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Unformatted text preview: in concerning the UK’s conformity
with the EU Stability and Growth Pact (which applies to the United Kingdom even though it is not a member of the Euro). The deficits and debt of subnational governments are scored within the general government measures monitored by Ecofin.
This manifests itself in unresolved tensions in public attitudes to centralization. First, territorial variation in cash benefits is deemed intolerable, even
when strong cases could be made in terms of regional variations in the cost of living. Second, though centralized bureaucracies are viewed as
suspect, attempts to decentralize public sector decision-making (eg purchaser-provider separation in health, with local determination of some
priorities) quickly face bitter complaints about ‘postcode lotteries’. Paradoxically, if devolution brings greater transparency about in-kind provision, this
might revive pressures for uniform provision. Commission on Fiscal Imbalance 6. CONCLUSIONS
In conclusion, four final observations will be made. Firstly, it is essential to recognize where the UK devolved system of
government is coming from and not to criticize it on the grounds that it would not have been invented in that form had
there been a clean slate. Devolved government in Scotland and Wales is only two years old and the restoration of
devolved government in Northern Ireland, itself two years old, suffered a 24-hour suspension on 10 August 2001 for
reasons unconnected with the subject matter of this paper. The start has undoubtedly been shaky, but the show is on
Secondly, the conceptual framework of the economic theory of fiscal federalism is most helpful in constructing an
analysis of a particular country in terms which resonate elsewhere. However, prescription ought to proceed with great
caution. The mainstream literature on fiscal federalism has a strongly normative orientation, relating to the optimal tiering
and spatial design of government. Much of its development predated the influence of public choice theorists, a factor
which probably explains the relatively optimistic view of government characteristic of this tradition. Clearly, those who
start with a Leviathan model of government are likely to reach different conclusions from those making more benevolent
assumptions. Moreover, the trade-offs between efficiency, equity and broader political considerations (such as
sustaining territorial integrity) will crucially depend on context. In some cases, the units of a devolved or federal structure
are themselves open to negotiation, in others they are historically and culturally determined. Similarly, traditions about
the extent of fiscal equalization can be deeply embedded.
Thirdly, one possible line of constitutional development would see Wales and Northern Ireland converge on the Scotland
model, at the same time as the Scottish Parliament sought to expand its fiscal power. By far the greatest uncertainties
attach to developments in England, where the Labour Gove...
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