The Barnett Formula is a mechanism used to determine the allocation of public spending across the nations and regions of the United Kingdom.
It was first introduced in 1978 by Joel Barnett, who was then the Chief Secretary to the Treasury. The formula is named after him.
The Barnett Formula is based on the principle that public spending should be allocated to each of the four countries of the UK according to their population size and the extent of their devolved powers.
The formula works by adjusting the block grant given to each of the devolved administrations to reflect changes in public spending in England.
Under the Barnett Formula, any increase in public spending in England is allocated proportionately to the other three countries of the UK, based on their population size.
This means that Scotland, Wales, and Northern Ireland receive a share of any increase in spending in England, regardless of whether the increase is related to devolved areas of policy or not.
The formula therefore seeks to maintain a degree of parity in public spending across the UK, while recognizing the different levels of devolved powers in the various regions.
The Barnett Formula is a relatively simple mechanism that does not take into account the differing needs and circumstances of the different regions of the UK.
It has been criticized by some for failing to address the long-term economic challenges faced by the different regions and for not taking into account the relative economic and social needs of different parts of the UK.
In recent years, there have been calls for the Barnett Formula to be replaced by a more sophisticated mechanism that would take into account a wider range of factors, such as levels of deprivation, demographic changes, and economic performance.
However, any changes to the Barnett Formula would require agreement from the UK government and the devolved administrations.
Despite its limitations, the Barnett Formula remains a key mechanism for the allocation of public spending across the UK, and it continues to be the subject of ongoing debate and discussion.
As the devolution of powers to the regions of the UK continues to evolve, it is likely that the formula will need to be reviewed and revised to ensure that it remains relevant and effective.
When was the Barnett Formula last revised?
The Barnett Formula has never been formally revised since it was first introduced in 1978.
That said, there have been adjustments made to it over the years, particularly in relation to changes in the level of funding provided by the UK government to the devolved administrations.
In 2016, a review of the Barnett Formula was commissioned by the UK government as part of the process of devolving more powers to Scotland.
The review concluded that the formula remained a useful mechanism for determining the allocation of public spending across the UK, but recommended that it be accompanied by a more comprehensive system of financial scrutiny and accountability.
In recent years, there have been calls for the Barnett Formula to be reviewed and revised to take into account a wider range of factors, such as levels of deprivation, demographic changes, and economic performance.