Letter to the Editor of the Financial Times – Ben Thomson
Sir,
David Miles and Gerald Holtham (“Scotland is taking more than its share of funds”, July 6) argue that the Barnett formula used to calculate the Edinburgh government’s block grant gives Scotland “more than its share of funding”.
This is to miss the point that the current system of a grant given by Westminster to Holyrood causes a dependency culture that does not provide a real incentive to Scottish politicians to grow the economy or undertake a much-needed restructuring of Scottish public services.
The current arrangement is neither popular in England, where most people believe that Scotland receives more than it should, nor with Scots, who argue that North Sea oil revenue makes Scotland a net contributor to the UK budget. Both arguments can be supported by the recent release of the Scottish accounts.
The Calman Commission proposals for extending devolution does not address the issue as they only slightly increase Holyrood’s revenue-raising powers, leaving it still reliant for about 80 per cent of its funding on a grant from Westminster.
The answer is to devolve control over most current taxes to Holyrood, making it responsible for raising the bulk of the money it spends. This would provide an opportunity for Holyrood to adapt its taxation system to best achieve sustainable economic growth, with a clear focus on job creation and improving public services.
It would also diminish the potential for conflict between Westminster and Holyrood, providing a fairer financial settlement to underpin the devolution settlement. Greater financial responsibility should, therefore, be a policy that strikes a chord not only in Scotland, but also in England.
To read the article at FT.com , click here.