Parity with Scotland?

There are many things to criticize Plaid Cymru for, but the one thing that has disturbed me most is in fact the central plank of their election campaign: namely that they want parity with Scotland both in terms of devolved powers and in terms of funding.

I don't have a particular problem with parity of devolved powers because, as things stand, our National Assembly has fewer powers than the Scottish Parliament, and therefore parity would be a practical first step. I would only qualify this by saying that I wouldn't want the powers of the Scottish Parliament to act as a limit. To give one example: it looks likely that powers to set the rate of Corporation Tax will be devolved to the Six Counties, but not to Scotland. Therefore I would want Wales to have this power too, irrespective of whether or not Scotland gets it.

For me, the principle is that I want everything that is currently decided at Westminster to be decided by our National Assembly ... in other words, independence.


But I do have a very big problem with the idea that Wales should get parity of funding with Scotland. And I am frankly amazed that Plaid Cymru has abandoned its previous position of wanting fair funding for Wales, and now wants something that is patently unfair.

Of course I understand why and how it happened, but that doesn't excuse Plaid's behaviour. The Holtham Commission did a good piece of work, demonstrating that Wales was underfunded relative to need on the basis of an objective formula. At that time, the block grant to the National Assembly fell short of what we would get by applying this needs-based formula by roughly £300m a year. This was set to get worse because of the Barnett Squeeze, but in fact has not got worse because cuts in public expenditure have put the Squeeze into reverse. However the shortfall will increase again when public expenditure starts to rise over the next few years.

Because of this shortfall, coupled with general discontent with the way Barnett worked anyway with regard to Scotland, there seemed to be consensus among all the parties in the Assembly (the Tories, Labour and LibDems as well as Plaid Cymru) that Barnett had reached the end of its working life and needed to be replaced. The problem is that just before the Scottish independence referendum, those three Unionist parties panicked in the face of closer than expected opinion polls, and made a vow to retain Barnett.

It was at this point that Plaid Cymru panicked ... with the result that they came up with a policy to demand the same amount of funding per head as Scotland gets. Of course not all public spending in Scotland is channelled through the Scottish Parliament (for example most benefits and pensions are paid directly to individuals and families) but if the same "block grant per head" were paid to our National Assembly as is paid to the Scottish Parliament it would indeed, after making allowance for different devolved functions, result in Wales getting something like an additional £1.2bn in block grant.

Now what's wrong with that? Well, to put it bluntly, any child could see what's wrong with it. Why pick Scotland? Why not pick England instead and demand that Wales gets a block grant equivalent to the same level of funding per head as England? Simple, because if Plaid Cymru picked England, Wales would get much less of a block grant than we do now. In other words, picking Scotland is a blatantly biased choice. If the principle you adopt is equal spending per head, then that has to apply across the whole of the United Kingdom—which, by the way, is UKIP's policy—it cannot be applied selectively.

In effect what Plaid Cymru are doing is asking English taxpayers to give Wales much more than we need on any objective basis, and very much more than they give themselves. It is a wicked and stupid idea, and I have to say I'm very glad that I am no longer associated with a party that can come up with something that can only be described as a total perversion of any concept of either fairness or reason.


In principle there are some very basic rules about how to redistribute funding between different parts of a state. We need to consider two things: how much each part of the state produces in terms of tax revenue, and how much each part of the state needs. One sum will be usually be higher than the other, and an equitable funding formula must be somewhere between the two. It cannot be outside that range.

A needs-based formula on its own will not work because, as the Holtham Commission noted, if it were applied to Scotland, it would result in Scotland getting maybe £4bn a year less in block grant than it does now. However that does not mean that Scotland is over-funded, because Scotland provides more per head in tax revenue to the Treasury than most other parts of the UK. In Scotland's case, the proportion of tax revenue it contributes to the Treasury is more than its relative needs, therefore it is right that Scotland gets more than it needs.

