Unintended Consequences

Over three centuries of muddle, messy compromise and financial mismanagement.

Winston Churchill and a donkey loaded with taxes, by Bernard Partridge, 1920s © Bridgeman Images.

My first reaction on finishing this book was despair, not at the quality of writing and analysis – both very high – but at the tale that it tells. The history of financial relationships between the four nations of the United Kingdom is one of over three centuries of muddle, messy compromise and unintended consequences. Hoppit does not mince his words, writing of the outcome as a crazy patchwork of governance; devolution under Blair was a ‘terrible muddle’ which has produced an unprecedented – within Europe – transfer of powers without satisfying the Scottish National Party. Meanwhile Margaret Thatcher’s distrust of local government, aped by her successors in the Tory party, has resulted in England becoming the most centralised state in Europe. English nationalism has produced Brexit and, potentially, the break-up of the United Kingdom. 

How did it all happen? At the core of Hoppit’s story are the union with Scotland in 1707 and with Ireland in 1801, while the much earlier conquest of Wales and the division of Ireland in 1923 play a subsidiary role. Both unions attempted to graft countries with different religions, tax-gathering systems and, above all, economies onto the much larger, more populous and richer ‘Dreadful Monster’ – in Hoppit’s rather whimsical title – of England. Meanwhile neither union had anything to say about what has frequently been seen as an alternative monster, the overwhelming power of London. Fitful and slowly changing arrangements for the integration of Ireland and Scotland within the Union were not accompanied by consistent attempts to deal with economic and social differences within England. Local government was allowed to grow in the late Victorian period and to wither a century later, but on the basis of ancient county boundaries and ad hoc arrangements for the growing towns rather than any clear recognition of English regions or of the profound differences between them. Now we have the hand-waving of ‘levelling up’. 

Tax policy and expenditure were described by an ever-changing list of fashionable watchwords, all of them ambiguous and disputable – equity, equality, efficiency, economy, need, rights. As Hoppit points out, industrialisation and de-industrialisation have waxed and waned in different areas of Britain at different times, so that a rigid adherence to equality – in the collection of excise taxes or in the allocation of public goods, for example – bore down more heavily on one part of the country than on another. Political commentators and lobbyists were not slow to point this out, of course, and the result was that jockeying for position took centre stage, such as in Cabinet discussions. To try to avoid this, the Goschen ratios for apportioning expenditure between the nations were adopted in 1888 and applied until 1958. After a hiatus they were then replaced by the current Barnett formula, but arguments have continued and exceptions and exemptions have always applied, as governments sought to appease public opinion in the different nations. The allocation of capital projects has been especially contentious, from the construction of the Caledonian canal between 1804 and 1822 to building aircraft carriers on the Clyde or the current expenditure on Crossrail under London.

At the heart of the problem is the British constitution, or lack of it. The concepts of parliamentary sovereignty and the royal prerogative can, in the hands of any government and particularly with an unscrupulous one, be used to justify virtually anything, including the breaking of international agreements and systems of allocation of public money which favour marginal constituencies held by the governing party. Hoppit rightly describes it as ‘a Heath Robinson contraption, over-elaborate, poorly engineered and steam driven’, which entirely ignores regional considerations and allows for arbitrary decisions. 

It is not surprising that Hoppit sometimes seems to lose his way in this minefield of self-interested decisions and unforeseen consequences. There are too many references to topics to be considered later, without a clear pointer to where that is to be, and several different attempts to define what the book is about. On the other hand, he copes very well with the complexities of the statistical information that is, or is not, available and manages to reduce it to a few well-designed tables and figures. One problem, however, is that he quotes money values from across a period of over 300 years without attempting to convert them to a modern equivalent. Few readers are likely to know the meaning of the £168,000 of revenue collected annually in Scotland in 1686-88, or even the £100 million lost in the collapse of the DeLorean car company in Northern Ireland in 1983. It is difficult to know what conversion to use, but even a rough guide would have been better than none. 

‘It is not for a historian to suggest what might be done to rectify this mess’, Hoppit states near the end of the book. This is a pity, as his research has given him an unrivalled understanding of the money problems that lie at the heart of much of the current, and past, discontents about the Union that he describes. He does suggest a solution to one muddle – the fact that only one third of the English live under combined authorities, with the others having to deal with a confusing pattern of county and district councils which create, he argues, a democratic deficit. I am not sure that I would start from there; the main effect so far of merging the district councils of Buckinghamshire last year into a single county council has been to create the largest body of councillors in the country. Perhaps it would be better to start at the top, with the equally bloated House of Lords and the first-past-the-post electoral system. But who knows what the consequences would be?

The Dreadful Monster and its Poor Relations: Taxing, Spending and the United Kingdom, 1707-2021
Julian Hoppit
Allen Lane 352pp £25


Roderick Floud is the author of An Economic History of the English Garden (Allen Lane, 2019).