Belfast Telegraph

Home News Politics

Rebellion in Tory ranks over money coming to Northern Ireland

Mounting anger over our cash allocation adds to PM’s woes as Ukip defector takes victory in by-election

By Adrian Rutherford

Tory MPs are in open revolt over the Prime Minister's failure to reform a public spending system skewed in Northern Ireland's favour.

David Cameron is facing an angry backlash from within his party after signalling the Barnett Formula will not be reviewed.

Some £10,876 is spent per person here each year - 28% more than those living in England.

In addition to higher public spending, Northern Ireland also looks set to get the power to set a lower corporation tax than England and tuition fees here are less than half the cost for those studying in England.

Despite growing calls to reform the Barnett system, Mr Cameron has said it won't happen in the near future, comments at odds with Conservative MPs who believe a fairer distribution of the UK's wealth is long overdue.

One MP said it was unfair that her constituents were living in poverty while Northern Ireland enjoyed higher spending per head.

The mounting rebellion added to Mr Cameron's woes as he dealt with the fallout of Ukip's victory in the Rochester and Strood by-election.

With a general election just months away, Conservative MPs are vulnerable to the growing threat of Ukip. Its leader Nigel Farage has already vowed to review the Barnett Formula.

However, appearing before a Commons committee this week, Mr Cameron said reform of the Barnett Formula was not "on the horizon".

He said there was no better alternative, adding: "If you don't have the Barnett Formula, you would have to have another formula."

His comments came at the same time as a Commons motion, backed by 70 Tory MPs, calling for a review of the Barnett Formula was taking place.

Anne Main, an MP for St Albans in England, said her constituents deserved good services as much as those in Northern Ireland.

"Far less money is spent on my constituents and I find it hard to justify to them that in my constituency, which contains areas of multiple deprivation, people get some 11% less than the UK average, 23% less than Scotland gets and 28% less than Northern Ireland gets," she said.

Ms Main was not available for comment yesterday.

But David Mowat, who represents Warrington South, agreed the current system was unfair.

He told the Belfast Telegraph: "If my constituency was in Scotland, with broadly the same demographics, it would receive £1,000 per person more in public spending.

"Over time we should move to a system that's based on relative need. That should be the basis of public spending."

Dominic Raab, who is MP for Esher and Walton in Surrey, said the Barnett Formula was divorced from reality.

"That formula is based on outdated spending patterns and population numbers and is already divorced from any objective assessment of real need across Britain," he said.

However, Northern Ireland politicians have vowed to resist any attempts to meddle with our cash allocation.

UUP leader MIke Nesbitt said the region was a special case.

He also warned that any new bodies to resolve legacy issues, which are being discussed during the ongoing inter-party talks, will have to be financed.

"There are times when we have to make a special case for Northern Ireland because of Northern Irish-specific legacy issues," he said.

"I don't see an argument for changing Barnett at the moment.

"I do see an argument for finding out who will provide the resources and funding for anything arising out of the current talks."

Background

Named after Lord Joel Barnett, the Barnett Formula was devised in 1978 and dictates the level of public spending in Scotland, Wales and Northern Ireland. The money is allocated based on the population of each nation and which powers are devolved. In 2012/13 Northern Ireland received £10,876 per head - £2,347 more per head than people in England, a gap of almost 28%.

Thorny issues that have MPs revolting

Tuition fees

Tuition fees in Northern Ireland are less than half of the cost for those studying in England.

Students can be charged a maximum of £3,685 per year if they are studying here, compared to a top rate of £9,000 across the water.

However, people coming to study here from the rest of the UK will pay a maximum of £9,000 annually.

It means English taxpayers help to bankroll a system which effectively discriminates against English students.

That has long been a source of tension within the Conservative Party.

Anger over tuition fees boiled over in 2010 when six MPs revolted and voted against the coalition government’s move to hike fees in England.

Among the rebels were former party chairman David Davis and Mark Reckless, who won Thursday night’s by-election after defecting to Ukip.

Barnett Formula

The Barnett Formula dictates the level of public spending in Scotland, Wales and Northern Ireland and is based on the population of each nation and which powers are devolved to them.

Controversially, they each receive greater public expenditure per head than England.

Northern Ireland is the clear winner under the formula, devised by the late Joel Barnett in 1978. An extra £2,347 per head, or 28%, is given to Northern Ireland compared to England.

Last year Northern Ireland got £10,876 per head, Scotland got £10,152, Wales got £9,709 and England got £8,529.

The PM’s announcement that reform is not “on the horizon” has angered Tory MPs. They believe Northern Ireland and Scotland receive an unfair share of Government spending.

Corporation tax

A decision over devolving the power to set the rate of corporation tax to Northern Ireland will be announced next month.

Currently the rate of corporation tax paid by businesses in Northern Ireland is 21%, compared to 12.5% in the Republic.

The Executive wants to be able to match Republic’s rate.

However, a cut in corporation tax would mean less revenue is collected for the Treasury.

The question is how much money Northern Ireland would hand back.

Conservative MPs, already unhappy at the higher spend per head of population here, will not accept losing out on any deal. The one caveat may be using corporation tax as a sweetener to secure DUP support ahead of a likely hung parliament at next year’s election.

Belfast Telegraph

Popular

From Belfast Telegraph