Regionalisation – The Destruction of England

An English Parliament is only common sense

In the wake of the decision of the Smith Commission to give more tax raising powers to Holyrood without scrapping the Barnett formula, concerns about how England is governed have been thrust into full view and will now dominate the political horizon. This time the English look like they are ready for a fight to correct the unfair and imbalanced devolution settlement that left them without a First Minister and their own Government in 1998. Since then, Scottish and Welsh parliaments have flourished whilst England looks nervously at the prospect of being broken-up into concocted ‘Regions’.

Yet the answer to this most pressing of questions is still a long way off. There are multiple proposals floating around, some of which are clearly ridiculous such as the former Tory MP Harold Elleston’s desire to re-establish the old Viking Kingdom in the North of England or calls to hand independence to Yorkshire First and Cornwall to Mebyon Kernow. These last two examples are easily shown to be based on ‘fiscal fantasy’ as both Cornwall and Yorkshire are dependent on funding which is transferred from other parts of England.

 Regionallisation 1.0

Eliminating the “mad and bad” ideas leaves two distinct camps to fight it out. At first glance they appear polarised along party political lines. The Conservatives are calling for a top down approach of “English votes on English laws” (EVEL) which appears to favour devolution for England that starts at Westminster. Labour want a bottom up approach of Regionalisation for England that rejects Westminster’s involvement.

The tricky question is how do we find a satisfactory solution that welds these two elements together? This may well look like an impossible task, on the one hand you have Labour’s “messy Regionalisation” approach that many now believe is unconcerned with keeping England together or giving the English part of the Union a collective voice. On the other you have the “who speaks for England” approach that sees only English discrimination and disadvantage and goes straight for English independence. Yet on closer examination it’s clear that both sides have more in common than would initially appear as both are campaigning for more localism or delegation of power to community decision makers. Lets call this agenda “decentralisation’.

So, there is common ground and a solution is possible, however we need it to be a satisfactory, long lasting solution that incorporates both sides. This way is not a “third way”, but a “fair way”. It would require the creation of an English government in order to devolve power to England’s local communities in a structured and coherent fashion. An English government could facilitate an ordered de-centralisation of power, combining elements of both the aforementioned approaches. The equation is simple: an English government equals sustainable devolution and localism. This would placate the English patriotic desire for a collective voice for England whilst ensuring that de-centralisation of power occurs. It is truly ‘bettertogether’, an English Parliament first and then local de-centralisation within England.

Solving the English question would re-stabilise the UK and would reduce economic concerns in England about how unfair the allocation of resources and spending are across the UK. For example if Scotland or one of these Regions becomes economically unstable due to over spending, who would financially bail them out?

Taking the “fair way” will require courage from Labour Politicians who would have to ignore their Scottish colleagues who are now repeating the SNP’s slogan that England is too dominant and must be broken into smaller pieces. The Scottish nationalists’ agenda is clear – they would like to see England as a single entity effectively “erased”, as dealing with smaller Regions would give them an economic and strategic advantage. Labour now needs to accept that a worse case scenario is possible as the SNP could be in a Coalition government with them after 2015. This would be an SNP government that unapologetically puts Scottish financial interests first! If Labour can ignore the clamouring of the Scottish MSP’s then they will see that giving England a collective voice will lead to rational policies that link taxation and spending with accountability for all within the UK.

It is clear that the English want a consistent and fair system as the latest research by the IPPR highlights in their survey. It shows that the English desire a consistent and united voice for England while decentralising some powers. It also appears that the people of England are increasingly aware that, without this collective voice England will be broken up into conflicting parts. You only need to look at the recent words of Boris Johnson’s regarding how London is not the ‘Cash Cow’ for England or Labour’s Sadiq Khan’s call for London to keep more of its tax money.

The recent BBC debates on ‘English ‘Devolution’ muddled the separate issues of Decentralisation and English Devolution and showed the inward looking features of local government. The potential pitfall of Regionalisation is the lure of each Region pursing self-interest to the exclusion of the greater good, ie rich Regions could refuse to financially help poor Regions or Urban City Regions could be pitted against rural towns and villages.

As more debates discuss how England is governed, it must be urgently spelt out to local government who the lender of last resort would be in the event of a financial crisis in the Devolved countries. Firstly, we need to take a systematic approach and accept that if the UK breaks up and independent countries emerge then the Bank of England would cease to be the bank of last resort for Wales, Northern Ireland and Scotland. England would be under no obligation to bail them out. English taxpayer’s only responsibility would be to England at that point.

Regionallisation 2.0

However if a Devolved English government is created and a UK federal system is established then the bank of last resort, the Bank of England, will still provide support to all the Devolved nations and Regions. The last resort of all, the English taxpayer, could still be relied upon to dig even deeper into their pockets. Yet without an English government, Regions of the “former” England who get into financial crisis could find themselves in an isolated position and competing with the Welsh, Northern Irish and Scottish governments for financial aid. This will run a risk of serious consequences, as Sterling would appear unstable to world-wide financial markets. To see that this would occur, you only need to remember the UK Treasury having to underwrite UK debt in order to reassure the financial markets in January 2014, or the strongly adverse reaction in the money markets of Alex Salmond’s hints that Scotland may not pay its share of the UK debt if denied Sterling. Internal financial arguments within the UK will inevitably impact on Sterling’s value in the money markets.

This is also partly because the smaller Devolved UK nations are loss-making, something that was confirmed in the House of Lords report 2009 when it discussed funding issues of the UK. It is also obvious to those who want to see it, that 85% of the UK’s taxpayers live in England and are the net contributors of tax revenue for the whole of the UK. What could lead to economic problems is the Treasury’s acceptance that it over funds Scotland, Wales and Northern Ireland due to the Barnett Formula whilst doing nothing to correct it. It is only Scotland who doesn’t want to accept this, laying claim to the majority of North Sea oil as this could allow them to spend without accountability. It is important that the English quickly find common ground, otherwise we will be entering a period of internal conflict and financial instability. That is why an English Parliament linked with decentralisation (based wherever the people of England decide) is the only way forward for the UK. It is the only rational, coherent and structured constitutional answer.