Gareth Young (Lewes, CEP): During Prime Minister's Question Time on 21st November 2007 Gordon Brown misled Parliament when he claimed that the Barnett Formula was based on need. His error was highlighted at the press briefing afterwards, but just two weeks ago he did it again:
We are due to publish a paper on the Barnett formula soon, but I say to my hon. Friend that the allocation of funds in the United Kingdom is based on a needs assessment that started more than 30 years ago, has been agreed by all parties subsequently, and has been followed by every Government since. It is based on the idea that we should allocate resources in the UK on the basis of need. That is the basis on which the Barnett formula exists.
Enter Lord Barnett, who created the Barnett Scheme "almost on the back of an envelope", to refute Brown's claim that the formula distributes money on the basis of need:
The current Prime Minister has frequently said in recent years that the formula is based on need but it isn't. It is based on a per-capita basis although varied slightly over the years - a very simple system, very simple but very wrong.
With Labour peers like this, who needs enemies? Very little of the pressure for Barnett reform is coming from Her Maj's Official Opposition, who well understand the problems of reform for the prospects of the Union. It is Lord Barnett and Welsh MPs (who see Wales losing out vis-à-vis Scotland) that are making much of the running. But as if that wasn't bad enough the most stinging criticism comes from Labour MPs in the North West and North East heartlands. MPs like Graham Stringer and Ronnie Campbell, whose constituents look north enviously at profligate Scottish spending, would like to see the Barnett Formula extended to English regions.
Up north the Scottish Government doesn't want reform of Barnett, they just want it scrapped, because they sense that a greater degree of fiscal independence for Scotland would accelerate the break up of the United Kingdom. And of course there's that black gold; which by rights is Scottish, so surely no one would object to a financially independent Scotland taking all the tax receipts from oil? The Barnett Formula was introduced to allocate funds on a fairer basis, but the desired cohesive effect on British unity has all but disappeared since devolution, and with it English magnanimity and goodwill that sustained it.
The Wendy Commission will examine how the Scottish Parliament could assume greater tax and spend powers to free it from the centralising constraints of Barnett and the UK Treasury's spending plans (more sop to the nationalists). This will make Scottish MSPs more accountable for the money that they spend but it will come with a concomitant loss of accountability for those Scots who sit in cabinet in England. If Scotland funds its devolved portfolio from taxes raised directly then a proportion of the money available to the Treasury to be spent in England becomes manifestly not Scottish. Or to put it another way, that tax money becomes English: No taxation without representation!
In the absence of a centralist formula that ties Scotland, Wales and Northern Ireland to English spending plans it becomes increasingly difficult to justify non-English MPs voting on English legislation. The West Lothian Question and Barnett Formula are intricately tied. Gordon Brown must resist calls for financial federalism because the logical extension of that is political federalism, and the English elephant in the room will become even more embarrassingly apparent. But address the unpopular formula he must.
Under the circumstances the only option that he can realistically pursue is a needs-based formula that can be extended to the English regions. But as 'the regions' are without personality and undemocratic this again raises the question of accountability, which may partly explain Brown's obsession with some form of regionalism for England.
The Barnett Formula was unfair before devolution, but devolution has given Scotland, Wales and Northern Ireland the opportunity to reject central policy (the 'English' NHS privatisation agenda for example) and differentiate themselves from England in a way that makes many in England envious. As English hospitals have the ground sold from beneath them, to be leased back in perpetuity to the English NHS, Scotland looks on in the knowledge that they will benefit from the Barnett consequentials as Brown sells off England's furniture to top up the UK pot.
The real question of accountability is not up at Holyrood.
