Wednesday, 18 May 2011

Myths of Fiscal and Political Autonomy

I have decided to make a few blogs (hopefully) about dispelling the myths around devolved economics. Since the SNP victory we may well have as good a chance as we get in a while to shout for a more federalised union and more devolution of power. However when you start to discuss autonomy it inevitably turns into amateur economist’s hour. Hopefully this will sort out unproven claims (both pro and con). As such I wanted to attempt to clear up a few things I regards as misconceptions.

1) You can’t afford devolution/ I don’t see how we can afford it

This is a common argument which confuses political autonomy with fiscal autonomy.
As things currently stand All devolved government have block funding from Westminster. In the case of Scotland this equates to approximately £8 billion a year. As such it I Impossible to go over that limit, you can run out of money but you cannot go into debt. This is a critical point. It is like having a bank account without an overdraft.

Even if Cornwall had solely political autonomy, i.e. the ability to choose how the block grant is spent, but not the power to raise it itself, it would not be possible for it go into debt. Looking at it further you may have noticed, Scotland, Wales and Northern Ireland all have devolved government and none of them have gone into debt, their countries have not descended insolvency either currently or in past financial cycles. The financial problems each nation faces comes as a results of UK wide Westminster government policy and the global financial melt down.

If Cornwall were to gain political autonomy the sky would not fall in just like it hasn’t due to devolved government anywhere else in the UK.

I will end on the point that most people who assert “I don’t see how we can afford devolution” are in fact saying “I don’t understand how government funding works” which is fair enough most people don’t either but the reason this statement is made is that people are understandably scared of issues which they have no real knowledge. If I didn’t understand it I wouldn’t be inclined to go for it either.

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