English taxpayers attack Scots 'subsidies'

Published on 09/09/2008 22:44

ENGLISH taxpayers have been subsidising Scotland for 20 years and they should not have to do so any longer, a campaign group claimed yesterday.

The Taxpayers' Alliance, a free-market pressure group set up to lobby for value for money for taxpayers, argued that Scotland was being subsidised by 1,644 per person per year by England, and had been for two decades.

The group called instead for each part of the United Kingdom to get just what it raises in tax revenue – a system known as full fiscal autonomy.

The pressure group has submitted its report on the Barnett Formula – which allocates shares in increased expenditure to the different parts of the UK – to the Calman Commission looking into the powers of the Scottish Parliament.

Sir Kenneth Calman, who is chairing the commission, will hold his first public meeting in Glasgow later today as he works towards his first main recommendations on what powers should be handed over to the Scottish Parliament.

In its submission to the commission, the Taxpayers' Alliance described the Barnett Formula as "extremely unfair" and claimed it had cost taxpayers 200 billion in 20 years because of the extra money it allocated to Scotland, Wales and Northern Ireland.

The future of the formula is currently being discussed by a House of Lords committee.

The small but high-profile Taxpayers' Alliance is led by individuals who used to be allied to the Conservative Party and who believe in smaller government and lower taxes.

Author of yesterday's report, former Treasury economist Mike Denham, said: "The Barnett Formula has a troubled history and has failed to address the extremely unfair situation of English taxpayers heavily subsiding Scotland.

"Everyone is struggling to make ends meet, and it is long overdue for the government to lift this burden from taxpayers' shoulders.

"English taxpayers want an end to subsidising Scotland, and the Scottish Government wants financial control devolved to Holyrood, so now is the ideal time to consign the Barnett Formula to history."

The report, "Unequal Shares: The Definitive Guide to the Barnett Formula", says public spending per head in Scotland is 1,644 higher than in England, with spending in Wales 1,042 higher and Northern Ireland 2,254 higher.

It says the formula, which automatically adjusts spending in the devolved nations when changes are made in England, has cost billions since 1985-86 – 102 billion going on Scotland, 57 billion on Northern Ireland and 43 billion on Wales.

It argues that "reform is essential" as the formula "cannot possibly withstand such pressure". "In an era of devolved government, such spending gaps are impossible to justify to English taxpayers," the report says.

A spokesman for the First Minister said it was clear from the Scottish Government's official figures that Scotland was not subsidised by England.

He said: "Scotland is in a substantially strong position within the UK as a whole. We are delighted with calls for us to look after our finances completely."

Commission examines the deal on devolution

THE Calman Commission was set up by the three main Unionist parties earlier this year to help improve the devolution settlement.

At the heart of the commission's remit has been an assumption that the Scottish Parliament needs more powers, ten years on from the original devolution settlement.

But the commission was also set up as a counterweight to Alex Salmond's "national conversation" on independence, which was launched last summer with the aim of kicking off a nationwide debate on Scottish independence.

The commission is chaired by Sir Kenneth Calman, the chancellor of Glasgow University. Other members include Colin Boyd, the former Lord Advocate of Scotland, Rani Dhir, director of the Drumchapel Housing Co-operative in Glasgow, Tory peer Lord James Douglas Hamilton, and Lord Elder, a Labour peer and a former adviser to Donald Dewar, who drew up the original devolution settlement.

Sir Kenneth is expected to publish interim findings by the end of this year and final recommendations next year. The one issue which the commission cannot consider is independence.