Barnett Formula

The Barnett formula is a mechanism used by The Treasury in the United Kingdom to adjust the amounts of public expenditure allocated to Northern Ireland, Scotland and Wales automatically to reflect changes in spending levels allocated to public services in England, England and Wales or Great Britain, as appropriate.

The formula is named after Joel Barnett, who devised it in the late 1970s, while Chief Secretary to the Treasury as a way of allocating additional or reduced finance based on population (and not need) as a short-term solution to minor Cabinet disputes in the runup to the planned devolution in 1979. It has been retained by Conservative Governments of 1979 to 1997 under Prime Ministers Margaret Thatcher and John Major, by Labour Governments after 1997 under Tony Blair and Gordon Brown, and the current interparty Government of David Cameron, with the Government declaring its intention to continue to use it as the basis for funding the three devolved governments.

The Barnett formula is said to have "no legal standing or democratic justification", and, being merely a convention, could be changed by the Treasury at will. In recent years, Barnett has called for a review of its long-term viability.