Barnett Formula

Baroness Quin Excerpts

Wednesday 15th June 2011 Lords Chamber

[Baroness Quin]

My Lords, I begin with my own words of congratulations and welcome to the noble Lord, Lord Stephen, and I hope that next time he addresses us he is able to do so at much greater length in a more leisurely debate. I also congratulate my noble friend Lord Barnett on his persistence in trying to abolish, in its present form, the formula that bears his name. I have very much agreed with his views over the years and I feel that his persistence should be rewarded with a new Barnett system that is based on needs and that, I hope, is agreed by all parts of the UK as a sensible way forward.

I would also like to express my general support for the conclusions of the report on the Barnett formula, which was the work of the committee chaired by my noble friend Lord Richard. I was taken by the comments of the noble Lord, Lord Forsyth, and my noble friend Lord Foulkes in talking about the new political situation and our need to keep that in mind as well as simply looking at the issue, as we have done over recent years.

I was very tempted to respond to the challenge laid down by my noble friend Lord Foulkes in talking about a federal system for the UK. However, he immediately hit on a particular problem in that suggestion, which is, given the size and the population of England, whether England would be treated as one unit or in devolved units. Despite the failure of the referendum in the north-east of England, I would be rather upset if we simply ended up with a very centralised English system within a devolved UK. I hope that that will not happen in future.

Like the noble Lord, Lord Shipley, I am very much influenced in my comments about the Barnett formula by my experience of belonging to the north-east of England. As he well knows, the formula and the way that it operates has been the subject of much public criticism in the north-east—in fact, it is almost as hot a political potato as it is in Wales. That criticism has also been supported by at times a very vigorous media campaign against the formula.

I certainly know from my own experience, having represented a north-east constituency in another place, that it was impossible to defend the formula to my constituents. I did attempt to do so once as a loyal Minister defending government policy and I very soon found that I was on a hiding to nothing. However, I will pay tribute to the way that, despite the operation of the formula, certainly under the previous Labour Government, many programmes of expenditure were directed to areas such as mine, and that has helped to redress the balance.

However, it remains true that over the years the less well-off regions in England, as well as Wales, have understandably felt disadvantaged by the formula. My noble friend Lady Hollis made the point to the committee that obviously there are more badly off people in populous, prosperous areas. Despite that, in any formula based on territories, a territory such as the north-east, which has a similar population to Wales and a slightly higher population than Northern Ireland, will compare its receipts to them, as it has compared its unemployment rates and general economic performance with Scotland, Wales and particularly Northern Ireland over the years.

We should learn from the international examples mentioned in the committee’s report. We should bear it in mind that although the systems are different to those of the UK, having a regular and automatic review of any funding system is important if you are to have a proper system based on needs. I hope that the Government will take that dimension into account in their future deliberations.