FINANCE

How long can the Barnett formula survive?

MJ editorial director Michael Burton muses on future funding arrangements between the nations after 2015.

How long can the Barnett formula survive?  Last week's little spat, outlined on page 5, between the Convention of Scottish Local Authorities (COSLA) and the LGA about who has done more for their respective members actually re-opens the much more contentious issue of Scotland's bigger slice of the UK public sector cake.

English local government has long grumbled that the Barnett formula, originally created in the 1970s, gives an extra £1,600 per head to Scotland and should be scrapped.

The LGA reckons its members are losing £4.1bn a year in subsidising other parts of the UK. There is an increasing cross-party consensus in England that if more powers are to be devolved to Scotland, then so should they be devolved to English local authorities and city regions.

The even bigger picture is whether an independent Scotland would have to raise taxes to compensate for the loss of subsidies to its public services; last week's official statistics showed Scotland's spending gap relative to the UK at £1.5bn.

So it was salt in the wound when last week COSLA's president Cllr David O'Neill, in attempting to robustly reject critics who complain the convention is too soft with the Scottish Government, told his annual conference that on the contrary local government has come out very well north of the border compared to the rest of the UK.

With seven out of his 32 members having handed in their notice complaining they are getting a raw deal from the funding settlement it was understandable Cllr O'Neill would want to trumpet COSLA's success.

He even threw in figures to show how worse the cuts have been in England.  Furthermore, Scotland's SNP local government minister Derek Mackay, who wants COSLA to remain intact rather than see rebel Labour councils set up their own group, backed up Cllr O'Neill's comments by saying ‘how jealous' the LGA was at Scotland's settlement.

He, too, in shoring up COSLA, therefore emphasised how Scottish local government has been spared the level of cuts in England.  The associations are of course anxious not to be seen to be squabbling and emphasise their good working relationship.

Michael Burton

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