Examination of Witnesses (Questions 860
- 872)
FRIDAY 27 MARCH 2009
Mr Peter Bunting, Mr John Corey and Mr Seamus McAleavey
Q860 Chairman:
You cannot run a system on the basis of ad hoc decisions dependent
upon who thumped the table last, and that is the danger with the
bypass, there is no coherent stream.
Mr McAleavey: I think the Treasury seem to have
tried very hard in recent years to stop all bypass decisions with
regard to Northern Ireland. That is our experience. When people
talk about that "Barnett squeeze", we have seen it in
Northern Ireland in the last ten years in that there has been
a significant drop in the per capita spend here on public expenditure
over England. Scotland does not have the same, I am sure it is
because there are various bypass deals, but certainly Northern
Ireland has dropped from around 30 to 21, the increase in public
expenditure working on the Treasury formula pushes it closer rather
quicker. One of the things we worry about is if Lord Barnett did
not think that there was a calculation for convergence, yet there
so obviously appears to be in terms of the mathematical formula,
somebody designed that in the Treasury.
Q861 Chairman:
We do not deny that.
Mr McAleavey: You worry then if we move to assessment
on need, how will the needs assessment be made, who will carry
it out, and will you just make the figures suit the ones to where
you want to get to. That becomes the worry.
Q862 Lord Sewel:
You are quite right on "squeeze", and clearly there
have been lots of bypasses in the past, and you are right to suggest
that the more you go down the devolution route, the more the opportunity
for bypass decreases. Also, it is important whether your population
is increasing or decreasing. Your population is increasing, Scotland's
is decreasing, so if your population is decreasing your base provides
a very effective buffer to stop the "squeeze" squeezing.
Let us go to alternatives. You mentioned needs assessment. The
types of services that the devolved parliament and assemblies
are responsible for, they are ones where need is a very sensitive,
powerful driver of expenditure. I would have thought that in many
of those areas you would be better off looking at issues like
deprivation, cost of provision, including services, and the detailed
make-up of the demographics as they affect the service, rather
than just a straight population adjustment.
Mr Bunting: That is a fair comment. I suppose
in many senses initially we would all be representing that our
main ethos would be of social conscience and we would be in some
way inclined to agree with that. We probably have the highest
number of this, that or whatever, okay, the highest number of
disabled people, especially with mental health needs, and probably
the highest number of people deemed to be economically inactive,
which is a wonderful phrase, but a lot of that came about through
the manipulation of unemployment figures at one stage or other.
This is where we have to be very careful. These are very subjective.
The question is what do we mean by that because it varies from
academic to academic and in the Joseph Rowntree Foundation's report
on poverty and social exclusion in Northern Ireland, which we
would maintain is quite high, but there again it could be comparable
with other areas, for example in England, and I know we do not
want to go into that, but there is northeast England, northwest
England, and huge levels of social deprivation right across the
UK and Northern Ireland, much of it stemming in the valleys of
south Wales from the demise of heavy engineering, which we experienced
as well in Northern Ireland. The interesting point about unemployment,
for example, was we had allegedly the lowest level of unemployment
in 20 years in Northern Ireland last year, but since the global
recession that has gone askew within a short period of nine months
or whatever. There is an interesting development there. It also
camouflages the fact that we still have over half a million people
of working age being non-productive, whether it be students or
whatever. How do you reconcile the economically inactive with
a very low level of unemployment? It is an oxymoron in many senses.
If you were doing this on needs it is very difficult from our
perspective. The other point we would have to make is who is the
determiner of deprivation and social need. That is very problematic
for us. Having said that, if we could work out some form of combination
would it be more beneficial to Northern Ireland, I do not know.
The other issue in Northern Ireland from our perspective is that
we are separated from GB by the ocean. We have a landlocked border
with a country in many senses where their infrastructure 15, 20
years ago was less than oursyou knew when you entered into
Northern Ireland by the quality of roadsbut now we have
the reverse, their infrastructure, their road network, is far
superior to ours. We sit back and say, "Whilst we are competing
with the regions within the United Kingdom and Northern Ireland,
we are now competing with a far higher level of infrastructure
in economic terms attracting economic development, et cetera.
