Friday, January 28, 2011

Barnett must go!

I haven't really the time to give this article (or the Scotland Bill) the attention they deserve, but I think this comment from the Conservative David Mowat is worth noting:
However, the proposal (the Scotland Bill) is structurally flawed. This is because the starting point is the existing unreformed block grant as computed by the Barnett formula. Roughly speaking, Scotland receives a settlement 20% higher than the English average. It is accepted that, were a more equitable needs-based analysis performed, the additional settlement would fall to nearer 5% extra. The difference is about £4.5 billion a year or £900 per head for every Scottish resident. This is a huge disparity and is manifestly unfair to England; in particular, the English regions, which if they received a “Barnett allocation” would be several hundreds of millions of pounds a year better off. There are parts of England where the failure of successive governments to reform the formula have and are causing real hardship.

This disparity has occurred because no attempt has been made to adjust the formula on the basis of changing need or changing population since it was first introduced over 30 years ago. Incredibly, Parliament has never been given the chance to vote on a mechanism of such monumental importance.

It is noteworthy that no coherent attempt has been made to defend the allocation mechanism. The last Government just claimed it was administratively easy whilst the SNP justify the calculation as some kind of “compensation” payment for their oil. Even the author of the formula, Lord Barnett, accepts that it is a very poor basis for continuing and needs to be urgently reformed.


David Vance said...

Agreed. Barnett says Barnett must go, time for change. NI would benefit from a more refined formula

Hen Ferchetan said...

Barnett was supposed to be a short term measure. It has now long outlived it's usefulness. Wales are losing out to the tune of £300m a year because of it and England even more so.

O'Neill said...

Hen & David,

Call me cynical but I reckon the reason it won't be changed is the sheer intellectual work involved in coming up with an alternative. MPs have much better things to be getting on with. Like sorting out their expenses claims.