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Devolving funding and taxation in the UK: a unique challenge

Published online by Cambridge University Press:  01 January 2020

Tony Travers
Tony Travers*
Affiliation:
Department of Government, London School of Economics; Centre for Cities; House of Commons Communities and Local Government Select Committee; House of Commons Education Select Committee; New Local Government Network
*
E-mail: a.travers@lse.ac.uk
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Abstract

This article describes the centralised nature of the UK, briefly describes the changes now under way in Scotland and Wales and then analyses differences in output per head as between nations and regions. It then considers the scope for devolution, including fiscal devolution within England. The United Kingdom today is one of the most fiscally-centralised of all OECD countries, but there will soon be reform in Scotland and Wales, with significant devolution of tax-raising powers to Edinburgh and Cardiff. In England, there is currently no ‘state’ or ‘regional’ tier of government. There have been significant differences in GDP/GVA per head of the nations and regions of the UK for many decades. Efforts to ‘rebalance’ the GDP/GVA totals shown above have involved public expenditure and investment programmes over several decades. The results of the UK's centralised distribution of resources, if any, on changes in regional and sub-regional performance are little studied. A highly-centralised system of taxation and public expenditure is not, it would appear, a guarantee of territorial economic equalisation. In a potentially radical policy departure, George Osborne has moved further than any minister in recent times towards a form of city-regional devolution within England. In the first instance, any devolved power is likely to be over public expenditure, though in the longer term fiscal devolution may become possible. The move towards a quasi-federal UK is now well under way.

Keywords

devolutionfiscal federalismdecentralisationcity dealH71H72H77
Type
Research Articles
Information
National Institute Economic Review , Volume 233 , August 2015 , pp. R5 - R13
Copyright
Copyright © 2015 National Institute of Economic and Social Research

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