Scotland: The Unfair 'Barnett Formula' Public Funding Bribe- Inequitable in Perpetuity?

The Barnett formula was discussed in this 2004 publication, which resulted from seminars in Uppsala in 2002. "In Scotland the fiscal issue remains up for grabs- especially as the Barnett formula is increasingly seen as politically unsustainable in the longer term. It discriminates against the English regions and favours Scotland. In any future negotiations Scottish elected officials may well prefer a trade off that gives them increased control over (almost certainly higher) local taxation in exchange for reduced centrally distributed largesse. Given the much stronger social democratic ethos that exists in the Scottish Labour Party, this is a possibility." (page 31).

This Telegraph article by Dan Hodges makes a fair point: "not at any price".

The Times has a related front page story on 17 September.

"Mr. Cameron's pledge to maintain the Barnett formula, which ensures that the Scots receive annual funding of £1,600 per head per year more than the English, triggered a revolt in the party..."

Gordon Brown has argued on TV (eg "Scotland Decides, The Dimbleby Interviews") that the Barnett formula continues to be justified "on the basis of need" (see especially the interview section from the 20'56 mark until 21'50). Gordon Brown made some very persuasive and convincing points overall, but some might justly object that the Barnett formula is not a good example of "sharing the same economic rights", of "equity between the regions", or of a process of "sharing and allocating resources equitably and fairly, according to need". Does Scotland really have much greater needs because of its rural areas and greater number of pensioners?

Gary Gibbon, Channel 4 News, wrote that Gordon Brown is "trying to get the Tories to sign up to the current funding arrangements for Scotland – the Barnett formula – in perpetuity".

Brown's call for "Three Guarantees" (BBC News)

What is "the Barnett Formula"? (Wikipedia)

"Barnett viewed the formula that he devised as unfair. In The Scotsman in January 2004 he wrote, "It was never meant to last this long, but it has gone on and on and it has become increasingly unfair to the regions of England. I didn't create this formula to give Scotland an advantage over the rest of the country when it comes to public funding."

See Barnett's original article in The Scotsman, Scotland on Sunday, 11 January 2004

See Lord Barnett's latest "terrible mistake" admission

Can it really be that the three main UK political party leaders have made a vow amongst themselves to have the Barnett formula "set in stone"?

Dan Hodges has returned to the topic (17 September):

"The people of Scotland have been given a guarantee that whatever people in the rest of the Union might decide, they will be insulated from their political choices...Nor, as we saw yesterday, are the people of Scotland being asked to sign up for economic union. Yesterday we had the “Vow” – brokered by Gordon Brown and endorsed by the leaders of the three main parties – that the Barnett Formula will be retained if independence is rejected. That’s the mechanism whereby Scotland gets 20 per cent more in annual public spending than England, and which was described by its architect Joel Barnett yesterday as "unfair and should be stopped, it is a mistake. This way is terrible and can never be sustainable, it is a national embarrassment.” It is this unsustainable national embarrassment that is supposedly the bedrock of our Union".

Update from Sky News "The Barnett Formula Explained"

A disagreement about the Barnett formula Andrew Fallon talks to Andrew Neill

Lord Barnett on the Barnett Formula: Latest -Talking to Peter Stanford (Telegraph) IMPORTANT!

Update: Gordon Brown, in his Fife speech on 20 September, confirmed that the Barnett formula will be maintained. Does Michael Gove agree?

The Guardian Q and A, Alan Travis and Tom Clark:

"What does it actually amount to?" 
"A close reading of the language on public spending amounts more to a hedge than a pledge. The UK parties were already committed to keeping the so-called Barnett formula, which determines Scotland's relatively generous UK funding for health, education, law and order and other devolved domestic services. But the convoluted wording on the promise to keep the 35-year-old Barnett formula meant the commitment was not quite clear. This confusion was compounded by William Hague saying on Friday that with increased devolution the formula would be 'less relevant' over time".

"What does the rest of the United Kingdom want to happen to the Barnett formula?
"The Barnett formula, named after the 1970s Labour chief secretary to the Treasury at the time, Joel Barnett, is used to calculate how public spending on devolved matters is allocated by the Treasury between the four British nations. English MPs from all parties, and the Welsh government, are demanding that it be revised. The formula is based on the population of each country, with England originally allocated 85% and Scotland 10%, but it has since been updated. Lord Barnett has made clear that it was not based on a needs assessment of each nation. In per capita terms, based on the 2011-12 allocations, it was estimated that per head England gets £8,529 per person under the formula, Scotland £10,152, Wales £9,709 and Northern Ireland £10,876. One way to address the different levels of public spending could be to base the formula on a needs-based assessment, rather than solely population, as Barnett, now 90, has suggested. This week he proclaimed it a "national embarrassment" and said he was ashamed his name was still associated with it".

Lord Barnett on the Subsidy, Mail Online

Final update on this topic: Tim Shipman, from his front page story on the Scotland deal, Sunday Times, 21 September:

"With Tory MPs poised to revolt if Cameron, as promised, keeps the Barnett formula, which guarantees Scots £1,600 a head more than the English, Paterson added: 'The English will not tolerate another lop-sided settlement designed to appease nationalist sentiment paid for by English taxpayers'".