Let me share a closely-guarded secret: the Scottish Government is, by any reasonable standard, awash with money and has been from the outset of devolution. Before anyone plans to raise more, there is an obligation to question how cash is currently spent.
Famously, there is £1700 more public spending per head in Scotland than the UK as a whole. The basis for that involved recognition by successive UK governments of our geographic, demographic and social needs. The geography has not changed, though we are entitled to wonder why so much extra cash has not made more difference by now to our economic and social indicators.
Two reasons for Holyrood’s favourable funding can be summed up as Donald Dewar and the Barnett Formula. There was no way Donald, or for that matter Gordon Brown, was going to embark on devolution without a strong financial base which then, prior to the recent plateauing, continued to grow and grow to its current level of £37 billion.
The Barnett Formula was introduced in 1978 to bring structure to the variations in spending. It was intended as a convergence formula – in other words, putting a percentage figure on ‘Barnett consequentials’ would gradually reduce the gap between Scotland and the UK as a whole rather than it continuing, randomly, to expand. This has proved an exceptionally slow process, for which we should be grateful.
It is still the Barnett Formula (which, at the last general election, the SNP wanted to replace with Full Fiscal Autonomy of which we now hear nothing) that guarantees us an extremely favourable share of resources with the Scottish Government free to spend each tranche of money as it sees fit, rather than being tied to Westminster priorities.
Therein lies potential for flexibility but also for an utter lack of transparency as highlighted this week by the respected cancer clinician Dr Anna Gregor, who is not normally a participant in the political fray.
Dr Gregor bluntly accused the Scottish Nationalists of failing to pass on Barnett consequentials to the NHS in Scotland which is, as a result, “hurtling over a precipice”.
Over a decade, the rate of spending on the NHS in England has increased by more than double the Scottish figure. Yet every penny of the English increase was reflected in annual Scottish settlements with intermittent add-ons. Nobody disputes that it is in the spirit of devolution for the Scottish Government to do what it likes with that money once it arrives – but there needs to be accountability.
What is apparently not in the spirit of the current administration is to offer any clarity about how the money is then distributed. To do so would be politically inconvenient because it would demonstrate exactly where responsibility lies for shortfalls. Blaming “Tory austerity” for everything is child’s play; explaining why Barnett consequentials which should have gone straight into the NHS in Scotland have been spent elsewhere might be a little more tricky.
A poll which accompanied Dr Gregor’s comments suggested twice as many Scots think NHS standards have declined over the past decade, compared to those who see improvement. How many who express dissatisfaction either know or care about Barnett consequentials or how they are allocated from Edinburgh? The Scottish Government’s interest is in ensuring that all this remains as clear as mud while never accepting responsibility.
All this will become even more obscure with the passing of more powers and money to Edinburgh under the forthcoming, substantial extensions to devolution. Holyrood will have far greater tax-raising powers as well as responsibilities which include most aspects of social security. The intention is to create political accountabililty by strengthening the link between raising and spending money.
This may prove over-optimistic. The Nationalists will never be in the business of accepting responsibility for things that cannot be afforded. It will always be someone else’s (i.e. England’s) fault, regardless of overwhelming evidence to the contrary, notably that pesky £15 billion deficit. If this is to be pre-empted then, before these powers and responsibilities accrue, there really need to be far more robust processes for scrutiny if the outcome is to be greater accountability rather than another platform for grievance.
A recent report by Audit Scotland emphasised the scale of what lies ahead: “Management of the Scottish public finances will fundamentally change,” it said. “Scotland’s budget is becoming increasingly complex and subject to greater uncertainty and volatility than when the block grant from the UK was relatively fixed. The new powers give more control over public finances and bring new opportunities and challenges.” The first challenge will be creating enough clarity to allow informed debate on priorities.
There has been much written about the anniversary of Labour’s 1997 success. Great changes ensued but one element is now overlooked – the fact, much ridiculed by our opponents, that the incoming government accepted spending parameters set by our predecessors. Yet this was absolutely the right thing to do. It created a financial and intellectual rigour which encouraged a focus on doing things better and reallocating resources, rather than simply spending more money.
The governance of Scotland is in urgent need of the same approach. A constant refrain of “send us more loot” takes place against the backdrop of little understanding of how existing priorities are set or money utilised.
Holyrood has no Public Accounts Committee and even if it had, it is doubtful if sufficient competence or political freedom of thought exist to make it operate effectively. Experience of government reinforced my view that no Minister should be entrusted with signing off millions or billions until they have demonstrated an ability to utilise thousands effectively. In Edinburgh, there has been no such requirement because money is generally plentiful and any scarcity can be blamed on someone else.
The new powers will create enhanced opportunities for obfuscation unless standards of scrutiny are transformed. If we can’t keep track of money from the Barnett formula for the NHS, and then prosecute the case politically, what chance is there of persuading anyone that benefits sometimes need to go down as well as up, even in Scotland, and that government involves hard choices, with no one else to blame.