Is the Scottish subsidy unfair?

The Daily Mail's analysis fails to take into account North Sea oil revenues. But the Barnett Formula

Today's Daily Mail leads on what it describes as the "yawning gap" between England and Scotland: public spending. The latest Treasury figures show that state spending in Scotland averaged £10,212 per head last year - £1,624 more than in England, where public spending is £8,588 per head. So, is this subsidy (I'll come to the issue of whether it really is a subsidy) as unfair as the paper suggests?

First, it's important to note that Scotland isn't the only part of the UK that receives a public spending premium (see Table 9.4). The national average was £8,845 per head but Northern Ireland spent £10,706 and Wales spent £9,829. There are also discrepancies within England itself. State spending averaged £9,503 per capita in the North East and £9,349 in the North West but just £7,691 in the East. The West Midlands received £8,618 per capita but the South East received £7,533.

Were spending consistently allocated on the basis of need there would be no reason to object. But in the case of Scotland (and Wales and Northern Ireland), funding is allocated through the Barnett Formula, an outdated population-based measure that even its founder (Joel Barnett) has argued should be scrapped. In 2004, he said: "It was never meant to last this long, but it has gone on and on and it has become increasingly unfair to the regions of England. I didn't create this formula to give Scotland an advantage over the rest of the country when it comes to public funding." Most analyses suggest that Scotland would lose out under a needs-based formula and reform is long overdue. But this remains one fight the government shows every sign of avoiding.

Much of the Mail's righteous fury, however, is overblown. The paper takes aim at the seeming panoply of benefits enjoyed by the Scots: free university education, free personal care for the elderly and free NHS prescriptions. But these policies simply reflect the spending priorities of the SNP government. There is no good reason, for instance, why English students could not also enjoy free higher education. The government's decision to triple fees to £9,000 was a political choice, not an economic necessity.

But if Scotland really is subsidised to the hilt, how large is its fiscal black hole? And can the country afford to go it alone? The Scottish adiministration's annual Government Expenditure and Revenue exercise, which calculates how much of the UK's revenue is raised in Scotland, and how much is spent in Scotland, attempts to answer this question. The latest figures from the Holyrood statisticians show that in 2009-10, Scotland borrowed £14.9 billion (13.4 per cent of GDP), a gigantic deficit by any measure. But if we factor in the country's geographical share of North Sea oil and gas, 81 per cent of which lies in Scottish waters, the deficit falls to £9.0 billion (6.8 per cent of GDP), a sizeable black hole but one that compares favourably with the UK-wide deficit of 9.8 per cent.

This leaves open the question of how Scotland will pay its way when the oil runs out (my answer: it won't) but it's also a reminder that the subsidy debate is rather more complex than the Mail's splash suggests.

George Eaton is political editor of the New Statesman.

Photo: Getty
Show Hide image

As crime moves online, the police need the investment in technology to follow

Technology offers solutions, not just threats.

It’s perhaps inevitable that as the world becomes more digital, so does crime. This week Alison Saunders, director of public prosecutions, recognised that online crime is as serious as face-to-face crime. “Hate is hate,” Saunders wrote referring to internet abuse, and the police should protect people from it wherever they are. This will add demand to under-pressure police forces. And it is only the tip of the iceberg. 

Forty-seven per cent of crime involves an online element. Police recorded 30,000 instances of online stalking and harassment last year. People are 20 times more likely to be a victim of fraud than robbery, costing businesses an estimated £144bn a year. On a conservative estimate, 2,500 UK citizens use the anonymous dark web browser, Tor, for illegal purposes such as drug dealing, revenge porn and child sexual exploitation.

The police need new technology to meet demand, a Reform report published today finds. Some progress has been made in recent years. West Midlands Police uses an online portal for people to report incidents. Durham uses evidence-gathering software to collect social media information on suspects, and then instantly compile a report that can be shared with courts. Police have benefited from smartphones to share information, and body-worn cameras, which have reduced complaints against police by 93 per cent.

Yet, Theresa May’s 2016 remarks that police use “technology that lags woefully behind what they use as consumers” still stand. Officers interviewed for Reform’s research implored: “Give us the tools to do our job”.

Online evidence portals should be upgraded to accept CCTV footage. Apps should be developed to allow officers to learn about new digital threats, following the US army’s library of knowledge-sharing apps. Augmented-reality glasses are being used in the Netherlands to help officers identify evidence at digital crime scenes. Officers would save a trip back to the station if they could collect fingerprints on smartphones and statements on body-worn cameras.

New technology requires investment, but forces are reducing the resources put into IT as reserves have dried up. Durham plans to cut spend by 60 per cent between 2015-16 and 2019-20. The government should help fund equipment which can meet demand and return future productivity savings. If the Home Office invested the same as the Department of Health, another department pushing “transformative” technology, it would invest an extra £450m a year. This funding should come from administrative savings delivered through accelerating the Government’s automation agenda, which the think tank Reform has previously calculated would save Whitehall £2.6bn a year.

As crime moves online, police must follow. Saunders is right to point to the importance of meeting it. But technology offers solutions, not just threats. Installing the next generation of equipment will give police the tools to do their jobs, addressing online hate and more. 

Alexander Hitchcock is a senior researcher at reform