This is my three thousandth post.
I am no great fan of the "Taxpayers' Alliance", an organisation of people too rich to have to pay income tax.
But, as Iain Dale writes:
Today sees the publication of one of the most important pieces of research the Taxpayers Alliance has ever carried out. Titled UNEQUAL SHARES it examines the vexed question of the Barnett formula, the convention which governs the share of public expenditure Scotland receives. It is very timely because both the Government and the Conservatives are examining its future. Written by Mike Denham, who is behind the excellent Burning Our Money blog and is a former Treasury economist, the research reveals...
• Identifiable public spending per head in England is £7,535 pa (2007-08). But in Scotland it is 22 per cent (£1,644) higher, Wales 14 per cent (£1,042) higher, and Northern Ireland an extraordinary 30 per cent (£2,254) higher.
• Just over the last two decades (since 1985-86), higher spending in the three devolved territories has cost UK taxpayers a cumulative £200 billion (£102 billion in Scotland; £43 billion in Wales; £57 billion in Northern Ireland).
• North Sea Oil has not funded the Scottish spending gap, despite Scottish Nationalist claims to the contrary. In only five of the last 23 years have North Sea Oil receipts exceeded the cost of higher funding paid to Scotland. Even with current high oil prices, the income from the Scottish share of North Sea Oil only just covers the spending gap, and North Sea Oil output is projected to fall by 50 per cent by 2020.
But the biggest scandal is the way the Barnett Formula actually works. It's not based on the needs of Scotland or Wales or Northern Ireland. It is calculated according to what is spent. So if the government spends £1 billion on a capital project in London, Scotland automatically receives £150 million, whether it needs it or not. It does not work the other way around though. Crazy.
Even Lord Barnett himself now considers his own formula an anachronism. Yet the trouble is that neither Labour nor the Tories will have the guts to do what their brains must tell them is the right thing to do.
ConservativeHome's four reasons are:
1. The party now enjoys a large opinion poll lead. Polls had suggested that reform of the Barnett formula could have an electric effect on voters - similar to last year's inheritance tax cut - but that the risk was no longer necessary. Ridley Grove made the case on Monday that large opinion poll leads are discouraging radicalism in Tory policy.
2. Reform could jeopardise talks with the Ulster Unionists. The focus is often on Scotland but as the graphic above shows, the biggest beneficiary of the current settlement is N Ireland. David Cameron has high hopes for Owen Paterson's co-operation talks with the UUP and unpicking the Barnett formula could greatly undermine the appeal of UUP-Tory candidates in their first General Election campaign.
3. Reform could be a gift to the SNP. Alex Salmond believes that reform of Barnett would be a massive gift to his hopes for independence. A poll earlier this week found that - regardless of Barnett - a quarter of Scots would be more likely to vote for independence if there was a Tory government.
4. Reform could hurt the Conservatives' Welsh revival. Although the party may not win many more seats in NI or Scotland there is a real chance of big gains in Wales. Conservatives in Cardiff fear that reform of Barnett could kill those chances. As part of the Tory commitment to Wales the Shadow Welsh Secretary Cheryl Gillan has already defended the continuation of the Welsh Office.
The North, the Midlands, the West Country and East Anglia deserve justice. We can achieve this by twinning each of the local government areas currently or more recently existing there above Parish or Town level, but below County level, with a comparably populous area of each of Scotland, Wales, Northern Ireland, and London or the South East, and requiring by statute that both expenditure and outcomes across each of the relevant Departments of State must never vary by more than three per cent between any such area and any one or more of its twins.
And we can achieve it by legislating to reduce the pay of the relevant Ministers (always including the Prime Minister) by any percentage difference in either expenditure or outcomes, above three per cent, between any of seven regions (the three Northern regions, the two Midland regions, the West Country and East Anglia) and any of the other five (Scotland, Wales, Northern Ireland, London and the South East), with any two or more such differences in the given year added together for this purpose.
Justice must also be secured for the Highlands, Islands and Borders of Scotland, and for North, Mid and West Wales, including by amendment of the devolution legislation. This can be done by twinning each of relevant the Scottish Lieutenancy Areas and Welsh Preserved Counties with a comparably populous area of the rest of Scotland or Wales as the case may be, and requiring by statute that both expenditure and outcomes across each of the relevant Departments of State must never vary by more than three per cent between any such area and its twin.
And it can be done by legislating to reduce the pay of the relevant Ministers (always including the Prime Minister at Westminster, as well as the First Minister in the devolved body where applicable) by any percentage difference in either expenditure or outcomes, above three per cent, between the peripheral and the central parts of Scotland, or between South Wales and the rest of Wales, with any two or more such differences in the given year added together for this purpose.
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"This is my three thousandth post."
