Fiscal federalism and Fiscal Autonomy: Lessons for the UK from other Industrialised Countries



overspending is allowed via the Reserve13. However, if the UK is to adopt the Stability and

Growth pactin the future, this may result in less flexibility for three-year spending plans.

Asymmetric and Multi-speed Reforms

Another feature of UK devolution is its asymmetric nature. The three devolved territories

have been granted different political and economic powers. Whilst the blueprints for English
Regional Government are not entirely clear, it is already apparent that the ultimate pattern of
devolution in the UK will not be symmetric. This is explicitly recognised in Russell Barter
(2000, p. 23), which in fact exalts this as a virtue of UK devolution:

“Not all regions need necessarily to have the same powers at the same

time.. .Indeed the Council of Europe argue that time-lags may meet some

regions’ needs to avoid taking on responsibilities they are not yet ready to bear”

The comparison with Italy is often made. There, five special status regions (Regioni a Statuto
Speciale
) havetraditionally had greater devolved powers. Spain is also a good example where
the three historic Basque Country territories: Alava, Guipuzcoa, Vizcaya, along with Navarra
have their own special tax regimes and a separate economic agreement with central
government. In Finland, the thinly populated Aland region has separate political and
budgetary powers.

However, Russell Barter (2000) does recognise some weaknesses in asymmetric devolution
settlements. In Spain asymmetry has led to considerable administrative and fiscal complexity,

13 See HM Treasury (2002): ".the presumption is that departments and the devolved administrations will
contain pressures on their budget by re-allocating priorities, seeking offsetting savings and using unspent
entitlements... The devolved administrations will be treated in the same manner as United Kingdom departments
in decisions on access to the DEL Reserve." (Section 9) "There is eligibility on EYF for DEL expenditure but
AME expenditure is not eligible. The whole DEL assigned budget of each devolved administration will
therefore be eligible for end-year flexibility... Breaches in DELs which materialise at the end of the year would
be viewed by the United Kingdom Government as serious mismanagement on the part of the devolved
administration and the presumption would be that the following year's DEL and grant to the devolved
administration would be reduced by an amount equivalent to the breach. The same rule applies to departments

31



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