Thesis (LL. M.)--University of Toronto, 2004. / Adviser: Kent Roach.

The creation of the National Assembly for Wales and the Scottish Parliament in 1999 was accompanied with an aspiration that these new institutions would allow Scotland and Wales to develop their own policies, better suited to local needs than those designed in Westminster or Whitehall. This thesis explores policy-making in the first terms of the devolved institutions in Scotland and Wales, focusing on where the policies developed by these institutions diverged from those pursued at Westminster. Policy divergence is examined by studying the development of the financing long-term care for the elderly policies. The aim of this thesis is to identify why policy divergence occurred in the long-term care case, considering the impact of actors (or agents) and the institutional setting in which they operate, as suggested by Scharpf's model of actor-centred institutionalism. As actor-centred institutionalism suggested, both actors and institutions played a major role in shaping policy responses. In the Scottish case a range of actors cooperated and lobbied together for the introduction of free personal care, spurred on by the First Minister, who created an opportunity for those in favour of free personal care to pressurise his government to introduce the policy. In contrast, in Wales, actors were divided and never built up the same momentum to ensure the introduction of a more generous long-term care package. The institutional setting in which these actors operated was a major factor in shaping their policy preferences and the strategies they adopted to achieve them. This thesis considers the impact on policy-making of the devolved institution's electoral system, financial and legislative powers, design of the institutions, and the place of these institutions in a UK setting. The different institutional structures in Scotland and Wales provided different incentives and resources for actors, encouraged different styles of policy-making from Westminster and affected the way in which issues were framed. Examining the roles of actors and institutions in the formation of distinctive policies highlighted that in the real world these two elements are mutually dependent and cannot be separated. As a result it is impossible, and pointless, to determine whether actors or institutions were most influential on the development of distinctive policies. Instead this thesis explores how the difference between the configurations of actors and institutions in Scotland and Wales contributed to the creation of policies which were distinctive both from each other and the UK Government.

The UK, traditionally one of the more fiscally centralised of OECD countries, is currently in the midst of an extensive programme of tax decentralisation. This is most evident in Scotland. Ten years ago the Scottish Government was almost wholly reliant on a block grant from the UK Government to fund its spending, and debate was focussed on how the determination of this grant should be reformed. Today the Scottish Government has far greater fiscal autonomy. Income tax was almost fully devolved to the Scottish Parliament in April 2017, and around half of VAT revenues will be assigned to Scotland by 2020. As a result, the devolved Scottish budget will in future be linked much more closely to Scotland’s economy, and Scottish politicians will be able to deviate from UK policy on the setting of income tax and various smaller taxes. The objective of this PhD is to examine the economic and political motivations for and implications of greater fiscal decentralisation, with a particular focus on the Scottish case. Its key over-arching questions include: • Which fiscal powers are more and less suitable for decentralisation, and what might constraints might a devolved government face in exercising devolved tax powers? • To what extent are the objectives of fiscal decentralisation compatible with the goal of inter-regional equity in public good provision? • To what extent is fiscal decentralisation likely to enhance the incentives faced by politicians in a devolved parliament to pursue particular types of policy? And to what extent does the answer to this question depend upon the way in which supporting fiscal institutions, notably including the design of block grant arrangements, influence this? • What factors determine regional economic performance, and to what extent can devolved governments be held accountable for (or face the budgetary consequences of) those trends? • To what extent might fiscal decentralisation assuage or accentuate demands for Scottish independence? This PhD consists of four academic papers covering aspects of regional economics and constitutional change in the UK, with a particular focus on Scotland. Each of the four papers is preceded by an abstract. An introductory chapter provides theoretical and policy context within which the four papers are situated. A concluding section to the PhD is provided in Chapter 6. The four papers cover the following topics: • Paper 1 (Chapter 2) was published in the immediate aftermath of the Scottish independence referendum of 2014, and considers the issues and constraints involved in devolving further fiscal powers to the Scottish Parliament. • Paper 2 (Chapter 3) considers the scope for replacing the Barnett Formula (used to allocate funding to the Scottish Government) with a form of spending-needs assessment, based on a comparative analysis of formulae used within England and Scotland to allocate health funding to territorial health boards. • Paper 3 (Chapter 4) examines how regional labour markets in the UK responded to the 2008/9 recession and its aftermath, and considers which factors may have influenced regional resilience to the recession. • Paper 4 (Chapter 5) examines the factors that determine differential growth in regional income tax revenues, and considers the extent to which it is reasonable to hold devolved governments wholly to account for differential economic performance. • Chapter 6 concludes.