Formula for devolved nations’ funding ‘must be more transparent’

26 Jul 19

The funding formula for devolved nations is becoming increasingly complex and the government must improve its transparency, MPs have said.

The Barnett formula, used to calculate how much money devolved administrations receive from central government, needs to be more understandable for taxpayers, the Public Accounts Committee has said.

Arrangements are becoming “increasingly complex” due to a growing number of adjustments that are needed to reflect the devolution of tax and welfare, a PAC report out today warned.

Regions often receive separate funding from government outside of the formula complicating things further. For instance, each of the devolved administrations has received UK government funding for city deals.

The report claimed that these extra payments made without subsequent payments to other nations meant it is “impossible” to determine whether spending decisions are based on need.

Allocations for the Barnett formula are set in the Spending Review and given the delays to the upcoming review, the PAC urged the Treasury to provide devolved nations with greater certainty.

“We are concerned by the uncertainty for devolved administrations caused by the UK government’s postponement of the Spending Review and the absence of a decision on how it will replace existing EU funding,” the report said.

The report also noted that the formula – which is based on population levels – was set 40 years ago and is now “baked in” not accounting for changes in population and other factors.

Meg Hillier, PAC chair, said: “The complicated and often opaque method for calculating funding levels for devolved administrations is based on population levels and needs across the UK agreed 40 years ago.

“At future spending reviews, when the block grant to the devolved administrations is allocated, Treasury should publish more detailed and transparent information about its funding decisions.”

The Treasury has been approached for comment.

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