ABSTRACT
This chapter reviews the problems arising from the financial arrangements for Scotland's Parliament. Designing a suitable financial system for devolved government has been a recurring problem for constitutional reformers. Devolution has led to greater political attention being paid to Scottish expenditure, partly by Labour MPs in the north of England concerned at the Scottish advantage, and partly by Conservative MPs reacting to their 'Scottish problem', which they saw as reflecting the Scottish 'dependency culture'. In practice, the art of needs assessment requires a fine meshing of technical and political judgements, and needs models are capable of manipulation to deliver politically acceptable results. At the heart of the political argument is disagreement over the imbalances in Scotland's needs and resources, leading to conflict over the fiscal position. There can be no doubt that the political case for devolution rests on the prospect of more efficient and accountable government.
