SCOTLAND’S core funding should be reassessed 40 years after the introduction of the Barnett Formula, MPs say.
On the first day of Boris Johnson’s premiership, the cross-party Public Accounts Committee (PAC) published a new report urging action over funding for devolved administrations.
It found greater transparency is needed over “complicated and opaque” calculating methods and that ministerial decisions on additional funding for Holyrood, Stormont and the Senedd should be subject to greater parliamentary scrutiny.
The report also raised concerns about the uncertainty for devolved administrations, caused by the postponement of the Spending Review ahead of Brexit in October – and the lack of any decision on how current EU funding will be replaced.
And the MPs’ body called on the Treasury to publish “evidence of its assessment that the current block grant continues to be the optimum way of allocating funding to meet the needs of the UK as a whole”.
Resting on baselines set 40 years ago when populations were different, the block grant must now be scrutinised, the MPs said, because the Treasury “does not know whether the block grant funding it allocates to the nations adequately reflects the needs of citizens across the UK”.
PAC chair Meg Hillier said: “The complicated and often opaque method for calculating funding levels for devolved administrations is based on population levels and needs across the UK agreed 40 years ago.
“At future spending reviews, when the block grant to the devolved administrations is allocated, HM Treasury should publish more detailed and transparent information about its funding decisions. Ministers are able to allocate funding outside of the Barnett formula, which is HM Treasury’s primary mechanism of calculating funding for Scotland, Wales and Northern Ireland.
“A lack of detailed supporting information to Parliament on this money makes it difficult for such ministerial decisions to be properly scrutinised. At future spending reviews, HM Treasury should publish information about how these decisions are made.”
The Barnett formula was brought in as a temporary measure to settle disputes about spending in the late 1970s and is not legally protected, but has been adopted by every government since due to concerns that ending its use could damage the Union.
Under current funding arrangements, changes to Westminster plans to increase spending in England for policing and other services and activities which are devolved in Scotland and Northern Ireland sees additional funding allocated to those parliaments in the form of Barnett consequentials.
UK ministers can also distribute direct funding, such as in the case of cash to cover the security costs of Donald Trump’s recent visit.
Another example is the money allocated to Northern Ireland as part of the confidence-and-supply deal between the Conservative Party and the DUP.
The PAC said that at £11,190 in 2017-18, Northern Ireland spends the most per head (on public services, followed by Scotland at £10,881, Wales at £10,397 and England at £9080.
The committee said funding arrangements for the devolved administrations are “complicated and are becoming more so”.
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