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Barnett Formula

3. David Taylor (North-West Leicestershire): What recent discussions she has had with the First Minister about the method of calculating the Barnett formula. [17489]

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The Minister of State, Scotland Office (Mr. George Foulkes): Discussions on a wide range of issues have taken place with the First Minister. To date, the Barnett formula has not been raised, as we have no plans to change it.

David Taylor: The Barnett formula was devised two decades ago as a temporary measure pending Scottish devolution and appears to be long overdue for reform. Is my hon. Friend aware that it currently produces levels of per capita education expenditure in Scotland that are 47 per cent. higher than those in Leicestershire, which has social problems every bit as severe as those of Scotland? Will he advise the First Minister that the Scottish Parliament should use its powers of taxation to fund part of its public services, as people in the English regions, including those who, like me, have Scottish roots, are getting fed up with bearing the burden?

Mr. Eric Forth (Bromley and Chislehurst): Hear, hear

Mr. Foulkes: The right hon. Gentleman expresses support, but in fact the Barnett formula has provided a stable, flexible and fair arrangement for funding Scotland, Wales and Northern Ireland under successive Governments. I say to my hon. Friend that there are substantial variations within the English regions. Some of the less prosperous English regions have about the same per capita expenditure as Scotland. Perhaps he might like to raise the matter that concerns him in relation to education in Leicestershire when today's statement on local government finance in England is made at 3.30 this afternoon.

Mr. Alex Salmond (Banff and Buchan): Does the Minister agree that one would have to come from a pretty anti-Scottish viewpoint not to recognise that the Barnett formula is a convergence formula that is squeezing increases in Scottish public spending to the tune of £350 million this year alone? Does he recall that that point was recognised by the Secretary of State in the 28 May edition of The Scotsman? She referred to what would happen

and said that the formula

How does that compare with the acknowledgement last week that Scottish growth is currently less than half that of the United Kingdom? How have we arrived at a situation in which, although Scotland is less prosperous, its increases in public spending are less? Would he describe that situation as a muddle or a fiddle?

Mr. Foulkes: I would describe the hon. Gentleman's argument as perverse. He clearly does not wish to see Scotland prosper. He is more interested in the SNP prospering than in Scotland prospering. The spending review has delivered £3.4 billion of new money to Scotland and £200 million was allocated in the Budget for the current year. We have delivered extra money for Scotland, just as we have delivered it for the whole of the United Kingdom. If the SNP thinks that Barnett is too mean and the English Tories think that it is too generous, most sensible people would think that it is just about right.

David Cairns (Greenock and Inverclyde): May I tell my hon. Friend that I have had the honour of serving as

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an elected councillor in a local authority in London and that it is true that there is a great deal of poverty and deprivation in England as well? Does he agree that the argument that the Government can increase spending either in Scotland or in England and Wales is an entirely false proposition? Is not it one of the great achievements of this Government that, in addition to providing £6 billion of extra spending in Scotland, we have increased spending in England and Wales as well?

Mr. Foulkes: I hope that SNP Members will follow the example of my hon. Friend. He is talking up not only Scotland, but London, England and Wales. That is what we are doing; and we are spending more money not only on Scotland, but throughout the whole United Kingdom. That would be lost if any of the parties on the Opposition Benches, including the nice people down there on the Liberal Democrat Benches, ever got their hands on the reins of power. The only way of ensuring continued extra expenditure is with a Labour Government.

Mr. Alan Reid (Argyll and Bute): Will the Minister please explain why the Government's interpretation of the Barnett formula is such that when a ferry service is running from Scotland to outwith Scotland from the constituency of the Chancellor of the Exchequer, the UK Government will pay for it, but when such a service runs from a deprived area such as Campbeltown, they pass the buck and the bill to the Scottish Executive?

Mr. Foulkes: Ultimately, the taxpayer pays for it. It would have been possible for the Scotland Office to ensure that funding was available for the ferry. However, at the request of the Scottish Executive, the Secretary of State agreed to go ahead with administrative devolution. This afternoon, the Scottish Executive's Cabinet will consider whether to make the money available. My latest information is that Labour Ministers are enthusiastic about that. Perhaps the hon. Member for Argyll and Bute (Mr. Reid) should have a word with Liberal Democrat Ministers; I understand that they are rather mean about the matter. If he does not get on the phone to Ross Finnie soon, he might not have a ferry.

