A CRITIQUE OF A DEFENCE OF EQUALISING GRANTS TO LOCAL AUTHORITIES*
| Date | 01 February 1982 |
| Published date | 01 February 1982 |
| DOI | http://doi.org/10.1111/j.1467-9485.1982.tb00441.x |
| Author | Neville Topham,Richard R. Barnett |
Scottish
JournoloJPnliticel
Economy,
Vol.
29,
No.
1,
February 1982
0
1982
Scottish Economic Society
0036
9292/82/000900(30(1$02
00
A CRITIQUE OF
A
DEFENCE
OF
EQUALISING
GRANTS
TO
LOCAL AUTHORITIES*
RICHARD R. BARNETT
AND
NEVILLE TOPHAM
University
of’
York
and
University
of
Salford
I
INTRODUCTION
Some of our comments on an earlier draft of King’s paper have been
superseded by his subsequent revisions. We welcome this opportunity to
respond to his remaining arguments.
The plan of this note is as follows. Firstly we make some brief general points
about the nature of Barnett and Topham
(1980).
Then we respond to each of
King’s points as they relate to the three main sections of our paper on
equalising grants to local government
:
the short-run impact within com-
munities, the medium term impact across communities, and the long-run
incidence of the grant.
I1
GENERAL
POINTS
Central to our paper is the simple belief that horizontal equity can only be
defined meaningfully in a whole-budget sense. Consequently it is our opinion
that both the benefit and taxation sides of the fiscal account must be analysed
simultaneously in this exercise. Previously we argued
:
Concentration on the tax paid for a given level of service ignores willingness
to pay for the good whose provision the tax finances.
.
.
(p.
236).
With this belief in mind, we sought to examine equalising grants from central
to local government of the DPE type;’ in particular, we sought to establish the
nature of the economic forces that such grants generate. We found an
adaptation of the Aaron and McGuire
(1970)
analysis
to
be a useful
modus
*Thanks are due to an anonymous referee
for
comments on an earlier draft of this note.
’
A
DPE --District Power Equalising-component, in the form
of
the Resources Element, has
for some time been included in the grant system as operated in Britain. The system has never,
however, been fully equalising. The DPE element is
to
some extent now becoming lost in the
muddied water of the new Block Grant arrangements. See
HMSO
(1979
and
1980).
Date
of
receipt
of
final manuscript:
20
November
1981.
111
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