If the Institute of Fiscal Studies does not actually set out to be misleading about a topic, they manage to succeed (your report, 12 November).
They overlook the fact that the extra money Scotland has is not down to Barnett – it was poured into Scotland in the post-war years to thwart the nationalist threat. The outgoing Labour government brought in the formula in 1978-79 associated with the 1979 devolution referendum.
We had a 20 per cent per capita advantage over England. It decreed that we would receive a straight 10 per cent population share of any year-on-year enhancement England received for inflation etc. So, if Scotland spent £120, England spent £100. If England received 5 per cent, they would get £5, and we also received £5, but on our higher level of spending, that is worth only 4 per cent. That is a 1 per cent squeeze on our block grant, currently £25bn, so the annual squeeze is about £250m.
Had the Conservative government not put more in that Barnett allowed, our per capita lead would have been reduced to single figures over its 18 years.
The “flaw” the IFS has wakened up to was in the system from the start. When there are cuts in expenditure, the same arithmetical calculation applies, ie, we gain to the extent of 1 per cent, but we still lose considerable amounts through the cuts.
Their reference to “£400m funding hikes throughout the 2000s” is mystifying. If they mean what came via Barnett, then the figures would be more than that – presumably they mean each year.
Regarding the question of a needs-based formula, England has no grounds for concern – only their funding is “need”-based, except it is not need that determines the amount, it is affordability – and I suspect that will never be out of the frame.
Douglas R Mayer