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Allocation of funds

'(1)   The Secretary of State shall appoint a panel of not less than four and not more than six experts to recommend the sums of money to be allocated to the Welsh Consolidated Fund.

(2)   The Secretary of State shall publish in full the terms of any recommendations made under subsection (1).

(3)   The panel shall have regard to—

(a)   the principle of fairness,

(b)   the principle of transparency, and

(c)   the particular needs of Wales.'.—[Lembit Öpik.]

Brought up, and read the First time.

Lembit Öpik: I beg to move, That the clause be read a Second time.

I am grateful to the hon. Member for Chesham and Amersham (Mrs. Gillan) and her colleagues for speaking so briefly on the preceding new clauses.

New clause 11 deals with the allocation of funds. It returns us to the age-old debate, which I have initiated many times over the past nine years, about the principles of fairness, transparency and a needs-based formula for conveying money to the Welsh Assembly and thus to the Welsh people. Currently, as all Members know, we have the Barnett formula, which is so discredited that Barnett himself—the inventor of the formula—says that he is
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ashamed to be associated with it. It was good for its time but its time has long gone, and for that reason we Liberal Democrats propose new clause 11, which would require the Secretary of State to

The Secretary of State would also be required to publish in full the terms of any funding recommendations made by the panel. Moreover, the panel would have specific regard to

The problem is that the Barnett formula is not needs-based and does not take account of the social and economic conditions of Wales. Furthermore, it has random unintended consequences that create difficulties in allocating funds to Welsh expenditure. If we compare what Wales is given with what it needs, it is clear that it often loses out. The levels of deprivation in Wales and its economic circumstances are often quite different from those in the rest of the UK. So our request is very simple: that the Government take on board a recommendation that has come from all quarters, including from the inventor of the existing formula himself; and that, for once, they listen to recommendations—made, on this occasion, by Opposition politicians—based on common sense.

Mrs. Gillan: The other day, the First Minister said that Wales has 5 per cent. of the UK's population and makes 4 per cent. of its income but receives 6 per cent. of that income. Does the hon. Gentleman envisage improving those figures through his new clause, or worsening them?

Lembit Öpik: We are not seeking to gerrymander the formula in favour of Wales; rather we are trying to ensure that it is fair to Wales—and, for that matter, to Scotland and Northern Ireland—by it being needs-based. We have to take the chance that, as Wales prospers under a Liberal Democrat Administration, its funding will be less because its needs will be less. But so far as we are concerned, this is not about begging bowls and asking for more; rather, we are asking for fairness. As the new clause makes clear,

are the right bases on which to allocate funds.

In conclusion, I look forward to hearing what the Minister and others have to say. I hope that he will say that he has been persuaded by the arguments—arguments that have been made many times before—and that he will incorporate the new clause. If he does, he will be a hero not just to the Liberal Democrats but to the people of Wales. If he does not, he will stand condemned alongside other Ministers who have shown a similar unwillingness to demonstrate the ability to listen that this "listening" Government so often claim for themselves.

Mrs. Gillan: I was not going to speak to this new clause—until I heard what the hon. Member for Montgomeryshire (Lembit Öpik) had to say, whereupon I was forced to my feet. I am sorry to say that if he presses it to a vote, I will be unable to recommend
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to my hon. Friends that they support him, not least because of the wishy-washy nature of subsection (3). [Interruption.] Someone said "Surely not" from a sedentary position, but

is fairly wishy-washy and imprecise language, as I anticipate the Minister will agree.

This is possibly a good-hearted attempted by the Liberal Democrats and I do want to be fair to the hon. Gentleman, who is probably leading with his heart but certainly not with his head. As he just said, if, under this new and magic formula Wales gets less money, well, so be it. Of course, much as that might appeal to people in Northern Ireland, Scotland and England, I doubt whether the people of Wales would be very happy to discover such an attitude toward the support that they receive. As I pointed out earlier, the First Minister has said that he supports the current situation. I therefore doubt very much whether the Government will accept the new clause—particularly given that it has not been planted and then moved by a Labour Back Bencher, but has genuinely come from the Liberal Democrats—because doing so would put them directly at odds with the First Minister.

8.15 pm

Mr. David Heath (Somerton and Frome) (LD): I am most grateful to the hon. Lady for giving way. She is obviously taking a view in her capacity as shadow Secretary of State for Wales, but does she not think that a fairer and more transparent system would be in the interests of many of the English constituents whom she and I represent?

Mrs. Gillan: The hon. Gentleman is perhaps in danger of being ruled out of order, Madam Deputy Speaker. [Interruption.] You are indeed nodding, and we are not going to go down that route. We are not discussing the English regions, much, of course, to his chagrin; rather, we are discussing Wales and the people of Wales and what is best for them.

Although the hon. Member for Montgomeryshire has tabled the new clause with hope in his heart, to be fair to the people of Wales, he is probably doing them a great disservice in doing so. If he presses it to a vote, I will be unable to support it.

Adam Price : I am disappointed to hear the hon. Member for Chesham and Amersham (Mrs. Gillan)—who has been gracious, as ever—say that, unfortunately, the Conservatives will not support the new clause, despite the spirit of revisionism that seems to be blowing through their party as we speak. This is an opportunity for us to raise the hugely important question of the Barnett formula, which is a non-statutory formula. Indeed, this is one of the few opportunities that we have had in recent years to force a vote on this issue, which, notwithstanding law-making powers and the various other important matters that we have been discussing, is probably the single most important determinant of the Assembly's and the Assembly Government's ability to improve the lives of the people of Wales.

The Barnett formula is a convergent formula: over time, it results in a fall in the relative position of public expenditure per capita in Wales, compared with
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England. For example, only six years ago—in 1999–2000—the public expenditure per capita index figure for devolved services in Wales was 115. Now, it has fallen to 112, which is a very significant relative fall over that period. That process will continue until we reach the point at which Wales and England are exactly the same, even though there is no guarantee that the level of need in Wales and England—the economic and social position—will be identical. That is why we must support the principle of a needs-based formula.

Mrs. Gillan: This matter is far too important to be discussed in the dying minutes of consideration on Report. It demands full and fair examination at another point, and in that regard I am in agreement with the hon. Member for Montgomeryshire (Lembit Öpik). Before I paint myself into a corner, let me reiterate that this issue needs discussion, but not at 19 minutes past 8 o'clock, with a guillotine about to fall at 8.30.

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