Financing a response to crisis – must Scotland rely on ‘luck’?

In Tackling Coronavirus, Scotland Asserts Its Separateness From England -  The New York Times
Jeff J Mitchell/Getty Images

By stewartb

It’s not often, I contend, that a serious report on government funding contains – indeed gives prominence to – the word ‘luck’. One finds it used in the conclusions of this report:

Bell, Eiser and Phillips (2021) Designing and funding the devolved nations’ policy responses to COVID-19. Fraser of Allander Institute report, 22 April 2021. (https://fraserofallander.org/wp-content/uploads/2021/04/Designing-and-funding-the-devolved-nations-policy-response-to-COVID-19.pdf )

The report notes that the devolved governments in Scotland, Wales and Northern Ireland are responsible for designing and implementing major parts of the public health response to the COVID pandemic in their respective nations plus significant elements of the economic response.  These governments have to “operate within fiscal frameworks which protect their budgets against shocks that affect government spending needs in a similar way across the whole of the UK”. More precisely, the “Barnett formula automatically provides them with a population-share of additional funding in England.” (my emphasis)

However, the authors caution that these fiscal frameworks provide much less protection against shocks that have significantly different impacts across the UK. This is important because strict limits on how much and for what purpose devolved governments can borrow mean that the devolved governments have limited budget flexibility.”

The report examines the financing of Covid responses in the early stages of the pandemic when the UK government applied the Barnett formula to its spending announcements in the normal way. It goes on: “But in the early stages of the crisis, two potential problems with the Barnett formula emerged.

  • the first was time-lags between English policy announcements and the confirmation of subsequent Barnett consequentials for the devolved governments
  • the second was the risk that the impact of the crisis and hence the spending needs of the devolved governments evolved differently from those of England”

Picking up on the second point, the general implication in the report seems to be that the devolved governments are blessed with good ‘luck’ when the impact of a ‘shock’ requiring a costly response from one or more of them is either the same or less in scale than the impact on England. The further implication is better known: what England needs, Westminster gives and what the devolved governments are given is determined by a formula applied to what England needs and gets – at least when it suits Westminster to apply it.

The authors acknowledge that Westminster did eventually mitigate the negative effects of these limitations: “the Treasury moved to a system of guaranteed funding for the three devolved governments in July 2020. These were minimum guaranteed increases in the devolved governments’ block grants for the 2020/21 financial year. “  So it was only in July 2020 that the devolved governments had some certainty over Westminster’s Covid support funding?

But even this was a fix that did not resolve all problems. The report points out that in autumn 2020, “uncertainties around whether the furlough scheme would be available within a devolved nation if a devolved government felt the need to apply tighter restrictions than prevailed in England created significant inter-governmental tensions, and may have marginally influenced the timing of particular restrictions being applied in Scotland and Wales.” I suspect the just ‘marginally influenced’ assertion may be difficult to stand up without forensic analysis. And was this same uncertainty of only marginal influence on businesses’ decision making?

The authors then conclude: “the devolved governments’ funding arrangements have largely coped with the COVID-19 pandemic. This is the result of a combination of luck, the huge sums of money provided by the UK government to address the crisis in England, and ad-hoc bypassing of the normal rules of the frameworks.“

The report’s authors are prepared to touch on hypothetical matters in the sense that they consider ‘what if’ the effects of Covid had turned out to be more different in different UK nations. And the report refers to it being “the huge sums of money provided by the UK government to address the crisis in England” which in turn enabled devolved governments to ‘cope’. It does NOT hypothesise on a glaringly related matter: what would have happened if relatively huge sums of money had been required in NI, Scotland and/or Wales but NOT in England. Or should we in the devolved nations’ just be thankful for our lucky break on this occasion?

4 thoughts on “Financing a response to crisis – must Scotland rely on ‘luck’?

  1. It would be interesting to know how much Scotland got funded for the Covid support. There are some reports it was £5Billion. The UK deficit is reported to be £300Billion Take off the ‘normal’ deficit. £250Billion. Scotland did not get £20Billion?

    The ‘normal’ so called deficit applied to Scotland is £13Billion. Imposed by Westminster. The things in the South, for which, Scotland has to pay. Loan repayments on loans not borrowed or spent in Scotland. Trident and military not based in Scotland. Tax evasion. Scotland cannot borrow to invest in the economy. Growth would pay for it. Even if it was £20Billion. Scotland could gradually pay it back over time. Sell bonds. Without Westminster colossal interference and mismanagement.

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  2. It looks like we are way too dependent on luck, and I’ve already experienced enough precarity and vulnerability for one life. So seeing as I’m a bit of a mentalist who’s trained to combine the cognitive sciences and stuff with the law, so as to tackle cognitive corruption in society and government, and improve transparency and accountability of social practice, I suppose I should do my thing. 🙂

    Using social and behavioural science to support COVID-19 pandemic response
    https://www.nature.com/articles/s41562-020-0884-z

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  3. Our luck is that we are not England , hang on to that , as a last resort fight for it.

    England want Scotland to be England , in fact many already believe that Scotland is just a part of england they think we are a different country in name only , a surprise awaits them because they will undoubtedly try and enforce that at some point.

    Gove and the other Scottish betrayers particularly those in the House of Lords know that there will never be a place for them in Scotland they will hang on til their fingers bleed to the salubrious life provided by westminster

    “ the promising, offering or giving by any person, directly or indirectly, of any undue advantage [to any public official], for himself or herself or for anyone else, for him or her to act or refrain from acting in the exercise of his or her functions.”

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    1. Terence
      As you state “because they will undoubtedly they will try and enforce”
      Well i kindly remind England of a J.F Kennedy qoute
      “Those who make peaceful revolution impossible
      Will make violent revolution inevitable “

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