In GB, devolution is moving on to another stage. Northern Ireland is being left behind. Today the call has gone out for the Welsh Assembly to take on tax varying powers of 3 %. It comes on foot of a request for law-making powers. Wales is bidding to follow Scotland, where the coalition government is legislating to award the Scottish government new income tax varying powers of 10%, as recommended by the Calman commission.
The Welsh report, by economists Gerald Holtham and David Miles, is the latest to blow a hole in the near 40 year old Barnett formula for allocating public spending from Whitehall. Wales is losing £8.5 billion over a decade but Scotland is overfunded by £4 billion a year, Holtham concludes. The real p0litical pressure then, is over Scotland. It’s a relief that Holtham and Miles add that if Northern Ireland was funded on the needs-based assessment employed for the English regions, the block grant for Northern Ireland would not change very much.
Holtham calls for the replacement of Barnett by needs based assessments. The Treasury is against an early revision as it fears this would only increase public spending at a time of record cuts. Holtham and Miles writing in the FT argue the opposite.
Reform of the Barnett formula could make the system fairer – particularly to the English regions – and save the taxpayer more than £3bn a year.
As the government introduces legislation to give effect to the Calman proposals to extend taxation powers to the Scottish parliament, it would be extraordinary if it did not take the opportunity to put the block grant on a rational basis at the same time.
That last bit is more in hope than in expectation. Where is the Northern Ireland Assembly in all this? To put it as gently as possible, can you imagine them being able to handle the arguments? After looking at Eamonn’s three headlines for one blog , would you trust them to levy taxes? The only tentative idea on this front comes not from Stormont but Westminster, which has put a cut in corporation tax back on the table. In isolation, this is a bad idea. By implying a consequent reduction in the block grant, it would only add to pressure on public spending. All other UK regions would rise up arms against NI preferential treatment. It is just as well the Barnett formula serves NI not too badly. But what happens next? Who can we trust to make NI’s case?
The Scotsman announces that the three Westminster select committees for S,W and NI are to conduct a joint audit into how the devolved administrations have delivered education, health and justice. Allowing for some deferment for justice, this exercise could become the first major expose of the performance of the NI Assembly, set against that of its opposite numbers. Will we cover our faces in embarrassment or hold our heads up?