A new £1.6 billion Stronger Towns Fund designed to pump investment into economically depressed communities will invite bids directly from local councils, including in Scotland.
£1bn of the fund will be ring fenced for communities in England, with most of that money already earmarked for areas of the north that voted for Brexit.
It had prompted claims from critics that the fund is a “bung” for Labour MPs to back Theresa May’s Brexit deal – although only three did so earlier this week. Under established convention, additional local government spending in England would result in a windfall for devolved administrations through the Barnett formula, which calculates the Scottish Government’s budget based on population.
When the fund was announced last week, Downing Street said further detail would be revealed at yesterday’s Spring Statement.
However, when asked if any Barnett money would follow from the Stronger Towns Fund, a Treasury spokeswoman said: “The process is ongoing, that’s why you don’t have a clear answer about it, but we think, though it’s not done yet, making the £600m biddable is the way that those regions can be funded.”
Pressed on the lack of guarantee of any Barnett funds being passed to the Scottish Government, the spokeswoman added: “The aim is to make sure that [Scottish local authorities] are able to access that money.”
Professor James Mitchell, a leading public policy academic at the University of Edinburgh, said the government had broken the “rule-based-approach” to devolved funding and had “undermined” the ‘Vow’ – the promise made by Unionist leaders during the 2014 independent referendum that the Barnett formula would be protected.
A Scottish Government spokeswoman said Edinburgh would “press the UK government to ensure that Scotland receives fair share of any additional funding through the well-established Barnett formula”.
SNP Treasury spokeswoman Alison Thewliss said the move was “an outrageous Tory power grab on the Scottish Parliament, which would roll-back devolution and could short-change the Scottish budget by more than £150m”.
Ms Thewliss said: “By seeking to ride roughshod over devolution, and put these powers in the hands of remote Tory ministers with no mandate in Scotland, the UK government is making the case for independence.”
Labour’s Shadow Scottish secretary Lesley Laird said it was “in no way surprising that Scotland was an afterthought for the Tories”.
“We saw their disdain for the devolution settlement during the EU Withdrawal Act, we saw their lack of understanding of Barnett consequentials when they gave the DUP their £1bn bung and now we find out that they are discarding the Barnett formula for this money,” Ms Laird said.
“I wrote to David Mundell and James Brokenshire when this funding was announced to establish what exactly this means for Scotland. Of course, there has been no response.
“For a party that claims to stand up for the UK, their actions, or lack thereof, suggest otherwise.”