An independent report has accused Whitehall of denying Scotland a fair share of the £3.5billion which UK taxpayers are contributing towards the 2012 London Olympics.
A Lords committee said planned expenditure on the games had been classified by the Treasury as “UK-wide” rather than “England only”, preventing it being taken into account in the Barnett Form-ula, the mechanism by which Scotland, Wales and Northern Ireland each get a fixed share of Whitehall spending.
Committee chairman Lord Richards said the spectacle of the Olympics and the competition would be of genuine benefit to the whole of the UK, but not the huge sums within the total being spent on the regeneration of rundown areas of east London.
The report, which demands the scrapping of the 30-year-old formula and its replacement by an up-to-date needs assessment by an independent commission, said the treatment of Olympics spending exemplified “a subjective application of the formula by the Treasury”.
Liberal Democrat Scottish affairs spokesman Alistair Carmichael, MP for Orkney and Shetland, said: “The report offers a fascinating insight into the way in which Treasury ministers fiddle the figures to suit their own political needs and whims.”
SNP Treasury spokesman Stewart Hosie, MP for Dundee East, said spending on regeneration projects in London in advance of the Olympics should come within Barnett, adding: “It is clear current arrangements are not working, and we want to be sure Scotland has not been swindled out of our Barnett share.”
SNP culture and sports spokesman Pete Wishart, MP for Perth and North Perthshire, said the report had “lifted the lid” on what was going on, voicing concern to ensure “Scotland has not been shortchanged out of our proper Barnett share”.
The report followed a detailed examination of the funding formula, renounced by its own author Lord Barnett, which labelled it “arbitrary and unfair” because it is based on a population share of increases in similar spending in England from a base line when he was Chief Secretary of the Treasury in a Labour government.
It called for the creation of a new independent UK funding commission to assess the relative needs of the different parts of the UK every five years and recommend a fairer share-out.
It also warned the current system benefits Scotland compared with Wales or Northern Ireland. Two Treasury studies in 1979 and 1993 showed Scotland received a lot more than officials believed was needed.
Lord Richards denied it opened up a can of worms but agreed it could only be implemented after the next general election because of the political implications.
It follows a report from the Calman Commission on the need for the Scottish Parliament to have some tax-raising powers which could be used to fund higher levels of public spending in Scotland.
The committee contrasted the Olympics decision with one classifying spending on a new underground mainline across London as “England only”, generating an extra £500million for the Scottish budget.
There is also continuing controversy over how the huge cost of a new Forth Road Bridge should be treated.
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