1. Will the First Minister make a statement on the Barnett formula and how it applies to Wales? OQ61413

Thank you. The Welsh Government has secured important reforms to the Barnett formula in recent years to put its funding on a more sustainable footing. However, the formula remains flawed as a long-term mechanism for allocating funding across the devolved Governments within the UK.

Diolch. A few years ago, I spent several exchanges explaining to Richard Wyn Jones that there was an element of need in the formula. And we have never given Carwyn Jones enough credit for negotiating the Barnett floor. There’s consensus that it needs changing, but to what? There are two changes that would make Wales substantially worse off, which are population share, or our tax take less our share of the Westminster expenditure. We’ve had piecemeal and asymmetric devolution, which needs addressing. Will the First Minister, as a matter of urgency, contact the Prime Minister and ask for an independent review of Welsh funding via the Barnett formula, creating a new formula?

Thank you for the question. As well as Carwyn Jones, the First Minister, it’s also fair to reflect, as he's in the Chamber, that the then Finance Minister had a hand to play in those direct negotiations to introduce an additional needs-based element in the funding formula, and that work that Mark Drakeford undertook does mean that we’re in a much better place than at the start of devolution on the formula. But we recognise that it’s not a long-term answer. That’s why the manifesto commitments to update the fiscal framework are welcome, and there is more work for us to do. Until we do get to a better long-term formula, in line with the proposals in 'Reforming our Union', actually having fairness on Barnett really does matter. We’ve been used in the last four or five years to having regular attempts to get around Barnett as well. And I think, now that there is more significant devolution in England as well, with metro mayors, it will help us to make the case that, actually, funding for the nations of the UK, and for the regions of England, really does matter. And the Prime Minister made a pledge in his first press conference about power and decision making needing to come out from Westminster. That’s good news for us, good news for the rest of the UK, and, I believe, it will set us on a path to a fairer long-term funding formula.

First Minister, I’ve made my position very clear over many years when it comes to the Barnett formula. I believe it is outdated and that a fairer, needs-based funding model is needed here in Wales. Now, as you know, there are several different models used across Europe, including the models of fiscal federalism in Germany, fiscal equalisation mechanisms in France, and so forth. First Minister, can you tell us what the Welsh Government’s position is on the models used in other European countries, and can you also tell us what sort of model of funding you believe works in both Wales and the UK’s best interests?

Well, we’ve set out the Welsh Government’s proposals in 'Reforming our Union', to look for a principles-based approach to UK funding and fiscal frameworks. It’s a real positive. There’s a recognition that the current fiscal framework for Wales is out of date. And that’s really important on a whole range of areas, about the flexibility we have about managing our money. We saw this during the pandemic, when, actually, because we’d been more efficient about the way we’d spent money and used it, we were actually then treated as another department of the UK Government, where, actually, they had massive underspends in what they were doing. That meant that, on money that Wales should have been able to roll over in an entirely normal way, a decision was made by the Treasury not to allow that. The wider flexibilities we need in updating the fiscal framework will make a real difference whilst we move towards the set of proposals we set out in 'Reforming our Union'.

Question 2 [OQ61405] has been withdrawn. Question 3, Vikki Howells.