Election 2015: Is the South East seen as the UK's cash cow?

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The economy has dominated this election campaign with several party leaders calling for money to be taken from the "over-heated South East" to fund less prosperous areas.

During the leaders' televised debate, the Welsh nationalist leader Leanne Wood called for "an additional £1.2bn into the Welsh coffers which would enable us to end austerity".

Labour's Scottish leader Jim Murphy has pledged to introduce a mansion tax on properties worth more than £2m, which he acknowledges are mostly in London and the South East, saying they'll use the money to pay for 1,000 more nurses in Scotland.

And the SNP leader Nicola Sturgeon says she'll fight changes to the NHS if they could impact on their budget.

South East spend

So, let's take a look at the funding figures:

  • The highest government spend per person per year is in Northern Ireland at £10,961 - 23% above the UK average.
  • That figure is followed by Scotland at £10,275
  • Wales is next with £9,924 per head
  • Average spending per head in England is £8,678

And out of all the English regions, public spending per head is lowest here in the South East at £7,756 per head per year - 13% below the UK average.

Professor Tony Travers, a local government expert at the London School of Economics, says: "Scotland, Wales and Northern Ireland have their revenue protected by the Barnett formula, which freezes the levels at 1970s values relative to England.

"Within England the distribution of money and spending is a mixture of formula and government spending decisions which does leave the South East with a relatively low figure and other regions - including London - with relatively high figures."

What is the Barnett formula?

The Barnett formula is a system of grants which dictates the level of public spending in Scotland, Wales and Northern Ireland.

Under it, extra funding - or cuts - from Westminster are allocated according to the population size of each nation and which powers are devolved to them.

The formula is named after its inventor, the former Labour chief secretary to the Treasury Joel Barnett, who devised it in the late 1970s.

'Cheesed off'

UKIP leader Nigel Farage says the canny Scots have had it too good for too long.

"English taxpayers are a bit cheesed off with so much of their money going over Hadrian's wall so there needs to be a re-balancing and in the future Scotland should get less per capita than they currently do."

Ms Sturgeon argues that Scotland has paid more tax per head of population than the UK average for 34 years in a row and Ms Wood says the current settlement leaves Wales with a £300m funding shortfall.

Senior coalition members warn that if the nationalist parties help form the next government it could be bad news for the South East," he adds.

"There's real danger if Ed Miliband comes to power in alliance with the SNP that the South East will be hit hard in order to fund Scotland even further," says Conservative chief whip Michael Gove.

And deputy prime minister Nick Clegg warns: "If you have a weak Labour administration dancing to the tune of Nicola Sturgeon, doing what Alex Salmond tells Ed Miliband to do, you get money taken away from one part of the country to help the SNP."

He insists the Lib Dems would do the right thing for the whole of the country.

If there's no clear winner at the general election the clamour for more funding from the affluent South East by the smaller parties, as part of any deal, is likely to grow even louder.

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