Flying the flag for a lower Scottish grant

Devolution's Hidden Cost

Share
Related Topics
It's there in the St George's flags that England football fans increasingly wave at internationals. It's there in the call among a quietly growing number of thinking right-wing Tories for an English parliament to match those for Scotland and Wales (see David Davis, below). And it's there in the subterranean restiveness among a few quite senior English Labour politicians about the distribution of public expenditure between the component parts of the United Kingdom. It may not yet qualify as a backlash. But Englishness in politics, as in football, is starting, post- devolution, to have a slightly harder edge.

Imagine it's millennium year. Gordon Brown's two-year ban on any spending increase over the levels set by the previous government no longer applies. Real live public expenditure negotiations are now happening in earnest once again. David Blunkett, Jack Straw and Harriet Harman are fighting against the Treasury (dominated, as it happens, by Scottish ministers) for more money for schools, policemen and child care. They form a cabal and start discreetly muttering to friendly English Labour backbenchers that they there would be plenty more money to go round if only Scotland wasn't quite so well off. Why, the well-informed backbenchers start asking in public, does Scotland have to enjoy public spending 14.3 per cent higher per head than the average UK figure? After all, there is now a Scottish Parliament with tax-raising powers and the freedom to allocate spending. Isn't it time England and Wales got their fair share?

This isn't fantasy. It's the stuff of Cabinet infighting. Which is one reason why the Treasury Select Committee was prescient last week in announcing a short inquiry into why the Barnett spending formula allocates spending more generously to Scotland. The Government's present policy, as expressed in the White Paper on Scottish devolution, is rather firmly in favour of the current block grant system which it says has produced "fair settlements" for Scotland. This was not the view that all English ministers took in the run-up to devolution. The Constitution Unit, in its own authoritative study of devolution, had recommended that an independent commission should examine the whole system. But Donald Dewar, the Scottish Secretary, held firm. The prevailing Cabinet view was that it would hardly help to deliver a yes vote in the devolution referendum if Scottish voters knew the spending formula was under threat. The Treasury Select Committee's purpose is merely to establish the facts. But its inquiry may also unwittingly anticipate a Cabinet conflict.

The facts are worth having. Assessment of the relative needs of Scotland, England and Wales is a hideously inexact science. Given the social needs of some parts of Scotland, the sparse rural populations of some others, and the high relative prosperity of south-east England, an equitable settlement would almost certainly not mean the same per capita level of spending in Scotland as for England (though it's rather less clear why it should be significantly higher for Scotland than for Wales). Nevertheless the Barnett formula, for reasons Joel Barnett could not possibly have foreseen when as Jim Callaghan's tough minded Chief Secretary he devised it in 1976, has not done the job he envisaged. Post-war, successive Tory and Labour Scottish Secretaries, often conjuring the nationalist spectre, secured a series of relatively favourable public spending settlements. By linking the Scottish block grant directly to the UK-wide totals, Barnett intended to bring Scottish per capita expenditure more closely into line with that of England and Wales. Instead the opposite happened, for reasons which are complicated but include a relative decline in the Scottish population and the fact that public expenditure has been contained rather than expanded since the early 1980s. Which is one reason why Joel Barnett has himself come out in favour of change. If nothing else it looks to many experts as if the northern English regions are left relatively worse off than Scotland, and that if Barnett-style convergence had been achieved, it might have been possible to extract some pounds 2bn from the Scottish spending totals.

This is a potentially explosive problem, particularly if you happen to believe in the Union. Nothing could be more calculated to fuel the Scottish nationalist cause than exacting a price for devolution through a raid on the block grant. On the other hand, English discontent could well intensify when the debate on public spending begins in earnest. (It's even possible, by the way, that Davis's deeply controversial idea of an English parliament might appeal in time to some Labour MPs.)

