English subsidy of Scottish tax breaks must stop, says taxpayers group

19th September 2014

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A taxpayers’ group has called for the end of the unfair way of calculating funding in the UK that sees people in Scotland receive an extra £1,600 per person each year.

Earlier this week Lord Barnett, who masterminded the ‘Barnett Formula’ used to determine how much funding from public money each area of the UK should receive, called the calculation a ‘terrible mistake’ and a ‘national embarrassment’.

The formula, which was introduced in 1978, means parts of the country are heavily subsidising others and Taxpayers’ Alliance (TPA) has called for it to be scrapped.

TPA said it was calling on Westminster to ‘urgently address the substantial constitutional and financial issues thrown up by the referendum result’.

It said there was a public spending gap between England and the three home nations with devolved powers that means spending per head in Northern Ireland is £10,876, in Scotland it is £10,152, in Wales it is £9,709 but spending per head in England is just £8,529.

The group argues that with devolved governments spending gaps have been harder to justify and questioned whether higher spending in some home nations should be subsidised by other parts of the country.

Following the vote against independence, Scotland is set to get increased powers under ‘devolution max’, with the ability to control its own taxes, spending and welfare.

TPA is concerned that other parts of the UK will have to subsidise any extra benefits the SNP introduces and said they should be paid for by higher local taxes. As it stands, politicians in the three major parties have agreed to maintain the Barnett Formula and the unequal shares.

Jonathan Isaby, chief executive of the TPA, said: ‘The people of Scotland have spoken, but in their last-ditch attempt to save the union politicians have also save the unfair Barnett Formula. It is outdated and has spectacularly failed to address the extremely inequitable situation of taxpayers from one home nation heavily subsidising others.

‘English taxpayers want an end to subsidising Scotland and the Scottish government wants control devolved to Holyrood, so now is the ideal time to abolish the Barnett Formula entirely.’

 

3 thoughts on “English subsidy of Scottish tax breaks must stop, says taxpayers group”

  1. therrawbuzzin says:

    Scots are not subsidised, it’s a lie.
    We pay £1700pp more in tax than UK average.

    1. Noo 2 Economics says:

      I guess you’re not best pleased about today’s result?

      I wouldn’t worry whether Scots, Welsh or any other group are subsidised – it’s a standard feature of any group of regions.

      In the USA states like New Mexico receive way more federal public funds than they contribute whilst California contributes way more than it receives and no-one bothers stateside. It’s sad that a “United Kingdom” has factions like this Tax Payers Group….

  2. therrawbuzzin says:

    How about we swap then?
    Frame all UK Govt. economic policy to favour everywhere BUT the SE of England, and WE’LL subsidise you?
    Scotland loses 40000 graduates a year, most of them to SE England, and whose tuition is paid by Scottish taxpayers and YOU’RE SUBSIDISING US
    The TPA should be told to STFU.

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