Fiscal devolution – boring but important

Baroness Valentine

The UK is one of the most centralised countries in world. While Scotland, Wales and London have a measure of devolution, the rest of the country remains highly centralised. And most of the funding for the devolved governments comes from central government grant, who raise only a poultry sum themselves from tax collected. In London less than 7 per cent of the Greater London Authority’s budget is funded from local taxation whereas New York and Tokyo raise over 50 per cent of their budgets.

Despite endless political pronouncements on “localism”, successive governments have failed to wrest power from Whitehall. The Commons Select Committee is now consulting on this subject; on whether and how more fiscal and financial powers should be devolved to English Cities.

The answer to the question whether they should be is “yes”. The answer to how is “where there’s a will there’s a way . . . “ but there’s the rub.

Why yes? Because the begging bowl approach to local investment is on the whole unhealthy. Much work has been done on identifying what makes cities competitive in the global economy and this strongly supports high levels of city self-government. If people have more control over the money they raise and how they spend it they tend to be more reasonable about their spending plans, they can plan longer term (rather than annually planning investment in e.g. transport), they are sensitised to local needs and opportunities and they have an incentive to invest in projects which ultimately earn them more money.

But is there the will to devolve power, and importantly, money? Even if the Select Committee recommends this, how will the government departments react to a diminution of their power bases . . . ?

11 comments for “Fiscal devolution – boring but important

  1. Gareth Howell
    06/01/2014 at 4:52 pm

    The Baroness sits on the cross benches…… and it shows!

    We could of course devolve the whole of Westminster to the Yorkshire moors to make more space in the Centre of London for tourism.

    The nearest I can think of, to a sensible idea with regard to her perceived “localism” is regional government. Some counties have amalgamated parts of their police authorities. others have done the same with their planning authorities, which in view of electronic administration should surely be very economical indeed, but since there is such a vested reactionary interest in “County” organization, though less so since the Lords reform in 2005, little progress has been made towards further regional integration.

    It is a progressive Labour policy; Counties are consistent with the ancient Earldoms and Lord Lieutenantry(!), dating back to the Norman conquest. In my view slightly overdue for a change.

  2. S Brown
    06/01/2014 at 7:06 pm

    And maybe the rest of the country won’t suffer because the money is always spent in London.
    If London had raised the money it spent on projects to purely benefit those in London no-one would complain, good examples being the Dome and the Olympics.

    • LordBlagger
      07/01/2014 at 1:59 pm

      You also have to say, who gets the debts. There’s about 9 trillion to slice up.

      Not that the peers will tell you. They still think there is no debt at the rate they are increasing their spending.

      • catherine benning
        12/01/2014 at 6:43 pm

        Perhaps we should elect Icelandic politicians, then we would be able to succour our poorest. Odd we want to escape from Europe and fully integrate with the Commonwealth and China. How seriously odd that is?

        • LordBlagger
          13/01/2014 at 2:12 pm

          Nothing odd. It’s all about saving some money.

          There’s the Lords and MPs little secret about a 9,000 bn debt, only 1,200 bn of which is on the books.

          They can’t pay and that’s the disaster.

  3. MilesJSD
    07/01/2014 at 1:06 pm

    It is far too late to secure our and the UK’s Future by mere fiscal-economo-politics.

    What is needed is “tangible-economics”
    Earth-citizenship, further-education & participatory-democracy devolving.

    [See regular insights on RT News (Russian Television worldwide 24/7) “Breaking The Set”, “The Keiser Report”, “Cross Talk”, “Doxcumentaries”;
    and Others

    including for wider contextuality or hidden detail
    visit the not-for-profit British citizens voluntary website
    administered by myself and one or two voluntary unpaid part-timers.]

  4. Gareth Howell
    07/01/2014 at 1:14 pm

    Counties are consistent with the ancient Earldoms and Lord Lieutenantry(!), dating back to the Norman conquest. In my view slightly overdue for a change. The hard core of the conservative party is so deeply involved with “County”, as in what used to be called the “County crowd”, and probably still is, that they are up in arms against any change to County borders, to which they are ridiculously loyal.

    The Lords reform had the effect that the Lord Chancellor’s department by name was no longer the paymaster of the Lord Lieutenant’s offices in every county. As far as the employees were concerned it merely meant that the name of the office paying them had changed. I should think that the Ministry
    for Constitutional Affairs now pays their wages.

    Understanding why the Lords reforms went no further also entails knowing why Regional government did not become a fact. A lot of it is mere emotional attachment to particular areas of the country.

    Having 8 or 9 regional governments would have made enormous sense in terms of Welsh and Scottish devolution and an English national parliament.
    As it is the Scottish look as though they are going to depend on the Privy Council for any real political connection with the rest of these tiny islands.

  5. maude elwes
    07/01/2014 at 3:15 pm

    Ah, here we have an opening for suggestions on change and how we are governed…. Well, lets see? If we had ‘true’ or ‘pure’ democracy we could accommodate just exactly what the Baroness is toying with.

    First we have some excellent ideas from Canada. Really good thinking.

    To be followed up by a reminder of our own historic good thinkers. Where have they all gone?

    And last but not at the least.

    Feast on the concept, it could change the world for the good of mankind in general.

  6. Gareth Howell
    08/01/2014 at 2:12 pm

    The European based COR ( Committee of the Regions) may have in part been responsible for the development of Regional thought in the UK. There are about 330 members of COR which has its own bi-annual assembly. I am not entirely clear whether it is A)exclusively EU based or B) whether all its delegates are inclusively delegates from the EP.

    The name of the word is “Regionalism” but since the Baroness is on so many London oriented activities, I can’t see why she should put the question at all.

    • LordBlagger
      13/01/2014 at 2:13 pm

      Yet another quango like the Lords, raking in the cash and expenses.

      • Gareth Howell
        14/01/2014 at 9:38 am

        Ha!Ha! The Lords a quango! That takes the cake!!

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