Comment: Unfair formula must be ditched

Jul 4 2008 Liverpool Daily Post

SO THE controversial Barnett Formula could soon be history. It is unlikely many tears will be shed across much of England if the Government does decide to abandon this funding rule.

And why would anyone support a standard which delivered far more public spending in Scotland at the expense of deprived areas of England.

Economists appointed by the House of Lords to look into this anomaly will consider the statistics and, in all likelihood, conclude there is no sense to them.

In the last financial year, Scotland pocketed £9,179-per-head from the Treasury. The North West figure was just £8,247 – despite income-per-head north of the border being 95% of the national average in 2006, compared to Merseyside’s 73%.

The problem with the Barnett Formula is that it takes no account of different needs or different costs in different areas. Similarly, it does not affect existing levels of public expenditure, even if relative population shares change.

Other issues include the fact that it does not apply to divisions of expenditure between the different regions of England, and takes no account of different amounts of tax paid in respect of different areas or of changes in these amounts.

In fact, the formula is such a farce that its own author, Lord Barnett, was delighted to learn that it was finally under threat, 30 years after it was conceived.

It is unthinkable that a formula described by its inventor as something that should “never have been kept” can endure much longer.

It may be glum news for those areas that have benefited so richly from its unfairness, but there is no doubt Merseyside will heave a sigh of relief if it were to be given a swift exit. Then, perhaps, the money can be allocated to those areas most in need of the funding – and no one would surely argue against areas of the North West being first in the queue when that happens.