HC Deb 06 March 2001 vol 364 cc135-7
3. Mr. Michael Fallon (Sevenoaks)

What recent discussions she has had with Treasury Ministers about the operation of the Barnett formula. [150735]

The Minister of State, Scotland Office (Mr. George Foulkes)

My right hon. Friend the Secretary of State and I have regular discussions with Treasury Ministers about a range of matters. The Barnett formula continues to provide a fair deal for Scotland within the United Kingdom and we have no plans to change it.

Mr. Fallon

Now that education and health spending are at least 25 per cent. higher per capita in Scotland than in England, and as that difference is paid for through the formula mainly by taxpayers in England, would not it be reasonable to invite the Scottish Parliament to use its tax-raising powers to enable Scottish decisions on higher teachers' pay or free nursing care, which it is fully entitled to take, to be financed with enthusiasm and integrity by Scottish taxpayers?

Mr. Foulkes

I do not think that the hon. Gentleman understands the question. The spending allocations in Scotland were originally based on a needs assessment. The Barnett formula allocates the increases each year according to population, so they an updated annually as the population changes north and south of the border. I have been considering his constituency, which has an unemployment rate of 1.5 per cent. My constituency has an unemployment rate of 6.6 per cent.

Mr. John Bercow (Buckingham)

Blame the MP!

Mr. Foulkes

The hon. Gentleman says "Blame the MP"; I thought that he was going to say "Blame the Government". I suppose that it is the same thing.

Although the rate has been reduced by a third since Labour came to power, it is still 6.6 per cent., which is more than four times that in the constituency of the hon. Member for Sevenoaks (Mr. Fallon). All the other indicators there are better than those in my constituency, too, which suggests that Scotland still has needs that do not exist in his part of England. Some parts of England will be receiving higher per capita expenditure than Scotland, however, as they also have substantial needs.

Mrs. Maria Fyfe (Glasgow, Maryhill)

Does my hon. Friend agree that those who seek to abolish the Barnett formula are doing Scotland a great disservice? Will he speculate on their motive for doing so?

Mr. Foulkes

I do not think that such people can be motivated by a desire for re-election in Scotland, which has clearly been abandoned by the Conservatives. Sometimes, Opposition Members say that the decisions taken by the Scottish Executive, who have a finite budget, create preferential treatment north of the border. Devolution means that they decide their own priorities. If they choose to spend more on one area, it means that less will be spent on another area. However, that spending is in the context of the fastest increasing budget in living memory north and south of the border. By 2003, the Scottish Executive will have £3.4 billion extra to spend because of a Labour Government, and they will spend it according to the priorities decided in Scotland.

Mr. Alasdair Morgan (Galloway and Upper Nithsdale)

Will the Minister concede that, year on year, the Barnett formula reduces the percentage of Government expenditure in Scotland? Despite that, the Government surplus of revenue from, against expenditure in, Scotland in the next couple of years will be approximately £7.7 billion, which should help to subsidise some Members and their constituents.

Mr. Foulkes

I find this a bit strange. The Tories from the leafy suburbs in the south-east claim that the settlement is too generous, while the nationalists whinge as usual and say that it is not generous enough. That suggests that it is about right.

It is good to see the hon. Gentleman in the Chamber. I am glad that we have fine weather for his day trip to London. I have here the Scottish National party's voting record in the House of Commons; it is appalling. There is one consolation: it is not the worst, simply the second worst after that of Sinn Fein.

Mr. Michael Connarty (Falkirk, East)

Will my hon. Friend assure us that the Barnett formula will be the prime method of calculating spending in Scotland, and that he will oppose the statements of Sir Malcolm Rifkind, who said that the Tories could not guarantee maintaining spending in Scotland and that there were several areas of spending the Tories would like to see cut"? Will my hon. Friend assure us that during the election campaign we will defend the Barnett formula against such an assault by the Conservatives?

Mr. Foulkes

As I said earlier, the Barnett formula is fair; it does not squeeze, but continues to provide a fair expenditure allocation to Scotland, based on need. Not only the Barnett formula but the Labour Government's huge increases in expenditure across the board benefit Scotland and, indeed, the rest of the United Kingdom.

Sir Robert Smith (West Aberdeenshire and Kincardine)

Does not the Minister realise that spending increases in the past two years have been to make up for the massive cuts in the first two years of the Government's tenure? At the end of their term of office, the percentage of gross domestic product that is spent on public services will be less than that under the Conservatives. The Barnett formula determines the amount of money that is available for investing in public services in Scotland. When the Minister discusses it with Treasury Ministers, does he appreciate that, in tomorrow's Budget, the Chancellor should put such investment before tax bribes for the election?

Mr. Foulkes

The Chancellor has put investment in public services at the top of the agenda. The Government have provided four times the increase in education expenditure that the Liberal Democrats requested. Whenever the election takes place, voting for the Liberal Democrats or the nationalists in Scotland will be one way of returning a Tory Government—

Mr. Malcolm Bruce (Gordon)

My hon. Friend defeated a Tory.

Mr. Foulkes

Who can tell the difference between him and a Tory? A Tory Government would not be committed to increases in public spending.

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