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

Austen Lloyd: Private Client Solicitor - Oxford

Excellent Salary : Austen Lloyd: OXFORD - REGIONAL FIRM - An excellent opportu...

Austen Lloyd: Clinical Negligence Associate / Partner - Bristol

Super Package: Austen Lloyd: BRISTOL - SENIOR CLINICAL NEGLIGENCE - An outstan...

Recruitment Genius: Sales Consultant - Solar Energy - OTE £50,000

£15000 - £50000 per annum: Recruitment Genius: Fantastic opportunities are ava...

Recruitment Genius: Compute Engineer

Negotiable: Recruitment Genius: A Compute Engineer is required to join a globa...

Day In a Page

Read Next
Syrian refugee 'Nora' with her two month-old daughter. She was one of the first Syrians to come to the UK when the Government agreed to resettle 100 people from the country  

Open letter to David Cameron on Syrian refugees: 'Several hundred people' isn't good enough

Independent Voices
Amjad Bashir said Ukip had become a 'party of ruthless self-interest'  

Could Ukip turncoat Amjad Bashir be the Churchill of his day?

Matthew Norman
Iraq invasion 2003: The bloody warnings six wise men gave to Tony Blair as he prepared to launch poorly planned campaign

What the six wise men told Tony Blair

Months before the invasion of Iraq in 2003, experts sought to warn the PM about his plans. Here, four of them recall that day
25 years of The Independent on Sunday: The stories, the writers and the changes over the last quarter of a century

25 years of The Independent on Sunday

The stories, the writers and the changes over the last quarter of a century
Homeless Veterans appeal: 'Really caring is a dangerous emotion in this kind of work'

Homeless Veterans appeal

As head of The Soldiers' Charity, Martin Rutledge has to temper compassion with realism. He tells Chris Green how his Army career prepared him
Wu-Tang Clan and The Sexual Objects offer fans a chance to own the only copies of their latest albums

Smash hit go under the hammer

It's nice to pick up a new record once in a while, but the purchasers of two latest releases can go a step further - by buying the only copy
Geeks who rocked the world: Documentary looks back at origins of the computer-games industry

The geeks who rocked the world

A new documentary looks back at origins of the computer-games industry
Belle & Sebastian interview: Stuart Murdoch reveals how the band is taking a new direction

Belle & Sebastian is taking a new direction

Twenty years ago, Belle & Sebastian was a fey indie band from Glasgow. It still is – except today, as prime mover Stuart Murdoch admits, it has a global cult following, from Hollywood to South Korea
America: Land of the free, home of the political dynasty

America: Land of the free, home of the political dynasty

These days in the US things are pretty much stuck where they are, both in politics and society at large, says Rupert Cornwell
A graphic history of US civil rights – in comic book form

A graphic history of US civil rights – in comic book form

A veteran of the Fifties campaigns is inspiring a new generation of activists
Winston Churchill: the enigma of a British hero

Winston Churchill: the enigma of a British hero

A C Benson called him 'a horrid little fellow', George Orwell would have shot him, but what a giant he seems now, says DJ Taylor
Growing mussels: Precious freshwater shellfish are thriving in a unique green project

Growing mussels

Precious freshwater shellfish are thriving in a unique green project
Diana Krall: The jazz singer on being friends with Elton John, outer space and skiing in Dubai

Diana Krall interview

The jazz singer on being friends with Elton John, outer space and skiing in Dubai
Pinstriped for action: A glimpse of what the very rich man will be wearing this winter

Pinstriped for action

A glimpse of what the very rich man will be wearing this winter
Russell T Davies & Ben Cook: 'Our friendship flourished online. You can share some very revelatory moments at four in the morning…'

Russell T Davies & Ben Cook: How we met

'Our friendship flourished online. You can share some very revelatory moments at four in the morning…'
Bill Granger recipes: Our chef serves up his favourite Japanese dishes

Bill Granger's Japanese recipes

Stock up on mirin, soy and miso and you have the makings of everyday Japanese cuisine
Michael Calvin: How we need more Eric Cantonas to knock some sense into us

Michael Calvin's Last Word

How we need more Eric Cantonas to knock some sense into us