Righting a wrong

For even the most committed of political anoraks, Hansard can make for dull reading, but trawling through the weighty pages of faithfully recorded utterances made in the House of Lords can feel terminal. No wonder so many of the lords and ladies of the house fall asleep on their buttoned, red leather seats. But turn to volume 698, number 48 of Thursday February 7 2008 and the debate from the Liaison Committee is a surprising page turner. Extracts reveal Scottish history springing to life and the prospect of a dramatic and prescient constitutional change.

11.45am Lord Forsyth of Drumlean (Conservative): "My Lords, I support the noble Lord, Lord Barnett, in his request that this matter be looked at again… It must be a terrible burden to have one’s name attached to a formula of which one thoroughly disapproves. If for no other reason, the House should seek to release him from the chain he carries around with him… I believe that this is a truly urgent matter. We are seeing the real prospect of the disintegration of the United Kingdom… This issue does not seek to reopen the question of devolution but it is essential that devolution is looked at in the context of the funding and that all parts of the United Kingdom believe that the funding system is fair and is seen to be fair…. But so long as we continue with a scheme which is based on increasing the funding according to population while maintaining a baseline that reflected previous circumstances, and as long as we have a separatist regime in Scotland, which is determined to create conflict north and south of the border, the United Kingdom is in danger because of our failure to tackle this…"

Lord McNally (Liberal Democrat): "… The noble Lord, Lord Barnett, is a charming lobbyist and he can get a lot of support for apparently simple, straightforward and neat propositions. But the noble Lord, Lord Forsyth, illustrated perfectly well what a Pandora’s Box would be opened. My old mentor, Joe Gormley, once advised me, “Don’t build platforms for malcontents to stand on”.  I suspect that this inquiry would find itself looking far and wide on this matter. I understand and have sympathy with the noble Lord, Lord Barnett. However, as the noble Lord, Lord Forsyth, hinted, he is a political ancient mariner, for ever wandering the land with the Barnett formula around his neck, looking for the noble Lords, Lord Turnbull and Lord Armstrong, to come along and provide a Turnbull formula or an Armstrong formula so that the albatross will no longer hang there. As the noble Lord, Lord Peston, clearly indicated, in so doing we would be taking ourselves into an area which is not as clear and cut-and-dried as he suggests. Indeed, I suggest that if he made it at the other end of the Corridor, he would find a great deal of discomfort. I am not sure that in setting up an ad hoc committee we should not reopen a battle between Lords and Commons which some of us thought had been settled perhaps in 1911…"

Lord Barnett (Labour): "My Lords…I am grateful for many of the comments that have been made in this debate, but can I make one thing quite clear? I am not concerned about the burden of my name being attached to a formula, providing that the formula is based on need. I have said that in a debate in this House once before. If we want to have a Barnett formula, I am happy for my name to be used—we could call it mark II—providing that it is based on need…" 

Conventional wisdom tells us that the British public aren’t interested in politics and yet ask them if they know what the West Lothian Question is or to explain the Barnett formula, they could wax lyrical – which basically boils down to one thing, Scotland vs. England, simple as that. Two fairly technical and interrelated pieces of political malarkey that have polarised a nation, never mind the House of Lords. 

Indeed, ignoring the success of the SNP in last May’s Scottish elections, then the West Lothian Question and the Barnett formula remain the two most painful thorns in the side of a Labour Government which backed devolution, presumably based on the presumption that they would be in power both in Westminster and Scotland and can now see the English saying ‘enough is enough’. 

The problem with them both is that the received wisdom is flawed; the WLQ is not as simple as whether Scots MPs should be allowed to vote on purely English matters or not and the Barnett formula isn’t simply based on cash being divvied out on the basis that Scotland is colder, poorer or more sparsely populated than its neighbour south of the border. And even the man at the centre of that expenditure confusion, the diminutive 84-year-old former MP for Heywood and Royton and lifelong Manchester United fan, Lord Barnett, says it is time to reassess. Joel Barnett has spent 44 years in the Houses of Parliament – 20 years in the House of Commons including five years as a member of Cabinet and 24 years in the House of Lords – and has talked on subjects as diverse as the Iraq War, house repossessions and ‘Buying British’ but it is his eponymous formula that he will be forever remembered for, yet the man himself rejects the proposition that he ever even created a formula.

“It’s rubbish,” he laughs. “This all came about when I produced a system in 1977, when I was chief secretary to the Treasury and member of Cabinet, for allocating money. I don’t think I even put it to Cabinet because it was simply a system of expenditure allocation, making life a little easier for me. In fact it was so unmemorable that when I published a book in 1982, I didn’t even mention it, for the obvious reason that it was not a formula.

“It became known as a formula because Margaret Thatcher and John Major kept it going for 18 years and that’s what made it a formula and made me famous, or infamous, and of course since then, Tony Blair and now Gordon Brown haven’t wanted to touch it and even David Cameron on his first trip to Scotland, and surprisingly for a Conservative who would have nothing to lose in Scotland anyway, promised that he had no plans to change the Barnett formula either.

