First ministers and the spending review

The devolved first ministers’ declaration about cuts (available here; the BBC News story is here) is rather interesting, even if there’s less to it than meets the eye. It’s scarcely a secret or a surprise that all of them are unhappy about the planned scale and timing of cuts, even if the impact on devolved spending will probably be less serious than it might be. What is intriguing is to do with timing and tactics. Both Alex Salmond and Peter Robinson have hitherto held their fire rather on cuts. Salmond has appeared to be saving his opposition as a tactic to use in the election campaign, while Robinson has generally been muted in criticism of the cuts (if less so than the UUP), in contrast to Sinn Fein, and Northern Ireland has certainly had warm words from both the Secretary of State (here) and the Chancellor (here). The preference of some devolved governments to express their opposition behind the scenes, while others (notably Wales) have been very public in voicing theirs, has come to an end. All are now united both in their substantive opposition and in the tactics they are using.

With only a fortnight to go until the spending review is finalised, time is getting tight to secure any sort of favourable settlement. Moreover, all three clearly see little advantage in holding their fire – Salmond, for example, appears to have given up hopes of getting a maximal version of the Calman proposals in the bill to be published in a couple of months’ time. Clearly the sorts of representations they’ve made at their periodic meetings with Treasury (most recently on 15 September), and the response they’ve had, have failed to convince them. The devolved governments now clearly see no advantage in holding their fire.  And clearly, by making the target of their attack the scope of cuts and their economic impact (not just on devolved areas of public spending), they’ve taken on a wider role as politicians of the opposition, speaking for the wider interests of their parts of the UK and not just as administrators of particular devolved functions.

The real question is how the UK Government will respond – if indeed it does. I’ve already noted the limited and declining capacity of UK Government to engage with devolution issues in a coherent or strategic way. Most of Whitehall will, in any case, be too busy to deal with this. The likelihood is that it will simply be overlooked, or perhaps receive the sort of acknowledgement that indicates it’s not actually going to have an effect. Joint declarations are all very well, from a devolved point of view, but will require some sort of sustained campaign to have a tangible impact. Perhaps this should be viewed more as the first step in the 2011 election campaigns that as a démarche in intergovernmental relations.

Perhaps a more interesting question about the Spending Review is this. Why aren’t any of the territorial Secretaries of State on the Public Expenditure Committee that is resolving disagreements between Treasury and spending departments? Membership is one of the rewards for departmental Secretaries of State who have agreed their spending allocation with the Treasury already. Block grants are notionally paid through the Secretaries of State to the devolved administrations, so they do have a stake in this arguments – and one which implies it’s their job to present devolved concerns more than the devolved governments themselves. It’s hard to see how this doesn’t apply to the Scottish, Welsh and Northern Ireland Secretaries, who don’t have any direct stake in the review at this point as the block grants are determined as consequences of spending agreed for other departments. The bitter truth appears to be that none of them actually matter enough to be on such an important committee. Those who think that Scotland, Wales or Northern Ireland continue to benefit substantially from retaining ‘their’ Secretary of State might wish to note this powerful indication of their lack of influence within Whitehall.

UPDATE: According to Eddie Barnes in last Sunday’s Scotland on Sunday, Michael Moore has been made a member of the Public Expenditure Committee.

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7 Comments

Filed under Conservatives, Devolution finance, Intergovernmental relations, Lib Dems, Whitehall

7 responses to “First ministers and the spending review

  1. Jeff Jones

    This has all the all marks of a political gesture with the fingerprints of Alex Salmond all over it. In practical terms it will have no effect whatsoever on the UK Coalition. Why should it when under the present settlement it is the UK government and UK Parliament that decides economic policy not the devolved ‘spending agencies.’ In any case who is going to take any notice of letter signed by a politician who wants to break up the UK one minute and is begging you to build aircraft carriers for the UK navy the next. A politician who couldn’t even get elected to the Commons on May 6th. A politician who wants to be part of a foreign country which is imposing a cuts package more savage than the one being proposed by the UK Coalition. The last politician to sign would also have been instructed by his political party to have nothing to do with this sort of letter if his party , the Labour Party was introducing the cuts proposed by Alexander Darling. For any of those who signed to argue that they have a mandate for such a letter would also probably only cause laughter in Whitehall.

