commission on fiscal imbalance 合集

For every pound extra that has been announced for

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Unformatted text preview: and, the highly centralized inclinations of the Department for Education and Employment (now Education and Skills) have combined with the desire of Westminster politicians to gain credit for ‘new money’, leading to the announcement of direct payments to schools which bypass the block grant local authority financing system. The knock-on effect, probably felt more intensely in Northern Ireland, where there seems to be more awareness of English developments, is that schools in Northern Ireland believe they have been missing out. Thirdly, there is the curious situation when the Barnett formula is widely criticized, albeit for diametrically opposite reasons. It is primarily exceptionally high rates of nominal public expenditure growth which has brought the convergence issue on to the policy agenda in the territories. There has also been extensive media attention to changing patterns of relative GDP, usually focusing on Scotland moving much closer to the UK average and Wales dropping much further below. However, this focus on relative GDP is largely misguided, as the drivers relevant to differential needs for devolved expenditure are demography, geography and participation rates in publicly provided services such as health and education. The so-called ‘devolution backlash’ has been relatively subdued. In part, this is because the territories receive little attention from the UK media. However, there is undoubted resentment, particularly in the North East of England (adjacent to Scotland), about the higher expenditure levels and greater policy autonomy of the territories, now much more widely known. So far, resentments have been fuelled, without there being real transparency in how the territorial expenditure system operates.36 Thus far, the expectation of many strongly supportive of devolution that the budget constraints would be highly restrictive has not come about, because of broader UK developments. A key issue is whether the system, which theoretically embodies a hard budget constraint, can withstand the inevitable political pressures when money becomes genuinely tight. 33 Traditionally, Scottish local authorities have owned a large stock of ‘council housing’. Over the past 20 years, a substantial proportion has been sold to sitting tenants. Some local authorities, like the City of Glasgow Council, with a large proportion of its remaining stock in poor condition, see the transfer to a housing association as a means of renovating the stock. Housing associations, though heavily dependent on public funds, are treated by the Treasury as private sector bodies which can borrow in the capital market without that scoring against public expenditure aggregates. The technical issue is presumably that, at the time of the transfer, the local authority would seek a writing-off of that part of its debt relating to the nowtransferred housing stock, with the Scottish Executive accepting responsibility for servicing that debt. However, newspaper coverage suggests that a write-off of housing debt across the United Kingdom at the time of transfer might avoid the Scottish Executive taking over this debt. 34 These calc...
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This note was uploaded on 03/06/2013 for the course ECON 220 taught by Professor Paulo during the Spring '13 term at University of Liverpool.

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