Barnett Formula

Lord Shipley Excerpts

Wednesday 15th June 2011 Lords Chamber

[Lord Shipley]

My Lords, I am grateful to the noble Lord, Lord Barnett, for his continuing determination to bring an end to the distortions of the formula that bears his name. Years ago, it was understandable to introduce the formula, but ever since it has been right to want to get rid of it because it was always meant as a temporary solution to a specific problem.

Not long ago, I was interviewed by BBC Scotland and asked whether I approved of the Barnett formula, given my interest in it as the then leader of Newcastle City Council. I said I could be a strong supporter of it, just as long as the Scottish border was redrawn along the River Tyne.

I have a serious constitutional point as well as a serious financial point. First, the principle should be that public spending should reflect public policy which should then be financed on the basis of need, irrespective of nation or region. The Government's official measure of need includes such matters as age, housing conditions, health, crime levels, unemployment rates, travel costs, and scarcity of population. This is right. Needs assessments may not be perfect but they are better than just using proportionate population figures.

The public spending figures published by the ONS by nation and region in July last year show that planned public spending for 2009-10 was £8,559 per head of population in England; in Northern Ireland it was £10,662; in Wales it was £9,597; and in Scotland it was £10,083. In London it was £10,139, second only to Northern Ireland. In my own region, the north-east of England, it was £9,588, only the fifth highest. It is very hard for people in England to comprehend how this financial anomaly has been allowed to continue for so long when every English region has lower public spending per head than the four devolved Administrations and in some cases significantly higher needs.

That takes me to my constitution query. Why is it that all the devolved Administrations receive more from the Government than English regions? We must understand better the reasons for this, which is why I believe a UK funding commission should be established to assess relative need and a new method for distributing funds in the context of recent and pending legislation. We need fairness for all parts of our United Kingdom.