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.
When it comes to taking devolution further, the key element is welfare devolution, and how that might be funded. That would involve devolving at least one more significant tax base, for which none of the options is particularly attractive. Another important factor is the structure of the new Universal Credit. The result is that the policy options are rather narrower than one might think (and some might hope).
All these problems then also have an effect on bigger issues, particularly the sort of ‘enhanced devolution’ that might be offered through or following a Scottish independence referendum. I think it is possible to put in place a system that will deliver the sort of substantial ability to reshape public policy that will achieve the outcome Scottish voters appear to want. However, it will not involve the massive handing-over of functions that some might wish. In this sense, the difference between achievable forms of ‘self government within the Union’ and independence is greater than it might seem.
This was one of my first presentations of recent and ongoing work, and I’ll have a good deal more to say about this, on here and elsewhere, in the next few months.
The slides are available HERE.