Block grant

In a fiscal federal form of government, a block grant is a large sum of money granted by the national government to a regional government with only general provisions as to the way it is to be spent, in contrast to a categorical grant, which has stricter and specific provisions on the way it is to be spent.

The national debate in the US regarding the effectiveness of block grants has recently intensified as Congress decides whether to convert Medicaid to a block grant program.

Since devolution in the United Kingdom was implemented in the late 1990s, creating the Scottish Parliament, Welsh Assembly and the Northern Ireland Assembly, the devolved governments of Scotland, Wales and Northern Ireland have been funded by block grants from the government of the United Kingdom because only a relatively small percentage of the tax revenue is collected by the devolved governments. Westminster provides a block grant for Transport for London reflecting the expense of operating the London Underground and the fact the London Authority is unable to raise a Transport Levy on Council Tax unlike other metropolitan counties in the UK (Though since 2012 the Mayor of London’s Community Infrastructure Levy has been introduced allowing the Mayor to attach a levy on property development to serve a similar function).

Under the terms of the Scotland Act 2012, the block grant from the United Kingdom government to Scotland will be cut, but the Scottish Government will be able to collect an equivalent amount of income tax.

Since the 1970s, the United States government has provided large sums of money through block grants, under a policy that has come to be known as "devolutionary" or "New Federalism." Block grants replaced the previous policy of revenue sharing (1972–87).

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