We need a dynamic economy to eliminate social deprivation, et
cetera. I do not want to be of the begging bowl mentality because
that is one thing I totally disagree with, but in relation to
that those are objectives. In terms of criteria, where would you
locate that land mass, that competition in economic terms, in
infrastructural terms, and where do you go, because that is all
rooted in attracting foreign direct investment, exports and all
the rest of it. We have a problem with that. Whilst my heart would
say it is a great way to go and I can throw all sorts of statistics
at you, levels of mental health, disability, whatever, I have
to say that is transient by its nature as well, very subjective
and would it help Northern Ireland to get a fair shake, I do not
know.
Q863 Chairman:
Can I put this point to you. The Treasury did a very detailed
needs assessment in the mid-1970s, 1977/78, and what they seem
to have been doing over the last 30-odd years is updating that
periodically and still using it not exactly as a base for the
whole thing but as part of the calculations. If you had a needs
assessment drawn up by a wholly independent commission, nothing
to do with the Government, you would have to take it out of the
hands of the Treasury, I accept that
Mr Bunting: I think we would all agree on that.
Q864 Chairman:
So you take it out of the hands of the Treasury and you give it
to an independent body and tell them to have a needs assessment,
it need not be as detailed or as comprehensive as the one the
Treasury did, which took about three years, but you could have
five or six comparators, variables, and if they concentrated on
those you would get 95 per cent fairness. You would never get
100 per cent fairness but you could get a very considerable degree
that is fairer than the present system. That would take care of
a fair number of your problems, would it not?
Mr Bunting: The other point that would have
to be factored in there as well is the legacy of our own conflict.
Q865 Chairman:
Yes, of course.
Mr Bunting: With the segregated society still
there, is the conflict over, as witnessed two weeks ago, what
is the future of it and where are we all going. If this formula
came out and we examined it and said it had given us a degree
of assurance, why not even if it went for a short period of time
and then we could all stand back and review it.
Q866 Chairman:
The Australians do it via a Commonwealth Grants Commission and
review it on an annual basis.
Mr Bunting: Yes.
Q867 Chairman:
They are independent of the state governments, independent of
the federal government and they produce their assessment. I am
told that what happens after that is for about two or three days
everybody complains how unfair it is and, "They have forgotten
this. We deserve more than X, Y or Z", but it then goes to
sleep after that for another 360 days, then they produce the next
assessment and you have another two or three day eruption and
then it calms down again. I would not say it was an ideal system
because there are obviously differences between the way in which
they are structured in Australia and the UK and all the rest of
it, but the principles behind that would seem to me at any rate
to be something that clearly we should look at very, very seriously
indeed.
Mr McAleavey: I think the reaction to the allocation,
no matter what formula or method is used, is probably the same.
I do not think there is anybody who would jump up and down and
say, "The Barnett Formula is wonderful and does us really
well", so everybody tends to say negative things no matter
what the formula may be. I would support a needs-based analysis
because it seems that the only need in what is called the Barnett
Formula that is recognised is population size, which is fairly
objective but clearly very crude. I certainly would support a
needs-based analysis. We used it here for small amounts of money
in the first peace programme, we allocated money to district council
areas by population with a weighting for deprivation and using
the Noble indicators that were deprivation indicators here that
the government had in Northern Ireland. I would support that type
of thing. Where you get worried is how you arrive at what the
needs are and are they different for Scotland, Wales and Northern
Ireland. One of the issues in Northern Ireland is the economic
one in that we do sit between the economies of the Republic of
Ireland and England. For quite a while the Treasury lost 500 million
a year in revenue in terms of diesel taxes because everybody bought
their diesel south of the border because it was cheaper. The economic
development that took place and the pain that has taken place
has always had an impact on the development of our economy. Our
economy is clearly under-developed with a heavy dependence on
public expenditure and all of that. Is that going to be the same
in Wales and Scotland? I am not so sure. I am wondering can the
same indicators be used for all. The wider the indicators, the
better they are at seeing need, but presumably it gets more and
more complex and presumably the reason that the Treasury has stuck
with Barnett for 30 years is that it has been relatively straightforward.
Q868 Chairman:
It is easy. From the Treasury's point of view it is absolutely
marvellous, they have not got to think too much about it and they
apply mathematical formula and that is it.
Mr Bunting: They know exactly what the calculation
is going to be for all of us.
Q869 Chairman:
So from that point of view I can see that it is easy. The question
is, is it sufficiently fair? I have doubts as to whether it is.
