Daily Telegraph: Barnett formula for Scots cash 'has to change'

THE Barnett formula that decides how much taxpayers' money is given to Scotland should be changed to make it fairer to England, the head of a Government-backed review has suggested.

Sir Kenneth Calman said all the evidence presented to his commission, which is investigating Scottish devolution, shows that the formula needs to be altered or scrapped.

The scheme gives Scots more than £1,600 extra per head in terms of public spending than the British average, but the allocations are not based on need.

Sir Kenneth's commission, which is backed by Gordon Brown, is to hold a series of meetings in England next month to ask residents how the system should be improved.

Describing changing the Barnett formula as "one of the big tasks'', he said: "I think all the evidence we've had, and I speak mainly about the evidence coming in, suggests that needs to change.'' Asked if the formula was fair to British taxpayers, he said: "It's pretty good for Scotland - it depends if you think that's fair or not. But I don't think it reflects the needs.''

But he added: "If you look at London for example, you would see London does pretty well.''

Sir Kenneth said options include tweaking the Barnett formula, or replacing it.

He said there would be no official response before the main report was published next summer, and no conclusions had yet been reached.

But Matthew Elliott, the chief executive of the TaxPayers' Alliance, said: "The Barnett Formula is outdated and unfair and it has got to go.''

The Calman commission was set up in March to review the workings of devolution and will report back to all the Unionist parties north and south of the border.

Tensions have risen since the SNP took power in Edinburgh last year, with the nationalists introducing a series of "giveaways'', including phasing out prescription charges and freezing council tax. This has prompted accusations that the Barnett formula is making English taxpayers subsidise Scotland for services that are not available south of the border.

The commission is investigating the operations of the Scottish Parliament, its dealings with Westminster and its powers. The Barnett formula is expected to top the agenda at meetings in Newcastle and London next month.

The formula was devised by Joel Barnett when Treasury chief secretary in the 1970s but was meant to provide only a temporary solution to how to allocate public spending.

Earlier this year Lord Barnett disclosed that his scheme was "concocted almost on the back of an envelope'' using approximate population figures.