Barnett Formula

Yesterday, during a Lords debate on Northern Ireland, Lord Shutt of Greetland informed the Lords that "the Government have no plans to review the Barnett formula until the fiscal stabilisation plans set out in the Budget have been worked through. However, that report [Lords' Barnett Formula Select Committee] is still valid and will be considered at the due time." To which Lord Barnett responded:

My Lords, the noble Lord said that the very important report of the Select Committee on the Barnett Formula would be considered in due time. Would he care to define the meaning of “due time”? Does he appreciate that the Chancellor has just announced that in the autumn there will be departmental cuts in public expenditure of some 25 per cent? Does the noble Lord recognise that if this is not noted and taken care of, there will be very serious problems in England?

Lord Shutt (who stood for election seven times but was never elected as an MP) was pressed for an answer as to what he meant by "due time" and he had to confess that he had absolutely no idea.

Today sees the first plenary session of the Joint Ministerial Committee, with representatives from Scotland, Wales and Northern Ireland travelling down to Westminster to meet with their British counterparts to discuss where the axe should fall on public services:

The economy is expected to dominate talks between Prime Minister David Cameron and the leaders of the devolved administrations.

The Tory leader will chair the first plenary session of the joint ministerial committee (JMC) which brings together the heads of all the UK nations.

Not quite all the UK nations. England won't be represented.

There will be smart arses who say that England is represented by UK ministers, or by the UK Government as a whole, but that is a downright lie. The Government represents the United Kingdom in its entirety, not parts of it. Nick Clegg, who attends the JMC talks, is only a minister because the Tory party could not command a majority across the UK despite the fact that it won the majority of seats in England. Yet Clegg will have a ministerial say on English domestic matters. Danny Alexander, Nick Clegg's axe-weilding Scottish Chief Secretary to the Treasury, will not be attending the meeting, but he - constitutionally no less a representative of England than Cameron or Clegg - will slash England's public spending despite being elected outside England and possessing no direct democratic mandate from the people whose lives his cuts may ruin.

If the UK Government truly represented England's interests then they would lose no time in scrapping the Barnett Formula in favour of something transparent and fair, which is the only way of making the spending cuts open, responsible and fair.

I want to make sure we go about the urgent task of cutting our deficit in a way that is open, responsible and fair.

I want this government to carry out Britain's unavoidable deficit reduction plan in a way that strengthens and unites the country.

I have said before that as we deal with the debt crisis we must take the whole country with us - and I mean it. - David Cameron, 7th June 2010

Baroness Hollis of Heigham:

Given that the Barnett formula funds on the basis of population and not need, it is profoundly unfair to overfund Scotland by the extent of £4bn to £5bn a year while requiring underfunded local authorities in the rest of the country to make further savage cuts as their contribution to reducing the deficit.

Read the Lords debate here.

On the publication of the coalition agreement I said that the West Lothian Question had been kicked into the long grass. Later I said that I thought it "strange that the devolved administrations can defer their budget cuts, given that the need for budget cuts is so urgent that the Tories were prepared to concede vast swathes of their manifesto to the Lib Dems in order that the cuts should happen this year and not next?"

I'm pleased to report that the IPPR agree with me.

He [David Cameron] also appears to have rowed back on measures that might provoke tension with the devolved nations. The party’s policy of introducing a version of ‘English votes on English laws’ (which would restrict the voting rights of non-English MPs at Westminster) has been kicked into the long grass with the establishment of a commission to consider the West Lothian question, and Cameron has also offered a short-term deferral of spending cuts in Scotland and Wales. However, while he will be anxious to appeal to Scottish and Welsh sensitivities so as not to undermine the union, Cameron is also going to come under serious pressure from the growing English nationalist wing of the Conservative Party to address English grievances with the devolution settlement. Conservative MPs tend to think that England has suffered as a result of asymmetric devolution and that the devolved nations are too generously funded (Kenny and Lodge forthcoming).

To an extent. I actually don't think the English will be that aggrieved by the offer of deferred cuts to the devolved administrations. However, I do think the continuation of the Barnett Formula will feed English and Welsh grievances, and the deferral of the cuts may exacerbate that problem and heighten the wide-spread perception that Scotland gets too much money.

We were given what looked like cast-iron assurances that the Barnett Formula would be scrapped but, as I mentioned previously, political expediency has dictated that the coalition puts Scotland's interests first. English and Welsh people are entitled to ask why Scotland, the most affluent country in Britain, receives such favourable treatment through a completely discredited (and disowned) fiscal formula.

