Last night, a 75-year-old woman with underlying health issues became the first Briton to die in the country at the Royal Berkshire Hospital in Reading. It came hours after Prime Minister Boris Johnson met with the Governor of the Bank of England, Mark Carney, and Chancellor Rishi Sunak to map-out plans for how to allocate additional funds for health services and the economy, which will be announced later today. Scotland’s First Minister Nicola Sturgeon has said she expects coronavirus numbers to rise “possibly very rapidly” in the days to come, and Scotland could receive a financial boost from Westminster.
This is thanks to the Barnett formula, a calculation used by the Treasury to automatically adjust the amount of public expenditure allocated to Northern Ireland, Scotland, England and Wales from Westminster, an expert in devolved governments told Express.co.uk.
Professor David Heald, from the University of Glasgow, said: “Essentially what it does is as English expenditure goes up, in Scotland, Wales and Northern Ireland they receive an addition to their budget based on their population share.
“It’s population-based, and it compares on the comparable with expenditure, it is not statutory, but it is semi-automatic.
“It has been running for 40 years and was created because England is so much bigger than the other countries, so for them to have any kind of budgetary discretion, they don’t want London interference in their programmes.
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“But what the Treasury gets out of it is they can control the amount of public spending.
“Barnett is for novel expenditure, it something absolutely exceptional happens, it will be dealt with separately.”
Last year Scotland paid out 20 percent more per person than England, at £10,152 compared to £8,529.
Since 2010, cuts in devolved services, such as the NHS, have totalled £110 per person in England and Wales, but the Scottish and Northern Irish block grants only fell by £19 per person – 17 percent of these cuts.
The IFS also showed that a £1 cut in the English budget only leads to a 17p cut in spending per person in Scotland and Northern Ireland.
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Professor Heald said we are likely to see the same numbers, if not more – but added there is a clear justification for it.
He said: “This is historical, it’s the recognition that Scotland has got larger areas of deprivation and larger rural area.
“People have different views about this, but my view is that the Barnett formula works quite well.
“It gives the devolved administration discretion over their spending, in a context that historically they have not had much.
“84 percent of the population lives in England, eight percent in Scotland, five percent in Wales and three percent in Northern Ireland.
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“People in England say that Scotland gets too much money, people in Scotland say that England steals their oil money.
“I think the system is changing now that Scotland is raising significantly more money itself, but the broader constitution is unstable.”
The formula has come under fire, even by its maker, Joel Barnett – who admitted it was “fundamentally flawed” in 2014.
Previous to that, in 2009, the House of Lords Select Committee on the Barnett Formula concluded that “the Barnett Formula should no longer be used to determine annual increases in the block grant for the United Kingdom’s devolved administrations”.
Peers noted: “A new system which allocates resources to the devolved administrations based on an explicit assessment of their relative needs should be introduced.”
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But Professor Heald warned this would leave to further issues between Scotland and the rest of the UK.
He added: “You could run a needs-based assessment, and the example is the Australian one, but that is quite expensive and there are far more states than there are countries in the UK.
“My view is it would be incredibly difficult and the politics would be rather prodigious.
“Scotland would think it was a stitch-up, that would be the immediate story.
“You will have great difficulty in establishing what the base is, should there be university fees? Should there be pre-prescriptions?”
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Professor Heald added that the Scottish independence bid and Brexit further complicate this.
He continued: “There would be immediate controversy about the base of that assessment.
“No part of Australia is trying to defect from the Commonwealth, whereas in the UK a significant body of Scotland wants to.
“My view would be that Barnett is syncretic, but the UK is a very syncretic place.
“Changing the funding system int the present context, with the UK leaving the EU against the wishes of Scotland, a significant change would destabilise that further.”