Funding allocation for UK regions 'should be more transparent'

By Rebecca Black

The method by which funding is allocated to the UK regions should be made more transparent, a Westminster committee has recommended.

The Barnett Formula is currently used by the Treasury to calculate annual funding from the UK Treasury for Scotland, Wales and Northern Ireland.

Baseline levels of funding for the regions were determined more than 40 years ago.

However, a new report by the House of Commons Public Accounts Committee says that the Treasury does not know to what extent funding is meeting the needs of the populations, and described the current arrangements as "not explained in a way that is readily understandable to taxpayers".

The report also points out that funding arrangements are becoming more complicated as tax and social security powers are further devolved to the regional administrations.

It has called for greater transparency about how funding decisions are made.

The report also raised concerns at the uncertainty for devolved administrations caused by the postponement of the Spending Review ahead of the UK's departure from the EU, and the absence of a decision on how it will replace existing EU funding.

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, and funding allocated to Northern Ireland as part of the confidence and supply deal between the Conservative Party and the DUP. 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.

"This should include evidence of its assessment that the current block grant continues to be the optimum way of allocating funding to meet the needs of the UK as a whole," the report recommends.

The committee has also recommended that the Treasury should write to it with analysis of the funding and share "timely information" with the devolved regions.

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 spokesman 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."