I took part in an interesting and successful conference in Cardiff on Friday on ‘Financing Devolved Government: The Principles and Practicalities of Reform’, organised by the Wales Governance Centre at Cardiff University. The morning session was devoted to discussion of the Holtham report, and some criticisms of it, from Dr Calvin Jones and Professor James Foreman-Peck of the Cardiff Business School. I spoke in the second of the afternoon’s sessions, along with Jim Gallagher (who talked about ‘The Calman report and its critics’). In my talk, I discussed the absence of any overarching constitutional or intergovernmental strategy from the UK Government, and related that to the various proposals for reforming UK devolution finance that are presently on the table. The full programme is here, and the slides from my talk are available as a slideshow HERE.
Perhaps the most interesting part, though, were the presentations by a group of Italian colleagues associated with the Centre for Studies on Federalism in Turin: Professor Paola Bilancia and Dr Filippo Scuto (from the University of Milan), and Professor Carlo Buratti (from the University of Padua). While the implementation of a large-scale reform of the country, conferring substantial powers on the country’s regional governments, was blocked in 2006 following a referendum, consideration of financial reform has advanced considerably in the meantime. This involves, to a very large degree, abolishing discretionary grants from the central state. If implemented, regional governments will have to fund public services from their own tax revenues, aided by a measure of fiscal equalisation, and based on assumptions of a ‘standard cost’ for services which the central government is presently working out. The process is of course a complicated and slow one. if introduced, however, it would introduce both a high degree of central control (via the ‘standard costs’) coupled with a very limited measure of redistribution. To undermine territorial solidarity in this way would amount to a recipe for break-up in many countries. In Italy, while it might free the richer northern regions from the ‘shackles’ of subsidising the poorer south, it removes many the incentives for the south to remain part of the same country. Being Italy, of course, there are many obstacles to realising such a change, but it will have far-reaching implications if it were introduced.
Details of the reforms are set out in the presentations from Professors Bilancia and Buratti, which along with the other presentations are available from the WGC website here.