Building a Conservative Majority (2)... Replacing the Barnett formula with a nationwide Social Justice Fund

By Tim Montgomerie
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Yesterday in the first part of this series on Building A Majority I advocated recruiting more northern Tory candidates. Today I turn to the Barnett formula.

(2) A FAIRER WAY OF DISTRIBUTING TAXPAYERS' MONEY ACROSS THE UK

One of the big themes of MajorityConservatism will be the need for a fairer constitutional settlement for England. The Coalition has dragged its heels on subjects such as English Votes for English Laws despite the best efforts of backbench MPs like Harriett Baldwin. I see both greater fairness and huge political opportunities for the Conservative Party if it champions the interests of England and of Wales.

I'll get into other parts of these 'English questions' on another day but want to start with the Barnett formula. Drawn up more than three decades ago by now Lord Barnett the formula distributes taxpayers' money across the UK. Even Lord Barnett now describes the formula as "unfair". On both the Left (IPPR) and Right (TaxPayers' Alliance) there is agreement that the formula is well past its sell-by date. Scotland and Northern Ireland receive a much greater share of UK taxpayers' money than need in either country would require. The biggest losers are the poorer English regions and Wales. There has long been a campaign in Cardiff for Barnett's reform.

This seems one of the great no-brainers of British politics. England is losing up to £4.5 billion every year because a Conservative-led government is sending that money to parts of the UK that stubbornly refuse to vote Conservative AND there is widespread agreement that the system isn't driven by social need.

The Liberal Democrats with nine Scottish MPs - but facing meltdown north of the border - are reluctant to tamper with the formula. There is also the question of the looming independence referendum. Some in Whitehall are understandably anxious about antagonising Scottish opinion. I do not think we should try and keep Scotland in the UK by bribing them. If the Barnett formula is unfair then it is unfair. Both the SNP and the Liberal Democrats make a big deal out of their commitment to concepts like social justice and solidarity. So let a Conservative Prime Minister call for the phased ending of the Barnett formula and over, say, five years the savings be poured into a social justice fund. This fund would be available to every part of the UK - including Scotland, Anglesey but also Hackney, and the poorest part of Britain, Jaywick Sands in Essex. It would fund projects that were working with the most disadvantaged people in Britain. It could be run in ways similar to the City Challenge programme introduced by John Major in the 1990s.

It would be a policy that was fair in two important ways: (1) It would be fair to England and to Wales and (2) fairer to Britain's poorest communities. It could be one of compassionate conservatism's biggest ideas. What is not to like?