What is the Barnett Formula?

Published 30/11/2020   |   Last Updated 30/11/2020   |   Reading Time minutes

The Barnett formula is used to calculate the annual change in the block grants of the three devolved administrations. If the UK Government makes spending changes in England to areas that are fully or partially devolved, the block grant for Wales will change.  This is often referred to as a "consequential".  ​.

The Fiscal Framework introduced a needs based factor to the application of the Barnett formula in Wales.  From 2018-19, increments passed onto the Welsh budget from the Barnett Formula will be 5% greater than they would have been under the previous formula.  In 2017, it was calculated that relative funding per person in Wales is around 120% of that in England. If, in the future, this falls below 115%, then the needs based factor will be changed to 115%.