Barnett Formula

Lord Empey Excerpts

Wednesday 15th June 2011 Lords Chamber

[Lord Empey]

My Lords, it can truly be said of the noble Lord, Lord Barnett, that he is a great man. His name is, in government-speak, legendary. Having seen it operate from the inside, I do not know what the Department of Finance and Personnel in Belfast would do without the name Barnett. Everything is consequential now that we have Barnett consequentials, and these things are looked at with great interest and concern. However, there are a number of very serious issues here.

Ten years ago, the Northern Ireland Executive entered into negotiations with the Treasury and we started a process of establishing a needs basis. It was our initiative. Work started and, before the first Northern Ireland Executive came to an end, the Treasury produced some needs-based assessments for a limited number of departments. Those established, for example, that we did not have enough money for health but they also established that we got more money for industry than we should have needed at that time. That process was not pursued because the then Executive did not survive and there was an interregnum. Northern Ireland does not fear a needs-based assessment, although the Barnett formula has, by and large, been good to us. We have had the fastest-growing population in the UK and therefore that has been reflected in the formula, but we have also had substantial pockets of real need, and the statistics are there for all to see. With a younger population, there is clearly huge pressure on our education and health systems. We have had substantial inward migration in recent years, and that is also now putting great pressure on housing, jobs and other services. Of course, we also have legacy issues that go back over 40 years to the Troubles, and we are still trying to come to terms with those.

I believe that, whatever other faults it might have had, the formula of the noble Lord, Lord Barnett, at least found an efficient and effective way of distributing resources, which was one of the main problems. If it is proposed to move away from that, agreement will first have to be reached on how needs are assessed, because to some extent need is in the eye of the beholder. What I might consider to be a need, others might not. For example, we have industrial legacy issues, which we share with Wales and Scotland—in particular, the west of Scotland—where huge pockets of people suffer from asbestosis and other industrial-related injuries; we have climatic issues; and our pattern of population distribution is linear rather than grouped, which of course means that more money is required for services.

Because of the political and economic significance of this proposal, it is important that there is national consensus on how it is carried out. Otherwise people will feel a sense of injustice, which will have a political knock-on effect and will be used rigorously by those who want to smash up the union. That would be an economic disaster for any part of the country and we must not contribute to it. Therefore, consensus on the mechanism for assessing these matters will be a critical factor before we carry out this exercise. I urge noble Lords to bear that in mind when we come to take a decision on this issue.