But in the case of Wales, what we produce in tax revenue per head is quite a bit lower than other parts of the UK, and the sum is also lower than what we objectively need, based on the formula used by Holtham (which, by the way, is based on the way money is distributed by departments within England). It is therefore reasonable and justified to say that Wales deserves more money, but only as much as will bring us up towards what we objectively need ... not more than that. To ask for or expect more is nothing but greed. Yet this is what Plaid Cymru have sunk to. It's sickening and shameful.


It's also deceitful, because it is undeliverable. As I showed in the last post, even if the SNP win upwards of 50 seats on Thursday, they will not get to determine the direction of government. The same would be just as true if Plaid Cymru won 35 seats in Wales. 533 English MPs will never vote to give Wales more than it either contributes to the Treasury or needs.

That's not to say that there are other aspects of the way Wales is funded that can't be improved. In addition to the £300m shortfall in the block grant (or whatever it now is when the Holtham formula is applied) we can rightly call for our fair share of infrastructure investment so that, for example, Wales gets a pro-rata share of rail infrastructure investment or research funding relative to the rest of the UK. But we must make a reasoned and rational case for this, and we weaken any case we make if we, at the same time, are making unreasonable and irrational demands.


In closing, I would also ask people to consider, in practical terms, what the result of getting more money from England than we either need or contribute to the Treasury would be. How on earth would it help us stand on our own two feet as a nation? It would simply tie us closer into dependency on England. Yet this is party policy ... from a party that supposedly wants independence! Perhaps, under better leadership, Plaid Cymru might become a party that is worth voting for again ... but it certainly isn't worth voting for them now.

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Anonymous said...


Anonymous said...


Anonymous said...

Bitter old windbag

Anonymous said...

There is a saying......something about urinating in(to) tents as far as I can recall.

Anonymous said...

You're not associated with the party not by your own choice, but because you were thrown out for trying to sabbotage an election. & now you try to use your increasingly irrelevant & largely unread blog to do the same.

Anonymous said...

You're rewriting history. Michael was thrown out because he made it clear that he would always tell the truth, even when Plaid politicians were telling blatant lies. For people like Elin Jones in Ceredigion, telling the truth on this blog was tantamount to "bringing the party into disrepute", which, when you think about it, is an admission that Rhun ap Iowerth WAS in fact lying.

That's why Plaid wanted to keep the whole thing secret, and it was because Michael refused to let them cover it up that he was thrown out. Plaid's leadership shot themselves in the foot. They never thought he would have the balls to reveal their duplicity, and they now regret it.

Glyn said...

Good to see a nationalist talking sense. Gerald Holtham seems to agree that Plaid Cymru have got this one completely wrong.

maen_tramgwydd said...

I've given the author of this blog the benefit of the doubt hitherto.

I won't be visiting here again.

Anonymous said...

@07:42: P***ing inside the tent is something best left to Lord Ellis Thomas. Even that old rogue thinks Plaid made a bad mistake by claiming they could deliver £1.2bn extra, and went as far as to tell people to vote Labour rather than Plaid in this election.

So when Plaid lose Arfon and Carms East and fail to win Anglesey, Leanne and her smug crew won't blame him and throw him out, they'll blame an "increasingly irrelevant & largely unread blog" instead.

Anonymous said...

The error of Plaid Cymru for years has been not to campaign for independence. If Plaid Cymru is not for independence there is no point to it.
The SNP have campaigned for independence for years and they are where they are.
Plaids campaign is all wrong. 13% in the eve of election poll is not very good.

Anonymous said...

There’s a realistic possibility Plaid Cymru could end up with 1 seat on Friday morning and it’d be one more than they deserve after the joke of an election Leanne’s team have run.

Bangor University students are liking Labour messages and could make the difference, Alun Pugh is a strong local candidate and Hywel Williams needed a better campaign than he and Plaid Cymru have run, I suspect there will be worried faces in Caernarfon on Thursday night.

Jonathan Edwards isn’t a cert either the Greens and UKIP are polling well taking votes off Plaid Cymru which could be enough to let Labour’s Callum Higgins get elected.

