Scotland politics

Funding model should be made clearer, say MPs

Money Image copyright PA

The method by which Scottish government funding is calculated should be made more transparent, a Westminster committee has recommended.

The Barnett formula is used to share funds across the UK with allocations for Scotland, Wales and Northern Ireland.

Baseline levels of funding for the nations were first determined in the 1970s.

The UK Treasury said it would "consider" the findings of the report.

The report by the Public Accounts Committee said the formula has become too complex.

The Westminster committee said greater transparency was needed over the "complicated and opaque method" for calculating funding.

The report also claims the current arrangements are "not explained in a way that is readily understandable to taxpayers" and need more parliamentary scrutiny.

New prime minister Boris Johnson has long been a critic of the Barnett Formula but during the Tory leadership campaign he promised there would be "no change" to how Scottish government funding .

'Properly scrutinised'

Meg Hillier MP, chairwoman of the Public Accounts Committee, 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, HM Treasury should publish more detailed and transparent information about its funding decisions.

"A lack of detailed supporting information to Parliament on this money makes it difficult for such ministerial decisions to be properly scrutinised.

"At future spending reviews, HM Treasury should publish information about how these decisions are made."

Image copyright EPA
Image caption In 2014 Boris Johnson said the then prime minister, David Cameron, had made a "slightly reckless promise" to retain the Barnett Formula

Under current funding arrangements, when there are changes to government plans to increase spending in England for services and activities which are devolved in Scotland and Northern Ireland such as policing, additional funding is allocated to those regions, known as Barnett consequentials.

Ministers can also allocate funding directly to the regions, such as funding to Scotland to meet the policing costs associated with US President Donald Trump's visit, but this does not trigger changes in funding for England or the other regions.

Of all the regions, Northern Ireland received the most spending per head (£11,190 in 2017-18), followed by Scotland (£10,881), Wales (£10,397) and England (£9,080).

The report has recommended that at future spending reviews, the Treasury should publish more detailed and transparent information about its funding decisions and explain how it has ensured that funding decisions are prioritised according to the needs of citizens across the UK.

A Scottish government spokesman said: "This report makes clear that the UK government's decisions on devolved funding are not transparent and we have no clarity on the impact of spending announcements until the Treasury decides where the money will come from.

"The Scottish government is no further forward than we were three months ago in knowing if there will be a UK spending review in 2019 and it is crucial that the UK government confirms its intentions so all devolved administrations have clarity."

An HM Treasury spokesperson said: "We will consider the findings of this report.

"We are very transparent about the amount of funding we provide for the devolved administrations - all changes to their block grants are set out in our annual block grant transparency publication."