13 February 2004
Spending per head in Scotland has increased, despite expectations that the Barnett Formula would bring funding convergence across the UK, a Scottish Parliament committee was told this week.
Professor Arthur Midwinter, adviser to the finance committee, pointed to inconsistencies in the Executive's spending programme, noting that expenditure on housing, agriculture and tourism had 'grown significantly' compared with that in other Scottish departments and the rest of the UK.
Commenting on the Executive's recently published report, Government expenditure and revenue in Scotland, 2001/02, Midwinter said that Scotland's share of the UK population had fallen from 8.6% to 8.3%. However, in terms of spending per capita, its position had improved, rising from nearly 18% above the UK average to almost 20% between 1997/98 and 2001/02.
He added: 'This is contrary to the expectations of some analysts who have argued that the Barnett Formula would have a convergence effect in the long term across the UK.'
Comparative figures in the report show that Scotland's spending per capita figure of almost 20% above the UK average compares with England's position of being about 4% below. The figure for Wales is 13% above and Northern Ireland 27% above.
Midwinter told Public Finance that the increase in per capita spending in Scotland was partly due to supplementary spending allocations and budget transfers between departments each year.
For example, Scotland had gained an additional £1bn from the Treasury to cover the cost of Glasgow Council's housing transfer, which was outside the Barnett Formula. Another example was the cost of the Lockerbie trial in the Netherlands which resulted in extra money from the Treasury.
'There are still a number of decisions that bypass the formula, without having a crucial effect on the different devolved administrations,' Midwinter said. He believed those who had voiced fears about a Barnett 'squeeze' were being 'hopelessly simplistic'.
Midwinter said the figures also showed that the committee's concern over the Executive's inconsistent performance in funding its priorities was well founded.