The party conference season always produces a crop of policy announcements that are meant to be eye-catching. The extent to which these are thought through is often doubtful, though – these are announcements for political purposes, not necessarily to work in the real world. That also means how their devolution implications is addressed is often rather sketchy. Regular readers of this blog will know that concern about ‘devolution literacy’ is a long-standing one of mine, and one which I find has slowly but materially improved over the courts of the 2000s and 2010s.
Either devolution has bedded itself into party-policy framers’ consciousness, or something has changed. When he made his announcement about free school meals for 5-7 year olds in England, Nick Clegg was keen to point out that funding would be given to the devolved administrations to decide whether to follow suit. (The political pressure to do so will be considerable, of course – a lot of parents’ and poverty groups will be asking pointed questions about it.) And that’s all well and good; the Treasury’s Statement of Funding Policy provides that spending on the schools budget has a 100 per cent comparability percentage for Scotland, Wales and Northern Ireland – so any extra spending on that budget automatically triggers a full population-related comparable payment.
Ed Miliband’s widely-trailed announcement about cancelling a cut in corporation tax and instead making one in business rates (strictly, non-domestic rate or NDR) is more problematic. The aim is to favour smaller businesses, which may not be incorporated (or have profits), but which necessarily occupy business premises. Like Clegg, Multiband will apparently announce a change for England, with funding for devolved governments to make a similar cut. The problem is that this is not what the Statement of Funding Policy says. NDR is only 100 per cent comparable for Wales, where a complex England and Wales pooling mechanism currently exists. Even there, there are plans for change following the Morgan Review last year (BBC News summary here, full documentation here). In Scotland and Northern Ireland, NDR is 0 per cent comparable – because it’s regarded as fully devolved. So any decision for England would not automatically trigger comparables for Scotland or Northern Ireland.
There are ways to resolve this, of course. The easiest is probably the messiest – a one-off concession relating to adding a specific block of money to the devolved governments’ budgetary baselines. (If the comparability percentage were changed, it would lead to further complications in future.) Even then, though, there is no guarantee whatever that devolved governments will use the extra money in the way UK Government might desire. (Indeed, the Scottish Government has been imaginative in making use of NDR as an instrument of local economic policy – extra charges for out of town superstores, for example.) But the point is that Miliband’s attempt to make an impression by reshaping where the burden of business taxation falls has run into the practical realities of how the post-devolution, fiscally decentralised UK functions. While Miliband deserves 8/10 for effort in thinking about the problem, it’s only 4/10 for success in doing so.