tax powers to Wales for fear that it would preserve an unfair settlement.

The Holtham report in 2010 claimed Wales was losing out by about £300m a year through the use of a formula which did not fully take into account the cost of providing public services to a relatively older, poorer and less healthy population.

In November 2015 the then Chancellor George Osborne announced a funding floor that Welsh public spending per head would not fall below 115% of the figure for England.

"At the time we did the report in 2010 we were able to point to Wales getting 3% or 4% less than it should have been getting by the English comparison," Mr Holtham told the assembly's external affairs committee.

"Nobody has wanted to update that work because they are all afraid of what it might show.

"But as far as I can see, from a rather rough and ready updating of it, Wales is no longer significantly underfunded."

Mr Holtham said it might be down to a lag in the way the formula works.

'Not entirely encouraging'

Mr Holtham also accused the Welsh Government of not having a strong enough economic strategy, saying ministers should focus on a smaller number of priority areas.

"You cannot concentrate on nine sectors which make up 80% of the economy," he said.

"That is diffusion not concentration."

He also warned that the UK government was unlikely to make up all the EU funding that Wales would lose after Brexit.

He said the "noises" from Conservative ministers in Westminster were "not entirely encouraging".

'Reform Barnett'

A Welsh Government spokesman said: "Our Budget in 2019-20 will be 9% lower in real terms than in 2010.

"Despite this, we have continued to invest in key public services, which matter most to the people and have taken steps to protect them from the worst of the UK Government's austerity agenda.

"The leave campaign made clear Wales would not lose a penny as a result of the decision to leave the EU.

"Following the vote to leave, we - and the people of Wales - expect those promises to be kept and delivered.

"We continue to call for reform of the Barnett formula, which takes no account of Welsh needs either now or over the longer term."