Allocating Grant to the UK's Devolved Territories by Needs Assessment: Lessons from School Funding Formulae in England and Scotland1. (23rd February 2017)

• Record Type: Journal Article
• Authors: King, David; Eiser, David
• Is Part Of: Fiscal studies. Volume 38:Number 1(2017)
• Page Start: 81
• Page End: 109
• Publication Date: 2017-02-23
• Subjects: Barnett formula -- spending needs assessment -- school funding -- H72 -- H75 -- R50; Finance, Public -- Periodicals; Fiscal policy -- Periodicals; Economic policy -- Periodicals; Finance, Public -- Great Britain -- Periodicals; 336.3
• DOI: 10.1111/1475-5890.12088
• Languages: English
• ISSNs: 0143-5671

Abstract

Abstract: The UK's devolved governments (DGs) receive block grants to finance almost all their expenditure. The Barnett formula used to calculate these grants is often criticised because it does not consider the DGs' spending needs. However, the feasibility of allocating block grants 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 formula in turn to calculate the relative spending needs of the UK territories. The rationale is to consider how similar the two formulae are in how they estimate the territories' relative spending needs for education, a major responsibility of the DGs. The results show that the English and Scottish education allocation formulae produce similar estimates of the territories' relative education spending needs. This suggests that it may be more feasible to allocate education resources to the UK's devolved territories based on needs assessment than some have suggested. The results also suggest some inequity in current patterns of education spending across the UK.