Barnett Formula

Earl of Mar and Kellie Excerpts

Tuesday 17th December 2013 Grand Committee

[The Earl of Mar and Kellie (LD)]

My Lords, I will speak briefly in the gap.

I was a member of the Select Committee which recommended moving from the Barnett formula to needs assessment. However, the first thing we learnt from the evidence was that the Barnett formula is extremely simple to operate, which was a bonus for the Treasury, which knew immediately how much was to be allocated to Scotland, Wales and Northern Ireland.

We learnt from the evidence that England and Scotland are pretty similar in terms of needs, while Wales has a disproportionate number of ill people and Northern Ireland a disproportionate number of young people. We also learnt, as I sincerely believe, that Wales misses out under the current arithmetic of the Barnett formula. In Scotland the Barnett formula is seen as a bribe to stay.

A more valid reason, and in my view the only possible justification, for the £1,600 per person additional spend in Scotland is that the tax take from Scotland does not include the oil and gas revenues, because these are allocated to the slightly fictitious area called the United Kingdom continental shelf, not to Scotland.

Ultimately, any perceived proposed reduction in the Barnett formula is a gift to the yes campaign and the possibility of Scotland becoming a better democracy. It was a great disappointment that there was no White Paper from the no campaign, one with a title something like “The Better Governance of Scotland”.

I understand that the three major parties still have no idea what they would like to deliver for Scotland; they need to work that out. They all talk about more devolution, but I wonder how much more can be devolved before eating into what I call the four pillars of reservation: microeconomics and taxation, the welfare system, foreign policy, and defence. The solution for a better United Kingdom is never going to be described in the party election manifestos, so there is more work to be done on this.

Noble Lords should not read anything into the fact that I am speaking from this side of the Committee—I have always done so since the Grand Committee came into effect. We were allowed to sit anywhere, and I like to see the whites of the Minister’s eyes.