Derivation v Equalisation: A row over Scottish funding from the 1990s, Arnold Kemp, the Herald. It is interesting to note how the debate over funding has changed since then, I think. Jackie Kemp.
The long-standing principle of equalisation means that all revenues (except local government tax) are remitted to the centre. They are then allocated according to a formula that takes account of need, sparsity of population and so on. This system reflects the essential idea of the unitary state -- that all its citizens should have a similar expectation of services irrespective of the wealth of their region.
[Critics] assumes that a Scottish Assembly would be financed by a system of derivation rather than equalisation. Under this principle expenditure is related to revenue raised in a particular geographical area.