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

The block grants allocated to the UK's devolved administrations are not determined by any estimate of their spending needs. There are increasing calls to replace the current grant allocation mechanism with one that explicitly considers the devolved administrations' spending needs. This paper compares two existing formulae for estimating healthcare spending needs – used by the National Health Service (NHS) to allocate resources within England and Scotland – by applying both formulae to the devolved administrations. It is found that these formulae provide very similar estimates of the devolved administrations' healthcare spending needs, and both formulae imply that the current distribution of resources across the devolved administrations may be inequitable.