Swinney accused of stirring up Barnett row to boost SNP

Published on Friday 27 February 2009 21:25

JOHN Swinney, the finance secretary, was yesterday accused of "testing the current funding system for Scotland to destruction" as a tactic to win independence.

The accusation came as he opposed a new formula for funding the UK based on need rather than population because he "does not trust" the Treasury's ability to make a fair and objective decision.

Instead, he has said he would rather stick with the current arrangement until the Scottish Government can be granted tax-raising powers, even though he believes the UK government has used the system to deny Scotland money it should rightly receive.

Giving evidence to the House of Lords committee investigating the Barnett Formula, he bemoaned the way the Treasury treated Scotland "like a Whitehall department" and raised old arguments over the loss of money to Scotland through funding for English prisons and the London Olympics.

But members of the committee, including the former Conservative Scottish secretary Lord Forsyth, suggested that the true reason Mr Swinney was avoiding a fairer, needs-based approach to the Barnett Formula, even in the short term, was because he had been warned by civil servants that it would take billions off the Scottish budget.

"When I was secretary of state, I was told to resist a formula based on need at all costs," he said. "I was advised it would cost the Scottish budget 2.5 billion to 4 billion and that was in the 1990s. I'm sure that you have received the same advice."

Mr Swinney refused to be drawn on whether Scotland would lose out through a needs-based system, instead arguing the problem was that the Treasury could not be relied upon because its decision would be "significantly subjective".

Lord Forsyth suggested the new constitutional arrangements had made it more difficult for politicians responsible for Scotland to bypass the Barnett Formula.

He said that when he was secretary of state, he was able to argue for extra money to fund pay rises in the health sector, which would not have been fully covered under the Barnett Formula. He added: "Is there some tactic here? Do you see this as a way of testing the system to destruction so you get whatever else it is you want?"

Another committee member, Lord Sewel, an academic and former Aberdeen councillor, pointed out that a needs-based system of distributing money existed to decide how much Scottish councils receive from the Scottish Government. "Why can't the same be true for the Barnett Formula?" he asked.

However, Mr Swinney argued the relationship between the Convention of Scottish Local Authorities and the Scottish Government was different from the one between the Scottish Government and the Treasury. He insisted the only change that could work was fiscal autonomy.

He said: "If you don't get fiscal autonomy, you really don't have an argument about changing the existing arrangements."