In 1888 a system was inaugurated by which Grants in Aid of Local
Purposes have been made in the Three Kingdoms on the basis that England
should get 80 per cent., Scotland 11 per cent., and Ireland 9 per cent.,
when such subventions are given from the Imperial Exchequer. The
Legislation sanctioning this proportional allocation began with the
English Local Government Act of 1888, when Grants in Aid were made out
of the Probate Duties, and has been carried into several other Statutes
relating to England, Scotland and Ireland. These proportions have become
to a large extent stereotyped in the allocation of such grants. The new
basis of contribution was originated by Mr. Goschen and was stated by
him to depend upon the amount of the assumed contribution of each
country to the Revenue for Common purposes. The method of calculation,
he said, was a very complex one.[80]
It was pointed out at the time that under the new system the party that
would probably require the largest amount of the grant would be the
poorest country, and yet the richer country would get the larger
proportionate grants.[81] The method of segregation is as follows. The
Revenue and Expenditure Returns divide public expenditure into four
clauses: (a) "Imperial or Common Services," (b) "English Services," (c)
"Scottish Services," and (d) "Irish Services"; and having treated the
three latter as "local services" and charged the particular outlay on
them against each of the three countries, they estimate the balance left
in cash as "the Contribution" of England, Scotland and Ireland to the
"Imperial" Expenditure. It is admitted that this division is absolutely
arbitrary. It has no sanction by any Act of Parliament. It is opposed to
the system of Finance under the Act of Union. All the revenues of
England, Scotland or Ireland are contributed for "Common" purposes, and
in which all expenditure of any kind in any portion of the United
Kingdom is alike "Common" or "Imperial." The details of the division
were never disclosed, when the proportions were originally fixed. The
segregation of the services classified as "Imperial" is open to serious
objections. The method of computation is empirical and unconstitutional,
and if carried to its logical conclusion would now result in depriving
Ireland of any share whatever in future Equivalent grants, as her
contribution to the services thus classified as "Imperial" is
practically a minus quantity, though the revenue actually raised in
Ireland is much higher than it ever has been before. This method of
Distribution of Grants in Aid has been condemned by a succession of the
highest financial authorities. Lord Ritchie, as Chancellor of the
Exchequer, said, "he did not think it possible really to defend in all
its details distribution by contribution."[82]