Lords call for end of Barnett formula

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The system that sets the level of public funding in Scotland, Wales and Northern Ireland is "arbitrary and unfair", peers have said. Skip related content

The 'Barnett formula' should be replaced by a needs-based system due to differences between regions, the report found.

It said that England and Scotland had markedly lower overall needs per person than Wales and Northern Ireland.

Originally introduced as a short-term fix, the Barnett formula accounted for £49bn of annual public spending in 2007/08 despite having not been revised or reviewed in 30 years.

The Treasury has said it will look into the report, but there are no plans at present to change the formula.

The report recommended that an independent body, the UK Funding Commission, calculate the needs of devolved administrations.

And it urged the use of a baseline grant, along with future periodical reviews as well as the publication of annual data.

A new arrangement for funding would not be implemented before a transition period of up to seven years, depending on the extent of change required.

Committee chairman Lord Richard said: "After 30 years of increasing allocations year-on-year, and in the light of possible cuts in public spending, it is now time to scrap the formula and replace it with a clear system of determining a grant of funds for each of the devolved administrations based on their actual needs."

But the government defended the present arrangements ahead of next year's general election.

"It has proved to be a robust mechanism for allocating spending to the devolved administrations and has stood the test of time," a Treasury spokesman said.

"There are no current plans to change the Barnett formula."#
Yes by screwing the English year after year.
Source (http://uk.news.yahoo.com/11/20090717/tpl-lords-call-for-end-of-barnett-formul-0a1c1a1.html)

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The 'Barnett formula' should be replaced by a needs-based system due to differences between regions, the report found.

It said that England and Scotland had markedly lower overall needs per person than Wales and Northern Ireland.

That sounds like a recipe for disaster. It could become even more out of wack than the graph posted by Wat, only Scotland would become a screw-ee instead of a screw-or; if "England and Scotland had markedly lower overall needs per person than Wales and Northern Ireland" than one would expect there to be 'markedly lower spending per person in England and Scotland than Wales and Northern Ireland' under the proposed system. The current system at least is stable and acts as some sort of cap to prevent the spending from becoming too disproportionate, if it was changed to a 'needs-based system' then there could be a 'race to the bottom' as the different entities try to present their populations as 'needier' in order to get a higher baseline grant. It could also open the system to political manipulation, for example a Labour government in the UK Parliament could increase funding to Scotland to support a Labour led government in the Scottish Parliament, or cut it to undermine a SNP led government in the Scottish Parliament.