10 facts you need to know about the Barnett myth

The Guardian, which should know better, called on Blair to ''rejig the Barnett Formula which funnels 20% more funds to Scotland.'' The Westminster Lobby was briefed to the effect that the PM's northern tour was intended to ''soften things up'' so that the iniquitous Barnett can be scrapped.

Perhaps that would be the best thing to do with Joel Barnett's wretched formula, which has caused more confusion and misreporting in the last 20 years than an entire roomful of Scottish Executive spin-doctors.

To repeat: the Barnett Formula is NOT a means of allocating higher public spending to Scotland. Quite the reverse: it actually cuts Scottish spending relative to the rest of the UK.

Here are the ten facts every schoolboy should know about Barnett:

1: The formula was devised by the Callaghan Government in 1978 to ensure that spending levels in Scotland and England converge over time.

2: Spending on services in Scotland will rise at less than half the rate of spending in England over the next three years.

3: Public spending in Scotland has been running at less in real terms than under the Tory Scottish Secretary Ian Lang in 1994/5.

4: Spending on Scottish health will be #400 less per head by 2002 than it would have been if it had risen at the rate of health spending in England.

5: Nine of the 14 sickest constituencies in Britain are in Scotland.

6: It costs a lot more to provide roads and schools for small communities in the Hebrides than in Hackney.

7: There is less private schooling in Scotland than England so more are educated here at the public expense.

8: Figures on relative spending levels between English regions like Greater London or the South East are not available.

9: Official figures on public spending exclude the billions spent in London on things like the Jubilee line extension and the Millennium Dome.

10: The Barnett Formula calculates increases in public spending in Scotland on the basis of population rather than relative need.

The reality is that Barnett does precisely the reverse of what it is claimed to do. But don't take my word for it.

According to Professor Brian Ashcroft of the Fraser of Allander Institute, probably the leading authority on public spending in Scotland, spending on comparable public services - health, education etc - is due to rise by 5.5% in Scotland over the next three years, whereas such spending in the rest of the UK will rise by 13.9%.

''The difference,'' according to Prof Ashcroft, ''reflects the application of the Barnett formula to comparable programmes in the Scottish and UK Budgets.''

In other words the Barnett Squeeze is really beginning to bite. In the past, under Tory administrations, Barnett was frequently over-ridden for political reasons. The irony is that under this Labour government it is only now being applied as was originally intended.

Under Chancellor Brown's Comprehensive Spending Review, Scotland will continue to lose out relative to the rest of the UK until 2002. So while it remains true that, for reasons of geography and demography, Scottish spending on health and education is currently higher than in England that relative advantage is disappearing. To his credit, Jack McConnell, the Scottish Finance Minister has never denied this. So why has no one told No 10?

Under pressure from the SNP it is understandable that Scottish Ministers would prefer not to be seen cutting relative spending levels. It has been a convenient political myth that Scotland gets privileged treatment under Barnett. It means Ministers can promise to defend Scotland's high relative spending levels by supporting a formula which is actually reducing them.

Brilliant! A slogan that says one thing and means another - every politician's dream.

This may be all right for street politics in Lanarkshire, but it really will not do for British public spending policy to be founded on a fallacy.

Yet, Tony Blair has signalled to his fractious Northern MPs that their complaints have been heard, and that something will be done about Scottish spending. Either he is being disingenuous here - knowing that the Barnett Squeeze is reducing the relative level anyway - or else he really does believe the Barnett myth, in which case the future looks bleak for Scottish public services. And for Labour's tenure in Holyrood.

For as is patently obvious, there are pressing social problems in Scotland. It is no accident that worst constituencies for premature death and infant mortality are in Scotland. Homelessness is at record levels according to Shelter Scotland.

Today's report on poverty from the Rowntree Foundation confirms that inequality is getting worse, and is geographically concentrated.

True, there is a great deal of wealth in Scotland as well as poverty and the old stratification of Britain into rich and poor regions no longer applies in the same way that it did. But nor is the arbitrary reduction of health and education spending in one part of the UK likely to help bridge the wealth gap.

It will certainly not help Labour hold on to Holyrood. Nor will it help the Scottish Labour MPs who are looking to hold onto their Westminster seats at the next general election.

It's often said that these MPs have little to do now there is a Parliament in Edinburgh. Well, here's a real job for them: start knocking some sense into their Northern colleagues about Barnett and public spending.

The real divide is between rich and poor, not between regions. Can they really be as stupid as to believe that cutting health and education spending in Scotland will improve these services in the North East of England?