mudhook

Once more the financial inequalities between the countries of Britain are exposed. The office of national statistics (ONS) has issued United Kingdom health statistics 2008 and these statistics in Table 8.5, page 114 give the spending per head on health and personal social care for 2006/07:

Scotland £2313

Wales £2109

N Ireland £2096

England £1915.

Thus someone in England - and that includes Cornwall - has nearly £400 less spent on him than someone in Scotland. Concern about public spending inequalities like these will not go away. They are part of the perceived unfairness that is, I think, slowly dissolving the United Kingdom, an unfairness that the Labour government appears indifferent to.

Will the Liberal Democrat MPs for the Cornwall constituencies cry foul? I doubt it.

Will Cornish nationalists complain of inequality and injustice? I’m not holding my breath.

Will Labour and the Conservatives in Cornwall complain? I’m still not holding my breath.

Come on, surprise me.

If the Conservatives win the next general election the contentious Barnett formula will be replaced with a needs-based formula: see the story in the Scottish newspaper the Herald for 23 May 2008 here .

David Cameron said he wanted the change to be “consensual” and “non-inflammatory.”

This is a sensible approach. The Barnett formula is unfair and perhaps helps to sustain an unwise economy in Scotland; it should be replaced with a formula fairer to all the deprived parts of Britain. See here where I explain that we can be much sharper in our focus on deprivation.

The Conservatives have little to lose electorally in Scotland and it will be interesting to see how the Scottish nationalists respond and whether Labour, with much more electoral support there than the Tories and dependent on Scottish seats for a UK majority, has the courage and energy to tackle the issue. As I have remarked before, the Liberal Democrats in Cornwall, while complaining about the share of Britain’s public money for Cornwall, never mention the formula, never mention Scotland’s share of public spending.

Of course, needs-based formulas have their problems as the disputes about Cornwall’s share of public spending show but the change from the present Barnett formula would be fairer and supportable.

Previous posts on the formula are here.

Is public spending per head in London higher than in Scotland?

I’m not sure that it is productive to compare a country with a region but let us examine the per capita public spending as set out in the annual public expenditure statistical analyses (PESA) documents published by the UK Treasury. The outturn figures for 2005/06, the latest outturn figures presently available, are Scotland
£8 179 and London £8 164. That’s London less than Scotland.

The 2006/07 planned identifiable expenditure gives figures of Scotland £8 623 and London £8 404. London again less than Scotland. The outturn figures may be different of course.

In fact in the five years since 2001/02 for which outturn figures are known, London has had a larger per capita spend than Scotland only in 2004/05.

You can read all the statistics here on the Treasury website at table 9.2. The introduction to the document has some useful technical comments about the statistics.

The table also shows clearly that per capita public expenditure in Scotland (and Wales and Northern Ireland) is higher than in England, which includes Cornwall; and that the proportion going to Scotland, after a dip in 2004/05, is not significantly declining.

Incidentally, there are no separate PESA figures for Cornwall but the south west per capita outturn figure for 2005/06 was £6 398. How odd that nationalists here complain about perceived underfunding for Cornwall but never raise the issue of per capita public spending across Britain. Why is that?

For 2006/07 the Scotland figures are probably about £5 overstated, ie the per capita figure should be about £5 less than given; previous years have a per capita overstatement of about £1. With this correction Scotland still exceeds London. The correction is noted here - scroll down to Revision to chapters 9 and 10. There will be a correction in the next PESA.

These per capita public spending figures are contended as this article in the Guardian for 3 November 2007 shows.

Perhaps here is a good place to point out that the latest available government expenditure and revenue figures for Scotland (GERS), for 2004/05, show that Scotland receives about £11.2 billion more in public spending than it contributes to the UK excluding North Sea oil; including the oil revenues, the difference drops to about £6 billion. Read it here .

