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Devolved Administrations

Volume 511: debated on Tuesday 8 June 2010

11. What his policy is on the mechanism for the provision of funding from the Exchequer to the devolved Administrations; and if he will make a statement. (928)

The Government recognise the concerns expressed by the Holtham commission about the system of devolution funding, but as we made clear in the coalition programme for government, the first priority has to be reducing the deficit.

I thank my right hon. Friend for that answer, and for the acknowledgement in the coalition agreement of the work of the Holtham commission. Its message was that there was historical underfunding of Wales to the tune of £300 million a year; that was backed up by Lord Barnett himself and a Lords Committee. Does my right hon. Friend accept the report’s conclusion that Wales has, historically, been underfunded? We acknowledge that cuts will be borne right across the UK, and across all its regions and nations, but will he use this opportunity to confirm the Government’s commitment to fair funding across the country?

In the coalition agreement, we say that we recognise the concerns raised by the Holtham commission, but the priority must be to reduce the deficit. We also said that once the forthcoming referendum has taken place, there will be a Calman commission-like process. The Calman commission looked at greater financial accountability for the Scottish Parliament, and a similar process for Wales might help to address some of my hon. Friend’s concerns.

Will the Chief Secretary please tell us why his party campaigned throughout the election against immediate spending cuts, but is now, in return for jobs in the Cabinet, willing to risk tens of thousands of jobs across the country?

The hon. Gentleman just needs to look around the world to see that the argument for rapid fiscal consolidation is becoming stronger by the day. He should look at the G20 and the independent assessments. Clearly, making the sort of decisions that we are making now—the £6 billion exercise and the decisions that will no doubt be announced in the Budget—is absolutely essential to create a responsible basis for the public finances and return the country to the right economic track.