Examination of Witnesses (Questions 780
- 800)
FRIDAY 27 MARCH 2009
Mr Michael Smyth, Professor John Simpson and Professor
Colin Thain
Q780 Lord Sewel:
I am talking about social work.
Professor Thain: Then your argument is that
England does not have social work problems that come through the
social work allocation that then goes to Scotland, Wales and Northern
Ireland.
Q781 Lord Sewel:
England has some and it distributes its social work expenditure
to local authorities on a needs-based formula, so why should the
amount going to Scotland out of the UK bit not go on a needs-based
formula?
Professor Thain: But it does via the rate support
grant element of the Barnett Formula. If the debates are in England,
the block figure in England, the consequential increases each
year or in the three-year cycle of the Comprehensive Spending
Review includes debates about putting more money into social work
which you then give on the basis of need and then there is an
increase in the budget for social work.
Q782 Lord Sewel:
There is an increase in the budget for social work and you get
a consequential of that, but that consequential is a population
driven consequential, it is not a needs driven consequential.
Professor Thain: It is not related to pockets
of particular need, absolutely not. My problem is how would you
generate your formula so that would be acceptable to say social
work needs in rural parts of Scotland or rural parts of Northern
Ireland are more important than urban social work needs. How would
you build a formula? It has been difficult enough with the rate
support grant to come to an agreement about what figure is being
given for that element of social need.
Q783 Chairman:
Population cannot be a substitute for that surely?
Professor Thain: It is a proxy for the policy
debates which you then have.
Q784 Chairman:
It is a 35-year old proxy pretty well, is it not?
Professor Thain: It is not because it has moved
on.
Q785 Chairman:
The basis of the thing is.
Professor Thain: The upgrading of the population,
Northern Ireland getting a larger proportion as its population
rises, Scotland going down, admittedly it has not happened regularly
enough for that to feed through to the Formula but a larger proportion
of public spending that is going to be covered by the Formula,
something like 90 per cent or so instead of something like 45
or 50 per cent when it first started, are all movements in the
process. It is not a dead system that has kept the same, there
are elements of dynamism.
Professor Simpson: I have no difficulty with
the concept of the block grant being based on a needs formula
which I hope would not be too complicated, not too many variables,
but I am worried about the discussion that goes on to say we are
going to try and assess need so we will end up knowing what the
comparative need is for social workers, for doctors, and the next
step is you spend it without any discretion. For example, on the
whole health and social services network we spend it differently.
Put schools to one side for the moment. Part of the logic of what
you are doing is leaving the regional authority, be it Northern
Ireland or Scotland, with permission to play at the edges of that
but they accept the basic principles of, say, a National Health
Service. If Northern Ireland decided not to have a National Health
Service then we would have trouble.
Chairman: I think we would, inside and
outside Northern Ireland.
Q786 Earl of Mar and Kellie:
Can I come back to the Australian model. Presumably the Australian
Treasury gives a block grant to the Territorial Grants Board to
divvy up amongst the states and territories, all of whom in theory
have applied on the same basis.
Mr Smyth: Yes, on the recommendation of the
Commission.
Q787 Earl of Mar and Kellie:
Does this mean that the Commonwealth government decides how much
is being put into the state and territorial activities, or do
they say, "We would like so much, please send it to us"?
Mr Smyth: They make a series of reports. There
are certainly annual reports under different headings to the Commission
and then the Commission publishes its report and, as the Chairman
said, there is always a big row and then it settles down. The
states themselves have considerable discretion in how they use
that money.
Q788 Earl of Mar and Kellie:
The gross amount of money which is put to these activities is
determined by the Commonwealth Treasury?
Mr Smyth: Yes.
Professor Thain: But it is a federal spend.
It is like the US Federal Government giving money to the states.
It is not the same as having what we have got.
Earl of Mar and Kellie: To a degree we
are being encouraged to head towards the Australian system, but
in actual fact it strikes me as being more different than I initially
thought it was.
Q789 Lord Sewel:
What is the best thing to read on the Australian system?
