WHO GOT WHAT

23 November 2013

The Treasury has recently published the outturn figures for public spending in the countries and regions of Britain for 2012/13. You can see them here.

Table A2 shows this breakdown: public expenditure in 2012/13 by per head of population and as a comparative index of UK spending
UK £8788, 100
N Ireland £10 876, 124
Scotland £10 152, 116
Wales £9709, 110
England £8529, 97

For the South West region of England, which includes Cornwall, the figures are £8219, 94. There are no figures currently available or possible for areas below the regional such as local authorities.

Barnett formula
When UK public spending increases, the Barnett Formula gives the three devolved countries (Scotland, Wales, and Northern Ireland) increases proportionate to their share of the UK population. This has resulted in the devolved countries having a larger perhead spending for public services than England and the South West of England.

LGA
The unfairness of this mechanistic formula to people in England is increasingly cried out. The Local government association of England (LGA) has said that councils in England lose around £4 billion a year through the present allocation arrangements: pro rata by population that is about £40 million lost by Cornwall.

MK: sssh, don’t mention the formula and England
Note, however, that the Cornish nationalist party, Mebyon Kernow (MK), while crying up its view that Cornwall is shortchanged by the UK government – what it englishes as London or Westminster – does not discuss the present allocation arrangement throughout the UK and the apparent overpayments to the Celtic fringe; these are still the silenda and tacenda of MK and Cornish nationalism as I pointed out back in 2009 when I said political nationalism complained about the redistribution of public funds within England but

never seem(s) to ask about the larger redistribution among the four countries of Britain. Why is that? It is time that Cornish nationalism faced the formula.

I shall return to this in a post on MK’s inadequate ideas about devolved funding for Cornwall.

Previous posts about devolution and funding
English and Cornish devolution 6 September 2011 (with links to other posts)
London subsidises our bills 16 February 2012


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UNEVEN BRITAIN

1 April 2013

Today prescription charges go up to £7.85 an item for those who pay.

Whoa, not quite.

They go up in England, including Cornwall. Prescriptions are free in Scotland, Wales, and Northern Ireland. That’s down to the generous share of per capita funds for public spending those countries get from UK taxpayers under the Barnett redistribution scheme and the parliaments/assemblies they have. I think that basically England taxpayers with no parliament of their own are enabling the free prescriptions elsewhere.

It’s called the National Health Service. It’s called the United Kingdom; and we’re all in it together.

Will Cornish nationalism, fretting about 1337 and all that, question this uneven imposition on sick people in Cornwall? Prescription charges are the real world …


I am returning to the question Who pays for Cornwall? which I last looked at in the post Cornish nationalism and the Rub’ al Khali (11 January 2012). This question is not going away.

One of the difficulties that I have with Cornish political nationalism is that it is too often incoherent and vague. The issue of funding a self-governing Cornwall is an instance. Nationalism has not produced a comprehensive, detailed, viable, and convincing policy that deals with this question.

A recent issue shows the difficulties. The Tory Libdem government is – I think “exploring” is probably the best way to put it as it is a muddle – exploring the possibility of public sector pay and some benefits being moved from national rates, largely identical in Leeds and Bodmin, to local rates based on differing local circumstances. I have explained over several posts since this post in 2009 (Tories eye benefits and wages in Cornwall 6 September 2009) that I oppose this localisation which for Cornwall will mean cuts in pay and benefits.

The other day Cornwall Council voted to oppose cornished pay and benefits. The part about benefits came from the Cornish nationalist party Mebyon Kernow (MK), I believe.

I’m puzzled.

I think Cornwall is a part of England and should not receive unjustified lesser public pay and benefits compared to the rest of England.

However, if Cornwall is self-governing and not part of England, as nationalists desire and claim, on what grounds should it receive the rates applicable in England? Should not a self-governing Cornwall, a nation apart from England, pay its own way: raise its own funds, levy its own taxes, deliver its own public pay and benefits at its own levels?

