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Unformatted text preview: (eg on owner-occupied housing)
cancel out because regional revenue is correspondingly depressed. However, they do affect the comparability of expenditure measures.
Objective 1 is the classification which brings eligibility for the highest level of European Regional Development Fund financing. On the role of EU
funding in Wales, see Blewitt and Bristow (1999).
This provoked outrage in the Scottish media, always keen to spot offence, until someone pointed out that an extension of this concession to Scotland
(which was losing ERDF funds) would have meant a reduction in the Scottish Parliament’s Budget. 269 Commission on Fiscal Imbalance 4. REAL AND IMAGINED PROBLEMS
The new arrangements in the United Kingdom exhibit some real problems, whereas others are imagined.
Notwithstanding that some of the problems which appear in public debate are imagined, this does not mean that they
have no influence on the evolution of the system. 4.1. Lack of Transparency
There is a lack of transparency about both processes and data.18 The territorial fiscal mechanisms originated in the
context of the territorial deconcentration of UK central government, with the territorial Secretaries of State being
members of the UK Cabinet. Typically, they were relatively junior members of that Cabinet, but acquired constrained
autonomy over the operation of public policy in their territory, in part as a reward for their loyalty to the Prime Minister of
the day. Neither the Treasury nor the territorial departments had any interest in transparency: the Treasury culture
naturally disposes itself to secrecy; and the territorial ministries thought that they could best protect territorial interests
behind a veil of secrecy (Midwinter et al., 1991). A continuing consequence is that UK territorial data are generally of
poor quality, arguably deteriorating during the 1980s and 1990s when the Conservative Government categorically ruled
out devolution. In the UK system, most official statistical work is geared to the needs of UK policy, and requests for data
which might have been taken to imply support for devolutionary policies were suspect. These effects reach far beyond
territorial public expenditure data; for example, Cameron and Muellbauer (2000, Abstract) noted that ‘The historical
unreliability of the Regional Accounts has implications for economic research on regional consumption and convergence
and may have caused the poorest regions to miss out on EU Structural Funds’.
Given the technical problems of producing regional data, and the political context within which they are produced, all
regional data are likely to be challenged politically. The best data about a constituent part of the United Kingdom appear
in the series ‘Government Expenditure and Revenue in Scotland’ (GERS),19 originally published by the Scottish Office
and now continued by the Scottish Executive. However, this series is regularly abused by governments. Michael
Forsyth, Conservative Secretary of State for Scotland, 1995-97, released one issue on the eve of a Scottish
Conservative & Unionist Party Conference, at which he used its contents to denounce the devolution plans of the
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