    It does,however, raise an interesting constitutional question of whether regional politicians have more right to be listened to than local government politicians. Should a UK government pay more attention to the devolved adminstrations because they describe themselves as ‘governments’ than let’s say the GLA or the LGA? In Spain as we know the regional governments often try to squeeze concessions out of Madrid and this is one of the reasons why the international money markets are worried by the Spanish response to the economic crisis. But did the architects of devolution really want the devolved administrations to be treated in some sort of special manner? I doubt it.

    Salmond in particular had also better be careful when he argues that Scotland is more vulnerable to the cuts agenda than other places in the UK. Just look at the disposable household income figures. Scotland’s is £14301. Northumberland is £12741, South Yorkshire £12482 and the West Midlands is £12097. It’s also simplistic as research for the Centre for Cites shows to argue that cities in the devolved regions because of the concentration of public employment are more vulnerable. Swansea which is often quoted might be vulnerable but Cardiff is expected to easily weather the storm.

    In practical political terms all the devolved administrations have a problem which raises some interesting questions about devolution. They were set up an Age of Plenty with a UK government prepared to give them huge increases in finance. As elected spending agencies they were able to introduce popular policies which often included free services without any thought for the long term economic consequences. They basked in the opinion polls which showed how popular they were compared to the UK government as the economic storm developed. Now all of that has changed and for the first time in their political lives they have to make difficult and probably unpopular decisions. Salmond could if he wanted to allow Local government in Scotland to start raising council tax as many authorities want to. In Wales councils as part of their cuts package are already talking of another council tax increase of about 5%. He could use the tax varying powers of the Scottish Parliament. To argue that it will take two years to implement this is pretty feeble given how long the time scale for the cuts agenda will be. Carwyn Jones could argue for taxraising powers for the Welsh Assembly. Instead only this week he has stated that this is off the agenda because it will somehow frighten the voters. What does that say about confidence in devolution and the need to make government more accountable amongst Weslh politicians? As Ken Morgan rightly argued you can’t have ‘representation without taxation’. I pay £50 a year in tax to my local community council but nothing to the Assembly.

    No one knows what the political fallout from the cuts will be. How voters will view devolution in 10 years time will be interesting to observe. For Salmond the hope is that the reaction will push Scots further down the road to independence. If he is wrong and next year voters in Scotland return to the Labour Party in a rerun of the 1980s to protest against the cuts then Salmond’s political career will effectively probably be over. In Wales we will see the argument of the pre devolution days that the Assembly would protect Wales from another Tory adminstration tested to destruction. Politically Labour are hoping as in Scotland to see a political reward at the polls in both the 2011 Assembly and 2012 Local governmen elections. For devolution on the other hand the reaction could easily be one of ‘why are we are wasting money on a political institution which doesn’t seem to be able to do very much when it comes to public services?’.

    One thing is for certain is that we are entering uncharted waters in both economic and political terms and no one can be certain of the outcome. To quote Attlee we will soon see if the politicians who serve in the devolved institutions are ‘Up to the Job.’

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  3. Russell Mellett

    Alan:

    If I recall correctly, the territorial departments take their running costs (or a portion thereof) out of the Barnett formula before passing the spending envelope on to Scotland, Wales or Northern Ireland. So in the jargon, they ‘top slice’ the transfer. The same thing occurs in Canada with transfers from the federal government to First Nations. So a portion of the transfer intended for First nations is kept by the regional federal department prior to passing on.

    An additional point is that, given ‘top slicing’, if the Barnett formula, or any successor, transfer the ‘right’ amount of transfer to regional governments; these governments actually do not receive the intended amounts. Territorial department budgets and transfer payments (and related calculations) can and should be separate.

    Given ‘top slicing’ continues, when the Barnett transfer is cut as a consequence of fiscal austerity, I wonder if territorial departments budgets will be reduced accordingly; or will these departments continue to take a fixed or growing amount for their operations; thereby increasing the Westminster transfer cuts.

    More broadly, I don’t see the value added of territorial departments; particularly if Scotland, Wales and Northern Ireland are evolving toward being regional governments rather than regional administrations. It makes increasing sense, as you have pointed out many times, to centralize the business of intergovernmental affairs between Westminster, Scotland, Wales, and Northern Ireland.

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