ReplyDeleteNever mind the quality, feel the width, eh, David?
Feel it indeed, Bill.
ReplyDeleteFeel it indeed.
"requiring by statute that both expenditure and outcomes across each of the relevant Departments of State must never vary by more than three per cent between any such area and any one or more of its twins."
ReplyDeleteIn many cases, spending and outcomes will vary massively at the outset. Aligning spending would require cuts to the areas currently receiving greater spending - this will be extremely difficult to push through politically, whether or not it is desirable. Aligning outcomes simply cannot be achieved instantly - in many cases it will take years. For example, health spending is already currently higher in many poor areas than in rich areas, because of the way the funding formula works, and has been for nearly a decade - you can argue about whether this is fair or not, and about whether this is effective or not, but the point stands that Labour has spent disproportionate amounts of public money on the poorest.
Outcomes are still worse in most poor areas, for obvious reasons, most notably (a) that there is a significant time-lag between inputs and outcomes in most areas of public policy, some time-lags longer than others (for example, I've seen persuasive arguments that low life-expectancy in Glasgow now is hugely influenced by the exceptionally unhealthy environment in which Glasgow children grew up in the 1940s and 1950s - those children are now in their 60s and 70s, and will die younger than most other people in the UK, and there's not a lot we can do about it now because we can't change the environment they grew up in); and (b) that many important outcomes are affected by many factors other than public spending anyway.
To give another example: many poorer areas of the country have very high rates of smoking. You can invest a lot in smoking cessation activities there, and that may help, but they will still have higher rates of lung cancer than other parts of the country for decades to come because of the cigarettes they've already smoked.
So I'm interested in how you intend to solve the political problem of getting this through, and in how you intend to punish variations in outcome which will still exist for several decades after you implement the policy, through no fault of your own. You can require whatever you like by statute, but a law against tides won't stop the tides.
Blah, Blah, Blah.
ReplyDeleteIf Ministers knew that the alternative would be the docking of their pay, then they would damn well make it happen.
"the point stands that Labour has spent disproportionate amounts of public money on the poorest"
ReplyDeleteIs that a joke, Eric? It's not a very funny one.
Cut their pay. They'll teach them and nothing else will.
So are you saying that if you were a minister you would be more motivated by the possibility of losing pay than you would be by the possibility of changing the country for the better? You've just lost my vote.
ReplyDeleteHere’s an interesting table
ReplyDeleteSpending per pupil on schools, broken down by Government Office region:
East Midlands – 4,100
East of England – 4,170
London – 5,280
North East – 4,470
North West – 4,300
South East – 4,190
South West – 4,040
West Midlands – 4,260
Yorkshire and Humber – 4,260
Now here’s a table of results at GCSE 5 A*-C, again by GO region:
East Midlands – 57.9
East of England – 61.2
London – 60.2
North East – 60.5
North West – 60.3
South East – 62
South West – 59.5
West Midlands – 59.3
Yorkshire and Humber – 57.8
So in other words, the region currently receiving the *second most* money already – the North East – has one of the poorest GCSE pass rates.
Under BPA policy, you would want the North East to simultaneously be given less money, and achieve higher results. How do you expect that to work?
Some more data I've dug up
ReplyDeleteSpending increases since 1997, %
East Midlands – 39
East of England – 35
London – 38
North East – 47
North West – 44
South East – 35
South West – 36
West Midlands – 43
Yorkshire and Humber – 43
So the North East has received the single biggest increase in government spending of any region since 1997. And again, you want to cut that.
On a quick calculation of spending averages, you have pledged to cut around £100,000 from every secondary school in the North East. That's around 3 teachers per school. Do you think that will be a good slogan to run under? And that's before anyone does some similar number crunching on nurses, police, social housing etc etc
I should also point out that these stats took me about 5 minutes to find. It's not hard to construct a pretty good attack line.
No, JuliaB, I am saying taht the people who are currently Ministers are like that.
ReplyDeleteThe rest of you haven't readd the post properly. Such is your hysteria at the idea of a fair deal for anywhere outside the Golden Square of Scotland, Wales, Northern Ireland, and London and the South East. Even when that fair deal depends on maintaining both high expenditure and high outcomes in those places.
But David, this is a policy you want to bring in under a BPA government - so you must be assuming that BPA ministers would be motivated mainly by the prospect of losing salaries.
ReplyDeleteYes, I have read the post properly. You've said you want to legislate by statute that both expenditure and outcomes should be equal across all regions. Both Eric and myself have shown that this would actually mean *less* money for some regions, including the North East, whilst seeking better outcomes. How would that work?
