The Barnett Formula - Select Committee on the Barnett Formula Contents


The House of Lords has established a Select Committee on the Barnett Formula. The Membership of the Committee is:

The Terms of Reference for the inquiry are:

To examine the purpose, methodology and application of the Barnett Formula as a means of determining funding for the Devolved Administrations of the United Kingdom, to assess the effectiveness of the calculation mechanism to meet its purpose and to consider alternative mechanisms.

These orders of reference exclude consideration of three main areas:

The overall system of funding the Devolved Administrations—in particular the question of whether greater tax-raising powers should be accorded to the devolved administrations;

Other political aspects of the devolution settlements; and the distribution of funds within the different regions of the United Kingdom

The Committee would be pleased to have your views. The Committee in particular will explore the following key issues in detail and would welcome your views on any or all of the following questions. Please note that questions are not listed here in any particular order of importance.

Written evidence must arrive by no later than Monday 2 March.

Application of the Formula in practice

Are the present disparities in public expenditure per head of population between the countries of the UK a consequence of the Formula itself, the historic baseline or of other factors? To what extent are those disparities related to need?

What effect does the Barnett Formula have in terms of equity and fairness across the UK as a whole?

What effect does the Barnett Formula have on the aggregate control of public expenditure?

What measure of flexibility do the Devolved Administrations (DAs) presently enjoy in allocating funds, between various policy areas, between capital and current spending, and for accounting purposes? Is there any need for reform in this area?

Formula By-Pass and the Barnett Squeeze

Has convergence of levels of public spending in Scotland, Wales and Northern Ireland based on the English level of spending happened, and if not why?

To what extent did bypassing of the Formula occur before 1999? Has scope for such "Formula by-passes" changed? What have been the consequences of that change in scope?

Data Quality and Availability

Are sufficient data available to enable a clear understanding of how public spending is distributed across the UK, and to show the working of the Formula as set out in the Statement of Funding Policy?

What additional data, or ways of presenting data, would be necessary to undertake a new needs assessment, or otherwise to reform the Formula?

What additional data, or ways of presenting data, should be available to ensure that the Formula is transparent in its application?

What body should undertake the collection and publication of such data?

Need for reform/Alternatives to the existing Formula

Do the advantages of the Formula as presently constituted outweigh its disadvantages?

Should the Barnett Formula be (a) retained in its current form, (b) amended or (c) replaced entirely?

Should the Barnett Formula be replaced by a system more adequately reflecting relative needs, costs of services or a combination of both? If so, what factors should be considered as part of a needs assessment?

What practical and conceptual difficulties (particularly for defining 'need') would arise in carrying out a needs-based assessment? How can these difficulties be overcome?

Should a needs-based assessment seek to encompass a wide range of factors or be limited to a smaller number of indicators of 'need'?

Who should carry out a needs-based assessment, if one were to take place?

Decision making and dispute resolution

How effective, appropriate and fair are the processes and criteria by which HM Treasury determines matters relating to the Barnett Formula? In particular, is the way HM Treasury determines whether items of spending in England do or do not attract 'consequential' payments under the Formula, and claims by the DAs on the UK Reserve, appropriate and fair?

Are the existing procedures for resolving disputes between HM Treasury Ministers, territorial Secretaries of State and the Devolved Administrations about funding issues adequate?

How could dispute resolution procedures be improved?

For more information on the Committee, including Members' declared interests, please see:

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