Consequentials

The funding of the devolved administrations - Scotland, Wales and Northern Ireland - was something that I once knew something about, so I was interested to read how the system now in place - rather more complicated than that which I knew - has ripped the Welsh off to the tune of £4bn.

Every year, government departments haggle with the Treasury about how much money they are going to get in the years to come, in particular in the year to come. Sometimes this haggling gets a bit noisy and a committee of senior ministers is convened to adjudicate. For these purposes the devolved administrations count as government departments.

In my time, the allocation of money to the devolved administrations was largely controlled by something known as the Barnett formula, named for Joel Barnett, Chief Secretary to the Treasury back in the days of Wilson and Callaghan, but invented back when Irish Home Rule was the issue of the day. It is described in brief at reference 2 and at length at reference 3.

Again in my time, the general idea was that if more money was allocated to an English programme like roads or health, then population related proportions of those increments were allocated to the devolved administrations. A crude, simple and reasonably fair arrangement which took most of the heat out of the annual round of haggling, then and probably now known as the Public Expenditure Survey. Provision was made for exceptions, that is to say haggling, for particular programmes where devolved circumstances might (arguably) be different.

From reference 1, it does look as if the Welsh have not done very well on the rail front. But maybe they have done well on other fronts, and the understanding was that one takes the rough with the smooth. In any event, reference 1 fails to allow for the convenience of the current arrangements. A convenience which has suited the parties well enough over the years and which has meant that various calls for upheaval have been quietly shelved.

That said, the current arrangements look a lot more complicated than those that I knew - with one of the complications being illustrated in the snap above, taken from reference 3. The complication there being that the devolved administrations now have some powers of taxation and the exercise of those powers needs to be properly allowed for in the block grant delivered by the Barnett formula. 

Furthermore, moving away from the bean counting which I was involved with, I read that '... If there is a disagreement between HM Treasury and the devolved administrations about the application of the Statement [reference 3], the relevant devolved administration can pursue the matter through the Finance Interministerial Standing Committee (F:ISC) Secretariat and Intergovernmental Relations (IGR) Secretariat and the dispute resolution mechanisms set out under the Review of Intergovernmental Relations'. Fancy sounding machinery which did not exist in my day.

A proper compromise between continuing with what we know and switching to some fine new system dreamed up by some academic?

References

Reference 1: It's the great Welsh train robbery - and a £4bn injustice - Will Hayward, Guardian - 2024.

Reference 2: https://en.wikipedia.org/wiki/Barnett_formula.

Reference 3: Statement of funding policy: Funding the Scottish Government, Welsh Government and Northern Ireland Executive - H M Treasury - 2023.

Reference 4: https://www.gov.uk/government/publications/communiques-from-the-finance-interministerial-standing-committee. The one that I looked at, the most recent, was fairly bland. Maybe the meeting itself was a bit rougher!