Lord Foulkes on fiscal autonomy


THIS is an edited version of a speech given by Lord George Foulkes to the House of Lords on 15 June:

“I FEAR that events have overtaken the Calman commission and its report.

Frankly, block grants are wrong and the Barnett formula should not be revived on a needs basis, or on any other basis, and should be scrapped. Block grants mean that all the easy decisions about spending money and priorities are made by the Scottish Parliament, which does not make any of the difficult decisions about raising that money.

That is why no one has suggested the use of the plus-or-minus three pence in the pound that Scotland already has. The Auditor-General in Scotland has already indicated that free higher education, free prescriptions and free personal care will not be sustainable in the near future without substantial additional income. They will be under threat. What will happen? Alex Salmond, like Oliver Twist, will say, “I want some more”. He is already doing it – asking for more in the block grant and more taxation powers. If he does not get them, who does he blame? He blames Westminster.

That is why I think that the time has now come when we must seriously consider a more radical change in funding devolved governments. It is described by some as full fiscal autonomy; I would describe it more appropriately as full fiscal responsibility, so that the responsibility for raising money as well as spending it goes to the Scottish and other governments. Of course, there has to be an agreed pre-eminence of the United Kingdom Government in defence, foreign affairs, welfare and other reserved areas.

It also means that we have to start moving on from our present asymmetrical devolution towards a fully federal system. I am astonished that the Liberal Democrats, who, traditionally, have espoused federalism, are so quiet. Apart from the centralised system, which we have abandoned, or the break-up of the United Kingdom, it is the only stable, justifiable system.

We should all be getting together to argue for it. If we do not, if we do not move towards a fully federal system with each of the devolved parts (and I am open to argument whether it should be England or regions of England; we have tried regions of England) raising their resources and putting money into the central United Kingdom Government, if we unionists do not become federalists, we will see the break-up of the United Kingdom, which would be a disaster for all of us.”