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Jamie's analysis of the Lord’s Ad Hoc committee report The Barnett Formula is not likely to endear him to his colleagues in Liberal Democrat circles, nor for that matter to his fellow Unionist peers, but we suspect his views are shared by many others in his party.
The House of Lords Committee was appointed by the House in December 2008: “to examine the purpose, methodology and application of the Barnett Formula as a means of determining funding for the devolved administrations of the United Kingdom, to assess the effectiveness of the calculation mechanism to meet its purpose and to consider alternative mechanisms”
As Jamie says, the controversial report, written by Unionists, has released the genie of the Unionist bribe that the Barnett Formula clearly is.
The report is available at http://www.parliament.uk/hlbarnettformula
I WAS a member of the House of Lords ad hoc committee which was set up to examine the Barnett Formula – the funding of the Devolved Institutions – and to look for an alternative and fairer method of funding these institutions, without departing from the concept of a block-grant from the UK Treasury.
At the insistence of Lord Barnett, the House of Lords commissioned a report into the working of the Barnett Formula, and towards a new method of distributing funds from Westminster to the three devolved institutions.
Lord Barnett told us in evidence that he considered the current funding process to be unfair, particularly as Scotland receives far more than it logically deserves; and that he disliked being associated with that unfairness. He told us that, as Joel Barnett MP he was, in 1978, Chief Secretary to the Treasury, responsible for distributing funds around government departments. In a difficult spending round, the formula was devised to end arguments with the three Secretaries of State (Scotland, Wales and Northern Ireland). Once the English departments had been allocated their share, the three Secretaries of State would get their pre-published percentages of English spending, largely according to their populations.
This formulaic approach is much liked by the Treasury, who have persisted with it ever since 1978, and told us that they expect to continue with it in the future.
However, over the 31 years, Scotland has come to receive more than it ‘needs’, while Wales and Northern Ireland have received less than ‘needed’. This is due to the Barnett Formula being unable to respond to population changes. Scotland’s baseline assumes that the population has not declined, and Wales’s and Northern Ireland’s as if theirs has not increased.
A further problem has arisen with the Barnett Formula in that it is driven by spending programmes for English departments. Devolution has, rightly, produced policy divergence e.g. free personal care for the elderly, abolition of tuition fees, free prescriptions, a possible departure from Council Tax. Already there are anomalies, and these will become greater. Consider the effect of a departure in England from the NHS to, say, compulsory private health insurance. This would remove £10bn from the Scottish block grant.
Another problem with the Barnett Formula is this: the Treasury decide whether spending in England is English or British. If it is English, then it has a consequential payment to the Devolved Institutions, but if it is British, then there is no consequential payment- eg the Olympic Games. Similarly the Treasury used to decide whether additional spending could be added in a process known as formula bypass, though this has not happened much since Devolution.
The ad hoc committee’s report published in July of this year, recommends that the Barnett Formula be brought to an end, and that an objective needs assessment formula be enacted, with an independent Funding Commission to re-measure ’need’ every five years. This would compare the populations by measuring a number of set criteria eg the % of people under 5, under 16, over 65, over 75, the mortality rate, the morbidity rate (life altering illness), the unemployment rate. Comparison of these population criteria would produce the deviation required respectively for the three countries from English ‘need’.
The consequence of carrying out such an exercise is that England and Scotland are comparatively similar, though Scotland does have more elderly people. Wales and Northern Ireland have greater ‘need’, with Wales having more sick people, and Northern Ireland having more young people and fewer elderly.
So, what does this mean?
Within the existing devolved arrangement, Scotland needs less and Wales and Northern Ireland need more. Block grants from the Treasury would be adjusted up over, say, three years, and down over, say, seven years.
For Unionists this is disaster. Their ‘bribe the Scots to stay’ strategy is in ruins. Any suggestion that the Scottish block grant would be greater than the tax take in Scotland is over.
For those seeking to create a full Scottish democracy this is good news. Why continue to send taxes to the UK Treasury to be spent on British policies eg Afghanistan, Trident, aircraft carriers, the foreign policy of a 60 million state, when the people of Scotland could democratically determine how their taxes are to be raised and spent? Gone is the questionable presumption of getting back more than we have put in.
The report is on the table, and we await the UK Government’s written response, which will be debated in the House of Lords. Don’t hold your breath. This report, written by Unionists, has released the genie of the Unionist bribe. Huge attempts will be made to stuff it back in the bottle.
During the winter of 1706/7 members of the parliament of Scotland were bribed to vote for the Union with England Bill. Hence my mantra: ‘Founded on bribery, sustained by bribery, the Parliamentary Union will end when the bribery ceases’. Scotland needs to become that democracy.
Comments
Charles McGreggor 24/08/09 |
I watched the debate on television.
Regarding the three Secretaries of State's input and in particular the part when they were discussing the situation where the designation of a project is 'British' or 'English' at the whim of the Treasury, I was less than impressed with the response of our secretary, Jim Murphy. Whereas the SoS for N.I. and Wales were unequivocal in their condemnation of the present system, Mr Murphy tried to defend it. He gave an example of a project which was re-designated 'English' upon supplication by himself and the other SoS to the Treasury. The wrongness of the need to do that was quickly pointed out by,to me a surprising source, ex SoS for Scotland Lord Forsyth. |
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Bob Ingram 19/08/09 |
Scotland is a small wealthy nation-wellable to stand on our own financially. Too many Scots have listened for too long to the unionist propaganda. On the website of the Scottish Democratic Alliance read the financial reports about Scotland's true wealthy status. |
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Debbie Wilkie 19/08/09 |
The key question I have is in relation to the definition of the term 'need'. How is it being determined that Scotland has had more money than was justified by its 'needs' whilst England and Wales have had less than they 'need'? Having worked in the Industry Department in the late 1980s dealing with area policy, Scotland suffered greatly from the decline in heavy industries such as steel and shipbuilding. The steel industry in Scotland lost out to Wales when Ravenscraig was closed down in favour of Llanwern. The service industries that were encouraged to become established in the wake of these heavy industry losses are now suffering through the credit crunch and huge losses in employment. England and Wales is not exempt from these symptoms but how are the comparators on 'need' between the different parts of the UK being determined and used. |
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