The timing of implementing Calman: it won’t help the Unionist parties, and it won’t help build the new Forth Road Bridge

When it published its white paper Scotland’s Place in the United Kingdom in November, the UK Government made it clear that it had no plans to move to implement those of the Calman Commission’s recommendations it had accepted before the UK General Election.  It therefore shouldn’t come as much of a surprise that a vote at Holyrood in December to urge early implementation of what could be implemented without Westminster primary legislation was opposed by Labour (and the Tories), but supported by a majority comprising the pro-independence parties (the SNP and the Greens), along with the Lib Dems.  (Details of the vote, and text of the resolutions, are available here.)  It should equally be little surprise that the UK Government has rejected the Parliament’s vote – even though it only applies to devolving control of air guns, drink-driving and speed limits, and the motion only called for ‘the UK Government to work with the Scottish Parliament to ensure that, where there is consensus, all such recommendations are implemented before the dissolution of the current UK Parliament’.

It’s hard to avoid thinking that the UK Government is making a major tactical mistake in the way it has held fire on implementing the Calman recommendations.  Moving to early implementation of these provisions would, as I’ve said before, be a clear sign of the commitment of the UK Government to deliver on Calman, rather than making promises which will only be fulfilled on the other side of the UK general election – when it’s likely Labour will be out of office in any case.  What Labour are seeking is a high level of trust from an electorate that appears to be quite some distance ahead of them in wanting more devolution, quickly.

The timing of Labour’s policy means that, at best, there would be a bill in a Queen’s speech in June 2010, and legislation at some point during that Westminster session.  That session is likely to be a long one, running from June 2010 to around October 2011.  Even if a bill were introduced in June or July 2010, would it have passed by May 2011?  It’s possible, but unlikely – it would depend on the content of the bill being relatively uncontentious, and not needing extensive amendments to ensure it worked in practical terms.  It’s therefore very probable that the bill will not be on the statute book by May 2011.

That has two consequences.  First, the unionist parties will not be able to campaign in the 2011 Scottish Parliament elections on the basis of having ‘delivered’ further devolution – which could be a very useful position to be in.  Second, if that bill is not on the statute book, it will be hard for them to set out their tax policies as part of their election manifestos and platforms.  How can you make an electoral pledge about how you’ll use a power that doesn’t actually exist yet?  That in turn means it would be hard to bring in the new tax system before the 2015 Scottish Parliament elections.   Politically, that’s a golden opportunity for the SNP.  Given where public opinion is, it ties one hand behind the backs of those who believe in both devolution and the Union, because they are promising a modest amount of jam a long way in the future, rather than something tangible soon.

It’s worth noting that the position is likely to be very similar for the Tories.  Although they have said they will need to produce their own white paper (see George Osborne’s response to the Scotland’s Place white paper here), it’s hard to see how that could take a very different approach to Labour’s.  They have, after all, committed themselves to ‘fiscal responsibility’ for Holyrood, the key principle in the Calman recommendations.  Any more would go beyond what George Osborne appears to have in mind, and any less would fail to deliver on that principle.  The timescale would be later with the Tories, but unless they want to give the SNP a pass at the 2011 elections they will need to have a bill in Parliament by early 2011, making little practical difference to the timescale sketched above.

Apart from its political consequences, there is one very practical ramification of the slowness in implementing Calman.  It is that even the borrowing power promised in white paper cannot be used to fund the replacement of the Forth Road Bridge, which needs to be underway by 2014 at the latest.   At present, there seems to be a stalemate in resolving this.  The Scottish Government has a commitment to replace the bridge, does not want to fund it using the Private Finance Initiative, and doesn’t have the cash to do so out of its mainstream revenue (especially with the reduction in capital spending required by the Treasury to fund the public spending deficit).  The UK Government has rejected the Scottish Government’s request to ‘spending within the Block Grant to accomplish this, saying that you cannot borrow for capital spending from expected but not certain future receipts.  (That’s a strange position, given that the Treasury regularly remind critics of the present arrangements that one of its virtues is reliable and stable funding for the devolved administrations.)

News of the negotiations between Edinburgh and London has vanished since the summer, but that doesn’t mean the issue has gone away.  In fact, it gets more pressing with every month that passes.  No doubt a good deal is going on behind the scenes (and the governments realised that the press-release-diplomacy of last spring and summer wasn’t actually helping anyone).  But this does need fixing, and pretty soon.

What Calman proposed on borrowing powers (a limited power to fund capital spending infrastructure and manage fluctuations in tax receipts, exercisable through the Treasury) was far from perfect.  In its favour, though, it was practicable and workable, and protected the UK Government’s most important interest – that devolved borrowing might undermine UK macro-economic goals or the UK’s ability to borrow – by giving a key role to the Treasury.  But that was diluted in the UK white paper, chiefly by requiring that extra tax revenue be expressly raised to fund any borrowing – a form of hypothecation that not only runs counter to the principles the Treasury applies to itself, but makes it hard if not impossible to use the borrowing power.  This is the sort of constraint that looks ‘prudent’ from a Whitehall point of view, and is itself rooted in distrust of the devolved institutions, and the voters who elect them.  However, it runs counter to what one would think is the UK Government’s goal – to show that devolution within the Union is in fact workable.  That, after all, is what the electorate in Scotland and Wales want.

If the Calman borrowing power won’t be available, the UK Government will need to come up with some ad hoc way of achieving the necessary outcome.  Labour politicians will be well aware of the ability of the SNP to pass the blame to London if a solution isn’t found and serious problems result.  (Conservative politicians ought to be conscious of that too, though if they actually have to deal with this problem it will be very urgent, and very serious.)  The Treasury will be concerned about setting a dangerous precedent.  It may, however be forced into doing so.  The clock is ticking, and the best way out of the mess would be (or have been) the Calman power.   Anything else is likely to be less effective for everyone involved.



Filed under Calman Commission/Scotland bill, Devolution finance, Intergovernmental relations, Labour, Scotland, SNP, Whitehall

7 responses to “The timing of implementing Calman: it won’t help the Unionist parties, and it won’t help build the new Forth Road Bridge

  1. Pingback: David Cameron’s speech to the Scottish Conservative conference « Devolution Matters

  2. Pingback: Jim Murphy at the CIPFA Scotland conference « Devolution Matters

  3. Pingback: Amending the Scotland bill: the Scotland Office announces its plans « Devolution Matters

  4. Pingback: Financing Welsh devolution: the Welsh Government’s proposals « Devolution Matters

  5. Pingback: Flawed fiscal thinking in Wales | Public Finance Opinion

  6. Pingback: Click on Wales » Blog Archive » Welsh taxation as an economic lever

  7. Pingback: Intergovernmental Relations in Scotland: what was the SNP effect? | Paul Cairney

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.