Monday, 1 December 2014

Mathematics and politics

I’m not over-impressed by the response of either Carwyn Jones or Kirsty Williams to Plaid’s claim that Wales would have £1.2bn extra per year if funded on the same basis of Scotland.  Calling it a bizarre figure and claiming not to understand where it has come from are not exactly grow-up responses.  Comparing it with the figure of £300m arrived at by the Holtham Commission is simply not comparing like for like; the figures are the result of calculating two very different things.
The Holtham Commission set out to calculate by how much Wales was losing out as a result of the inbuilt unfairness of the Barnett formula, and came up with a figure of around £300m a year.  There’s a sense in which it’s a ‘snapshot’ figure, and of course, it can change over time.  It’s the result of calculations based on a range of factors which are not themselves constant, but it’s a figure which is widely-accepted, and an entirely reasonable basis for debating change to the underlying formula to come up with a needs-based distribution.
The figure of £1.2bn, however, is something very different.  Scotland is, it is generally accepted, over-funded compared to what the situation would be under a needs-based formula, but there is nothing inherently unreasonable about estimating how much better off Wales would be if we were over-funded in the same way as Scotland.  As a mathematical exercise, it’s an interesting and novel way of highlighting the extent of the unfairness built into the system. 
I’m rather less sure about the politics than the mathematics, though.  On what basis is it reasonable for any politician to argue that Wales should be over-funded just because Scotland is?  Asking for a sum in excess of a needs-based share is a huge jump from a wholly reasonable demand for fairness.  And whilst the facts that Scotland gets more than it should while Wales gets less might, in mathematical terms, be just two different variables in the same equation, giving attention to the Scottish part rather than the Welsh part seems a strange approach, more likely to persuade people of the need for a downward revision in Scotland than an upward one here.
Perhaps that’s the intention.  It is natural for those getting a bigger share of the cake than an assessment of needs would determine to seek to protect their special treatment; and there is always scope for considerable debate about how need is defined and measured.  And those are the two big problems which need to be addressed in any reform of Barnett.  But they do need to be tackled, and any revision to the formula will inevitably mean a reduction in Scottish over-funding, which is precisely why the parties at Westminster are avoiding the question.  From a Welsh perspective, however, and for as long as the devolved administrations are funded through block grants, I really can’t see any basis on which we can reasonably demand more than our fair share.


Anonymous said...

'I really can’t see any basis on which we can reasonably demand more than our fair share.'

But what is our fair share? In these stringent times Professor Holtham's calculations indicate that Wales is now being over-funded rather than under-funded. Indeed, the esteemed gentleman has been at pains to point this out over recent years. And yet this over-funding is all set to keep on increasing.

As for Scotland, Barnett will remain but not the scale of Barnett transfers. And if the oil industry remains in the doldrums expect those living in the north of the UK to experience very tough times for a prolonged period, devo max or otherwise.

For those in England better times are on the cards. Less block transfers via Barnett and more money staying at home. But doubtless there will be many in the home nations calling upon England to do more!

Anonymous said...

Anon 14:26

Holtham has consistently said that when looked at on the basis of need, Wales is underfunded. Only in your crazy, mixed-up imagination has he said anything different.

Bored of Labour said...

Is Carwyn Jones capable of doing anything else but sneering?

The whole debate about funding is wrong headed, We've got Plaid Cmyru a nationalist party demanding more from the Union while the Unionist parties only acknowledging that what's wrong with Wales is a £300 million per year under spend. That doesn't make for good debate.

Anon, what Gerry Holtham actually said that Wales might not be underfunded because of the large scale cuts, not that Wales definitely is.

Anonymous said...

Anon 20:53, we are talking about funding arrived at by the Holtham commission, nothing to do with the much more subjective 'needs' based funding.

And since when did you continue to fund a heroin addict with more and more. No, you show tough love and start to reduce and restrict the funding. In truth, this is just what Wales needs too.

Anon 21:56, I agree with your last paragraph but that was over two years ago. Check with him again now via the IFW we site.

As for the comments made by Plaid, quite shocking. Especially those made by Leanne Wood on Question Time. If she is fighting for Wales and Wales only no-one can really blame England if it decides to keep more and more of its own money.

Anonymous said...

14 years @ 300 million = 4,200,000,000 + interest

John Dixon said...

Anon 23:55

As a mathematical statement, that's entirely correct. But why choose 14 years? That's an arbitrary number - Barnett has been in operation for longer than that. And whilst £300m per annum is the conclusion of the Holtham Commission, that isn't a constant - you can't simply take a snapshot figure and multiply it backwards.

However, there is an underlying truth in the equation with which I entirely agree - namely that in a union which according to its supporters is supposed to be fair and redistributive, Wales (and not only Wales) has consistently been under-funded in relation to need.