The Barnett formula
The nutshell
The Barnett formula is a calculation the UK Treasury uses to work out the change each year in the money given to Scotland, Wales and Northern Ireland. It sets how much that funding goes up or down, not the total amount.
Every fact on this page comes from official Treasury guidance and non-partisan explainers. Each source tag — like HoC — opens where a fact comes from.
The basics
What the Barnett formula does
Scotland, Wales and Northern Ireland each run a separate budget for things like schools and hospitals. Most of that money comes from the UK government as a single lump called theblock grant. The Barnett formula sets how much the block grant changes each year.HoC It changes the grant, but does not decide the total.
How the sum works
When UK spending on a service goes up or down in England, each nation gets a share of that change. The share depends on how much of the service is devolved and on the size of the nation's population.IfG So a bigger nation gets a bigger slice of the same change.
A rule of habit, not law
The Barnett formula is a convention — a settled habit, not a written law. The Institute for Government notes that the formula is non-statutory, so the Treasury can even choose to bypass it.IfG Even so, one government after another has kept using it.GOV
Why it is argued about
The formula has defenders and critics. In its favour, every nation gets the same change per person for devolved services.HoC Against it, a House of Lords committee found the formula takes no account of the different levels of need across the nations.HoL
- The UK Treasury uses the formula to give each nation a population-based share of changes in UK spending, and successive governments have chosen to keep it
- The House of Commons Library notes one point in its favour: the formula is simple and automatic, so funding is not argued out afresh every year
- For devolved services, each nation gets the same change in pounds per person, according to the House of Commons Library
- A House of Lords committee found the formula takes no account of the different levels of need across the nations
- That committee recommended replacing it with a system based on an assessment of relative need
- The Institute for Government says spending per person in Scotland drifts towards the level in England over time, an effect known as the Barnett squeeze
The deep end6 min
How a change flows to each nation
The Barnett formula works on the change in spending, not the total. When a UK government department's budget for England rises or falls, the Scottish Government, Welsh Government and Northern Ireland Executive receive a population-based share of that change on comparable services.GOV The Institute for Government sets out the sum: the change in a department's spending, multiplied by a comparability factor, multiplied by each nation's population share.IfG The starting point each year is last year's block grant, so the formula only adjusts the amount already in place.
A convention, not a statute
The formula is named after Joel Barnett, a Treasury minister in the late 1970s, and has been in use ever since. It is non-statutory, which means no Act of Parliament requires it and the Treasury can set the grant a different way if it chooses.IfG In practice, successive UK governments have committed to keep using it.GOV
The case for keeping it
The House of Commons Library records one argument in the formula's favour: it is simple and automatic, so the funding for each nation does not have to be argued out from scratch every year.HoC Under the formula each nation receives the same cash change per person for devolved services, so no nation is singled out for a different rule.HoC
The case for changing it
A House of Lords select committee concluded the formula takes no account of the different levels of need in each nation, and recommended replacing it with a system that shares out money based on an explicit assessment of relative need.HoL The Institute for Government adds that, because the same cash change is spread over a growing population, spending per person in Scotland drifts towards the English level over time — an effect known as the Barnett squeeze.IfG Funding floors have since been added for Wales and Northern Ireland to stop those grants falling below a level linked to need.HoC