MPs demand Barnett review

Jun 12 2008 by William Green, The Journal

GORDON Brown is under mounting pressure over the controversial funding system that hands more public cash to Scotland amid signs of a backbench revolt.

A cross-party coalition of 20 MPs have signed a Parliamentary motion calling for a review of the Barnett Formula, which hands £1,500 more to Scotland per head than England.

The North East gets more cash than other English regions, but still receives £576 less per person than Scotland. North East Labour MPs David Clelland, Denis Murphy and Ronnie Campbell are among the members to demand an inquiry into the system that decides how funding is divided across the UK – a move blocked by the Prime Minister.

And the pressure on Mr Brown increased further yesterday after it emerged that an official commission into Scottish devolution is set to examine the future of the Barnett Formula. Mr Campbell, MP for Blyth Valley, said: “If you are going to have a UK, let’s have a fair one.”

Earlier this year, Downing Street insisted there were no plans to change the formula amid reports the Prime Minister ordered a review because of rising anger in England.

But a “factual” paper on funding mechanisms for the devolved administrations, setting out how they work, has been promised and could be published later this summer. The row has dogged Whitehall for years, but has been inflamed by free student tuition fees and care for the elderly north of the border, in stark contrast to England. Sir Kenneth Calman, who is heading the Scottish devolution commission, told MPs that part of the job of a panel of experts would be to “look at how the financing currently operates and how it could change, within that, the Barnett Formula is part of it”.

Panel chairman Anton Muscatelli, principal and vice chancellor of Heriot-Watt University, said: “Sir Kenneth has specifically asked me to advise on the strengths and weaknesses of the present system of financing devolved expenditure, and any alternative fiscal options.

“He has also tasked me with considering the potential costs and benefits to Scotland of any alternative system, and the issues of equity and the economic and fiscal consequences for Scotland and to the UK as a whole.”

Prof Muscatelli promised independent advice to the commission and said it would be relevant to a “wider audience” interested in financial accountability and equity in devolved administrations in Scotland, the UK and the world.