Wadler's Blog

The Barnett Formula is the system used to decide the size of the “block grant” sent every year from London to the Scottish Government to run devolved services. ...
Until now, however, it’s been politically impossible to abolish the Formula, as such a manifestly unfair move would lead to an upsurge in support for independence. In the wake of a No vote in the referendum, that obstacle would be removed – Scots will have nothing left with which to threaten Westminster.
It would still be an unwise move for the UK governing party to be seen to simply obviously “punish” Scotland after a No vote. But the pledge of all three Unionist parties to give Holyrood “more powers” provides the smokescreen under which the abolition of Barnett can be executed and the English electorate placated.
The block grant is a distribution of tax revenue. The “increased devolution” plans of the UK parties will instead make the Scottish Government responsible for collecting its own income taxes. The Office of Budget Responsibility has explained in detail how “the block grant from the UK government to Scotland will then be reduced to reflect the fiscal impact of the devolution of these tax-raising powers.” (page 4).But if Holyrood sets Scottish income tax at the same level as the UK, that’ll mean the per-person receipts are also the same, which means that there won’t be the money to pay for the “extra” £1400 of spending currently returned as part-compensation for Scottish oil revenues, because the oil revenues will be staying at Westminster. ...
We’ve explained the political motivations behind the move at length before. The above is simply the mechanical explanation of how it will happen if Scotland votes No. The“if” is not in question – all the UK parties are united behind the plan.
A gigantic act of theft will be disguised as a gift. The victories of devolution will be lost, because there’ll no longer be the money to pay for them. Tuition fees and prescription charges will return. Labour’s “One Nation” will manifest itself, with the ideologically troublesome differences between Scotland and the rest of the UK eliminated.
And what’s more, it’ll all have been done fairly and above-board, because the Unionist parties have all laid out their intentions in black and white. They’ll be able to say, with justification, “Look, you can’t complain, this is exactly what we TOLD you we’d do”.