A Federal UK?

The rescue plan for Scotland, otherwise known as Devo Max, has of course implications that extends well beyond Scotland. All the other regions of the UK will be affected. One assumes that if Scotland gets new powers, won’t Wales and Northern Ireland be entitled to those too? In particular powers relating to tax and spending decisions.

Consider the position of Northern Ireland, it shares a land border with the Eurozone country of Ireland. Now while cross border trade is an important part of the NI economy, it’s difficult for NI companies to compete with Irish one when taxes south of the border are much lower, in particular corporation tax. So I suspect NI wouldn’t mind being allowed to adjust its corporation tax rates to match those of the Republic.

Of course that would leave a deficit in tax revenue that would have to be made up somewhere else. And keep in mind that NI already receives more money under the Barnett formula than any other region of the UK. Inevitably the English will start to worry about being the ones left holding the cheque not to mention the old “West Lothian Question” that needs resolving.

I recall reading in the London Evening standard (not that I normally pay much attention to what they say, but this was a rare moment of clarity!) an article, during the referendum debate which pointed out the two regions of the UK which have done particularly well since the Blair government’s policy of devolution, were London (with it Mayor) and Scotland. The paper argued that having a vocal local government clearly helps a region get a better deal, so presumably an English Parliament, would be a solution.

Of course its not quite that simple. After all, Wales and NI also have a parliament, yet they don’t necessarily don’t get everything they ask for. London and Scotland have the advantage of holding certain strategic assets that Westminster wants to retain, the money (in London) and the oil (in Scotland). Both of which of course also net a considerable part of the UK’s tax revenue. If Wales threatened a referendum on independence, would they have promises lavished on them? Probably not.

Also the costs of running rural services in parts of Scotland, Wales and NI are much higher than in England. And an overcrowded London has a large list of infrastructure projects that are needed to keep the city functioning. In short, there’s no guarantee that further democratisation of England would mean England getting a fairer deal, as that largely depends on one’s definition of the term “fair”. Certainly if oil revenues and the earnings of the city of London were excluded, I suspect much of England would find itself worse off.

But in order to avoid any English parliament becoming some sort of talking shop, where has-been & washed-out politicians discuss the route of the new A5 bypass, it would need to be given serious legislative powers. In other words the powers to tax and spend. That opens a whole new can of worms. Not least because, for example, it would relocate much of the debate in this current parliament about austerity, from Westminster to the region’s. Parliament effectively reduced to making some limited decisions about foreign policy, defence and some of the broader issues on health care or social welfare policy.

Also such a policy would trust the regions to be capable of managing their own finances, given that in the event of things going tits up it would be Westminster who has to bail the regions out. It would also trust them not do something incredibly stupid (bridge to nowhere sort of stuff). Now while in some Federalist countries, notably Germany, this system has worked well (as the states of Germany would sooner eat cat food for a few decades than ask Berlin to bail them out!). However in other countries, notably Spain, it has been a disaster.

And perhaps more fundamentally, do the English want this? Recall that Tony Blair tried to have a new parliament in Northern England and Cameron has promoted directly elected Mayors. In both cases such policies were largely rejected by the public.


6 thoughts on “A Federal UK?

    • Some US states manage their affairs pretty well (NY and the New England region).

      Some try very hard but don’t really put much thought into it, e.g. California one of the richest places on Earth is effectively bankrupt because the state government is afraid to either put up taxes on its exceedingly wealthy citizens.

      Other states are little more than GOP fiefdoms, think Alaska and Colarado, both of which are home to many of the Tea party but receive far more in federal money than its citizens pay out in taxes…big government stay on my back!

      So something of a mixed bag all around


  1. I’ve no doubt that a federal system could be satisfactorily devised for the various nations, islands and provinces of what is now the UK.; however, not, I fear, by those currently in a political position to do so. They have too much self-interest in preserving the status quo!


    • This is why it took the threat of Scotland leaving to force the issue. They knew if Scotland left the chickens would come home to roost and had to at least promise to do something.

      If they don’t commit to devolution for Scotland however, I won’t want to be bet on Scotland being part of the UK for much longer.

      They also need to find something for Farage to do, because he’s about as useful as a waterproof teabag in Brussels.


  2. not the bridge to nowhere in Lewis then? i wonder how many there are in this world?

    If the regions and cities of england all have devolved powers what’s left for the Westminster mob to do? except spend our money on foreign wars and Trident?


    • Right along the top of the Galtee mountains in Ireland is a wall which serves no real purpose, built during the famine (hence the name “famine wall”) for no reason other than the fact that the government wanted to give people something to do, as it didn’t believe in social welfare!

      I’d consider trident as a £20 billion weapon system that they’d never dare use as a pretty useless waste of money. Don’t get me started!


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