4. DILEMMAS: THE CHALLENGE OF SUBSIDIARITY

Inevitably the Wilton Park conference generated more questions than answers, especially about how best to implement subsidiarity, a principle which urgently needed to be clarified. However, the conference did manage to highlight some of the key dilemmas of devolution in a multi-level polity. This section addresses five of these dilemmas, namely:

• Accountability;

• Inclusivity;

• Diversity;

• Co-ordination;

• Solidarity.

A multi-level polity of the kind that is emerging in the EU raises important questions about accountability: in short, who is accountable for what in a system which seems designed to allow 'buck passing'? In other words, in a system where responsibilities are either unclear or shared, it becomes ever more difficult to apportion credit and blame - not least because, as noted earlier, "success has many parents, while failure is an orphan". Many participants expressed the hope that the forthcoming EU White Paper on Governance, which is likely to be a key theme of Romano Prodi's presidency, would go some way to making the Union more accountable and more transparent. Equally if not more important for the future, however, was the decision of the Nice Summit to support the German-inspired idea of a catalogue of competences, which would more precisely define the rights and responsibilities of EU, national, regional and local levels - a clarification of subsidiarity in other words.

As was noted earlier, however, clarifying subsidiarity carries costs as well as benefits because the lack of clarity served a purpose - namely, it could mean anything one wanted it to mean, an ambiguity which allowed member states' different philosophies of political power to co-exist. The conference heard that there were at least two very different conceptions of subsidiarity on offer in the EU: on the one hand a narrow legal conception and, on the other, a broader political conception. Strictly speaking, the narrow legal conception is the conception which is embodied in the Treaties, and in this interpretation the principle of subsidiarity applies only to the relationship between the EU and Member States. In contrast, the broader political conception brings sub-national power relations into the equation, and in this interpretation the principle of subsidiarity applies to localities and regions as well as national governments and the EU. The conference heard that it was up to each Member State to decide whether and how subsidiarity should be applied at the sub-national level. Further clarification could expose major differences among the Member States, pitting centralised states against federal states.

One of the recurrent themes of the conference was the desperate need for greater inclusivity in the EU, so that citizens were not only part of the process, but felt themselves to be a part of it. This problem of the alienated or disconnected citizen, which is a problem for each and every Member State, is even more acute at the supra-national level because EU institutions seem so much more remote to the ordinary citizen. There were some encouraging signs at the Nice Summit that this problem was beginning to be acknowledged at last. In a declaration to be included with the Treaty of Nice the heads of government said that the EU needed to increase its democratic legitimacy and transparency and they stressed that all interested parties - including representatives of civil society - should be involved in the preparations for the next conference in 2004, when the governance of the Union will be clarified. If the EU fails to achieve greater inclusivity then, in the view of many participants, its future cannot be assured.

The debate on the Committee of the Regions revealed one thing above all others, namely the extraordinary diversity of the sub-national level in the EU. Although cultural diversity was invariably seen as an asset, something to be valued and nurtured for its own sake, the diversity of powers, competences and resources at local and regional levels also created problems - for example, it was difficult to make general statements about rights and responsibilities at the sub-national level when local and regional structures were so diverse. As the Committee of the Regions prepares to take on more members, it will face an even greater challenge in speaking with a single voice because enlargement will create a degree of diversity hitherto unknown in the EU.

A multi-level polity presents difficult co-ordination problems with respect to both vertical and horizontal co-ordination. As regards the vertical dimension (which embraces EU, national, regional and local levels) there is a temptation to think in purely hierarchical terms, with the result that supra-national and national levels are assigned the strategic issues of design, while the sub-national levels are given the more prosaic issues of delivery. This hierarchical division of labour is becoming less and less sustainable, not least because the separation of design and delivery is not a good recipe for effective public policy; and furthermore, sub-national actors cannot be expected to have ownership of, or commitment to, a policy which has not tried to utilise their local knowledge. Some of the most innovative and effective policies, by way of contrast, seek to harness the energies of 'regional experimentalism', where regions become laboratories of development in which regional actors learn to find joint solutions to common problems (Henderson and Morgan: 2001).

But 'regional experimentalism' presupposes some real devolution of power, and there are at least two major barriers facing this form of subsidiarity: namely 'top-down' barriers, like the reluctance of power-holders to relinquish power; and 'bottom-up' barriers, like the competence of regions to perform the tasks devolved to them.

