On Friday 14 September, I gave a presentation at the conference of the Territorial Politics working group of the Political Studies Association. This is a biennial event, and this time it was held in Brussels.
I presented a version of the work I’ve been doing on how a more decentralised approach to devolution finance might work, and also discussed how that relates to wider ideas about ‘enhanced devolution’ particularly but not only for Scotland. I gave it the snappy and glamorous title ‘Devo more, devo plus and so on: extending devolution in the UK, and financing it.’ At least it’s accurate.
Fiscal devolution is the starting point here, but the problem is that it’s hard to design a funding system when you don’t know the nature and costs of the functions devolved. This means that outlining models for ‘fiscal devolution’ at the start of working on schemes of enhanced devolution rather than the end of them is like putting the cart before the horse. The deeply-established fiscal centralisation of the United Kingdom – which goes back at least to the Middle Ages, and which in both Tudor times and the late seventeenth century was key to the power of the English state – is a major factor here. Under the existing model of devolution, health, education and local government services are the most costly functions in devolved hands. For this, I think it’s possible to create something workable through devolving (all) personal income tax, assigning a large proportion of VAT to devolved governments, and devolving the various land taxes and alcohol and tobacco duties (though that will require quite a major restructuring of how those work). That needs to be accompanied by an equalisation grant, and there are some big questions about how that works.
