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.