Saturday, July 12, 2008

All quiet on the Barnett front

Why has it all gone quiet over the Barnett Formula? And could it be anything to do with Glasgow East? Here's my column in today's Newcastle Journal.

***

Earlier this year, a brief flurry of excitement went around the Westminster village that Gordon Brown might be about to do something that few thought possible for a Scottish PM.

The Treasury had ordered a study into the workings of the controversial Barnett funding formula which governs the allocation of public spending within the UK - surely a precursor to its eventual abolition.

At the same time, Labour, the Tories and the Lib Dems agreed to set up a Commission to look at the Scottish Parliament’s powers and funding, likely to include consideration of whether the Scots should move towards greater financial self-sufficiency.

Could the 30-year-old formula, long a source of disquiet in the North-East on account of the tens of millions of additional spending it awards to Scotland, finally be on the way out?

BBC Political Editor Nick Robinson certainly thought so, proclaiming on his blog that "the skids appear finally to be under the Barnett Formula.”

I myself was slightly more circumspect, commenting on these pages that the long battle for a fair funding deal for the North-East still had a way to go yet.

Since then, though, nothing. Maybe Mr Brown has thought better of it. Maybe the various reviews, studies and commissions are taking longer than expected to come to fruition.

Most likely, it's been put on the back burner pending the resolution of other political crises requiring more immediate attention.

The issue, of course, has not gone away. This week's report by the regional think-tank ippr north once again underlined the case for reform.

It found that although the gap between Scotland and the North-East in terms of public spending has narrowed in recent years, it still stands at £716 per head.

The report's main author Guy Lodge said the Barnett formula was no longer "fit for purpose" and should be replaced.

"It does not result in a fair distribution of spending, and is becoming an increasing source of tension between the nations of the UK," he added.

In its response to Thursday's report, the Treasury certainly gave little indication that anything was about to change.

It said there were "no plans" to change the Barnett formula, describing it as "a fair allocation which reflects population shares in the different nations of the United Kingdom" - which is pretty much what it's been saying for the past 11 years.

But whatever the reason behind the apparent lull in government activity around the issue, it is doubtful that much more is going to happen in the next fortnight at least.

Why? Because on July 24, voters in Glasgow East will go to the polls to elect a successor to Labour MP David Marshall, who resigned his seat on the grounds of ill-health last month.

Like Crewe and Nantwich, like Henley, this was undoubtedly a by-election that Mr Brown could have done without.

The main opponent will be Alex Salmond's Scottish Nationalists, and even the slightest movement on the Barnett Formula is bound to be exploited.

Mr Salmond, indeed, got his retaliation in early in his response to Thursday's report, saying: "It is abundantly clear that the motivation of both Labour and the Tories on this issue is slashing Scottish spending."

He claims that, far from being subsidised by England, Scotland's oil revenues are actually subsidising the rest of the UK to the tune of £4.4bn a year.

Does Glasgow East represent any sort of threat to Mr Brown, given that Mr Marshall had a majority of 13,507and had held the seat for Labour since 1979?

Well, ordinarily, no - but these are not ordinary times and the Prime Minister's record in by-elections thus far hardly inspires confidence.

Furthermore, there is one aspect of the Glasgow East contest that carries a particular danger for Mr Brown - the fact that it is taking place in his own Scottish political backyard.

If he can't win this one, Labour MPs will justifiably start to wonder whether he can actually win anywhere.

Mr Brown can at least take comfort from the fact that the by-election is taking place two days after the start of the summer Parliamentary recess, reducing the scope for plotting.

But the fact that even Harriet Harman has been talked about during the past week as a possible replacement demonstrates the extent of the trouble the Prime Minister is in.

My guess is that Labour will hang on, and that the immediate danger for Mr Brown will recede until the start of the conference season in September.

But as for the future of the Barnett Formula, the Prime Minister finds himself as caught between a rock and a hard place as he ever was.

It was, I think, always Labour's hope that it could safely ignore the problem, and that the formula would simply wither on the vine as spending between the different parts of the UK gradually converged.

It has now become clear, though, that this process will take so long that unless something is done sooner, the union could well fall apart in the meantime.

Reforming the Barnett Formula might have been one of the many radical things that Mr Brown dreamed of doing once he got to Number Ten.

Now he's there, though, he has found himself far too preoccupied simply with staying alive.

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17 comments:

dirty european socialist said...

We should not get rid of the barnett formula. London gets more money per head than us. So why should we be the one that are picked on. Anyway it is to make ip for the oil money. In 2005 scotland was getting back what it put in. I should not say this but now we out more in than we get out, thanks for high oil prices.
But bringi up the barnett forumla does not do us much good when we have a by election. The argument works both ways. It can be argued we should get more.

dirty european socialist said...

Here is good anti snp story for you to help put forward.

"http://news.scotsman.com/politics/Former-SN
P-figure--attacks.4273464.jp"

The SNP candidate apparently helped a bullying campaign against another SNP member.

By the way shopuld you not a labopur man be helping the glasgow east cmapaign not sticking in the mud with stuff about barentt formula. Talk about that after the election. You just play into SNP hands talking about that. Or do you want us to lose? :

Mike Smithson said...

Re DES. Paul has built up an excellent reputation with his blog which would be undermined if he chose to use it in a partisan way to support Labour or any other faction.

People come here because they know Paul will give it warts and all irrespective of whether it helps or hinders Labour.

I have the same issue on Politicalbetting.

dirty european socialist said...

