In Great Britain, local governments are suffering from restrictive central controls, says Ken Davey

Professor at the University of Birmingham (United Kingdom), Ken Davey was a speaker at the workshop on proper resources and autonomy in budget management, during the conference on democracy and decentralisation in St Gallen, Switzerland, on 4 and 5 May 2010. In his interview, he gives a critical view of the British local self-government system, which he finds too restrictive.

Interview – 4 May 2010

Question: During this conference, much has been said about the need for the decentralisation of power. The United Kingdom has had experience with devolution to Scotland and Wales after a long debate and much political effort. How would you assess the results of this process today?

Ken Davey: The devolution is now ten years old, and I think it has been very successful. However, it works off a very peculiar financial system in which the the Scottish and Welsh governments’ revenue come from the national budget, and not very much comes from any taxation set by those parliaments. However, the money is distributed to Scotland and Wales by a very beneficial formula, and the Scottish and Welsh governments have around 20 per cent more per capita than the average for the United Kingdom as a whole. As a result, they have been able to provide quite a lot of services and benefits which are not affordable in England. So, from that point of view the devolution appears very successful, but not necessarily fair to the English taxpayer.

Question: Decentralisation implies a wide degree of financial autonomy for regional and local communities, yet the lack of financial resources has been identified as one of the major problems at local level. How is this problem addressed in your country?

I think that the British system is pretty unsatisfactory because local taxing is restricted to only one tax, which is the property tax on houses or residences. It only contributes a small proportion, about 25 per cent, of the overall expenditure of local governments. The rest of the money, in one way or another, comes from the national budget. It comes largely by block grants, and local governments have a fair discretion on how to spend it. But the distribution, by an equalisation formula which changes very frequently, is not very transparent. The system is complicated, due probably to historical circumstances. However, in addition to the financial situation, more difficulty comes from the fact that we had two decades of very centralising government, which set degrees of central controls and targets that were very restrictive for the freedom of local governments in very counterproductive ways. A lot of autonomy of local government is also restricted by new and more regulations on health, safety and the environment which may be good but have very big implications.

Question: How can decentralisation be “played” at European level, against the background of European integration and efforts to strengthen the European Union?

I don’t think that there is a will among European governments to strengthen further the European Union. I think that with the economic crisis and the current Greek crisis, the integration process will be slowing down. I’m not saying it is a good thing but it is the reality.