Spending to generate positive Barnett consequentials: FOI release

Information requested

At FMQs on 13th June 2024, John Swinney said this:

“What we have here is a classic example of what Anas Sarwar gets up to in public debate. He comes here and says one thing in Scotland, and in England his bosses are doing a completely different thing, which will have an effect on our budget here in Scotland.”

John Swinney was referencing remarks made by Wes Streeting, who has said that a future Labour government at Westminster will utilise private capacity to help bring waiting lists down in England. When the UK Government spends money in this way in England, Barnett consequentials are generated for the Scottish Government.

But John Swinney’s remarks imply that the “effect on our budget here in Scotland” would be negative. Please provide any information held by the Scottish Government demonstrating that the kind of spending proposed by Wes Streeting would fail to generate positive Barnett consequentials for the Scottish Government.

Response

The Scottish Government receives Barnett Consequentials where the UK Government provides additional funding for expenditure in England in areas which are under devolved competence.

It should be noted that Barnett consequentials accrue to the Scottish Government as a whole and it is then for Scottish Ministers to decide how they should be allocated based on their spending priorities for individual programmes.

The Statement of Funding Policy (SoFP) (latest version available here: Statement_of_Funding_Policy_November_2023__FINAL_.pdf (publishing.service.gov.uk) sets out how UK Government funding for the Scottish Government is determined. The Statement sets out the policies and procedures which underpin each individual element of that funding and explains the interactions with the funding the Scottish Government raises itself.

The largest element of Scottish Government funding remains the Barnett based block grant.

Changes in block grant funding for the Scottish Government in relation to public services are linked to changes in planned spending by UK Government departments. This link is achieved through the operation of the Barnett formula (changes in Scottish Government block grant funding are often referred to as Barnett consequentials).

Under the Barnett formula the Scottish Government receives a population-based proportion of changes in planned UK Government spending on services in England, England and Wales, or Great Britain. The Barnett formula therefore determines changes to Scottish Government’s funding with reference to changes in funding for UK Government departments; it does not determine the total allocation for the Scottish Government afresh each time it is applied.

The Scottish Government also operates within the requirements of the Fiscal Framework, agreed as part of the further devolution of fiscal powers contained in Scotland Act 2016 as found in The updated agreement on the Scottish Government’s Fiscal Framework - GOV.UK (www.gov.uk).

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