Barnett Formula and You

Do you Know what the Barnett Formula is and how it affects you?

 

The Barnett formula was created by a Labour government (Lord Barnett) in 1978 as a short-term solution to minor Cabinet disputes in the runup to planned political Devolution in 1979.This well before UK Devolution of 1998 had created a Scottish Parliament, a Welsh and Northern Irish Assembly.


The Barnett formula is a mechanism used by the Treasury in the UK to automatically adjust the amounts of public expenditure allocated. 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.

 

If we use Scotland as an example:

 

The key to Scotland’s relative wealth in comparison to the rest of the UK and its higher earnings is the Barnett Formula. This year 2016, it provided Scotland with around £10 billion more for devolved spending than Scots contributed in taxation.

This is equivalent to one-third of the Scottish Government’s entire budget and almost equal to total NHS spending. The latest Government Expenditure and Revenue Scotland (Gers) figures from the Scottish Government’s own statisticians confirm this widening gap which will reflect only part of the fall in oil revenues.

Thanks to Lord Barnett. Whatever is spent in the UK, Scotland gets a fixed share. That is why they have £1,400 a head higher public expenditure than England. Why Scotland have a bigger public sector and thus (to a significant extent) why Scots have higher average wage rates.

The Barnett Formula determines Scotland’s block grant, at which point the Scottish Government can divide up the cash as it pleases. It also delivers significant additional money to Scotland in the course of a year, reflecting additional Whitehall spending. There is no transparency about how these “consequentials” are applied.

A small example was found in the recent flooding. Extra allocations by Westminster for England meant that Scotland automatically receives an additional £9 million.

When HS2 goes ahead, the Scottish Government stands to get an extra £1.5 billion in Barnett consequentials as a result of HS2 spending in England, to utilise as they like in Scotland.

The same examples can be given for Wales and Northern Ireland

 

The Workers of England Union campaigns for the abolition of the Barnett formula because it penalises the Taxpayer in England (you). – We say we need a needs based formula

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