This takes me to getting and spending, to taxation. As I have pointed out before, the devolution bill that Dan Rogerson (then and now Libdem MP for North Cornwall) put up appeared to see devolved Cornwall funded by redistribution from a common pool, in a Barnett way, that is with its money coming from the UK, in effect mostly from (the rest of) England. I pointed out that the section of the bill dealing with the funding of Cornwall “is very brief — the section dealing with the remuneration of assembly members is twice as long”. That is an unconvincing devolution as I set out here (How should Cornwall be governed? 24 October 2009).

I find MK funding policy unsatisfactory. The party apparently does not see the levying of income and company tax in Cornwall as a responsibility of its desired Cornwall assembly/parliament; it seeks only a “fair share of central government funding” for Cornwall which suggests a Barnett approach rather than a self-financing Cornwall. However, its parliament would be responsible for a range of activities which involve spending. MK should be explicit now about how it sees these matters and what it has in mind; it should share its thoughts with us. Whose money and where it comes from should be spelled out. How much MK considers is needed to fund Cornwall; the funding formula it has in mind, its principle and basis; and any net cost to people outside Cornwall, should be stated by the party now rather than waiting on an improbable commission. “Fair funding” is not serious politics; it’s sloganising.

I have raised this question before and I shall go on with it until nationalism comes up with a satisfactory answer. Who pays? Would a self-governing Cornwall no longer part of England still depend on taxes from people outside Cornwall for its hospitals, schools, roads, public sector pay, benefits, police…? Does Cornish devolution at bottom mean ‘in England for getting the money, out of England for the spending of it’. Oh, what a brave new Cornwall that would be.

Note
About 84 percent of income tax payers in the UK in 2012/13 are people in England: see table 2-2 here and its footnotes.


In this post I am briefly looking at two related devolutionary issues: the constitutional and financial arrangements of the UK. PESA is the annual Public Expenditure Statistical Analyses by the Treasury.

PESA 2010-2011
The PESA figures for 2010/2011 (tables 9.2 and 9.4) are a catastrophe for the present financial (and constitutional) arrangements of the UK. They show that the latest percapita identified public spending for the four countries of the UK in £:
Northern Ireland 10 706
Scotland 10 212
Wales 9829
England 8588

As an index the figures are Northern Ireland 121, Scotland 115, Wales 111, England 97, UK 100.

Although there are regional figures there are no separate ones for Cornwall.

Imbalance
This imbalance is the result of the discredited 1978 Barnett formula which redistributes tax money on the basis of population not need. The differences above have continued over many years.

The main publically noted contrast is between England and Scotland though there are Barnett distributive effects in Wales and Northern Ireland.

People in England, including Cornwall, are increasingly aware that through the Barnett formula Scotland gets more UK identified public spending per head than England and is enabled to provide a range of free public services that charge in England. For example, prescriptions are free in Scotland but each item on a prescription costs the patient in England £7.40 (though there are exemptions); and compare tuition fees at the university at Falmouth which are to be £9000 a year, and no tuition fees at a Scottish university for a resident of Scotland. The financial differences are there in everyday life.

There is an England again
As for constitutional devolution, the debate for some years has been dominated by the issue of Scottish independence. While the Scottish nationalists prepare for a referendum on independence in a couple of years’ time, slowly, very slowly but discernibly, people in England are now questioning whether the present devolutionary (and financial) arrangements benefit England and are just. People in England are beginning to think positively about issues like English devolution, English-only votes on English-only matters in the Commons, an English parliament, and even independence from the UK. If, as seems possible, Scotland chooses independence outside the UK, the total effect on the other three countries of the UK is difficult to forecast. Parliament at Westminster would become in effect an English parliament with a handful of MPs from Wales and Northern Ireland but that assumes Wales and Northern Ireland choose to remain in the UK on the present terms.

