Wednesday, September 10, 2008

Barnett Review Uncertainties.

Enjoyed a cappuccino this morning at a Cardiff Bay cafe named Mischief. They remember me there because I was their very first customer. Reading my Telegraph in full relax mode when my eye was drawn to an innocuous little report by James Kirkup at the foot of page 4. The issue under report would be a candidate for 'Most boring subject of the decade' - except that its rather important. I speak of course of 'the Barnett Formula'.

This 'Barnett Formula' is the mechanism by which public money approved for spending each year by the Government is distributed amongst the four nations of the UK. Its so named because it was established some 30 years ago when Joel Barnett was the responsible Minister. It hasn't been changed since. During the 8 years I was an Assembly Member, both Plaid Cymru and the Liberal Democrats were vociferous in their demands that the Formula should be abandoned and a new system put in place - usually calling for it to be needs-based and claiming that Wales would benefit to the tune of hundreds of millions of pounds. For part of that period I was the Conservative Finance Spokesman,(shadowing the hugely respected Finance Minister, Sue Essex). We were both reluctant to support what we saw as opening an unpredictable can of worms.

Back to today's article and the point of this post. It seems that the Taxpayer's Alliance has just published a report, written by a former Treasury economist, Mike Denham also supporting calls for a review of Barnett. But from a rather different perspective - and one that I feared might prove to be the most influential worm in the can. It claims that £200,000,000,000 has been spent in Wales, Scotland and N. Ireland over and above the equivalent per capita amount that has been spent in England since the Formula was introduced. The report also points out that in 2007/8 per capita spend in England was £7'535, while in Scotland it was £9,179, in Wales it was £8,577 and in N. Ireland it was £9789. I've no reason to think these figures are inaccurate. The reason for this of course is that public money was distributed according to need when Joel Barnett was in charge, and the need has always been greater in Scotland, Wales and N. Ireland. But its not how everyone sees things - especially in England. Another of the unpredictable worms in the can is the extent to which any review will be subject to political 'manipulation'. My advice to those who assume with casual certainty that huge financial benefit will flow towards Wales following a review of Barnett is 'Be careful what you wish for' and 'Proceed with great care'.


Anonymous said...

It's really pathetic that both Plaid and the Lib-Dems are making such an enormous fuss over the 'Barnett Formula' when neither party is doing much about getting the Welsh economy onto a firm economic footing in its own right.

When was the last time you heard the Lib-Dems speak up for protecting Wales greatest asset: its intellectual property. This year? Last year? When exactly?

If Wales is the smart country that Labour claims it to be - why is Wales giving away so much of its future tax base by failing to properly protect Wales's great asset, IP.

Anonymous said...

As a Welshman, I obviously want the best deal for us, but I am also a unionist - and I do fear a growing English backlash against Wales (and even moreso with Scotland) that the Barnett Formula, West Lothian Question and over-representation of MPs is causing. I have two visions of the best future for Wales - either abolish the Assembly and return to just Welsh counties that are no different to English counties, with Wales being purely a heritage area like Wessex or Mercia; OR make the Assembly a proper tax raising institution; but only if England is given its own parliament too (not English regions but ONE parliament and not based in London) and that all Welsh expenditure has to be raised within Wales and all English expenditure is raised in England. There should be no cross-border subsidising from Wales to England or vice-versa, although Wales could 'buy' services from England (e.g. for use of its hospitals for its residents, as we do with Royal Shrewsbury) and England could do the same for water in Welsh reservoirs. A 'federal senate' parliament in Westminster then takes a subscription from each of the four nations to pay for collective issues such as defence. We should then leave the EU and renegotiate a purely free trade agreement with them. I am also having growing doubts about our NATO membership if the alliance continues its VERY dangerous push to allow every Tom, Dick and Harrytopia to join, regardless of the Alliance's long term security needs!

Glyn Davies said...

anon - Its so easy to play the victim hard.

roman - It is rather ridiculous that the Barnett Formula should cause resentment in England, because whatever formula is used would give a higher per capita expediture in areas of greater need - which is Wales.
In general I agree with your analysis about the constitutional position - but overlaid with pragmatism. I support law making powers in devolved subject areas because I do not think abolition would be supported by the Welsh poeple. And the reason that I don't think there is any point in going further than the above (on tax raising or criminal justice for example) is that I don't think the Welsh people are ready for that either - even if there is a certain logic behind it.
I've no objection to an English Parliament, but prefer the idea of all English MPs meeting as such a Parliament on Thursdays.
And then you go into areas where it would be dangerous for a Parliamentary candidate to stray!