Peers said there must be more formal processes for liaison between London and Edinburgh and Cardiff if devolution is to continue to work when different political parties are in power in the three capitals.
The proposal for consultations with the devolved administrations about macro-economic and fiscal policy, before decisions are made by the UK government, ignored the tradition that not even the cabinet are ‘consulted’ and are only told of the content of the Budget at a meeting a few hours before it is delivered.
Peers also urged that an independent Devolution Finance Commission be set up to rule on disagreements over whether extra resources are needed to deal with shocks which disproportionately affect the economies of the devolved administrations – like the crisis in the fishing industry caused by conservation measures being imposed by Brussels to conserve cod stocks which hit Scottish fishermen harder than others.
They want such decisions taken out of the hands of the Treasury.
And they urged an independent review of the Barnett Formula, named after former Labour chief secretary Lord Barnett, which determines the Scottish and Welsh shares of public expenditure.
Brown and the government have six months in which to respond.
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