Anyway, after years of manufactured invisibility there is an England again.

Parties
Putting aside Scottish independence and the consequent permutations for the remnant countries, the Barnett distribution and Labour’s asymmetrical devolution, which left England out in the cold, look set to be the end of the UK if the main parties continue to turn away from the England question – the twins of the financial and constitutional issues. This double issue won’t go away.

Cornwall
For Cornish nationalists too all this brings difficulties. There are two central weaknesses in claims for Cornish devolution.

First, exactly what status for Cornwall do nationalists want? I think they are seriously divided: independent British country outside the UK, independent country in the UK, semi-independent part of England, souped up county, an assembly, a parliament? How do they envisage the UK: separate countries, a federal UK with federal and independent institutions, pretty much the present set up with England and Cornwall joining the other three or two, a republic, still a monarchy …? It’s time the nationalists set out their status vision clearly.

Second, the economy and finance. Who will pay for an autonomous Cornwall? That depends to an extent on the shape of desired Cornish constitutional devolution. No one seriously believes Cornwall can live only on the money it could raise; the devolution schemes produced so far certainly do not suggest a financially self-sufficient Cornwall but rather one dependent on others’ largess. A Barnett formula solution? Really? A Guernsey-style offshore model? Really? I don’t think either is now politically practical. This is a pressing question for nationalists: how would Cornwall be financed?

So, Cornish nationalists should be crystal clear what it is they seek in terms of constitutional status and accompanying financial arrangements. The questions are simple: What constitutional status for Cornwall? Who pays?

Earlier posts
Hokey kokey devolution 14 December 2009

How should Cornwall be governed? 24 October 2009

Don’t mention the formula 1 June 2009

Cornwall pays 5 January 2009

Barnett formula to go 25 May 2008

External sites
Letter from the City of London 3 March 2009 to the House of Lords Select Committee on the Barnett formula

Memorandum by CEBR March 2009 (Centre for economic and business research) to the House of Lords Select Committee on the Barnett formula

Unequal shares: the definitive guide to the Barnett formula 2008

Yougov poll August 2011, page 12 of the poll


WHO GETS HOW MUCH

28 April 2010

This is an update of the post Who gets how much, the original of which I have put below. The outturn figures for total identifiable public expenditure for 2008/09 per head in real terms (2008-09 prices) were published 22 April 2010. They are:

Northern Ireland £10 127
Scotland £9412
Wales £9209
England £7960.

These come from table 9.4 of the UK Treasury PESA 2010 document here. About 85 percent of total public expenditure is now allocated between countries and regions.

These figures can be represented thus: England 100, Wales 116, Scotland 118, Northern Ireland 127.

Of the England regions only London at £9464 (119) has a larger per head expenditure than Wales and Scotland.

London merits comment.

In the original post I noted the report The fiscal landscape: understanding contributions and benefits, published November 2009, which showed London and the south east of England contributing more taxes than they receive in public spending, whereas for Scotland, Wales, and Northern Ireland the position is reversed. The latest annual report of London’s place in the UK economy 2009-2010 similarly delineates London’s net contribution: London pays about 18 percent of the UK’s taxes but receives about 14 percent of UK public spending (page 5). This is a long-standing position and London’s net contribution to the UK (that is, taxes paid by London residents and workers and businesses exceeding public spending in London) has typically ranged between £10 billion and £20 billion a year (page 95).

Additionally, local spending reports, outcomes of the Sustainable Communities Act, are available at district and county levels.

___________________________________________________

Original post

WHO GETS HOW MUCH
10 November 2009

Planned total identifiable public expenditure 2008/09, per head in real terms (2007/08 prices) by UK country:
Northern Ireland £9766
Scotland £9313
Wales £8945
England £7782

There are nine regions in England; their per head planned spending ranges from £6835 (East) to £9437 (London). Only London exceeds the Northern Ireland, Scotland, or Wales figures. Cornwall is part of the South West region which has planned expenditure of £7225.

