£4bn budget warning

Published on Tuesday 6 July 2010 17:14

SCOTLAND's budget could be cut by £4 billion if the Barnett formula was scrapped and funding calculated on how much the country needed, a report on devolution funding commissioned by the Welsh Assembly claimed.

Authors David Miles and Gerald Holtham said the formula should be abolished as it did not allocate money fairly across the UK because it was based on population and not what was needed to pay for public services in different areas of the UK.

"An assessment consistent with those used to distribute health, local government and education spending around England could eventually result in Scotland getting as much as 4bn less than it currently does," Mr Miles and Mr Holtham wrote.

The report, "Fairness and Responsibility", called for a reform of devolution that would see the Welsh Assembly handed powers to vary income tax levels in their country by up to 3p in the pound, a power already held by Holyrood.