The United Kingdom is in the process of becoming a near-federal country.
The new taxation powers to be given to Scotland’s government will make it one of the most devolved sub-national governments in Europe. With powers over income tax and control over most domestic expenditure, the Scots will be more like a German or American state than any elected governmental institution hitherto seen within the UK.
Scotland is only part of the story. Wales is also to be given enhanced powers, possibly including control over income tax. It is likely that such substantive changes will lead to pressure to reform the Barnett formula which automatically sustains the relationship between public spending in England and other parts of the UK.
Scotland’s first minister wants an end to austerity. It will be impossible to deliver such an outcome if there are no changes to the Barnett formula.
England is seeing the first signs of limited devolution to city regions. The chancellor has reaffirmed his commitment to the Greater Manchester agreement and has made it clear other cities can achieve similar freedoms if they sign up to a directly elected mayor.
The proposed cities devolution bill will allow MPs to put down amendments to push for a more comprehensive settlement to pass powers from the centre to major cities.
Without radical change within England there is a risk of English resentment about devolutionary reforms in Scotland and Wales. The continuing pressure to reduce local government expenditure opens up the possibility the new government could transfer control over large parts of public expenditure to city regions and other sub-national units in England.
We know from the period 2010 to 2015 that local authorities can manage the contraction of spending far more effectively than other parts of the public sector. If the Treasury could transfer health, education and welfare funding to localities, there would be opportunities for spectacular efficiencies. Of course, Whitehall would fight such reform.
There will also have to be some kind of constitutional settlement. The UK cannot limp along with endless ad hoc changes to the machinery of sub-national government without a route map.
We will soon need a constitutional court. Indeed, near-federal countries require near-constitutions.
Tony Travers, director, Greater London Group, London School of Economics