Assessing relative spending needs of devolved government: the case of healthcare spending in the UK

Abstract

The system used to allocate resources to the UK's devolved territories, known as the Barnett formula, takes no account of the relative expenditure needs of the territories. In this paper we investigate the prospects of developing a needs based model for allocating healthcare resources to Scotland, Wales and Northern Ireland. We compare the method used by the National Health Service in England to allocate resources geographically within England with the method used by the NHS in Scotland to allocate resources to territorial Health Boards. By applying both approaches to the UK's devolved territories, we are able to examine similarities and differences in the two methods, and explore implications for an assessment of the relative healthcare expenditure need of each territory. The implications for the way in which revenue is distributed to Wales, Scotland and Northern Ireland are discussed.