Brown’s U-turn on devolution hurt us more than Scotland Today, in the last of our series of fascinating extracts from Rhodri Morgan’s autobiography, the much-loved former First Minister describes how Wales suffered as Prime Minister Gordon Brown went to b
IF Tony Blair was a reluctant devolutionist, led into it via the glory of bringing peace to Northern Ireland, Gordon Brown was the exact opposite.
Gordon was an utterly convinced devolutionist from way back, and an avid follower of the John Smith theory of the settled will of the Scottish people.
Yet, when Alex Salmond won his right to form a minority SNP Government in May 2007, Gordon went right off the whole thing – his beloved Scotland was now in the wrong hands.
The problem for us in Wales was that the much tighter attitude from London towards Scotland actually hurt Wales and my Labour-led Government far more than it hurt Scotland.
Scotland had a cushion of generous funding far greater than ours, and an economy and social structure that was far easier to pay for.
Elderly people retired away from Scotland, but they retired to Wales; the Scottish birth-rate was well below ours in Wales, so fewer children to educate; the proportion of the workforce in white-collar employment was identical to England’s, while it was very blue-collar in Wales.
So when the new Prime Minister and his new Chancellor of the Exchequer, Alistair Darling, agreed to meet me, Alex Salmond, and Peter Robinson and the late Martin McGuinness, the two First Ministers from Northern ireland, to discuss why the Olympic Games was being exempted from the normal workings of the Barnett Formula and some other funding issues, I led on the Olympics.
I could see why you could at least make a case for exempting the sports facilities – such as the athletics stadium, the velodrome and the aquatic centre – but it was plainly absurd that the transport and urban regeneration spending across east London should be exempt.
Gordon was seething. Alex Salmond was enjoying himself far too much, seeing a Labour politician like me laying into two Scottish Labour head honchos like Gordon and Alistair, and allowing Alex the luxury of an occasional smirk or two. But no joy whatsoever. Gordon just could not overcome his loathing of Alex Salmond – some of it loathing for Alex personally, some of it for the SNP, and maybe that bit of the loathing was spiced by the accursed SNP getting into minority government by that one single seat in the Scottish Parliament.
So, Wales got it in the neck as collateral damage from Gordon’s desperate desire to scotch the Scottish nationalists.
In that meeting of the three devolved administrations to protest about the exemption of all expenditure on the Olympics from the Barnett Formula, Alex Salmond had raised the issue of borrowing powers for Scotland. The Treasury line was that all the borrowing would have to come out of the block grant.
I said, rather foolishly looking back, that in Wales we were already borrowing small amounts to support economic development via Finance Wales, our in-house quasi-bank investment subsidiary.
Then, within about a month, the Treasury had closed the loophole, and all of Finance Wales’ borrowings were deducted from our block grant! I should have kept my mouth shut.
We all thought we had the Treasury’s agreement to disregard Finance Wales’ borrowings from our block grant – they had certainly agreed this verbally, and I was assured there was no problem because we had it written down on paper as well.
But horror of horrors, no-one could find the piece of paper on which the Treasury had agreed to disregard the borrowings, And we were stuffed.
You could see what had happened. After the meeting with the Prime Minister and the Chancellor, Alex Salmond must have set his officials to task on how to achieve parity of treatment for Scotland compared to Wales.
He wanted borrowing powers for Scotland as well, with the same disregard, when the block grant was calculated. The Treasury had then refused, and was no longer going to disregard Finance Wales’ borrowings – Wales had been penalised, while the intention all along was to stop the SNP getting away with something.
And it didn’t help matters after the fruitless search for the elusive written agreement with the Treasury that our own civil servants said Finance Wales’ borrowings should have been deducted from the Welsh block grant in the first place.
When I heard that last little contribution, it was one of those I-nearlyfell-off-my-chair moments. How could any civil servant in the Welsh Government want to “give” £200m back to the Treasury?
Rules! That’s what drives some civil servants. Anyway, setting up