Page last updated at 16:34 GMT, Tuesday, 17 June 2008 17:34 UK

Scotland budget method 'perverse'

Scottish bank money
Scotland's Treasury money is worked out from the Barnett Formula

The process which decides the level of cash Scotland gets from the Treasury is perverse and not efficient, a public spending expert has said.

Oxford University's Professor Iain McLean told MSPs the Barnett Formula was unsustainable in the long run.

His claim that Scotland was ready to look after its own taxes was welcomed by the SNP and Liberal Democrats.

The comments came as Holyrood's finance committee heard evidence from academic figures on the budget process.

Prof McLean, a public spending expert, is currently advising the Calman Commission review on devolution.

He told the committee inquiry: "I think you have excellently designed institutions for the budget process in an independent state, or a state with substantial fiscal autonomy.

Prof McLean's evidence points to one of devolution's fundamental flaws
Joe FitzPatrick
SNP MSP

"Of course what we have is neither of those."

Prof McLean's submission to the inquiry stated: "Barnett is unsustainable in the long-run. It is neither efficient nor equitable."

He continued: "It gives perverse incentives to the devolved administrations - their block grant is a function of a number they cannot control.

"In turn, their decisions have consequences which the UK government cannot fully control."

Stating public spending was higher per head in Scotland, Northern Ireland and London, Prof McLean, of Oxford's Nuffield College, said: "It probably derives not from greater need but from the more credible threat to the Union of the United Kingdom that they pose."

Labour MSP Elaine Murray said members of the public would never get interested as long as MSPs were forced to "shuffle the cards" dealt by Westminster.

Budget confusion

And after the committee meeting, Nationalist MSP, Joe FitzPatrick, said: "Prof McLean's evidence points to one of devolution's fundamental flaws - that we are spending money without direct responsibility for raising it."

Liberal Democrat finance spokesman, Liam McArthur, said the Barnett Formula provided stability during the early years of the Scottish Parliament, but added: "It is time to look again at how we fund our policy priorities."

The UK Government has said Scotland's share of public spending provided the same per capita spending increase as comparable government departments in England.

It added that Scotland also benefited "substantially" from the UK's continued strong economic growth and employment performance.

Edinburgh University professor, Irvine Lapsley, also told the committee there was "much to be proud" at the Scottish Parliament but Jo Armstrong, of the Centre of Public Policy for Regions, warned the budget process in Scotland was not fully understood.


SEE ALSO
Swinney lays council cuts blame
04 Apr 08 |  North East/N Isles
Money matters on timetable
06 Jun 08 |  Scotland
Salmond makes resignation threat
05 Feb 08 |  Scotland
Government warns budget critics
28 Jan 08 |  Scotland
Row over spending review figures
09 Oct 07 |  Scotland

RELATED BBC LINKS

RELATED INTERNET LINKS
The BBC is not responsible for the content of external internet sites


FEATURES, VIEWS, ANALYSIS
Has China's housing bubble burst?
How the world's oldest clove tree defied an empire
Why Royal Ballet principal Sergei Polunin quit

BBC navigation

BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.

Americas Africa Europe Middle East South Asia Asia Pacific