The constitutional implications of the UK Spending Review

The Spending Review is no longer at the forefront of the news, but it’s still worth thinking about. The spending plans it sets out and their implications will determine much of political, economic and social life for the remainder of this Parliament. That’s as true for territorial matters as it is for any others.

The most important lesson from the Spending Review is that the UK Government emphatically sees devolved governments as subordinate administrations with limited functions, and no wider role beyond the discharge of those functions. They don’t have a wider role as ‘partners’ in the governance of the UK or to speak for their nations; their role is seen as limited essentially to the public services for which they’re responsible. What they are to be ‘respected’ for is therefore similarly restricted.  This is deeply regrettable. I’ve been arguing for some time that there is a serious mismatch between how devolution actually works, how the publics in Scotland, Wales and (somewhat surprisingly) Northern Ireland want it to work, and how the UK Government thinks it works. Any of those mismatches would be problematic; the three sets of them are all the more so. (I’ve written about that at greater length in a paper that appeared in the summer 2009 issue of Scottish Affairs, and a chapter in a book to mark the 20th anniversary of Charter 88.)

This limited interest in devolution and its implications means that only scant efforts were made to think through the implications of how the review was carried out. While they made efforts to engage with devolved ministers as part of the process, clearly those had limited effect – it was UK ministers talking to devolved ones, hearing what they had to say, but not negotiating or changing plans as a result. This rather token intergovernmental engagement was the sort of consultation exercise that naturally breeds cynicism around the wider public sector. A further consequence of that was that there was no effort made to avoid the absurdity of Wales coming worse out of the review than Scotland or Northern Ireland, despite the relative harshness of the present arrangements for Wales (previously discussed HERE).  There are plenty of discussions of whether these spending plans are regressive or not in a general sense; the IFS’s analyses are available here, Reform’s are here, and there’s an IPPR paper here.  However, there’s been much less of an effort to think through the territorial implications of the spending plans overall – the impact in different parts of the UK of cuts in public spending, of changes to the welfare system, and so forth. While we’ve heard a lot about the implications of housing benefit changes in London, there’s not been much (other than this paper from IPPR North) about its impact elsewhere. Certainly, you wouldn’t know much from the Treasury’s official ‘regional press notices’ (available here), which are even less specific than they were in the past. It looks rather as though the UK Government doesn’t really know what those implications might be. If it does know, it’s certainly not telling the wider public.

Two points need to be made about this.  One is the unsuitability of this sort of Spending Review process for allocating funding to devolved governments generally – having them as recipients of funds that depend on inter-departmental negotiations driven by spending and political priorities that relate first and foremost to England. The speed of that process, and the tendency of immediate concerns to take precedence over remoter ones, is structurally inappropriate.  It also leads to serious specific mistakes. In 2007, the biggest mistake was about consequentials arising (or not) from the 2012 Olympics (discussed HERE). That has been a running sore in relations which still festers. The 2010 parallel appears to have been the decisions about S4C’s funding and organisation, discussed HERE.

Making that sort of system work would require two changes. One would be to slow it down, so that there are meaningful opportunities for devolved governments to engage in the process. The second is to create the framework for that engagement, to address areas of policy spill-over. The clearest example of this at present is higher education (discussed earlier HERE).  It’s one thing for UK to make decisions about higher education funding for England; it’s another to do so when those decisions profoundly affect devolved choices as well. In most federal systems, a policy of that magnitude would be formulated with extensive consultation, to work out what parts of it the devolved (regional-level) governments agreed with, what parts they didn’t, and how to manage the areas where there wasn’t agreement. It wasn’t done by one government seeking a report and then coming up with a confusing and contradictory set of announcements about they intend to implement it, while writing into its financial plans a set of commitments with very tangible implications for the other governments. In a system with so many and serious policy spill-overs as the UK has, a serious approach to such intergovernmental relations isn’t an optional extra. It needs to be central to the whole undertaking.

The second is that the Coalition appear uninterested in the wider purpose of devolution of keeping the UK together, by enabling devolved parts of the UK not just to have the gewgaw of their own governments and legislatures, but also to reshape public policy to reflect their preferences. ‘Respect’ has been treated as being something about process (though it has often miscarried even on that level), not substance.  That’s not new, at least as far as the Conservatives are concerned, as I’ve been pointing out for some time, even if it does indicate the limited impact the Lib Dems have had in this area.  As matters stand, Scotland and Wales clearly want something that is much more social-democratic than the Coalition’s approach at UK level. Those choices might well change over time, but that’s where they are now. The question is how to accommodate that diversity. Denying the power of devolved governments to make different choices, while sucking them along the path determined by London, simply threatens to undermine the political benefits devolution offers.