OK sorry. But surely it is not the right time to mention the barnett formula. It just stirs up anto scottish and anti english resentment and arguments.
Plus the barnett formula is made up anyway. Scotland get what it puts in no governnment would give it more than it puts in or less than it puts. The barnett formula is in reality fiction, you can work these things out anyway you want.
Anyway at PB what do you think of the "SNP bullying an old lady story". Will you mention it in your blog. It has got zero covergae in the UK blogs. I bet if this was a labour candidate it would be all over the press.

dirty european socialist: said...

What is this blog trying to become the jocks and the geordies. London get more per capita spending than us. Plus Scotland only gets what it puts in due to the oil money.
As I say the barnett formula is aload of myth making by people trying to pretend the government were being generous when they increased spending on the country when it just "happened" to arrive when the oil money arrived from the north sea. The country just gets in what it puts in. And look at the pvoerty glashow east, caused by tory deindustrisation it is not as if we are a country that does not the spending we deserve anyway because of the oil.

Anonymous said...

Paul: Scotland and "The North East"? Health apartheid applies across England thanks to the Barnett Formula.

"dirty european socialist": Scotland gets what it puts in because of the oil money? Do me a favour - that's not the reason the Barnett Formula exists! The oil should be a UK resource whilst the UK lasts - and when it ends the maritime border must be returned to its pre-Continental Shelf Act position - returning oil to English waters which were allocated to Scotland by the UK Government c. 1968 - without consulting the electorate in England.

Of course, this was done on the understanding that the oil was a shared, UK resource - so there was no need to ask the electorate in England's permission, was there?

That's NOT how it's turned out.

Either it's a UK with shared natural resources, or it's separate countries - but whatever happens the maritime border needs correcting!

Barnacle Bill said...

I think Paul makes a valid point about the recent lack of movement on the Barnett Formula from both sides of the political divide south of the border.
Now whether this is a bit of political slight of hand by our glorious unelected Leader I leave you to draw your own conclusions.
I would only point out the messy way the Human Fertilization & Embryology Bill was pulled from being voted on next Monday - coincidence?
Anyway when is a good time to talk about it, after the next General Election?
There might not be a Labour Party north or south of the border able to provide effective opposition then!
If only Tony Wots His Name had gone after the last General Election, the Fifeshire Feartie might have had the time and popularity to tackle the Barnett Formula.
Now unfortunately Mr. Bean is hostage to too many opposing camps with interests that conflict with the way he would have liked to go.
Quite frankly I think we will see Jack Straw addressing the Labour Party conference this autumn as PM.
Whilst GB will have done a "Marshall" - resigned on the grounds of ill health.

Toque said...

I think you're right Paul, now is not the time for Labour or the Tories to be discussing the Barnett Formula. Labour desperately need to hold on in Glasgow East and the Tories need to do better than they usually do for appearances sake, so they can say that they are a party of the union.

I'm surprised that the Lib Dems aren't making more of it. IPPR are committed regionalists and I'm surprised that they haven't latched onto it to push the case for federalism and local tax-raising.

Gregg said...

I find it unlikely that Salmond's opposition to getting rid of Barnett is entirely sincere. Getting rid of it would surely aid the SNP's cause, ushering in the end of the union within a few years.

dirty european socialist said...

12 July, 2008 12:05
Nope you are just a manipulative nationalist with a bullying attitude to scotland. So if the oil is a uk resource that means all taxes in the UK are a UK resource, is that your line ofcourse not in reality your line all the wealth generated in england especially the south east is english, especially south east english, while all the wealth in scotland is a UK resource. Give me break we are not stupid savages you can con.
The 1968 act is the fair jkidgtment and it places 90% of opil oin scottsh territory. You cannot change the border after the oil was found.
It is our oil. I am happy to be in the union. But do not disscount the oil to pretend we are subsidised. The reality is we are not subsidised in fact with high oil prices at present subsidise the rest of the UK. At other times when the prices are low we are subsidised.
There is higher spending on health in the scotland but there is higher spending on univerisites per student in england. There are differences positive and negative, that is what you get with devolution different governments spend money on different stuff. But you con everyone with focusing on the areas where we spend more cash, and ignoring the issues where we spend a smaller ammount of cash. You choose to be petty nationalist who wants scotland to give money to england. Grow up we are not idiots.
If you want to steal the oil money of us you are just nationalistic bully. You seriously suggesting that sea of the coast of scotland should given to england.
No one will fall for your tricks.

dirty european socialist said...

I support the union but not for us to be bullied into being poor by nazi tories.
The fact is scotland normally get round about the same ammount of money it puts in. And there are differences on what which government prioritise. Nationalists both sides of the border should shut up. The north east should get more money. But from the south east. Which is the really wealthy area of the UK not scotland just look at glasgow and the highland regions. Those areas need more money.

Ben said...

Postponing the vote on the Human Fertilisation and Embryology Bill, as opposed to planning to withdraw or modify the legislation, tells us much about Gordon Brown's estimate of the intelligence of the average Roman Catholic voter in Glasgow East.

I couldn't possibly comment.

Letters From A Tory said...

Labour are clearly desperate to avoid any more hiccups before this election as, although they have a large majority, anything other than a comfortable victory in Glasgow will be a bad result for them.

stephen rouse said...

Coincidentally, the Western Mail led on this on Friday. http://www.walesonline.co.uk/news/wales-news/2008/07/11/momentum-for-the-reform-of-barnett-formula-gathering-at-last-91466-21323371/
(I apologise - my lack of web skills mean I cannot insert a neat hyperlink)
The story doesn't say how this Lords committee will be composed or what status its findings will have.

Paul Linford said...

I'm not sure the Lords Inquiry fundamentally takes us any further forward Stephen. Lord Barnett, who is clearly embarrassed by the whole thing, has been sounding off for the past decade about how his formula should be scrapped, and this just seems like another opportunity for him to air his views.

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