The United Kingdom’s Territorial Funding Arrangement: A Holding Together Tool?

Abstract

The accommodation of territorial diversity is one of the biggest challenges that modern societies must face nowadays, especially in a context where secessionist movements are on the rise. Multilevel government plays a key role in managing diversity and reducing the risk of secession. The fiscal dimension is a vital component of any system of shared government as the lack of financial resources to finance constitutionally assigned competences would render them inoperable, reducing autonomy to an empty vessel. However, the use of fiscal instruments to accommodate diversity and reduce the risk of secession has barely been explored. Against this background, this chapter explores, from a legal perspective, the internal architecture of the United Kingdom’s territorial funding arrangement, the Barnett formula, with the aim of investigating its integrative and disintegrative effects in relation to Scotland. This is done on the hypothesis that redistribution mechanisms: raise the cost of secession in subunits that are net receivers of funds; have an integrating function as they promote economic development and cohesion; and tend to enhance a sense of belonging and solidarity among constituent units by fostering national unity. The chapter focuses on all sources of law, including also secondary legislation, with the final aim of evaluating if and to what extent the Barnett formula can be conceived as an instrument of nation building that contributes to reducing territorial tensions and accommodating diversity, in the end reversing disintegrative trends. This is done through the evaluation of the integrative and disintegrative potentials of each of the elements of the internal architecture of equalization mechanisms.