By Lucy Phillips
25 May 2010
The formula which allocates public funding per head to people in Scotland, Wales and Northern Ireland should be extended to regions in the north of England, according to a think-tank.
The Smith Institute has warned that Yorkshire and the Humber, the Northeast and the Northwest would be disproportionately affected by spending cuts announced by the government because of their heavy reliance on public sector jobs and fragile local economies.
Paul Hackett, director of the Left-wing think-tank, called for the Barnett Formula to be put in place in the north of England in same way it had been introduced to top up public spending in the nations during a period of hardship in the late 1970s. He told Public Finance that applying cuts in a ‘crude silo manner’ across the country would have disastrous consequences for towns and cities such as Stockport, Middlesbrough, Hull and Stoke on Trent, whose local economies had been boosted in recent years by investment.
‘If you apply the austerity package on a Whitehall-driven, departmental basis without consideration of how they will cut through, we could be creating really serious problems for the North, with little chance of pulling that back,’ he said.
Yesterday, the new government announced £6.2bn of spending cuts to be made this year, but said it would retain the Barnett Formula for the nations. Before the election, both the Conservatives and Liberal Democrats indicated they would scrap the formula, which is perceived by many as deeply unfair.
Hackett condemned the coalition for failing to take regional discrepancies into account. ‘If it’s good enough for Scotland and Wales, why not for these three northern regions?’ he said.
But he welcomed the coalition’s decision not to scrap regional development agencies entirely, as originally signalled. In today’s announcement, the chancellor said £270m would be cut from ‘lower value’ RDA spending.
25 May 2010
The formula which allocates public funding per head to people in Scotland, Wales and Northern Ireland should be extended to regions in the north of England, according to a think-tank.
The Smith Institute has warned that Yorkshire and the Humber, the Northeast and the Northwest would be disproportionately affected by spending cuts announced by the government because of their heavy reliance on public sector jobs and fragile local economies.
Paul Hackett, director of the Left-wing think-tank, called for the Barnett Formula to be put in place in the north of England in same way it had been introduced to top up public spending in the nations during a period of hardship in the late 1970s. He told Public Finance that applying cuts in a ‘crude silo manner’ across the country would have disastrous consequences for towns and cities such as Stockport, Middlesbrough, Hull and Stoke on Trent, whose local economies had been boosted in recent years by investment.
‘If you apply the austerity package on a Whitehall-driven, departmental basis without consideration of how they will cut through, we could be creating really serious problems for the North, with little chance of pulling that back,’ he said.
Yesterday, the new government announced £6.2bn of spending cuts to be made this year, but said it would retain the Barnett Formula for the nations. Before the election, both the Conservatives and Liberal Democrats indicated they would scrap the formula, which is perceived by many as deeply unfair.
Hackett condemned the coalition for failing to take regional discrepancies into account. ‘If it’s good enough for Scotland and Wales, why not for these three northern regions?’ he said.
But he welcomed the coalition’s decision not to scrap regional development agencies entirely, as originally signalled. In today’s announcement, the chancellor said £270m would be cut from ‘lower value’ RDA spending.