Mrs. Jacqui Lait (Beckenham): As the Minister prays in aid an increase in total public expenditure in Scotland, can he tell us precisely whether the Barnett formula is working?

Mr. Foulkes: As I said earlier, the Barnett formula is stable, fair and works extremely well. I commend it to the hon. Lady. If she wants to find out about it, she should talk to her hon. Friends who were in government. They operated it and believed it to be stable, fair and flexible. On this occasion, although it is difficult to say it, we agree with them.

Mrs. Lait: I am interested that the hon. Gentleman is determined to stick with the Barnett formula, given that, in a debate in the House of Lords on 7 November, Lord Barnett said that convergence was never intended. A body of academic opinion in Scotland suggests that the formula

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works towards convergence. Does the Minister therefore agree with Conservative party policy that a long, hard look at it is required?

Mr. Foulkes: That is going a little far. I agree with the hon. Member for Galloway and Upper Nithsdale (Mr. Duncan), but agreeing with Tory party policy is one step too far. The theory is that the Barnett formula would involve convergence. In the past few years, however, there has been no convergence. The formula is stable, flexible and fair, and we have no plans to reconsider it. I mean no disrespect to Joel Barnett, but he is no longer in government. We are in government, and we have no plans to review the Barnett formula.

Mr. John McFall (Dumbarton): I inform the hon. Member for Beckenham (Mrs. Lait) that one of the most vociferous proponents of the Barnett formula was a former Secretary of State for Scotland, Michael Forsyth, who was a soulmate of the shadow Leader of the House. He robustly supported it in the House of Lords debate. May I advise my hon. Friend not to listen to the strident voices of disaffected Tories or the jaundiced SNP? They are simply jealous of a constitutional settlement that is a pride and joy of the Labour Government.

Mr. Foulkes: You know, Mr. Speaker, I could not have put it better myself, and I shall not try.

Commercial Embassies

4. Angus Robertson (Moray): What discussions she has had with the Scottish Executive about opening Scottish commercial embassies to represent and promote Scotland's economic interests abroad. [17490]

The Secretary of State for Scotland (Mrs. Helen Liddell): The Scottish Executive and the Government agree that Scotland is stronger as part of the United Kingdom. We therefore have no plans to reduce Scotland's influence by separating it from the network of British diplomatic posts abroad.

Angus Robertson: I thank the Secretary of State for that answer, which was not a reply to the question that I tabled. However, does she agree that we may wish to repeat the highly productive and effective model of Scotland House in Brussels elsewhere in the world to promote Scottish interests? Is she aware of the transparent funding arrangements for sub-letting offices of the many bodies that use public money at Scotland House? Does she agree that such arrangements are successful because they are transparent and abide by the rules?

Mrs. Liddell: The hon. Gentleman should reflect on the fact that 58 officers of the Scottish Executive work internationally because of arrangements between the Scottish Executive, the Foreign and Commonwealth Office and the Scotland Office to ensure that Scotland's voice is heard abroad. It is heard, just as the voices of Labour Members and Labour Members of the Scottish Parliament are heard effectively throughout Scotland. That meant one of our best results and one of the SNP's worst results at the general election.

Rosemary McKenna (Cumbernauld and Kilsyth): Does my right hon. Friend agree that it would be better

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to harness the support of the Foreign and Commonwealth Office for her "Friends of Scotland" initiative, especially the extensive network of 46 high commissions, 99 embassies, 10 missions and 69 consulates?

Mrs. Liddell: I agree with my hon. Friend that we are much stronger together and much weaker apart.

Mrs. Eleanor Laing (Epping Forest): Has the Secretary of State made an assessment of how much taxpayers' money would be wasted—spent—on establishing Scottish commercial embassies around the world? That money would be much better spent in the United Kingdom, strengthening the United Kingdom's—and Scotland's—position, rather than pandering to the prejudices of the Scottish nationalists.

Mrs. Liddell: I have not wasted any taxpayers' money assessing the impact of Scottish commercial embassies abroad, because Scotland's interests are well represented abroad, just as Scotland is much better represented in the Cabinet than it would be by the rump of the SNP that survived the last general election.

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