Covid shows UK developed nations need funding flexibility, researchers say

Independent researchers conclude that the UK government should provide more access to funding to Scottish, Welsh and Northern Ireland governments that can help them respond to crises like the pandemic coronavirus outbreak, independent researchers have concluded.

The recommendations from researchers at the Institute for Fiscal Studies, the Fraser of Allander Institute of the University of Strathclyde and the School of Management at the University of Stirling come amid growing tensions over funding among the central government. and the central government of the United Kingdom.

Westminster grants to developed countries are calculated using the so-called “Barnett formula”, which is based on changes to UK spending levels and allows relatively high level public expenditure per capita in Scotland, Wales and Northern Ireland.

In their report published Tuesday, the independent researchers recommended that even in “normal” times, developed countries should be able to borrow more on their accounts.

In the event of “an extreme and rapidly moving adverse shock such as the Covid-19 pandemic”, a combination of funding guarantees and further expansion of the borrowing power of governments could be warranted. achievements, the report said.

This will ensure that policymaking is not delayed by waiting until funding is available through the Barnett formula, after policies are published for the UK, they write.

Developed nations, controlling their own health policies, throughout a pandemic are generally more willing to impose harsher coronavirus restrictions than Westminster.

But conscientious authorities have repeatedly complained that Treasury funding for costly programs, such as staff training programmes, is only possible when the UK government imposes restrictions in the UK. Brother.

“Our ability to provide and sustain longer-term economic support during this new wave of ongoing public health emergency is severely limited by the current position of the Treasury Department. the United Kingdom,” Mark Drakeford, First Minister of Wales, said on Friday.

The UK Treasury on Sunday said it was doubled to £860m Additional Covid funding for Edinburgh, Cardiff and Belfast. But this amount will have to be repaid if UK government spending in the UK before the end of the financial year does not increase by the same rate.

Kate Forbes, Scotland’s finance secretary, dismissed the Treasury’s announcement as mere “confirmation” of the funding.

“We have no way of generating huge new funds overnight without [the UK government],” Forbes tweeted on Monday.

David Phillips, deputy director of IFS and co-author of the report, said the UK government had granted funding guarantees to the administrative authorities last year, while other countries had stepped up their powers. loans to areas devastated during the pandemic.

“With the Omicron variant of the coronavirus spreading across the UK, it is important to draw lessons from previous pandemics for development governments funding arrangements,” said Phillips. speak.

David Eiser of the Fraser of Allander Institute, another author, said borrowing limits for developed countries could be relaxed without any “meaningful risk” to targets. UK overall fiscal.

“Currently, development governments cannot borrow to finance discretionary resource spending. There is a strong case for changing this often to give them additional flexibility to respond to unforeseen events,” said Eiser.

When asked about the report, the Treasury said Covid was worth £400 billion support packages supported people, businesses and public services “in all parts of the UK”.

“The UK Government has worked closely with the administrative authorities that have dealt with this throughout the pandemic and continues to do so,” the Treasury said, adding that A review of the Scottish government’s “fiscal framework” will take place next year.

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