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Wuz we robbed?

Brian Taylor | 12:16 UK time, Wednesday, 10 October 2007

We wuz robbed. Or wuz we? (Incidentally, on that theme, United wuz definitely robbed when Kalvenes was sent off against Killie. That ref needs to have a word with his shirt sponsor.)

Anyway, as forecast, a top grade political row over spending.

In one corner, the chancellor, the Scotland Office and Labour MSPs lobbying hard - seriously hard - to persuade the wider world of the merits of this deal.

In the other corner, SNP ministers and special advisers vigorously stressing the downside - with Scottish Government officials doing the sums.

Here’s your handy Q&A:

Has Scotland’s budget been cut? No, it’s going up, more than inflation. The row’s over the rate of increase.

Is it a tight deal? Yes, by comparison with recent years.

Has the Barnett formula been applied strictly? Yes, to Scotland, Wales and Northern Ireland.

Is that a good thing? It used to be when Barnett felt generous. The formula’s been tightened over the years. Now tends to squeeze, esp in NI.

Was the formula fiddled? No

What’s this about the new baseline? The Treasury decided to recalibrate certain existing budgets for England, principally the NHS: essentially, assuming they’d got less this year than the actual out-turn figure.

Why did they do that? Version One, it was a standard statistical exercise. Version Two, it made the percentage increase for health look bigger.

Why does that affect Scotland? Barnett. Scotland experiences changes consequential upon all comparable English departments, eg health.

Is that fair? It’s the formula. Live with it - or negotiate everything from scratch, which might not be to Scotland’s advantage.

What does it do in practice? It explains why Scotland Office say the growth increase over three years is 1.8% while Scottish Government say it’s 1.4%. They’re using a different starting point.

What else? It explains why Alex Salmond says the first year growth increase is just 0.5%. The effect of changing the baseline impacts in the first year.

Has Scotland been punished for voting SNP? Alex Salmond is not making that assertion. Neither am I. There is no evidence for that.

Did SNP ministers see this coming? Mostly, yes. The Treasury had been clear this would be a tight round. But John Swinney says he had received assurances that the impact of recalibration would be smoothed over three years.

What happens now? Scottish Government can complain to the Treasury about the first year deal.

Chances of success with that? 0.0%. In real terms.

And after that? John Swinney works out his Scottish budget details over the next month.

Will that hit their spending plans? Yes. At the very least, big schemes may have to be deferred beyond the first year.

Which is? A feeble excuse or a sound reason, according to taste.

Comments

Wales is not very happy either.They too, speak of the base line being changed therefore a squeeze on their spending plans.They too seem to be making it clear that this is a fault totally attributable to Westminster.

  • 2.
  • At 12:56 PM on 10 Oct 2007,
  • Mac wrote:

By changing the baseline Scotland was effectively robbed of the same increases in public spending compared to England.

England got more, Scotland got much less than more.

We Wuz Robbed.

  • 3.
  • At 01:14 PM on 10 Oct 2007,
  • Gordon from Ayr wrote:

Just watched PMQ and it brought me back to your call for clarity Brian, with the PM talking about 'the whole country' in his answers to PQs from MPs on both sides.

IHT will affect the whole country but Whitehall spending on schools and hospitals will only affect England, but politicians of both major parties eschew the 'E' word, while the BBC to be fair now qualify all such annoucements with their geographical impact.

Time I think for Salmond and Swinney to get on with it and show us they can cut the mustard and deliver within the allocated budget whether it is fair or not. If they can do that then they will reap the benefit in 2011; as they say in football 'it's a results driven business', and as a Killie fan it seems to me the dodgy refereeing decision at Rugby Park has not unduly affected the Arabs' performance since, whereas Naismith's eleventh hour departure to Rangers.............well that's another story.

  • 4.
  • At 01:16 PM on 10 Oct 2007,
  • Stephen S. wrote:

I'm still curious. So, we got an increase of more than the rate of inflation, but less of an increase in previous years. Okay.

