Friday, 23 October 2009

Caroline Spelman MP @ Conservative Conference: Contribution to the Mayors Consultation

The Centre have agreement from Caroline Spelman MP, Shadow Secretary of State for Communities and Local Government, to publish this speech as a contribution to our elected mayors consultation.

It can be read here.

Tuesday, 13 October 2009

New book advocates fiscal autonomy for Scotland

‘The Political Economy of Financing Scottish Government’ by economists Professor C Paul Hallward (University of Connecticut) and Professor Ronald MacDonald (University of Glasgow) was launched on Monday 12th October at the Royal Society of Edinburgh. Introduced by Professor Drew Scott, Co-Director of the Europa Institute, the book was praised as an important piece of work in the wider debate on the future of Scottish monetary policy.

The book comprises a of collection papers on the funding of Scottish Government. The authors argue that with soft budget constraints the Barnett formula of the bloc grant is unlikely to survive because of the UK’s budget deficit. They present alternative proposals on appropriate forms of financing for Scotland under its current status within the Union (fiscal autonomy) and outside the union if Scotland was to become independent (full fiscal autonomy).

At the launch McDonald questioned the UK’s ‘one size fits all’ monetary policy. Despite opinion polls indicating minority support for the Scottish National Party, he argued that funding from Westminster ensures that a non-Unionist majority in Scotland continues to support the status quo. The lack of fiscal autonomy means that there is no incentive among Scottish politicians to drive economic growth, given that tax revenue inevitably goes to the British exchequer.

Comparing Scottish public services to the rest of the UK, MacDonald suggested that under the current system too much emphasis is placed on equity rather than on efficiency. Hallward questioned the effectiveness of the Calman Commission’s recommendations arguing that it maintains soft budget constraints. The authors also contend that while the Commission’s report focuses to some extent on efficiency, little emphasis is placed on the private sector and not enough on the public sector.

For Hallwood and MacDonald fiscal autonomy would allow for the devolution of most tax policies with the exception of VAT, while full fiscal autonomy would enable the Scottish government to control all tax policies including VAT.

By providing hard budget constraints these proposals would address the current ‘one size fits all’ monetary policy and promote efficiency in both the public and private sectors. However the authors admit that there could be trade-offs in terms of an emphasis on efficiency over equity.

Nevertheless Hallwood concluded that these proposals would not only be beneficial for Scotland, but would also enable England to streamline its own taxation and spending policies.

The Political Economy of Financing Scottish Government: Considering a New Constitutional Settlement for Scotland by C. Paul Hallwood and Ronald MacDonald Edward Elgar Publishing £59.95 pp160

Stephen Meredith
Research Associate

Monday, 5 October 2009

"Welcome to the World": Contribution to the Mayors Consultation

This article was published in the Scotsman.

Scotland’s cities are facing their biggest test for a generation. As the aftershock of the global economic meltdown feeds through into severe restraint of public sector finance can our cities face up to the challenge? Is it possible for our locally elected politicians to debate and decide by committee how best our cities can tackle these very testing times head on, or is there something fundamentally wrong with our system of civic leadership?

Our City Councils have gorged on growth budgets almost since their creation in 1996 and now, all of a sudden, the funding supply tap has been switch off. As we prepare for the economic upturn, are the political leaderships in our cities equipped to take the tough decisions that bring about real and lasting change, or is a different democarcy required?

Are there lessons for Scotland from the great cities of the world as they themselves begin to tackle many of these same issues? And if so, what are the chances of our political system heeding them and implementing any required change in time to make a positive impact and avoid catastrophe?

In short, if tough decisions require strong political leadership would Scotland’s cities benefit from the election of powerful Mayors (or Provosts if you like)?

In Edinburgh, over the life-time of the City Council a common feature of complaint by the citizens of the capital has been the lack of bold initiatives that really make a difference. Where game-changing projects have been promoted they have often come to nought. Why is that? What makes Scotland’s capital uniquely ill-equipped to effectively tackle change?

We don’t have an elected Mayor. Tough, decisive and almost by its nature, initially unpopular change cannot be designed around a committee table. Local, short term interest gets in the way of the large scale change required to deliver long term, sustainable service improvement.

Whether debating school closures designed to better match the supply of places to the emerging demand for them in an energetic pursuit of excellence, or introducing congestion charging to generate huge revenue sums for public transport projects to efficiently get people to work, locally elected councillors will always seek to protect their own patch. City Mayors can see the big picture.

Mayor Livingstone sought a popular democratic mandate through his manifesto commitment for the Congestion Charge and then delivered a scheme that even the bold Boris dare not undo. In Edinburgh, we’re still trying to work out how to pay for the trams, and arguing over whose responsibility they are.

A raft of other examples can be found along the road to reform that leads out of the capital, cast aside as democratic timidity gradually squeezed out any initial signs of bold political action.

Housing Stock Transfer? Failed. The creation of a modern transport interchange at Waverley? Failed. The redevelopment of the world famous Princes Street and its incredible city centre gardens against the stunning backdrop of Edinburgh Castle? Failed. Even a shared stadium for Hearts and Hibs (a la Ac & Inter Milan!)? Failed. The list is never-ending.

Scotland’s other cities have fared no better.

In Aberdeen the council has collectively stumbled from budget crisis to budget catastrophe and back again, still with no apparent end in sight.

In Dundee, the lack of strong civic leadership and the party political in-fighting culminated in the capitulation and transfer of the Provost from his lifelong political affiliation to try a different team.

In Inverness, the local council has established a “City Committee”, which in democratic terms pushes all the right buttons but in reality has no real devolution of power from the parent Highland Council.

In Stirling, the council’s major challenge – how to grow the city and its surrounding region – suffered greviously from committee-ism and local vested interests, with the choice of the “least bad option” of plonking a 3,000 house super-scheme out of sight and out of mind on the other side of the motorway.

Is it possible for any committed collection of councillors to drive real, lasting change from around the committee table?

“Glasgow does” I hear you cry! Perhaps not, as Glasgow’s Council Leader is treated externally, and to a large degree internally within the City Chambers, as a City Mayor without the formality of the title. Preparation for the Commonwealth Games, apprenticeships for all young Glaswegians who want one, the completion of the missing M74 road link, modern purpose-built schools and hospitals (following a robust programme of closures to remove spare capacity), the Clyde Gateway. All delivered with strong political leadership – just like a Mayor!

So has the time come for Scotland’s cities to join the family of nations by electing Mayors? It is certainly an idea that is finding increasing, cross-party political traction. Labour introduced City Mayors in England. The Tories have now endorsed the concept for the whole of the UK. The Liberal Democrats are against, but would surely trade City Mayors for greater proportional representation at Holyrood or its introduction at Westminster.

And what of the SNP? In preparation for the Independence referendum it is essential that the SNP make the case that Scotland’s economy can stand on its own two feet. This relies on our cities being the engines of sustainable economic growth; which is, after all, the Scottish Government’s central policy purpose.

As Ministers ponder the possibility of introducing such a radical change perhaps they will ask themselves whether Bonn, Paris and New York are wrong in their belief that City Mayors play a crucial part in the drive to pull their cities out of recession? Can we introduce Elected Mayors for Scotland’s Cities? Yes, we can. Or, as someone else once said, “Its time”.

Ross Martin
CSPP Policy Director