Finance & Public Expenditure in Scotland Since Devolution - Essay Example

As an after effect of the constitutional change in UK, the distribution of revenue throughout the regional and territorial government in relation to its corresponding public expenditure was greatly affected. (McLean, 2003) In order to minimize and prevent an unfair distribution of UK revenue among the Enlish and British territories such as the Northern Ireland, Scotland and Wales, the need to examine the Barnett and the traditional Goschen formula used in the allocation of money to its corresponding territories arises.

In line with the increasing concern over the use of Barnett and Goschen formula in the United Kingdom, the researcher will first conduct an in-depth analytical research study on the budgetary, financial arrangements, and public expenditure of Scotland including the impact of devolution over its finances. In the process, the researcher will discuss a brief history behind Scotland’s financial arrangements prior to devolution in 1999 including the application of the Goschen formula. The researcher will also provide an analytical description of the Barnett formula since its inception back in 1978 and subsequent revival in 1992.

Eventually, the researcher will examine the strength and weaknesses of using the Barnett formula versus the Goschen formula. As stated in the third edition of the Statement of Funding Policy that was published by the Treasury back in July 2002, the financial arrangement between the United Kingdom and the Administration in Scotland follows the conventions for Scotland way back before the devolution. (Scotland Office, n.d.) Using the public expenditure framework controlled by the UK government, the HM Treasury allocates budget for the public expenditure of U.K., Scottish Executive, and Northern Ireland.

The devolved Scotland administration normally receives a block grant. There are legally two components under a block grant known as the: (a) redistributed national non-domestic rates (NNDR); and (b) the Revenue Support