Mersey funding hope as Lords order review

Jul 4 2008 Liverpool Daily Post

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THE infamous Barnett Formula looked doomed last night as Britain’s top economists were given the go-ahead to investigate whether it should finally be scrapped.

The funding rules – which deliver much lower public spend-ing in Merseyside than in richer Scotland – will be reviewed for the first time in 30 years by a House of Lords committee.

Crucially, the 12-strong commit-tee will employ leading econo-mists to examine why the formula gives the Scots much higher funding and which parts of England are penalised.

They are certain to focus on why Scotland, in the last financial year, received £9,179-per-person from the Treasury, while the North West figure was just £8,247 – a staggering £932 lower.

Yet Scotland is much richer. Income-per-head north of the border was 95% of the national average in 2006. In Merseyside, it was just 73%.

Meanwhile, the Scottish Parliament – thanks to higher funding from London – has announced eye-catching plans for free prescriptions, free eye and dental checks, a cut in class sizes in primary schools and a cut in business taxes.

Now treasury ministers will be called to defend that huge gap in spending and wealth, as will minis-ters from the Scottish Executive.

A delighted Lord Barnett, the author of the formula who has since disowned it as patently unfair, described the move as the “biggest threat to its existence” since it was born in 1978.

The Labour peer believes the Government will find it impossible to dismiss the verdict of respected, independent economists in the way that past protests have been shrugged off.

Lord Barnett said: “I hope the committee will find that my formula should never have been kept on for 30 years and that there are fairer ways to deliver expenditure, based on need.”