THERE will be ''very serious problems'' in England unless the Barnett formula for allocating public funds to other parts of the United Kingdom is replaced, the man who invented it said today.

Lord Barnett, who produced the formula when he was Chief Secretary to the Treasury in the 1970s, said the forthcoming cuts in public expenditure announced in the Budget make the issue more pressing.

The Labour peer, who has long been campaigning for reform of the system, has highlighted that the formula now leads to public expenditure being about £1,600 per higher in Scotland than in England.

Anger has grown because Scotland receives £755 per head more than the North-East, yet income per head north of the border is 98 per cent of the national average - compared with 77 per cent in the North-East.

Government deputy chief whip Lord Shutt of Greetland had told peers at question time that the formula would be reviewed ''in due time''.

But Lord Barnett asked him: ''I wonder if you would care to define the meaning of 'due time'.

''The Chancellor has just announced that there are going to be departmental cuts in public expenditure in the autumn of some 25 per cent.

''Do you not recognise that if this is not noted and taken care of there is going to be very serious problems in England.''

Lord Shutt replied: ''It is not for me to take a view on when that time will be. I am not able to indicate when that time is because I don't know. If I knew I would tell you.''

He said he took the view ''personally'' that ''it should be looked at''.