Wednesday, April 02, 2025
Barnett formula short-changing Welsh public services on national insurance increase
The BBC reports that Wales' public services face a shortfall of up to £65m as a result of the National Insurance increase because, although chancellor Rachel Reeves has committed to covering the public sector costs in England, here in Wales the UK Treasury is using the Barnett formula for its calculations, leaving Welsh public services short, For once Welsh Labour are on the case:
Using the Barnett formula means that public sector employers in England, such as councils and the NHS, would be fully covered and those in Wales would not.
That is because the public sector in Wales is proportionately larger than in England.
Drakeford told Senedd members: "We should have been compensated for the actual costs not the Barnett share of the costs in England."
He said Chancellor Rachel Reeves was "wrong to do that".
"Treasury ministers had a choice to make, I believe they made the wrong choice."
Alun Davies described the population based formula as "not fit for purpose" and accused the UK government of breaking an agreement "where one government takes a decision which has a negative financial impact on another government then they should provide the costs in full".
Drakeford could not confirm what this would mean for public sector bodies in Wales, but said they would "look to see if there is anything further we can do to help those public services".
It will not just be charities, social care providers and other bodies that will be hit by the employer national insurance increase, but Welsh councils will face a shortfall as well, and that means that other public services will face yet more cuts. So much for a fresh start under Starmer's Labour.
