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21 Nov 2007 : Column 156WH—continued

The hon. Gentleman was right to raise this issue for another reason. One of the problems with the Barnett formula is that it is not statutory, so there is a lack of
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consistency and transparency about the way in which it is applied. We saw an example of that in the comprehensive spending review when the Treasury implemented a change in the baseline for the English Departments. As a result of money not being spent and the baseline being shifted—jiggery-pokery, effectively—Wales lost £260 million. What Barnett giveth, Barnett can apparently take away, and we saw such a reverse Barnett formula applied in the comprehensive spending review.

The other problem is what is and is not included in calculating the Barnett formula. I have with me the statement of funding policy—the bible of the Barnett formula—which is published every three years. It makes curious reading, because a number of things are excluded from the formula as a result of being categorised as benefiting the UK as a whole. That is fair enough, but such things are often principally for the benefit of England and, in many cases, one part of it—the south-east.

For example, the Government have spent £552 million on the channel tunnel rail link this year alone, but that is excluded from the Barnett formula. When the Conservative Government made the original decision to build the channel tunnel back in the 1980s, high-speed one would come into London, and high-speed two and three would go into Wales and the west of England and link up the north of England and Scotland. That was fair enough, because it was a UK project, and we would all benefit, with connections across the UK and to the European mainland. Then, however, high-speed two and three, which would have connected the rest of the UK, were cancelled, so the high-speed rail link now begins and ends in London and we are no longer talking about a UK project. None the less, it is excluded from the Barnett formula.

There are other examples. Some £29 million was spent on the botanic gardens at Kew, but there was not a penny in a Barnett consequential for the national botanic garden in Wales, which is in my constituency, so I should declare an interest. Nor does the royal botanic garden in Edinburgh get a penny, although I seem to remember that it predates not only the Barnett formula, but the botanic gardens in Kew—it was actually created first.

There are loads of these anomalies. Some £17 million has been spent on cycling, but we do not get anything, even though I seem to recall that we do actually ride bikes in Wales and Scotland. There is also £72 million for sustainability and renewable energy, which are big issues in Wales and Scotland, but not a penny comes to us. The list goes on and on.

Then there are the negative Barnett consequentials, which take money away. For some reason, for every pound that the Government receive from the Dartford toll crossings, 11p is taken from the Scottish public services block and 6p from the Welsh one. Can anyone explain why the Government’s receipts from the Dartford toll crossings have anything to do with the level of expenditure that we should have on public services in Wales and Scotland?

There is also the issue of prescription charges. Income from prescription charges is included as a negative in the Barnett formula. Some £450 million is raised in prescription charges in England, but Wales
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and Scotland take a hit for every pound that is handed over in prescription charges. There are therefore all kinds of anomalies in the way in which the formula currently operates.

There are also some quirky things in there. Some £90 million is spent on nuclear non-proliferation and subscription to international organisations. Low and behold, the National Assembly for Wales and the Scottish Parliament get a 100 per cent. consequential on that. When Scotland’s First Minister wrote to the 178 embassies and consulates asking for observer status for Scotland on the nuclear non-proliferation treaty, he was attacked by the Scotland Office, which said that that was outside the competence of the Scottish Parliament. It should have had a word with the Treasury, because apparently that matter is part of the responsibility of the Scottish Parliament and the National Assembly.

The Barnett formula is anomalous; it is an anachronism; it is unfair; and it lacks transparency. That is the case across these islands, including for the English regions, such as the south-west, that suffer from it. It is not fit for the era of democratic devolution. We are being treated as branch offices of Whitehall. What of the language that is used—“consequentials”? Decisions are made about English expenditure, which then bind our democratic institutions in Wales and Scotland. That is no way to reflect the era of democratic devolution. We need real accountability. We need a needs-based formula and, yes, we need elements of fiscal federalism as well.

To conclude, I want to ask the Minister whether the Treasury will commit itself to co-operating fully with the first official review of the Barnett formula since it was created, which was announced by the Labour-Plaid Cymru “One Wales” Government, so that we can finally get clarity on the issue, and a clear picture of who, if anyone, gains from the formula and who, including Wales, loses.

