Examination of Witnesses (Questions 40
WEDNESDAY 28 JUNE 2000
40. So nothing automatic, but in the hands of
the Treasury to note?
(Mrs Brown) Yes, if it is not already listed as a
comparable sub-programme there would have to be some special process
to get it into that list.
41. Is that listed, in terms of railways?
(Mrs Brown) There is a listI think the most
up to date list of comparable sub-programmes is included in a
document that Treasury issued at the end of March 1999 about funding
arrangements for the Scottish Parliament, National Assembly for
Wales and the Northern Ireland Assembly and there is an annex
which lists a range of sub-programmes and shows the extent to
which, if at all, they are readable across to Scotland, Wales
and Northern Ireland.
42. And is there a mention of railways within
(Mrs Brown) There are some mentions of railways; from
a quick look at them I do not see read-across to the devolved
administration, but the sort of things I am looking at are British
Rail privatisation, British Rail pension funds, residual British
Railways grant, British Railways Board, London Regional Transport,
Rail Consultancies and so forth.
Mr Clarke: Okay. I think that concludes my questions,
Chairman: You must tell me if this is an unreasonable
question? Ah, we are going to be interrupted by a Division in
the House of Commons, on the floor of the House. It is now 21
minutes to 5. I suggestand we apologise to you for this
break, but it does happen. I suggest that the Committee reconvenes
at 10 minutes to 5; that gives us 11 minutes to vote.
The Committee suspended from 4.38pm to 4.51pm
for a Division in the House.
43. I will carry on and I was going to ask a
question that you might say is outside your terms of reference
and you could not answer, but it follows on the questions which
Mr Clarke was asking you about the Barnett Formula. We are, of
course, conscious that we are meeting in the shadow of the irony
of Lord Barnett's own evidence to the Treasury Select Committee
last week in which he made it perfectly clear that the arrangements
which were established in 1979 to which the name the "Barnett
Formula" has been accorded by virtue of his being the Chief
Secretary to the Treasury at the time, were really pretty rough
and ready and they may have served very well as a formula in the
period since, but that they were not in fact the product of any
very precise analysis of need in the various component parts of
the United Kingdom and in that sense they were statistically formulaic.
The question I wanted to askand you must forgive me for
its innocenceas I understand it, during the period prior
to devolved administration and in particular in the period before
the cease-fire, the decisions taken by the Government in terms
of the money they were receiving under the Barnett FormulaI
am ignoring Ministry of Defence spending which was obviously quite
separatewould have caused there to be a bias on the part
of the Government towards Law and Order spending, security spending
in the nature of the problems which the Province then had? First,
is that a fair question?
(Mrs Brown) Yes.
44. It is both a fair question and the observation
(Mrs Brown) Yes.
45. Right. Now if we move to a situation of
a devolved administration where the devolved administration is
going to take over in terms of what we are now talking about a
very considerable slice of public expenditure transferred over,
the fact that there has been an historic bias in favour of Law
and Order expenditure, which I understand is not being transferred,
would that in fact have produced a bias in terms of the amount
that is transferred?
(Mrs Brown) I believe not. Under direct rule the bias
towards spending on Law and Order was a bias decided upon by Government
Ministers in Northern Ireland because they set
46. I understand that. It is the consequences
now that quite interest me?
(Mrs Brown) As to whether the devolved administration
has lost access to that funding?
47. Is there a division in terms of security
spending between what remains with the Secretary of State and
what is transferred to the devolved administration?
(Mrs Brown) Yes, the Secretary of State retains responsibility
for the funding for policing, criminal justice, etcetera and that
is in Vote 1.
48. I am sorry; you must forgive the innocence
of my question. If, because of the historic bias, there is more
money going into Vote 1not more money overallbut
there is a distorting bias into Vote 1 because of history, does
that confer an inflexibility on the resources available under
(Mrs Brown) The Northern Ireland block which existed
during direct rule was split in preparation for devolution and
at that time there was the split between NIO's Vote 1 which we
retained and the money for the devolved administration in Vote
2. A decision was made on the quantum of resources which should
go to the devolved administration as opposed with staying at the
Northern Ireland Office and that took account of the needs which
the Northern Ireland departments were projecting and the views
of the Government as to how that money might best be used to serve
Northern Ireland as a whole. So the split between security funding
and non-security funding was made on the basis of a very conscious
decision about trying to get the right balance. Subsequent to
that, the money that the Northern Ireland Office has for security
expenditure is something which is scrutinised closely by Treasury
and it is not a case that we can assume that what we have we hold
or that we get automatic increases if we ask for it. Our budget
now is a matter of negotiation with Treasury.
