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The UK's devolved territories (Northern Ireland, Scotland and Wales) rely on grant from the UK government to finance their expenditures. For over 30 years, the Barnett Formula has been used as the mechanism for determining the level of resources allocated to each devolved territory.
There is increasing dissatisfaction with the Barnett formula as a resource allocation mechanism. The main criticism with Barnett is that it takes no account of the spending needs of the UK territories when allocating resources, potentially leading to arbitrary and unfair allocations.
As as result, there is increasing interest in the possibility of replacing Barnett with a needs based formula. A needs based resource allocation formula would allocate resources to the devolved territories based on consideration of the spending needs of those territories in providing public services (for example, areas with a greater proportion of school-age pupils may require additional resources for education), and the differential costs of providing services in different parts of the country (for example, costs of providing certain public services may be higher in very remote or highly urbanised areas).
This two-year, ESRC funded project is investigating how needs based funding models could be developed to allocate resources to the UK's devolved territories.
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