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.
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.
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 email@example.com to confirm your attendance if you’d like to come.
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.
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.
The UK Government has now taken to using publicly a clear line about the independence referendum. A Yes vote, and Scottish independence, will lead to Scotland leaving the United Kingdom (despite semantic objections from the Yes side). That means an independent Scotland will also cease to be part of UK institutions. It can’t expect to be able to maintain participation in such bodies as the Bank of England (as emphasised by the row over currency union), the BBC (illustrated by Maria Miller’s comments in Oxford), and others. The European Union is another of these. Lord Wallace’s impending speech makes the point vividly clear. Expect to see the research councils added to the list over the coming weeks, as another body where an ‘independent’ Scotland would seek to share arrangements with rUK. There may be some hard choices to be made about a common travel area and its security implications. The ground for both of those has already been laid in the Scotland Analysis papers. And expect arguments about such detailed matters as the organ transplant ‘pool’, which currently operates on a UK-wide basis.
None of this should be a surprise. It’s been implicit in the UK Government’s position since the beginning of the Scotland Analysis programme. Remember that that kicked off with an analysis of the international legal issues, concluding that (r)UK would be the successor state in international law and Scotland would be a new state. The line of argument now emerging is simply the logical fulfilment of that.
This is also perfectly consistent with the strategy of the Unionist side in another respect. Since the May 2011 Scottish election result, and David Cameron’s prompt acceptance of the need for referendum and stipulation that it be ‘legal, clear and decisive’, the UK Government has pursued an excluded-middle Continue reading
Nicola Sturgeon’s lecture for the Constitution Unit on Thursday evening, 13 February, was a rare opportunity for her to speak to a London audience, and for a London audience to see her. What they heard was a very slick presentation of the SNP’s case for ‘soft independence’, carefully tailored for the audience, and predicated on advancing Scottish self-government rather than breaking up the UK. Her key arguments were that Scotland could be independent, and was well-prepared for that because of the development of devolution; that Scotland could and should become independent, because Westminster’s politics and policies were at odds with those of Scotland; and that independence would be a firm basis for good relations with all the nations of the British isles. She emphasised that Scottish independence was ‘emphatically not separatist or insular … [n]or … driven by antipathy towards or resentment of our neighbours in the rest of the UK.’ Indeed, she said she was sure independence could be achieved without any lingering sense of resentment in the rest of the UK. She added that the debate was not about ‘identity’ and that the SNP were not asking people to choose their identity as part of the process which may come as a surprise to some observers). Rather, it was about the best form of self-government for Scotland.
Much of this was familiar to those who have heard the SNP in recent years, and much could be strongly contested. The line that Scotland’s politics were different to those of England was undermined by arguing that Scottish independence would not doom the rest of the UK to unending Conservative governments, for example. Sturgeon made a good deal of how important it was for Scotland to have control of such issues as economic management, defence and foreign affairs from Westminster – even though an independent Scotland’s room for manoeuvre under its white paper blueprint would be limited, and even though there is little sign from polling that these issues are key in voters’ minds. Continue reading
The heavy trailing of an announcement by the Chancellor of the Exchequer (and Danny Alexander and Ed Balls) that the UK Government is not prepared to establish a currency union with Scotland for use of the pound in the event of Scottish independence (see also BBC News coverage here) is a serious blow to aspirations of the SNP for a form of ‘independence lite’. The logic of this was that it would avoid disrupting many key symbolic and economic ties between an independent Scotland (iScotland) and the remainder of the UK (rUK), so comforting swing voters about the limited scale of the risks of independence. Those risks are real; think of how attractive Scottish investment trusts and insurance companies look if the complexities and exchange-rate risks of using a different currency are introduced into the equation, for example. But this shift in the ground also emphasises a number of key issues about the implications of a Yes vote, and what would happen after it.
The first problem – which is particularly the case with the idea of a currency union, but applies to many other important issues – is the asymmetry of interest. A currency union is central to the way the SNP has formulated its model for independence. (That view can be contested, of course – whether by the likes of Jim Sillars on, essentially, autonomy grounds, or by Angus Armstrong and Monique Ebell on economic ones, relating to the flexibility of economic policy instruments and the implications of a debt burden.) But it is of marginal interest or benefit to rUK at best, poses a serious risk at worst, and concluding that the risks of it from an rUK point of view exceed the benefits is a reasonable judgement to come to. This isn’t the only issue where iScotland has a strong interest in something of limited concern to rUK, either. In bargaining situations, iScotland has got to have something convincing to offer to rUK – and other than staying in the UK, or the Clyde nuclear bases, it’s hard to see what that might be. Continue reading
Guy Lodge and I had a post in the New Statesman’s politics blog, The Staggers, on Friday about income tax devolution in Scotland.
Since this went up, there has been further coverage of the story. John McTernan came up with a rather doubtful proposal in Friday’s Scotsman – calling for substantial welfare devolution (including key UK-wide redistributive benefits like Job Seeker’s Allowance), but no fiscal devolution. Saturday’s Guardian leader highlighted the importance of a ‘proposition that goes beyond the status quo’ from the unionist parties as part of their campaign in the Scottish independence referendum. Scotland on Sunday’s coverage includes the front-page lead, a detailed analysis piece, and a leader. Unsurprisingly, Alex Salmond is making the most of Labour’s disarray.
The Staggers post can be found here, and the text is also below.
Labour must not retreat from further devolution to Scotland
Those concerned about the survival of the Union would do well to turn their attention away from David Cameron’s “seven months to save the UK” speech and look instead at developments taking place in the Scottish Labour Party. Worryingly, just at the moment when the Yes camp appear to be gaining some momentum in the polls, Scottish Labour appears to be retreating from providing Scottish voters with a clear alternative to independence in the form of additional powers for the Scottish Parliament. Continue reading
There has been remarkably little public discussion of what would happen if there were a Yes vote in the Scottish independence referendum. The widespread assumption seems to be that negotiations would be swift and straightforward, and Scotland would readily become an independent state. The Scottish Government’s position (previously set out in the February 2013 paper Scotland’s Future: from the Referendum to Independence and a Written Constitution, but repeated in the independence white paper) remains that May 2016 would be when Scotland would become independent. That is a very simplistic approach; negotiations would be complex, possibly protracted, and gravely complicated by the May 2015 UK general election. Considerations about timing, and the impact of the referendum vote would affect the strength of the various negotiating positions, as well.
Nick Barber of Oxford University has now written an exceptionally good post about the implications of Yes vote. I don’t wholly agree with it, but it should be read by anyone thinking seriously about these issues. It can be found on the UK Constitutional Law Association’s blog, here.
In a separate but related development, the Lords Constitution Committee at Westminster has announced an inquiry into the implications of a Yes vote. There’s news coverage from the BBC here, and details of the inquiry and its call for evidence here. The closing date for submissions is 28 February 2014.
UPDATE, 27 January: There’s also a Lords debate on Thursday about ‘The implications for the UK of the forthcoming Scottish independence referendum’. Details are here.