Regional Studies, Vol. 39.4, pp. 495–518, June 2005 Embeddedness of UK Devolution Finance within the Public Expenditure System DAVID HEALD* and ALASDAIR MCLEOD† *Management School, University of Sheffield, 9 Mappin Street, Sheffield S1 4DT, UK. Email:
[email protected] † formerly Centre for Regional Public Finance, University of Aberdeen, Aberdeen AB24 3QY, UK. Email:
[email protected] (Received March 2004: in revised form February 2005) H D. and ML A. (2005) Embeddedness of UK devolution finance within the public expenditure system, Regional Studies 39, 495–518. Before devolved government was established in 1999 in Scotland, Wales and Northern Ireland, it was expected that the financing system would become more transparent. In fact, greater transparency about process (i.e. the rules) has not yet been matched by transparency about the numerical operation of a key element in the system, namely the Barnett formula, which regulates the budget envelopes of the devolved administrations. This paper tracks the numerical implementation of the Barnett formula since devolution in order to deepen understanding of how devolution finance is embedded within the UK’s public expenditure planning system. Accordingly, data are provided showing the generation of formula consequences for Scotland in each of the UK Spending Reviews 2000, 2002 and 2004. This cannot yet be done for Wales or Northern Ireland because the necessary data are not in the public domain. Then, for all three devolved administrations, the paper chain-links their ‘Departmental Expenditure Limits’ from one Spending Review to the next. These changes are systematically analysed into six analytical categories developed for the purpose.