Dwyfor Merionydd is a safe seat, but tactical voting could have unseated the incoming PC candidate, maybe next time.

The SNP's huge success is going to sting badly, if Plaid Cymru had been wiped out it would have been better for them and for Wales.

Anonymous said...

I think that all these bitter recriminations against MH are ill judged. Leanne's claim for parity with Scotland is, as we all know, a piece of nonsense dredged up on the hoof because the other parties were all talking about removing the present underfunding resulting from a faulty Barnet formula. The logic of demanding that London and the South East should redistribute their wealth to Wales but that Scotland shouldn't do the same escapes me. Re-distibution of wealth is a socialist ideal but Plaid can't be selective about who they demand it from.

MH said...

As I said at the outset, there are many things to criticize Plaid for, so thanks to 09:44 for putting things straight, but I don't really want to concentrate on that. In this post, I simply wanted to criticize Plaid for this particular policy.

Also, I hadn't read Gerry Holtham's comment on ClickonWales, but what he says echoes the main point I've made. All I would re-iterate (Gerry would say adumbrate) is that there are two factors in fair funding. One is need, but the other is what Wales, Scotland or any other part of a state contribute in terms of tax revenues. The problem with Gerry's report is that it only deals with need (which is the remit he was given). That's fine so far as Wales is concerned because our need is greater than the tax revenue we contribute. But for Scotland it's the other way round.

I am not saying that each should get the higher of the two, but somewhere between the two, because it's important that those places which contribute more should themselves get more. This will become all-important as we move towards greater fiscal autonomy. The idea is to make things more equal, but still provide an incentive for each area to improve its own performance by keeping any extra revenues their economic policies generate. This is already happening (in the form of local authorities being able to retain any uplift in rates revenue, for example) and it is going to happen more and more. The direction of travel is clear. The pressure for London, for example , to keep some of the money it raises from property taxation is enormous. Let's not forget that London already has a devolved Assembly, and that places like Greater Manchester are in effect becoming devolved entities.


To give some more background, another factor in Plaid's decision to abandon fair funding was that the three other parties have each, in their own way, made policy commitments to introduce a funding floor. That is a perfectly good way of addressing underfunding in Wales without affecting the Barnett Formula as it applies to Scotland and the Six Counties.

The thinking in Plaid seems to have been that they couldn't possibly let other parties say they would solve the problem this way, so they decided to "up the stakes" in the name of "standing up for Wales". They knew that the catchphrase "parity with Scotland" worked as a way of saying what powers we wanted to see devolved to the Assembly ... so they thought it would be a wizard wheeze to apply the same catchphrase to funding, even though it simply exposed their economic illiteracy.

Of course Plaid will claim that it's "popular". If you engender a false sense of grievance that Wales is underfunded by some huge amount (far greater than it actually is) and pluck an arbitrary comparison, it's not at all surprising that people will say, "of course I'd like Wales to get that much." Another factor is that they might just be trying it on.

To me, that's just selling snake oil. Offering something that doesn't have a hope in hell of delivering ... but knowing full well that they'll never get enough seats to be able to deliver it anyway. It's a way of being able to blame other parties, even when those parties deliver on a Barnett Floor. "Whatever you give us, we'll always say we want more ... and you won't be standing up for Wales unless you deliver every inflated claim for more money we make!"


I think it will backfire on them, because it shows them as chancers rather than responsible politicians. But so many other things Plaid have done contributed to that impression. It's not just a matter of being self-contradictory and wishy-washy on independence, they are like that on everything. It's endemic in the upper echelons of the party.

MH said...

I'm not sure Plaid will be wiped out, 18:05. Like the LibDems they'll survive as a party. The chwilod duon of politics, perhaps. They're sure to hold Dwyfor.

I think they'll just hold on in Carmarthen East, even though Calum Higgins is one of the better Labour councillors (he co-chaired the report on the future of Welsh in Sir Gâr, which was a good piece of work which may well stop the rot). In fact the response of Labour-/Independent-controlled Sir Gâr is much more positive than the response of Plaid-controlled Ceredigion. One of the perenial promises in Plaid's manifestos is to "encourage" councils to work in Welsh. But even though Plaid took Ceredigion in 2012, they seem to have done nothing to make it happen even though they have been in a position to.

