The Politics of Central—Local Grants in Britain and France

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Abstract
Redistribution of resources through central–local government grant systems is justified as fiscal equalization, the subject of a substantial literature, underpinned by normative assumptions and a rational-synoptic model of the policy process. Goals are known and policy outcomes are measurable. In Britain and France, this approach is not helpful to understanding. Theories of fiscal equalization are problematic and inconsistent. There is no agreed territorial welfare function against which outcomes can be assessed. A politically based interpretation sees grant allocation as part of intergovernmental politics, in which conceptions of fiscal equalization are used largely for legitimation. Politics guides decisionmaking and the main test of policy applied by governments is political acceptability. The two cases of Britain and France do show important differences in intergovernmental politics. In France, change is incremental and negotiated. In Britain it is radical and unilateral, though outcomes often fall short of expectations as policy is modified in implementation.

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