Examination of Witnesses (Questions 331
- 339)
FRIDAY 27 FEBRUARY 2009
Mr Dave Moxham
Q331 Chairman: Mr
Moxham, thank you very much for coming, we are really grateful.
Mr Moxham: You are welcome.
Q332 Chairman:
As you know, we have been set up by the House of Lords to have
a look at the Barnett Formula and how it operates. Our terms of
reference are fairly restrictive and I think you have seen them.
Mr Moxham: I have read them.
Q333 Chairman:
So you know that we can look at the Barnett Formula but we cannot
look at anything like fiscal autonomy.
Mr Moxham: I am glad of that; it takes up too
much of my time already!
Q334 Chairman:
If I may start with a slightly general question: do you think
the Barnett Formula treats Scotland, Wales and Northern Ireland
fairly?
Mr Moxham: It is a pretty broad question. I
wonder if I could interrupt myself for a minute. Before I started
I had intended to pass on the apologies of our General Secretary,
Grahame Smith, who in normal circumstances would have wanted to
give evidence himself but because of a previous commitment could
not. I will then go on to talk about the STUC's position. We obviously
recognise that the Barnett Formula, particularly in light of the
evidence of Lord Barnett to this Committee, which I have read,
was not created either to be long-lasting, or to be needs based,
or indeed to provide convergence over a period of time. However,
to some extent we believe, irrespective of whether that was the
intention, that has been the effect of the duration of years in
question. We recognise the fact that in 1979 a needs-based assessment
was undertaken, although it appears that was entirely separately
from the Barnett considerations, and certainly during the 1980s
we would be of the view that the kind of differentials that the
formula offered did reflect, relatively speaking, the relative
needs of Scotland. We recognise that the convergence criteria
such as they exist or do not exist have not been particularly
transparent, and certainly it has not worked in the way that some
people have described it. However, in broad terms over the piece
over its 30-year period, we are generally content with it and
generally content with the recognised need of providing public
services in Scotland.
Q335 Chairman:
On the whole Scotland have done quite well out of it?
Mr Moxham: We certainly would not be of the
opinion that we have suffered as a consequence of it. The extent
to which any extra advantage has been conferred is difficult to
calculate, but our general view would be that particularly post-1979
when there was this clear separation, if you like, between provision
of public services and the other forms of welfare transfers which
continue to be devolved, mainly through the DWP budget. The DWP
side of things would appear to show 108/109/110 per cent expenditure
in Scotland and does not necessarily reflect the overall cost
of providing the services which resulted from that need, and we
would make reference to the National Health Service in particular
in Scotland to give evidence.
Q336 Lord Forsyth of Drumlean:
On that point about the Health Service, when I was Secretary of
State I think the additional spending per head on health was about
23 or 24 per cent, and if the Barnett Formula had been allowed
to operate purely on a share of population basis, given that health
wages are negotiated nationally, and given that in the Health
Service about three-quarters of its costs is actually wages, if
you had Barnett operating purely on a share of population basis
that would create an enormous gap in the funding for pay in Scotland.
Mr Moxham: Indeed.
Q337 Lord Forsyth of Drumlean:
In those days the Secretary of State would go along to the Chief
Secretary and say, "We are bombing here," and above
him to the Chancellor or Prime Minister, and get the money. One
of the things that is a bit surprising is that post-devolution
there is no mechanism for doing that. Some people call it formula
bypass, but actually it is a reflection of the fact that the baselines
are very different, and that is how it operated before. We have
heard this morning some evidence that indicates that that was
never the intention, but people read that into it. Now the Barnett
squeeze is operating so, wearing your TUC hat, are you not concerned
that if this continues on a population basis rather than having
some kind of needs element then the inevitable consequence will
be very considerable pressure on areas like the Health Service
and local government?
Mr Moxham: I think that is a very fair comment.
In suggesting that the block grant governed by the Barnett Formula
thus far has not done a bad job in assessing need, it should not
necessarily be taken from that that we believe that the Barnett
Formula should endure ad infinitum. Indeed, we have been relatively
clear that, while we would not want to see any immediate change
to the status quo without due consideration, a needs-based element
to the funding of the Scottish government is absolutely vital.
In relation to the funding particularly of the NHS, we have made
some reference, although I would not claim to be an expert on
it, to the various formulae that govern the disbursement of NMS
funding across Scotland, and the Share and the Arbuthnott formulae
which, as I am sure you know, are now being altered. What appears
to be the case for us is that the type of redistribution that
goes on in Scotland sits fairly well with the type of additional
funding that the NHS is given in Scotland. By that I mean if you
look at an indicator such as early morbidity, which is generally
judged to be a reasonable indicator of overall health, if you
take all local government areas in Scotland, nearly every one
of them sits above the England and Wales average. If you then
you look at how Share and Arbuthnott distributed the monies, that
is on the basis of need and partially on the basis of geography,
too. Those local authority areas which you could say were comparative
with the UK for England and Wales in terms of early morbidity
would appear to require that level of funding, and the additional
funding was dispersed to areas of Glasgow and others based on
their incredibly high levels of early morbidity. That is going
beyond the question that you have asked but it gives you some
background.
Q338 Lord Forsyth of Drumlean:
It illustrates my point because I cannot remember what it is called
now, but I remember wrestling with it prior to Arbuthnott (which
I think was done in my time when I was responsible for health)
and there you had an attempt to find some kind of needs-based
way of distributing resources within Scotland between the various
health authorities, so the problems that they have, for example,
in Glasgow where they have higher morbidity rates and all kinds
of different problems, is reflected in the overall distribution,
but the amount at the top that Scotland gets for health is a straight
percentage, relative to population, of the increase in England.
It does not take any account of our higher morbidity rates or
any other issues. One of the things that is slightly puzzling
me is that you were like Francis of Assisi: "Lord, make me
pure but not quite yet"! Is the reason that you do not want
yet a needs-based system of the kind you have described internally
in Scotland because you think that it would disadvantage Scotland?
Mr Moxham: I do not think that is the case.
I think anybody who suggests that they have the answers to exactly
what the needs-based redistribution would be has not done enough
work to find out and they do not know how difficult it is. Maybe
at the heart of this is our view that it clearly is not the formula
but it is the original basis on which the formula was built, the
population basis, which then saw the drop in Scottish population,
which, if you like, has artificially placed Scotland in a situation
today where we think that, particularly in relation to health,
the type of settlement we receive matches need. However, I totally
take on your point that were that to continue and were the differentials
to narrow, that to do that and not test that against need at some
point in the future would potentially disadvantage Scotland.
Q339 Lord Forsyth of Drumlean:
Suppose we move into a period of inflation and constraints on
public expenditure, then the effect of an inflation-matching pay
rise in the Health Service on the Scottish budget would be enormous.
Mr Moxham: Indeed.
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