Talk:Barnett formula

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[edit] Oil revenues and NPOV

I removed "Scottish oil revenue subsidy that England receives from Scotland, estimated at £200bn since 1975" as POV. If it is to remain, I think it would need

1. a source which is not the SNP: the Treasury says UK North Sea revenues in 2004-05 were just over £5bn [1], some of which comes from natural gas from the southern North Sea, so the figure is not impossible though it looks high at first glance
2. a differential public expenditure analysis: my quick reading of [2] suggests that Scotland was getting about £7bn more a year in 2004-05 than it would if public expenditure levels were the same per capita as in England (a difference of about £1400 per head times a 5 million population)
3. a differential tax analysis covering other taxes: I don't know a source for this but I would be surprised if as much per head was collected in Scotland as in England in income tax, national insurance, VAT or non-North Sea corporation tax

Without this balance the statement is just spin from a political party as in [3]. --Henrygb 00:53, 16 February 2006 (UTC)

1 Oil revenues take into account more than just corporation tax derived from them there's also the Petroleum Revenue. According to the Royal Bank of Scotland [4] revenues were £9.1bn in 2005 and to this year, and forecasted to be £11.7bn this fiscal year to March 2007 - when one takes into account all of the revenue derived from Scottish Oil.

Those are the same numbers as mine - which also include corporation tax: the £9bn in 2005-06 and £12 bn in 2006-07 also include a windfall tax, while the £5bn in 2004-05 and £4bn in 2003-04 are more typical of recent levels of receipts.

It doesn't matter, those levels ameliorate Scotland's "supposed" fiscal deficit. Whether there is a windfall tax or not is absolutely irrelevant - oil taxation has been altered innumerable times over the last 30 years - royalties were abolished some years ago, and taxation structures - for corporation tax have changed over that period too. The £12bn level is very close to the £15bn accrued by the government in 1984/85 - when the North Sea was at its most productive.

2 Recently there was evidence, unearthed by a Radio 4 programme [5].

That was based on papers written before rather than after the receipts started coming in.

And if you actually listen to the programme in question, which features interviews with those involved at the time, with retropect you'll hear politicians and ministers - such as Dennis Healey - admit their calculations were an "underestimate" of the true position.

3 Even as far back as 1997, Government Ministers admitted the net subsidy Scotland had paid the UK was at least £27.1bn [6].

That is interesting, though severely spoilt by the requirement in the question that a constant figure was needed for Scotland's share of the deficit (17.9% in 1994-95 is twice Scotland's population share). Adding up the oil revenues (on Salmond's assumption of 90%) for those 17 years gives £69bn. The fairly meaningless £27bn figure is decreasing over time from 1991-92 onwards.

It still shows quite a few years of Scottish subsidy to England, I do agree the conditions were very strict, and of course apportioning a 17.9% deficit to Scotland is utterly ludicrous, given its population share, wealth share and even hypothesised fiscal deficit, but it still on balance shows net outflows from Scotland to England, which I'm afraid are indicative of a subsidy, even with these, rather strict, terms. You should also note in that figure the oil revenues ARE NOT standalone, and they are at "current prices" - presumably 1997 prices, which makes a substantial difference, to their true value - that's just simple economics.

4 Of course there is the problem of differential tax analysis. But the fundamental point is oil isn't allocated to Scotland's fiscal position - it is, by proxy, allocated to the rest of the UK's. However, Scotland has 8.6% of the UK population, and its share of receipts is here [7] - crucially which doesn't include oil.

That publication as a whole [8] is a useful source. Among other things, it suggests that UK North Sea receipts in total were £105.5bn from 1980-81 to 2003-04 (an they were minimal before that). It also quotes an analysis from the University of Aberdeen suggesting about 75% of this was "Scottish".

The above listing for Radio 4, indicates that the Government had alternative views - over 90% types of views - the 75% figure is utter conjecture, the share of Scotland's oil is dependent on the productivity of fields, in production, those going out of production and those coming into production - using these figures, indicates an almost exclusive share, rather than a spurious geographical definition. I hardly think that the levels before 1980 were insignificant - the first Oil Taxation Act was passed in 1975 as oil first came ashore, they were around £4-5bn - at those years prices - certainly enough to rescue a bankrupt economy that was desparate to raid the riches from the North Sea, to maintain its integrity at that time

I am far from interested in what Scotland get spent on it by central government (because that is a large can of worms - especially when a little digging shows many non-Scottish elements that are included in it). The more interesting and more important question is how much Scotland accrues in Revenue and its long term net fiscal position. I also don't support the SNP, nor am I a member.

And that ultimately is the key point. The Barnett formula is and always has been solely about what Scotland (and Northern Ireland and Wales) gets spent on it by central government, or at least changes in that amount. It has nothing to do with revenues, as the article now says. And so £200bn, which now looks clearly inconsistent with other sources, does not belong in the article, and as a bald unbalanced statement is also POV. --Henrygb 13:03, 16 February 2006 (UTC)

£200bn is the widely accepted figure, it is actually, if anything an underestimate - but I suspect, given the conflicting evidence we'll never truly know - and Scotland will never truly know what it has lost.

Quite a bit of information about this subject here - It's Scotland's oil for cross reference.--Gavinio 10:49, 8 September 2006 (UTC)

[edit] Rewrite

Read quite a few academic papers and official documents, and added a heap of stuff, referenced as far as sensible. Hope people think it's OK. I've tried to cover both points of view equally.

If it seems a bit concentrated on the Scottish/English allocation debate then sorry - it's merely that that's the angle most documentation (including government) takes on the matter. The addition of further Welsh or NI issues would be welcome if anyone can find a suitable source.

Cheers!

Mauls 00:28, 18 March 2006 (UTC)

[edit] Disagreement

As far as I can tell, this article is saying that the formula has nothing to do with regional needs etc. However, Joel Barnett's article says it does, and I don't think they can both be right :S

That issue had been addressed here with referenced source documents. The Joel Barnett formula statement wasn't sourced, so I have changed it into a bland statement that the formula exists and it's most basic purpose (dividing funds between the Home Nations). There's no point replicating this article as a section of Barnett's biog!