Equalisation of public funding across the regions

Scotland, Wales and Northern Ireland receive significantly higher public expenditure per person than England. In the latest Public Expenditure Statistical Analyses (2008, Chapter 2, Tables 9.1 and 9.2), the average expenditure per head on regionally specific issues (e.g. excluding things like defence which are hard to assign the benefits geographically) is £7,790, but

  • £9,179 in Scotland,
  • £8,566 in Wales,
  • £9,789 in Northern Ireland and
  • £7,535 in England.

If each region got equal amounts, we'd save £7.1bn on transfers to Scotland's 5.14m population, £2.3bn on Wales's 2.98m population, and £3.5bn on NI's 1.76m population. We propose that public funding within these categories in Scotland and Wales should be reduced to nearer the English average, and count £9bn of saving in our budget from doing so. After all, the Scots can hardly claim that it is done simply on the basis of need when they have provided full public-funding for some health and education facilities that are not fully-funded in England.

Given the history, you wouldn't move too quickly to pull the plug on the latter, though it should be the long-term objective for NI to establish a thriving economy that is less reliant on public spending. Public-sector employment can crowd out the private sector, so public-sector spending should be reduced proactively to encourage the private sector, rather than waiting for the private sector to show that it is ready to take up the slack under the burden of such public-sector dominance in the economy.

This will gradually equalise under the Barnett Formula (which was only intended to be a temporary measure), but it will take 30 years. That seems a bit long to wait. And in the most recent year, the gap actually increased with Scotland and NI, though the Welsh did particularly badly out of the changes that year.

Similar calculations can be done for the English regions. The South East (excluding London) does particularly badly, presumably because employment was (until recently) relatively high. London does exceptionally well, though they justify their favoured treatment by reference to the amount of tax paid in the capital. But rather than being based on economic contribution or need, the strongest correlation seems to be between high-spending areas and traditionally Labour-supporting areas.