I think that UK public expenditure should be redistributed across Britain on the basis of the need of the individuals and communities wherever they live and, where given to communities, to the smallest feasible units rather than large units though devolution has complicated that. In terms of need does it make the best sense to redistribute on a country or even regional basis if we can target more precisely than that? Given the controversy and even ill-will that the present distribution causes, along with the disputes that surround the data, it is time the government looked again at the population-based Barnett formula and at need, and looked again at the collection of the relevant data, so that we can consider what sort of redistribution we want.

People in Scotland are getting for free a range of public services that people in England are charged for. In England prescription charges are presently £6.85 an item and only off-peak buses are free for people over sixty. In Scotland there are free eye check ups, free dental check ups, and the arrangements for free bus travel for the elderly are more generous. Tuition fees are paid by students at university in England but Scottish students at university in Scotland do not pay them (though there is in Scotland a one-off flatrate graduate fee of about £2300 payable on graduation). In Scotland there are generally shorter NHS waiting list times and smaller school classes; some drugs are available on the NHS that are not available in England; the arrangements for personal and nursing care are more generous.

The Scottish government has just started a six month pilot of free school meals in some areas for pupils aged five to eight and hopes to extend it all over Scotland. It has also announced that prescription charges will be abolished for everyone within the lifetime of the present Scottish parliament and aims to abolish the university graduate fee.

I don’t live in Scotland and it is up to people there and their government to decide what happens in Scotland.

However, these improvements are possible because the Barnett formula gives a much higher percapita amount of UK identifiable government spending on public services in Scotland than in England. The formula, leading to the higher spending in Scotland and the free or more generous services, is increasingly seen as unfair to England. For 2005/06 the percapita public spending in England (including Cornwall) was £6762 and in Scotland £8265 (and in Northern Ireland £9088, and Wales £7666). This formula is unfair and untenable. It should be scrapped and a new arrangement made for spending UK taxes in the four constituent countries.

For Labour, with a majority of the Scotland seats in the UK parliament and dependent on Scotland for its UK majority, this is an issue they will not tackle; nor will they tackle the related issue of MPs for Scotland constituencies voting for England-only issues in the House of Commons. The Conservatives sometimes rumble about Barnett unfairness but seem undecided whether to commit to tackle it. It is noticeable that the Liberal Democrat MPs for Cornwall complain about what they see as unfair public spending in Cornwall, point to the UK government, but do not mention the Barnett formula.

Slowly people in England are realising the unfairness of the present formula and the present House of Commons voting arrangements and eventually parties will not be able to ignore them.

The Times on 11 October 2007 quoted figures from the Centre for Economic Business Research that showed state spending by the constituent UK countries as a proportion of economic activity was lowest in England and significantly higher in the other three countries.

An earlier post on the Barnett formula is here.

Andrew George, the Liberal Democrat MP for St Ives, Cornwall says in the Western Morning News for 26 July 2007: “The simple principle should be established that decisions which affect one community and no other should be taken in that community and not by others outside it.” He was responding to the news that the government has accepted Cornwall county council’s proposals for a unitary council.

On the face of it, most people would agree with this localism. Local people should decide local issues not people far away who are do not know at first hand the issue and do not have to live daily with the decision. Even the European Union believes, it says, in subsidiarity, the idea that a decision should be taken at the lowest possible level of relevance and competence. There’s even a saw about the principle: The wearer knows best where the shoe pinches.

There are, however, serious difficulties with the simple principle. Let me look at a few.

(1) It is difficult to identify items which affect only “one community and no other.” Issues and decisions tend to leak all over the place. One of the arguments against English votes for English affairs is that of interdependence and consequential effect. As Cornwall, even a devolved Cornwall, would not be self-financing, all local decisions in Cornwall depend upon money from other communities, a point made by some exasperated people in England about the spending decisions of the Barnett-financed devolved parliaments and assemblies in Scotland and Wales.

Who pays the bills for local decisions? Not the locality, most cannot afford it. In a way all decisions affect everyone because everyone pays. (Actually not every adult pays; some people receive but do not give.)

I suppose we are talking about not absolute independence but the degree of independence and the degree to which that the decision impacts upon the daily life a particular community rather than others.