They might hold on to Arfon, although it will be far too close for comfort. Alun Pugh is a very credible Labour candidate.

I don't think they'll gain Ceredigion or Ynys Môn, although I might be wrong. They've certainly thrown the kitchen sink at them. But, for example, on Ynys Môn they have chosen a candidate who is not only pro-nuclear, but is against the development of any windfarms on the island. The most he will contemplate is small (12m) single turbines. Plaid have completely thrown away their Green credentials.

The point is that they could, if they had show that they were prepaed to stick to policies for the whole of Wales rather than have as many different policy positions as they have candidates, have been carried along in the slipstream of the SNP's success. The Plaid's leadership should have wondered why their membership wasn't increasing in leaps and bounds in the same way as that of the SNP and Greens, including the Greens in Wales. They should have started listening to their members and adhering to policies agreed at conference, rather then ignoring those decisions and doing their own thing.

As a say, perhaps they'll learn. Maybe a better leader (perhaps Adam Price) will be able bring the bickering factions and entrenched interests to a sense of shared purpose. And, if it ever happens, perhaps I'll encourage people to vote for Plaid.

Dafydd Williams said...

A strange argument. The guarantee to keep Scotland's current funding was made in the Westminster parties' last minute panic before the independence referendum It was a tribute to the political clout of the SNP. It would therefore be odd for Plaid's leadership not to press the case for funding parity - especially since the erosion of Welsh funding in recent years under the Barnett formula has created major problems for the NHS in particular.

MH said...

Thanks for the Comment, Dafydd. Let's examine what you said:

"The guarantee to keep Scotland's current funding was made in the Westminster parties' last minute panic before the independence referendum."

I agree.

"It was a tribute to the political clout of the SNP."

I disagree. Scotland's funding has nothing to do with political clout. It was recognition of the simple economic fact that Scotland contributes a greater proportion in tax revenues to the Treasury than the proportion it needs in public spending from the Treasury. There was talk that Scotland's funding would be reduced. If that happened, then the Scots would be better off if they became independent. Therefore the promise to retain Barnett was made to remove that reason for the Scots to vote for independence.

Plaid Cymru's leadership have misunderstood the nature of the economic argument for Scottish independence. They seem to think that Scotland is getting more in public spending than it deserves, and therefore that the vow to keep Barnett was a way of "bribing" the Scots to stay in the Union. Joni Edwards (in one interview) called it a "union dividend".

If that way of thinking were accurate, then of course it would be right to demand that Wales got the same undeserved money. But it isn't accurate. If the Scots are being "bribed", they are being "bribed" with their own money. But if Wales got the same "bribe", it would come from someone else's pocket. This is the critical difference.

"It would therefore be odd for Plaid's leadership not to press the case for funding parity - especially since the erosion of Welsh funding in recent years under the Barnett formula has created major problems for the NHS in particular."

As you (and Plaid's leadership) have got the reason why Scotland gets more in public funding than it needs wrong, your "therefore" doesn't apply. However the erosion you speak of is fair comment: that is the effect of the Barnett Squeeze. But it would perhaps be worth pointing out two things.

First, that the Barnett Squeeze applies just as much to Scotland and the Six Counties as it does to Wales. Their block grant funding is being eroded (to use your word) too.

Second, that in historical terms Wales has been overfunded. It was only in the last few years that this historic overfunding moved to underfunding, but it was only a dip, because the Barnett Squeeze goes into reverse if public spending is cut. Therefore Wales is now less underfunded than it was when Holtham Commission did their calculations, and might not be underfunded at all (someone would have to re-do the calculation to be sure). However, when public spending starts to rise we will again move into being underfunded relative to need unless a Barnett Floor is applied. If the Tories (as they are now governing alone) apply this floor, as they say they will, the problem of block grant underfunding will be solved.

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