The UK Treasury has denied that Wales has got extra funding via the Barnett Formula as a result of spending on HS2, which would have set a precedent leading to a potential £5.3bn price escalation in the costs of the project. On Tuesday, Welsh Assembly finance minister Jane Hutt said in a statement that:
“In the Spending Round 2013, the [UK Government Department for Transport capital budget] was increased by more than £2bn, which included £832m for HS2. As a result, the Welsh Government received a consequential increase in its [capital budget] from the total increase in the [DfT capital budget] of £84m.”
However, since then the UK Treasury has denied that Wales got extra money due to HS2, saying: “At the spending round, Wales received Barnett consequentials in the normal way; this excluded funding for HS2. The government is clear HS2 will be a vital part of our national infrastructure, boosting regional growth across the country and providing vital capacity the UK needs to compete in the global race. As with any government spending Barnett consequentials will be considered at the next spending review.”
The Barnett Formula exists as a way to compensate devolved Governments for spending which takes place in other parts of the UK, and Ms Hutt is now facing calls for an urgent clarification amid claims she may have misled Assembly Members, as any payments made to Wales under Barnet would set a precedent, estimated to be worth up to £4bn for Wales over the lifetime of the HS2 project.
Plaid Cymru has always maintained that Wales should get compensation for a project which does not benefit Wales, whilst a spokesperson for the Welsh Liberal Democrats said: “It is crucial that the finance minister clarifies this issue as soon as possible because if what the Treasury says is true, the finance minister has misled the finance committee. Assembly members expect the information provided to them by the Welsh Government to be accurate and correct.”
Previously unseen sections of a report by KPMG, obtained under FOI legislation last week showed potential annual economic losses for Wales as a result of HS2 for: Cardiff (£70.06m), Carmarthenshire (£12.14m), Conwy (£9.74), Gwynned (£3.21m), Monmouthshire (£8.44m), Neath Port Talbot (£6.15m), Newport (£36.42m), Pembrokeshire (£9.38m), Powys (£5.62m), South Wales Central (£28.37m), South Wales East (£18.16m) & Vale of Glamorgan (£7.07m).
Stop HS2 Campaign Manager Joe Rukin said:
“What we have seen over the last couple of days is par for the course where HS2 is concerned, in that it’s a complete godawful mess. The Barnett Formula exists to compensate the rest of the UK for spending which just takes place in England, and with a Government commissioned report showing massive economic losses for parts of Wales as a result of HS2, it should be impossible to say that they won’t qualify. There is no point in Westminster politicians saying HS2 benefits all of the UK when their own reports say the opposite.”