The Calman bill, and what it doesn’t do

The bill implementing the Calman Commission’s recommendations is apparently still on track to appear in the political autumn. This season doesn’t bear much relation to calendrical autumn (it really means ‘before Christmas’), but it does mean the bill will appear in late November or early December. It will be pretty much a straight delivery of the Calman Commission’s recommendations; it won’t be a ‘Calman plus’ with more than 10 points of income tax or other taxes devolved,, and it won’t have clauses to extend its provisions to Wales (which would substantially enable it to deliver the Holtham Commission’s recommendations and which was recommended by Gerald Holtham). Nor will it include any changes to the arrangements for the Barnett formula (not least because these are non-statutory so would not need legislation). In that respect, the bill won’t, in fact, implement the Calman recommendations. The Scottish Secretary is perhaps trying to pre-empt the criticism he expects from such a limited bill by announcing that he sees the Calman bill as merely the first step in increasing Scottish devolved fiscal autonomy, a commitment that also appeared in the Scottish version of the Lib Dem election manifesto (but not the British or Welsh ones).

There are two interesting points about this. the first relates to how the Coalition UK Government operates. In this case, the commitment in the Programme for Government is being treated literally, and as giving little if any room for manoeuvre. We’ve seen, however, that in many other cases PfG commitments are being adjusted or amended more or less as people feel like. The PfG contains no commitment for a wholesale reorganisation of the NHS in England, for example. While it does contain commitments to transfer resources ‘to support doctors and nurses on the front line’ and reduce administrative costs, it also pledges to stop top-down reorganisations. It has no commitment to limit child benefit to less well off families – indeed, in relation to tax credits, it talks of removing the ‘couples penalty’ that arguably is exactly what will result from the proposed CB reforms. The point here is not to score points off the Coalition, but to point out the wider inconsistency. In some cases, the PfG has to be taken at face value, no more and no less; in others, it is largely dispensable – and it’s far from clear which set of rules apply when. This is confusing for outsiders including, no doubt, many civil servants – and particularly the devolved governments. If the Lib Dems come to think they’re getting the short end of these changes, it may signal internal trouble too. It is, in any case, a rum way of running a government.

The second point is that the delivery of Calman will signal a significant failure of the Scottish Government’s constitutional and intergovernmental strategy. For at least a couple of years, there has been a belief in nationalist circles that a Conservative UK Government might be open to the sort of deal that would very substantially enhance Scottish autonomy to keep Scotland within the Union. It’s understandable that the SNP would give up on hopes of securing such far-reaching autonomy from Labour. It’s also understandable that the SNP could reasonably believe that a Conservative government interested first and foremost in England, and the concerns of its mostly English voters, would be willing to consider that.

Acting on that, the SNP has tried very hard in private to convince the Coalition (and David Cameron in particular) of the case for a much wider form of fiscal autonomy as part of the Calman bill – and failed. Not much of this has been visible in public, but a serious and sustained lobbying effort has gone on to make the case for full fiscal autonomy or something close to it, as a policy with serious attractions for the Coalition as well as the SNP.

It’s intriguing that the SNP made such an effort, and appears seriously to have believed it stood a good chance of success. It’s long been pretty obvious in London that it doesn’t, and that the hopes of the SNP in this regard were highly exaggerated. There’s been no compelling political pressure on the UK Government to do so (other than the SNP’s lobbying), and the political incentives look much greater from Edinburgh. The SNP appears to have seriously under-rated both the (pretty traditional) Unionism of both the Conservative leadership, and what Conservative back-benchers from English constituencies might be willing to stand. (I’d love to see what the readers of ConservativeHome might say if the idea were seriously to be proposed by the Coalition.)  The other idea used by some to support the belief that this door might be open has been the Lib Dems’ plight in Scotland, now they are part of the London Coalition, and the fact that they appear to be making the running on Scottish devolution. At the extreme, this leads to a belief that the Conservatives have subcontracted Scotland to the Lib Dems, for good or ill. (Tavish Scott himself appears to be keen to spread this view, according to this piece from Scotland on Sunday by Tom Peterkin.)  This view, though, similarly lacks foundation. It owes more to wishful thinking and the prominence of the Scottish Secretary on Scottish issues than to evidence of any real difference between the Coalition ministers on this. The bill that appears will be a government bill in every sense; while the Scottish Secretary may be leading on it, the Chancellor and the Prime Minister have been as fully involved as they might be.

A cool appraisal of all this might have told the SNP that the idea of securing full fiscal autonomy at this point had at best a slim chance of success, and so was not worth making the repository of such huge hopes. For whatever reason, that isn’t what happened.

The price of the SNP’s maximalist strategy was that they failed to secure changes to the Calman bill that might well have been on offer, and which would have materially improved the problems in the Calman scheme. The most notable case is the progressivity of the devolved rate of income tax. Calman called for all rates of income tax to move by the same amount – if the Scottish rate were 11 per cent, that would be 11 per cent on all bands – so standard rate would be 21 per cent in total, and higher rate 41 per cent. That puts all decisions about progressivity in the hands of Westminster. The Holtham report suggested a different approach, devolving control of the rates charged on each band but with a requirement that they could not vary by more than 3 per cent from the rates set by UK Government for England. Under that it would be possible for the Welsh standard rate to be 12 per cent (total 22 per cent), but the higher rate to be 8 per cent (total 38 per cent). That would not only affect the revenues generated, but also enable the devolved government, within constraints, to use tax rates as a lever of economic and social policy. Rates like that would be less progressive than the UK level, but would probably raise more revenue, for example.

Perhaps it’s reading too much into it, but it appears to be the Scottish Government’s realisation that it had lost this issue that led to a significant change in how it has approached relations with London. It’s conceivable that it lies behind the abandonment of a bill on an independence referendum and the move toward the ‘independence is the only way to stop Tory cuts’ line. It’s impossible to say whether that’s so or not – there’s enough obscurity about timing, and what else would the SNP use as its platform for next year’s election? But this rebuff would appear to underpin the change in tactics about the cuts expected in the comprehensive spending review, and the joint declaration by all three first ministers last week opposing them (discussed earlier HERE). Effectively, because it has lost its hope of securing a Big Win from the Conservatives, the SNP has been forced back to a strategy of rhetorical opposition and confrontation.

Advertisement