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Following the Scottish referendum, Mark Littlewood examines the potential of devolution and suggests that much government expenditure, including arts funding, should be handed over “hook, line and sinker” to the constituent parts of the UK.

If necessity is the mother of invention, politicians of all stripes will have to be spectacularly inventive in dealing with the fallout from the Scottish referendum result. And we may yet stumble upon a new constitutional settlement that will go some way to encouraging both innovation and constraint in the bloated public sector both north and south of the border.

Such an outcome would be remarkable given the depressing, big government, high spending narrative that was deployed by both sides in the referendum. A casual observer may well have concluded that the only economic issue facing Scotland was how to spend the supposedly vast resources at the nation’s disposal. The nationalists barely deigned to acknowledge that wealth generation in an independent Scotland would be a challenge at all – simply splurging more imaginary money on state-run health, education and welfare would be an automatic consequence of separation. The unionists proudly declared that state spending per person in Scotland was measurably higher than elsewhere in the UK – as if achieving colossal levels of government expenditure was somehow the mark of a successful, dynamic and efficient economy... Keep reading on City A.M.