UK Government Spends 30 Percent More on Scots Than English: Report

Scottish First Minister Nicola Sturgeon arrives to update MSPs on any changes to the COVID-19 five-level system in Scotland at the parliament in Holyrood in Edinburgh, Scotland, on Dec. 15, 2020. (Andrew Milligan - Pool/Getty Images)

For every pound the UK government earmarks for the English, according to an economic think tank, it gives the Scottish an extra 30 pence.

The Institute for Fiscal Studies (IFS) report says that almost all of the 30 percent gap is down to the controversial Barnett formula.

That formula is a fixed way of divvying out money among the UK’s devolved governments for certain services. However, critics say the formula is trapped in historic differences in spending and is too inflexible.

According to the IFS, the spending gap is increasing.

The report found that the Scottish government will, per person, “almost certainly” get more funding for tackling the pandemic.

It claims, however, that First Minister Nicola Sturgeon’s government plans to use money earmarked for the pandemic for other policies—including those central to her re-election manifesto.

“Excluding temporary COVID-19 funding, the Scottish government has over £1.30 per person to spend on public services this year for every £1 of spending per person on comparable services in England," David Phillips, associate director at the IFS, said in a statement.

“This is almost entirely due to funding received from the UK government via the Barnett formula, with less than 2p of the gap due to the Scottish Government’s borrowing and higher income taxes.”

He said that despite tax hikes in Scotland, tax incomes have risen only slightly due to the weak performance of the economy.

“They would have fallen relative to a world without tax devolution had those tax rises not been implemented, reminding us that devolution brings risks as well as opportunities,” he said.

Scottish Finance Secretary Kate Forbes blamed the spending gap on a decade of “unrelenting” austerity under the Conservatives.

According to Holyrood magazine, she said, “While the Barnett formula does provide Scotland with slightly higher public spending per head than in England, it is already under attack by the Tories at Westminster, who have cut our capital budget by 5 percent and stripped the Scottish Parliament of powers so they can engage in ‘pork-barrel’ spending through the so-called levelling up fund.”

A Scottish Tory economy spokesman said, according to the Telegraph, “The extra money Scotland gets through the Barnett formula in the months and years ahead will be key to saving jobs, supporting businesses, growing the economy and offering high-quality workforce training.”

According to the Institute for Government, the main bone of contention with the Barnett formula is that it uses the previous year’s devolved budget as a starting point, and “therefore preserves historic differences in spending between the nations.”

“The formula is also slow at responding to changes in relative population size, which further disadvantage England where the population has grown most quickly.”