Devolved nations 'protected from spending cuts'

Spending will be better protected in devolved nations because of the controversial way funds are allocated across the UK, a study found today.

Experts warned such a situation risks inflaming public opinion in England, where there is growing unease over the share of funds for Scotland, Wales and Northern Ireland.

Professor David Bell, of the Institute for Public Policy Research, highlighted the potential flashpoint among a number of "deficiencies" in the way funds are shared through the Barnett formula.

He also argued that devolved nations cannot influence the Westminster government's budget, leaving them in a state of limbo when trying to plan for cuts they know are coming.

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.

Prof 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.

Previous research by the institute found that 40 per cent of people in England think Scotland gets "more than its fair share of funding" - up from 22 per cent in six years.

In his paper, Devolution in a Downturn, Prof Bell said the Barnett formula goes into reverse during cuts, meaning the proportionate fall in spending in devolved nations "will be lower" than in England.