But, is this increase more representative of how much we're actually due? So far as I know, the Barnett formula has been unfairly biased toward us Scots for a while. Does this "squeeze" bring us back into line? More to the point, how representative is the block grant of the tax collected?

If the squeeze does indeed bring us back into line, then I don't see any grounds for complaint. After all, for as long as we're part of the UK, we have to play fair and be realistic. If we're now receiving money similar to the volume of tax collected, we should be happy. We're playing with the correct amount of money, not extra pocket money from England.

(Any argument along the lines of "They owe us money from the past!" is childish, and incompatible with the independence movement.)

  • 5.
  • At 01:53 PM on 10 Oct 2007,
  • Ed Martin wrote:

It was not in Gordon Brown's/Labour's interest to make life easy for Alex Salmond's administration. That is a fact. I don't count Darling in this - it's Brown's budget and if anyone knows how to manipulate figures to his own advantage - he's your man.
Brown is worried by what is happening on the political scene in Scotland and wants the SNP Government to be SEEN to struggle so that he and Holyrood Labour can say that the SNP were all talk, making promises they couldn't keep and able to fulfill their manifesto pledges.
But Alex Salmond is every bit as fly as the Fifer and I reckon he and his team will carry on as they have been doing, introducing things they know they can do and putting off the other stuff until the money comes through later in the Parliamentary term while all the time letting everyone know that the blame lies south of the border.

  • 6.
  • At 01:55 PM on 10 Oct 2007,
  • Chris wrote:

A helpful piece of analysis, Brian. (And I also agree about Kalvenes at Rugby Park - we should be equal on points with Rangers!)

The upshot is that it's a slight increase in funding but by far the smallest increase since devolution. As you say, take your (party political) pick in terms of how you choose to describe that situation.

The statistical bit is slightly more contentious. It does look as if Labour have tried to reduce the baseline figure as much as possible in order to claim a bigger percentage increase.

What has struck me is the punch and judy ludicrousness of the party political arguments. For example - Labour's Iain Gray arguing that Alex Salmond now has double the amount of money that Donald Dewar had with which to govern Scotland. By 2010 that will, in terms of numbers of pounds sterling, be true. But it's disingenuous and misleading.

In fact, prices rise over time, so amounts of money in today's terms cannot reasonably be compared with figures from the past. It's a bit like saying that Gordon Brown has, say, 200 times more money at his disposal than Churchill, therefore our public services should be 200 times better.

Mr Gray is essentially treating the public as if we are daft. Please, politicians, lift the quality of the debate...

  • 7.
  • At 02:00 PM on 10 Oct 2007,
  • sheena wrote:

The Barnett formula is not biased against us Scots - the whol epooibnt of the formula is, over time, to even out the disparity in public spending in Scotland compared to England - people seem to be forgetting that public spending is 20% per head higher in Scotland than in England.

There are some good reasons for that in the cost of services in remote and rural areas for example, given the land mass of Scotland as a proportion of Britain compared to population share.

But there is also an element of Scotland being bought off as a political problem over pre-devolution years (for all the good it actually did for the then Tory government)

Scotland's local politicians bleating about being hard done by is all grist to the mill of the growing sense of unfairness in England...which is perhaps the Nationalists real intention

  • 8.
  • At 02:05 PM on 10 Oct 2007,
  • Bruce wrote:

Stephen S. - The big problem is the way it has been phased in for the first year, despite assurances that it would be gentler. For nationalists it's annoying them that as tax revenues from North Sea Oil are much larger now than in the past, Scotland get's squeezed because of the recalibration of the baseline.

Yes, in many ways it looks like girning, but in many ways it also looks suspiciously engineered to have maximum effect on Scotland's financial position, in a negative manner, especially in the first year.

  • 9.
  • At 02:10 PM on 10 Oct 2007,
  • Scamp wrote:

What's really happening is that Scotland is reaping the consequences of Gordon Brown's general economic ineptitude and that's something we can't escape until we have full independence.

