England in a Changing Fiscal Union

Type:

Book Chapter

Author:

Iain McLean

Published:

2018

Publisher:

British Academy

The UK has formal arrangements for tax transfers to Scotland, Wales and Northern Ireland, but not for transfers within England. Nor can we judge whether public expenditure per head is ‘fair’ to all regions of the UK, nor yet what relationship should exist between tax yield per head and public expenditure per head for each part of the UK. The chapter discusses the ‘Barnett’ formula to allocate expenditure to the three non-English territories and explains why it is not an appropriate tool. Some suggestions for an allocation mechanism are made. Such a mechanism must balance fairness with the preservation of incentives to grow a region’s economy and its tax base. Any new fiscal mechanism for England must also work both for those parts of England that have ‘devolution deals’ across a region or city region, such as Greater Manchester and Tees Valley, and for the rest of the country.

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