Inequalities - Motion to Take Note

Part of the debate – in the House of Lords at 4:23 pm on 30 November 2017.

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Photo of Lord Richard Lord Richard Labour 4:23, 30 November 2017

My Lords, I start by congratulating my noble friend Lord Liddle on securing this debate and on the detailed, magisterial and persuasive way in which he opened it. I was slightly worried about whether what I was going to say would fit into the pattern of the debate. However, I am grateful to my noble friend Lord Parekh, because he has reassured me firmly that what I will say will, I hope, be of some relevance.

My noble friend Lord Liddle and other speakers have demonstrated clearly that there are economic, social and cultural inequalities between different parts of the United Kingdom. I do not propose to look at the economics of the situation, but I have some comments to make about the politics.

One thing that most concerns me is the haphazard, asymmetric and almost capricious way in which we are developing a pattern of devolving powers in this country. In some ways, this is really rather strange since, whenever the British set up a constitution for a former colony, or when, for example, it advised the then German Government on a proposed constitution for a federal Germany, the tendency was always in the direction of political symmetry, not asymmetry. However, the situation that we now have in the United Kingdom, in which different parts of the UK have different patterns of devolution, seems to be potentially dangerous and unstable, and what I have heard in today’s debate slightly reinforces my fears in that respect. The more we go down that particular road, the worse it will get. That is particularly so given the way in which powers are now being increasingly devolved not only to the nations that make up the UK but to the cities and regions. It is an untidy and almost quaintly eccentric way to behave. It reminds me a bit of the Chesterton poem “The Rolling English Road”, which he described as:

“A merry road, a mazy road, and such as we did tread

The night we went to Birmingham by way of Beachy Head”.

We now have a new British creation. It is individualistic, idiosyncratic and inefficient and, unless we are very careful, it will soon become traditional and, as such, deemed worthy of historical respect. I really do not think that this country can go on affording such a luxury for very much longer.

However, if there is a need for political symmetry, the other side of the coin is that there is clearly a need for greater financial equalisation, which brings us to our old friend the Barnett formula. I do not think that you can produce greater equality between the different parts of the United Kingdom unless and until you can produce greater equality of contributions from central government to those parts. In 2008, I had the honour of chairing a committee of this House which considered the Barnett formula. It concluded that the Barnett formula should no longer be used to determine annual increases in the block grant for the UK’s devolved Administrations. The formula accounts for around £50 billion of public spending each year. It has been neither reviewed nor revised during the last 40 years, and indeed it was totally disowned by its originator, Lord Barnett himself.

The main recommendation of that committee—I commend it to the House this afternoon—was:

“A new system which allocates resources to the devolved administrations based on an explicit assessment of their relative needs should be introduced. Those devolved administrations which have greater needs should receive more funding, per head of population, than those with lesser needs. Such a system must above all be simple, clear and comprehensible. It must also be dynamic: able to be kept up to date in order to respond to changing needs across the United Kingdom”.

I can see no reason at all why precisely the same principle should not apply to the regions and cities of Britain as a whole as it could apply to the devolved Administrations. It seems to be common sense that needs should be the determining factor in deciding the size of central government allocations. Can this be achieved? I think that a major examination of the scope and extent of devolution is needed, whether that applies more to the nations of Britain or also to the cities and other regions. It really should not be beyond the wit of man to devise a system in which needs are assessed and moneys are distributed accordingly. Indeed, our committee in 2008 pointed the way forward.

It could be done if the Government are prepared to do it. My noble friend’s Motion calls for a fuller examination of this problem. Potentially, it raises issues of profound constitutional importance—I do not deny that—but we surely have to start this process with serious and detailed consideration of this issue and the numerous other issues that it raises.

I hope that the Government will at last have the courage and the determination to look at this problem in its entirety and not roll around it in a charmingly eccentric, almost Chestertonian way, attractive on the surface but inherently dangerous underneath. I hope that will happen but, given my past experience, I am not holding my breath.