WHO GOT WHAT

23 November 2013

The Treasury has recently published the outturn figures for public spending in the countries and regions of Britain for 2012/13. You can see them here.

Table A2 shows this breakdown: public expenditure in 2012/13 by per head of population and as a comparative index of UK spending
UK £8788, 100
N Ireland £10 876, 124
Scotland £10 152, 116
Wales £9709, 110
England £8529, 97

For the South West region of England, which includes Cornwall, the figures are £8219, 94. There are no figures currently available or possible for areas below the regional such as local authorities.

Barnett formula
When UK public spending increases, the Barnett Formula gives the three devolved countries (Scotland, Wales, and Northern Ireland) increases proportionate to their share of the UK population. This has resulted in the devolved countries having a larger perhead spending for public services than England and the South West of England.

LGA
The unfairness of this mechanistic formula to people in England is increasingly cried out. The Local government association of England (LGA) has said that councils in England lose around £4 billion a year through the present allocation arrangements: pro rata by population that is about £40 million lost by Cornwall.

MK: sssh, don’t mention the formula and England
Note, however, that the Cornish nationalist party, Mebyon Kernow (MK), while crying up its view that Cornwall is shortchanged by the UK government – what it englishes as London or Westminster – does not discuss the present allocation arrangement throughout the UK and the apparent overpayments to the Celtic fringe; these are still the silenda and tacenda of MK and Cornish nationalism as I pointed out back in 2009 when I said political nationalism complained about the redistribution of public funds within England but

never seem(s) to ask about the larger redistribution among the four countries of Britain. Why is that? It is time that Cornish nationalism faced the formula.

I shall return to this in a post on MK’s inadequate ideas about devolved funding for Cornwall.

Previous posts about devolution and funding
English and Cornish devolution 6 September 2011 (with links to other posts)
London subsidises our bills 16 February 2012


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MK AND SCHLESWIG-HOLSTEIN

20 November 2013

I have previously confessed that I find MK’s nationalist policy on autonomy – an assembly and all that – vague with lacunae.

I was therefore interested to read in this MK blog that the party’s recent review of this policy found that some MK members are not “entirely clear” about the autonomy policy.

Some of MK’s own members aren’t entirely clear about it. They don’t get it. I’m reminded of Palmerston and the Schleswig-Holstein question.

Meanwhile, in the Commons this (Hansard 19 November 2013 columns 870 and 871) and this (column 1074) about Cornwall, devolution, and city deals.


I have argued for several years that MK is not a serious party. Its policies are not thought through and there are vast and ridiculous gaps in them. Its policies on interrelated devolution and funding are especially lacking in substance and detail. I have explored these lackings over several blogposts and in my last post, MK: Cornwall says no thanks, I suggested that MK really should listen to its candid enemies. I quoted Augustine of Hippo, learn from what your enemies say.

Well, on the heels of its poor unitary council election result, MK has started a members’ review of its policy on devolution. Such policy reviews are routine for parties after a disappointing election; nevertheless, it shows commendable sense and the beginnings of seriousness in MK. Of course, there are other MK policies that cry out for review but this is a start.

I hope MK does not simply rehash its present inadequate policies, new clothes on old frames. I hope this isn’t only about trying to make the present vacuous nonsense more palatable. The task MK faces is showing how local devolution would work, how it fits with localising power in the rest of England and increasing interest in English devolution; whether it sees a role for troubling nationalism in this MK devolution; and, importantly, how it would be paid for. Would the MK devolution be the end or a stage?

In the past MK has surrounded itself in vagueness but that is not an option now. There must be clarity.

My blogposts on MK raise some of the relevant questions and point to inadequacies in its policies. It will be interesting to see whether MK listens to its candid enemies as well as its members.

Perhaps I should add that Augustine also said, “Da mihi castitatem et continentam sed noli modo” (Confessions 8.7). Oh dear, I hope, understood politically, that isn’t the spirit of MK’s review.


In the blog post The first labour of Mebyon Kernow I looked at Mebyon Kernow’s unresolved ambiguities about what it wished for the government of Cornwall: a stew of independence, semi-independence, devolution, a parliament, an assembly, a souped up county council, in England, outside England, in the UK, outside the UK, republic, monarchy.

Don’t look, don’t tell
I am now going to look at MK’s ambiguities about the financing of its Cornwall. These ‘labour’ posts are not about the local elections and manifestos only, but about MK’s published wider aims for Cornwall. MK seems not to have worked out thoroughly and coherently how it sees the funding of its autonomous and nationalist Cornwall, but no state or county or whatever in between can flourish without money in its exchequer. This is a question fundamental to MK’s ambitions.

Where would the money come from for an MK Cornwall? The answer is interwoven with what sort of governance its Cornwall would have, the resolution of MK’s first labour.

