Overview

This bill mandates the Chancellor of the Exchequer to present to Parliament proposals for replacing the Barnett Formula, currently used to determine public spending allocations for Scotland, Wales, and Northern Ireland, with a new system based on a relative needs assessment. This new system would be enshrined in law.

Description

The Barnett Formula (Replacement) Bill compels the Chancellor to develop and submit to Parliament, within three months of the bill's passing, a plan to replace the existing Barnett Formula. The proposed replacement would use a statutory scheme to allocate resources, determining funding based on the assessed relative needs of each nation. The current formula, a system of allocating funds based on population and changes in spending in England, would be replaced with a new formula calculated using relative needs. The bill does not specify the details of this new needs-based allocation scheme; it only requires the proposal to be presented to Parliament.

Government Spending

The bill itself does not directly impact government spending. Instead, it initiates a process to review and potentially reform the existing Barnett Formula, which may result in changes to future government spending allocated to Scotland, Wales, and Northern Ireland. The ultimate financial impact depends entirely on the yet-to-be-determined proposals for the replacement scheme.

Groups Affected

The bill could significantly impact:

• Scotland, Wales, and Northern Ireland: These nations' public services and funding levels could be substantially altered depending on the specifics of the replacement scheme for the Barnett Formula.
• UK Government: The UK government's budgetary processes and spending priorities will be affected by the necessity of developing and implementing a new allocation system.
• Local Governments within Scotland, Wales, and Northern Ireland: Funding received by devolved administrations would change under a new system and would subsequently impact the budget and ability to provide services at the local level.

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