SCOTLAND has enjoyed a £600m bonanza from a Barnett Formula blunder while the North suffered harsh cuts, a study reveals today.

And it warns of similar windfalls in the future, despite the Government’s claim that that infamous funding rules will gradually weaken Scotland’s advantage.

Now ministers have been urged to avoid similar mistakes which “may be seen as unfair to the people of England and Wales”, as the Edinburgh Parliament gains more powers.

The expose, by the respected Institute for Fiscal Studies (IFS), comes amid growing anger at a cross-party deal to preserve Scotland’s higher public spending forever after the referendum ‘No’ vote.

David Cameron, Ed Miliband and Nick Clegg joined forces to pledge to keep the 35-year-old Barnett Formula, to win over voters leaning towards independence.

But the Formula has delivered Scotland £733 more per person than the much poorer North-East – a figure that has more than doubled from £361, in 2010-11.

Meanwhile, Scotland’s gross value added (GVA) per head currently stands at 98.6 per cent of the UK average, while the North-East languishes at just 75.9 per cent.

Now the IFS has highlighted a “flaw” in the way the Barnett formula deals with business rates, delivering a £600m windfall to Scotland – and £200m to Northern Ireland – since 2010.

The money flows to Holyrood because most of the savage cuts to the budget of the department for communities and local government (CLG) have been excluded from the calculations.

Under the Barnett Formula, English business rates are treated as part-funding CLG - rather than all Whitehall departments – reducing knock-on cuts to the Scottish block grant.

The Edinburgh Parliament also enjoyed a £400m boost to its budget during Labour’s years in power, compared with funding if a “corrected” formula had been used.

The report states: “This matters because the CLG budget has been cut much more than the other big devolved budgets of spending on the NHS and schools.

“So the block grants to Scotland and Northern Ireland have been cut by much less than the average cut faced by departments serving England.”

To calm protests, ministers have claimed funding disparities produced by the Barnett Formula will lessen in future years, as Scotland controls more of its income tax.

But, crucially, the IFS argues it all depends how the rules are rewritten, concluding: “In designing further tax devolution, we should not make the same mistake”.

Next April, Scotland will control stamp duty land tax and landfill tax – under a 2012 Act – yet ministers are yet to decide how Holyrood’s grant will be adjusted, the report points out.

More than 80, mainly Conservative, MPs will demand a “review of the Barnett Formula” in a Commons debate next week.