The Barnett allocation mechanism: formula plus influence?

Abstract

This paper seeks to explain why the operation of the Barnett formula has failed to generated convergence in the per capita public expenditure levels in the four countries of the UK. Using Scotland as an example, the paper argues that a 'formula plus influence' allocation mechanism has been in place. This offers improved flexibility, greater political integration and increased information flows than would be available through either a straight bargaining or formula process. While devolution has not changed the Barnett formula, it has altered the environment in which it operates and that this may well destabilise an otherwise secure system.