West Midlands gets less cash

England is getting less cash from Whitehall than other countries in the UK, new figure revealed today.

And the West Midlands gets less than many other regions in England.

The report has stoked up fears that the way state cash is shared out could undermine the union.

The Government spent £4,523 per head in England in 2007/08, compared to £5,050 in Wales, £5,676 in Scotland and £5,684 in Northern Ireland, said the report from the thinktank IPPR North.

But the West Midlands fared even worse. The Government spends £4,430 per head in the region - five per cent below the national average.

IPPR North said the region is one of five in England to receive below the average.

When central funding is measured against economic performance and poverty levels, Scotland is receiving more than it needs and England less, said the report.

And it warned that the disparity has become "an increasing source of tension" between the four nations.

The report called for a new financial settlement combining greater tax-raising powers for the devolved administrations with a new central government grant calculated according to need.

The Barnett formula which has governed the distribution of money between the UK's nations since the 1970s is "no longer fit for purpose" and should be scrapped, said IPPR North senior research fellow Guy Lodge.

"It does not result in a fair distribution of spending, and is becoming an increasing source of tension between the nations of the UK," he said.

"There is currently popular support for the continuation of the union in all parts of the country, but failure to act now and address devolved funding could see this tension grow."

Today's report found that spending in Northern Ireland and Scotland was about 21 per cent and in Wales eight per cent higher than the UK average, while in England it is three per cent lower.

Although the Barnett formula does not directly cover the regions of England, there was evidence of stark variations in spending between them, with the East of England receiving least - £3,820 a head, or 18 per cent below the UK average of £4,679.

Inside England, only London, the North-East and North-West received spending per head above the UK average, with the capital getting £5,985 (28 per cent above the average), the North-East £4,960 (six per cent) and the North-West £4,927 (five per cent).

Yorkshire and the Humber received £4,477 (four per cent below average), West Midlands £4,430 (five per cent), East Midlands £4,086 (13 per cent), the South-West £3,947 (16 per cent) and South-East £3,874 (17 per cent).

The Barnett formula contains a "squeeze" mechanism intended to bring about equal spending over time, but today's paper found little evidence that this was having an effect in Scotland.