Scotch sphincter muscles fore and aft working overtime .....
Robert Henderson
New cash deal could cost Scotland £4.5bn - The Scotsman
Published Date: 08 December 2009
By David Maddox
SCOTLAND could lose out on £4.5 billion a year from the Treasury if a
new funding arrangement based on need was implemented, a leading
economist warns today.
http://thescotsman.scotsman.com/getEdFrontImage.aspx?ImageID=448808
Professor David Bell has analysed the impact for Scotland of a study
looking at the future funding of the nations and regions of the UK. His
report was commissioned by the Welsh Assembly to produce the first fully
worked-through alternative to the Barnett Formula – the current
funding arrangement that has been in place for more than 30 years –
since devolution.
As part of the study into funding for Wales, the report calculated the
money that would go to the devolved assembly based on need rather than
population.
Writing in today's Scotsman, Prof Bell warns that, if the same measure
were used for Scotland, the result would be a £4.5bn cut in the amount
it receives from the Treasury.
"If its calculations were put into practice, it would have dramatic
effects on the Scottish budget," Prof Bell says. "The size of the block
grant from Westminster to Holyrood would shrink substantially. Instead
of the Scottish grant being 20 per cent higher per head than in England,
the margin would shrink to 5 per cent.
"At current spending levels, this would mean a cut of around £4.5bn in
Scotland's annual grant from Westminster."
The Stirling University professor's conclusions have sparked a row over
the possible consequences for Scotland of a Conservative victory in the
general election next year.
Labour has argued that it means Scotland could lose out on billions of
pounds if David Cameron plans to introduce a spending formula based on
needs, rather than the current system of population.
Labour's Holyrood finance spokesman, Andy Kerr, said Prof Bell's
analysis showed why Scotland did so well from being part of the UK. He
added: "It also shows that we could lose billions under a Tory
government, although further analysis needs to be done of this review
for the Welsh Assembly."
But the Tories have claimed that the Welsh study is inconclusive and
that Scotland could do very well from the change, because it has
"substantial needs".
The Conservatives' shadow Scottish secretary, David Mundell, said: "We
believe that the Scottish Parliament needs to be given more
responsibility for raising its own revenue. We also believe that there
needs to be a full assessment of the different needs of the different
parts of the UK.
"But we're clear that, if Barnett is replaced with a needs-based
formula, then Scotland has substantial needs and will get substantial
resources."
However, Prof Bell, who advises Holyrood's finance committee, warned
that, despite the Tories' arguments, a needs-based formula would not
differ greatly from the conclusions of the Independent Review of Funding
and Finance for Wales.
Although he insisted he does not believe Scotland receives £4.5bn more
than it needs, he said: "The review takes into account models of
deprivation used in England, which suggest it is pretty close to what
might happen, should a needs-based formula be introduced."
And referring to the likely effect on the debate over independence, he
added: "Of course the argument here is that the assessment of need would
be made on English terms, rather than a Scottish one."
The conclusions have added fuel to MPs in the Conservative ranks who
believe Scotland is benefiting enormously from an out-of-date formula
and should have its funding cut significantly.
Monmouth Conservative MP David Davies said: "This doesn't surprise me.
The Barnett Formula is over 30 years old. Scotland and possibly Wales
are getting more than they should on a needs-based formula. The English
taxpayer has every right to be aggrieved."
The suggestion was described as "crackpot" by former Conservative
Scottish secretary Lord Forsyth, who this year took part in a House of
Lords committee's review of the Barnett Formula.
The House of Lords committee also recommended a needs-based replacement,
but to be introduced slowly.
During the committee's hearings, Lord Forsyth said that when he was
Scottish secretary he had been advised to resist Treasury proposals to
introduce a needs-based formula because it would cost Scotland between
£2.5bn and £3bn a year.
"That is why it would be a mistake to introduce this barmy proposal from
the Calman Commission," he said.
"The tax base does not exist in Scotland to make up that difference. If
a needs-based formula were to be introduced, it would need to be done
over time."
A spokesman for finance secretary John Swinney said: " The only
acceptable change from the Barnett Formula is full financial
independence for Scotland.
"Along with several eminent economists – including Andrew Hughes
Hallett, who was a member of the Calman independent expert group – we
have pointed out that the Calman proposals are not properly thought
through and could well be damaging to Scotland."
