COVID and the UK nations' fiscal frameworks: impacts, performance and lessons

Lead Research Organisation: University of Strathclyde
Department Name: Economics

Abstract

The UK's devolved governments (UKDGs) are responsible for much of the COVID-19 response for 10.5 million people. But they have raised concerns that the funding frameworks in which they operate are constraining their ability to respond effectively, putting vital public services and recovery at risk.

The devolved governments' funding frameworks and settlements have been tested by the COVID-19 pandemic in a way which was never envisaged. But if the funding frameworks are to be effective, they need to be robust to shocks. There is thus both a key opportunity and a vital need to assess performance, identify any pressure points, and develop beneficial reforms.

This project aims to examine these issues by examining the following two objectives:

First, to examine whether the existing fiscal frameworks are sufficiently robust to enable the UKDGs to effectively plan and deliver their responses to the COVID-19 crisis and support recovery.

Second, to appraise options for redesign of those fiscal frameworks to make them more appropriate and effective.

The outcomes of the work will inform a planned review of Scotland's Fiscal Framework to take place later in 2021, and a newly established Fiscal Commission in Northern Ireland which will examine the scope for further fiscal devolution to Northern Ireland. The project will also inform ongoing public debate around fiscal devolution and the fiscal responsibilities of the devolved governments, in the context of the upcoming elections to the devolved legislatures.

The outcomes of the project will help ensure that the UKDGs have the appropriate fiscal resources and tools to respond to the ongoing effects of the crisis and support recovery in 2021 and beyond, and ensure learning from the COVID crisis, making fiscal frameworks more robust in future.

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