UK economic growth has almost all been predicated on consumption and debt. That's not real growth that's paper growth. The signs have been there for a long time.. Record trade deficit, record household debt, record house price inflation and now record current account debt with Govt borrowing going through the roof.

It's what happens when you allow the City to dictate economic and industrial strategy. You end up with little real industry, lower exports, lower high value adding jobs and reduced corporation tax because what we had is slowly being sold to everyone else. The economy has to be properly rebalanced before it is too late.

  • 10.
  • At 02:11 PM on 10 Oct 2007,
  • Peter, Fife wrote:

Brian the key questions seem to be, does the base line recalculation that was carried out on English NHS data have a negative effect on English funding or is it only Scotland, Wales and Northern Ireland who will suffer?

Is this further evidence of Gordon Brown's own version of Red Shift to Britishness.

  • 11.
  • At 02:25 PM on 10 Oct 2007,
  • Ross wrote:

It has always struck me that within SNP complaints about the "Barnett squeeze" there is a tacit acceptance that Scotand has for many years received more per head in public spending than England and continues to do so. The formula's inventor Lord Barnett is on record saying that he believes his own creation is now too generous to Scotland. The bottom line is that the SNP Government has more money to play around than any of its predecessors so it's hard to see how they can portray this as a bad deal for Scotland. Rather it seems they are getting their excuses in early for being unable to fulful their manifesto pledges drafted when they knew what was likely to be on the table.

  • 12.
  • At 02:54 PM on 10 Oct 2007,
  • Stephen wrote:

Look, if its to bring us unto line with the rest of the Uk fine, accept it and go on.

If its Westminster spinning higher budget increases then nothing wrong with pointing out the real increase in honest terms as long as they are not uduly biased against one of the four nations and get on with governing as best you can in the first year.

If the goal posts have been changed to decrease the amount of money the SNP can spend in the first year , then they do have a right to complain if indeed they have an agreement with the treasury that the funding squeeze was to be gradual over the next three years (clearly political if true).

It would be damaging to the SNP to continue in arguing these points and better for them to look into the efficiency improvements and better value for money budgeting throughout their term as this will lead to more confidence from the electorate and not negative pointless arguments with the treasury. It would seem, with the additional 1 billion J swinney got from the treasury (the last executive wasnt allowed to touch this by their westminster masters)that the treasury is being a little more open to the new government in scotland than it has before.

Time to tighten our belts, be (I hate using this word )Prudent and try to spend the money in the best possible way for Scotland. Positivity always beats negativity every time

  • 13.
  • At 03:26 PM on 10 Oct 2007,
  • David wrote:

Scotland is always whining and trying to blame England for everything.

Scotland has is cushy on money - courtesy of the English taxpayer. They whinge about oil - (extracted by foreign companies) and say they want to keep all the revenues for themselves - fine! It's nearly all gone.

No wonder 70% of English pollsters want Scotland to be independent.

  • 14.
  • At 04:01 PM on 10 Oct 2007,
  • PMK wrote:

Is the Treasury punishing Scotland for voting SNP? Yes, the figure is lower than that discussed before the election (when the assumption still was there would be a Lib-Lab Pact in power). Any other interpretation is both ridiculous and politically motivated.

Was the Formula fiddled? Yes, the baseline has been changed which (funnily enough makes) a stingy 1.4% increase look like a supposedly generous 1.8%.

  • 15.
  • At 04:21 PM on 10 Oct 2007,
  • HughB wrote:

The difference is, they tell us how much we are allowed, then tell the other parts of Britain how much they are allowed, but then Westminster gets to keep all the extra pocket money to do what it wants with.

We don't get a share of that extra cash that areas around Westminster get most of.

It's not valid to equate the Scottish share with the English share, because they have control of all the extra money that they don't share out.

The only solution is for Scotland to keep all its own tax money, including our oil money, like any other self-respecting country would do.

