Scottish Secretaries negotiated better than their Welsh counterparts

In light of today’s Wales Audit Office Report stating the need for drastic reductions in public spending in Wales over the coming years, its worth highlighting a passage from by Lord Ivor Richard at the start of the Lords Debate on the Barnett Formula last week.

He said that the Barnett Formula’s introduction was in part an attempt to contain spending in the 1970’s and on allocation of additional resources that ‘After World War II successive Scottish Secretaries of State negotiated additional allocations. They argued special needs, such as sparsity of population in the remote areas and density and poor housing in the central belt.’

The full passage is here ‘I cannot resist going into the history of the Barnett formula a little, although I see that my noble friend Lord Barnett is here. The history is interesting and, indeed, instructive. It dates back to 1976, when it was felt by Ministers in the Treasury that a formula was needed to determine the territorial distribution of public spending in the UK.

As far back as 1888 the Goschen formula-named after the then Chancellor of the Exchequer, the one whom Lord Randolph Churchill forgot-allocated funds based on the population: 80 per cent to England and Wales, 11 per cent to Scotland and 9 per cent to Ireland. Over time the precision of that formula came to be eroded. After World War II successive Scottish Secretaries of State negotiated additional allocations. They argued special needs, such as sparsity of population in the remote areas and density and poor housing in the central belt.

The introduction of what became known as the Barnett formula was part of a wider attempt to constrain public spending in the mid-1970s. The new formula was in essence an update of Goschen, being based on population rather than need. I cannot resist quoting from one or two portions of the evidence given by the noble Lord, Lord Barnett. He made it clear to us that the formula was not designed as a permanent solution. He said:

"I thought it might last a year or two before a Government would decide to change it. It never occurred to me for one moment that it would last this long".

Later, I put it to him:

"You devised a mechanism which helped the Treasury to distribute money. You did not base it on need. It was a straight population index and you did not think it would last".

To this, the noble Lord, Lord Barnett, gave a simple and definite answer: "No". When asked whether he thought that the formula had been successful, he answered in thoughtful terms:

"Successive Governments over 30 years have kept it going. I do not consider it is successful. I do not think it is fair. It cannot be fair with this kind of gap ... At the moment, all one can say is that the figures indicate a huge gap in the expenditure of the different regions".
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