Examination of Witnesses (Questions 920
- 937)
WEDNESDAY 1 APRIL 2009
Rt Hon Jim Murphy, Rt Hon Paul Murphy and Rt Hon
Shaun Woodward
Q920 Lord Rooker:
I agree entirely with what Shaun said about the drug. Policy diversion
from devolution, that is what we expect. What we do not expect
is competition. If it was thought by, let's say, the English that
the Welsh, Scots and Northern Ireland got more unfairly and then
used the extra bit for competition against them, they would be
annoyed. The example I have got is this. As I understand it, the
Welsh Assembly Government has given a subsidy to manufacturing
industry causing mayhem with companies who have branches on the
English side and the Welsh side of the border. Do they sack and
close their factories in England and move to Wales to take advantage
of that? This is not a devolved issue in the sense that subsidy
to manufacturing industry does not figure on the list. The fact
is they have got the money to do it. Because they have that extra
money to do it that the regions have not got here, the RDA's in
England do not compete with each other. It is set down in tablets
of stone, I understand. They do not compete with each other with
the various tranches of money they get. This is an example on
the mainland where the border now is a problem and a policy divergence
on an issue like that where it creates competition between the
regions of England and in Wales cannot be acceptable.
Mr Paul Murphy: If those differences are as
stark as that then I rather suspect the state aid rules would
come in and tell us that that could not happen. Certainly there
are different schemes and, Lord Rooker, if you want to let me
know particularly what concerns you, we could look into it for
you. There are different schemes in England and in Wales to help,
particularly at this time of the downturn, companies which are
in difficulty. My explanation for that is that there are different
ways in which different governments decide to help. That is an
inevitable consequence of the policy of devolution. If in fact
there were regional governments throughout England, as some of
us think there should be, then we would be perhaps in a better
position. Wales would compete with Scotland, Scotland would compete
with Northern Ireland and Northern Ireland certainly competes
with the Republic of Ireland. I am afraid in a sense we have to
live with that because that is the way we deal with it.
Chairman: We have a division.
The Committee suspended from 6.18 pm to 6.30
pm for a division in the House
Q921 Earl of Mar and Kellie:
To finish off my question which was about how the actual process
of decision about whether spending was United Kingdom or England,
the one time when this definitely seems to have worked against
Scotland, Northern Ireland and Wales would be over the regeneration
aspect of the Olympics. We have been given evidence of the fact
that the Treasury makes all these decisions but I wonder whether
that is really the case. What was your part in the decision that
there should be no Barnett consequential?
Mr Jim Murphy: I was dealing with the Lisbon
Treaty in the House of Commons at the time which was much more
straightforward.
Q922 Chairman:
Do you know whether your predecessors were consulted?
Mr Woodward: I do not know.
Q923 Chairman:
Would you expect them to have been consulted?
Mr Paul Murphy: If the Devolved Administrations
had felt uneasy about the decision then most certainly they would
have been discussing the issue with the ministers. That is my
guess but I do not know.
Q924 Chairman:
If you had been in that position would you expect to have been
consulted before the decision was taken?
Mr Woodward: We cannot speak for our predecessors.
That is relevant, Lord Richard, in relation to answering your
question. What we can say of course is that this was discussed
at Cabinet. The decision about the Olympics was discussed at Cabinet.
There were Cabinet subcommittees and by implication Cabinet Members
were involved in discussions about that. What none of us can possibly
tell you is what any financial implications might have been from
that and what discussions might have taken place. It would be
risky for us to speculate.
Q925 Chairman:
Can you tell me what was discussed in Cabinet? I do not want the
details but just the subject?
Mr Woodward: You would have expected the Olympics
to have been discussed at Cabinet.
Mr Jim Murphy: While it is not strictly the
regeneration aspect, whether for example the associated investment
in London around Crossrail with the approximately £500 million
now confirmed as a Barnett consequential is something that since
taking up this post I have been involved in discussion with the
Treasury and the Scottish Finance Minister about. The read across
from that number one transport investment in London to the number
one transport investment in Scotland would again be the Forth
rail crossing.
Q926 Chairman:
Are you getting anywhere with the discussions?
Mr Jim Murphy: Yes, it is now confirmed.
Q927 Lord Forsyth of Drumlean:
What the Earl of Mar and Kellie was getting at was the arbitrary
nature of the decision as to whether something is UK or English
expenditure. Mr Jim Murphy, the Scottish Secretary, has had a
victory in persuading somebodypresumably the Treasuryto
treat the Crossrail expenditure part of it as being infrastructure
and therefore having Barnett consequences in order to fund the
second Forth Road Bridge crossing. The original position taken
was that Crossrail was not expenditure which would have Barnett
consequences. The point which the Earl of Mar and Kellie is making
is is it not a great weakness in the system that somebodywe
do not know whoin the Treasury will decide without any
accountability what is UK and what is English expenditure and
if there is accountability can we know what the criteria are for
determining it?
Mr Jim Murphy: The way in which this is arranged
of course is contained in the Statement of Funding which sets
it out in a transparent way. Alongside the Statement of Funding
there is also a disputes mechanism. As far as I am aware, but
I stand to be corrected, none of the Devolved Administrations
and none of the parties to that Statement of Funding have ever
invoked that disputes mechanism. Not only is it there in the Statement
of Funding, but there is an appeals procedure that has never been
invoked.
