Economic Affairs Committee — hearing of 16 June 2026: transcript & video

00:07 - 01:36

Speaker 1

Welcome to this evidence session in our Lords Economic Affairs Committee inquiry into fiscal devolution in England. And we're delighted in today's session we're going to hear from four experts on this issue with international case study expertise. If I can briefly introduce Dr. Sean Dougherty, a senior advisor at the OECD, Dr. Sandra León, who is a research scientist at the Institute of Public Goods and Policies at the Spanish National Research Council, Dr. Johanna Schnabel, a researcher at the Free University in Berlin, and Professor Alain Trannoy, who's research director at the School for Advanced Studies in the Social Sciences. We're really grateful for your time. We're going to take a transcript of the session and we will pass it on to you soon afterwards so you can make any factual corrections.

So let me start with a general question, and perhaps I'll start with directing this at Sean from the OECD to start with. What exactly is the evidence for fiscal devolution's tendency to actually produce positive economic outcomes to support economic growth? And how confident can we be that fiscal devolution does result in better economic outcomes and higher levels of growth? Sean, over to you.

01:36 - 03:12

Speaker 4

Well, thank you very much, Chair. I think it's a pleasure to be here and I think it's a very important fundamental question, although I would have to say that it's not usually the main motivation for decentralization. Decentralization's often more motivated by political devolution of responsibility to the appropriate level of government in accordance with even democratic principles. But that said, it can definitely support growth. It doesn't automatically cause it per se.

In a well-designed system with an appropriate degree of decentralization and alignment of responsibilities and resources and support, it can also support good quality public service delivery, public investment, responsiveness, and regional development. The causal evidence I think is interesting. We do have some, specifically in the area of healthcare, where we find an appropriate degree of decentralization can help to promote lower costs and higher quality, but an excess degree of decentralization, and that really means excess, can sometimes lead to fragmentation of responsibilities and worse outcomes. But just to be a little bit more concrete, and I'll try to be brief here, you know, some countries find really quite balanced roles. I mean, Switzerland, Canada, the Nordic countries often I would say cited quite clearly that an appropriate degree of decentralization where revenue responsibilities are appropriately decentralized at the right level of government where the service delivery takes place can often lead to a really high quality outcomes in terms of service delivery and high quality value of services.

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