Monday, 6 August 2007

Whose problem is Barnett anyway?

It was interesting to note the way in which a number of anonymous commenters on my previous post seem to have responded to what they assumed me to believe, rather than to what I actually said. (To say nothing of the implicit assumption that anyone who raises any question about the Barnett formula is somehow expecting 'the English' to pay for Wales). I suppose it also does much to justify the fears of those who think it a mistake to raise the issue at this time.

In this regard, it is a pity that the people of the North East of England rejected the Regional Assembly which was on offer to them in 2004. Had that Assembly been established, I think we would have been debating Barnett in a wholly different context, because that new Assembly would also have been raising it as an issue.

There are really only two ways ahead for funding the devolved administrations within the UK. The first is that they are allowed to raise their own taxes, and the second is that they continue to receive a block grant from central government in London.

The first is an entirely rational viewpoint to hold, but implies that self-government goes further and faster than many are ready to accept. The second treats the issue as a UK-wide issue of deciding how to allocate resources to the devolved administrations. My original post started from the assumption that the issue is going to have to be addressed in the latter context, rather than the former.

Much has been made about the fact that spending per head on the areas covered by the Barnett formula (which is not at all the same thing as total government expenditure per head) is higher in Wales, Scotland, and Northern Ireland than in England. Whilst this is incontrovertibly true, it overlooks the fact that there are variations in spending per head within those countries as well – and within England itself.

Spending variations on specific policy areas within the territory of any administration are an entirely natural way to run a country, mirroring needs and circumstances. Some services cost more to provide in rural areas than in urban areas; others cost more in urban areas than rural. Levels of chronic sickness (and therefore health service costs) are not constant across all the nations and regions of the UK. ‘Fairness’ in allocation of resources, does not necessarily equate to ‘equality’ of allocation of resources, considered purely on a ‘£ per head’ basis.

That is particularly the case when one looks at only a subset of government expenditure rather than the totality. In the areas of devolved responsibility, it is clear to me that expenditure is higher in Wales, Northern Ireland, and Scotland than in England as a whole (although treating England as a single unit in this context masks significant regional differences there as well). Whether the same is true in non-devolved areas of expenditure is a moot point, to which none of us really knows the answer – although of course many claim to do so, based largely on their own political standpoint.

The problem with all this is that, and here I agree with Glyn Davies' response, working out a needs formula is far from being a simple matter. And, returning to my original post, even if a Wales-based review comes up with a consensus view, there seems to be little political prospect of it then being accepted and implemented at a UK level.

And that brings me back to my central concern. If we see Barnett as being a UK issue, to do with how we determine the 'fair' level of resources to be allocated to the nations of the UK (yes, and to the regions of England as well), then it needs to be reviewed at a UK level with buy-in from all concerned, and some sort of commitment to implementation (what Glyn Davies described as ‘binding’). To conduct a review from a purely Welsh perspective - which is what the Assembly government has decided to do - runs the risk of producing a fine report which then gets ignored.

Such a conclusion might give us increased scope for political discussion and argument, and might even allow us to base that discussion around a more objective view, rather than political prejudice - but it won't resolve the issue of fair funding for the Assembly.

5 comments:

alanindyfed said...

We have to distinguish here between nations and regions. Devolution implied that the union was to be carved up into devolved "regions".
Wales was not recognised as a separate entity as a nation, but merely a "region". National status is for Scotland and Wales (and the Cornish strive for it). All other parts of the island of Britain are "regional" not "national", and the nature of the funding should be different to reflect this.

Ceredig said...

AlaninDyfed,

I'm afraid that that looks to me like a complete non-argument, and merely serves to confirm the worst prejudices of the likes of the anonymous correspondents who left comments on my previous post.

On what basis do you seek to argue that being a 'nation' rather than a 'region' gives Wales an entitlement to a greater level of the UK's resources? There is no logic in that at all.

There are two, and as far as I can see, only two, ways of looking at this. The first is that Wales becomes a self-governing nation and funds all her requirements within the revenue raised within Wales, and the second is that Wales is part of the UK and receives a share of resources based on some objective assessment of need.

I could make out a reasonable case for either of those scenarios; I have yet to hear anyone making a rational case along the lines that you seem to be suggesting, i.e. that simply being a 'nation' increases our entitlement!

alanindyfed said...
This comment has been removed by the author.
alanindyfed said...

As we are not yet self-governing the first example you make is not relevant. So the second example applies today, and a nation needs extra funding because of its national institutions and extra funding needs. ask Dafydd Wigley!

Ceredig said...

So we are agreed that, as things stand today, Barnett has to be discussed and reviewed in a UK context, and the question to be addressed is what share of UK resources should be made available to the National Assembly.

On that basis, the needs of Wales are inevitably competing with, and have to be considered against, the needs of other parts of the UK, and we need an objective way to make that assessment.

I really don't see why Gordon Brown or anyone else is going to give Wales more just because we are a 'nation'. (Indeed, you are close to making out a good case that we would be better off if we accepted that we are a 'region' rather than a 'nation' because then we wouldn't have the costs of 'national institutions', but I somehow don't think that's your intention.)

If we want to argue that the Barnett formula should be replaced by a formula based on needs, (and that is the implication of the Assembly Government's decision to hold a review in the first place) and if we accept that we are going to argue the Welsh case within the context of UK funding, then the case has to be made on the basis of objective evidence of Welsh needs - directly compared to needs in other parts of the UK - in delivering the services for which the Assembly is responsible. Simply saying 'Wales is a nation, therfore we are entitled to more' is a pretty good way to get ignored, it seems to me.