Examination of Witnesses (Questions 400
- 411)
FRIDAY 27 FEBRUARY 2009
Mr Ruchir Shah
Q400 Lord Forsyth of Drumlean:
I am sorry, I am not grasping this. If it is the Department for
Work and Pensions, how can there be a different policy in Scotland
for the Department for Work and Pensions than England?
Mr Shah: It is about how their activities are
fitting with the other programmes in the country. For example
in Scotland, yes, the benefits system is reserved but clearly
skills, education and other issues which have a direct relevance
to any programmes that the DWP runs when it comes to benefits
or volunteering in Scotland will have an impact on each other
and will interplay quite considerably. I suppose that is where
I am trying to focus on it.
Q401 Lord Forsyth of Drumlean:
It is a slightly different area from what we are concerned about
really. It is to do with Whitehall departments implementing programmes
in Scotland and perhaps not being sensitive enough to the fact
that there is a different approach.
Mr Shah: If we take a step back from that and
just look at the Barnett Formula as an iconic formula that has
been used not just for its original purpose. which is for the
Scottish block grant, but all these other programmes as well—
Q402 Lord Forsyth of Drumlean:
It is not an iconic formula. All it is is that you get your relative
share of the population.
Mr Shah: Some of UK-level Government Departments
expand on it and tweak it. For example, I mentioned Barnett Plus
being used for the National Lottery.
Q403 Chairman:
What is Barnett Plus?
Mr Shah: I do not fully understand it myself.
This is something that is done behind closed doors but I think
it tries to bring in an element of need into the population-based
Barnett Formula.
Chairman: Our expert says nobody knows
what it is but it exists.
Lord Forsyth of Drumlean: It sounds very
interesting because Mr Shah says it attempts to bring in an element
of need.
Q404 Chairman:
That is coming from the Lottery as such, their contribution to
Scotland, is it? Your complaint really is that the amount of money
that is being distributed in Scotland is based only on the Barnett
Plus population formula, and if we move away from that to some
other formula based on need, we have got to make sure that that
is administered sensitively as far as Scotland is concerned; is
that right?
Mr Shah: I think so because the Scottish voluntary
sector is highly sensitive not just to the Scottish block grant
but to any funding sources. As I mentioned, this 70 per cent cut
in the Lottery funds due to the Olympics has had a major effect
on the voluntary sector in Scotland. You may well come up with
a new formulation on how Scotland's Government gets its share
of the funds, and that system may well then very quickly be adopted
by other Department in operationalising programmes, whenever there
is a kind of consequential for Scotland, and it would be good
to be aware of that, yes.
Q405 Chairman:
So it is the imitation of the principle behind the Barnett Formula
that you are worried about?
Mr Shah: Indeed.
Q406 Lord Rowe-Beddoe:
Did your sector have any warning about the 70 per cent cut?
Mr Shah: Of course yes, not from the DCMS I
have to say, but a lot of people have been analysing this. My
colleagues at the National Council for Voluntary Organisations
have also been very much on this.
Q407 Lord Rowe-Beddoe:
What I meant by warning was when did you know that you were going
to have to find replacement funds somehow in order to carry out
your programmes?
Mr Shah: We were on the case with the DCMS at
as early a stage as we could and it really did depend on when
they were able to pass on information to us. Obviously, a lot
of this is intuitive understanding of other programmes taking
place, like the Olympics and the threat that could have in terms
of diversion of Lottery funding, and putting two and two together.
It was then just a case of waiting or prompting DCMS to come out
with a statement.
Q408 Lord Forsyth of Drumlean:
Just returning to Barnett, you indicated that you would prefer
to have a needs-based system rather than a population-based system.
Mr Shah: Not quite. I would not say that we
would insist on a needs-based system. What I am saying is that
the voluntary sector and the kind of areas it works in and the
kind of client groups it works with would benefit financially
more from a formula based on needs rather than on population.
I think that is something the Committee should take into consideration.
Q409 Lord Forsyth of Drumlean:
Are you concerned about the fact that because the baseline is
higher in Scotland and that Barnett now post-devolution is being
applied absolutely, and you cannot go and have a separate negotiation
to take account of increases in the Health Service pay deal or
teachers' pay, things of that kind, that the Barnett squeeze is
now operating rather more savagely than in the past, and do you
recognise that if left it will ultimately lead to convergence?
Mr Shah: To be honest with you, all of those
aspects are very much masked by the effects of the overall squeeze
on public finances right across the UK and how that translates
into cuts.
Q410 Lord Forsyth of Drumlean:
I must have missed that. When did that happen?
Mr Shah: It has been happening over the past
five or six years.
Q411 Lord Forsyth of Drumlean:
In terms of public finances?
Mr Shah: On the public sector funding that is
available to the voluntary sector, which seems to tally with the
overall finances of for example local authorities in Scotland
with Scottish Government overall grants and so on. From a voluntary
sector perspective, there seems to be quite a squeeze on public
sector funding available for a whole range of areas which the
voluntary sector is involved in. In Scotland, there has been a
lot of disquiet about cuts made by various local authorities and
a lot of that may or may not be a response to the current economic
downturn. Some of it may well be in response to policy priorities.
Certainly there is a tightening funding environment in the sector
that we have seen in the past seven or so years, and that, I would
suggest, masks any kind of changes, any kind of convergence that
we might otherwise see in the environment.
Chairman: Thank you very much indeed.
You have put down a marker which we have noted and we will consider.
I am glad that I have understood it towards the end; I am not
sure I understood it a bit earlier. Thank you very much.
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