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Embeddedness of UK devolution finance within the public expenditure system

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  • David Heald
  • Alasdair Mcleod

Abstract

Heald D. and McLeod A. (2005) Embeddedness of UK devolution finance within the public expenditure system, Regional Studies 39, 495-518. Before devolved government was established in 1999 in Scotland, Wales and Northern Ireland, it was expected that the financing system would become more transparent. In fact, greater transparency about process (i.e. the rules) has not yet been matched by transparency about the numerical operation of a key element in the system, namely the Barnett formula, which regulates the budget envelopes of the devolved administrations. This paper tracks the numerical implementation of the Barnett formula since devolution in order to deepen understanding of how devolution finance is embedded within the UK's public expenditure planning system. Accordingly, data are provided showing the generation of formula consequences for Scotland in each of the UK Spending Reviews 2000, 2002 and 2004. This cannot yet be done for Wales or Northern Ireland because the necessary data are not in the public domain. Then, for all three devolved administrations, the paper chain-links their 'Departmental Expenditure Limits' from one Spending Review to the next. These changes are systematically analysed into six analytical categories developed for the purpose. The empirical results show that the UK devolution financing system cannot be understood simply in terms of applying the Barnett population-based formula proportions to changes in comparable expenditure in England. Finally, practical suggestions are made about the steps necessary to render the system fully transparent.

Suggested Citation

  • David Heald & Alasdair Mcleod, 2005. "Embeddedness of UK devolution finance within the public expenditure system," Regional Studies, Taylor & Francis Journals, vol. 39(4), pages 495-518.
    • Handle: RePEc:taf:regstd:v:39:y:2005:i:4:p:495-518
    DOI: 10.1080/00343400500128556
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    References listed on IDEAS

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    1. Kevin Morgan, 2001. "The New Territorial Politics: Rivalry and Justice in Post-devolution Britain," Regional Studies, Taylor & Francis Journals, vol. 35(4), pages 343-348.
    2. Ronald MacDonald & Paul Hallwood, 2004. "The Economic Case for Fiscal Federalism in Scotland," Working papers 2004-42, University of Connecticut, Department of Economics.
    3. Arthur Midwinter, 2002. "Territorial Resource Allocation in the UK: A Rejoinder on Needs Assessment," Regional Studies, Taylor & Francis Journals, vol. 36(5), pages 563-567.
    4. Iain Mclean, 2001. "Scotland: Towards Quebec - or Slovakia?," Regional Studies, Taylor & Francis Journals, vol. 35(7), pages 637-644.
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