The challenge of a Federal UK

Tomorrow’s referendum has been presented as a “Yes” vote for the freedom of the Nordic Social Model on one hand; or a “No” vote for the security of the “best of both worlds” and a Federal UK. The former, as noted on this blog, is a fantasy. The problem is, the latter may be too – developing a Federal UK is nothing like as simple a task as its proponents make out. Nevertheless, it so happens that it is my own constitutional preference, and so I have given it some thought – I will share this, for what little it’s worth, on Referendum Eve!

Leaving aside the questions of how precisely to develop localism in England and what to do about London’s dominance of the English/UK economy, there are three main difficulties with developing federalism in addition to the obvious one of “English votes on English issues”.

We need to remember also that the whole point of federalism is that each country would have the precise same “devolved powers”. Quite what these powers are should probably be a matter for a UK Constitutional Convention of some sort. However, for the purposes of this article we assume the maximum devolved powers currently applying anywhere will in future apply everywhere – so Northern Ireland’s unique powers in Employment and Welfare as well as its own Civil Service and tax-varying powers on air duty will be mimicked in Scotland and Wales; Scotland’s unique tax-varying powers on income tax will be mimicked in Northern Ireland and Wales; Wales’ unique borrowing arrangements will be matched in Scotland and Northern Ireland; and so on. This is essential – asymmetrical devolution (the UK currently, Spain, arguably Canada) inevitably creates separatist tensions; symmetrical federalism (Germany, United States) works.

It is obvious, of course, that there should be “English sitting days” at Westminster as proposed by David Davis, and that MPs sitting for English constituencies should be the only ones voting on issues which affect England only – creating a de facto English Parliament. This does create an arguable imbalance, but no more than would be the case if each country were sovereign, and one that can be countered anyway by greater English localism. However, three fundamental problems remain:

  • legislation at Westminster rarely applies only to England (in reality or in theory);
  • departments in Whitehall usually have functions applying only to England and other functions applying to the entire UK; and
  • finance is nearly all raised at UK (“federal”) level even though most decisions are made at devolved (“country”) level.

On legislation, even laws which look like they apply only to England may apply elsewhere or have obvious consequences elsewhere. For example, most of the provisions of the Child Poverty Act apply only to England, but some aspects place statutory requirements across the UK (and thus on devolved administrations); the policy on tuition fees in England affects devolved budgets through “Barnett Consequentials” (an issue to be resolved under Finance); and so on. Federalism would require the area of application of legislation to be absolutely clear, with no mixing – entire bills at Westminster would either apply to England, or to the whole UK.

In terms of departments, UK Federal Cabinet may look like this. Each Department would now specifically be England-only or UK-wide. Those in the Cabinet Office, the Foreign Office and initially the Treasury would be UK-wide (although there is a real case, below, for the latter to move towards being England-only); those in the Home Office would become essentially those of an “English Executive”, run solely for England (on occasions, and again these would specifically be noted, excluding London). The Home Secretary would essentially become England’s “First Minister”; UK functions of the Home Office and other Departments would switch instead to a successor of the current Department of Constitutional Affairs. It is noteworthy also that, UK-wide at least, these Departments/Offices would remain absolutely stable in statute due to their federal nature – they could not just be jumbled around by an incoming UK Government at will, because that may disturb the balance and cause difficulties if later transfer of powers (notably from the Treasury) were sought. There is also some hint already in that “Federal Cabinet” of a recognition of London’s unique role as “Federal Capital” and its consequent relevance to the whole UK, which may in time develop into a fifth “federal unit” on its own alongside the four countries.

(It is worth being clear what this means in terms of Government appointment and staffing after a UK General Election. The Prime Minister would be appointed on ability to command a majority in the UK Parliament and would in turn advise on appointments to “Federal Offices”, but the Home Secretary would now be appointed directly and separately on ability to command a majority on English sitting days and would advise on appointments to English Departments; these would always be two different people, and may well be in two different parties. The position of Minister for the Civil Service transfers to the latter because this would now be England-only; Federal Offices would be staffed separately, perhaps from a separate “Federal Civil Service”.)

