On the back of an envelope

How much longer are we to use the Barnett formula for deciding allocation of London grants to support spending in the various parts of the UK? The formula was produced something like 30 years ago for the situation which pertained then, that is about 20 years before the decisions on devolution.

The Institute of Public Policy Research earlier this month published a paper on the issue. Their conclusion was that the formula which had been intended to equalise spending per head throughout the UK now actually causes inequality. A main reason for this is that the formula is based not on current needs but on historical spending patterns and population levels. It is cast in stone.

The IPPR attempted to calculate relative levels of spending by looking at spending in various regions and countries, but omitting benefit and pension payments and agricultural payments

The result is that for the UK as a whole, spending emerges as £4, 679 per head.

For the four constituent countries the figures are:
Northern Ireland £5,694 per head, or 121% of the national average
Scotland £5,676 , also 121% of the national average
Wales £5,050, or 108% of the national average
England £4,523, or 97% of the national average

It will be seen that spending in Northern Ireland is generally 26% higher than in England. The word generally is important as there are important differences within each country.

The IPPR has calculated the differences bewteen regions in England.

What emerges is:
London has spending of £5985 per head, or 128% of the national average
N.E England has £4,960, or 106% of the natiopnal average
NW England has £4,927 or 105% of the national average.
Yorkshire and Huimberside has £4,477 or 96% of the national average
West Midlands has £4,477 or 95% of the national average
East Midlands has £4,086 , or 87% o9f the national average
South West has £3,947 , or 84%
South East has 3,874 , or 83%
East England has £3,820, or 82%

Within each country and within each regions there are variations, where the conurbations and large towns generally fare much better than rural areas. This may be political, in representing the location of Labour support, but it may also reflect special problems of urban areas.

Over the past 5 years there has been a tendency to greater equality per head in spending, for example in Wales from 113% to 108%, but the Scottish "benefit",while it did decline to 115%, has risen sharply again since about 2004.

How do we explain the Scottish figure? Is it a reflection of the dependance on Scottish votes and MPs? Is it a fear that the SNP might exploit any narrowing to urge independence? There is certainly evidence of the latter, in the posturing of the SNP.

There may be areas in all parts of the UK where Government-financed spending should be higher, but the low funding in rural regionas and the high funding in Scotland suggests that naked politics may be at work.