A Time of Magic

One of the increasing problems for the UK government is the fact that large chunks of what were formerly nationwide financial decisions have been devolved to the regional governments which make for some peculiarities that are most noticeable in these difficult times.

Thus we have the national government saying that they will ring-fence health and, largely, education spending. A fine aim for sure, but both of those budgets are devolved to the regional governments which causes problems because those governments are financed by what’s called the block grant – essentially a big cheque to cover all of their bills.

The effect of this is that those block grants are what will be reduced (by anything from 25% to 40%) and it will be up to the regional governments to distribute those reductions amongst the areas within their responsibility. Taking Northern Ireland as an example we find that health and education take up around 60% of the total budget so if they are ringfenced by the regional government and the cut were 40% then all other departments would need to be closed down which is hardly a runner. Even at 25% that would mean a 60% cut in the other departments. Thus ringfencing health and education is hardly going to be possible, no matter how desirable it might be in principle.

I think it’s safe to say that we can expect some extremely difficult decisions from the regional governments in the coming months.

Related posts:

1. Education gets a hammering too
2. Is seeing the country’s political leaders on TV actually worth it?
3. Just how hi-tech does education need to be?
4. What happened to copyright?
5. Banking magic: the Northern Rock

This entry was posted on Tuesday, July 6th, 2010 at 10:18 am and is filed under Finance. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.