David Cameron: No reform of Barnett Formula

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DAVID Cameron has ruled out changing the Barnett Formula as MPs debated a motion in parliament to review the way spending is allocated around the UK to “end the Scottish subsidy”.

Giving evidence to the Commons liaison committee of senior backbenchers Mr Cameron insisted that reform of Barnett is “not on the horizon” but claimed that its “impact will be reduced” as more tax powers are devolved to Holyrood.

Prime Minister David Cameron appears before the Liason Select Committee in the House of Commons. Picture: PA

Prime Minister David Cameron appears before the Liason Select Committee in the House of Commons. Picture: PA

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The Prime Minister was giving evidence to the committee - made up of chairs of parliament’s select committees - just ahead of a motion co-sponsored by Tory backbencher Dominic Raab and Labour’s Frank Field calling for a Uk-wide consultion into devolution including a review of Barnett Formula and tackling the so-called West Lothian question where Scottish MPs can vote on issues which only affect England.

During hearing public acccounts committee chairwoman Margaret Hodge suggested that devolution of income tax would give Scotland an “unfair advantage” because extra money spent in England from extra taxes raised there would have to be passed on to Scotland because of the Barnett Formula whether the Scottish Government raised taxes or not.

But Mr Cameron responded: “You need to look at the big picture on what needs to happen with devolution.”

He insisted that “as Scotland raises more of its reveneue then the Barnett Formula impact will be reduced.”

He also said that “there needs to be some sort of formula” and the the current one “works well.”

Tory MP Dr Sarah Woolaston pressed Mr Cameron on whether it was fair Scots have £203 more spent on them in health serves than English do.

but Mr Cameron said: “I warn you there is not a pot of gold at the end of the Barnett Formula.”

He pointed out that Scotland has just six million people compared to England’s 55 million which meant not much extra money could be found from reblancing the formula.

In response to a question from Treasury committee chairman Andrew Tyrie he said; “Reform of the Barnett Formula is not on the horizon.”

The Prime Minister also told MPs that he is “very confident” that the vow to hand over extra powers made by the three main Westminster leaders in the final days of the Sottish referendum campaign will be delivered as it was set out.

But he told the Commons Liaison committee voters will “get both” sets of constitutional reforms including English votes for English laws if he is returned to No 10 next year.

Asked if the pledge for additional powers to Scotland was free standing, he replied: “Effectively, yes. The pledge that was made by the party leaders I think is important and we’ll meet the terms of that pledge in full, I’m very confident of that, which is that there should be further, particularly fiscal, devolution to Scotland, the power to raise taxes and spend money and there’s a programme for delivering that.”

Mr Cameron said he was “very happy” with the way the Smith Commission was progressing but refused to rule out amending any of the clauses drawn up on the back of the Smith report at a later stage.

“I hope that isn’t the case because what we are trying to do here is reach a consensus between the parties,” he said.

“I’m confident that we will meet both the timetable and the substance.”

He also said it was “essential” that the devolution question was settled so politicians could discuss the “important issues” such as jobs and the economy.

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