ReplyDeleteI think both Eric and jan make some good points. I'm all in favour of trying to equalise outcomes in poorer regions - that's why I support the Labour government giving them *more* cash than the prosperous South East. They're not quite there on outcomes yet, but it takes time, and they're making progress. If all regions must be equal in expenditure, that means poor students and families in the North East get *less* cash. Why would I support that?
ReplyDeleteCan you explain how your critics have misread the post? Their criticisms look pretty compelling to me.
ReplyDelete- political problem: cutting spending in some areas is difficult to sell to the public, and easy for opponents to attack.
- technical problem: some outcomes have nothing to do with public spending.
- technical problem: some underperforming areas already get more public money than well performing areas.
- technical problem: some public spending will improve outcomes, but not for very many years.
- technical problem: some bad outcomes partly caused by old underspending cannot be solved by new additional spending, because it's simply too late (no amount of money can prevent a person who's already got cancer from getting cancer, so they just will die young - tough).
- moral problem: you suggest that the ministers who will implement this policy are more motivated by their own salaries than they are by making the country better, or by any other possible motivation.
- misconception problem: you seem not to realise that some very deprived areas already receive more government money than some very rich areas.
Can you deal with each of these in turn?
Somtimes I could just despair, you know.
ReplyDeleteThis really is not hard to grasp, but I'll try again: in the North, the Midlands, the West Country and East Anglia, BOTH spending AND outcomes (have you go that?) would have to be NOT LOWER THAN in Scotland, Wales, Northern Ireland, or London and the South East, within a statistical margin or error. Nowhere would come down. That's the point.
There.
Of course, you did understand that anyway.
Go on, admit it. You are horrified at the idea of the Government-engineered privileges of Golden Sqaure being extended to anyone else. And you are horrifed at the idea that the Ministers you work for/wish you were/intend to become might be financially accountable for not doing their jobs properly.
JuliaB, when the Archangel Gabriel contests an election, then I'm sure that he will have your full support. But I don't expect him to do so any time soon.
This really is not hard to grasp, but I'll try again: in the North, the Midlands, the West Country and East Anglia, BOTH spending AND outcomes (have you go that?) would have to be NOT LOWER THAN in Scotland, Wales, Northern Ireland, or London and the South East, within a statistical margin or error. Nowhere would come down. That's the point.
ReplyDeleteOK, but spending in those places is already NOT LOWER THAN at least some of the places you mention. And outcomes there are already worse - have been for a very long time, despite spending increasing faster in those areas under Labour. How are you going to get the outcomes to change?
The only mechanism you have given is a cut in ministerial salary - which you then say would have no motivational effect on BPA ministers in any case.
This makes no sense. I have a horrible feeling that your policies are concocted in your own head, based on unsubstantiated assumptions about the way the world works, and with no regard for boring things like facts.
"The only mechanism you have given is a cut in ministerial salary - which you then say would have no motivational effect on BPA ministers in any case."
ReplyDeleteI never said any such thing.
Our people are politicians, not saints. And human beings, not angels.
I have a horrible feeling that your comments are concocted in your own head, based on unsubstantiated assumptions about the way the world works, and with no regard for boring things like facts.
Enjoy your pay cut. Richly deserved.
"And it can be done by legislating to reduce the pay of the relevant Ministers (always including the Prime Minister at Westminster, as well as the First Minister in the devolved body where applicable) by any percentage difference in either expenditure or outcomes, above three per cent, between the peripheral and the central parts of Scotland, or between South Wales and the rest of Wales, with any two or more such differences in the given year added together for this purpose."
ReplyDeleteThat's your mechanism. I assumed the words "And it can be done by..." implied some sort of causal link. Am I missing something?
(By the way, I'm not a government minister and nor do I aspire to be, so your exhortation to "Enjoy your pay cut", while kind of you, is misplaced.)
If they knew that their pay would be cut if they didn't do something, then they would sure as hell make sure that they did it.
ReplyDeleteDavid, how do you account for the fact that your words here:
ReplyDelete"I never said any such thing."
and your words here:
"If they knew that their pay would be cut if they didn't do something, then they would sure as hell make sure that they did it."
appear to be diametrically opposed to one another?
Can you actually read English, Elmo?
ReplyDeleteGood to see that you have brought the public school/Lenin High School thickies out of the woodwork with this one.
ReplyDeleteEven they are dimly capable of understanding that they would not be in their jobs if there were fair competition for them instead of government rigging in favour of their own Golden Square (I love that one), the central belt of Scotland, and South Wales.
Why stop at Ministers? Why not dock the pay of governing party MPs, at least, whose constituents were so ill-served that there was no such delivery of the goods?
Amazing, isn't it?
ReplyDeleteHow much of our money are these Westminster monkeys paid? But they can barely read. They certainly can't follow sentences with subordinate clauses in them, or anything like that.
All related, of course. Inbred.