“The whole thing is ridiculous. They should come and ask me what the background was and then they would see the sense in having a review and in creating a much more just system – a proper formula.

“All I did was put together, almost on the back of an envelope, a mechanism for allocating public expenditure between England, Scotland, Wales and Northern Ireland on the basis of population – even that was on approximate numbers. There was nothing scientific about this but I naively thought it made life easier for me because I didn’t need to then have detailed and individual debates with the individual Secretary of States for the various areas of the UK because there was a system in place – it was a case of ‘there it is, leave me alone and get on with it’.”

Barnett was chief secretary to the Treasury in the last throes of Jim Callaghan’s ill-fated Labour Government when he produced his now controversial funding system that allocated around 85 per cent of extra Treasury spending to England, 10 per cent to Scotland and the rest to Wales. At the time, and for many years after its introduction, the formula was of low political importance but in the intervening years, it has become invested with considerable symbolic interpretation. Barnett may describe it in fairly innocuous terms but others believed it was designed to stave off a gathering appetite for independence in Scotland – Barnett himself dismisses such conspiracist theories - and thinks it is now so wrapped up in emotion, sentiment and embedded in devolution that no political leader has been brave enough to address it. Barnett, however, remains unapologetic for its introduction, simply reiterating that it was just a quick fix to a minor irritant.

“Life was pretty difficult for those of us in the Treasury in those days because we were cutting public expenditure all the time, not increasing it. I thought my system would last a year or two at the most and then we would have a new, more sophisticated system based on need.

“It became known as a formula because Margaret Thatcher and John Major kept it going for 18 years and that’s what made it a formula and made me famous, or infamous"

“The current Prime Minister has frequently said in recent years that the formula is based on need but it isn’t, it is based on a per-capita basis although varied slightly over the years; a very simple system, very simple but very wrong! 

“There are all kinds of people that have said this is a means of gradually equalising parts of the country but this is nonsense. None of the reasons that are bandied about are true. I introduced it and indeed, I have been told this formula being named after me is a great honour but if that’s true then I want a Barnett formula mark two based on need. There is a need to end this now or at least review it and seeing that if on the basis of need, Scotland got that same size of expenditure. I have nothing against the Scots but we need to examine how much money they get and why.

“But the real danger in not doing anything is that people in England will begin to be so angry about it that they will do what Salmond wants them to do and press for a break up of the UK.”

I suggest to him that theories abound that he was actually boxing clever as chief secretary and was following orders to quash SNP support at the time and suppress questions about Scottish oil.

He laughs. “Scottish oil wasn’t even in my thinking when I put together my allocation process. I have since tried to find out what the Scots would have got if there was such a thing as Scottish oil and you can’t because you can’t draw a line across England and say, that’s Scottish and that’s English. Anyway, the total revenue from oil in the North Sea is about £9bn and it’s not a lot of money if you then lost a whole load of public expenditure because of independence.

“I have discussed the formula with Alex Salmond and he just goes on and on about Scottish oil and independence and I know what sort of an operator he is. I supported devolution but would never want independence. I think the Labour Party had not thought through what would happen if there was a different party from them in power in Scotland and now the unbelievable has happened and they are frightened of rocking the boat further by reviewing spending but it is essential that it is revisited properly.”

Indeed Barnett feels so strongly about this, that he has repeatedly called for the Barnett formula to be reviewed but so far with little support. His most recent moves in the House of Lords to have an ad hoc select committee have a review, were rejected after being called, he says deliberately, on the last day before Christmas recess. A further call for an amendement was put to the liaison committee earlier this year, which was also rejected. He has now proposed that the chair of committees reconsider this decision. He says that this will then come back to the floor of the House for approval and he is adamant that if this time the Lords reject his proposal, he will push it to a full vote, which could be the catalyst for a formal committee review of the workings of the Barnett formula next session, which he would anticipate reporting next summer. The latest twist in the debate that has dogged Whitehall for decades, comes as passions have been inflamed by free tuition for students and care for the elderly in Scotland and an SNP Government that is not frightened to fight its corner with Westminster.

Barnett says he would not sit on the committee but would like it chaired by an independent cross-bencher and says that the tight terms of reference would mean that if called to give evidence, Alex Salmond would be unable to come before it with an argument for independence.

“I have little doubt that there are very few people who now understand this situation except most people will certainly know that Scotland is getting more money because  Cameron, in particular, has used that money, that difference, to point out what previous Labour leaders have not and is, in my view, doing that deliberately to provoke the English to demand separation.

“I didn’t create this formula to give Scotland an advantage over the rest of the country when it comes to public funding or to create a situation that could provoke separation.