  • 16.
  • At 05:13 PM on 10 Oct 2007,
  • Norman M wrote:

No 3. Why is it childish? When Scotland was coerced into the union, we took on a share of the combined national debt. Which is the same thing, only changing the sign.
But will we go back to that positon when independence comes. Answers on a pin head in 78 pica!

  • 17.
  • At 06:53 PM on 10 Oct 2007,
  • mairi macleod wrote:

brian,

WE WUZ ROBBED.!!
STATISTICS AND NUMBERS
we can make anything we like out of
them that we want,spin,spin, out of control, so what is to be done when those who hold the purse-strings play politics with scotland, when they help themselves to scotlands oil87$ a br. at present prices.greadily grabbing all for them
and even refusing to pay our farmers
what has been given to the uk.
NOW THATS PURE SPITE. WHAT FEAR IS IN THEIR BREASTIE,they are determined
scotland should fail, i cant discribe the disgust i feel when i saw labour trying to hide their GLEE
YESTERDAY after stealing tory thunder. no scruples, so YES I ALSO THINK WE SCOTS ARE GETTING PUNISHED
FOR KICKING THEM OUT,YES WE WUZ ROBBED.

  • 18.
  • At 08:01 PM on 10 Oct 2007,
  • wrhouston wrote:

Good Evening Brian,

Thanks for this, clear and to the point. Enough said.

  • 19.
  • At 08:06 PM on 10 Oct 2007,
  • Rory K wrote:

Again a thoroughly interesting two sided argument. I hate to say it but if Scotland ever does become independent, I'll miss the BBC's critical analysis of otherwise slogan and politically motivated one-sided argument that the rest of this divided isle manages to put on us.

  • 20.
  • At 08:33 PM on 10 Oct 2007,
  • Megz wrote:

Labour have fantastic ways of counting, i think i'm going to have to learn their way of adding things up to deal with my kids pocket money.

  • 21.
  • At 08:35 PM on 10 Oct 2007,
  • Dougthedug wrote:

Alex Salmond is standing up as First Minister and doing what he was elected to do which is to represent all Scots and get the best deal possible out of Westminster.

What nobody's mentioned here are the dogs who haven't barked. It's understandable why Labour MSP's are doing as instructed by Darling and Brown and keeping quiet, or cheering at the squeeze, but where are Goldie and Stephen for the Conservatives and the Lib-Dems?

I would have thought that both these leaders of the Scottish sections of their parties would have been standing up beside Alex Salmond and complaining, fighting for more money for all Scots. Not a peep. Not one I've found in the news anyway.

Which is strange as both are in opposition in Westminster as well as in Holyrood. For the Conservatives the more embarrassment they can cause to Labour and Brown the better it is for them just now. Or maybe that's just for Westminster.

These two were elected to represent their constituents, and as party leaders by extension the whole of Scotland, but they appear to have sat on their hands in silent support of Labour.

Is this the first real sign of the unofficial Lib-Lab-Con coalition?

  • 22.
  • At 09:23 PM on 10 Oct 2007,
  • K Monaghan wrote:

Why doesn't wee Alex just use The Scottish Execs tax raising powers? It will give the punters up there (teh ones that work) a taste of life after Independence. Oops, sorry that wont happen will it, can't have the Scots paying for their own home comforts can we.

  • 23.
  • At 09:54 PM on 10 Oct 2007,
  • huttcity wrote:

Seems to me the treasury are peeing on us and telling us that "it's raining"

  • 24.
  • At 11:28 PM on 10 Oct 2007,
  • BrianMcL wrote:

I've just watched the Newsnight Scotland interviews and what I'm not sure about is when the SNP knew or should have known that the English health budget (in particular) was going to be rebased to a lower level.

Is this something that anyone can fill me in on?

I think that if the size of the rebasing was common knowledge before May's election then the SNP can't argue even that the proposed phasing is unfair.

If however it only came to light over the past month or two then the Westminster government might have to come to terms with the fact that they can't just change base numbers without detailed and involved consideration any more.