[Data from Table 9.4 in the UK Treasury document Public sector expenditure by country, region and function ]

These figures can be represented thus:
England 100, Wales 115, Scotland 120, and Northern Ireland 125.

Table 1.2 of the report The fiscal landscape: understanding contributions and benefits, published November 2009 by the 2020 Public services trust sets out an estimate of the percentage of total UK public spending by area and the percentage of total UK taxes received from those areas. These figures show Scotland, Wales, and Northern Ireland receiving a larger share of total UK spending than they contribute in revenue; for London and the Southeast of England that is reversed. The report is here.

Previous post: Don’t mention the formula
_________________________________________________________

UPDATES
See the Isle of Man updates 27 October and 30 November 2009. I have also updated the PESA data to 2008/09.

Among the silenda and tacenda of Cornish nationalism is the redistribution of UK taxes to public expenditure among the four countries of Britain. The allocation of public expenditure per capita benefits the three devolved countries more than England.

Barnett Formula

The vehicle for the redistribution of collected taxes is known as the Barnett Formula, which I have discussed before. This formula now seems to be on the ropes.

A House of Lords committee has been examining the formula since last December and a House of Commons committee has commented on it as part of a completed examination of the working of devolution: Lords, Barnett Formula Select Committee ; Commons, Justice Select Committee . The Commons committee have looked at asymmetric devolution and suggestions for territorial powers for England.

Most people giving evidence seem unhappy with Barnett, mainly because it is largely based on the population numbers of the countries of Britain rather than on people’s needs for public services, though there are also challenges to the degree that tax collection and, more specially, spending are centralised in Britain. The consistently larger share to Scotland, Wales, and Northern Ireland as against England (though not as against London), as measured by per head spending, is also increasingly challenged as unfair. The Commons committee has declared that “the Barnett Formula is no longer fit for purpose” and is “overdue for reform”.

The latest per head annual public spending figures (2008/09) due to the formula are: Northern Ireland £10 127, Scotland £9412, Wales £9209, England £7960. (Source: Public expenditure statistical analyses (PESA Table 9.2 in chapter 9) here ).

Those higher figures are the primary cause of what is seen as the better provision of public services in Britain outside England. The Taxpayers Alliance (TPA) has estimated the money total of the “excess” spending in Northern Ireland, Scotland, and Wales from 1985/86 to 2007/08 is about £202 billion: see Unequal shares: the Barnett Formula (2008) . Incidentally, in the same document the TPA has also said that the North Sea oil revenues do not balance out the higher Scotland allocation: only in five of the last twenty three years has the revenue exceeded the excess allocation.

The Centre for Economic and Business Research (CEBR) makes the reasonable point in its evidence to the Lords committee that per head comparisons, while important, do not take into account the effect of differing prices and earnings in different places and their consequent effect on the differing costs of providing the same level of services in different places.

CEBR also draws attention to another and damaging aspect: the share of public expenditure as a share of an area’s GDP. Those figures also show that Northern Ireland, Scotland, and Wales have a much higher share of their GDP on public spending than England. The large share taken up by public spending probably discourages enterprise by creating a world in which the ready assumption is to look to the public rather than the private to provide services. Additionally, in areas with higher GDP, with in general higher incomes (that is, areas in southern England), public services tend to be poorly funded. In such areas the poorest, dependent on public services, are seriously adversely affected.

All in all, the Barnett Formula is discredited, irrationally based on population numbers not need, and consistently discriminating financially against people in England outside London. However, London is a nett contributor to the UK: CEBR estimates its subsidy to the rest of Britain in 2007 was about £30 billion, though falling significantly as the recession bites.