“It has now lasted more than 30 years, because successive governments have failed to deal with it for fear of upsetting the Scots.” And he agrees that never has that been more obvious than now when we have a Scot as Prime Minister, who may feel electorally vulnerable.

Barnett says he is a Labour Party man interview to the core and has no wish to harm the Prime Minister but as a moral man, he also believes that it is political folly to ignore the consequences of an allocation system that is perceived to be unfair.

Barnett joined the Labour Party aged 22 just after the war ended in 1945 because he “wanted to change the world”. He came out of the army in 1947 and did a number of different jobs before training to be an accountant. He won his first parliamentary seat in 1964, having fought and lost some local council seats and a hopeless parliamentary seat in Cheshire.

“My family were not political at all. I felt the Labour Party was the only party likely to make the changes that were progressive enough to make a better future for the people of Britain. That may sound a bit pompous now but then I wanted all the people in the UK to benefit from social change and the Labour Party was the only one to do [that] so I joined but never expected to end up as a politician, or in the government or in the Cabinet or ingrained in political history with a formula that I didn’t even think was any big shakes.”

After so long in parliament, how does he measure the changes that have happened in the UK?

“I suppose one can see how marginal changes are. Even someone like Thatcher achieved some things but no huge fundamental changes in people’s way of life so in that respect, I suppose I am disappointed that in 44 years, things stay pretty well the same.

“People obviously have better living standards and we have the NHS, which was the big thing in the 1945/1950 government, but very little structurally changed.”

How have his core party values changed over the years? 

“I wasn’t mad happy about New Labour at the time but I saw us win three elections in a row and while we didn’t achieve some of the things I would have liked to achieve, I still preferred even having a New Labour Government instead of a Conservative Government and I accept that we wouldn’t have won if we had not moved in that direction.

“It is important that the present Labour Government, and I am a great admirer of Gordon Brown – he was a very good Chancellor and is a powerful man but things have gone a bit sour for him in recent times – can recover and produce a programme that can do what I came into the party to achieve – improve the standards for the ordinary people. 

“It is a worry that the parties become too similar and we will try too hard to win elections and lose sight of what we want to win elections for.

“In the last quarter of my political career, I have seen more changes in the Labour Party than anything that came before. It’s what you do with power once you have it that is the crucial thing. I would hope that the Prime Minister would not ditch the general Labour Party philosophy of wanting to help people, ordinary people, and that doesn’t mean necessarily that the very wealthy people should not earn more, that doesn’t bother me because they are a minority but the majority should be helped.

“Gordon Brown’s heart is in the right place, I might not have said the same about Tony Blair but I would about Brown. Gordon is more steeped in the party than me and desperately wants to do well. He has problems just now as a Scottish politician and with the Barnett formula right at the centre of that. He had another question about it recently and I was shaking my head vehemently as he said that it was based on need because it isn’t and even though there are leaks coming out, saying he wants a review, he doesn’t. Des Browne has said categorically both in Chamber and elsewhere that there is no question of a review. All that they have asked Alistair Darling to do is produce the facts. Well, I could do that in five minutes if they asked me – it’s not based on need. I dropped Gordon a note when he first became PM and he replied, ‘Dear Joel, we have a comprehensive spending review regularly and we have no plans to change it’, oh, dear, you see what I am up against?

“Our leader in the House of Lords tried to dissuade me from pursuing this review and said that Alistair Darling would be very upset with me and that he is worried about it and I said, ‘are you telling me that he hasn’t got bigger worries than the Barnett formula?’

“The Government is simply frightened of publicity in Scotland that would imply that they want to cut public expenditure in Scotland and that the SNP will hijack that. If, as I expect, when I have got my review and it says it should be based on need, the Government will dispute that and refuse to accept it, I am sure, because they are frightened of the political effects but it will be there on the record and one day it will be done.

“Michael Forsyth and Nigel Lawson have both said I want to get this off my shoulders and that I am worried about the burden. I pointed out that I don’t see it as a burden; I see it as wrong and needing to be resolved. I am not seeking the change because of the weight of this infamy on my shoulders. I want it reviewed because it is wrong. I never intended for it to last 30 years. It is actually a burden for everyone else. Governments don’t like change. Margaret Thatcher, John Major, you could have asked them if they kept this going because it was in the national interest, they couldn’t argue that and neither could Tony Blair or Gordon Brown.

“I don’t want to cause trouble for my party but I do want to right a wrong. If the conclusion is that this should be based on need then Scotland might not be any worse off but let’s review it and make it transparently fair and just and not open to perception, innuendo and a stick to beat a certain group of people in the UK with.

“I won’t give up on this. By keeping very, very busy, I have been able to survive 44 years in politics and continued to focus on the basics that first brought me into it and I can’t see there ever being a point when I will give up. You do see a lot of them in the House dropping off to sleep but if I want a sleep, I will go home to bed…this world of politics and debate is what keeps me alive.”