Homegrown fiscal devolution: How the UK’s nations can teach us about fiscal devolution

Guest article by Jason Bunting, Fairness Foundation. PolicyWISE is pleased to publish this article on fiscal devolution and cross-nation policy learning.

The UK remains one of the most centralised and regionally unequal countries in the world and as we know, the impacts of those disparities often fall hardest on people living in the devolved nations; a recent report found that the toughest places to grow up and old in across the UK include Wales, Northern Ireland and the South West of Scotland. 

Devolution, particularly of fiscal powers, has of course been long contested as one potential way of tackling these challenges and that is the topic of our new report at the Fairness Foundation. Based on research and interviews with a range of stakeholders- Mark Drakeford MS and Nicola Sturgeon MSP- we explore whether increased fiscal devolution could help to narrow regional inequalities, improving the fairness of our economy for every community. 

When we started to interrogate this issue, it was tempting to look far abroad for inspiration, whether Australia’s system of Commonwealth agreements, Germany’s fiscal equalisation system, or regional development legislation in Finland and Croatia. 

But we know that too often, assessments of question can risk overlooking the lessons much closer to home. After all, decades of devolution in each of the nations offer rich and insightful examples of what works, what doesn’t, and what might come next. Yet those lessons remain stubbornly siloed. 

So in our new report, we explore how our nations might help shape the next logical stage of devolution to English regions: meaningful fiscal powers, and how greater cross-country working could help in improving outcomes. Across the board, it will come as no surprise that we found each nation offers insights from the process of devolution as a live policy experiment. Northern Ireland illustrates how devolution can make a difference in some areas yet also shows where limited powers have undermined the ability of the NI Executive to mitigate poor socio-economic outcomes. Scotland offers an example in how devolved policies such as the Scottish Child Payment can deliver progress, yet where an appetite for a more diverse set of levers remains unmet, while Wales demonstrates convincing progress in many areas, yet where a similar desire and ambition for deeper devolution has been frustrated by institutional reticence from the Treasury.

In fact, common themes on the unmet promise of fuller devolution emerge across all nations including a perception of entrenched central scepticism, ambiguity about the direction of devolution, and the need for stronger capacity both in Whitehall and in local places. As the government’s devolution agenda for English regions gathers pace, the expertise of the nations would prove invaluable in navigating the inevitable barriers and challenges which will arise. Yet the government has so far failed to knit our different layers of government together on this question. 

That is why, building on excellent PolicyWISE research, we ask whether the Council of Nations and Regions could help close this gap. As PolicyWISE’s recent work suggested, the Council has the potential to support “enhanced collaboration around common priorities” and to give devolved leaders a stronger voice in shaping UK-wide strategy. Fiscal devolution seems a logical place to start, by bringing together local experts from each place and facilitating cross-country learning on how fiscal devolution could be developed more effectively in the nations- and how these experiences might inform English fiscal devolution. 

The Council of Nations and Regions might also prove a useful forum in making explicit a longer-term commitment from the government to more ambitious and comprehensive fiscal devolution, underpinned by a strong narrative of fairness. Such a programme of work could make a meaningful contribution to the debate on fiscal devolution across the country and help to bring together layers of government in a timely and relevant way. 

Of course, fiscal devolution alone will not entirely eliminate socio-economic inequalities- and as the nations know only too well, devolution is no silver bullet. But each of our nations holds expertise and experience that can prove invaluable in helping to make the devolved arrangements work more effectively and cohesively in the next phase of the UK’s journey towards a more regionally equal country. If given the space and agency to collaborate, it’s our firm belief that they can play a central role in the wider mission to rewire the state and build a fairer, more balanced country.

Jason Bunting is the Advocacy Manager at the Fairness Foundation, with extensive experience in political advocacy and public policy. He previously served as a Parliamentary Assistant in the Northern Ireland Assembly, focusing on regional economic inequalities, and as a Press and Policy Assistant at the SDLP’s central office, where he made a key contribution to party policy development. Jason has recently completed the Master’s in Public Policy programme at the University of Oxford’s Blavatnik School of Government, and he holds a First-Class Honours degree in French and Politics from Queen’s University Belfast. 

The Fairness Foundation works to change the debate around fairness in order to build a fairer Britain. Our vision is a Britain where everyone has the ‘fair necessities’ (fair essentials, fair opportunities, fair rewards, fair exchange and fair treatment). We believe that inequality is not only unfair and unpopular but is also damaging our society, economy and democracy. We work to persuade UK policymakers of the moral, the political and the policy arguments for tackling inequality.