THE POLITICS OF CENTRAL-LOCAL GRANTS IN BRITAIN AND FRANCE

Redistribution of resources through central-local government grant sys tems is justified as fiscal equalization, the subject of a substantial literature, underpinned by normative assumptions and a rational-synop tic model of the policy process. Goals are known and policy outcomes a re measurable. In Britain and France, this approach is not helpful to understanding. Theories of fiscal equalization are problematic and inc onsistent. There is no agreed territorial welfare function against whi ch outcomes can be assessed. A politically based interpretation sees g rant allocation as part of intergovernmental politics, in which concep tions of fiscal equalization are used largely for legitimation. Politi cs guides decisionmaking and the main test of policy applied by govern ments is political acceptability. The two cases of Britain and France do show important differences in intergovernmental politics. In France , change is incremental and negotiated. In Britain it is radical and u nilateral, though outcomes often fall short of expectations as policy is modified in implementation.