A COMMITTEE of peers will examine ripping up the rules that deliver much higher public spending in Scotland than in poorer Merseyside, it was announced yesterday.

The infamous Barnett Formula, which gives Scotland around £800 more per person, is set to be reviewed by an ad-hoc committee in the House of Lords.

The move is the first chink of weakness in the much-criticised formula, drawn up for a single year in the 1970s, but never scrapped, despite being widely seen as unfair.

In the last financial year, Scotland received £8,623-per-head from the Treasury, while the North-West figure was just £7,798.

Yet income-per-head north of the border was 96% of the national average in 2005, while the average North West person boasted just 88%.

The disparity is especially unfair to Merseyside, the most deprived part of the North West region.

The contention has grown as the Scottish Parliament, thanks to higher funding from London, has been able to make popular spending measures, unavailable in England. Most notably, it scrapped all fees paid by Scottish university students, while English students pay up to £3,000-a-year.

Now the liaison committee of peers, including all three party leaders in the upper chamber, will examine whether there should be an inquiry.

Lord Barnett, the former Labour Treasury minister after whom the formula is named and the peer who came up with the idea, said he was confident the answer would be yes.

But, even if the liaison committee says no, its decision can be overturn- ed in the House of Lords where, according to Lord Barnett, support for change is strong.

The peer said: "There is tremend- ous support from all sides of the House. It is a very important issue."

Walton MP Peter Kilfoyle said: "I welcome the review, not only because the Barnett Formula is unjust, but because it's a timebomb for a prime minister representing a Scottish constituency."

Introduced in 1978, the formula gave England 85% of public spending, Scotland 10% and Wales 5%, on a per- capita basis. Lord Barnett, then chief secretary to the Treasury, intended it to be in place for just one year, but it survived, virtually unchanged, through the Thatcher, Major and Blair governments.

Just days before leaving No.10, Mr Blair virtually admitted higher spending was a bribe to keep the Scots within the United Kingdom