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House of Lords

Wednesday, 3rd December 1997.

The House met at half-past two of the clock: The LORD CHANCELLOR on the Woolsack.

Prayers--Read by the Lord Bishop of Bristol.

Scotland and England: Per Capita Payments

Lord Dean of Beswick asked Her Majesty's Government:

    What is the annual subvention from the Treasury per capita of population in England, Northern Ireland, Scotland and Wales, and what would be the cost to the Treasury of bringing the per capita payment in England level with that in Scotland.

Lord McIntosh of Haringey: My Lords, grant in aid is annually voted by Parliament to the Northern Ireland Consolidated Fund in respect of the difference between payments from the fund and its income from rates, other receipts and its attributed share of United Kingdom taxes. That subvention is estimated at £2 billion in 1997-98. No similar arrangement exists for other parts of the United Kingdom. Therefore, I am not able to give my noble friend the answer that he requires in respect of those other areas.

Lord Dean of Beswick: My Lords, is my noble friend at the Dispatch Box aware that, if one talks in simple financial terms, per capita of population £871 is paid for each person in Scotland in excess of that paid in England and that if we were to bring the 49 million people in the English regions up to that level, it would cost over £340 billion? Is my noble friend also aware that this week local authorities are being told the amount of grant they will receive? Is he further aware that, if Manchester, where I was eventually the leader of the council, was paid according to the Scottish formula, it would be drawing £348 million a year more than it is at present and that, if Leeds, where I was a Member of Parliament, was similarly treated, it would be drawing £450 million extra? Will there be equality during the devolution proceedings?

Lord McIntosh of Haringey: My Lords, the figures my noble friend gives are exactly the reason why we do not do that. I gave my noble friend the figures in respect of the subvention. The figures that he quotes relate to the general government grant to different parts of the United Kingdom rather than to the subvention, which is the difference between the grant and what is received by those different parts of the country. The impossibility of making such a calculation becomes more apparent when one considers smaller areas such as Leeds and Manchester.

Lord Campbell of Croy: My Lords, does the noble Lord agree that before the noble Lord, Lord Barnett,

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rationalised the differentials which were favourable to Scotland they had already existed for many years, based on what was called the Goschen formula, but that the public in Scotland were mostly unaware of that bonus, no doubt due to the complexity of the subject, as illustrated by the Deputy Prime Minister in his Statement yesterday?

Lord McIntosh of Haringey: My Lords, I was afraid that someone would tempt my noble friend Lord Barnett to intervene. I see that he intends to. The noble Lord, Lord Campbell of Croy, is right in saying that the Barnett formula was preceded by the Goschen formula in the 1880s. If I may say so, the Barnett formula is widely misunderstood. It refers only to changes in expenditure and is calculated strictly on a population basis rather than a needs basis.

Lord Barnett: My Lords, naturally I am flattered that the Barnett formula has lasted 20 years under a whole series of Chancellors, including the noble Lord, Lord Lawson. However, is it not a fact that the figures clearly indicate that expenditure per head in Scotland and in parts of England--not Wales, which is still suffering badly--is still so far out of line that there is a case for a Barnett formula Mark 2? Did my noble friend notice what the Prime Minister said recently--that, in the public expenditure review, nothing has been ruled in and nothing has been ruled out? Does that include the Barnett formula?

Lord McIntosh of Haringey: My Lords, I read very carefully my noble friend's evidence to the Select Committee on the Treasury in another place on 13th November. I notice that my noble friend refers to a "Barnett formula Mark 2" rather than to a new formula because he has become very attached to his name over the years. Of course, there is no commitment for all time to any particular formula. The advantage of the Barnett formula over the years has not been that it is based on strict rationality but that it avoids argument each year when the allocation of resources is determined.