49. And therefore is outside the Barnett Formula?
(Mrs Brown) Yes, it is.
50. Right, and to ask a peculiarly ignorant
question, and has always been? I would be a little surprised if
it had always been.
(Mrs Madden) When the Law and Order Vote was part
of the Northern Ireland block finances, it wasas were all
of those financesdone through the Barnett Formula and it
is only since devolution that the resources have been split between
what remains in the Law and Order Vote and Vote 1 and the moneys
that have moved to the devolved administration has the Law and
Order Vote now been assessed on need and not Barnett because we
are now, in fact, a stand-alone Whitehall department which bids
to Treasury for its needs.
(Mrs Madden) Whereas the Northern Ireland Assembly
bids on the basis of Barnett and has Barnett as the funding arrangements
that have been decided upon by Treasury for funding all three
of the devolved administrations. Barnett continues to be the mechanism.
52. But let meagain, I apologise for
my ignorance, in the case of Scotland and Wales, are they also
stand-alone in terms of their negotiation with Treasury, that
part of it that is not devolved?
(Mrs Madden) Scotland Office stands alone as I understand
it and bids separately to the Treasury for its funding. The Scottish
Parliament is funded through the application of Barnett. As far
as I understand the position to be.
53. Yes, and do you have a view about Wales?
(Mrs Madden) I understand that Wales is the same.
Certainly the Welsh Assembly and the Scottish Parliament and the
Northern Ireland Assembly all are funded through the funding arrangements
which Treasury have published and assessed through the mechanism
of Barnett. The Secretary of State for Northern Ireland is in
a quite unique position where he holds responsibilities which
have not been devolved to the local administration and in his
instance he applies to Treasury for his funding on the basis of
54. So any distorting effects of the security
expenditure which might have existed under direct rule has effectively
been eliminated by the separation of the funding and security
being made a straight forward piece of negotiation between the
Northern Ireland Office and the Treasury.
(Mrs Brown) That is correct.
Chairman: You have been extremely helpful and
I am very grateful to you for having answered the questions which
I asked. If you decide you want to modify any of the answers afterwards,
do not hesitate to do so. Mr Thompson?
55. Just before I ask this other question, could
you just say a little bit more about the last questions. Under
direct rule when we had severe security problems, the overall
expenditure in Northern Ireland was based on a direct grant which
presumably in some way related to the whole Government expenditure
in the United Kingdom. As the security requirements decreased
was there then virement between the Northern Ireland Office and
the Northern Ireland departments and now with the separation,
does that mean that if the security expenditure goes down does
that money go back to the Treasury and not back to the environment
through to the Northern Ireland departments?
(Mrs Brown) If I answer your second question first,
that is correct. If NIO does not require as high a level of resources
for security next year as it did this year, the money would go
back to Treasury or back to the centre rather than moving to the
Northern Ireland departments. In the past, decisions about levels
of expenditure were made indeed on the basis of looking at the
Northern Ireland block and decisions were made as to the relative
priorities of security versus health versus education,
etcetera and money was able to shift freely to and from security
56. Does that not in effect mean the Northern
Ireland departments now are, to some extent, at a disadvantage
to what they were at when they were under direct rule?
(Mrs Brown) That is difficult to say because I suppose
it depends on the state of the security situation and the way
in which it developed. There were times in the past where actually
with the Northern Ireland system, the local departments would
have felt at a disadvantage from being part of one block because
when the security situation was bad and additional security resources
were needed; those effectively had to be drawn by finding savings
in the Northern Ireland departments' programmes. So it could work
57. But the overall block under direct rule
was based on the formula that gave the proper proportion and fairness
to Northern Ireland, is that right?
(Mrs Brown) That is what it attempted to do. That
is what it was meant to do. There are different views as to whether
it was completely successful in doing that.
58. How can it now be guaranteed that when the
two blocks are separated that Northern Ireland overall gets its
proper share of the UK resources?
(Mrs Brown) That is the situation where Northern Ireland
has to depend on Barnett and any special pleading, special negotiation
it can make to Treasury. I am sure if you were asking that question
of the devolved administration, the devolved administration would
say it does not have as much resources as it wishes to have or
as it needs to have; that is the view of the devolved administration.
I am sure if you were talking to Treasury you might get a rather
different perspective on it.
59. Could we also add, or in the past it might
have been able to have?
(Mrs Brown) I do not quite follow your question.