Letter sent to the Scotsman
Sir,
Your report on David Bell's analysis of the proposal to switch from the
Barnett Formula to a needs based system (New cash deal could cost
Scotland £4.5bn ) includes this claim by a spokesman for finance
secretary John Swinney: " The only acceptable change from the Barnett
Formula is full financial independence for Scotland. "
If Scotland did have such independence Scots would find they had a
massive financial black hole, and that would apply even if they had the
SNP claimed 80-90% of oil revenues. (In reality it would be much less
than this, perhaps as little as 55%.)
To begin with the oil and gas from the North Sea is a rapidly
diminishing asset, which is unlikely to produce a substantial revenue
stream for much more than 30 years at most and that will be a stream
diminishing all the time. Moreover, the price of oil and gas may not
remain even as high as it presently is because of future technological
discovery and advance in using both oil and gas and substituting for
them with other energy sources and material bases.
More immediately important, a fiscally independent Scotland would have
tofind money to:
1. Make up the £6bn extra currently gained by the Barnett Formula.
2. Fund their own benefits system - this is not included in the Barnett
Formula money but is additional funding from the Treasury as needs
arise. This could be even more substantial than the money currently paid
in benefits in Scotland because Scots public sector employment -
approaching 60% of GDP - is very dependent on the English subsidy and
would almost certainly reduce if Scotland was fiscally independent thus
causing a rise in benefits.
3. Fund the servicing of the UK national debt in proportion to
Scotland's share of the UK population.
4. Fund a share proportionate to Scotland's population of the costs of
foreign policy (including the FO), defence and foreign Aid.
5. Most immediately daunting, Scotland would have to take full
financial responsibility for RBS and HBOS.
There would also be the complication of UK government work currently
undertaken in Scotland which is there only because of British
governments from the 50s onwards shifting work out of England to placate
the Celtic Fringe. Scotland could expect such work to be taken back to
England thus reducing the economic base of Scotland even further.
What needs to be understood by Scots is the immense fragility of their
economy both in terms of its over-reliance on public sector employment -
income tax and NI derived from public sector employment is simply an
accounting manoeuvre moving the money from one public pocket to another
- and in the narrowness of the private part of the economy which is
overwhelmingly dependent on oil and gas, whisky and financial services.
They also need to understand the weakness of the Scottish tax base
The £6bn the Scots receive via the Barnett Formula is not the full
amount of the subsidy they receive from England each year because their
per capita tax take is significantly lower than that of the English.
Yours sincerely,
Robert Henderson
--
Robert Henderson
Personal website: http://www.anywhere.demon.co.uk
Robert Henderson
<phi...@anywhere.demon.co.uk> writes
>...As they ponder the loss of their vast English subsidies. RH
>
>New cash deal could cost Scotland �4.5bn - The Scotsman
>�
>Published Date: 08 December 2009
>By David Maddox
>SCOTLAND could lose out on �4.5 billion a year from the Treasury if a
>new funding arrangement based on need was implemented, a leading
>economist warns today.
>http://thescotsman.scotsman.com/getEdFrontImage.aspx?ImageID=448808
Very interesting that all the fantasy Celts and Scotch English subsidy
deniers have not attempted to refute this. RH
Nkosi (ama-ecosse)
wrote:
> In message <+67eAqNOEnHLF...@anywhere.demon.co.uk>, Robert Henderson
> <phi...@anywhere.demon.co.uk> writes
>
> >...As they ponder the loss of their vast English subsidies. RH
>
> >New cash deal could cost Scotland £4.5bn - The Scotsman
> >
> >Published Date: 08 December 2009
> >By David Maddox
> >SCOTLAND could lose out on £4.5 billion a year from the Treasury if a
> >new funding arrangement based on need was implemented, a leading
> >economist warns today.
> >http://thescotsman.scotsman.com/getEdFrontImage.aspx?ImageID=448808
>
> Very interesting that all the fantasy Celts and Scotch English subsidy
> deniers have not attempted to refute this. RH
Well Rabbie you post so much shite on this board that nobody takes you
seriously anymore.
Nkosi
Robert Henderson
<c59ebd29-838f-45dc...@k19g2000yqc.googlegroups.com>,
"Nkosi (ama-ecosse)" <mina...@googlemail.com> writes
>> >http://thescotsman.scotsman.com/getEdFrontImage.aspx?ImageID=448808
>>
>> Very interesting that all the fantasy Celts and Scotch English subsidy
>> deniers have not attempted to refute this. RH
>
>
>Well Rabbie you post so much shite on this board that nobody takes you
>seriously anymore.
>
>Nkosi
Strange how they all pile into other threads I start... RH