Barnett Formula ‘should be extended’
News
Northern England
BY LUCY PHILLIPS
The formula that allocates public funding per head to the devolved nations should be extended to regions in the North of England, according to a think-tank. The Smith Institute has warned that Yorkshire and the Humber, the Northeast and the Northwest would be disproportionately affected by spending cuts announced by the government. This is because of their heavy reliance on public sector jobs and fragile local economies. Paul Hackett, director of the think-tank, called for the Barnett Formula to be put in place in the North of England in the same way it was used to top up public spending in the nations during a period of hardship in the late 1970s.
Clipped wings: cuts
would be ‘disastrous’ for the North
local economies had been boosted in recent years by public sector investment. ‘If you apply the austerity package on a Whitehall-driven, departmental basis without consideration of how they will cut through, we could be creating really serious problems for the North, with little chance of pulling that back,’ he said.
He told Public Finance that applying cuts in a ‘crude silo manner’ across the country would have disastrous consequences for towns and cities such as Stockport, Hull Middlesbrough and Stoke on Trent, whose
The government has said it will retain the Barnett Formula for the nations. Before the election, however, both the Conservatives and Liberal Democrats indicated they would scrap the formula, which is perceived by many as deeply unfair.
Hackett condemned the coalition for failing to take regional discrepancies into account. ‘If it’s good enough for Scotland and Wales, why not for the northern regions?’
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10 PUBLIC FINANCE MAY 28–JUNE 3 2010
www.publicfi
nance.co.uk
PHOTO: PA
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