Mr Corey: I suppose you could almost argue that
the Treasury's line saves public expenditure in that there is
no money being wasted on complex formula. We represent working
people and families in Northern Ireland, Seamus represents the
voluntary and community sector, and our anxiety is not to see
something which in time comes to be seen as having the result
of less public expenditure being available in Northern Ireland.
Everything is caveated by that.
Q870 Chairman:
We understand that.
Mr Corey: The opening answer from Peter to the
question "Has Barnett been fair" is we do not really
know, in truth. I would make four points in addressing the needs
issue. It comes back to something you said, my Lord Chairman,
a wee while ago about how the Treasury makes decisions, say on
the Olympics, and nobody has a say in that. The first question
is the Formula is about dividing up the cake and what size is
the cake that is being divided up. At the moment the Treasury
can make decisions about the overall size of the UK cake knowing
that their decisions will have no impact on the devolved administrations
in terms of their funding. It has an impact in the sense the cake
has got smaller, but the Treasury can make decisions in terms
of how it is going to spend money in the UK in the knowledge as
to whether or not this is going to have a consequence for a devolved
administration. If we were moving to a needs-based assessment,
and that would be the needs of all regions of the UK and all devolved
administrations, then the question would arise as to what is the
cake that is going to be divided up in the needs-based assessment
and is it the same cake that is there at the moment. Would it
be the comparable services and functions formula that would be
used or in some way would it be different. That is a question
that occurs to me. The second point is in relation to the needs
assessment itself you said could you have five or six comparables
or variables. In moving to any needs assessment, all the commentators
in everything we read say this is very complex, it is going to
be subjective, it will not be wholly objective, and there will
be all sorts of arguments as to what should or should not be in
it. I think Seamus made the point, which is the third point I
would make, is a needs-based assessment sufficient to accommodate
any other inherent demographic or geographic differences between
Northern Ireland as it sitswe are separated by water from
the UKwhich do not affect Wales or Scotland to the same
extent or in the same way. Is needs-based assessment capable of
addressing that. The other point would be to what extent can a
needs-based assessment exclude politics in its application because,
and I hasten to make it clear we are non-party political, we are
a trade union without any political objects and we are not in
any way linked politically, the reality is decisions about expenditure
by the UK Government for Scotland has very different political
implications than it does about expenditure for Northern Ireland
in terms of the UK Government. To what extent can you create a
needs-based formula and bring all the variables into play which
would have no political influence or would be objective as opposed
to subjective. Those are the things we would be anxious to examine
if someone was presenting an alternative by way of a needs-based
assessment from a Northern Ireland perspective.
Mr Bunting: Just to add a caveat. Reading through
Heald, I will read the quote again because you can understand
our dilemma at times here. It says: "However, it is an illusion
to think that a needs assessment automatically brings more resources".
From an empirical researcher with data like that, that frightens
me, worries me, concerns me.
Q871 Lord Sewel:
There will be winners and losers.
Mr McAleavey: Inevitably.
Mr Bunting: We are not here to advocate that
we be losers.
Q872 Lord Sewel:
I think it is a little bit rich, quite honestly, to hear the argument,
and you have not advanced it but we have heard it elsewhere, that
because it is population-based it is objective and that contrasts
with a dreadful, politically manipulatable, subjective needs assessment.
Okay, the formula may be objective, but if you look at everything
that is in the base from pre-1979 that was all subjective. If
you look at the bypassing that went on right the way through,
that was subjective. The total amount that is delivered through
that process, a heck of a lot of it is subjective.
Mr Bunting: If you go back to what we have said
about three or four times, we do not know if it is fair or unfair.
It is unfair if we are in the very subjective position of others
saying, "We're not going to advocate something in that sense",
so denying people more public expenditure in Northern Ireland,
and that is a problem for us. What happens will happen. No matter
what it is in life, everything changes. Workplaces change, technology
changes, terms and conditions of employment change, we all change.
In essence, the Barnett Formula at some stage or other will be
reviewed and everything has to evolve, nothing can stay static
forever. That is life. What we would be attempting to do is get
the best for Northern Ireland and you would not expect us to say
anything else.
Chairman: I think you have made the Northern
Ireland position very clear. Thank you very much indeed, it was
kind of you to come.
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