The much-criticised Barnett Formula, which is widely regarded in England as giving an unfair public spending advantage to Scotland, needs to change, the head of a review of Scottish devolution said yesterday.

Sir Kenneth Calman, who chairs the review into Holyrood's powers, maintained that finding a suitable way to change the formula - which automatically gives Scotland a proportion of all new public spending in England — was one of his main tasks.

His commission was set up by the Unionist parties at Holyrood — Labour, Liberal Democrats and the Conservatives — and was regarded as a means of outflanking the Scottish National Party, which supports independence.

Opinion polls in Scotland show that there is more support for the Scottish Parliament acquiring more powers, including new fiscal responsibilities, than for outright separation from the rest of the UK.

Sir Kenneth said in Edinburgh that all the evidence received by his commission called for changes to the present funding system, which gives Scotland a £1,500 per head spending advantage over parts of England.

Asked if the formula should be reformed to better reflect a needs-based system rather than population, Sir Kenneth said: “I think all the evidence we've had ... suggests that needs to change. The issue of changing that, in whatever way I don't know, is clearly one of the big tasks.”

Sir Kenneth said that judgments on whether the Barnett Formula was fair to English taxpayers depended on which part of England was being considered.

“It's important you don't think of England as a single place, you can break down the regions quite easily,” he said. “If you look at London, for example, you would see that it does pretty well.”

Sir Kenneth also said that while Scots strongly supported devolution and the Scottish Parliament, there was still, ten years on from its founding, some confusion about Holyrood's responsibilities.

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