The Barnett Formula - Select Committee on the Barnett Formula Contents

Examination of Witnesses (Questions 620 - 622)


Mr Paul Griffiths, Mr Ian Carruthers and Ms Maria Jones

  Q620  Earl of Mar and Kellie: If we are to persuade the Treasury to alter the way they do things, it strikes me there are two things that we could do. One is that we invite them to have an independent commission advising them on a year-by-year basis as to how much to distribute round the three countries; or alternatively—and the one I suspect that is more likely—to go along with this they might do one needs assessment of this type and then revert to the Barnett Formula for a few years. Do you think that the latter could be helpful—is in fact a re-jigging of an alteration of the baseline and a fresh start, which I think the Treasury would probably like because they have only got to do it once? Could that be helpful?

  Mr Carruthers: I think you would come up against the fact that if you try and move the baseline, then those that will gain will support that change, and those that will lose will not support it. It seems to me undeniable that if you want to change the methodology, you have got to have a good look at the alternative range of indicators, and needs, I think, has to be one of those that you would want to look at. Then you are going to have to look at the way in which you might balance it. I think the Treasury would probably agree if it is not going to require them to transfer any more resources than they already have to, but it seems to me that inevitably you would have to have some form of transition process, which indeed is the experience in Australia; that you have to put more resources into the system during the transition period in order to get people to buy into that process. I think it is almost inevitable that to move people from where they are to where you want them to be, there has to be some kind of transition process. That may well be difficult to achieve in times when public expenditure is under intense and increasing pressure, as it will be over the next few years.

  Q621  Earl of Mar and Kellie: What I am really getting at is that, since I believe it will be easier to persuade the Treasury to do this once as opposed to doing it every year, if that is going for a one-off and then re-starting the Barnett Formula—would that be at all helpful or would that be just a waste of time?

  Mr Griffiths: I wonder if what you are suggesting is almost the norm in these needs-based systems, that you set up a needs-based assessment and you then inevitably have a long period of transition in implementing it. The only adjustments you make annually to that needs-based assessment is any input of fresh data, which is likely to be population data—so it looks a bit like Barnett. What I believe most of them do, and what we do in Welsh Local Government, is have a long-term planned cycle of reviewing the framework, bit by bit and indicator by indicator. You do not re-evaluate the whole thing each year. If that is what happens elsewhere, it is not so different from your proposition that you end up with a bit of a big bang with a transitional taper, and then population adjustments subject to a long cycle of review.

  Q622  Lord Moser: We all talk about possibly replacing Barnett by something else, and the something else we describe in terms of different indicators: can you think of a way—I have not—of expanding Barnett into a Barnett type 2 formula which includes additional indicators, which goes beyond just population but includes a few of the others you have talked about. It becomes more sophisticated. I do not know whether one can think along those lines—I am just asking.

  Ms Jones: In our submission to the Committee there was one suggestion in that vein, which was basically looking at the comparable percentage increase year on year, basically looking at the marginal increase year on year, which at the beginning might not disrupt the baseline, but it might be an occasion where consideration was given in a different format to how the comparable percentage was allocated. Over a period of time that would then overtake the baseline and re-establish over time that complete baseline as a new Formula-based allocation or a needs-based allocation. One of the issues there is that it might appear to be too prescriptive in terms of the need to spend in different areas, and it may compromise the ability to continue within the devolved environment, with the ability to determine the local policy priorities.

  Mr Griffiths: I would like to think through what you have said and have a chance to come back.

  Chairman: Could you give a piece of paper setting out the thoughts when you have them? That would be helpful. Can I thank the three of you very much for coming this afternoon. We have had a fascinating session. As I said to somebody else, from the point of view of people on this side of the table, this commission is in some ways a great learning process, and you have helped us in that learning process. Thank you very much.

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