Seven challenges for the fifth term of devolved government

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Today voters across the UK go to the polls for the fifth time since devolution began in 1999. As further powers are devolved to Scotland, Wales, Northern Ireland and parts of England, government at all levels faces a number of challenges. Akash Paun highlights his top seven.

 

1. Adapting to the new politics of fiscal devolution

A central feature of devolution to date is that the Scottish, Welsh and Northern Irish governments have little control over the size of their budget. Important tax and borrowing powers are now being devolved to all three nations, although the Barnett Formula also survives for now. Fiscal devolution within England is far less developed, but this may change as the voice of cities and regions grows louder and business rate changes come into effect. The result is that sub-national governments increasingly have to make trade-offs between public expenditure, taxation and borrowing, rather than simply deciding how to spend a grant from Westminster. This creates sharper accountability and strengthens their incentives to take policy decisions that boost the tax take.

2. Building devolved capacity to take on new powers

New systems and institutions need to be built to ensure that new powers are effectively managed. In Scotland, the Government is planning a new Social Security Agency to administer devolved welfare benefits. Revenue Scotland – the tax-collection body – may need to expand as further taxes are devolved. Similarly, a Welsh Revenue Authority is being created. Fiscal scrutiny bodies such as the Scottish Fiscal Commission and the planned Independent Fiscal Council for Northern Ireland are also becoming more important. Within England, devolution in areas such as health, justice and transport will require new policy and operational capacity in local areas too.

3. Developing effective and accountable institutions of shared rule

Devolution is creating a more complex delineation of power between central and devolved levels. Effective government will require the strengthening of institutions of shared rule between central and devolved bodies – at both political and official levels. For instance, the Department for Work and Pensions (DWP) and the Scottish Government will have to work closely together to create a seamless interface between reserved and devolved welfare systems. Devolved governments are also gaining flexibilities over how Universal Credit is administered by DWP in their territory. HM Revenue & Customs will become a de facto delivery agency for the devolved governments on income tax and corporation tax – raising the need for new accountability systems. And in areas such as energy, the environment and transport, new requirements for governments to consult one another are being created.

4. Making a reality of ‘One Civil Service’

Civil servants working for the Scottish, Welsh and UK governments are part of a single Home Civil Service. But networks between administrations have declined and devolution is not understood well enough across the system. This can lead to misunderstandings and frustrations – for instance, when devolved governments are not consulted properly during the policy process. There are now active programmes to encourage interchange of staff between governments and to raise awareness of how devolution works. These are important initiatives but they will succeed only with ongoing commitment from civil service and political leaders. Steps should also be taken to build understanding in Whitehall of local government (where devolution deals are creating increased variation) and Northern Ireland. Finally, more emphasis should be placed on learning and evidence sharing between governments to capture the potential of the UK’s policy laboratory.

5. Opening up inter-governmental relations

When UK and devolved ministers meet – for instance, to negotiate over fiscal matters or EU policy – they do so under a veil of confidentiality. Space for private discussion is important, but at present there is too little scope for scrutiny of how governments resolve their differences. There is now growing pressure to increase transparency – Scottish ministers recently committed to reporting to the Scottish Parliament before and after meetings with UK ministers. How this will work and whether the UK government follows suit are key questions to be addressed. A review of inter-governmental relations is currently underway and should address these issues.

6. Answering (or at least asking) the English Question

The introduction of ‘English votes for English laws’ means that English (or English and Welsh) MPs have a veto over legislation in areas devolved to the other nations. This reform has not yet made much impact, but the procedures might over time be toughened up – for instance, to exclude Scottish MPs from certain debates or votes altogether. The evidence suggests that English national identity is growing stronger, alongside dissatisfaction with elements of devolution to the other nations (such as the financial deal). These pressures may lead to the emergence of a distinct English political arena, with uncertain consequences for government and the Union as a whole.

7. Rethinking the Union?

Constitutional orthodoxy holds Westminster to be supreme and devolved bodies as subordinate. However, it is now established in statute that the Scottish (and soon the Welsh) bodies are permanent and that Westminster does not legislate in devolved areas without consent. The Scottish referendum of 2014 effectively accepted the principle that the UK is a voluntary union of nations. And power-sharing in Northern Ireland is reinforced by international treaty. These changes move the UK closer to a quasi-federal settlement, in which sovereignty is shared and devolved bodies have entrenched rights and powers. In this context, the case grows stronger for devolved governments to be treated as equal partners when working with Whitehall in shared policy areas and when being consulted over matters such as the UK position in EU negotiations. Some English city-regions or counties may gradually edge towards a similar status too as devolution deals take effect.

Ultimately, making a success of devolution will be as much about the change of mindset all this will require as it is about any of the specific institutional reforms discussed above.

This post was originally published on the Institute for Government blog and is re-posted with permission.

About the author

Akash Paun is a Fellow at the Institute for Government and a member of honorary staff at the Constitution Unit.

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