Scotland has benefited from a £1bn funding boost because of the ‘flawed' way in which the controversial Barnett funding formula treated English business rates, public finance experts have calculated.

The finding is contained in a report issued today by renowned economists the Institute for Fiscal Studies, which has estimated the devolved Governments of Scotland and Northern Ireland were cushioned to the tune of £600m and £200m respectively, because of ‘incorrect' application of national funding formula in the Coalition's 2010 and 2013 spending reviews.

This study finds ‘flawed' use of the Barnett formula – the means by which the Treasury has since 1978 allocated funding for the constituent nations of the UK on a per-capita basis – has protected Northern Ireland and Scotland from the full scale of cuts in block grants passed on to English councils.