Picture of virus under microscope

Research under the microscope...

The Strathprints institutional repository is a digital archive of University of Strathclyde research outputs.

Strathprints serves world leading Open Access research by the University of Strathclyde, including research by the Strathclyde Institute of Pharmacy and Biomedical Sciences (SIPBS), where research centres such as the Industrial Biotechnology Innovation Centre (IBioIC), the Cancer Research UK Formulation Unit, SeaBioTech and the Centre for Biophotonics are based.

Explore SIPBS research

The Richard commission and the financing of devolved government: the economics of devolution in Wales: Briefing No. 8

McGregor, P.G. and Swales, J.K. and Turner, K. and Jones, Calvin and Munday, M. and Roberts, A. (2004) The Richard commission and the financing of devolved government: the economics of devolution in Wales: Briefing No. 8. Working paper. Economic and Research Council.

[img]
Preview
PDF (strathprints007264.pdf)
strathprints007264.pdf

Download (316kB) | Preview

Abstract

If the Barnett formula is rigorously applied to determine the budget of the Welsh Assembly Government, this will ultimately adversely affect the economy of Wales by limiting the growth in aggregate demand. This effect is reinforced now that population weights determining rises in expenditure in Wales (and Scotland and Northern Ireland) are regularly up-dated. There is some controversy in Wales about whether some form of needs-assessment exercise would favour Wales relative to its current position. What is clear is that the outcome of a rigorous, long term application of the Barnett formula would be a share of UK public expenditures in Wales (and Scotland and Northern Ireland) that was almost certainly below the level that would be dictated by any conventional understanding of 'needs'. The impact of the tax-varying power favoured by the Richard Commission is ambiguous, with the direction of effects dependent on the reaction of the current labour force and potential migrants. If workers insist on full compensation for loss of income to tax through a rise in gross wages a tax rise would lead to an economic contraction. However, if workers value the additional public services financed by the tax rise as equal to their loss of disposable income, this effect can be avoided. Much in other words would depend on how the proceeds of the tax rise were spent