Guidance

Devolved administration funding and the Barnett formula

Published 21 October 2021

The UK Government allocates funding to Scotland, Wales and Northern Ireland in two ways - either by spending UK-wide, for example defence spending, or, where UK Government spending doesn’t cover the whole of the UK, for example most health spending, by allocating funding to the relevant devolved administrations. The Barnett formula is the way the UK Government provides the devolved administrations with a share of any additional funding.

The Barnett formula was first used in 1978 and is named after Joel Barnett – the Chief Secretary to the Treasury at the time. The formula aims to provide each administration with the same pounds-per-person change in funding as the equivalent UK Government spending. For example, if spending on education in England increases by £100 per person, the devolved administrations’ funding will increase by £100 per person.

The formula is generally applied slightly differently at spending reviews compared to Budgets. While the intended outcome is the same, the different approach reflects that spending reviews sets overall funding for departments while Budgets provides funding for specific programmes.

  • At spending reviews, the formula is generally applied to relevant changes in overall departmental spending
  • At Budgets, the formula is applied to changes in funding for individual spending programmes

The devolved administrations are able to spend their funding as they wish. For example even if the Barnett formula has been applied to additional spending on education in England, this does not mean that the devolved administrations have to spend the newly allocated funding in the same area. The devolved administrations also have their own sources of funding, for example some tax and borrowing powers, that operate alongside UK Government funding.