The Barnett formula

Lord Norton

The Barnett formula is the name given to the formula that determines the distribution of public funds in the different parts of the UK. The way the formula works, Scotland receives more per capita (as does Northern Ireland and Wales) than England. It is controversial, not least in terms of the current debate about the effects of devolution.

There was an interesting discussion in the Lords today, when Lord Barnett (after whom the formula is named) pressed for an ad hoc committee to be established to examine the workings of the formula. The chairman of committees, Lord Brabazon, on behalf of the Liaison Committee (which recommends whether new committees should be appointed), resisted the request. He contended that, as it involved expenditure, it was not appropriate for the House to consider it, but rather a matter for the Commons. This line of argument was not well received, some peers arguing that the House was perfectly entitled to examine the issue. Indeed, Lord Brabazon appeared largely friendless in the debate. Just before he replied to the debate, I intervened to point out that the matter had been discussed as if no committee of the House had ever considered the Barnett formula. I pointed out that the Constitution Committee, in its report on Devolution: Inter-Institutional Relations in the UK (2003) had indeed addressed the Barnett formula as part of its inquiry. (I chaired the committee at the time, and we took evidence from a number of experts on the formula – it took some time to get to grips with what is a feriously complex formula!) Given that, I thought it difficult to argue that it was in principle undesirable for a Lords committee to consider the issue. Sensing the mood of the House, Lord Brabazon invited Lord Barnett to return to the Liaison Committee with his proposal.

On the complexity of the Barnett formula, I recall an earlier debate in the Lords on the subject, initiated by Lord Barnett. Afterwards, a senior member of the House – a former Cabinet minister – commented that there was only one speaker in the debate who really understood the formula – adding ‘and it wasn’t Lord Barnett’!