Fair Central Government Spending

Suggested constitution clause:

'Central Government spending must be on a basis which is fair to all regions of the [UK].  As a general rule, amounts spent by Central Government in each region must be on the basis that average per-capita expenditure is the same in all regions of the [UK].  Expenditure may however be varied where this is justified by evidence of greater or lesser needs of different regions.'

 

Idea behind the draft clause:

The Barnett Formula should be scrapped and replaced with a constitutional requirement that spending be allocated fairly to all regions of the UK, with the starting point being equality and then with tweaking according to evidence-based individual needs of regions 

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edited on Apr 12, 2015 by Ian Smith

Ian Smith Apr 5, 2015

Dear All,

I am posting a quick comment here and in my other ideas.

Firstly, I want to say how much I have enjoyed seeing all of your contributions on this and other ideas and how impressed I am with the range of expertise and erudition which has filled these debates.

Secondly, I wish to put forward a couple of suggestions as to a way forward at this stage.  They are:

A.   I suggest that we all refrain from further voting until the ideas have been refined and represented and have then been debated for a while.  My thinking here is that we will want to see the reshaped ideas and see the comments on those refined ideas before we decide whether they are to be voted up or down,  I do not think that we should refrain from voting on comments but perhaps try not to vote to hastily on them.

B.  Now that the hurly burly of the "Hacking" phase (some of it quite savage) has passed, I hope and wish that we will adopt a more collaborative and less combative approach in our commentary, so that commentary is given a chance to be constructive and really do the job of refining the ideas in question.

C.  I would hope that we can refrain from attacking the very existence of the idea under discussion in this phase or the fact that it has successfully gone through to this phase against the wishes of those who voted it down.  I sincerely hope that the previous critics of an idea, will still respect that it found favour with the crowd and now help to refine the idea in this phase.

Thirdly, I will try my best not to introduce any more typos and mangled phrases! 

Best wishes for the holiday week end!

Ian 

Harry Blain Apr 6, 2015

Thanks for this Ian. Michael and I will do our best to help make the refining phase nice and smooth. As a start, I have removed my own post on the Barnett Formula so we can avoid that duplication and channel the discussion here (I understand that Debra commented on that idea asking where to find the "full brief" - it is the little red tab just above "refining the content" on this page)
I also agree with your point on the comments on ideas - they are through the first phase now, so the more constructive the debate, the better. 
I'm glad we've made it this far!

Ian Smith Apr 6, 2015

Hi Harry,

Thanks.  Do you have any suggested edits/refinements?

Best wishes,

Ian

Harry Blain Apr 11, 2015

This is a popular idea as it is Ian, perhaps we can think about how it relates to Debra's emphasis on regional tax-raising powers https://constitutionuk.com/post/86928?forPhase=6556 and Alastair's impressive attempt to bring together some of the different ideas in his regional government idea: https://constitutionuk.com/post/90350?forPhase=6556 
I imagine that if we emphasise regional tax-raising powers we are sort of saying goodbye to the Barnett Formula?

Debra Storr Apr 10, 2015

I was hoping for more detail on an alternative .... especially under a Federal logic.

Whole issue links to https://constitutionuk.com/category/#/post/86928

 

Ian Smith Apr 11, 2015

What would you suggest Debra in terms of wording in this idea? Kind regards, ian

Debra Storr Apr 11, 2015

I think the principle here is that

each tier of government should be empowered to raise the required revenues and have sufficient borrowing powers to discharge its functions, 

Each tier shall be responsible for the setting and collection of taxes in agreed areas.  

An equalisation mechanism shall be established to address excess costs in deliverng a service or historic disparities in the tax base.  

Note : excess costs : I'm thinking here mainly of geographical factors e,g. Remote rural areas.  Disparities in tax base : largely addressing poverty issues but there are also massive differences in property values.  

When considerng which taxes are allocated to which tier (my mental model is UK- state- region- sub region - town - community : with no requirement to have all tiers and my preference being to have UK - state and community and the basis and to work to fill in the middle accordingly to the desire of each state.) care will be needed to ensure that that tier has a sufficient tax base that relates in some way to its activities.  so there is a logic in the tier responsible for waste collection to have control of at least some element of a property tax.  And education is larely about people so perhaps income is a decent Match, etc etc.  

Mark Cooke Apr 15, 2015

Referring to the original proposal - the requirement can't be for equal expenditure, can it,  otherwise there will be no delegation of the decisions on whether your part of the country is a high tax/high spend or low tax/low spend part!

Debra has this correct:

The consitution has to set out:

1) the mandatory responsibilities at each tier

2) the tax creation powers of each tier, 

3) whether the taxes created at each tier must have their rate setting delegated to a lower tier, or whether it may be set uniformly for the whole tier of government

4) that wherever rate setting is delegated to the lower tier, there must be an equalisation mechanism so that the revenue raising capacity of each part of that tier is similar, taking account of differing local costs  (for example,  if a uniform property tax was created at national level,   the rate could be set at local level,  but councils that set the same rate should receive the same income just like council tax, in theory)

Debra is right that the decision about allocation of powers should be driven by the mobility of the tax base and spill-over effects - hence corporation tax is best set at a high lelve (ideally internationally) as are many environmental taxes, while land and property taxes are ideal as a local tax base.

 

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