£4bn cut to Scottish budget looms as Cameron letter fails to curb Barnett fears


  By Martin Kelly
UK Prime Minister David Cameron has come under pressure to clarify whether the Barnett Formula will be scrapped after refusing to guarantee its continuation.
Mr Cameron was responding to a letter sent by First Minister Alex Salmond that had asked if the PM could guarantee the funding mechanism would remain in the event of a No vote.

Despite saying a change was “not on the horizon”, the Conservative leader refused to confirm if that meant no future change would occur.

Mr Cameron wrote: “Your request for guarantees in perpetuity about the future is quite astonishing; I can no more bind future UK governments than you can bind future Scottish governments.

“What I can say is that reform of the Barnett formula is not on the horizon.

“Indeed, the only immediate threat to Scotland’s funding is a vote for independence.”

The Prime Minister’s response has been seized on by Deputy First Minister Nicola Sturgeon who accused him of refusing to give any assurances on what happens in the event of a No vote despite demanding guarantees from the Scottish Government on their post Yes plans.

“David Cameron has finally let the cat out of the bag. He has admitted he is unable to give any guarantees on what will happen to Scotland’s budget in the event of a No vote – despite demanding absolute guarantees on every aspect of a future independent Scotland.” said Ms Sturgeon.

Earlier this month concerns over Scotland’s future funding under Westminster were raised after an All-Party Parliamentary Group recommended the Barnett Formula, which is used to calculate funding for Scotland, Wales and Northern Ireland should be scrapped.

The Scottish Government has calculated that scrapping the system, which sees Scotland receive a budget based on English public spending, would mean a £4bn cut to the Scottish block grant.

The SNP has highlighted comments from the Prime Minister himself in which he made it clear that the Barnett Formula would soon be scrapped.

Speaking to Wales Online in 2010, Mr Cameron said: “We do think the Barnett formula is coming to the end of its life.

“But the assurance I would give to people is that if you replace the Barnett formula you have to replace it with a needs-based formula …”

Ms Sturgeon added:
“His comments on what is ‘on the horizon’ for the Barnett formula give the game away completely because it is what is just over the horizon that people should be concerned about, and the PM himself is on record as saying Barnett is ‘coming to the end of its life’.

“The Westminster parties are determined to slash Scotland’s cash in the event of a No vote, by up to £4 billion a year, and only a Yes vote will prevent that.
“Once again David Cameron is entering the discussion on Scotland’s future without having the courage to debate the issues openly – if he is so sure of his arguments he should now agree to a head to head debate with the First Minister.”

Calls for the Barnett Formula to be scrapped have been made by all Unionist parties in recent years.

In 2007, former Scottish Labour leader Wendy Alexander gave a speech in which she said the system had to be replaced.

In their 2010 manifesto, the Lib Dems vowed to replace Barnett with a “needs-based formula”.  Three months earlier, Chancellor George Osborne pledged “a needs based assessment across the UK”.

In 2011, Labour councillor David Sparks claimed the system disadvantaged English councils and called for a review. 

In January 2012 several Conservative MPs called for the Barnett Formula to be scrapped.

Gordon Henderson, the MP for Sittingbourne and Sheppey, said: “There is increasing resentment within England about this – there is a feeling that we are treated less favourably,”

He added: “The Barnett Formula is well out of date and needs to be scrapped entirely.”

In July 2012 Mr Henderson said: “It is simply wrong that English taxpayers are being asked to help subsidise for people living in Scotland a range of services not available in England, including free prescriptions, free hospital parking, free accommodation in care homes and free university tuition fees.

“There is widespread agreement that the Barnett formula has to be scrapped and replaced with a fairer system. Indeed, the House of Lords made it clear a couple of years ago that the formula was not fit for purpose.

“Something has to be done before the justifiable resentment felt by many people about the unfair subsidy English taxpayers are expected to contribute towards superior services north of the border, manifests itself in an anti-Scots backlash.”