TERRITORIAL PUBLIC EXPENDITURE IN THE UNITED KINGDOM

Abstract

Although the devolution plans of the 1970s were abandoned, those debates had far‐reaching consequences for the determination of relative public expenditure levels in the United Kingdom. The Barnett formula (10:5:85) of 1978 provided that increases in public expenditure in Scotland and in Wales for specific services within the territorial blocks would be determined according to the formula consequences of changes in equivalent English expenditure. A parallel formula allocated 2.75 per cent of the change in equivalent expenditure in Great Britain to Northern Ireland. The essential distinction is between base expenditure (whose current levels are carried forward) and incremental expenditure (which is determined by formula). The predicted convergence of block expenditure relatives on the LJK per capita average was frustrated by formula bypass, and in Scotland by relative population decline. The background to the 1992 recalibration of the Barnett formula (10.66:6.02100.00 and Northern Ireland 2.87 per cent) is analysed. Territorial block expenditure is set within the structure of territorial public expenditure aggregates, and evidence is assembled on identifiable public expenditure relatives between countries and by English region.