Nationalist responses have been inconsistent as I pointed out in the post Hokey-kokey devolution.

I explored this question too in Cornish nationalism and the Rub al Khali and asked Who gets to pay for an autonomous Cornwall. I shall repeat parts of that post here mutatis mutandis.

Present funding arrangements for Cornwall
I put in the next paragraphs a simplified and short account of the financing of Cornwall. A fuller account is in Surviving the crunch by the Audit Commission, 2010.

Central UK government collects taxes from individuals and companies and businesses, and borrows money, and redistributes some of those pooled funds to councils, including Cornwall, as revenue and capital for spending on public services and projects and the encouragement of enterprise. The EU also recycles funds for projects across the UK, including Cornwall.

This system of pooling and redistribution pays for pensions, benefits, schools, hospitals, roads, and grants to private enterprises for example. Local council tax, raised from people in the council area, funds only a minority proportion of councils’ public spending: see chapter 3 of Surviving the crunch. On top of council tax there are direct payments by people for particular services, such as using car parks and applying for planning permission, and some council borrowing and match-funding arrangements.

The amounts made available from the national pool to Cornwall and other local authorities are decided by the UK central government according to various and varying formulas and indeed many decisions on local spending are in effect made by the central UK government. An example this year is a cut in central government funds to councils which has led Cornwall Council to impose some council tax payments on people hitherto seen as too poor to pay any.

Future funding arrangements
There are broadly two possible ways that an autonomous Cornwall could be funded: from funds generated wholly within Cornwall and redistributed wholly within Cornwall or, as in the preceding paragraph, from pooled UK funds with some local levies in Cornwall.

Cornwall pays for itself
Is it MK’s intention that an autonomous Cornwall would wholly pay its own way (apart from externals like defence perhaps and recycled UK funds from the EU)? This means that whatever we need inside Cornwall would be paid for by taxes raised only in Cornwall and not elsewhere; and an MK Cornwall would take its own decisions using only its own locally-raised money. It would set and collect its own income and corporate tax rates, for example, and take responsibility for funding future ‘state’ pensions.

Such a self-financing Cornwall would effectively be independent though if it used the UK sterling currency that independence would be curtailed by financial decisions in the rest/remnant of the UK.

However, I doubt that this self-financing is feasible. I do not believe enough money could be generated from within Cornwall to pay for a twenty-first-century state. What does MK think?

Financial dependency
More likely is the funding of a nationalist Cornwall based on the Barnett scheme or some such. The expectation would be that taxpayers outside Cornwall would subsidise our devolutionary fling; that is, taxpayers in the UK would pay us more from the common pool than we put in. Suppliant devolution, eh; a you-pay-we-spend autonomy. Some destiny that, and vastly unattractive and unpersuasive. Such funding would require Cornwall to remain in the UK, a monarchy, and would also limit the autonomy of Cornwall.

The 2001 petition did not detail funding and the 2009 parliamentary bill for an assembly seemed to envisage Cornwall largely funded by a redistributed UK pool arrangement, though this came from Libdem MP Dan Rogerson and MK did not think the bill gave enough autonomy to Cornwall.

An uncertain vision
Although MK does not as far as I can see explicitly spell out its preferred funding scheme for Cornwall there are somewhat contradictory clues in the policy statements and manifesto on its website.

On the one hand the MK 2013 manifesto laments Cornwall’s present share of redistributed UK funds and seeks a larger share apparently on the basis of need, though how we measure and meet need are contended. This approach indicates that MK does not believe an assemblied Cornwall could be self-financing but rather sees it as financially dependent on UK (largely English) redistribution. On this reading MK seeks a Barnettesque policy for a Cornwall. The argument is then about what Cornwall’s share of redistributed UK funds should be and how that would be determined. MK promotes the victim view that Cornwall is suffering from unfair Government underfunding, a view which I have challenged several times on the blog.

On the other hand MK in its website policies seems to invoke a Cornwall sufficiently financially independent to increase funding for affordable housing and reduce indirect taxation and tax avoidance. Alongside these sovereign aims would be a separate curriculum for schools in Cornwall, more spending on the Cornish language, a radical reform of the financial sector, and the establishment of a Cornwall department for economic development. I think together these, the aims of a party for a country not a county, imply a Cornwall financially independent of the central UK government, a Cornwall commanding its own funds.

However, the language of policy is often indecisive. For example we have the string “MK is committed to … support for.. a reduction in indirect taxation”. I have presented these MK policies more forcefully than MK which amusingly uses the familiar language of what it unconvincingly calls the London-based parties to express this vision, a mix of MK believes, want(s) to, is committed to, will establish, call(s) for, supports: aspirations, promises that aren’t quite.