Links
By deferring cuts, Cameron ‘will only anger the English’ - Times Online
David Cameron’s Northern Ireland cuts deal ‘angers England’ - Belfast Telegraph

Professor David Bell was on Newsnight Scotland last night explaining that Scotland's £332m budget cut was just the tip of the iceberg. Scotland would need to cut two to three times that amount every year for the next four years, and possibly more if the areas ring-fenced from cuts (Health, Education) lose their protected status in England. So Scotland is optimistically looking at £4bn worth of cuts over the next four years.

It was the same David Bell who last year warned us that reform of the Barnett Formula along the lines envisaged by the Holtham Commission would cost Scotland £4.5bn a year.

So why was reform of the Barnett Formula shelved by the coalition Government?

In a word: Scotland.

As John Osmond writes:

The problem for the government is that, as expert Iain Maclean explained on this site yesterday, if that move were made, the Scottish budget would be cut since it benefits unduly from the present arrangements. Plainly such a prospect was uncomfortable for the London government in the coming year when it has to face elections for the Scottish Parliament.

Losing £4.5bn per year through reform of the Barnett Formula and £4bn per year by the end of 2013 in budget cuts, would spell calamity for a country where the public sector accounts for 50% of the GDP.

And David Cameron and Nick Clegg know that only too well:

Mr Cameron, the Prime Minister, and Mr Clegg, his deputy, had promised in their manifestos to replace the formula with a system that distributes public money based on need.

But it is understood they were nervous about the political ramifications of handing Scotland a ‘Barnett cut’ on top of reductions to the Scottish block grant already in the pipeline.

The Barnett Formula was always about Killing Home Rule with Kindness, but one has to wonder whether during the terrible austerity years that are to come, unionist politicians might regret not addressing Barnett in the times of plenty. I have a feeling that the people of England and Wales will make them wish that they had. Implementation of the Calman Commission's ridiculous 10p tax rate proposal might go some way to damping down anti-Scottish feeling in the rest of the Union (which is exactly what it is designed to do) but it will be disastrous for Scotland (see Gerry Hassan)

BTW, is it only me that thinks it strange that the devolved administrations can defer their budget cuts, given that the need for budget cuts is so urgent that the Tories were prepared to concede vast swathes of their manifesto to the Lib Dems in order that the cuts should happen this year and not next? What mugs we English are.

A gentle reminder to Conservative MPs about the popularity of one of the measures on which they were elected.

...it has been suggested that when MPs at Westminster consider issues that affect only England, only English MPs (and not Scottish, Welsh or Northern Irish MPs) should be allowed to vote on them. Do you support or oppose this idea?

Support: 66%

Oppose: 17%

Don't know: 17%

And a gentle reminder to Liberal Democrat MPs that they were elected on a promise to do something about the Barnett Formula.

Scotland currently receives around 20% more public spending per head of population than England. Do you think Scotland gets ...

More than its fair share of government spending: 59%

Pretty much its fair share, given Scotland's large land area and the costs that arise from this: 24%

Less than its fair share: 3%

Don't know: 13%

The polling data is taken from YouGov for the Sunday Times, three weeks prior to the general election.

The toxic badger has been telling the Welsh that Labour intend to keep the Barnett Formula.

“We intend to maintain the Barnett formula because it works.

“But we have also said that we will make sure that Wales isn’t disadvantaged as a result of the Barnett formula.

“It’s not just the Barnett formula that Wales benefits from. For example, we are going to electrify the railway line between London and south Wales.”

“So yes, in relation to Barnett we will maintain it and we will make sure that Wales is not disadvantaged.

Lush! That's mega, boyo.

Just one thing, almost everyone except for you and Gordon Brown thinks that the Barnett Formula should be scrapped. Make that two things actually, the secong being: And what about England you cretinous little turd?

The English lion still isn't roaring, but it's stopped purring.

Times: Scotland and England at breaking point?

An exclusive YouGov opinion poll for The Sunday Times on English attitudes to Scotland today shows that 64% believe Scotland gets “more than its fair share” of public funding. At the onset of devolution 10 years ago, only 21% expressed a similar view.