What’s most depressing, though, is that I could have written almost every word of the above at any spending review since 2001. In this respect, the Coalition’s thinking is as narrow as Labour’s was – but in a very different context, where the underlying consensus that made devolution easy before 2007 no longer exists and where what they’re doing is profoundly disputed. The UK Government has utterly failed to learn from the past. This is not just a gambler playing the same hand time after time, thinking their numbers will come up sooner or later. They’re doing so in circumstances where the game they’re playing is double or quits. And worse, they don’t seem to think that it’s a gamble at all.


Filed under Comparisons from abroad, Conservatives, Devolution finance, Lib Dems, Northern Ireland, Policy issues, Scotland, Wales, Whitehall

4 responses to “The constitutional implications of the UK Spending Review

  1. Jeff Jones

    But they are only equal governments in the eyes of Nationalists or those in the nationalist wing of the Labour Party. Calling yourself First Minister doesn’t give you the same status as the Prime Minister I’m afraid no matter how much Salmond in particular huffs and puffs. You again make the mistake in my opinion of lumping all the devolved adminstrations together. This might make sense from a Scottish perspective and even the devolution industry perspective but it doesn’t I would argue make any sense from a Welsh perspective. The need to reform Barnett clearly shows that Wales and Scotland have different interests.
    You also need to answer the question of why should a UK government negotiate with the devolved adminstrations over the contents of a UK budget when Yorkshire as David Blunkett quite rightly points out has a larger population than either Scotland or Wales. The only logical conclusion from this post is independence for Scotland and Wales. Unfortunately for that viewpoint it isn’t the view of the majority in either Scotland or Wales. In Wales in particular it is a minority interest.
    The problem with devolution of power on national lines is that it developed as a knee jerk reaction to nationalist electoral success in the late 1960s and early 1970s. The consequences of this Home Countries Soccer tournement approach to devolution was never thought through. It became even more popular amongst some Labour politicians because of the 18 years of Tory government between 1979 ad 1997.Not many of them believed in devolution but they thought that it might protect Wales or even Scotland from another period of Tory government at Westminster. That theory is now going to be tested to destruction. Some were also enthusiastic because it offered another opportunity to become a full time politician with all the financial rewards and status that they believed wrongly in my opinion of such a position. They never thought through the consequences of a devolved system which only involved Scotland, Wales and Northern Ireland and not the regions of England.The 2006 Act in the case of Wales which was passed without much real debate just made matters worse. Sadly there has never been any real debate in Wales on the issue involved. The small Welsh establishment without exception are united in their belief that devolution is a good thing. To question devolution is seen by some as being odd or even worse anti Welsh. This is despite the evidence that since 1997 and even with all the money thrown at Wales it hasn’t really improved the lot of most people. No one even bothers to put together a coherent argument of why I should be subject to different laws from my cousin who lives in Devon. A century ago you could make argument that Wales was somehow different from the rest of the UK because of nonconformity. You can’t today when the lives and attitudes of the majority are no different from that of other parts of the UK. You pose the question that no one has carried out any research on the effect of the change in housing benefit. The only important change as far as Wales is concerned is the 10% reduction for those on JSA after a year. Even with that the reaction of most people in Wales would not be dissimilar to that shown by the recent opinion polls which is to support the reform. For some reasonn it is automatically assumed that 60 politicians in Cardiff Bay will produce better laws then 650 in Westminster. The samll amountof legislation under the LCO system shows that this isn’t the case. Some of the laws passed by the Scottish parliament have also hardly set the Western World alight. As far as most ordinary people are concerned devolution is something that still doesn’t concern them and the probable low turn out next March will confirm this. Their political outlook is still shaped by their attitude to UK political parties and their reaction to the policies of the government in Westminster. Without a sporting nationalism which was devised by the Victorians and which will dominate Welsh life in the next month ( which says something about Wales) there still isn’t an answer to the question posed by the late Gwyn Alf Williams of ‘When was Wales?’. As it stands at the moment in my opinion there is a real danger of Wales becomng marginalised from where real power actually is and that is still as Nye Bevan argued in Westminster. Obtaining law making powers in the devolved areas without any form of revenue raising powers will not change that. Frankly the reaction of some politicians to the CSR in the last few weeks with their emphasis on ‘Wales the victim’ has been embarrassing to watch and has not enhanced politics one bit in my opinion.

  2. russell mellett

    Hello Alan:
    Fiscal austerity brought with it the opportunity to revisit intergovernmental finance; particularly the possibility to revamp the Barnett formula, to make it more reflective of relative expenditure needs and thereby more equitable. Perhaps more telling, however, is the continued unwillingness of Westminster to transfer to Scotland, Wales, and Northern Ireland a reasonable amount of tax-raising capacity, so that these governments could have the responsibility to raise part of own spending requirements and thereby have some choice as to how and when fiscal austerity would apply in their regions. Instead, as you point out, Westminster persists in seeing the devolved governments as “subordinate administrations with limited functions”. An opportunity has been missed to see fiscal governance and austerity as a shared responsibility. Instead devolved administrations are left to move money around within a declining spending envelope, calculating which one has been harder done by.

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