Whether and where to build a car park or lavatory and what fees to charge are suitable for local decision; their impact is overwhelmingly upon the local community (and its visitors) hardly at all on people many miles away. The cost is relatively modest.

However, building a school involves significant money in land and building costs and subsequent running costs and well-educated children matter to us all. Others will therefore have an interest.

(2) I think that by and large local people or local councils do not take as broad and long a view as people, like central government, who are immersed in complex interdependent decisions and who usually work on broadly benthamite principles. Local decisions are about the immediate practical issues and effects not universal principles, all trees and no wood.

Despite the chatter about community the localist emphasis is often on me rather than us. Local decisions are not likely to be so liberal as centralised decisions: read this depressing account of the response of the locality to the most deserving and respectable of people. Ask would any affordable housing for first-time buyers get built in Cornwall if people in the locality made the decision and there was no national insistence? What then are the prospects for any provision for the vulnerable and the socially difficult: how many rehabilative hostels would get permission if it depended solely upon locals and not national guidance? Where would one build the less desirable but wholly necessary facilities of life such as sewage works, incinerators, and factories if every local population everywhere had a veto?

(3) An aspect of (2) is what we have come to call the post code lottery: different quality of services in different areas, even some areas lacking the services provided in others, all on the irrational basis of human geography. Nothing about need, only the dictate of the most assertive and demanding of local opinions and local elbows. The sharp elbow model of redistribution, a model which in many places gives very little to a whole galaxy of people - single mothers, aspirant first time house buyers looking for affordable housing, and people living untidy lives.

If locals in Cornwall decided what priority of health money and treatment should be given to people, would not those with locally out-of-favour illnesses get little? In Cornwall with a larger than average proportion of pensioners how would HIV and alcoholism and drug addiction fare against arthritis and mobility problems? The national service sets national rules which try to ensure a reasonably fair shot for everyone.

(4) Of course by localism politicians often mean not the affected immediate locality and its inhabitants taking decisions but a broader community: the district or the county or even region rather than the hamlet. In Cornwall it might turn out to be people of Wadebridge and Bodmin deciding what happens in Penzance and Camborne, or vice versa, though this is an outcome Andrew George opposes.

(5) Localism also tends in practice to mean not decisions by the people but by their claimed representatives. And this in turn means a well-organised group can unduly influence council decisions; the ideal picture is of a community coming together to decide what it wants and in what order. In reality localism can be government by the noisy and those sharp elbows, the prejudices and preferences of local people who are assertive and articulate, rather than by the people though that applies to national government too.

A simple principle? No, it isn’t.

Additamentum 1 August 2007 Permission for the service forces accommodation at Ashtead was unanimously given by councillors today.

See also this later post: If you can’t do it right, make it shiny

Taxpayers in England (including Cornwall) in effect subsidise public spending in Northern Ireland, Scotland, and Wales through the Barnett Formula. Annual per head public spending in GBP (£) in 2005-2006 was:

N Ireland 9088
Scotland 8265
Wales 7666
England 6762– this includes Cornwall.

Issues like health and education have been devolved to the Scottish parliament – it decides them for Scotland. One of the consequences is that MPs from Scotland can, and mostly do, vote in the British parliament on issues such as health and education which affect only people in England and which do not affect their constituents in Scotland. MPs from England cannot vote on issues which have been devolved to the Scottish parliament.

This strikes many people as unfair and they want to see English votes for English matters - well, only MPs from England voting on England-only matters. Of course a party might have a majority in the British parliament and be the government but not have a majority among English MPs. Tricky.

The present financial and constitutional arrangements are unfair to people in England (including Cornwall) and should be changed. Labour, with a majority among Scotland MPs and keen to put party advantage before fairness, will change nothing.

A start could be made among Liberal Democrats and others: their MPs from Scotland could immediately voluntarily stop voting on England-only matters. And challenge the Barnett Formula.

Also see here a later post on the Barnett formula.