The Strathclyde Commission report

The Scottish Conservatives have today published the report of the Strathclyde Commission, their review of how Scottish devolution should change if there is a No vote in the September referendum. I’ve been an adviser to the commission since it was set up, and it has been a great pleasure to advise Lord Strathclyde and his fellow commissioners, and the party more generally, and to help them consider what can (and what cannot, or cannot sensibly) be done by way of enhancing devolution.

The report recommends the devolution of income tax, including the power to set the rates and thresholds between bands, as well as some smaller taxes, and to look at assigning a proportion of the proceeds of VAT.  It also proposes devolution of attendance allowance, housing benefit if that is possible given the Universal Credit, and a general devolved power to supplement UK-level welfare.

The report is available from the Scottish Conservatives’ website here. Their press statement about the report is here, and Ruth Davidson’s article for Scotland on Sunday on the plans is here.  Sunday’s Telegraph trail for it (pretty well informed) is here.

The impact of the work I’ve been doing with Guy Lodge in the IPPR’s Devo More project is palpable in the Strathclyde proposals. This is clearly a model for enhanced devolution and – as I argued in my chapter for the IPPR’s book Democracy in Britain – works from the point of view of all three major political traditions, with some variations.

Those interested in the effect of the Strathclyde proposals may find it useful to look at two tables I’ve prepared.  These can be downloaded HERE. Table 1 shows how much of the Scottish Government’s budget would come from devolving the various taxes considered in the report, without any change to its current functions. Table 2 shows the proportion of its budget it would generate from tax revenues if the measures of welfare devolution that it contemplates also took place. In the case of tax revenues, it assumes that Scottish tax levels of devolved taxes would remain the same as those set by the UK Government, so in that sense it should be regarded as an assessment of fiscal capacity rather than a straightforward amount of money. The assumption that 10 points of VAT (rather than some other figure) is mine, and made mainly as that is the figure used in Funding Devo More which involved some complicated arithmetic given changing rates of VAT between 2007 and 2010.

UPDATE: There’s news coverage from BBC News here, and a Guardian liveblog (quoting this post!) here.  The Guardian news story is here, a blog post by Severin Carrell here, the FT‘s are here and here (note: registration/paywall), and the Telegraph’s (emphasising David Cameron’s support) here.

 

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Filed under Conservatives, Publications and projects, Scotland

‘Devo More’ seminar in Cardiff, 11 June 2013

I’m giving a seminar on Devo More and what it would mean for Wales in Cardiff on the morning of Wednesday 11 June. The full title is ‘Devo More: How fiscal and welfare devolution can benefit Wales and strengthen the Union’, and it is part of the UK Changing Union programme based by the Wales Governance Centre at Cardiff University, under the aegis of the National Assembly’s Cross Party Group on the Changing Union. (Those who haven’t seen them can find the Devo More and Welfare paper here, and Funding Devo More here.)
The seminar will take place at 8.30 am in conference room 24 in Tŷ Hywel, with tea, coffee and pastries provided. To book a place, please email info@ukchangingunion.org.uk.

UPDATE, 12 June: The slides from Tuesday’s talk are now available HERE.

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Guardian ‘Comment is Free’ piece on ‘What happens after a Scottish independence Yes vote?’

Drawing on my Belfast lecture, I’ve a piece in the Guardian‘s ‘Comment is Free’ section on what would happen following a Yes vote in September’s Scottish independence referendum.  I argue that the difficulties with a long transition are very great indeed, and that there are compelling reasons to ensure Scotland becomes independent by the time of the May 2015 UK general election if there is a Yes vote.  That  would be formidably difficult – not only are there are tough and complicated issues to be negotiated and resolved  between the governments, but also legislation needs to be passed by both Scottish and UK Parliaments (and the UK Government would need to pass a paving bill too).  But the problems caused by a longer transition are even more formidable, in my view.

The CiF piece can be found here.

 

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Filed under Implications of Scottish independence, Publications and projects, Referendums, Scotland, Scottish independence, Westminster, Whitehall

Lecture in Belfast on what happens after the Scottish referendum

I’m giving a public lecture at the University of Ulster’s Belfast campus on 15 May, on what happens following September’s Scottish referendum.  It will take place in the Conor Lecture Theatre at 5 pm.  The poster, with more details, can be downloaded here.  Please email Zoë Lennon on z.lennon@ulster.ac.uk to confirm your attendance if you’d like to come.

 

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Unlocking the lockstep?

There are interesting changes to the ‘Calman’ model of income tax in the Wales bill (which had its Commons second reading on Monday) and the Finance bill (which had its Commons second reading on Tuesday).

The ‘Calman’ model applies a ‘lockstep’ to the devolved income tax rate, which has to be the same for all three tax bands (basic, higher and additional or 45 per cent). That rate can be 0 per cent, 10 per cent (as it is at present) or some other figure but it must be the same for all three bands – so if the devolved rate were nine per cent, you would have tax rates of 19, 39 and 44 per cent. While this question did not attract particular attention when the Scotland Act 2012 was going through the UK and Scottish Parliaments, it has been controversial in Wales. It was not recommended by either the Holtham or Silk Commissions, and has attracted criticism from the Commons Welsh Affairs Committee, the First Minister (who called the power with the lockstep ‘pretty useless’) and the Plaid Cymru and Welsh Conservative leaders.

