Promoting decentralised and flexible budgets in England: Lessons from the past and future prospects

The UK has traditionally been viewed as a classic example of a unitary state in which central institutions dominate decision making. The recent Labour Government sought to counter this convention through devolution to Scotland, Wales, Northern Ireland and London and administrative decentralization to the English regions. This article examines New Labour’s efforts to promote sub-national policy discretion and fiscal autonomy via the Regional Funding Allocations (RFA) process. Findings are subsequently drawn upon to offer insights into the difficulties the Coalition government is likely to face in its endeavor to decentralize functions and budgets to local authorities and communities. The paper addresses two central questions (i) Can New Labour’s attempt to promote decentralized and flexible budgets in England be viewed as evidence of a transition to a more fluid, multi-level form of governance? (ii) What lessons can be harnessed from the RFA experience in taking forward the Coalition government’s plans to promote fiscal discretion at the sub-national tier? It concludes that there are deep-rooted barriers in Whitehall that may limit the freedoms and flexibilities pledged to local government and could undermine efforts to decentralize.