Mark Drakeford has warned Wales could miss out on up to 拢65m to cover the increased costs of employer national insurance contributions in the public sector. The finance secretary confirmed that Rachel Reeves, the 海角视频 chancellor, has decided to distribute national insurance funding via the Barnett formula.
鈥淚 think that she is wrong to do that,鈥 he said. 鈥淎nd I have said so in direct terms to the chief secretary of the treasury 鈥 as did the finance ministers for Scotland and Northern Ireland.鈥
As well as local authorities the increased in employer national insurance contributions applies to charities and GP surgeries. Also impacted is Welsh Government-owned Cardiff Airport and its investment bank subsidiary the Development of Wales.
He stressed: 鈥淲e should have been compensated for the actual costs, not a Barnett share.鈥
Prof Drakeford told the Senedd: 鈥淭he result is that we are now, it could be as much as 拢65m short of what we estimate public services in Wales 鈥 within the chancellor鈥檚 own definition 鈥 will have to pay.鈥
鈥楴ot fit for purpose鈥
Labour鈥檚 Alun Davies described the population-based Barnett formula, which was devised in the late 1970s as a temporary measure, as not fit for purpose.
During finance questions on he told the Senedd: 鈥淚t also ensures that Wales does not get a fair crack of the whip when it comes to the distribution of funding across the 海角视频.鈥
The Blaenau Gwent Senedd member voiced concerns about the 海角视频 Treasury using the formula to compensate public sector employers for national insurance costs from April.
Mr Davies said this would break an agreement that where one government takes a decision that has a negative impact on another, it should provide the costs in full.
Prof Drakeford agreed with his Labour colleague and Joel Barnett, who 鈥渕any times鈥 has described the formula he devised as no longer fit for purpose.
Holding a copy of the of funding policy referred to by Mr Davies, he said talks with the 海角视频 treasury on the matter continue and the figures will not be confirmed until late spring.
He said: 鈥淧aragraph 10 on page 13 says 鈥 鈥榳hen decisions are taken by any of the administrations which leads to additional costs of another of the other administrations, the body whose decision leads to the additional cost will meet that cost鈥.
鈥淲ell, that suggests to me that when the 海角视频 Government made its decision that it should reimburse Welsh public services for the actual costs of the increase in NI contributions 鈥 not a Barnett share of the costs in England.鈥
The Conservatives鈥 Janet Finch-Saunders supported reforming funding to be based on need rather than population, calling for help for care homes with the costs of NI increases.
鈥楯udge, jury and executioner鈥
Prof Drakeford reiterated his position that the Welsh budget should not be used to plug gaps created by 海角视频 Government policies.
He emphasised the real issue is that the formula can only be reformed if every part of the 海角视频 agrees, 鈥渁nd some parts do rather well out of the Barnett formula鈥.
鈥淭he pressure on them to seek reform is not the same,鈥 he said.
Describing national insurance as a 鈥渟hocking鈥 example, Adam Price said: 鈥淭he Barnett formula is not just clearly unfair, it鈥檚 also inconsistently applied and lacks transparency.鈥
The Plaid Cymru politician warned: 鈥淚t鈥檚 not working at any level.鈥
Prof Drakeford called for an independent oversight body: 鈥淲e cannot go on, I believe, indefinitely having the [海角视频] treasury, the judge, jury and, occasionally, the executioner when it comes to the Barnett formula.鈥
Questioning the first minister a day earlier, Mr Davies argued reform of the Barnett formula is one of the most important questions facing Wales.
He said: 鈥淭he real question facing this government and this parliament is protecting and investing in the future of our people and our communities. We can't do that if Wales is the worst-funded country in the United Kingdom.鈥
Eluned Morgan responded: 鈥淚 couldn鈥檛 agree more and that鈥檚 why I have made it a point of bringing up these issues at every opportunity I have had with the prime minister.鈥
Andrew Jeffreys, director of the Welsh treasury, last week reiterated the Welsh Government position that spending should be distributed based on need rather than the Barnett formula.
But he told a Senedd committee on Friday: 鈥淭he 海角视频 Government doesn't seem interested in any substantial reform to the way that system works.鈥
Plaid Cymru finance spokesperson, Heledd Fychan said 鈥淲ales is facing a 拢65 million black hole in our public services鈥 finances thanks to Labour's NIC rise.
鈥淭his is yet another example, if we needed one, of the "fundamental unfairness" of the funding formula and how Westminster - and Labour - take Wales for granted.
"England is granted full reimbursement for NICs increases, Wales is not. This is a damning indictment of this so called 鈥榩artnership in power鈥, as Labour in Wales clearly have zero influence on the whims of their London bosses.
鈥淧laid Cymru demands urgent clarity from the Welsh Government as to what impact yet another disastrous decision by Labour will have on those bodies that provide essential services in Wales.鈥
