Barnett consequentials and transport spending: FOI release

Information requested

For every £1 per increase spending on transport per head of England's population, does Scotland receive at least a £1 per head increase to Scotland budget?

Response

The Statement of Funding Policy (SoFP) (latest version available here: Statement_of_Funding_Policy_November_2023__FINAL_.pdf (publishing.service.gov.uk)  sets out how UK Government funding for the Scottish Government is determined. The Statement sets out the policies and procedures which underpin each individual element of that funding and explains the interactions with the funding the Scottish Government raises itself.

The largest element of Scottish Government funding remains the Barnett based block grant. Changes in block grant funding for the Scottish Government in relation to public services are linked to changes in planned spending by UK Government departments. This link is achieved through the operation of the Barnett formula (changes in Scottish Government block grant funding are often referred to as Barnett consequentials).

Under the Barnett formula the Scottish Government receives a population based proportion of changes in planned UK Government spending on services in England, England and Wales, or Great Britain. The Barnett formula therefore determines changes to Scottish Government’s funding with reference to changes in funding for UK Government departments; it does not determine the total allocation for the Scottish Government afresh each time it is applied.

There are three factors that are multiplied together to determine changes to the block grant under the Barnett formula:

• The change in planned spending by UK Government departments
• The extent to which services delivered by UK Government departments correspond to services delivered by the devolved administrations
• Scotland’s population as a proportion of England, England and Wales or Great Britain (as appropriate to the Barnett formula calculation depending on the territorial extent of the planned spending). 

So the consequential is the Change to planned UK Government spending X Comparability factor X Appropriate population proportion.

Comparability is essentially the extent to which services delivered by UK Government departments correspond to services delivered by the devolved administrations. Comparability therefore ranges from 0% (where services are delivered by the UK Government) up to 100% (where services are delivered by the devolved administration). A full explanation and the comparability factors used at Spending Review 2021 can be found in Annex B of the SoFP.

As your question references per head, we’ve excluded the population percentages from our calculation. For reference, this is currently 9.67% for Scotland.

The current compatibility factor for transport is 91.7%

Therefore for every £1 of spending per head on transport for England, Scotland will receive 91.7p per head.

£1 x 0.917 = £0.917

At fiscal events (such as the Spring Budget or Autumn Statement) and UK Parliamentary Estimates (so events other than at a Spending Review) the Barnett formula is applied at programme level. The calculation of each Barnett consequential uses the change in the planned spending on each programme, the relevant population proportion and the programme comparability factor, which is set to either 0% or 100%. The aggregate of these Barnett consequentials is added to existing block grants for each of the devolved administrations, again calculated separately for resource and capital. So the Scottish Government will receive a population share of any additional funding allocation on comparable programmes.

Barnett consequential funding is not ring-fenced – it is for Scottish Ministers to decide how funding is allocated according to their own priorities. So consequentials related to additional UK government transport funding does not have to be spent on that purpose in Scotland.

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