Friday, June 23, 2006

Barnett Says Scrap Barnett

Lord Barnett has said the Barnett formula, which allocates extra public spending resources to Scotland, should be scrapped. Here's an extract of his interview with David Mills of GMTV, which will be screened on Sunday...

DM: What is the Barnett formula and what were you trying to achieve when you came up for it?
Lord Barnett : Well first the first thing to understand is that it was never a formula in the first place! I’d been having a pretty tough time getting public expenditure cut through cabinet colleagues and I wanted to make it a little easier so I said we’ll have a system that 85 % of the agreed figure for public expenditure will go to England, 10 % for Scotland, and 5% for Wales based broadly on a population per head basis. Now that saved me the trouble of negotiating separately with the Scottish and Welsh secretaries of state. That’s all it was. Indeed when I left office and published a book called ‘Inside The Treasury’ in 1982 I never even referred to it as a formula as it was never intended to last. I thought it should be based on needs which it wasn’t. So it became a formula because Margaret Thatcher then John Major kept it going for 18 years for fear of upsetting the Scots at the end of the day in 1997 they lost every single seat in Scotland and Wales, for which I take the credit of course!

DM: Obviously things have changed since then, does the system of allocating resources between the nations of the UK need to be changed?

Lord Barnett: It’s quite wrong and I’ve said so in a debate which I initiated in the House of Lords, It clearly should not be based on per head expenditure but it should be based on needs in particular areas , in the present moment the amount of Money going to Scotland on a needs basis by comparison, say with my own north west, or the north east, is far higher than it should be, indeed so it should be changed. If they want to keep the name they like the idea of a formula called the Barnet formula then it should be Mark 2 and it should be based on need not on expenditure per head.

David Mills: Could you give us a rough estimate of the sort of difference you’d envisage of the amount of money going now and under mark 2 Barnet?

Lord Barnett: Well in fairness, if you analyse the needs of Scotland, because there are large areas, agricultural areas where income per head would not be very good, where they may need extra expenditure. They may not all lose that much, they’d lose quite a bit in my guess, done on a proper needs basis because for example they paid for the cost for the whole of the enormous cost of that new building, parliamentary building, they paid for it without having to raise an extra penny. Because the parliament formula financed it. I’m going there shortly, I’m not sure whether I’ll be well received.

DM: So we’re talking about billions of pounds potentially?

Lord Barnett: Oh yes, very large sums.

16 comments:

Anonymous said...

Let's get a few things straight.

First of all Lord Barnett has been saying this for the last 15 years. Big deal.

Secondly, when the Tories were in government they used to call the formula mechanism after a Tory peer, whose name escapes me. Indeed there were whole pages in the campaign guide praising the formula. Funny how you've all dropped the name now and slag it off - wouldn't be because Scots vote Labour would it?

Thirdly, and most crucially, the formula does *not* determine how much money is spent in Scotland or Wales or Northern Ireland - it determines the changes in spending levels on the basic and entirely sound principal that, say £1 per head of extra spending on health in England should release an additional £1 per head of the population of what Whitehall calls "the territories".

At its basic level it is as simple and fair as that, though there are complexities layer on top to account for the different repsonsibilities (eg most policing matters in Scotland are a responsibility of Scottish ministers but not quite all so Scotland gets slightly less than the quid, if you see what I mean.)

What determines the actual base funding level is an assessment of needs. The last truly comprehensive one of these was done by the Tories a long time ago, though the Treasury keep it all under broad review.

If you replaced the formula and automaticity then you have a choice: have a blantantly unfair system because you hate the Scots for being lefties or have an annual assessment.

Don't kid yourself that an annual assessment will do anything but alloacte more money per head to Scotland than England. Scotland's heath, housing and unemployment ought to tell you why.

But an annual system would also be perverse - to keep the money the Scottish executive would have to keep people ill, badly housed and unemployed.

So, to parapharse Churchill, the formula is the worst system except for all the others. Mrs Thatcher seemed to agree, everything else is just Tory English prejudice until you come up with a sensible alternative that is based on keeping the union strong.

Anoneumouse said...

for god sake, let them have their independence, let them keep the oil revenues. England will become a very rich nation because the UK will no longer be a member of the European Union.

Scots, please VOTE SNP, you know it makes sense

chatterbox said...

Well said anonymous, I think that this perception that Scotland gets a better deal than anyone else is unfair.
I know that the mood for "kicking" the Scot's" to remind them of what they owe England is getting stronger, and if it succeeds it will rip the union apart.
I did not vote for devolution but had accepted the democratic result of the vote. Funnily enough I thought the price of devolution was a strengthened loyalty to the Union, but now if I am going to be penalised because of certain peoples dislike of Labour's stranglehold on Scottish politics then I think that we should go it alone with Independence.
Suddenly it does not seem like a bad option and maybe in time it might make certain people realise that the Barnett formula was all about fairness rather than a simple political bargaining tool.
We might make a tidy packet exporting all our natural resources South of the border. At least we will not have to have new nuclear reactor's built here to keep the whole UK supplied, we might even be able to become a lot more self sufficient with renewable energy. Shame all those loyal torie supporter's in Scotland wasted the last 10 years trying to keep the party alive, if this kind of sentiment continues then the party will die up here.

tyke said...

Let Scots support their own. If they want free services and cancer drugs the English aren't allowed access to, then let them pay for it themselves.
If Scots want to live on remote islands and have all their amenities supplied by the public purse, let the city dwelling Scots pay for it, or turn them into animal sanctuaries.
I don't care what the Scots do, but for heavens sakes, get rid of them and give England its own Parliament.

