Amending the Scotland bill: the Scotland Office announces its plans

Michael Moore, the UK Government’s Scottish Secretary, announced on Monday his proposed revisions to the Scotland bill.  It’s also just emerged that the bill will have its report stage and third reading on 21 June.  So this is clearly the ‘re-launch’ of the bill for that, and it’s good to see that rumours of an adamant UK Government refusal to amend the bill in any form have proved false.

The Scotland Office’s press statement is here, and there’s news coverage of it from the Scotsman here and BBC News here.

The problem is that Moore appears to have approached this with a by-now customary doggedness.  He’s considered requests for amendments from the Scottish Government, and endorsed those he considers ‘workable’ and not those he doesn’t.  He’s struggled to work out what exactly it’s asking for, which isn’t a surprise as the Scottish Government has been far from clear.  That is probably partly a matter of deliberate tactics, but it’s also partly because the Government has been working out what its position is.  (Moore issued a slightly testy press statement last week lamenting this, available here.)   But those difficulties are of Moore’s own making – he could, as I suggested HERE, have insisted on a motion being passed by the Scottish Parliament setting out what they did and did not require in order for the bill to have passed.  That would have fitted better with the current constitutional position, where the key issue is what the Parliament will consent to under the Sewel convention.  Or he could have responded directly to the recommendations of the Scotland Bill Committee in the last Parliament (discussed HERE), and the Commons Scottish Affairs Committee, which largely followed them.

Instead, Moore has preferred to deal with the Scottish Government rather than the Parliament.  While this may make practical sense, it has also made his own political position more difficult.  In this respect, he’d have been better off being a constitutional literalist and insisting on knowing the views of the Parliament.

As regards the substance of the proposed changes, they’re detailed aspects of the financing arrangements, mainly concerned with borrowing powers.  As indicated by Nick Clegg when he went to Edinburgh last week, borrowing powers are to be brought forward in time. This is being accomplished within the framework of the bill, it seems, rather than through the very limited mechanism in the 1998 Act.  There’s a possible power for the Scottish Government to issue bonds, depending on a Treasury review and under conditions.  It’s all welcome stuff, but it’s a far cry either from the sorts of amendments the Scottish Government has been hinting at, or those needed to show that the Unionist parties are capable of delivering the sort of constitutional settlement Scots appear to want.  For those in London worried about a ‘slippery slope’ – well, this sort of tentative step actually encourages that argument, as well as weakening the Unionist position for a referendum campaign.

The power relating to bonds is a particularly interesting one.  If the power for the Scottish Government to issue these were to come into effect, it appears that there would still be very considerable Treasury control over the terms of such borrowing.  The main thing that would change would be the name of the formal issuer – there’d still be both UK control over borrowing, and at least an implicit UK guarantee in the event of default.  Treasury’s argument here is a strong one – sub-state borrowing is a huge issue, which can seriously undermine state-level financing as well, as Jonathan Rodden argues in his book Hamilton’s Paradox.  This sort of symbolic gratification of the Scottish Government’s request must necessarily be that, unless (or until) one can get to the point where the Scottish Government has both the self-generated tax resources and political credibility to borrow without any UK-level guarantee.  Not many places around the world have managed that; Canadian provinces are among the few sets of sub-state governments that have.  (Incidentally, this is one reason why Carwyn Jones’s claim that this position for Wales makes it untenable to deny borrowing powers to the Welsh Government too is wrong – see here and here.  Raising your own revenues and being able to borrow against those revenues are different sides of the same coin, and if you don’t have your own source of income, the only person from whom you can borrow is whoever dishes out your pocket money.  No bank gives a loan to a 12 year old without even a paper round.)

However, there’s a tactically astute aspect to the UK proposals.  These are not only things that the Scottish Government wants, but they’re also things it needs, and needs urgently.  Time is ticking for sorting out the replacement Forth Bridge (as I’ve pointed out HERE and HERE).  That means the Scottish Government is under considerable pressure to agree to these changes and secure Parliamentary approval for them.  So perhaps these changes are best understood as a tactical manoeuvre to get the Scotland bill through, with Holyrood’s consent.  From a UK point of view that’s rather smart, in the short term, as it makes the Scottish Government make a hard choice about how badly it wants borrowing powers.   The problem is that it means the UK side misses an opportunity to build a better platform for the Yes referendum campaign.  Ultimately, that’s a balance of advantage that probably still advantages the SNP in the wider campaign.

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2 Comments

Filed under Calman Commission/Scotland bill, Devolution finance, Lib Dems, Referendums, Scotland, SNP, Wales, Westminster, Whitehall

2 responses to “Amending the Scotland bill: the Scotland Office announces its plans

  1. JPJ2

    “Canadian provinces are among the few sets of sub-state governments that have.”

    I bet that is something to do with Alberta having much more control than Scotland does over its oil revenue 🙂

  2. Jeff Jones

    I’m glad to see that the borrowing issue has been put into context. Labour in Wales has got itself into a real pickle by arguing in its manifesto that it will not seek tax raising powers even though it is clear that Part Two of Holtham follows Part One as night follows day.If we are not careful we are going to get a great deal of gesture politics around the issue of borrowing and whether or not any recommendations from the Welsh Calman requires a further referendum. To make matters worse the manner in which the March referendum was conducted has also probably raised expectations which cannot be fulfilled and this could produce a backlash in the next few years from voters. The result if Wales is not careful is that it will be ignored as relations between Scotland and the UK Coalition dominates the next stage in the devolution debate.

    Thanks for mentioning ‘Hamilton’s Paradox’ which I’ve just sent for from the States.

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