Public Finance in an Asymmetric Union
In both the 1707 and 1800 Unions, a poor country was joined to a rich one, therefore the tax potential per head in the expanded Union declined. However, until the 1880s, governments spent money mostly on public goods, which did not raise the issue that taxes were raised in rich areas and spent in poor ones. Distributive politics of this sort began when governments started to spend money on schools and crofters — the 1870s and 1880s. The first public spending formula for the territories is due to Chancellor George Goschen in 1888. The formula that is current (although under great strain) was devised by Chief Secretary Joel Barnett and his officials in 1978.
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