I think the indecisiveness in language reflects ambiguity, unsureness, and unease in MK about the fundamental questions of Cornwall’s governance and financial basis. The party appears not to have worked through this thoroughly. It appears confused about whether it is presenting a case for a country or a county. The vision is blurred, uncertain.

MK should be clear about the funding of its Cornwall
MK should tell us exactly what it has in mind financially for its separated Cornwall; and give us the arithmetic. It is not credible to talk about autonomy, devolution, semi-independence, financial aims, and so forth, and not detail the amounts and sources of funding and give some idea of priorities and a timetable. Without a published funding scheme which estimates how much it will all cost and identifies where the money will come from, MK is showering us in hot air and cannot be taken seriously as a national party. What is needed is a clarity from MK setting out its governance and financial proposals, with the arithmetic, order of priorities, and a timetable.

Note
Let me acknowledge that those other parties in Cornwall whose local publications I have seen – I haven’t seen all the parties’ – seem lacking in details about costs and timetable. They all seem to assume a continuing Barnett-style subsidised financial model for Cornwall and, as far as I can read their localism, what strikes me as a souped-up county.


Over a few brisk posts – this is the first of them – I’m going to look at several issues that I think Mebyon Kernow (MK), the Cornish nationalist party, has to resolve, the tasks or labours it has to undertake. Largely, MK has to be very much clearer about what it believes and wants and its routes to achievement. I take political nationalism seriously and think it is important that people in Cornwall understand what MK stands for on central issues so that they can make an informed judgement in support or opposition; MK merits that. Oh, and as Themistocles figuratively said, παταξον μεν, άκουσον δε (Plutarch Themistocles 11.3).

Bothering ghosts and devolving Cornwall
There are arguments from some nationalists about the historic duchy and whether there have been a loss of powers and degradation of status for Cornwall into a county of England. Revisiting and reconstructing the past is not, however, a substitute for clarity about the future. It does not rationally matter what happened in 1337, nearly seven hundred years ago; what matters is not bothering ghosts but what MK and nationalism want for the future status of Cornwall.

Let me go straight to the point. What would be the status of a nationalist and autonomous Cornwall? Broadly, an independent country outside the UK as the Scottish nationalist government seeks for Scotland; or a part of the UK but not of England with devolved powers more or less like Scotland, or Wales, at present; or part of England with devolved powers? A republic or with the monarch as head? In the EU or out? Do I need to mention Guernsey?

UK future
How does MK envisage the UK after Cornish autonomy? Separate independent states with no UK; a federal UK with federal and independent institutions; the current set up with England and Cornwall together or separately joining the other three as devolved countries in the UK; a republic or still a monarchy?

Cornish parliament
Mebyon Kernow  talks of “self-government” and “powers at least equal to those of the Scottish parliament” which suggests to me the middle course, semi-independence within the UK but outside England. I think that MK  should spell out with unmistakable clarity the status it seeks for Cornwall and the UK. It would be more candid to talk of a Cornish parliament rather than an assembly and it should spell out too that it sees the future of its Cornwall outside England.

Unresolved questions
However, there are unresolved questions.

The moves in Scotland towards independence make continued comparisons with Scotland ambiguous and raise a question for the party. Is the current Cornwall status that is sought the final one or are there larger ambitions? Is the current MK status policy only a step along the road to SNP-like independence?

There is also a question that MK tends to disregard: the increasing discovery of England by people living there, something the Labour devolvers never imagined. This has been prompted by the view that devolution and the Barnett formula which predated it have delivered a disproportion of UK tax revenue to Scotland, Wales, and Northern Ireland and England has lost out or at least not benefited from devolution. See this poll which suggests a growing number of people wish for independence for England outside the UK. Do MK aims and means take into account the new visibility of England and the changing aspirations of its people?

I set out my views on how we should seek change in Cornwall in the posts How should Cornwall be governed? and Empowering Cornwall: an all-England approach, Cornwall campaigning within England with other counties for more powers. However, MK sees Cornwall as a “distinct national community,” a place other than a county of England as the comparisons with Scotland and Wales also indicate. This raises the question of how MK expects to achieve its status goal for Cornwall. We are talking beyond localism and increasing the powers of local authorities in England, as the MK response to the Rogerson bill showed; MK presumably does not see itself as part of any general agitation for increased powers for cities and counties in England. As far as I can see the party does not have a credible strategy for getting to its status goal; a clear road to semi-independence or autonomy should be mapped out. There are difficulties here: successive UK governments are decidedly indifferent or hostile to any separatist ambitions in Cornwall and most people in Cornwall do not support MK in county-wide and national elections. Has MK got a plan?

I shall look at the second labour of MK, about the related issue of funding, in the next post in the series.


FUNDING DEVOLUTION …

18 July 2012

… and other devolutionary issues

The other day I put up the post Who pays for Cornwall? asking nationalists how an autonomous Cornwall would be funded.

