Barnett formula ‘no longer fit for purpose’, say CIPFA

12 Mar 15

The Barnett formula needs to be scrapped as part of moves to ensure an equitable and sustainable distribution of public funding across the UK, a CIPFA submission to the Northern Ireland Assembly has concluded.

In evidence to the assembly’s finance and personnel committee inquiry on the formula, which is used to increase the money available to devolved administrations when overall public spending in England rises, the institute said distribution needed to be modernised.

The ratio for increases has not been revised since the creation of the formula in 1979, and is based on population rather than need, which critics say means distribution of public money is now inequitable.

Submitting the evidence to the committee, CIPFA’s head of devolved government Don Peebles said what was intended as a short-term approach to devolving funding has been used as long-term formula but was no longer fit for purpose.

‘CIPFA has called for a replacement of the Barnett Formula and our submission to the Northern Ireland Assembly states clearly that it must be replaced,’ he said.

‘Within the evidence we have given we have suggested that a mechanism linked with tax devolution, that would support sustainable and equitable public services, should be implemented. This should be underpinned by a principles-based approach that focuses on: need, equity, accountability and transparency.

‘CIPFA has also recommended that an independent funding commission should be established to oversee and advise on methodologies and decisions on funding, this would remove the process from the political stage to encourage more transparent and sustainable decision making.’

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