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Do you know what the Barnett Formula is and how it affects you?
What Is the Barnett Formula?
The Barnett Formula is a mechanism used by the UK Treasury to automatically adjust the amounts of public spending allocated to Scotland, Wales, and Northern Ireland. It was created in 1978 by Lord Barnett as a short-term solution to minor Cabinet disputes in the run-up to planned political devolution in 1979, well before the 1998 establishment of the Scottish Parliament, Welsh Senedd, and Northern Ireland Assembly.
How It Works
The formula dictates spending adjustments based on each nation’s population proportion and the scope of devolved powers. Whenever public funds are increased or reduced in England, a corresponding “consequential” amount is automatically applied to the budgets of the devolved administrations.
Impact on Scotland
This year (2016), the formula provided Scotland with around £10 billion more for devolved spending than Scots contributed in taxation. That sum represents approximately one-third of the Scottish Government’s entire budget and is nearly equivalent to total NHS spending.
The latest Government Expenditure and Revenue Scotland (GERS) figures confirm this widening gap, which does not fully account for the fall in North Sea oil revenues.
As a result, public expenditure per head in Scotland is roughly £1,400 higher than in England, contributing to a larger public sector and (to a significant extent) higher average wage rates in Scotland.
Key Case Studies
Flooding Response: Extra allocations by Westminster for England automatically triggered an additional £9 million for Scotland.
HS2 Rail Project: When HS2 spending in England proceeds, the Scottish Government will receive an estimated £1.5 billion in Barnett consequentials, which can be spent at its discretion.
Similar mechanisms apply to Wales and Northern Ireland, further amplifying budgetary differences across the UK.
Why We Campaign for Change
The Workers of England Union campaigns for the abolition of the Barnett formula because it penalises taxpayers in England. We advocate for a needs-based funding formula that reflects true fiscal requirements rather than population shares alone.
Discover our needs-based funding proposals and join the campaign to ensure fair funding for every region of the UK.
workersofengland.co.uk | Independent Workers Trade Union
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Economics
