It is good to see that David Cameron and the UK coalition government intend ‘respect’ to be the hallmark of its relationships with devolved governments. In Wales the agreement to ‘take forward the Sustainable Homes Legislative Competence Order’, which the Conservatives in opposition had managed to block, may be an indication of that respect.

The proposals on funding for Scotland and Wales however suggest that the former is to be accorded more respect than the latter.

On page 28 of the Programme for Government document we read that ‘we will review the control and use of accumulated and future revenues from the Fossil Fuel Levy in Scotland’. That’s pretty unequivocal, and the advantage to the Scottish Parliament’s budget is likely to be substantial.

Not so the issue of the demonstrable injustice of the current funding arrangements for Wales. The ‘concerns expressed by the Holtham Commission’ are recognised (which is some way short of accepting the substance of Holtham’s findings), but action to correct the injustice must await ‘the stabilisation of the public finances’ which, need one emphasise is likely to take a long time. The spin that the ‘priority must be to reduce the deficit’ is of course is irrelevant: correcting an injustice in funding terms is as important in times of scarcity as it is in times of plenty – indeed it is probably more so.

The gross inequity in the funding for Scotland and Wales under the Barnett formula has a long pedigree. Those interested in the story should read Tomorrow’s Wales’s evidence to the Holtham Commission and the House of Lords Barnett Committee of Inquiry. It has nothing to do with justice and everything to do with the comparative esteem in which Wales and Scotland are held by the UK Government.

What has this to do with the forthcoming referendum and the issue of proper law-making powers of the National Assembly? Quite a lot, it seems.  The Coalition’s Programme for Government document also says, ‘Depending on the outcome of the forthcoming referendum, we will establish a process similar to the Calman Commission for the Welsh [sic] Assembly.’ (Calman considered issues of  funding as well as further powers for the Scottish Parliament.)

Try breaking the code and you might get something like: ‘We shall see from the result of the forthcoming referendum whether you Welsh deserve to be taken seriously and your grievances addressed’.

It looks as if a resounding Yes vote is vital, not just to get a more effective, more democratic system of government for Wales, but to get at least some of the extra cash we need to protect us in what promises to be a time of hardship.

Following on from presenting evidence to the Lords Committee on the Barnett Formula last month, an essay on the topic by Cymru Yfory’s Cynog Dafis and Peter Price appears in today’s Western Mail.

If the Barnett Formula had ears, they would surely be burning at the moment as its has surely never had so many people talking about it. In Scotland, it is one of the issues being considered by the Commission on Scottish Devolution chaired by Sir Kenneth Calman, while WAG has set up its own review into how Welsh devolution is financed in the form of Gerald Holtham’s Independent Commission on Funding and Finance for Wales.

Not to be left behind, the House of Lords is also conducting a review through the specially convened House of Lords Barnett Formula Select Committee, which is chaired by Lord Richard of Ammanford, who is the man of course who chaired and gave his name to the Richard Commission whose report remains a key reference point in the devolution debate.

Today, the House of Lords Commitee meets in Cardiff to take evidence from Welsh-based academics and civil society organisations. Among those giving evidence will be Tomorrow’s Wales, represented by Peter Price and Cynog Dafis. You can read the paper submitted by Tomorrow’s Wales to the Committee here. Its main points include:

• * the Barnett formula is not fit for purpose;
• * Wales suffers significant disadvantage as a result of the way in which the formula works;
• * the formula fails to reflect changing circumstances;
• * the formula does not reflect needs;
• * at the moment, London receives 65% more than it would if public expenditure were allocated on the basis of GVA per head, with Scotland receiving 11% more, and Wales receiving 14% less;
• * if based on GDP, the devolved spending per head should be 27% higher in Wales and Northern Ireland and 6% higher in Scotland than in England;
• * the way allocations are made are opaque and based on spending levels in English departments;
• * a new system for allocating resources should be based on need;
• * the new formula must preserve devolved governments’ autonomy in making decisions on public spending;
• * transparency should be a key principle of the new system;
• * we strongly support the proposal made by a number of experts that a new Territorial Grants Commission, on the lines of the Commonwealth Grants Commission of Australia, be set up;
• * final decisions on funding allocations would have to be unanimous, with GDP per head the proxy indicator of need.

Read Tomorrow’s Wales’ paper in full here.