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Devolved Governments: Public Expenditure

Volume 817: debated on Thursday 20 January 2022


Tabled by

To ask Her Majesty’s Government what discussions they have had with the devolved governments regarding monitoring of their public expenditure.

My Lords, on behalf of my noble friend Lord Foulkes of Cumnock—who is self-isolating, according to law—and with his permission, I beg leave to ask the Question standing in his name on the Order Paper.

My Lords, the Chief Secretary to the Treasury is responsible for the Treasury’s relationship with the devolved Administrations and last met their Finance Ministers a week ago, on 12 January. The devolved Administrations provide the Treasury with information on their spending every month to support the management of the public finances. It is for the devolved Administrations to allocate their Barnett-based funding across their devolved responsibilities. They are accountable to their respective legislatures for their decisions.

My Lords, the Minister is aware, as he says, of the billions of pounds that are transferred to the Scottish Government under what is known as the Barnett consequentials, but does he know where it is spent? The Scottish Government seem remarkably reluctant to tell the Scottish Parliament and the Scottish people how that money is spent. What does he think of the fact that, at the moment, the Scottish Government are starving Scottish local authorities of money, thereby forcing them either to put up council taxes or cut services?

My Lords, as I said in my opening Answer, the Scottish Government are accountable to their electorate and to the Treasury here for how they spend their money. They have had a very generous settlement in the SR—an additional £8.7 billion went to the devolved Administrations, of which £4.6 billion per year has gone to Scotland. I encourage the noble Lord to keep his scrutiny up.

My Lords, does my noble friend realise that there has been a series of major financial scandals in Scotland, such as two ferries for the price of five? There is a whole series of examples of complete mismanagement of public money, and there seems to be no consequence. Following on from the point made by the noble Lord, Lord Robertson, about the Barnett formula, the Scottish Government have the gall to blame Westminster for cuts in the health service where they fail to spend the Barnett consequentials on health that they have been given. There is no transparency. Surely the Treasury has a responsibility to ensure that transparency is given.

I agree with my noble friend that any wastage in government is extremely distressing, certainly to me. In October of last year, we reached an agreement with the Scottish Government to jointly commission an independent report covering the block grant adjustment arrangements. The independent report will inform a broader review of the Scottish Government’s fiscal framework later this year.

My Lords, the Scottish Government have a Minister for consular affairs. Does the Minister believe that this is consistent with the delivery of devolution? Following up on the intervention by the noble Lord, Lord Forsyth, would the Scottish Government not better serve the people of Scotland if they concentrated on protecting and delivering public services and developing a strong economy, instead of fiddling in a way that has had a disastrous effect on the economy and job losses?

My Lords, in 2005, the then Labour Government agreed to allow the Scottish Government to have international development involvement. To my knowledge, they are involved in three countries—Rwanda, Malawi and Zambia. I can only come back to my earlier point that it is for the Scottish electorate to decide whether that is a good use of public funds.

My Lords, my noble friend mentioned the discussions which are happening and the report that will come later this year. Will it be clear that there will be more transparency on how the money is spent? It is not the money going from here but how the money is spent in Scotland that is so opaque.

My Lords, we are certainly keen to see more transparency. At the moment, the Treasury receives monthly reports on expenditure—but I accept that more transparency would be useful.

My Lords, the Scottish Government have a unit committed to making the case—or more correctly, preparing the case—for independence. Does the Minister think that that is a proper expenditure for the people of the United Kingdom to have to bear?

My Lords, as someone who is very against the independence movement in Scotland, I would agree. We have also to accept that an increasing amount of revenue is raised in Scotland for the Scottish Government. For example, from 2017-18 Scottish income tax rates were entirely devolved, and all revenues from Scottish income tax are retained. Likewise, in 2015, stamp duty was devolved to the Scottish Government. So there is a rising percentage that is in their own gift and I can only assume that some of that is being used for what is, in my view, a mistaken approach.

My Lords, perhaps I might take a moment to remind the House that, as well as Scotland, Wales has a devolved Government. I believe transparency there is of an order of which we could all be proud. I want to pick up on a point made yesterday by the noble Lord, Lord Forsyth, during a Question about the Barnett formula. In his opinion—and in the opinion of many of us—it needs to be looked at in a radically new way for a new age. The Answer from the Dispatch Box yesterday was, quite simply, that there was no prospect of such a review. Is the Minister today, who is refreshingly different from the Minister yesterday, of the same mind?

My Lords, I think we all know that the Barnett formula was something of a fudge, put together many years ago. It is an extremely complicated thing to try to unravel. We know that the amount of funding that goes to individual citizens is favourable to the devolved regions, but the formula is not necessarily satisfactory—so I would encourage the noble Lord to keep up his campaign to push for a review.

My Lords, given the Minister’s dislike of waste in government, could he comment on the article earlier this month by the Comptroller of the National Audit Office, Gareth Davies? He criticised the lack of any formal process for evaluating both the efficiency and delivery of cross-government projects. He said that there was very little information on

“what difference is made by the billions”

spent by government. What does the Minister think of that?

I think the noble Baroness makes a very good point. I will suggest to the relevant Ministers that the work on the fiscal framework, announced in October, includes a review of the points raised.

My Lords, building on that point, is not the problem that the UK Government are in no position to lecture others—whether it is the National Audit Office, influential think tanks or others? We regularly hear of cases where Ministers have exercised poor judgment when spending public funds. The most recent example was the quiet announcement that the Treasury does not intend to chase down an estimated £4.3 billion fraudulently claimed from coronavirus support schemes. Why did the Government not listen to Labour’s warning about potential fraud earlier in the pandemic, and why will family units have to pay the price for the actions of fraudsters through upcoming tax increases?

The noble Lord raises a very good point. I believe that I will be coming back on Monday to deal with an Urgent Question on this specific subject. I would remind noble Lords that these schemes were stood up at an incredibly fast pace to protect the productive capacity of this country. Yes, the fraud losses are extremely frustrating but, if we had not got that money to the business community as quickly as we did, we would have seen a lot more damage to our economy.

My Lords, to what extent do the UK Government make clear in the publicity in the devolved Administrations the amounts of money that come from the UK Government to those Administrations?

My noble and learned friend is right that we need to remind Scottish citizens that a great deal of the funding that goes into Scotland comes from here. We now have a Minister for the Union, Michael Gove, and his job is to keep reminding all the devolved Administrations that we are one union. A very senior civil servant, Sue Gray—of whom some of you may have heard—is the Permanent Secretary for the Union, and we are encouraging engagement at, for example, local authority level on a much more frequent basis.

My Lords, we are talking about the spending of government money, and I congratulate the Government on the fact that, on 26 December 2021, although it did not get a lot of press, they decided to spend £360 million—for which I and others had been asking—on homeless prevention grants, so that people were not put out because they had lost their job due to Covid-19.

I thank the noble Lord for his support. Homelessness is one of society’s most complicated problems and we are very committed to trying to minimise it.