You can already find English ministers cheerfully devising, in private, a long-term Catch 22 argument for cutting the Scottish block grant: if the Scottish Parliament decides to increase taxes then they should have the equivalent grant deducted to avoid an overall increase in public spending. If it cut taxes then then the grant should still be reduced, on the grounds that the English cannot be expected to subsidise Scottish tax cuts. Needing to strike a delicate balance the Government might be well advised to call for a full-scale, and no doubt lengthy, inquiry. As it happens, the devolution White Paper, in a passage that some attribute to Jack Straw, holds out the possibility of a review when it stresses that any "substantial revision" would have to be carried out "in full consultation" with the Scottish executive. Sometimes, if the bough is not to break, it has to bend.

React Now

Latest stories from i100
Have you tried new the Independent Digital Edition apps?
iJobs Job Widget
iJobs General

Selby Jennings: VP/SVP Credit Quant- NY- Investment Bank

Not specified: Selby Jennings: VP/SVP Credit Quant Top tier investment bank i...

Ashdown Group: Senior Marketing Executive- City of London, Old Street

£40000 - £43000 per annum + benefits: Ashdown Group: Senior Marketing Executiv...

Ashdown Group: Marketing Manager

£40000 - £43000 per annum + benefits: Ashdown Group: An international organisa...

Ashdown Group: Internal Recruiter -Rugby, Warwickshire

£25000 - £30000 per annum: Ashdown Group: Internal Recruiter -Rugby, Warwicksh...

Day In a Page

Read Next
 

Errors & Omissions: pours or pores, pulverised, ‘in preference for’ and lists

Guy Keleny
Ed Miliband created a crisis of confidence about himself within Labour when he forgot to mention the deficit in his party conference speech  

The political parties aren't all the same – which means 2015 will be a 'big-choice' election

Andrew Grice
Aren’t you glad you didn’t say that? The worst wince-and-look-away quotes of the year

Aren’t you glad you didn’t say that?

The worst wince-and-look-away quotes of the year
Hollande's vanity project is on a high-speed track to the middle of nowhere

Vanity project on a high-speed track to nowhere

France’s TGV network has become mired in controversy
Sports Quiz of the Year

Sports Quiz of the Year

So, how closely were you paying attention during 2014?
Alexander Armstrong on insulting Mary Berry, his love of 'Bargain Hunt', and life as a llama farmer

Alexander Armstrong on insulting Mary Berry and his love of 'Bargain Hunt'

From Armstrong and Miller to Pointless
Sanchez helps Gunners hold on after Giroud's moment of madness

Sanchez helps Gunners hold on

Olivier Giroud's moment of madness nearly costs them
A Christmas without hope: Fears grow in Gaza that the conflict with Israel will soon reignite

Christmas without hope

Gaza fears grow that conflict with Israel will soon reignite
After 150 years, you can finally visit the grisliest museum in the country

The 'Black Museum'

After 150 years, you can finally visit Britain's grisliest museum
No ho-ho-hos with Nick Frost's badass Santa

No ho-ho-hos with Nick Frost's badass Santa

Doctor Who Christmas Special TV review
Chilly Christmas: Swimmers take festive dip for charity

Chilly Christmas

Swimmers dive into freezing British waters for charity
Veterans' hostel 'overwhelmed by kindness' for festive dinner

Homeless Veterans appeal

In 2010, Sgt Gary Jamieson stepped on an IED in Afghanistan and lost his legs and an arm. He reveals what, and who, helped him to make a remarkable recovery
Isis in Iraq: Yazidi girls killing themselves to escape rape and imprisonment by militants

'Jilan killed herself in the bathroom. She cut her wrists and hanged herself'

Yazidi girls killing themselves to escape rape and imprisonment
Ed Balls interview: 'If I think about the deficit when I'm playing the piano, it all goes wrong'

Ed Balls interview

'If I think about the deficit when I'm playing the piano, it all goes wrong'
He's behind you, dude!

US stars in UK panto

From David Hasselhoff to Jerry Hall
Grace Dent's Christmas Quiz: What are you – a festive curmudgeon or top of the tree?

Grace Dent's Christmas Quiz

What are you – a festive curmudgeon or top of the tree?
Nasa planning to build cloud cities in airships above Venus

Nasa planning to build cloud cities in airships above Venus

Planet’s surface is inhospitable to humans but 30 miles above it is almost perfect