However discredited the present formula is, there are political difficulties in changing it. Labour in the UK is increasingly dependent on votes in Scotland and Wales; the Conservatives wish to prosper in Scotland and Wales and are reallied to the unionists in Northern Ireland; they (and the Liberal Democrats) are reluctant to do anything that could be presented as reducing help or subsidies to those places and thus losing votes in them. Of course, this assumes that a rejigged allocation based on need, for example, would reduce the flow; it might increase it as some have argued. However, allocations over large areas, even if based on need, will always contain unfairness because need very much varies within countries and regions as well as between them.

Isle of Man

The Isle of Man is another part of the Cornish nationalist silenda. Richard Murphy’s Tax Research UK blog has been arguing that the Isle of Man is subsidised by taxpayers in the UK. The post of 18 May 2009 is headed “Isle of Man costs UK at least £1.5 billion a year” and says Britain provides a “heavy subsidy” to Man. The post from Murphy of 21 May at 1113 hours gives a short and straightforward account of his argument. I think the Isle of Man and the British government have a case to answer.

ADDENDUM 27 October 2009: In October 2009 the Vat revenue sharing agreement between the UK and Isle of Man was changed on the initiative of the former. This revision, along with other consequences of the recession, will result in the Isle of Man receiving £90 million less in 2010/11 and £140 million less in 2011/12 and each year thereafter. This revision strikes me as confirming that the agreement subsidised the Isle of Man. The Tax Research UK blog says that the island will still be getting a subsidy. The Celtic League said that the Isle of Man “should rethink its links with the UK” including the option of independence in the light of the tax changes. It did not mention the claimed subsidy aspect of the UK/Isle of Man agreement.

ADDENDUM 30 November 2009: See this post (‘The Isle of Man is still being subsidised – by at least £40 million a year’) for a further update.

Cornwall

Of course, there is wailing, essentially unjustified, about the share that public services in Cornwall get relative to other parts of England, but the wailers never seem to ask about the larger redistribution among the four countries of Britain. Why is that? It is time that Cornish nationalism faced the formula.

CORNWALL PAYS

5 January 2009

Late last year the privately run car parking at the Royal Cornwall Hospitals Trust main hospital at Treliske, Truro was reorganised. For users the chief change was an increase in charges of 23 percent for a two-hour slot (or 54 percent if one takes into account the half hour grace the previous system gave for overrun appointments). The hospital is distant for many people in Cornwall and thus expensive in fuel, and regular travel to the hospital and car parking there probably represent a serious tranche of money for many patients and their visitors, though some help is available.

This post is prompted by the news that patients in Scotland and their visitors to NHS hospitals in Scotland will park for free (except at three PFI hospitals). Details are here.

In Wales there is already such free parking and in Northern Ireland parking is free for patients with a longterm illness and their visitors.

The UK department of health said that patients in England would continue to pay because free parking was not a sensible use of money. I think they meant, well, not sensible in England at any rate.

The cancer care organisation Macmillan has explained that cancer patients, whose income it says typically drops by half after their diagnosis, pay more than £300 for hospital car parking during their regular hospital treatment. I think that to require those payments is straightforwardedly uncivilised, a tax on illness as Macmillan says, but the department of health probably think it is a sensible money charge.

NHS prescriptions are free for everyone in Wales and set to become similarly free in Scotland this year and in Northern Ireland next year. They are not free in England (apart from the elderly and for people with certain illnesses) and raise £430 million a year from patients in England.

These lead me to the distribution of public spending in Britain. These are the figures for outturn per capita expenditure for 2008/2009, in £:

Northern Ireland 10 127

Scotland 9412

Wales 9209

England 7960

The England figure includes Cornwall of course. These figures are from the country and regional data in Chapter 9, Table 9.2 of the Public expenditure statistical analyses 2010 (PESA) here.

Decide for yourself if devolution is working fairly for the people of Cornwall and the rest of England.

My view was put in this post:

“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.”

In the meantime, Cornwall pays.

Added 20 January 2009:

Free cancer drug applications begin

NOTE
The PESA data has been updated to 2008/09.