Lord Mackie of Benshie: My Lords, does the noble Lord find extraordinary the amount of jealousy that devolution in Scotland engenders among noble Lords from other areas? It is a fact that the calculation has been made on the basis of need in those vast areas and on the lack of enterprise in Scotland compared with the spending in England. It would be interesting to hear from the noble Lord how much the Government spend in the London area as compared with Scotland. Does the noble Lord agree that, when we have a new formula (whether Barnett, Goschen or a mixture of the two), after five years there will be no question but that Scotland will have increased its prosperity to such an extent that there will be no need for any formula at all?

Lord McIntosh of Haringey: My Lords, I have much more sympathy than the noble Lord, Lord Mackie, for those in the English regions mentioned by my noble friend Lord Dean of Beswick who feel that they have had a hard deal over the years. I must correct the noble

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Lord. The Barnett formula does not represent need but is based on changes in expenditure and population. It has subsequently been justified on the basis of need by sparsity of population and so on, but that is really an argument ad hominem.

Lord Mackay of Ardbrecknish: My Lords, perhaps the noble Lord can confirm the following answer given to me on 11th June 1997 by his noble friend Lord Haskel:

    "There is no intention to make any alteration to the Barnett formula until the review has been completed".--[Official Report, 11/6/97; col. 930.]

Can the Minister further confirm that the review will not be about the Barnett formula and increases in expenditure by UK departments but about the base line? Can the Minister assure the House that in considering the Scottish base line proper account will be taken of Scottish need?

Lord McIntosh of Haringey: My Lords, the noble Lord is quite right in saying that the comprehensive spending review is about the base line. It is concerned with zero budgeting and achieves its strength exactly from that. However, as the noble Lord rightly says, the Barnett formula is based on changes, not increases, in public spending. The reason why my noble friend gave the answer he did in June was that, as the noble Lord, Lord Mackay, well knows, the Scottish and Welsh White Papers both make clear that for the purposes of devolution the Barnett formula is to be retained.

Lord Cledwyn of Penrhos: My Lords, I am grateful to my noble friend for drawing the attention of the House to the fact that Wales is suffering badly. What is my noble friend doing to put that right?

Lord McIntosh of Haringey: My Lords, I am not certain that either noble Lord is right. I do not believe that Wales suffers badly in terms of expenditure per head. I have no basis on which to calculate the subvention; that is, the difference between expenditure and receipts.

Lord Peyton of Yeovil: My Lords, if the Minister can shed the inhibition contained in his original Answer and let his mind range over the available evidence, can he resist the conclusion that the present situation is highly prejudicial to the north of England?

Lord McIntosh of Haringey: My Lords, I do not believe that I am in a position to speculate when I do not have the figures to do so.

Lord Lawson of Blaby: My Lords, does the noble Lord agree that the reason for the Barnett formula--

The Lord Privy Seal (Lord Richard): My Lords, I apologise for interrupting a distinguished former Chancellor of the Exchequer but we have spent nine minutes on this Question and we have three others.

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Primary School Class Sizes

2.46 p.m.

Lord Northbourne asked Her Majesty's Government:

    Whether all children under five years old who are in primary school reception classes enjoy a teacher/pupil ratio and other adult care appropriate to their age and needs.

The Minister of State, Department for Education and Employment (Baroness Blackstone): My Lords, information on reception classes will be collected centrally for the first time in January 1998. The Government are committed to providing a good quality free nursery place for every four year-old child, with early years development plans and partnerships ensuring that this has been achieved by September 1998. We shall also be consulting early in the new year on establishing a more uniform regulatory and inspection regime for early years settings, including reception classes.

Lord Northbourne: My Lords, I am grateful to the noble Baroness for her reply. Does the noble Baroness agree that children's first experience of school is an important factor in their subsequent progress and success in school? In reviewing the situation, and in the new arrangements to be introduced in March, will the Government consider the introduction of regulations to ensure that all local authorities are obliged to comply with the staff/pupil ratios which are already applied by law to the private and voluntary sectors?

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