By David Scott in Edinburgh
CIPFA has called for an independent body to be set up to consider the future of the Barnett Formula, which determines public spending levels in the devolved nations.
In written evidence to the House of Lords select committee inquiry into the formula, CIPFA suggested that control could be put in the hands of a body similar to the Commonwealth Grants Commission in Australia.
The formula – which guarantees the devolved administrations a percentage share of the spending allocations for Whitehall departments – has been the target of criticism, especially over higher levels of spending per head in Scotland.
The CIPFA evidence noted that media coverage of spending choices had contributed to a belief in England that Scotland was getting a better deal under devolution than the rest of the UK.
The evidence said: ‘Other countries, like Australia, for example, have attempted to introduce an element of independent oversight to the system of grants, based on a needs assessment.
‘The funding allocated to states is based on an assessment undertaken by an independent body, the Commonwealth Grants Commission. The UK equivalent would be a non-departmental public body.’
According to CIPFA, the creation of an independent body could encourage confidence in the formula, and would potentially bring greater transparency to the calculations.
One of the major criticisms of the formula is that it is based on population and not need. CIPFA suggested that, if needs were to be reassessed, a study covering all the devolved nations and the English regions would be required.
CIPFA chief executive Steve Freer said: ‘The current system imposes a firm financial discipline, and within the current economic climate this is needed more than ever.
‘CIPFA’s suggestion of the establishment of an independent body to oversee the development of the formula might help to bolster confidence in this important funding mechanism.’
