The economic case for further fiscal decentralisation to Scotland: theoretical and empirical perspectives

Abstract

This paper examines the background to calls for further fiscal decentralisation in Scotland in the light of theories of fiscal federalism. In particular, it examines whether spatial differences in preferences, which are central to ‘first generation’ theories of fiscal federalism can be argued to play a central role in the case for granting Scotland further tax and spending powers. ‘Second generation’ theories of fiscal federalism draw attention to the political economy of allocating tax powers to different levels of government. Some of the authors in this strand of theory argue that the case for allocating tax powers to subnational governments can be made in terms of ‘accountability’ – the notion that local politicians can be better held to account for the outcomes of policy actions. Our empirical analysis suggests that there is no clear difference in preferences between Scotland and the rest of the UK along a number of key political dimensions. However, the Scottish parliament enjoys substantially higher levels of trust among the Scottish electorate than does the UK parliament.

Universal Basic Income as an instrument of regional development policy: a micro–macroeconomic analysis for Scotland

“…2 Danson (2020) refers to the greater communitarian tradition in Scotland as compared to England. However,Bell and Eiser (2015) found little evidence of significant differences in preferences.…”

A Scandinavian ‘high-tax, high-spend’ model for regions? The impact of enhanced regional fiscal autonomy

“…Furthermore, after the Scottish Independence Referendum in 2014, although the majority of those participating in an ESRC-commissioned surveys wanted greater devolution of fiscal powers to Scotland, only a minority favoured tax rates that differed from those in the RUK. This apparent contradiction may reduce to an issue over which Government -at Holyrood or Westminstercommands greater trust (Bell and Eiser, 2015). On average, respondents wanted to see lower taxes and higher welfare benefits, which would very probably violate the balanced budget constraint of the present analysis.…”

“…However, the view that the Scottish people would in practice favour a radical expansion in public expenditure needs to be tempered. For example, Bell and Eiser (2015) find no statistically significant difference for various indicators of political attitudes on a right-left scale between Scottish and RUK respondents to the British Social Attitudes survey. Furthermore, after the Scottish Independence Referendum in 2014, although the majority of those participating in an ESRC-commissioned surveys wanted greater devolution of fiscal powers to Scotland, only a minority favoured tax rates that differed from those in the RUK.…”

Persistent States: Lessons for Scottish Devolution and Independence

“…As Bell and Eiser (2015) point out, even where preferences over policies are aligned, the location of the decision-making can matter to voters. The incongruent results of the 2016 referendum on EU membership, with Scotland voting to remain and the United Kingdom as a whole voting to leave, may suggest a difference in attitudes but could also reflect an unwillingness to let powers drift towards being again centralised at Westminster.…”