3.20 pm

John Robertson (Glasgow, North-West) (Lab): I congratulate my hon. Friend the Member for Manchester, Blackley (Graham Stringer) on securing the debate. I sometimes wonder, when the Barnett formula is mentioned, where I should be coming from, but I think of the old “Carry On” film with Kenneth Williams, when he came out with the line, “Infamy! Infamy! They’ve all got it in for me!” That would apply to every hon. Member who has spoken in the debate. They have all told us that they live in the poorest area of the world or the universe, that they are hard up and that Scots people are well off. Yet by my figures six of the poorest constituencies in the United Kingdom are in Glasgow. My hon. Friend the Member for Glasgow, South-West (Mr. Davidson) represents one of the poorest areas in the United Kingdom. Yet we are told that everyone else’s constituency is just as poor as ours, or worse off. My hon. Friend the Member for Vale of Clwyd (Chris Ruane) mentioned the uneven circulation of money allocated by the Ministry of Defence. Some areas benefit much more than others, including in Scotland and Wales, yet when we talk about the Barnett formula we want to argue about who is the poorest, who is the richest, and who gets money for what.

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The agreements were arrived at for a reason. I do not want to give everyone a history lesson, but perhaps I may explain exactly how the Barnett formula came about. The Barnett formula followed on from another formula, which was put in place in 1888, called the Goschen formula. It was based on population, which is why the Barnett formula took a similar approach. Other national characteristics were also taken into consideration. The figures for Scotland traditionally gave a higher level of spending. Why? Scotland contains a third of the British land mass, with isolated islands and rural communities. More than 60 per cent. of the UK coastline is in Scotland. Of the 10 areas with the worst life expectancy in the UK, seven are in Scotland, and six of those are in Glasgow. I have great respect for the hon. Member for Cities of London and Westminster (Mr. Field), and have spoken in many previous debates with him on many Bills, and I apologise for the time when I said that everyone who worked in the City was a crook—it is probably only half of them. But when he speaks of being able to show us poverty only a few hundred yards from here my reply is that I will take him to Glasgow and show him real poverty. We can compare things and see who has it worst.

We appear to have an unholy alliance—[Interruption.] It is disappointing.

Mr. Angus MacNeil (Na h-Eileanan an Iar) (SNP): Would the hon. Gentleman say that about the Irish nationalists?

John Robertson: The hon. Gentleman is saying things from a sedentary position, but I would just remind him of the saying about people in glass houses.

My hon. Friend the Member for Paisley and Renfrewshire, North (Jim Sheridan) made a good point. I do not remember a Labour Government, months into their tenure, being called liars and cheats, and being accused of hoodwinking people to win an election, as has happened with the Scottish National party. I do not remember any party getting that kind of treatment only a few months into its tenure. Promises are promises; we do our best and try to work to them. Obviously, that applies only to certain parties in this House, and I am glad to say that mine is one.

Mr. MacNeil: Will the hon. Gentleman give way?

John Robertson: Certainly. I cannot wait.

Mr. MacNeil: Would the hon. Gentleman care to remind us what the 2003 Labour party manifesto said about council tax rebanding? Did it happen?

John Robertson: The hon. Gentleman has obviously caught me at a loss. He may carry the Labour party manifesto about; good luck to him. He obviously gets a lot of knowledge from it. I do not carry every one of our manifestos around, but I do know whom I represent, what a lie is, and what the truth is. I shall stand up for that. Unfortunately, it appears that his party, north of the border, cannot do that these days. [Interruption.] I hear from a sedentary position that this is scandalous. I am sure that if I were doing anything scandalous you would tell me to sit down,
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Mr. Atkinson. If I were telling a lie I am sure that the Scottish National party would want to take me to court.

Mr. Peter Atkinson (in the Chair): Order. I was about to get to my feet to remind the hon. Gentleman that we are debating the Barnett formula.

