Lord Rowe-Beddoe, a member of the Lords committee on the Barnett formula, says reform is now urgent
The Government welcomed the report of the House of Lords Select Committee inquiry into the Barnett formula as an “important contribution to the debate on the future of devolved funding arrangements in the UK”. However, out of eight recommendations made in the Committee’s conclusions, the Government appeared to reject – or place firmly on back burners – five. Those that were accepted were mostly uncontroversial declarations of belief in motherhood and apple pie.
The creator of the formula, Lord Barnett, gave evidence to the Select Committee at the outset of our work in January 2009. This provided a helpful historical perspective surrounding the reasons for the introduction of the Formula. His own expectation was that such funding arrangements might last a year or two. Thirty-plus years later the topic ebbs and flows, sometimes as frequently as the tide. Recently we have had a plethora of reports – the Calman Commission, the Holtham Commission (First Report), published in July 2009, and our own report published also in that month.
For me personally, sitting on the Committee was an education in itself, with particular regard to the manner in which Her Majesty’s Treasury presents itself and its arguments. This was the first time that I had been exposed to such intransigence and even at times evasion. Power is all-consuming: it feeds on itself, often with arrogance. The much-used phrase ‘judge and jury of their case’ came frequently to mind.
Whatever the political complexion of the next Government, it must – as a priority – address the increasing inequality of funding between the four countries of the United Kingdom. And I mean four. I am an ardent unionist and the people of our islands are in need of much more equitable and transparent financial governance. It was unhelpful for the Scottish Government, for example, not to wish to engage fully in a discussion on the formula with us (or perhaps with anybody), but just to hide behind their stated objective to open up the whole subject of fiscal autonomy.
On the other hand, perhaps increased financial responsibility should be pursued not only by Scotland but by the other two devolved administrations. The result would be to increase the powers and abilities of the respective governments to focus on the needs of the population which will inevitably differ in detail. However, how would such developments resonate in the North East and North West of England?
With regard to Wales, the Secretary of State’s Ministerial Statement in November last year said that the Government had agreed new arrangements in relation to future funding. He particularly focused on the pressures in the way the Barnett Formula works for increasing convergence which could bring further disadvantage to Wales in the future. Whilst the statement was a welcome recognition it does not address the central problem that the formula itself is not fit for purpose. Witness after witness provided evidence to support this proposition.
It is also to be welcomed that the Chief Secretary to the Treasury has agreed to take a hard look at the formula. I understand preliminary work on as assessment of spending per head in Wales is starting and this is useful. In recent weeks, during visits to Wales, both the Prime Minister and the Leader of the Opposition have referred to the formula and acknowledged its shortcomings.
The formula must be replaced, and not just tinkered with. We need a new formula that addresses the various needs. On this matter both the Lords Committee and Holtham Commission are singing from the same hymn sheet. We have both recommended that the replacement must be transparent, dynamic, simple in design, easy and inexpensive to operate. Again, as we both recommended, it must be administered by an independent advisory body. The worsening and unacceptable inequalities of the current situation must be eradicated. A formula that is based on relative needs is practical, and should – nay must – be pursued vigorously.
As we embark on the General Election I urge all political parties to commit themselves to introducing a needs-based system over a transition period of three to five years.
