My Lords, as the noble and learned Lord, Lord McCluskey, said, the Barnett formula has been the subject of significant debate during the passage of the Bill and has been raised in various statements and at other opportunities. I do not propose to go over well-worn ground, but I recognise the strong views that the formula evokes, particularly in this House. As has been said at other stages in the Bill’s progress, the retention of the Barnett formula is a manifesto
commitment not just of the Government but of all three of the main UK parties. It will therefore continue to determine changes to the block grant resulting from changes in UK government departmental spending.
However, as my noble friend Lord Selkirk noted, the significance of the Barnett formula will be reduced, as over 50% of the Scottish Government’s budget will, in future, come from taxes raised in Scotland. As has been said before, the size of that budget will be determined increasingly by changes in Scottish taxes.
The amendments tabled by the noble and learned Lord call for a memorandum to be published within 30 days of the Scotland Act passing, providing additional detail on the future of the Barnett formula. We are already delivering the intent of these amendments. On Friday, the Chief Secretary to the Treasury placed in the Libraries of both Houses a supplementary technical annexe to the fiscal framework agreement. This sets out in detail how Barnett will operate in future, alongside the adjustments for new tax and welfare powers. Much of the detail of how Barnett operates is already published in the Statement of Funding Policy, which was last updated in November. The details of how the devolution settlement operates are also set out at each fiscal event.
In addition, we have listened to the views expressed in this House about transparency and reporting. The UK Government and the Scottish Government have agreed to report annually on the operation of the fiscal framework. Finally, in response to the House of Lords Economic Affairs Committee, the Treasury has undertaken to look at how the whole operation of the Barnett formula can be made more transparent. We on this side of the House fully expect scrutiny to continue beyond the passage of the Bill and therefore I urge the noble and learned Lord to withdraw his amendment.
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