Whether Salmond or Sturgeon are at the helm in Holyrood, the news has consistently focused on Scotland’s constant requests for independence, and the subsequent struggle for additional powers and devolution of Governmental decisions to Scotland.
Among the most highlighted points when discussing the situation between Scotland and the rest of the United Kingdom is the existence of the Barnett Formula.
The formula which is used to adjust the amount of public spending allocated per person in Scotland to reflect changes in public spending in the rest of the United Kingdom.
It already shows a favourable picture for the nation which is constantly pushing for IndyRef2.
While Northern Ireland and Wales also benefit from the formula, I will focus on Scotland while referencing their pursuit of devolution and additional powers.
How is the Barnett Formula Calculated?
The formula which was created in 1978 by Joel Barnett, is used (for example) whenever public spending on funding in England is increased relative to Scotland.
This increase is multiplied by two factors; the population proportion of Scotland comparative to England, and the “Comparability Factor” of Scotland to England (which is the extent to which the relevant English departmental programme is comparable to the services carried out by the devolved administration in Scotland).
To demonstrate the formula being used: in 2014, Scotland’s population was estimated at 5.3 million, and England’s population at 53.9 million; so the population proportion is 8.94%.
The comparability index for the Department of Health was reported as 99.7%.
For a £1 billion increase in spending on Health in England, Scotland will receive approximately £89 million more as part of the formula.
Not surprisingly, even the creator of the Barnett formula believes it is out of date and should at least be revised.
Why Does the Creator of the Barnett Formula Want it Changed?
When the formula was devised and implemented, it was created with errors in the calculation.
To remove the need to calculate the population proportion each time the formula is applied, a ratio between the populations of Scotland and England was proposed at 11.76%.
This is much higher than the figure calculated in the previous example which set it at 8.94%, meaning that as the Scottish population was grossly overestimated.
The result is that the amount of funding given to Scotland after an increase in spending on a service in England, was much higher than it should have been.
The initial error still has not been properly accounted for, and is another reason why Lord Barnett believes it should at least be revised.
What is the Difference in Public Spending Per Head?
The Government spend per person in 2012/2013 was:
- England: £8,529
- Scotland: £10,152
- Wales: £9,709
- Northern Ireland: £10,876
As you can see from the list, Northern Ireland and Scotland were the clear winners with the formula.
When working this out as a percentage of the average spend per capita, England gets 97% of the spend per head from the average, Scotland get 116%, Wales get 110% and Northern Ireland get 124%.
Each Scottish resident received £1,623 more per person than in England.
If the formula were to be abolished, you would see an increase in spending for all residents in England, and a sharp drop in the funding to Scotland residents.
Why Does Scotland Want Independence?
Despite the United Kingdom promising additional powers and devolution to a nation, which already gets a higher public spend per head, it is difficult to answer.
Currently, there are a few sore points which are regularly brought up by members of the population outside of Scotland.
The first is Scotland’s ability to offer free University admission to all Scottish students, while Universities in the rest of the UK will see the students pay up to £9,250 a year in tuition; hardly fair in a “United” Kingdom which has a common Parliament (and a luxury which is partially funded by the Barnett Formula).
The extra caveat to this agreement which I believe is far worse is the offering of this free Scottish education to all students from EU countries, EXCEPT from England, Wales and Northern Ireland.
This means that students from all EU countries (with the exception of England, Wales and Northern Ireland) have the potential to get higher education for free; again, hardly a fair European “Union”.
Furthermore, there is an issue surrounding the variable cost of prescription medicine between Scotland and the rest of the United Kingdom.
Scotland (and also Wales and Northern Ireland) have access to free prescriptions for all citizens, which is in contrast to England which currently has a prescription cost of £9 per item.
Again, when considering the discrepancy of public spend per capita between Scotland and England, it seems a very unfair arrangement that is being fully or partially funded by the outdated system.
Finally, the flaws of the formula were highlighted more than ever as it was reported that Scotland had benefited in the last decade to the tune of £1 billion (from getting out of £600 million in public spending cuts between 2010 and 2013), and by gaining £400 million in funding hikes since 2004.
So much for us all being in this mess together!
Even the most casual reader of this blog post would gather than I am not a fan of the Barnett formula; I believe it is incredible to think that the United Kingdom would have such different rules for each of its citizens.
Rather than continuing to promise additional powers to a nation which benefits greatly from the current arrangement, we should be having our own referendum to establish whether we should keep the Barnett formula, and whether we agree to allowing this additional devolution.
I propose that we scrap the formula, and ensure that public spending per head is the same for each person (otherwise calling us “United” Kingdom probably doesn’t seem very appropriate!)
We could then aim to provide free prescriptions for ALL United Kingdom citizens, and offer a revised tuition fee amount for all UK students to make us a more United Kingdom.
