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Barnett Formula

My Lords, I am glad that we are debating this report and its conclusions as I believe that it points a way towards a fairer union. It certainly presents difficulties when it comes to implementation in Scotland, but it rectifies underfunding and unfairness for Wales and Northern Ireland and, of course, it could pave the way to a more systematic funding method for the English regions—not that we were allowed to consider their plight, and nor should they be considered as the equals of Scotland, Wales or Northern Ireland. I believe there to be a substantial desire in Scotland and elsewhere for increased self-government, allied to a belief that the union should be fair and should evolve to accommodate this desire for greater self-government within the union. Certainly, the union has evolved dramatically since 1603. The treaty that my predecessor signed and promoted in 1706 bears little resemblance to where we are today, and nor should it. Multinational states must evolve or become redundant. Given my own minority position, as someone seeking political independence for Scotland and a confederal union, this inquiry and report was an interesting exercise in how to develop the current devolution settlement. Leaving aside the problem of altering the block grants, perhaps the biggest problem of the present system, the Barnett formula, is the inevitable fact that, as devolution expands and the years pass, so policy deviation will increase—quite rightly—to the point that the various polities are doing significantly different things. The Barnett formula is, of course, derived from policy in England. That connection may become ever more irrelevant and obscure. This is made worse by the Treasury’s control of the decision about consequential funding, or the decision that a new policy is a UK activity or a devolved activity. These increasing anomalies are replaced by the new formula of indentified objective criteria, needs assessment and an independent grants commission. The needs assessment process should be placed on a statutory footing and carried out every so many years. In between these assessments, the agreed percentages will be used by the Treasury to announce the annual block grant. It would be just as easy as it is now. This needs assessment and grants commission formula would be an improvement to the devolution settlement and prolong its life. However, greater self-government is demanded and is certainly needed. The union has a lot more support than the current settlement deserves. Further development would take us to either the anomalous "devo max" and the convoluted thoughts of the Calman commission; or to a federal union, which would be very difficult to construct; or to a confederal union, where sovereign states pool some of their sovereignty in limited policy areas. I hope that the United Kingdom Government will begin to respond more favourably to this report than they have done so far. They should take confidence from the strong support for a fairer union and face up to the alteration to the block grant, in the name of fairness. If that should happen to make the people of Scotland think that taxing themselves and making all their own decisions was simpler and more logical, then the British family is growing up and moving out, back into the world. Scotland may well come to realise that it is the 35-year-old who needs to leave home. This report may provoke such a reaction in the long run. In the short term, it sorts out unfairness and copes with policy deviation.