The Barnett formula is a mechanism used by Her Majesty's Treasury in the United Kingdom to adjust automatically some elements of public expenditure in Northern Ireland, Scotland and Wales to reflect decisions affecting other parts of the country. It was devised in the late 1970s by the then Chief Secretary to the Treasury, Joel Barnett, as a short term solution to minor Cabinet disputes, though he later called for a review of its long term application.

Barnett consequentials are calculated to ensure that a particular change in public expenditure in one geographical area leads to a change in total public expenditure in others which are proportionate to population in the different areas. It is not applied to all public expenditure, but it remains a default option unless other decisions are made. A decision to change expenditure in Great Britain will lead to Barnett consequentials in Northern Ireland; a change in England and Wales to Barnett consequentials in Northern Ireland and Scotland; and a change in England to Barnett consequentials in Northern Ireland, Scotland and Wales.

The Barnett formula is widely recognised as being controversial, though there is no consensus on how to change it.

1. It takes no account of different needs or different costs in different areas.
2. It does not affect existing levels of public expenditure, even if relative population shares change.
3. Since existing levels of public expenditure are not allocated in proportion to population, a particular expenditure decision will lead to different percentage changes in different areas.
4. It does not apply to divisions of expenditure between the different regions of England.