Public Spending: Barnett Formula

Baroness Chapman of Darlington Excerpts

Wednesday 15th March 2023 Lords Chamber

[Baroness Chapman of Darlington (Lab)]

My Lords, it is a real pleasure to take part in this debate. I too live on the Darlington-Stockton railway line in Darlington. We are very proud of our railway heritage, and we are looking forward to the centenary in 2025, when we will celebrate our fine contribution to the railway infrastructure of the world, all starting in Darlington.

I congratulate the noble Lord, Lord Shipley, on securing this debate, which is timely, given today’s Budget Statement and in the light of other developments, such as the UK internal market Act and the creation of a new UK subsidy control scheme, as well as the distribution and spending of levelling-up funds. We are all very interested in those issues, today especially.

As the helpful Lords Library briefing outlines, the Barnett formula is a long-running Treasury policy. It does not have a statutory underpinning, but it is very well established. I was struck by the noble Lord, Lord Wigley, saying that he spoke in the debate in 1978 in which it was introduced. I doubt whether the Minister was born in 1978, which goes to highlight just how long this has been going on.

As someone who lives in the north-east and is married to a Welsh MP, I am very familiar with the sense of grievance that exists around the current situation. We know that various complaints are levelled against the Barnett formula, and the Government should engage positively with those debates and attempt to move this forward. Of course, the formula is not the only way in which the Government claim to be closing disparities between the nations and regions of the UK. The levelling-up fund is, contrary to initial expectations, allocated by Westminster rather than being devolved. That has raised questions, particularly from the Welsh Government, and I hope that the Minister can address those concerns.

The noble Lord, Lord Greenhalgh, spoke about setting regions and councils free. Obviously, everyone would like to see that, but I gently point out that it is quite difficult to be free when you are tied up in spending thousands of pounds, if not more, which you would like to spend on services, bidding for various funds to help you grow and regenerate your area as you would like to do.

Concerns have been raised about the use of the levelling-up fund, and there have been plenty of accusations of funds being given to certain local authorities for perhaps more political purposes rather than on the basis of need. We on these Benches are deeply concerned about that and support the prioritisation of need in allocation of funds. In recent weeks there have also been reports of significant sums being allocated but not actually being spent, which suggests that the system is not functioning as well as intended and that some funds might have been better spent in other parts of the UK.

Alongside Barnett and levelling-up funding, there is also of course the question of the UK shared prosperity fund, which is coming on stream to replace EU regional development funds—I think the noble Lord, Lord Shipley, referred to this as well. The UK shared prosperity fund has identified geographical areas in Wales, Scotland and Northern Ireland, but the formula used is different to Barnett and the precise forms of support for each part of the UK seem to differ, as does the nature of the interaction between Whitehall and the devolved Administrations.

I also recognise and congratulate the noble Lord, Lord Hendy of Richmond Hill, on his maiden speech. As someone with great experience at the top of FirstGroup, Transport for London and Network Rail, he has a solid track record of overseeing public spending on infrastructure projects, and we all look forward to benefiting for years to come from that insight and experience, and we welcome him here. I especially congratulate him on including Darlington in his maiden speech and encourage him to continue to do so throughout his many years and contributions in this place.