Labour accused of putting £4bn of Scottish funding at risk

Labour has been accused of putting £4 billion worth of funding for Scotland at risk in a growing row over its plans for the future of the Barnett Formula.

Labour Leader Jeremy Corbyn delivers a speech to crowds numbering in their thousands at a rally next to the Sage building in Gateshead. Picture: Getty

Scottish Labour leader Kezia Dugdale was forced to deny that Labour plans to get rid of the formula that allocates funds to Scotland, Wales and Northern Ireland after the Welsh First Minister said it was unfair and would be “scrapped”.

But yesterday Welsh Labour stood by Carwyn Jones’ comments, saying the internal Labour committee that signed off its UK manifesto – which includes Ms Dugdale – agreed to replace the Barnett Formula in the medium to long term.

Yesterday the Prime Minister sought to exploit “infighting” between Mr Jones and the UK Labour leader Jeremy Corbyn.

“They can’t even agree on how much money is going to be available to Wales under a Labour government,” Mrs May mocked.

Unveiling the party’s Welsh manifesto on Monday, Mr Jones said Labour would introduce a new funding formula “that is fair to all the nations and regions of the UK”.

Asked by BBC Wales if Labour would scrap the Barnett formula, Mr Jones said: “That’s what the manifesto says.” He said: “It says in the manifesto that there will be a new funding formula based on need. That means having a new formula to replace Barnett.

“Nobody can defend a situation where we have a funding formula that is over 38 years old by now, that was based on the way things were in the 70s.”

Opposition parties claimed Labour’s stance on the Barnett Formula had descended into “total chaos”.

Under the Barnett Formula Scotland enjoys higher public spending per head than the rest of the UK, including Wales, drawing criticism from a number of senior figures.

Earlier this year, the Labour candidate for West Midlands mayor, Sion Simon, called for English regions to “take back control” of their funding from devolved nations. Mr Simon was narrowly defeated by the Conservatives.

Asked about his proposal ahead of the Budget in March, shadow chancellor John McDonnell told journalists: “No, we’re not going to re-open the Barnett Formula.”

Scottish Labour leader Ms Dugdale said: “The UK Labour Party manifesto is very clear – it supports the Barnett Formula. It includes an additional £3bn coming to Scotland from UK-wide spending decisions.

“I spoke to Carwyn Jones this morning, and we’re both focused on fighting for a fair deal for Scotland and Wales,” she said. “You only get that with Labour – the Tories want to strip back investment and the SNP wants to break up the UK, which would mean the end of the Barnett Formula.”

A UK party spokesman said. “Our manifesto costings are based on the Barnett Formula and we will not scrap it.

“Over the course of the next parliament, we will consult on long-term reform of how the UK allocates public expenditure to ensure that it reflects the needs of the nations and regions of the UK.”

But in a statement sent after the row erupted, Welsh Labour said the policy “makes perfect sense to anyone committed to fairness”.

“That is why this policy proposal from Welsh Labour, a position that Carwyn has pushed for some time, was passed unanimously at the Clause V meeting to decide the content of the UK Labour manifesto.

“Carwyn and Jeremy spoke about this issue prior to the manifesto publication, and we are delighted that the democratic party process backed this important change.”

Ms Dugdale had input on the UK manifesto as set out in Clause V of the party rulebook.

The SNP candidate in Perth and North Perthshire, Pete Wishart, accused the Scottish Labour leader of “covering up” plans to shake up Scotland’s funding.

Labour’s Scottish manifesto makes no mention of plans to reform the Barnett Formula, despite both the UK and Welsh manifestos pledging to do so under the “Wales” heading.

Mr Wishart said: “Kezia Dugdale is covering up Labour’s plans to slash Scotland’s 
budget.

“By Labour’s own admission, the Barnett formula is worth £4bn in funding for Scotland’s public service – so Kezia Dugdale must explain how much of this will be cut by under Labour’s plan.”