Last week my Edinburgh colleague Drew Scott, and Andy Hughes-Hallett of George Mason University in the US and the University of St Andrews, published a paper on the economic implications of the Calman Commission’s recommendations. The paper can be found on Reform Scotland’s website here, a press release about it here, and news coverage of it from the Scottish edition of the Sunday Times here.
They’re rather more critical of the Calman recommendations than I was in my constitutional analysis of it. They’re heavily critical of its proposed restrictions on the Scottish Government’s borrowing powers, on the use of Treasury estimates instead of actual figures for tax revenues, as well as wider compliance and administrative cost issues. They also suggest that the rate of growth of such ‘Scottish’ revenues would appear not to have matched the rate of growth in the Scottish block since 1999 – in other words, that Scotland would have lost out financially had the Calman recommendations already been in place, during the last few years of rapid growth in public spending.
Their criticisms on borrowing powers and the use of estimates are particularly well-made. They point out that the power to borrow is a necessary concomitant of taxing powers, to cover fluctuations in revenue. Limiting the power to capital spending, and to require extra revenues to be earmarked to cover the monies borrowed, is inappropriate. Scott and Hughes-Hallett also point out that such estimates have often been inaccurate, are frequently disputed, and simply unsuited to be used to fund a system of own-source revenues. Personally, I’d go even further than Scott and Hughes-Hallett, and say that the use of such estimates beyond a short, limited (and inevitable) transitional period turns the prospect of a measure of genuine fiscal autonomy (albeit a limited one) into a virtual power run at the behest of the Treasury. That’s just not what is needed to support a system of devolution that corresponds to what the people of Scotland want.
Meanwhile, the UK Government has announced yet another small step in implementing the Calman Commission’s recommendations. The Scotland Office press notice is here, and a news story about it from the Herald is here. The Scotland Office is setting up an expert panel to consider the technical aspects of implementing the Calman recommendations. This might be more impressive if it had been announced as part of the white paper on Scotland’s Place in the United Kingdom rather than taking a further three months to do – especially as the announcement does not identify the members of the panel, just says it will be created. Progress comes dropping slow …