Financing Devolution in Practice: The Barnett Formula and the Scottish Budget, 1999-2003

Abstract

This article examines the impact of the Barnett formula on the Scottish public finances since devolution. Forecasts of a spending squeeze and budgetary constraint have not materialized and Scotland's share of the UK budget has remained stable. The real budgetary problem for the Scottish Parliament has been managing spending growth not squeeze. While there are calls to replace Barnett, its benefits in terms of providing budgetary stability and the flexibility to deal with specific funding problems are significant and Barnett is well suited to the incremental approach through which the British public finances are managed.