The provisions in the Wales bill mark a change from the draft bill published before Christmas. Instead of providing for a single ‘Welsh rate of income tax’ across all three bands, the key operational clause now provides for Welsh basic, higher and additional rates and defines each of them separately (see clause 9 of the bill). Clause 289 and Schedule 34 of the Finance (No 2) bill make similar changes to the finance provisions of the Scotland Act 2012. (Both bills also provide for beefed-up arrangements for reports on devolved tax powers by the Comptroller and Auditor General, something that was conspicuously missing from the Scotland bill.)

The substantive policy behind the devolved rate of tax remains the same; the lockstep is still in place, and UK Government policy backs it strongly. But this change creates the legal basis for having different rates of tax for each band, if that policy decision were taken later, by altering the rule regarding what a ‘Welsh’ (or ‘Scottish’) ‘rate resolution’ would be.

The application to Scotland appears to be an inversion of the position that ‘Wales gets what Scotland gets’, which is apparent throughout the finance provisions of the Wales bill. Since what Scotland has is proving politically very difficult in a Welsh context, creating a framework for a possible different approach is an interesting move. In the light of ongoing debates about fiscal devolution to Scotland, though, including the Scottish Labour Party’s proposals to increase the devolved rate of income tax from 10 to 15 points and to allow the Scottish Parliament to vary higher and additional rates upward, there are obvious potential uses on the table in Scotland as well.

UPDATE: There’s coverage of this issue – quoting me extensively – here, which appeared on the front page of Wednesday’s Scotsman, and a cartoon and comment, here.  It’s interesting to note a firm denial of the idea that there is any plan to break the lockstep from HM Treasury, reported in the Scotsman story.  Ben Riley-Smith of the Telegraph has also tweeted a denial from No. 10.  I don’t doubt the policy remains to maintain the lockstep, but also that this creates a smoother path to break it if the policy were to change.

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Devo More and Welfare

Our paper on devolving welfare, snappily entitled Devo More and Welfare, is now available on the IPPR website here.

Our concern in making these proposals has been to formulate workable proposals which preserve important parts of the UK and its ‘social union’ as it presently is. There’s a lot of material in the paper discussing this, and why risk-sharing at a UK level is in the interests of all parts of the UK.  Constraints also arise from the existing pattern of welfare spending and the structures that support that – the role of the National Insurance fund when it comes to contributory benefits, for example.  However, we think it would be wrong to treat that social union as rigid; sharing risks for big things like old age or unemployment doesn’t mean other things can’t and shouldn’t be changed.  We argue for recognition of the role of devolved governments when it comes to providing welfare benefits, bearing in mind the large role they already play in providing public services that are part of the welfare state – an approach we call ‘welfare pluralism’.

We endorse, broadly, changes in three areas.  First, housing benefit should be devolved, given how closely it is linked to the devolved function of social housing. This would enable devolved governments to improve housing policy, by joining up housing benefit with already-devolved functions, and giving them more flexibility in how they invest in providing social housing.

Second, we support devolution of functions where this will improve social investment.  This applies to two areas in particular: the Work Programme and welfare-to-work, and childcare.  Devolving the Work Programme would involve a form of executive devolution, with Job Seekers Allowance and Employment Support Allowance remaining paid on a UK-wide basis. Childcare powers are already in devolved hands; the question is how that should be funded, and here fiscal devolution (as we recommended in Funding Devo More) addresses the problem.  Devolving the childcare element of the Working Tax Credit would support this.

Third, we support a power for devolved governments to supplement UK level welfare, and removing existing legal restrictions on devolved governments providing cash benefits, provided they do so within devolved resources.  This would certainly simplify action like that taken by the Scottish Parliament to redress the ‘bedroom tax’/spare room subsidy, and would enable a much wider range of possibilities for devolved governments that wished to undertake them.

Welfare devolution should not simply be about handing over more powers to devolved governments.  It is about improving how devolution works, but even more importantly about improving social outcomes across the UK.  This can produce benefits for all; it is about a win-win game not ‘making concessions’.  It is also for all devolved governments; what we propose would be as applicable in Wales and Northern Ireland as in Scotland.  It is also, importantly, about responsibility; in particular, we argue that fiscal devolution is a necessary prerequisite before devolution of welfare functions can take place.

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‘Devo More and Welfare’ in ‘Scotland on Sunday’

The paper Guy Lodge and I have written on Devo More and Welfare as part of the wider Devo More project is published on Tuesday.   There’s extensive coverage of it in today’s Scotland on Sunday to whom we’ve given a preview of the paper, including a news article here and a comment piece by Guy and me here.

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Filed under Northern Ireland, Policy issues, Publications and projects, Scotland, Wales