Mr Smyth: Their annual reports. They set out
their desired outcomes and then their actual outcomes. Their annual
reports are put in terms of, "Here's what we were instructed
to do and here's our considered opinion" and they go through
their decisions in detail each year.
Q790 Lord Sewel:
Are there any articles on it at all?
Professor Thain: There is a very good serious
by John Wanna of the National Australian University who has been
working on budgetary policies.
Mr Smyth: I think the Institute of Fiscal Studies
here did a study on the Canadian and Australian ones from about
2004-05 by Richard Blundell.
Q791 Chairman:
How do they do it in Canada?
Mr Smyth: I know less about Canada but I think
it is similar. It is an independent
Q792 Earl of Mar and Kellie:
No, it is not.
Mr Smyth: I thought it was independent oversight.
Professor Thain: It is a federal disbursement
based on GDP variation between the territories and Quebec because
there is an issue about the statistics you use. It is a variation
from 100 per cent of GDP. So if a region is doing particularly
badly it gets an increase in its federal disbursement. The Canadian
model is one where it is based upon GDP.
Q793 Chairman:
I think it is based upon tax revenues. Canadian equalisation is
based on tax revenues.
Professor Thain: We may be talking about two
separate things here.
Mr Smyth: The other advantage of the Australian
model is it has the chairman and four members and, as far as I
can determine, the membership changes at certain times. There
seems to be no political connection between the membership of
the Commission and any of the main parties.
Q794 Chairman:
Any representatives of the individual states?
Mr Smyth: Three of them are from different states.
The fourth one I could not determine. They are a mixture of former
Treasury people and academics, or both.
Chairman: We will have to have a serious
look at this because I am bound to say it is one of the mechanisms
that seems to have attracted us as to whether this is one possible
way of doing it.
Lord Sewel: We have been talking about
that approach and I suppose we could ask the question would the
data be available in the UK to do that sort of exercise?
Chairman: That is for the Treasury if
the data is there.
Q795 Lord Sewel:
I do not know whether the data is there.
Professor Thain: National statistics have improved.
Professor Simpson: It could be organised but
I am not sure the political will is there to do it.
Mr Smyth: I am not sure about that. It changes
so frequently. Their presentation changes suddenly and the only
people who really know are a small number of people in the Treasury
and I think you would need to ask them.
Q796 Lord Sewel:
Oh joy! Oh joy!
Professor Thain: Also I think there is an issue
about national statistics in the UK and the quality and impartiality
of them. Probably you should get Michael Scholar in front of you
to ask him about the National Statistics Commission and see whether
he thinks more work could be done to put pressure on to get an
agreed set of statistics that we could all look at and say, "That
is fair" and keep them consistent.
Mr Smyth: How would this sit within the increasing
calls for an independent Monetary Policy Committee equivalent
in terms of fiscal policy nationally? Could it be nested? If that
ever came about, could you nest this underneath that?
Q797 Lord Sewel:
I think a Fiscal Policy Committee is a big issue.
Professor Thain: Beyond the scope of the House
of Lords!
Q798 Lord Sewel:
It certainly is!
Professor Simpson: I cannot see any Chancellor
of the Exchequer accepting that willingly.
Professor Thain: I think there is a strong feel
for that.
Q799 Chairman:
I may be wrong about this but I get the impression, or at least
the beginning of a feeling, that this issue of how you sort out
transfers between the centre and a lot of the administrations
is an issue that people have got to start trying to settle.
Professor Thain: Yes.
Q800 Chairman:
With the present situation you could argue for it, particularly
a great ad hoc man like you, if there is a problem you move outside
it and solve it, I understand all that, and politically that is
very attractive, but I think there is a feeling as a country we
have got to try and produce a structure and this Committee is
a very small part of that.
Professor Simpson: You have been talking about
a needs base and you may be aware the statisticians are actually
reviewing the basis on which they calculate relative GVA by region
in the United Kingdom, so if you are going to pronounce will you
wait until they have got the revised figures. I understand it
is at an early stage but the revision of GVA is going to make
Northern Ireland's degree of poverty less.
Chairman: Well, gentlemen, we have had
a good run round the course. Thank you very much indeed.
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