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Devolution and the United Kingdom

Funding devolution and the Barnett formula

  • 3 things to know
  • AS Unit 1

Overview

Block grant, barnett formula and barnett squeeze.

What you need to know

Answer each one before you reveal it.

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Key term

What is the block grant?

Key term

Why is the Barnett formula not a needs-based system?

Key term

Why does devolving a tax create financial risk for a devolved government?

Questions from this subtopic

Each one with the model answer underneath.

  1. 1

    What is the block grant?

    Model answer

    The block grant is the lump sum the UK Treasury transfers to each devolved administration to fund the services it runs.

  2. 2

    What is the Barnett formula?

    Model answer

    The Barnett formula is the rule that adjusts each devolved block grant by a population share of any change in comparable spending in England.

  3. 3

    When and by whom was the Barnett formula devised?

    Model answer

    It was devised in 1978 by Joel Barnett, then Chief Secretary to the Treasury, as a temporary means of settling territorial spending disputes.

  4. 4

    Explain how the Barnett formula works in practice.

    Model answer

    When spending on a comparable service in England rises or falls, each devolved budget is changed by that amount multiplied by the nation's population share and by how far the service is devolved.

  5. 5

    Why is the Barnett formula not a needs-based system?

    Model answer

    It allocates changes in funding by population alone, taking no account of age, health, poverty or the cost of delivering services in a given nation.

  6. 6

    What is the Barnett squeeze?

    Model answer

    The Barnett squeeze is the tendency for per-head spending in the devolved nations to converge towards the English level over time, because increases are shared out by population rather than by the existing higher base.

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