What's the great difficulty here? Blair sent planes in to bomb Iraq into accepting democracy, yet had no opposition in stripping it from the English.

Britain - the corrupt leading the plain stupid for the benefit of the corrupt

England - Streets paved with gold for Scottish Politicians

Splashitallover said...

Yes, he's said it before. But it's context, isn't it? If news consisted of people saying things for the first time ever, once only, the world would be an even stranger place than it already is (and news programmes would have to work even harder!) That David Mills - it's not Tessa Jowell's husband is it?

Paul Linford said...

Joel Barnett has indeed said this before, once in an appearance before the Treasury Select Committee in 1998 or thereabouts, and again in a House of Lords debate in 2002.

Anoneumouse said...

Did you know the average North Briton now receives in excess of two thousand a year more than the average English person in public spending from the UK Treasury.

Northern Ireland 8898
Scotland 8096
Wales 7509
England 6623

.

Anonymous said...

The idea that Scotland somehow owes England a living is just fantasy economics.

Every Scottish politician should be challenging these nonsensical claims now being peddled by anti-Scottish voices south of the border.

That the Labour/LibDem Executive have played into the hands of these increasingly strident anti-Scottish commentators and politicians shows they have failed to stand up for Scotland.

The fact remains that Scots will subsidise the rest of the UK to the tune of almost £800 a head in this coming year alone.

Rather than sending our wealth south to London to be short-changed in return, now is the time to take responsibility for our own finances.

With full fiscal responsibility, Scotland could become one of the wealthiest nations in the world, rather than subject to the whims of one London-generated formula or another as we are at the moment.

Only by taking responsibility for ourselves can we make the changes need to improve the lives of all those in Scotland.

Oh and Tyke! What planet did you study economics on have you heard of London allowances,London weighting.

Get a life Tyke or why not emigrate as England as you know it will be gone in ten years time. The immigration over the past nine years will make middle England black,muslim,asian,and then enclaves where people such as you will be holed up. The Omega Man, Charlton Heston that is what you make me think of, you are so funny.

Anonymous said...

Tyke will not like this but I have heard from a very informed source, on site Geologist, that massive new fields have been found to the North West of Scotland with more Oil and Gas than was found on the East Coast and North Sea! Better order my Bentley now

Anonymous said...

I'm sure the average person on the street in Scotland does not see the benefits of the barnett formula. The money goes on hundreds of new politicians.
There is enough money for the whole of the UK to have a barnett formula but we give £115 million
a week to the EU.In the last 30 years all british goverments have sold its people down the river to brussels.They have created these divisions for the sake of european integration, this includes the arch euro sceptic Thatcher.Now Gordon Brown wants to save Africa?
Is there no end to this nonsense?
Let the peoples of the United Kingdoms of Great Britain and Northern Ireland reap the benefits of their own labours and get out of Europe.
One of the first acts of this government when they came to power
was the abilition of the death penalty for treason, it is quiet clear to me they were thinking of their own miserable necks.

Anonymous said...

Well at least Scotland will never get their hands on our (relatively) good weather. Although perhaps with global warming things might turn out well in Scotland...

Perhaps that is why Blair's Government has been so rubbish at cutting CO2 emissions? Compounded with news that the Government is slashing this year's (yes, mid-way through the year) grant-in-aid budget to the Environment Agency of England and Wales by millions - what could be going on?

tyke said...

Tyke doesn't care about "oor oil." Tyke wants to live in a democracy and have an English Parliament.
Shhh, don't spread this round, but I would prefer Scotland to be self sufficient, if not prosperous. There's nothing worse than living very close to a third world country, especially when they wear skirts and leave skid marks on the bus seats.
Good luck to Scotland, but will they take their MPs out of England please?
Actually, if Scotland really were so very rich, they wouldn't be in England in the first place - just a thought, not an accusation.

chatterbox said...

tyke said,
You obviously have not thought your argument through. I can tell you that Scotland is not a third world country, but rich in some of the most valuable natural resources needed by the UK.
I will wait with interest to see if your English politicians get as excited about dumping Scotland and having to accept that they will even have to import electricity from North of the border never mind gas or oil.
It might make you feel better if you don't have to pay for the Barnett formula, shame your gas, oil and electricity bills will go through the roof.
In which parts of England will you be dumping the extra nuclear power stations and windmill farms?

Welsh Spin said...

Barnett may be a rough and ready mechanism, but like first past the post it has the great advantage of producing clear, simple results (at least by comparison with any alternative). Within minutes of Gordon sitting down, one can work out the consequences for the Welsh Block.

An annual needs assessment across the UK would be incredibly complex and politically loaded. One only need consider the complexity of the Standard Spending Assesment formulae used to determine the 'needs' of local authorities to see how hard it is, even with the best will in the world, to measure 'need' objectively. Furthermore it is by no means clear that such an alternative would result in less for the celtic fringes (Scotland might lose slightly, but those losses might be outweighed by gains for Wales and NI). The reason Barnett was kept on during 18 years of Tory government is the same as the stated reason given by the Treasury today, namely if it ain't broke don't fix it (I paraphrase).

Anonymous said...

How did you get that transcript?

Anonymous said...

probably from the broadcaster. Broadcasters send them out to journalists (and bloggers, these days), in order to generate coverage for their programmes.
Sometimes they even pre-release who's going to be on their shows - e.g. the spin ahead of Charles Clarke's appearance on Newsnight next week.