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The Barnett Formula

November 21, 2007

The Barnett Formula

Mark contributed to a debate on the Barnett Formula called by Labour MP, Graham Stringer, in Westminster Hall. The Barnett Formula is the system the government uses to allocate public spending to devolved authorites in Scotland, Wales and Northern Ireland.

Mr. Mark Field (Cities of London and Westminster) (Con): I congratulate the hon. Member for Manchester, Blackley (Graham Stringer) on securing this important debate. The issue has been fraught with significant controversy since 1978, when the Barnett formula was introduced, although preferential funding treatment for Scotland goes back to the end of the Victorian era and Lord Goschen. The problem became particularly strong in the aftermath of devolution, during the past eight years. However, it seems that the public at large often labour under a number of misapprehensions. [Interruption.] We all know what game the Scottish nationalists are playing. They want the whole thing shaken up; they would love nothing more than an aggressive cut in the Barnett formula, as it would allow them to play to the gallery at home. We are not going to play that game, and I hope that the same applies to Labour Members.

There is a perception that the Barnett formula is set in stone, but it is a convention that could be changed at will by the Treasury. There is also a sense that England gets an unfair deal, and that applies not only to the English regions, but in my part of London. I accept that it gets a fair amount of public expenditure. Indeed, the hon. Member for Manchester, Blackley referred to the protected £16 billion being invested in Crossrail, but as the hon. Member for Sittingbourne and Sheppey (Derek Wyatt) rightly pointed out, London is still a net donor.

Pete Wishart (Perth and North Perthshire) (SNP): When identified spending is factored into the equation, London secures more money than Scotland. What does the hon. Gentleman have to say about that? I do not ask him to accept it, but he should at least conclude that a debate is to be had about it.

Mr. Field: We could doubtless debate statistics at both ends of the argument, but there was a tacit acceptance of the Barnett formula by the Conservative Administration between 1979 and 1997, who relied on only a small minority of votes and seats in Scotland. That is one reason why it was maintained. I disagree with the hon. Member for Manchester, Blackley. My view is that after 1997, and particularly after devolution in 1999, it ceased to be a question of economics. It is now a matter of raw constitutional politics.

The formula fails to provide for the proper fiscal independence of the devolved Governments in Scotland and Wales. Even with its own Parliament, Scotland has to work within a total sum over which it has absolutely no control, although it does have some discretion. That is unacceptable. I have always been more relaxed than many of my party colleagues and many people across England about the effects of devolution. I believe that localism should be properly respected. One of the interesting things about my constituency?the seven square miles of central London that I represent?is that it is actively cosmopolitan.

Mr. David Hamilton (Midlothian) (Lab): It is rich.

Mr. Field: Of course, it has pockets of great wealth. It also has pockets of great poverty. I would happily go with the hon. Gentleman to literally within 200 yd of here, down to Abbey Orchard estate, and to Pimlico and Bayswater. It is much more mixed. The point is that even in the midst of a cosmopolitan constituency, there is a great passion for localism?for the idea of local residents associations and amenity societies. One of the big challenges of politics is trying to marry the fact that although we live in a global economy and a globalised world, it is one where local issues matter.

However, the postcode lottery was implicit in what the hon. Member for Manchester, Blackley said. Scotland, of course, has preferential treatment for university fees, for the long-term care of the elderly, and more recently for prescription charges. I congratulate the right hon. Member for Banff and Buchan (Mr. Salmond) on his clever political role on prescription charges, because the postcode lottery has a particular effect in relation to the health service. The nationalised health service is one subject that most people in the United Kingdom feel strongly about, and more so than about the postcode lottery or other elements of expenditure.

Jim Sheridan (Paisley and Renfrewshire, North) (Lab): The hon. Gentleman is right about the policies of the Scottish National party, including the reduction in primary school class sizes, the cancellation of student debts, the hiring of 1,000 new police officers and free prescriptions. The only difference is that they have not been delivered?neither are they likely to be delivered?and they will blame us for it if they are not.

Mr. Field: I shall not get into such localised debates, but the hon. Gentleman has put his concerns on the record. The move by the Scottish National party’s Administration at Holyrood to drive a new wedge into the area of health spending is clever politics, for it stokes up resentment on the subject that is of most concern in relation to the postcode lottery. It is a trap into which those who truly support the Union should not fall.

I have to say that my party’s view that we should support English votes for English laws is unworkable. It is absurd that we should have to go through a health Bill, saying that clause 13(7) can be voted on only by English Members but that clause 13(8) can be voted on by all Members. That is nonsense. Nor do I support the notion of an English Grand Committee. It will allow those who wish to do so to suggest that we are somehow trying to put the Union at risk. However, we must have transparency in matters financial. I hope that we will be galvanised by considering all the facts.

At least since devolution, I have preferred the idea of having an English Parliament with exactly the same rights as the Scottish Parliament. I am the only Conservative Member who voted in favour of getting rid of the House of Lords. I would have the Lords as a UK Parliament, with a unicameral system, and have English, Welsh, Scottish and Northern Ireland Parliaments with exactly the same powers, but allowing foreign affairs, defence and a certain amount of fiscal policy to be made by a UK Parliament.

We shall surely return to these matters many times. Make no mistake, however, that any move to recalibrate the Barnett formula would have political and, above all, constitutional implications well beyond the merely financial and fiscal elements that make up what is to many a somewhat mischievous mechanism.