THE 30-year funding rules that deliver far higher spending in Scotland than in much poorer Merseyside are "arbitrary and unfair" and must be scrapped quickly, a forensic new study says today.
The Barnett Formula is condemned as a "short-term fix" by a House of Lords committee, depriving the poorer parts of Britain of billions of pounds by lavishing spending north of the border.
For the first time, its report proposes a system for finally killing off the Formula, which would strip the "secretive" Treasury of the power to decide where £468bn is spent annually across the UK.
Economists sitting on an independent “UK Funding Commission” would decide all allocations based on genuine need – not population size – in a similar way to the method for setting interest rates. Crucially, the report concludes such an evaluation could be carried out quickly and simply – despite the Treasury's insistence the task would be hideously complex.
Lord Richard, the committee's Labour chairman and a former Welsh Secretary, said there was no reason why the Barnett Formula – introduced, supposedly for one year only, in 1978 – should not be fully dismantled within five years.
He said: "It is arbitrary and unfair and cannot continue indefinitely. Its main drawback is that it doesn't provide more money to the regions and countries of greatest need.
"It may be a can of worms, but it is an unfair can of worms. Some of the English regions feel disadvantaged compared to the devolved administrations – and that resentment will continue."
