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Barnett Formula

My Lords, I congratulate the noble Lord, Lord Richard, and the Select Committee on their thorough and sensible report on the Barnett formula. Perhaps even more congratulation should go to the noble Lord, Lord Barnett—who I see is returning to his place—on his persistence in getting a Select Committee set up to study the formula which bears his name. It was good to see that the committee had the noble Lord, Lord Barnett, as its first witness. The Select Committee’s report makes the issues seem beguilingly simple, but the allocation of resources, whether it is between countries and regions, between government departments or between or within public bodies, is always fraught with difficulties. However much people search for reason and science to inform decisions, judgments have ultimately to be made which are always subjective and often political. Even more subjective judgments have to be made if any form of transition is involved. Change is rarely accomplished without winners and losers, and the winners always want to benefit today while the users want to defer the impact of any loss. The Select Committee has been quite clear and united in its recommendation on the need to move to a needs-based assessment for the allocation of devolution funding. In principle, this is something which my party supports. We also support the transparency advocated by my noble friend Lord Trimble. The Government have been rightly criticised for their response. They say only that they, ""will continue to keep all aspects of public spending under review"," as if that was a proper response. This is code for never moving towards a needs-based assessment and not making moves towards more transparency. The committee’s report demonstrates that there have long been concerns about whether the allocations of resources to Scotland, Wales and Northern Ireland were fair. These concerns existed before the Barnett formula was introduced and the Barnett formula was never going to provide an answer to them. The Barnett formula might, I suppose, have produced a result that converged with an assessment based on what each country needed, but I think that would have been accidental and was probably highly unlikely. This leads to an inevitable conclusion that change is necessary. That is where the problems start. We believe that we have to start with what a needs-based assessment actually includes. There has to be much more thorough study of that accompanied by an open debate about the issues and the options. There is just as much controversy about what is included in a needs-based assessment as what is excluded. We are not sure that the committee’s solution of an independent commission is the correct one. There are clearly attractions in putting complex problems in the hands of experts. As the report acknowledges, decisions would have to be made by the Government, and any such body would only be advisory. Do we really want to create another quango?