John Robertson: Thank you, Mr. Atkinson; that is what I am talking about. The Barnett formula was an agreement made between Parliaments down here. When I make an agreement with someone I like to stick to it. If we had stuck to it, and merging had taken place over time as was supposed to happen with the Barnett formula, we would not be having this discussion. However, the Conservative party—whose spokesman will unfortunately speak later—let go of the formula from 1979 to 1992 without doing anything about it. If merging had occurred as was supposed to happen, the Barnett formula might have converged by now, or at least we might be contemplating that in the near future. Once again, a political party unfortunately did not do what it was supposed to. It wanted votes north of the border. Well, it got the votes it deserved, with two Members in the last three general elections. That says it all.

As a trade unionist, which I have been all my working life, I have been expected, by the members whom I have always looked after and supported, to deliver as I have said I would. Those expectations extend to the Barnett formula. The fact is that Scotland delivers quite a lot to the United Kingdom. We also have added problems that other areas of the United Kingdom do not have. We have talked of the rural areas and the highlands and islands, and the poverty in some of our inner cities, which is as great as in any inner city in the world in a nation that professes to be a civilized part of western democracy. However, there is at present an alliance between the Conservative party, which I now call the English national party, because that is what it now is, the Scottish National party, which is well known north of the border as the tartan Tories, and the Welsh nationalists, who, I am informed by my hon. Friend the Member for Vale of Clwyd, who is not in his place at the moment, are called the daffodil Tories. That speaks for itself. [Interruption.]

I am somewhat disappointed in nationalist Members. I sat in silence while the Plaid Cymru spokesman did his eight minutes and I never interrupted him with a word. All that they have done this afternoon—and this is a shining example of how the nationalists conduct themselves throughout the country—is shout people down when they do not agree with them.

Mr. Peter Atkinson (in the Chair): Order. I remind the hon. Gentleman that we are discussing the Barnett formula and that we should start the wind-ups quite shortly.

Mr. Lindsay Hoyle (Chorley) (Lab): I think the wind-ups have started. [Laughter.]

Mr. Peter Atkinson (in the Chair): Order. Has the hon. Member for Glasgow, North-West (John Robertson) finished?

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John Robertson: No, I was about to give way to the hon. Member for Foyle (Mark Durkan).

Mark Durkan (Foyle) (SDLP): I thank the hon. Member for Glasgow, North-West (John Robertson) for not naming my party in the unholy alliance. We are in an age in which the Government talk to us about the importance of evidence-based policy, in which we are told that the focus must be on outcomes rather than just inputs, and in which the Government’s priorities are based on equality, equity and meeting need. Does the hon. Gentleman not accept, therefore, that the Barnett formula indeed needs reviewing? It was not agreed between different Parliaments; it was agreed inside one person’s head in Whitehall. In terms of providing policy accountability, it does no justice to this Parliament to defend a policy that neither stands the test of time nor meets the needs of people throughout the country whom this Parliament serves.

Mr. Peter Atkinson (in the Chair): Order. The hon. Gentleman should allow the hon. Member for Glasgow, North-West to continue.

John Robertson: The hon. Member for Foyle speaks a lot of sense. In view of the time, let me conclude by saying that, although the Barnett formula might not be the panacea for all this country’s ills, it certainly should not be used as the tool to split it up.

3.31 pm

Mr. Roger Williams (Brecon and Radnorshire) (LD): It is a pleasure to serve under your chairmanship, Mr. Atkinson. I congratulate the hon. Member for Manchester, Blackley (Graham Stringer) on securing the debate, which has created great interest, as the attendance shows. I compliment him on the way in which he developed his arguments, and it is a pity that the debate has not followed his example and that it has degenerated into a debate on other matters.

We await the remarks of the hon. Member for Runnymede and Weybridge (Mr. Hammond), but a consensus is developing among a number of hon. Members that it is time to review the Barnett formula and the way that it works. That review should consider not only whether the formula should apply to the devolved nations and Administrations but whether it should apply to English regions as well. We in this Chamber can debate whether we represent the richest, the poorest or the most needy communities, but the key issue is not that but our determination to ensure fairness and transparency in the way in which the Westminster Government distribute money.

