John Prescott has hinted that spending levels for the UK's devolved administrations will be reviewed after the next general election, with a view to narrowing the gap between England and the UK's other regions.

In an interview with the Guardian on Tuesday Prescott, minister for the environment, transport and the regions said "This will have to be done quickly because it's not the sort of row you want in the [next] election period".

Prescott said there would be "one hell of a debate" and warned that the result could leave "blood on the carpet" as the winners and losers become clear.

The Barnett formula, which adopted in the mid-1970s, governs the way increased spending is shared between different parts of the country. The man responsible for drawing up the formula, Lord Barnett, has called for the formula to be scrapped. It needs "a major review that deals with real needs in different parts of the country," he told the Treasury Select Committee in June last year.

Labour had only intended the Barnett formula to apply for the current parliament, claimed Prescott, who said that "No government can guarantee beyond that".

Prescott's comments prompted Plaid Cymru leader Ieuan Wyn Jones to accuse Labour of planning to slash public spending in Wales. Welsh first secretary Rhodri Morgan should "stand up for Wales" he added.

"A revised formula based on needs would give us a substantial increase in public spending," said Jones.

With the review promised by Prescott likely to take in local government as well as regional spending, the debates over wealth distribution in the UK are set to continue. While the government has argued in the past that the differences within regions are as significant as those between them, other leading figures have argued that a real North-South divide needs to be addressed.

Former Northern Ireland Secretary Peter Mandelson argued in March that there are differences in performance between communities within the north east region but noted that "the statistics show that a large performance gap between regions remains".

Prescott, a long-time advocate of regional devolution in England, argued in the interview that reform should be the centrepiece of constitutional reform during a second Labour term, saying that "I don't think it will be at all credible not to have referendums in the next parliament".