From Expediency to Entrenchment: Territorial Finance in the UK and the Role of Crises in the Origins and Evolution of the Barnett Formula

Abstract This article explains the persistence of the “Barnett formula,” a mechanism for the territorial allocation of public expenditure introduced in the UK in the 1970s as an expedient during a fiscal crisis. Using a process-tracing approach, it shows how and why the formula, intended as a temporary expedient, became entrenched in public spending decision-making. This happened due to the confluence of fiscal, economic, and constitutional crises. Crises may be critical junctures allowing for a radical change of policy direction but the nature of the change depends on whether established and accepted principles or ideas exist to be activated or some past expedient is built upon, even if only intended as a short-term fix. Policies create interests and beneficiaries in a “recipient jurisdiction” will operate as purposeful opportunists to protect any advantage. Policies adopted as expedient in a crisis can be difficult to change even in the event of a later crisis.