Introduction

The recent devolution reforms in the UK represent one of most fundamental changes to the
Constitution in the 20th Century. However, the UK has not been alone in undertaking moves
towards greater decentralisation. Whilst other countries have not necessarily followed the
UK’s route of decentralisation through constitutional reform, many European countries (eg
France, Spain and Italy) have introduced greater fiscal powers for regional and local
authorities. A casual glance at the UK’s current position suggests that, in some respects at
least, it still retains a highly centralised fiscal system. The degree of fiscal autonomy enjoyed
by the UK’s constituent nations and local authorities is still limited compared to that in other
OECD countries.

The purpose of this article is the following. First, we provide a comparison of the degree of
fiscal decentralisation in the UK with that in other countries, and assess the extent to which
different areas of public expenditure are assigned to different tiers of government. Second,
we assess the degree of fiscal autonomy in the UK compared to that in other OECD
countries. We also provide some insights from the theory of fiscal federalism to assess
whether the current degree of fiscal autonomy in the UK is optimal, or whether there are
useful lessons to be learned from other economies. One key conclusion here is that, although
there would seem to be good reasons to increase the degree of fiscal autonomy in the UK, one
might want to proceed with caution. We also discuss whether other OECD countries offer
useful models in terms of the method of allocation of block grants, the allocation of taxation
to other tiers of government, and the way in which are used to achieve the twin objectives of
fiscal efficiency and equity. Finally, we consider whether the ‘asymmetric nature’ of UK
devolution, with different national and regional units being assigned different degrees of
autonomy, represents a desirable model in the light of experiences elsewhere in Europe.

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