The horizontal dimension raises the issue of 'joined-up' government, as it is called in the UK, which is a good description of the problem of co-ordinating formally separate but functionally integrated policy spheres - for example, a community regeneration programme will need to embrace employment, education, health, housing, social services and transport in a 'joined-up' fashion if it is to stand a chance of success. Bringing these spheres together in an integrated fashion is rendered difficult by departmental reporting lines, separate budgets and professional cultures to name but three elements.

Policy co-ordination, whether of the vertical or horizontal variety, is very time-consuming, especially in federal countries, where the regions are more empowered than in unitary states. For example, German experience testifies to the huge transaction costs involved in forging common positions. It takes enormous energy to co-ordinate the German position inside the country, more than in putting it across to Brussels. Far from being a purely technical exercise, policy co-ordination requires what we might call 'statecraft skills', a repertoire in which trust and inter-personal skills are as important as technical expertise.

The final dilemma to be addressed here is perhaps the most significant of all - that is the tension between subsidiarity and solidarity, a shorthand for social and spatial equality. As we have seen, the growth of regionalism could pose a major challenge to existing nation states in the EU, especially as regards the territorial distribution of resources. Three examples from the conference will serve to highlight the problem:

• the three most prosperous Lander in Germany (Bavaria, Hesse and Baden-Wurttemberg) have taken the Federal government to the Constitutional Court, claiming that they are being penalised and de-motivated by the workings of the inter-state equalization system. The Court has ruled that a new equalization law must go into effect at the end of 2004 at the latest, otherwise the whole equalization system would be unconstitutional and therefore null and void;

• the three most prosperous Lander in Germany (Bavaria, Hesse and Baden-Wurttemberg) have taken the Federal government to the Constitutional Court, claiming that they are being penalised and de-motivated by the workings of the inter-state equalization system. The Court has ruled that a new equalization law must go into effect at the end of 2004 at the latest, otherwise the whole equalization system would be unconstitutional and therefore null and void; the most prosperous region in Belgium, Flanders, is seeking to reduce its contributions to its poorer neighbour, Wallonia, a process which could eventually lead to the break-up of Belgium as a nation state. This might encourage other prosperous regions in the EU to follow suit - a very disturbing prospect from a solidarity standpoint;

• Giancarlo Galan, the president of Veneto, one of Italy's most prosperous regions, has announced that he wants to retain 66% of all tax revenues raised in the region and take control of health, education, immigration, law and order and, most extraordinary of all, foreign policy! If the centre-right coalition of Silvio Berlusconi wins the forthcoming general election, Italy could witness a significant devolution of power to the regions - but under a centre-right programme in which subsidiarity is promoted at the expense of solidarity. the most prosperous region in Belgium, Flanders, is seeking to reduce its contributions to its poorer neighbour, Wallonia, a process which could eventually lead to the break-up of Belgium as a nation state. This might encourage other prosperous regions in the EU to follow suit - a very disturbing prospect from a solidarity standpoint;

With notable exceptions (like the Structural Funds and the Cohesion Fund for example), the mechanisms for re-distributing resources in the EU are largely national mechanisms - hence the celebrated line that 'solidarity in the Union begins at home' (European Commission, 1996). This was a reference to the fact that Member State policies are the main instruments for achieving cohesion: for example, public spending accounts for between 40-60% of national GDP, whereas the EU budget accounts for less than 2% of Union GDP.

One of the unintended consequences of devolution is that it renders the territorial distribution of resources more transparent compared to a unitary state system, and this creates new tensions, not least between rich and poor regions. There was a sharp awareness at the Wilton Park conference that the tension between subsidiarity and solidarity - between democracy and equality - was the most challenging dilemma facing the EU. The challenge, in other words, is to strike a judicious balance between democracy (the right to vary standards according to local wishes on the one hand) and equality (the right to equal provision of services throughout the country on the other). This age-old tension is now being fuelled by the growth of regionalism, with 'democrats' championing regional autonomy and 'egalitarians' in favour of more central control. If subsidiarity and solidarity are deemed to be equally important, as most participants seemed to believe, then the holy grail of democratic devolution might be defined as 'equality in diversity' (Morgan: 2001).

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