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.

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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.

Will DC bring DD back?

No, says Iain Dale, who as Davis's close friend and former campaign manager probably knows more than most.

But I'm not so sure. As I've said on Iain's blog, Cameron does not strike me as a vindictive man and if, in time, it becomes clear that bringing back Davis in a senior role would strengthen the team - which in my view it will - I think he'll probably be prepared to let bygones be bygones.

Whereas incoming Labour Prime Ministers are required by the party's own rules to appoint Shadow Cabinet members to the Cabinet - although it didn't stop Tony Blair sacking four of them after a year - there is a fairly long Conservative tradition of bringing in heavyweights from outside whenever the party enters government.

Lord Carrington, chosen as Foreign Secretary from outside the then Shadow Cabinet by Margaret Thatcher in 1979, was an example.

There has been much talk in Tory circles about whether Prime Minister Cameron would bring in, not just DD, but also IDS, Ken Clarke and even Peter Lilley if he wins the next general election.

Such talk is a tacit recognition that the current Shadow Cabinet, while strong on intellect and ideas, is lacking in that indefinable quality that, in the days of Trollope, used to be known as "bottom."

My guess is that at least two of the aforementioned "Big Beasts" will return, and that the first Cameron Cabinet will indeed look fairly different from the current Shadow Cabinet line-up.

The Harman Hypothesis

Much comment in the MSM and blogosphere alike today over the leadership chances of Harriet Harman as she stood in for Gordo at PMQS. The Sun reckons she's already plotting to take over, as does Andrew Rawnsley. Mike Smithson on Political Betting rates her chances, but Ben Brogan thinks she's already blown it. Iain Dale suggests Jack Straw could be in on the plot, while a thoughtful Tory perspective comes from new-kid-on-the-blog Alan Collins.

So what do I make of it? Well, if Harriet Harman is seriously being talked about as the answer to Labour's problems, it merely demonstrates the depth of the crisis the party is in.

Harman is political Marmite - she has her very strong admirers among a certain stratum of politically-correct London society - but she is not, and never has been, generally liked by the broader mass of the British public.

This did not really matter when Labour was choosing a deputy leader. The job of deputy is more about reassuring the faithful than reaching out to the uncommitted. But it will matter if and when the party comes to choose a new leader - particularly after their experience with Mr Brown.

I suspect that Harman knows this, and that her comment at PMQs about there not being enough airports for the men who would leave the country if she became PM displayed a certain degree of self-awareness.

Her primary objective in any leadership battle will be, firstly, to hold onto the deputy leadership - a generational shift in the leadership, for instance to David Miliband, could make her a casualty along with Gordon - and to secure the sort of senior role in the next Cabinet that Gordon has denied her.

I suspect her real aim is to be Justice Secretary rather than PM, but letting the speculation ride for a bit will do her no harm in this context, as it underlines her claims to be seen as a "key player" and strengthens her position for the inevitable job bargaining that will accompany a leadership change.

My guess is that she will eventually throw her weight behind the "Anyone but Miliband" bandwagon that appears to be growing and back the candidate most likely to give the Foreign Secretary a run for his money. As things currently stand, that surely means either Straw, or Alan Johnson.