Finance is perhaps the most important issue. Federalism surely demands that most revenue is raised at devolved level; that would mean, in effect, the raising of almost every tax separately in England (perhaps also in London), Scotland, Wales and Northern Ireland and then some handed to the “federal” authorities, not the other way around. Compared to the status quo, that is the most dramatic – and no doubt politically most problematic – change of all. There would be transfer payments to poorer countries to ensure the same basic standard of living (perhaps a nominal “maintenance of the Barnett formula” could be politically justified with this, but the total amount in the pot would be reduced from the current level), but each country would nevertheless be encouraged to develop its own revenue streams, its own exports and its own entrepreneurial/investment-friendly culture – for example, by enabling any growth in VAT receipts to be retained (as reward) for public services entirely within that country. (I should be clear that the level of VAT and some other taxes would likely remain set at “Federal” level to avoid a “race to the bottom”.) In short, the basic principle that finance must be raised at the level at which the decisions are taken must be maintained. This all means that any country which gets embroiled in sectional in-fighting and endless institutional gridlock which create difficulties for the business environment will no longer be bailed out…

There are other issues to consider too:

  • Statute of Autonomy would need to be put in place for each country (including England), removing the automatic Parliamentary Sovereignty from Scotland, Wales and Northern Ireland (whose devolved legislatures would become equally sovereign, similar to the United States) – noting the above requirement that it would be identical in the powers allocated to each (but it may differ, for example, in establishing requirements to leave the UK, or recognising unique citizenship issues in Northern Ireland, and so on);
  • it would be helpful when writing these to establish and maintain the same phraseology – perhaps all devolved legislatures should be Assemblies (versus the UK Parliament); all devolved governments should be Executives (versus the UK Cabinet); all devolved-level elections should be Legislative Elections (versus the UK General Election) and so on;
  • Lords Reform comes back on to the agenda – with a real case for ensuring appointed membership (or any future elected membership) is in line with vote share at both UK General and devolved Legislative elections (and there is a case, at this level, for over-representing the devolved countries to counter some of the effects of “English sitting days”);
  • it may be helpful (particularly for tax purposes) to establish citizenship of each country (again similar to split citizenship as exists in the United States) – establishing in law the concept of British-English; British-Scottish; British-Welsh; British-Northern Irish and Irish-Northern Irish (perhaps also British Islands and British Overseas citizenships too) as well as, perhaps, ensuring equal rights and responsibilities for all these citizenships and Irish citizenship within the current UK, regardless of future constitutional settlements (not unlike the 1998 Belfast Agreement with regard to Northern Ireland).

As can be seen, this is perhaps a much more complex thing to be developed as a knee-jerk reaction to a few opinion polls in one part of the UK (“The Vow” certainly does not do justice to these complexities and will only frustrate those who wish to see greater democratic influence and participation in England). However it is, at least, possible if we really want it.

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8 thoughts on “The challenge of a Federal UK

  1. The Listener says:

    Are you proposing Confederation rather than Federation? In other words where primary power resides in the states and upwards to the centre.

    • Not just yet; but if you were to federalise the Treasury (as I hint at), I guess you’re getting there.

      I’m not so concerned about terminology. I do think the key is to raise funds at the level at which decisions are made.

  2. Chris Roche says:

    Just a thought on the gloomy people who would caution the Scots against taking a step into the unknown by choosing independence: in 2011 a certain royal British lady in her eighties took her courage in her hands and went walkabout amongst the people of a Republican city in Ireland’s Deep South where the Black-and-Tans feared to tread. Her deed proved epoch-making and cemented an enduring friendship between two nations who had once known only bitter mutual conflict. The sun shone brilliantly on Cork that historic day in May 2011, and it hasn’t stop shining on British and Irish relations since . Good came of an individual’s courageous walk into the unknown. Citizens of Scotland, follow the example of your Queen, Elizabeth 11!

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  4. Alan says:

    The biggest cultural change should be the introduction of IT powered governance. Representatives should not need to travel to London to contribute. That has implications for the very workings of Parl – whipping etc.

    There is also the need to have speaking rights in a Federal Assembly for Ministers at country level. With or without the need for oaths etc

    • That’s really interesting, and I’m inclined to think you’ve found a useful middle way between me and another contributor on Facebook!

      He had come back to say he felt Westminster should become the “English Parliament” only, with a separate “Federal Legislature” of some sort. I’ve some sympathy with that in theory, but it’s simply not going to happen.

      However, if you introduce remote-working and Ministers appearing in the UK Parliament, you solve a lot of that.

      The other thing to consider is the implication for the Upper House. For example, if Ministers in any part of the UK were automatically appointed to it and no oath were necessary, you solve a problem or two (but that requires significant “Lords Reform”, of course).

  5. […] This piece on a “Federal UK” requires some more thought on the fiscal issues. Frankly, I am no expert on these! […]

  6. […] My piece before the Scottish Referendum on the complexities of a Federal UK did not even attempt to answer the “English Question”. The obvious reason for that is that I don’t have an answer to it! A few thoughts, however… […]

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