We have a lot of areas to cover and I want to ensure that members of the committee get an opportunity to ask questions, so I shall move on to the block grant and the Barnett formula, which you have already touched on.
As you probably know, we took evidence from a huge range of academics with a variety of views on the entire process. One of them was Professor Trench, with whom you will be familiar. He has said:
“All key decisions regarding the working of the formula and the block grant and formula system are taken by HM Treasury.”
There are real issues in terms of transparency with that.
Professor Heald suggested to the committee:
“There is a transparency deficit that is undesirable now and—unless removed—would make major devolved taxes unworkable.”
Professor Trench has also stated:
“There are also very strong reasons to change the way the grant is administered and organised, so that fewer decisions are taken unilaterally by HM Treasury ... about the working of the formula and the funds allocated using it, and there is greater scope for impartial intervention”.
That theme was continued by Professor McLean, who said:
“how the Barnett formula works is entirely in the hands of HM Treasury”.—[Official Report, Finance Committee, 29 October 2014; c 36.]
He went on to state that it is not a statutory matter for the Scottish Parliament or the Scottish Government.
I could go on and on with those kind of comments, but I will finish with the views of Professor Trench. He questioned why
“our financing system essentially depends on an informal Treasury document that the Treasury drafts on its own.”—[Official Report, Finance Committee, 19 November 2014; c 30.]
Elsewhere, he has argued:
“the Treasury was not merely judge in its own cause, with a jury from its side of the fence, but it wrote the rules as well!”
He suggests that
“At the very least, there needs to be an impartial mediator”
and that the devolved Administrations should have a role in drafting and agreeing a revised statement.
It seems that a variety of economists of various political persuasions have real concerns about transparency with regard to how the process is going to work, how the Treasury operates and the murky, byzantine process that is the Barnett formula.
I am sorry to be so verbose, but I think that we are dealing with a key aspect here.