'No early moves' to replace Barnett formula

Published on Monday 7 June 2010 23:06

IT WOULD be "quite wrong" to replace the controversial formula that allocates funding to Scotland, Wales and Northern Ireland, the Westminster government insisted yesterday.

It had been reported that there may be moves to replace the Barnett formula, which calculates the amount of public spending in the devolved areas of the UK.

However, government minister Lord De Mauley ruled out rapid action on the issue despite pressure from Tory former chancellor Lord Lawson of Blaby and Labour's Lord Barnett, who produced the formula which bears his name when he was chief secretary to the Treasury in the 1970s.

Lord Barnett told peers: "There is approximately 1,600 per head more spent in public expenditure in Scotland than in England, which has very serious implications for the coming cuts."

He said a report by a Lords committee "unanimously recommended that is should be changed and based on need".

Labour former minister Baroness Hollis of Heigham said: "Given that the Barnett formula funds on the basis of population and not need, it is profoundly unfair to overfund Scotland by the extent of 4 billion to 5bn a year while requiring underfunded local authorities in the rest of the country to make further savage cuts as their contribution to reducing the deficit."

Lord De Mauley said the coalition understood the concerns but added: "In the light of the grave financial situation the country faces it would be quite wrong for a new government to rush to a decision on this complicated matter.

"We are carefully considering the various reports, but there is as yet no consensus on what a needs-based assessment would take account of."