The Many Forms and Consequences of Devolution

by Ken Gibb

I have just returned from a two day conference organised by Policy Scotland and the Urban and Regional Economics Seminar Group. The meeting took place at the Open University in Edinburgh. The title of the meeting was: devolution and federalism in a post-referendum United Kingdom. The timing was interesting, the event starting on the very day that the Smith Commission Cmmd Paper was published by the UK Government.

There were eight papers during the event. They can be grouped in the following way. Jim Gallagher presented a paper about where are now, setting the UK and Scotland as being half way between the rock of the referendum and the hard place of the forthcoming UK general election. Later on the first day Gerry Mooney from the Open University looked at the independence referendum and the Smith commission debates in terms of the centrality of social welfare policy.

David Bell and David Heald both separately talked about finances, devolution and the Smith Commission and the long-term fiscal arrangements for Scotland in the continuing quasi-federal state of the UK.

I gave a paper on the emerging independent Scottish review of the council tax and the options that might arise as a result of it. Elsewhere David Bailey from Aston University talked about the English questions relating to transforming LEPs into something more regional and developmental. Zach Wilcox from Centre for Cities talked about new ideas around reconfiguring local authority boundaries, sharing powers and making further governance changes to local government in England. Finally David Waite from Cardiff University looked at City Deals in Scotland and Wales and their future opportunities and constraints.

This was an interesting and lively series of papers with useful discussion and many nuggets of thought-provoking ideas coming out of the sessions. What were the main points that I took from the conference?

First, ambiguity and uncertainty surrounds both the Vow and still very rapid Smith Commission process. For example, was the defence of Barnett in relation to it as a resource allocation mechanism or should it be viewed as a symbol concerned with retaining the per capita spending advantage enjoyed by Scotland?

Second, Smith means that 60% of Scottish identifiable spending and 40% of revenues will be devolved. This is highly decentralised by international standards, so Scotland is going to be a highly federal sub-national system. However in two respects one might describe this form a UK perspective as quasi federalism. First of all, England remains asymmetrically dominant across the UK as a whole (84% of UK population and highly centralised). Second, many of the taxes are assigned revenues or in other ways Scotland does not have full control over them in term of key elements like the personal allowance for income tax.

Third, the critical element of the block grant adjustment means that Scottish government revenues and the tax base have to grow relativel to the UK taxpayers otherwise the block grant will actually shrink over time. There are incentives here but there are also risks.

Finally, the seminar discussed local and regional dimensions of devolution across the UK in different ways. To what extent is it possible to consider changing to a more shared services or common platforms for local governments? Second, is it possible to imagine a more coherent and consistent set of city deal arrangements in future? Third, is it possible to design a ‘missing space’ between local and national governance within which to promote regional local economic development? And, finally, can we conceive of the council tax freeze being removed and a more coherent version of the property tax being put in place? We will wait and see.