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Developing needs based models for the UK's devolved territories
                   
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Reform of the Barnett Formula with needs assessment: can the challenges be overcome?

Forthcoming, Regional Studies

Abstract. Block grants to the UK’s devolved administrations (DAs) are allocated using the Barnett formula. There have been widespread calls to replace this formula with one based on some form of spending needs assessment, but two obstacles to doing so have been raised.  First,  there is an argument that the DAs would be unable to agree on how needs should be assessed, and second it is less clear how needs assessment might work in the case of devolved governments which can pursue different spending policies. This paper investigates the first issue by analysing the extent to which the Scottish and English formulae for allocating funding for health and education within each country are statistically similar, and the second issue through a hypothetical policy simulation analysis.

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Replacing the Barnett Formula by needs assessment: lessons from school funding formulae in England and Scotland

Submitted to Fiscal Studies

Abstract. The UK’s devolved administrations (DAs) receive block grant to finance almost all their expenditure.  The formula used to calculate the block grant is often criticised because it does not consider the DAs spending needs. However the feasibility of allocating block grant by needs assessment is often questioned, given the contestability of spending needs.

This paper compares the formula used within England to assess the education spending needs of local authorities there with the equivalent Scottish formula, by using each formulae in turn to calculate the spending needs of the UK territories.  The rationale is to consider how similar the two formulae are in how they estimate the spending needs of UK territories for education, a major responsibility of the devolved governments.

Results show that the English and Scottish education allocation formulae produce similar estimates of the relative education spending needs of the UK territories. This suggests that it may be more feasible to allocate education resources to the UK’s devolved territories based on spending needs assessment than some have suggested. The results also suggest some inequity in current patterns of education spending across the UK.

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Assessing relative spending needs of devolved government: the case of healthcare spending in the UK

Published in Regional Studies, May 2013

Abstract. The UK’s devolved administrations (DAs) rely on block grants to finance most of their spending, but the level of grants allocated to them is not determined by any estimate of their spending needs. There are increasing calls to replace the current grant allocation mechanism with one which explicitly considers the DAs’ spending needs, although some commentators argue that assessing their needs is not practicable, given the normative dimension in defining need. This paper compares two existing formulae for estimating healthcare spending needs (used by the NHS to allocate resources within England and Scotland) by applying both formulae to the DAs. It is found that these formulae provide very similar estimates of the DAs’ healthcare spending needs, and both formulae imply that the current distribution of resources across the DAs may be inequitable. The implications for the possible development of grant allocation mechanisms based on estimates of spending needs are discussed.

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Assessing the relative healthcare spending needs of the UK’s devolved territories: a Scottish perspective

Published in Environment and Planning C: Government and Policy 30(2) 322 – 346 (2012)

Abstract. This paper applies Scotland's health allocation formula to Primary Care Trusts in England, Health Boards in Wales, and Health and Social Care Trusts in Northern Ireland, in order to assess the relative healthcare expenditure needs of the countries. According to the Scottish formula, England's per capita healthcare expenditure need is around 10% lower than Scotland's, while Wales’ per capita expenditure need is around 2% lower than Scotland’s, and Northern Ireland's is around 7% lower than Scotland's. Scotland's relative expenditure need over England is largely a function of higher rates of mortality and long-term illness, rather than its relative sparsity. Northern Ireland's relatively lower need is largely due to it having a relatively young population. We also compare the results of Scotland's allocation formula with the equivalent English formula, and find that the two approaches differ in their view of what constitutes an equitable distribution of resources between PCTs.

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Assessing the relative healthcare spending needs of the UK’s devolved territories: an English perspective

Working paper

Abstract. This paper considers the relative healthcare expenditure needs of England, Wales, Scotland and Northern Ireland. It applies the NHS weighted capitation formula – used to allocate resources to English Primary Care Trusts – to Health Boards in Wales and Scotland and Health and Social Care Trusts in Northern Ireland. According to this formula, per capita healthcare expenditure need in Wales is 16% higher than in England. Scotland’s per capita expenditure need for healthcare is shown to be 12% higher than England’s, while Northern Ireland’s expenditure needs are 10% higher than England’s. The paper considers implications for proposed reform of funding arrangements for the UK’s devolved administrations.

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Evidence submitted to the Silk Commission

We submitted evidence to the Commission on Devolution in Wales, the 'Silk Commission', in January 2012.

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Applying the Education FSS method paper

This method paper describes how we applied the English Formula Spending Shares model for education to the UK territories.

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Applying the Education GAE method paper

This method paper describes how we applied the Scottish Grant Aided Expenditure model for education to the UK territories.

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