  • 25.
  • At 09:06 AM on 11 Oct 2007,
  • Andrew G wrote:

If we'd had an inflation busting 25% increase messers Salmond and Swinney would still have cried foul.

The next four years looks like being "grab credit when the sun shines and blame Westminster when it rains".

  • 26.
  • At 10:21 AM on 11 Oct 2007,
  • Brian McHugh wrote:

If we were fully in control of our own finances, this whole argument would not be required.

However, I have no doubts that it is purely political. Westminster Labour were happy to fund a Scottish Labour administration's manifesto... but not too happy to do the same for an SNP administration in Scotland.

Surely it is time that the Scottish population woke up to the fact that they are viewed as no more than a pawn in the big two's fight for control of Westminster.

  • 27.
  • At 11:04 AM on 11 Oct 2007,
  • Poppaea wrote:

Swinney has known for a while how much he was gong to get - he needs to cut his cloth accordingly. If the SNP can't, then, as Iain Gray said, they should give way to someone who can.

FM cutting down on his expensive jaunts would be a good starting point for re-prioritising their priorities.

Sturgeon desisting from messing up already settled health cuts and budgets would be another.

Having said that, and as a serving civil servant, I have no confidence in this administration at all. All mouth and no trousers. And no respect for the cs staff who are trying to help them do their job of governing the country, against all the odds. They seem to think we're back in the middle ages, and we're all serfs! But I digress.

I daresay this will give them something else to moan about in the press and divert attention from the lack of governance coming from our 'glorious' leaders.

  • 28.
  • At 12:46 PM on 11 Oct 2007,
  • Louise wrote:

Brian I am a tad miffed with you at the moment. Due to you not publishing a previous comment on bias.
However all will be forgvien if you post this.
In effect Brain what this all boils down to is the fact that not as much money will be spent on the NHS in England as was in previous years. The NHS in england will still receive an increase but spending has been squeezed due to the recalibration. What we should be examining is the actual spending on the NHS in england rather than the barnett formula.

  • 29.
  • At 05:30 PM on 11 Oct 2007,
  • Maeve wrote:

Seems FM is being a bit economical with the truth - NI are quite content with their allocation! More huff'n' puff from the Tumshie in Charge!

  • 30.
  • At 10:18 AM on 16 Oct 2007,
  • Brian McHugh wrote:

To #29 Maeve,

NI should be happy with their lot. Infact, why the rest of the UK and me as a tax payer have been funding a military force due to NI's inability to live peacefully for so long is a question I would put to you?

  • 31.
  • At 09:17 PM on 17 Oct 2007,
  • jim brown wrote:

Fraid to say I am still confused. What I would really like is for someone to explain this to me in terms of plain simple money. Nowhere have I seen what the grant is over three years. By extrapolation I suspect it is in order of £85 billion but would like to know how much to (say) nearest £100 million.

Once we have that we can then ask how much SNP in form of John Swinney thought he was going to get when he made and costed his election proposals during the election period. Can't someone ask - as to date I do not believe anyone has?

If he had based his plans on a higher figure what was that figure; when did he tell the Scottish electorate and is there a website where a journalist worth his salt can check this out?

If was based on roughly the same aggregate amount as we are getting but with more in year one and consequently less in year two and / or three he should again be asked what these year on year figures were -there are only three of them.

If the response is that cost inflation is higher than expected during the election period then again can this be demonstrated as I was not aware that cost inflation expectations have significantly increased?

Seen in that light I am less than clear where the baseline comes in. Either SNP have the money ( taking inflation into account) which they said atthe time they needed to fund their programme or they have not. Programmes and policies are funded with money not percentages and/or baselines.

Am I being over simplistic and missing some complex point - of so can you - or someone - tell me what it is?

  • 32.
  • At 08:57 AM on 23 Oct 2007,
  • Mike wrote:

Has Scotland been punished for voting SNP?

Yup. I didn't vote for Salmond in May, but that doesn't mean I should have to suffer.

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