HC Deb 10 December 2003 vol 415 cc1043-4
3. David Taylor (North-West Leicestershire) (Lab/ Co-op)

What recent discussions he has had with the First Secretary about the impact of the Barnett formula on the economy of Wales. [142071]

The Secretary of State for Wales (Mr. Peter Hain)

Regular ones. The Barnett formula is a means of calculating changes to the Welsh block from its historic base. Welsh gross domestic product per head increased by 15.6 per cent. between 1997 and 2001.

David Taylor

The Barnett formula has now reached its quarter century, and its eponymous creator has said that it has become terribly unfair. Does the Secretary of State agree that that deeply unsatisfactory way of distributing Government grant should be replaced by a needs-based formula throughout the United Kingdom—[HON. MEMBERS: "Hear, hear."]—as that would be more equitable for the people of the English regions such as my own, the east midlands, as well as for the people and the economy of Wales?

Mr. Hain

I thought it interesting that my hon. Friend was cheered by the Welsh nationalists—he might want to reflect on his position—but I understand the very fair point that he makes on behalf of his constituency, North-West Leicestershire, and what I want and what the Government are delivering is record investment right across Britain, rising employment and improved public services. He is nodding his head in agreement. Of course he will understand that Wales has much higher deprivation historically and ill-health problems. There were 35 per cent. more incapacity benefit claimants in Wales than in the east midlands, despite the fact that the population of the east midlands is 1 million higher. So those problems have to be tackled, and the Barnett formula was designed to address that.

Lembit Öpik (Montgomeryshire) (LD)

Is the Secretary of State aware of a large, possibly Barnett-related deficit in mid-Wales health provision? For some years, the Royal Shrewsbury hospital has generously subsidised its services to Welsh patients. Does he accept that, with the best will in the world, that cannot continue? Is he willing to discuss whether the extra funding needed to remedy the problem should rightly come from the Welsh Assembly's existing budget, or possibly result from an adjustment to the Barnett formula?

Mr. Hain

The hon. Gentleman will understand that there is record spending on health provision in Wales, including in his constituency—I am grateful to him for nodding his head in agreement—and that the Welsh health budget has nearly doubled. I understand, however, that the subsidy in his constituency in respect of patients who are treated in Shrewsbury is an issue. I will certainly look into that and discuss it with the Secretary of State for Health and the First Minister.

Mr. Win Griffiths (Bridgend) (Lab)

My right hon. Friend will be well aware that, apart from the national health service providing excellent care for people in Wales, it makes an important contribution, through employment, to the Welsh economy. What consideration has he given to the fact that it has now been established, through the Yvonne Watts case, that there is such a thing as a waiting time that can be regarded as too long? What implications does that have for the health service and the Barnett formula, given the fact that waiting times in Wales are generally longer than in England?

Mr. Hain

These matters are being addressed. Of course the health budget that comes from applying the Barnett formula and the consequentials that flow across from the Treasury to Wales are now funding health services, reducing waiting times and improving health services in Wales. That should encourage my hon. Friend to say that things are improving under Labour, both here in Westminster and down in Cardiff as well.

Adam Price (East Carmarthen and Dinefwr) (PC)

Professor Maclean of Nuffield college has recently estimated that the Welsh Assembly Government would receive £620 million a year extra under the needs-based allocation. Since there is a range of views on this subject, will the Wales Office consider commissioning an independent study, so that we can have an objective assessment of whether Wales would be better off under a needs-based formula or the present arrangements?

Mr. Hain

We will continue to keep these matters under review. I note that the hon. Gentleman takes a close interest in them, but he will agree, because this is demonstrated by the facts, that wealth per head, spending and employment have been rising in Wales since 1997, and that Wales has been doing much better than most other parts of the United Kingdom and, indeed, most other parts of the world. He will also be aware that, partly because of the higher deprivation and need, total identifiable Government spending in Wales is 13 per cent. above the equivalent UK average and 18 per cent. above the English average. If the nationalists got their way, as he would wish, and Wales broke away from Britain, it would be plunged into poverty. That is the price that nationalism would have to pay.

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