The Barnett formula seeks to allocate increases in what are known as departmental expenditure limits based initially on English departmental allocations and it seeks to ensure that the increases in DEL, rather than annually managed expenditure, are conveyed fairly on a per-population basis to the devolved authorities, which are allocated their spending through a block grant. In England, each part of public expenditure that is departmentally limited is allocated departmentally rather than on a block basis. [Interruption.] I have explained that annually managed expenditure, such as social security, that is allocated on a demand basis is not part of the Barnett formula. The formula allocates Department expenditure-limited moneys that are in some ways devolved or not devolved, as the case may be, to Scotland, Wales or Northern Ireland. It is a needs-based formula for financial allocation.
The Barnett formula does not determine annually managed expenditure; its needs-based allocations are included in the limits, which hon. Members used to say that there was unfairness, whereas it distributes only part of total managed expenditure, which is known as DEL, rather than annually managed expenditure.