What is the Barnett Formula? How Britain decides how much money Scotland gets every year
John Nicholson shut down by Dinenage over Barnett formula
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Scottish independence is the centre of much debate since the Parliamentary elections last month, with nationalists pledging to hold a second referendum. However now those pushing for independence have been ridiculed by Scottish Comedian Leo Kearse, for the amount of money they receive from Britain each year. Speaking to GB News today, Mr Kearse jokingly said: “England only give us £14billion pounds a year under the Barnett Formula…”
So what is the Barnett Formula?
The Barnett Formula was conceived by Labour Party politician and Chief Secretary to the Treasury Joel Barnett in 1978.
The formula was designed as a short-term solution to minor Cabinet disputes in the lead up to the planned political devolution in 1979.
Under the Barnett Formula, the Treasury automatically adjusts the amount of public expenditure allocated to Northern Ireland, Scotland and Wales in order to reflect any changes in spending levels granted to public services in England, England and Wales or Great Britain, as appropriate.
Simply put, the Barnett formula decides the devolved governments automatically get a share of increased spending in England.
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The formula is often debated and dubbed archaic, with Mr Barnett himself calling it “increasingly unfair”.
In The Scotsman, in January 2004 he wrote, “It was never meant to last this long, but it has gone on and on and it has become increasingly unfair to the regions of England.
“I didn’t create this formula to give Scotland an advantage over the rest of the country when it comes to public funding.”
The Barnett formula is said to have “no legal standing or democratic justification” and, as a convention is at the mercy of being changed by the Treasury.
In recent years, Mr Barnett called it a “terrible mistake”
How does the Barnett Formula work?
Institute for Government explains the Barnett Formula as follows:
“The Barnett formula calculates devolved budgets by using the previous year’s budget as a starting point and then adjusting it based on increases or decreases in comparable spending per person in England.
“For example, if spending on healthcare in England increases by £100m, the Scottish government’s budget would increase by £9.7m since Scotland’s population is 9.7 percent of England’s.
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“Similarly, the Welsh government’s budget would increase by £5.6m and the Northern Ireland Executive’s budget would increase by £3.4m.
“Since the devolved block grants are not ring-fenced, the devolved administrations would be free to spend the additional money on services other than healthcare.”
Under the formula, Scotland, Wales and Northern Ireland will receive an additional £2.4bn in the next financial year.
This came in Chancellor Rishi Sunak’s budget, with Holyrood receiving an additional £1.2bn, the Welsh government £740m, and the Northern Ireland executive £410m.
Mr Sunak also announced in the March budget that the devolved administrations would be given £1.4bn in funding for 2021-22 outside the Barnett formula.
He revealed a £27m investment in renewable energy in Aberdeen and £5m for a “global underwater hub” in Scotland.
Mr Sunak also announced £4.8m to help the development of a demonstration hydrogen hub in Holyhead, Anglesey, and up to £30m for a “global centre for rail excellence” in Neath Port Talbot in South Wales.
And despite opposition, Cabinet Office Minister Michael Gove has said the Barnett Formula is here to stay.
Speaking on BBC’s Good Morning Scotland at the beginning of June Mr Gove said higher spending in response to the pandemic would continue.
He added through the Barnett formula “more money is spent in Scotland, Wales and Northern Ireland than in England”.
Mr Gove went on to say: “The Barnett formula is here to stay. We’ll be spending more.”
Whether a second Scottish Referendum would change this remains to be seen, with no date yet given for the vote.
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