As Scotland votes no, we demand change to the Barnett Formula
- Scots receive over £1,600 per person more in public spending
- Lord Barnett, the former minister who devised the formula, called it a “terrible mistake” and “national embarrassment”
- TPA also calls for a change to Scottish MPs’ voting rights in Westminster
After the No vote on Scottish independence, the TaxPayers’ Alliance (TPA) is calling on Westminster politicians to urgently address the substantial constitutional and financial issues thrown up by the referendum result.
As the polls tightened towards the day of the vote, the leaders of the three main parliamentary parties in London promised to protect the Barnett Formula, which since the 1970s has been used to allocate British taxpayers’ cash between England, Scotland, Wales, and Northern Ireland.
However, there is a substantial public spending gap that exists between England and the three home nations with devolved powers – with even Lord Barnett himself, who designed the formula, calling it a “terrible mistake” and “national embarrassment”.
In 2012-13, public spending per head in each of the home nations was:
- £10,876 in Northern Ireland
- £10,152 in Scotland
- £9,709 in Wales
- £8,529 in England
In an era of devolved government, such spending gaps have become increasingly difficult to justify. Should higher public spending in some home nations be subsidised from taxpayers elsewhere? Why shouldn’t those areas pay for their own promises through higher local taxes?
The Barnett Formula cannot possibly survive. Little more than a crude back-of-the-envelope rule for splitting annual increases in public spending, back in 1978 it was a short-term expedient. It was never designed to last for thirty years and to bear the public scrutiny and resentment it now engenders.
Reform is essential – but politicians have promised to maintain unequal shares.
Jonathan Isaby, Chief Executive of the TaxPayers’ Alliance, said:
“The people of Scotland have spoken, but in their last-ditch attempt to save the Union politicians have also saved the unfair Barnett Formula. It is outdated and has spectacularly failed to address the extremely inequitable situation of taxpayers from one home nation heavily subsidising others. English taxpayers want an end to subsidising Scotland and the Scottish Government wants financial control devolved to Holyrood, so now is the ideal time to abolish the Barnett Formula entirely.
“Furthermore, as even more power is set to be handed to the Scottish Parliament, the time has come to end the anomaly of Scottish MPs voting on policy for other parts of the UK where Westminster MPs have no such say North of the border. English votes for English laws is the only fair way to proceed.”
In 2008, TaxPayers’ Alliance Research Fellow, Mike Denham, authored Unequal Shares, a paper examining the Barnett Formula and public spending across the UK. You can read it in full here.