Barnett formula 'will protect Scotland' from worst of budget cuts

Published on Wednesday 21 April 2010 22:51

SCOTLAND will be better protected than England against public service cuts.

A paper published today by a leading academic think-tank, the Institute for Public Policy, claims that Scotland's funding mechanism – the controversial Barnett formula – means that its 30 billion budget will be sheltered.

One reason is that both Labour and the Conservatives have promised to protect health and education – which make up a large proportion of Scotland's block grant.

With the prospect of significant cuts in public expenditure after the General Election, the study argues that the way the Barnett formula works, the budgets of the devolved administrations will be better protected than those in England for spending on comparable services – known as the "Barnett squeeze".

This phenomenon sees the Barnett formula go into reverse when cuts are made.

The paper, entitled Devolution in a Downturn, argues that the squeeze means that the proportionate fall in spending in the devolved administrations will be lower than in England. Professor David Bell said: "The funding formulas which leave the devolved administrations so dependent on Westminster could work in their favour when spending cuts begin to bite."

He warns that public opinion may not tolerate a situation whereby the devolved administrations are perceived to be suffering less pain than England.

SCOTLAND OFFICIALLY COMES OUT OF RECESSION

SCOTLAND has officially emerged from recession, figures published yesterday revealed.

The economy grew by 0.2 per cent in the final three months of last year, bringing to an end five consecutive quarters of decline.

In terms of economic growth, Scotland lagged the UK as a whole, which registered growth of 0.4 per cent at the end of last year. But the Scottish Government argued that Scotland's recession had not lasted as long as the slump south of the Border. The Scottish Government pointed out that the recession in England began in the second quarter of 2008, whereas the Scottish recession did not begin until the third quarter of 2008.

First Minister Alex Salmond said: "We have welcome confirmation that growth is spreading across sectors and Scotland is now, overall, out of recession. This is good news for households and businesses across Scotland."

CBI Scotland's assistant director, David Lonsdale, said the figures were a "welcome though decidedly modest exit from the recession", which demonstrated the fragile nature of the recovery.