APPENDIX 3
COMPARABILITY FACTORS
The Treasury's Statement of Funding Policy (last
published in October 2007) contains a schedule of comparable programme
objects with the corresponding comparability factors. The treatment
of some of these raises questions as to whether or not they are
applied correctly. The examples given here are of some that appear
either to be incorrect or anomalous and are the more obvious ones.
Many of the more material programme objects require disaggregating
before a view can be taken as to whether or not the appropriate
comparability factor has been applied. This is not possible using
the information provided in the Statement of Funding Policy.
(1) The London Olympic Games. It was confirmed
in Parliament in January 2009 that the overall public sector
funding package for the London Olympics is £9.325 billion.
£2.175 billion will be contributed from the National
Lottery and central goverment will contribute £6.1 billion.
It is expected that the expenditure will be overwhelmingly for
the benefit of south east England and if this was recognised in
the usual Barnett treatment Wales would receive consequential
funding of just under £300 million. The UK Government
has decided to treat the bulk of the spending as being for the
benefit of the UK as a whole and Wales will receive £83 million
only as a Barnett consequential. (Wales will lose approximately
£100 million of lottery funds where Wales normally receives
6.5 per cent of UK allocations.)
(2) Cycling England has a comparability factor
of zero which implies that the expenditure is incurred on behalf
of the UK as a whole although it is an England only programme.
(Following a Parliamentary Question regarding this subject the
treatment was changed and the budget subsumed into another programme
object with a comparability factor of 100 per cent.)
(3) Expenditure on the Royal Botanic Gardens,
Kew has a comparability factor of zero which implies that such
expenditure, although incurred in England, is for the benefit
of the UK as a whole. This may well be the case but what of the
Royal Botanic Gardens in Edinburgh and the National Botanic Gardens
of Wales? Their role appears not to be recognised and any public
funding of these has to be found from elsewhere within the Scottish
and Welsh block grants. The way the Barnett Formula operates in
practice is that expenditure incurred in the England may be either
for England only or for the benefit of the UK as a whole but expenditure
incurred in Wales can only be for the benefit of Wales and not
for the UK as a whole. There is an asymmetric treatment of expenditure.
In the case of the Royal Botanic Gardens, Kew in the 2004 Funding
Policy statement the comparability factor was 100 per cent.
What was the reason for the change and was the change challenged
by the devolved administrations? If not, why not?
(4) The Channel Tunnel Rail Link and London &
Continental Railways have comparability factors of zero but Crossrail
has a comparability factor of 100 per cent. Presumably it
is argued that the Channel Tunnel Rail link was for the benefit
of the UK as a whole whereas Crossrail was for the benefit of
England only. It is recognised that allocation of benefits in
the case of transport networks such as roads and railways is challenging
but the rationale behind the determination of comparability factors
needs to be transparent and open to challenge.
(5) Nuclear Support for the former Soviet Union
has a comparability factor of 100 per cent implying that
the devolved administrations have comparable programmes. This
treatment appears to be questionable.
(6) Grants to the Greater London Authority for
Tourism has a comparability factor of zero which implies that
such public expenditure is treated as being for the benefit of
the UK as a whole.
March 2009
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