In today’s poll almost a third that said it was unfair for UK taxpayers to bail out Scottish banks, such as Royal Bank of Scotland, which many blame for the depth of Britain’s recession. But the deepening malaise is about more than money. The YouGov poll found increasing resentment at Scottish MPs meddling in English affairs, with two-thirds of those surveyed saying that they should be banned from voting on matters that affect only England.

The YouGov poll, available here, asked "Would you be personally be happy or unhappy if Scotland one day became a fully independent country?" And over 50% of people in England weren't bothered.

It must be polling like this that they have in mind when they say that devolution has strengthened the Union.

Also see English call for Scottish funding cut

Labour councillors in Durham have voted down a Lib Dem motion to scrap the Barnett Formula.

Lib Dem Mark Wilkes told councillors the formula, which delivers Scotland more cash per person than the North-East despite income per head being higher north of the border, was a gross injustice and treated North-East people as second class citizens.

“It is wrong and it can’t be justified by any rational human being,” he said.

But Labour councillor Simon Henig claimed that the Barnett Formula has no bearing on the resources available to the North East and that the Lib Dems were simply trying to deflect attention from their policy to scrap the regional development agencies.

Simon Henig is at least correct that the Barnett Formula does not determine the amount of money that central government provides to the North East. However, the Barnett Formula does determine that Scotland receives more than its fair share - money that might be more usefully used in parts of the UK with a greater need of it.

Professor David Bell of Stirling University has analysed the impact on Scotland of the Welsh Assembly's Holtham Commission report into a needs-based funding formula to replace the Barnett Formula.

Writing in The Scotsman Prof Bell warns that a move to a needs-based formula could lose Scotland £4.5 billion a year of Treasury funding.

"If its calculations were put into practice, it would have dramatic effects on the Scottish budget," Prof Bell says. "The size of the block grant from Westminster to Holyrood would shrink substantially. Instead of the Scottish grant being 20 per cent higher per head than in England, the margin would shrink to 5 per cent.

"At current spending levels, this would mean a cut of around £4.5bn in Scotland's annual grant from Westminster."

Councillor Simon Henig is a member of Labour’s National Policy Forum. Methinks he may be putting the interests of his party, and Scotland, before the interests of England as a whole. He's also Principal Lecturer in Politics at the University of Sunderland, Lecturer in 'North East Studies', and responsible for a range of novelty toilet paper.

The Lords debated the Barnett Formula yesterday, if you missed it you can watch it here.

The most interesting part of the debate, for me, was Lord Trimble's contribution. For two reasons: He states what I have said for a long time, that due to the Barnett Formula non-English MPs have a constitutional right, or at least a moral obligation, to vote on matters that are described as 'English legislation', and; he suggests strongly that the Barnett Formula is therefore the biggest impediment to solving the West Lothian Question, something that I have also believed for a long time.

The things that are classified as England-only are the ones that trigger consequentials. What is important for the devolved Administrations is whether or not there is a consequential. If it is said to be UK-wide, there is no consequential and no extra money. If it is deemed to be England-only, then there is extra money, so obviously the England-only decisions are matters of huge importance to the devolved Administrations. If anybody runs around with the quaint notion that these England-only decisions should be taken only on English votes, they will find that there are huge uprisings in all the devolved Administrations and a constitutional crisis.

His own party ran around with that notion for years, despite what everybody told them, albeit before Lord Trimble joined the Conservative Party. Why did the Conservative Party not see this for all those years that they advocated English Votes on English Laws?

Trimble continues:

In conclusion, if we do not have the reforms to Barnett that we are suggesting, and if the Government do not go down the line that we have suggested here, the political pressure to go down other lines will become greater. By other lines, I am thinking partly of Calman. I think that Calman, in concept, is misconceived and is the wrong road to go down-it will be very difficult in practice and very dangerous for the union. I say to the Government that if they want to sustain the union, they should not sit back and do nothing, because then things will drift in the wrong direction.

The Government won't touch Barnett for fear of handing the SNP a Scottish majority at Westminster. It will probably fall to the Tories, already despised in Scotland, to do the dirty work (after a period of reflection).

It is because of the Barnett Formula that the Tories have watered-down their policy of English Votes on English Laws. They cannot prevent non-English MPs from having a decisive say on legislation that will affect the Barnett monies due to their constituents; so under the new Tory plans Scottish, Welsh and Northern Irish MPs will continue to vote on English legislation, which would be subject to English Pauses for English Clauses.