Q928 Lord Forsyth of Drumlean:
Why did it change on the funding of the Forth Road Bridge Crossing?
Mr Jim Murphy: A strong argument was made about
the importance of the Forth Road Crossing, the way in which it
was a strategic priority for Scotland and that that money should
then read across on Barnett consequentials. This picks up on a
number of points.
Q929 Lord Forsyth of Drumlean:
When you say that a strong argument was made, what was the argument?
Was the argument we are in great political difficulty here, we
need the money, and somebody then decided there are Barnett consequentials,
or was the argument about why it merited Barnett consequentials?
Mr Jim Murphy: There was an argument based on
the merit of the individual case, based around the issue of the
Statement of Funding made the argument in the context of the Statement
of Funding that this was important and that there would be Barnett
consequentials. It was a detailed straightforward argument with
the Treasury.
Q930 Lord Forsyth of Drumlean:
I may be missing something but whether there are Barnett consequentials
or not relates to whether or not this is English or UK expenditure,
does it not?
Mr Jim Murphy: Yes.
Q931 Lord Forsyth of Drumlean:
You must have had to argue that this was not UK expenditure but
English expenditure in order to get it. It is nothing to do with
the merits of the proposal.
Mr Jim Murphy: One never knows why one is successful
in an argument with the Treasury. If one could make the precise
argument and understand the most effective way of doing it, then
you would use that argument on each and every occasion. I made
the argument along with others, my colleague Des Browne as well,
about the Barnett consequences on Crossrail and it is important
in terms of that strategic infrastructure project that there is
a read across in terms of Scotland as well.
Mr Paul Murphy: There are developments in terms
of how disputes are looked at and hopefully resolved. They have
grown up over the last number of years. There are three really:
the first is the increasing use of bilateral meetings between
the devolved finance ministers and the Chief Secretary to the
Treasury on individual issues that affect the particular country.
Secondly, quadrilateral finance meetings to which I referred earlier,
but perhaps most significantly in the last year or so the Joint
Ministerial Committee structure which has lain dormant for some
time and has now been resurrectedit is my job to look after
that side tooand a new Statement of Funding but also a
new memorandum of understanding in the Joint Ministerial Committee
which allows for distributes ultimately to go at the final point
to the JMC to be discussed. Obviously it is best if they can deal
with it earlier.
Q932 Lord Trimble:
You have described how there are ways in which issues can be raised
and to a certain extent resolved. We are dealing here with a situation
where you have Devolved Administrations of a different political
complexion than yourselves. Is it really then a hope that you
should continue to play a role in these issues when we are dealing
with different institutions and different parties? Is it appropriate
that everything at the end of the day always comes back to the
Treasury and the Treasury do things and you do not know what they
are doing and you are not in a position to explain and there is
not proper accountability, that there are not proper criteria?
Would it not be better to have a more formal process here? We
were given the example of the Grants Commission in Australia.
There is a separate commission which is not controlled by the
Treasury there which handles these issues and does so by reference
to clearly stated criteria rather than something that always comes
back to some sort of star chamber-like proceedings.
Mr Paul Murphy: Australia has a federal system
which covers the entire country and it is different when you have
an asymmetrical system such as ours.
Q933 Chairman:
Why does that make such a difference?
Mr Paul Murphy: I guess in Australia that it
is based on their constitution.
Q934 Lord Trimble:
It is a more recent development. Even if you go back to the very
asymmetrical devolution of the Government of Ireland Act 1920,
there was provision in it for a Joint Exchequer Board which would
sit on and resolve these issues but for various reasons the board
was never constituted and never met.
Mr Paul Murphy: I rather fancy that the Treasury
might still have been as powerful in 1920 as it is in 2009.
Q935 Lord Trimble:
That is the issue, is it not?
Mr Paul Murphy: Yes, but essentially because
the British Government is funded by general taxation. Although
in Scotland there is an option for some amount of taxation, there
is none in Wales or really in Northern Ireland.
Q936 Lord Trimble:
Is it not desirable to have some more transparent procedure because
it is all very well to have this private proceedings with the
Treasury virtually calling all the shots at a time when you had
no significant difference in the political complexion of the regional
administration and the centre. Now when there are political differences
these are issues which are potentially difficult political issues
and if there are not some clearly stated criteria, some clearly
transparent procedure, are you not storing up trouble?
Mr Paul Murphy: There is a procedure there.
The procedure which first of all allows for it to be resolved
at the lowest possible base, either between officials and if it
cannot be officials it is ministers between the two administrations
and ultimately through the JMC machinery which has been revived
and which has met on more than one occasion to deal with these
issues with politicians from different political parties.
Q937 Lord Trimble:
Is it not the case that JMC's are dominated by the London ministers?
Mr Paul Murphy: I would not say that to some
of the members who come from the Devolved Administrations. They
make their point very forcibly.
Mr Jim Murphy: This is an issue that Ken Calman
and the Commission on the future of Scottish devolution is exercising
some thought on. Initially this was not a piece of work that he
had envisaged undertaking but the evidence took him in this direction
of seeing what further could be done to enhance working relationships
in addition to what Paul Murphy said and that is an important
piece of work on which we will have some conclusions later this
year.
Chairman: We have another division. Thank
you very much for coming. You will appreciate that your views
have not exactly met with universal approval.
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