Unfair formula? Not in my name says Barnett

Lord Barnett has had enough, and is demanding that his name be removed from what he says is an "embarrassing" Treasury formula that puts an extra 1,000 per head on Scotland’s spending power when it comes to public services.

And the former cabinet minister says he is now ready to take on Westminster’s "Scottish Mafia" and fight for the end to a legacy that has blighted his life for 25 years.

He told Scotland on Sunday: "I wrote a book on this in 1982 and I never even referred to it as a formula, let alone the Barnett Formula. I wish they would stop using my name.

"It was never meant to last this long, but it has gone on and on and it has become increasingly unfair to the regions of England. I didn’t create this formula to give Scotland an advantage over the rest of the country when it comes to public funding."

However, the exasperated peer admitted that no-one in government was likely to be interested enough to tackle the measure, originally designed to allocate extra Treasury funding among home nations on the basis of their population.

"It is a great embarrassment to have my name attached to so unfair a system," he said.

"Especially as, when I introduced it, it was going to last only a year. It has now lasted more than 20 years, because successive governments have failed to deal with it for fear of upsetting the Scots."

He added: "I’d be astonished if anyone in the government had any real influence over Gordon Brown on this one. But ultimately it will have to change, and I’ll be doing my best to make that happen sooner rather than later."

The then Joel Barnett was chief secretary to the Treasury in Jim Callaghan’s ill-fated government when he was asked to produce a funding formula that would be fairer to all parts of the country - and buy off the burgeoning electoral threat of Scottish Nationalists north of the Border. He duly produced a system that would allocate around 85% of extra Treasury spending to England, 10% to Scotland and the rest to Wales.

But the short-term fix thrashed out during the desperate last throes of a Labour government survived almost two decades of Tory rule and remains untouched by six years under Tony Blair.

MPs and councillors in the north-east of England claim the set-up guarantees the Scots 537 per head more in public spending than their region, producing an annual funding gap of at least 1.3bn.

They, along with Barnett himself, are urging Brown to introduce a "needs-based" funding formula which would recognise the varying rates of poverty around the UK. Economists calculate that such a change would cost the Scots up to 2.5bn a year.

Barnett’s efforts to distance himself from his formula won him little praise from those campaigning to overthrow it.

"It may well cause Lord Barnett embarrassment, but it has done a lot more damage than that to the people of the north-east," said Councillor Bob Gibson, leader of the Association of North-East Councils.

"I have no doubt that, at the time, there was a need to put more money towards Scotland but the balance has now shifted so far the other way the northern regions are really losing out. But it doesn’t matter what it is called, it is the formula which is wrong."

An SNP spokesman underlined the problems Barnett still faces if he wants to appease the opponents of his creation once and for all.

He said: "One of the basic problems with the Barnett Formula is that Barnett himself doesn’t seem to understand it. It is a convergence formula and so it will disappear when the populations change.

"But any change away from the formula, apart from full financial independence for Scotland, would not be in Scotland’s interests."

Dumbarton MP John McFall, chairman of the influential Treasury Committee, predicted more years of misery for Barnett.

He told Scotland on Sunday: "Lord Barnett said he only came up with the formula to get people off his back 25 years ago and they are still jumping up and down on him about it today.

"Things are changing, not least in the assertiveness of English MPs, so we should at least be talking about it. But until there is convergence through population there is merit in keeping the formula in place."