Social citizenship rights only become meaningful when there is money to make them a reality. In federal or devolved political systems intergovernmental finances can determine who sets social citizenship rights. For instance, a system that provides devolved administrations with an unconditional block grant, when combined with substantial devolution of political powers, enables the administration to alter the citizenship rights available to its citizens. On the other hand, in a system where devolved administrations’ grants are conditional and key legislative powers remain with the federal or central government, it is central government that will dominate the country's social citizenship agenda. But shared standards, declarations of intent, public expectations and administrative efforts to create equal outcomes will all fail if the money is missing.

To understand intergovernmental finance and its consequences for social citizenship in the UK, we need to understand the extent of the powers and functions available to the devolved administrations in Scotland, Wales and Northern Ireland, and the way in which the UK intergovernmental finance system works – basically how the UK government taxes and spends. This is important for social citizenship for two reasons. First, where the power lies determines which administration has policy-making competence in the key areas for social citizenship, which will give an indication of whether it is the UK as a whole or the devolved administrations that are setting the social citizenship agenda. Second, how public spending is distributed has implications for social citizenship, as an equitable distribution of public spending can enable shared social citizenship.

This chapter explores the impact of the UK's devolution and intergovernmental finance arrangements on shared social citizenship in the UK. First, we give an overview of the degree of devolution, using public spending as a proxy for the degree of devolved powers, to explore whether it is the UK or the devolved territories that constitute a ‘sharing community’ (Banting, 2005a). Second, we outline how public spending is distributed in the UK, explaining the much misunderstood ‘Barnett formula’, how it works and why it is a source of political tension. Then we analyse where the spending actually goes, before considering whether the current distribution of public spending is equitable and promotes shared UK citizenship.