Tuesday, 28 August 2012
Barnett Formula - a haircut for English Taxpayers?
The Barnet Formula Explained?
As the possibility of a Scottish “Yes” vote for independence approaches, I am noticing that some people are focussing more and more on the question of the Barnet Formula.
The Barnet Formula is named after the former Labour Minister, Joel Barnett, now Lord Barnet, who devised it, he says: “Not so much on the back of a ‘fag packet’ but on the back of a ‘match box’.” It was originally intended by him to be a one year kick-start to the Scottish economy back in the 70’s. It is however significant that the political situation at the time was that the Scottish National Party were making serious headway in Scotland and therefore Labour’s agenda was to try to buy Scottish votes with English money! The extra Barnet funding of course therefore started before a single barrel of North Sea oil came ashore, but already the Scottish National Party were making wild claims that all of the North Sea Oil was “our oil”!
I have already blogged on this subject before that, in fact, on normal International Conventions, perhaps half of North Sea oil is in fact English oil and not Scottish oil. The English oil includes virtually all the North Sea gas that falls under what are now British waters. It is perhaps also relevant that, with the three British Establishment political parties being dyed in the wool Europhiles, the European Union is in the process of making a claim not only to all our fishing stocks, but also all our mineral rights as well, including all of North Sea oil. Needless to say that none of the Lib/Lab/Con careerists are to be trusted with preserving “our oil”!
The effect of the Barnet Formula is to give the Scottish people not only a subsidy from English taxpayers (the proportion of that subsidy depending on the view take of who owns the North Sea oil), but an additional subsidy over and above what would be spent in England for equal need. Every Scottish man, woman and child receives State spending of just over £2,000 each more than would be spent on the average English man, woman and child.
Even the poorest parts of England receive less public spending than the richest parts of Scotland.
For as long as the Scots are within a single State this is grossly unfair regardless of where the money comes from. To this extent whether Scotland pays its way or not is irrelevant to the unfairness of extra Government spending that is occurring unrelated to need. In fact if North Sea oil is taken out of the equation, the Scots are currently receiving a subsidy from England in the order of £32 billion a year. It is only if you attribute almost all of North Sea oil to Scotland that Scotland appears to break even on its spending and that, of course, is only for as long as oil prices remain high.
There are two reports which are well worth reading for anyone who wants the detail of how the Barnet Formula works. The first one that I would recommend is the Taxpayers Alliance Report, which I had a hand in commissioning with Matthew Elliott. It was done by a much respected economist who bent over backwards to be “fair” to Scottish arguments. The Labour Government itself described what Scotland was getting from the English taxpayer as a £12 billion a year “union dividend”, so you can be sure that, if anything, the amount of money given by English taxpayers is vastly in excess of even the headline comments made in the Taxpayers Alliance Report. (You can find the Taxpayers Alliance Report here >>> http://www.taxpayersalliance.com/unequalshares.pdf).
There is a further report that is worth reading, it is of course much more in depth, as it is the Cross Bench (independent) Report from the House of Lords in 2009. For anyone who wants to know the details of exactly the extent of cross border subsidy from England, then this is the report for you. It is however lengthy and detailed. It is nevertheless a highly inconvenient report to those so-called Unionists whose idea of a United Kingdom is that the English shut up and pay for everyone else. That is why it is rarely mentioned in the British press! (You can find this House of Lords report here >>>> http://www.publications.parliament.uk/pa/ld200809/ldselect/ldbarnett/139/13902.htm)