Policy focus – paying for devolution

Whichever party takes power in Westminster after the election, it appears certain that Scotland – and, subject to a referendum, Wales – will see increased powers to one degree or another.

However, the publication of new research by the ippr, undertaken by Professor John Curtice of Strathclyde University, suggests that those parties in Westminster committed to greater devolution of powers, whilst at the same time remaining committed to the Union, might have a difficult time convincing the English.

Professor Curtice’s paper found:

• Since devolution in 1999, the proportion of people in England thinking of themselves as British has remained relatively constant, up slightly from 44% in 1999 to 46% in 2009. Meanwhile, those identifying themselves as English has dropped slightly from 44% in 1999 to 41% in 2009;

• Support for an English parliament among English voters has increased at the expense of favouring the status quo. In 1999, the status quo of England being governed from Westminster stood at 62%, which dropped to 49% in 2009. This represents the first fall to below 50% support for the current system. Support for an English parliament however has risen from 18% to 29%, the highest level of support for an English legislature ever recorded;

• Whilst support for an English parliament has risen by 9% over the last decade among those who feel British, the level of support among those identifying themselves as English has risen by 13% over the same period; and

• A cause of the increasing support for an English parliament appears to be linked to a perception that Scotland gains more than its fair share of government spending. In 2001, 21% of English people questioned agreed with such a sentiment – by 2009, that figure had almost doubled to 40%.

Currently, UK Government spending on Scotland, Wales and Northern Ireland is based on a somewhat convoluted system known as the Barnett formula. Under the formula, the ippr last year said, that the “distribution of public spending across the UK is neither fair nor equitable”, with spending per head far higher across the devolved countries than in England.

It led the House of Commons justice select committee to say last year:

“The Barnett Formula is overdue for reform and lacks any basis in equity or logic.”

Similarly, last year, a commission established by the Welsh Assembly Government, under the chairmanship of economist Gerald Holtham, said that Wales is losing out to funding worth £300 million a year under the current formula, describing Barnett as being in “urgent need of reform”.

Reacting to the findings, Professor Curtice said:

“It is too strong to speak as yet of a widespread English ‘backlash’. But the research does suggest there has been a marked growth in resentment about the level of funding that Scotland enjoys.

“Moreover this seems in part at least to be generating increased support for the idea that England should have its own parliament. If these trends continue, then politicians may no longer be able safely to assume that England can be ignored in the devolution debate.”

The research comes just days after a poll for the BBC found that 62% of Welsh people believed the Welsh Assembly Government should have greater influence over Wales than the UK Government, and 40% supported the principle of greater powers for Cardiff, with limited tax varying powers.

Meanwhile, in Scotland, support for SNP plans for independence has fallen to a low of 27%.

So with just weeks to go until the next general election, where do the main parties stand on the contentious issue of funding for devolution?

Labour

For Labour, speaking in the House of Commons in October, Scottish secretary Jim Murphy described the Barnett formula as “simple, efficient and effective”, adding:

“We have no plans to change the Barnett Formula.”

Indeed, chief secretary to the Treasury Liam Byrne has said that Wales is “well funded” under Barnett.

However, both Murphy and Byrne have established a new group within Her Majesty’s Revenue and Customs to take forward proposals in the Calman Commission for much greater tax varying powers for Holyrood, thus reducing their dependence on finance from Westminster. Likewise, speaking over the weekend, Gordon Brown hinted that he might be prepared to review the Barnett Formula.

Conservatives

If David Cameron were to be returned to power after the election, his ability to make radical changes to any system will be somewhat limited by a lack of support in both Wales and Scotland. Across Wales, his party currently only has three MPs, with polling, reported yesterday on Left Foot Forward, suggesting that figure is unlikely to grow much. Meanwhile, in Scotland, Cameron only enjoys the support of one Conservative MP, with suggestions this might rise to two after the election.

That said, shadow Chancellor George Osbourne has told the Western Mail that if elected, Conservatives would establish a new independent commission to consider a new needs-based funding system for the whole of the UK.

Liberal Democrats

For the Liberal Democrats, their Scottish affairs spokesman Alistair Carmichael has said:

“After ten years of devolution, we have now come to the point where the Scottish Parliament is established enough to take control of most of its own budget.”

However, he made clear that in order to reassure those in England that any future system was fair, it had to be accompanied by a wholesale review of the Barnett Formula.