Andrew Wilson: Centralised power benefits no-one

Joel Barnett, the man behind the Barnett Formula pictured in 1976. Picture: PA
Joel Barnett, the man behind the Barnett Formula pictured in 1976. Picture: PA
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ANORAKS of the world united in joy last week when not one but two public finance stories allowed us to start the year salivating over the Barnett Formula and local government funding.

Separated by 30 years and 400 miles the stories nonetheless pointed to identical roots in an ossified system of centralised governance in Britain that should have died in the 1970s but staggers on today, to everyone’s detriment.

Revelations under the 30-year disclosure rule that Mrs Thatcher’s government secretly conspired to slash Scottish funding should have surprised no-one, really.

But they do serve as a reminder of the simply gargantuan task facing the Scottish Conservatives in detoxifying their brand. Murdo Fraser’s idea to start again with an autonomous centre-right party remains the obvious solution because the current government remains implicated as two serving Cabinet ministers – David Willetts and John Redwood – were involved in the conspiracy.

Barnett has always rankled Whitehall because it takes away its discretion to do anything. The formula works by taking this year’s spending amount in defined areas of (now devolved) responsibility such as health and education and increasing (usually) the amount for the next year by simply taking a population share of whatever the relevant Whitehall budget for England changed by.

This effectively locks in the spending balance of the 1970s and is designed over time to equalise Scottish spending on these areas towards the average for England. It’s a neat bureaucratic solution of the British kind. It effectively depoliticises something that, on reflection for a nanosecond, should be highly politicised.

The received establishment wisdom in Scotland was that it locked in a good deal for us that was only very slowly eroded over time, if at all. That it survived devolution in 1999 demonstrates the reality that while the Scottish Parliament is a great step forward, the powers it was given were identical to the ones exercised by the old secretaries of state. All that was added was the ability to make more laws more quickly and an unusable tax power that the risible conclusions of the Calman Commission decided to increase. We will eventually have an even bigger unusable tax power. Rejoice.

Surely the time for this to come to an end has long since passed. Whether you want independence or not, the idea that this is any way to fund a modern country is comical. Far better – again – to reach the conclusion Murdo Fraser seemed to on that matter also and devolve financial power to Scotland to make the parliament and government here responsible for how it raises the cash it spends, not just for dividing it up. If there is a cross-Border subsidy, better to make it transparent and democratically accountable.

If you nickel and dime your way through partial responsibility for finances, the risks to both the competitive position of our economy and the sustainability of policy is real. This is the danger in Calman Commission-style outcomes and half-hearted “devo-maybe” proposals from reluctant centralists. Because the culture of “get cash somehow and throw it at problems” which has defined post-war Scottish politics isn’t changed. Proper countries debate how to get the economy motoring, how to raise the tax needed to pay for the services we want, and what the role of government will be in delivering this.

This country is left feuding with itself over what little financial power it has – which was the second finance story of the week, with opinion polls suggesting two-thirds of us are willing to pay more council tax for better services.

Both Labour and the SNP campaigned on freezing council tax in 2011 and both are entitled to change their mind, I guess. But you can hardly blame a government for fulfilling its election pledges.

What’s certainly true is that local democracy and its rejuvenation is a crucial project for the coming decade. We are a small country so the efficiencies of central provision in some areas will always be a powerful argument. But having the political bravery to properly let go of power and funding and place it as close to the people as possible feels like the next step for modernising government. So easy to say, so hard to do and it would need cross-party agreement to make it sustainable.

We can hardly criticise Whitehall for centralism then replicate it here. But nor can we modernise properly until we have proper transparency and responsibility across all of the tax and spend levers normal countries have. The quickest and easiest way to fix that is in your hands come September.

The UK should be capable of the sort of democratic reform Murdo Fraser and others called for, but it has had an awful long time to prove it and hasn’t. And no comprehensive proposal from the UK parties yet exists. Whitehall would rather hold power close and have the ability to cut funding in secret than let the winds of change and democracy blow the cobwebs away. Time to “let it blaw”. «

Twitter: @AndrewWilsonAJW