As has been said, the Liberal Democrats have been in favour of reform of the formula for a number of years. Reform was mentioned in our 2001 manifesto and was included in the Welsh Liberal Democrats’ manifesto as well, so support for reform is not confined to English Liberal Democrats in Westminster but is found among Liberal Democrats in Wales and Scotland.

The formula contains an inherent unfairness in that it is based on population, and further unfairness in that the last needs-based assessment took place in 1978, since when things have moved on considerably. Changing populations and population proportions in
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England, Wales, Scotland and Northern Ireland have implications for the money that is available for the different Administrations. My understanding is that the population of Wales is increasing, but not as quickly as that of England. Consequently, the factor that allows calculation of the formula figures for Wales has decreased in recent years from 5.94 per cent. to 5.84 per cent.

Mr. Russell Brown (Dumfries and Galloway) (Lab): I am listening closely to the hon. Gentleman’s arguments. He is right that populations change, but there also are significant demographic changes within populations that can create more demand, especially if there is a large elderly population. If there were a review, there is every likelihood that no extra money would actually exist. Does he therefore recognise that there would be winners and losers if there were a complete review of all aspects, and is that what he thinks should happen?

Mr. Williams: I absolutely accept what the hon. Gentleman says. The thrust of today’s debate has been about fairness, and I accept that there will be winners and losers. However, if government is about anything, it should be about fairness, rather than showing undue preference. My understanding is that the Scottish population is actually decreasing.

Mr. MacNeil: No, it is going up.

Mr. Williams: Well, it has been decreasing in recent years, and the increase in the English population has an effect on the Barnett consequential.

Mr. David Hamilton: We have heard examples relating to many places in the south of England, and especially London. If there was a redistribution of a fixed amount of money to areas of dependence, we would have to ensure that places in the south of England that already receive money would not get an increase. Does the hon. Gentleman agree?

Mr. Williams: I accept that point. Whenever a formula is devised, whether for distribution of grants to local authorities by the Welsh Assembly or for distribution to English local authorities, people will debate whether it is just, which factors are relevant and how much emphasis should be put on each of them.

The hon. Member for Carmarthen, East and Dinefwr (Adam Price) made some very telling points. The key is transparency. As he pointed out in great detail, consideration of the bible for the Barnett formula reveals some extraordinary inconsistencies in what is included and what is not. Will the Minister say whether there is any possibility of simplifying the formula’s workings, so that there is more transparency and so that people can understand the formula better?

Although the debate is about the Barnett formula, the thrust of the speech made by the hon. Member for Carmarthen, East and Dinefwr was that there should not be a Barnett formula for the English regions, but that there should rather be a proper and just formula for those regions. That is what my party is aiming for in terms of a formula for the devolved nations.

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My constituency adjoins that of the hon. Member for Blaenau Gwent (Mr. Davies), and I know the problems that that area faces. At the moment, the Welsh Assembly is planning to set up a national commission to review the Barnett formula. I asked the Secretary of State for Wales whether, if the commission recommended a change, he would press for implementation by the Government or would act as a Government apologist and go back to Wales to explain why review was not possible.

With regard to the setting up of a steering committee to define the commission’s terms of reference, it is interesting that the only people on the steering committee are Labour and Plaid Cymru Assembly Members and MPs. Given the “One Wales” approach to government, it would have been better if members of other parties had been included.

Mr. Philip Hammond (Runnymede and Weybridge) (Con): I was hoping that the hon. Gentleman would tell us how the Secretary of State for Wales replied.

Mr. Williams: The Secretary of State said that he could do both jobs. We are left guessing as to where he placed the most emphasis, however. Was he Wales’ representative in Westminster or the Westminster apologist in Wales?

The hon. Member for Sittingbourne and Sheppey (Derek Wyatt) suggested that a Joint Committee of Lords and Commons should undertake a review. That could be a very productive way forward, but a consensus is growing that something needs to be done to ensure that Westminster money is spent responsibly and fairly, with due consideration to everybody’s needs.

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