HC Deb 06 December 2001 vol 376 cc449-50
3. Hywel Williams (Caernarfon)

What plans he has to review the method of calculating the Barnett formula. [18684]

The Chief Secretary to the Treasury (Mr. Andrew Smith)

The Government's spending plans have been agreed for the years through to 2004, including allocations for Scotland, Wales and Northern Ireland. Those allocations are governed by the statement of funding policy incorporating the Barnett formula, and that remains the Government's policy.

Hywel Williams

Lord Barnett has said recently, in evidence to the Treasury Committee and in a debate in another place, that the Barnett formula should be replaced by the Barnett Formula Mark II"—[Official Report, House of Lords, 7 Nov 2001; Vol. 628, c. 228.] based on an assessment of need. Will the Chancellor accept that, in the eyes of the people of Wales, the legitimacy of the present formula will continue to decline so long as it is based not on actual need but on an historical assessment of need?

Mr. Smith

The hon. Gentleman would do well to remember that, as well as the increase of almost £2 billion that the National Assembly for Wales received under its Barnett formula allocation, Wales received nearly £100 million a year extra in support of its objective 1 status, which was secured thanks to the efforts of this Government. That is proof of the Government's commitment to Wales. In addition, over the spending review period, Wales shared in the £44 billion increase in non-devolved spending areas such as the police, defence and welfare to work. So, Wales has had a good deal from the spending review, unemployment has fallen there, and we are getting more people into jobs.

Roger Casale (Wimbledon)

When my right hon. Friend has a chance to look again at the Barnett formula, will he take special account of the needs of areas such as London, where even constituencies such as mine have pockets of deprivation and a need for further measures to overcome social exclusion, especially among the ethnic minority community? What my constituents will notice this year, however, is that, despite a global recession,

the Government have been able to deliver a 5.1 per cent. increase in the local government grant. That will help Merton council to keep the streets clean, to work better with the community and to keep the council tax down, in stark contrast to the years in which there were cuts and more cuts under the Tories.

Mr. Smith

I understand my hon. Friend's concerns. When we discuss these matters, it is important to remember that, as well as the allocations covered by the Barnett formula, there are other measures that the Government have in place, such as the new deal, the working families tax credit, the child tax credit, the pension credit and the recently announced stamp duty exemptions, all of which help to target extra assistance on the most disadvantaged people in the most disadvantaged areas. My hon. Friend's constituents who are in particular need will benefit from that programme of tax credits, and from the Government's resolve to tackle poverty and get another million children out of poverty.

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