Return to MartinFrost.ws index page |
. |
|
English subsidise the Scots by £2,200 per headScotland’s annual subsidy from England has shot up to a record £2,200 a head – doubling since Labour came into power in 1997. Gordon Brown’s spending has pushed Jack McConnell’s budget to Scandinavian levels at a time when Scotland’s tax burden dropped below that of England, Poland and Canada. The Scottish Executive figures sparked a political storm as MSPs asked why the world-class spending has failed to be transferred into world-class public services. In 2003-4 the Government spent £45.3 billion, putting Scotland in a rare club of countries where state spending is more than half of the entire economy. Only £34 billion was generated in tax. The remaining £11.3 billion was subsidised by English taxpayers.Taken from the Scotsman
24 Jun 2005, an article by Peter Macmahon
Devolution finance has been stabilised by Barnett formula A leading expert on public finances has poured scorn on claims that there would be a squeeze on Whitehall funding for Scotland - leading to massive job cuts - because of the Barnett funding formula. Professor Arthur Midwinter, of the Institute of Public Sector Accounting Research at the University of Edinburgh, described the claims as an irrelevant diversion from the real problems of allocating resources across the UK. In a seminar in Edinburgh this week, he challenged the conclusions of a report issued in March by five academics from the University of Strathclyde that warned more than 120,000 jobs would be lost because of the long-term effect of Barnett. The report warned that applying the formula - which calculates how much of the UK Government's tax revenue is transferred to Scotland - would lead to a 5 per cent cut in Scotland's employment. Authors of the report - Dr Karen Turner, Prof Peter McGregor, Prof Kim Swales - and researchers Linda Ferguson and David Learmonth said their work demonstrated there was a "Barnett squeeze" - a cut in Scotland's budget over time. The report's findings were based on changes made by Alistair Darling when he was Chief Secretary to the Treasury in 1997. These ensured that the formula would be updated each year to take account of changes in Scotland's population relative to those of England and Wales. The report said that: "If the population weights in the Barnett formula are constantly updated, the real reduction in government expenditure, and the corresponding reduction in activity, is further intensified. With full capital and population adjustment, the Darling-amended Barnett equilibrium implies a 4.6 per cent reduction in Scottish GDP and a 5 per cent reduction in Scottish employment and population." Midwinter, who also acts as an adviser to Holyrood's finance committee, argues that there is no empirical data to support the idea that Barnett has led to a convergence of the spending per head across the UK that could result in a "squeeze" on Scotland. In his paper, at a seminar on devolution and constitutional change, Midwinter said: "Some economists have published papers calculating a hypothetical Barnett squeeze effect, on the basis of unrealistic assumptions, and attracted newspaper headings that Barnett will 'lose' Scotland £1bn over three years, or 120,000 jobs. Such studies operate in a policy vacuum." He said convergence on spending was "not a policy objective" of the UK Government, and that any of the devolved administrations - Scotland, Wales and Northern Ireland - could reopen the formula if they believed it was not providing resources relative to its need. To illustrate his point, Midwinter said Northern Ireland had sought a "Barnett-plus" deal from the Treasury in the 2002 spending review, without querying the continuation of the formula. Midwinter says: "Frankly, such theoretical arguments are best kept in the private world of economics seminars rather than attracting misleading headlines. They are an irrelevant diversion from the real problems of resource allocation." He said that only in Northern Ireland, where there has been significant population growth, was there evidence of spending per head converging on the UK average. In 1999-2000, £121 was spent in Scotland for every £100 spent per head in the UK as a whole. The figure is the same for 2002-3. The figures for Wales are £109 and £107 for 2002-3, and Northern Ireland's falls from £134 to £128 over the same period. Midwinter said that implications of "excess" public spending - caused by calculations of Scotland's need being based on work going back to 1979 - are small in the UK context . Should the system ever be changed to reflect a system of "need", which the Treasury admits is not a precise calculation, Scotland would lose around £1.3 billion and Northern Ireland around £130milion - less than 0.5 per cent of their total expenditure. Midwinter adds that "there is a popular misconception that Barnett disadvantages English regions, when in fact they are unaffected by it as their spending allocations reflect decisions in Whitehall." He says it is difficult to see any devolved administration asking for the formula to be reopened in the short term, and that the retreat from regional government in England increases the likelihood it will be retained. He concludes that the Barnett formula "has brought stability to devolution finance, and it would be astonishing if the present UK government decided to review a system which is working well in practice, in response to the theoretical or partisan arguments. "Barnett will survive much longer than the conventional critique assumes."
|
||
| meditations |
top |
|