Little Englanders beware:Drop Barnett at your peril

Are these events by any chance connected? Mr Moore contends that Scotland’s Government should apply its mind to “bread and butter issues”, but not to the price of butter, or to the economy generally. Yet the Bill, involving a sleight of Treasury hand over taxation, will have notable effects, none good, on the Scottish economy. Strange.

The newspapers then imply that greedy Scots get too big a share of the spending cake, a cake shrinking – this is not mentioned – thanks to the decisions of Moore and his Cabinet colleagues. Coincidence can probably be ruled out.

The Telegraph, Daily Mail and London Evening Standard set the tone in all of this, and not for the first time. For titles which would describe themselves, no doubt, as staunchly Unionist, they sing a peculiar tune where Scotland is concerned. They seem confused, for one thing, over what constitutes a British audience. But they are clear about their enemy: the Barnett formula, and all its iniquitous effects.

Why should Scottish students be spared the tuition fees being imposed on their English counterparts? Why should Scots have free prescriptions, free hospital parking, free school meals? It isn’t done, for some reason, to ask why people in England should not have these things. Scotland, says a quick (very quick) glance at the numbers, gets £1600 more “state cash” per head annually than England, and this is costing “every family south of the Border” £420 a year.

Yet again, for this is an old story, a lot is overlooked. For one thing, Barnett is not a law, but merely a convention. All Westminster governments have been able to amend or discard the formula ever since Joel Barnett scratched it out on the back of his famous envelope in 1978, as a pre-“devolution” revision of George Goschen’s 19th century attempt at the same exercise. At the time – this too is forgotten – Barnett did Scotland no favours.

In 33 years, nevertheless, no prime minister, not even a certain lad, has tampered with the basic formula. Why is that, exactly? Perhaps because there is a good deal more to holding the UK together, in terms of what might be gained or lost, than Barnett’s quick population assessment can encompass. Bluntly put, Scotland has been worth maintaining.

Critics of the formula have another problem. Is public spending fairly divided within England itself? Historically, as a region such as the East Midlands could attest, it has been anything but. Northern Ireland has long done better than Scotland in terms of per capita spending. Is that another iniquity? Or merely, given history, a stupid question?

Those outraged by Barnett’s consequences (and consequentials) generally demand an assessment based on need rather than population. The point is just, of course. But how would such an exercise be carried out? What would be the criteria for need when – I guarantee – each and every administrative area in Britain would discover a crying need, and each one would speak truthfully.

Barnett is crude; it was never meant to last for 33 years; it has had unintended consequences. But if the Margaret Thatcher who attempted the poll tax had possessed a simple alternative we would have heard about it, I think.

Critics forget, too, that the formula is designed to erode rather than enhance Scotland’s “advantage”. They call it the “Barnett squeeze”. The formula applies only to increases (or cuts) in public spending, remember, not to the total. Scots enjoyed a fairly high share of that total spending before 1978, but the Barnett formula reflects relative population change, estimated annually, and is based, crucially, on the changes in public spending in England. In time, shares will balance. Will anyone then talk of need?

But critics are at best, if persistently, disingenuous. Barnett is applied only to what the Treasury likes to call “identifiable” public spending. There is another sort. Sometimes there is a great deal of the other sort, and it is generally explained as spending devoted to common UK interests. Defence is often mentioned. Northern Ireland, Wales and Scotland are not always reassured, however, that every penny of outlay by the British state in other areas benefits the devolved administrations. They are right.

Still, if Barnett is flawed, why not grant the SNP Government its “fiscal autonomy”, rather than impose the Scotland Bill’s “additional tax powers”? Perhaps because those powers are something less than a boon. Perhaps, too, because of a political instinct in Westminster for the meaning of the word autonomy. Fully realised, it would relieve those who cry subsidy junkie of those greedy Scots and the Barnett injustice. But is that what Little England really wants?

Some clarity, not to say consistency, would be welcome. Let’s say David Cameron is ready to listen to those who would strip Scotland of its alleged advantage overnight. The Treasury could save a lot of money. Some of it would even help settle the bill for the London Olympics. But how would that play for the SNP? The answer ought to be obvious.

But then, if you believe opinion polls there is a substantial constituency below the Border who would happily send the sponging Jocks on their way. Their politicians are less eager. George Osborne, the Chancellor, just based a budget on a “volatile commodity”, namely oil, that Scotland supplied. Yet we hear that an independent Scotland could not possibly do the same. Someone should tell the Norwegians.

Reform Barnett by all means, if you can. Discard it, if that’s the choice. But don’t be surprised if each and every alternative serves only to demonstrate why Scotland is quite so valuable to the British state, and why the Treasury’s self-serving numbers fail to tell even the half the story. Take care, though: England might lose its subsidy.