Keeping Barnett ‘will increase English devolution demands’

16 Sep 14

A pledge by UK party leaders to maintain the Barnett Formula for funding public services in Scotland if there is a no vote in Thursday’s independence referendum will increase demands for English devolution, councils have warned.

Speaking after David Cameron, Ed Miliband and Nick Clegg promised to maintain the controversial formula, LGA chair David Sparks said this would create ‘an even greater need for English devolution to cities and county areas’.

The formula has been used since 1979 to allocate public money across the constituent parts of the UK.

To ensure relative equity of funding, it increases the money available to the administrations in Scotland, Wales and Northern Ireland when overall public spending in England increases.

However the ratio that determines the increase, which has not been revised, is based on population rather than need. This means that the proportionally higher level of public spending per person in both Scotland and Wales at the time of its creation has been ‘cemented in place’ over subsequent decades, the LGA has said.

Sparks said English councils needed to be freed from government-imposed restrictions on house building, introduced following the abolition of the Housing Revenue Account subsidy system.

‘We need funding for regeneration, skills and jobs devolved to local areas where decisions can be based on what businesses and young people actually need.

‘Crucially, this must be underpinned by a fair and equitable distribution of public money for all of the UK.’

However, Sparks ruled out backing the establishment of an English Parliament, which he said ‘would not represent true devolution for England’. ‘Instead we need locally elected councils driving local economies through devolved taxation, with greater control over council tax and business rates,’ he added.

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