If devolved nations haven’t enough to spend, they should raise it themselves

The three “Celtic” Finance Ministers are perfectly at liberty to work together (indeed, they should) and to oppose UK Government policy in an open manner (as they have, for example, here). This does raise two other problems, however.

Firstly, in a set-up where the vast majority of the overall budget setting is done at a “federal” level, there is a clear advantage for devolved parties to move “left” on financial matters because they can always blame someone else. They might consider, however, that this advantage is reversed at “federal” level where they begin to look irresponsible. An inevitable outcome, in a lopsided or consociational devolved system, is that the “centre” (say England in the UK, or even Flanders in Belgium) moves semi-permanently “right”, and the “regions” (say Scotland or Wallonia) move “left”, putting the whole future of the federation itself at risk. In other words, it is easy to be “left” if you do not have to raise your own revenue; and arguably somewhat easy to be “right” if the emphasis is on tax levels and apparently lucky outlying regions.

Secondly, however, the media are allowing the devolved regions away with the implication that they cannot affect the level of public spending (or, put another way, raise taxes). Actually, if they think the level of public spending they have is too low, they are perfectly free to raise revenue from within their own jurisdiction.

The obvious example is that the SNP (and previously Labour) had the power to raise the basic rate of income tax either way by three points. They also have power over the rate of household taxes at local level. (This is before we get to giveaways like free personal care or no tuition fees which are not enjoyed elsewhere, but which do in effect reduce their spending levels on other things.)

Most markedly hypocritical is, of course, the DUP. The DUP opposes any further revenue raising (except taxing the sick by charging for prescriptions), yet also believes that public spending levels are too low. Those cannot both reasonably be said to be true, not least since DUP Finance Ministers have already maxed out borrowing for infrastructure. If the DUP really believes, as it says in the letter, that public spending in Northern Ireland is too low, it could easily introduce water charges, advocate increased tuition fees, put up the Regional Rate to match GB Council Tax levels and so on; it could also stop Northern Ireland having the most generous concessionary fare scheme on public transport and such like, and that is before the millions we waste on segregation and other general inefficiency (like training teachers we don’t need in a segregated environment).

In the end, the quality of devolved government suffers because too much time is wasted on shirking the blame for one’s own inefficiencies and unwillingness to raise taxes. This is yet another reason that tax powers should be devolved as quickly and as far as possible – at devolved level, the “right” should be able to make the case for efficiency and low tax; and at “federal” level the “left” should be able to make the case for higher overall spending and the value of fair (if higher) taxation.

In the end we cannot escape reality: if we want more public spending here, we will have to raise more tax here. Only once we deal in that reality can we have a proper debate.

2 thoughts on “If devolved nations haven’t enough to spend, they should raise it themselves

  1. 416 says:

    I agree 100% with want more, raise more, however I can’t help but smirk at the idea of any government body on this island ‘easily’ introducing water charges. Good luck with that one!

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