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Spending cuts “will be less severe for devolved nations”

22 April 2010

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Due to the controversial manner in which funds are allocated across the UK, spending will be better safeguarded in devolved nations, a new study has suggested.

There is growing unease in England over the share of funds for Scotland, Wales and Northern Ireland, a feeling which may well be exacerbated by these latest findings.

A number of “deficiencies” in the way funds are shared through the Barnett formula have been highlighted by Professor David Bell, of the Institute for Public Policy Research.

Devolved nations can also be left in a state of limbo when trying to plan for imminent spending cuts, he argued, as they cannot influence the Westminster government’s budget.

The University of Stirling economics professor said the recession “exposed the lack of powers” in devolved nations.

He added: “Having been tethered closely to the economic fortunes of the UK as a whole, the devolved administrations now await with some powerlessness significant cuts to their block grants.”

He said the UK could learn from the German federal example, which allows greater discussion on budgets.

Professor Bell added: “It is also the case that the funding formulas which leave the devolved administrations so dependent on Westminster could work in their favour when spending cuts begin to bite.”

The bulk of the block grant to devolved administrations is based on education and health spending, areas the Tories and Labour pledged to protect in the general election campaign.

This is likely to “shelter” the scale of cuts in Scotland, Wales and Northern Ireland, he said.

Copyright © Press Association 2010

University of Stirling