Two thousand people in Wales have been polled for the Commission on devolution in Wales. The questions were about what additional financial powers the Welsh assembly should have. You can read the entire questionnaire and responses here (Opinion research on financial powers for the national assembly for Wales, July 2012). There’s much interesting information there such as people’s view of their identity and their large opposition to independence outside the UK and positive support for a more financially empowered assembly.

However, having asked Who pays for Cornwall? I shall focus on those questions and responses around the issue of Who pays for Wales?

At present public spending in Wales is greater than revenue raised in Wales; the shortfall is made up by taxes from the rest of the UK (including Cornwall).

A decisive majority agreed that “public spending must not exceed revenue raised in Wales”.

That seems straightforward and economically sensible, but how should the shortfall be made up in an empowered Wales?

From Wales itself? No. 49 percent disagreed that taxes in Wales should be raised so that public spending in Wales was wholly paid for by money raised in Wales. Where and whom from then? 57 percent thought that funds should be redistributed from the prosperous parts of the UK to Wales. As the title of chart on page 29 bluntly put it: “The books should be balanced but not by higher Welsh taxes, England can pay”. Of course, “England” includes Welsh people living there. About 84 percent of UK income taxpayers are in England (HMRC table 2.20 for 2009/10 and about 88 percent of income tax payments are made from England ( HMRC table 3.11 for 2009/10): see the tables for what income tax comprises; it is not only tax on employment income. HMRC points out that its tax statistics for sub-UK areas should be treated with caution.

Devolution in the UK, underpinned by redistributed UK/England taxpayer money, has gone on so far without any UK government asking people in England how they think the four countries of the UK should be funded and whether they want autonomy for England. That is unacceptable and undemocratic; though there have been some surveys about governance in England, none of the three major UK parties plans to consult people there.

I am happy to see power go to devolved countries and to see UK/England tax revenue spread around according to need. I wonder, however, whether the present disposition of funds is equitable and thereby causes tensions, worry about the consequences of getting to a position where the people spending the money are not the people raising the money, and think England is short changed in governance; and I certainly think people in England should have a chance to consider these matters with their own representatives.

Now back to Cornwall. Let me ask again, Who pays for an autonomous Cornwall?

Note

HMRC table 3.14 shows that for 2009/10 256 000 individual income taxpayers in Cornwall unitary authority area paid a total of £804 million. Remember the HMRC caution about sub-UK tax statistics.


LOOPHOLE CORNWALL?

3 July 2012

Last August I wondered about Cornish nationalism looking to Guernsey as a possible model for governance for a devolved/semi-independent/independent/autonomous/self-governing Cornwall. Although the nationalist interest is governance not the financial model, I do not believe they can be easily separated. I think the economy and finance underpin and are central to the success of any constitutional entity in the world whether or not recognised formally in a constitution.

In the succeeding months I have looked at the Guernsey financial model and Guernsey as a tax haven and the biting reality of what that means; the story did not get better as my posts on this show. The financial touches on governance and Guernsey is not a model for Cornwall.

Now comes a series in the Guardian and another story about the Channel Islands, dubbed in a scathing editorial the the Loophole Islands. The latest Guardian article on Guernsey is here.

Read too ‘Guernsey dreams up another way to abuse the world and shift money to tax havens’ from the Tax research UK blog, 27 June 2012.

The crown dependency governance model means that the Loophole Islands are responsible for their own taxation policy and they have used that to create tax havens. I wish to move away from the original story to another one; there are legitimate questions here beyond governance. I find partitive nationalism’s views on the funding of an autonomous Cornwall vague and asked some questions most recently here. Let me add to them. Exactly what are partitive nationalism’s economic and financial vision and ambitions for a self-governing Cornwall? What would be Cornwall’s desired financial arrangements with England and the rest of the UK, assuming the UK survives the Scottish referendum? Would that Cornwall be responsible for its own tax policy, setting its own rates and raising all the income it needs from within Cornwall? Would it then look to emulate the crown dependencies? Would it, for example, seek lower company and personal tax rates? Would it additionally seek to create in effect a Loophole Cornwall? Have a look at the article in the Scotsman linked at the foot of this post.

A time for clarity, I think, from the various and diverse strands of Cornish nationalism.

Earlier posts on Cornwall and Guernsey
Cornwall and Guernsey: yet more 4 December 2011

Cornwall and Guernsey again 9 November 2011

More for Cornwall to ponder on Guernsey 18 September 2011

Cornwall and Guernsey 31 August 2011

And this from the BBC: Guernsey government may be model for Cornwall 23 August 2011

And this story in the Guardian 26 November 2011.

This article in the Scotsman for 19 June 2011 asks whether the Loophole Islands are a model for an independent Scotland.