Category Archives: Policy issues

Legislative consent for the Trade Union bill?

In a speech at the SNP conference in Aberdeen, Grahame Smith of the STUC has apparently argued that the impact of the Trade Union bill currently before the UK Parliament is such that it requires legislative consent from Holyrood under the Sewel convention – ‘a consent that I am confident would not be forthcoming’, so in reality a veto on the bill at least for Scotland. The bill is unsurprisingly under heavy criticism not just from the STUC but also the Greens and Rise. The UK Government does not believe that the bill needs legislative consent, however (see Annex A of the Explanatory Note, available here; the bill itself is here as a PDF document).

Constitutionally speaking, it’s hard to disagree with the UK Government’s view. Industrial relations and trade union law, like employment law more generally, remains a reserved matter under Head H1 of the Scotland Act 1998, beyond the powers of the Scottish Parliament. The criteria for legislative consent under the Sewel convention are set out in Devolution Guidance Note 10 on Post – Devolution Primary Legislation affecting Scotland (available here as a PDF). Consent is not needed for bills which do not apply to Scotland at all; which apply to Scotland but ‘relate to’ reserved matters and do not alter Scots law on non-reserved matters; or which contain provisions applying to Scotland and relating to reserved matters, though they may make incidental or consequential changes to Scots law on non-reserved matters.  Consent is only needed if the bill ‘contains provisions applying to Scotland and which are for devolved purposes, or which alter the legislative competence of the Parliament or the executive competence of the Scottish Ministers’.

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Filed under Legislation, Northern Ireland, Policy issues, Scotland, SNP, Wales, Westminster

Plaid Cymru and a Welsh legal jurisdiction

Plaid Cymru is, so far as I know, the only political party in Wales to have taken a position on the issue of a Welsh legal jurisdiction. (The Welsh Government has, but that’s a government not Labour Party matter.)  Responding to the recent WGC/Constitution Unit report, Leanne Wood said such a jurisdiction was ‘essential’.

This is not policy-making off the cuff.  In 2010, Plaid Cymru held an internal discussion about the establishment of a Welsh legal jurisdiction and the form it should take.  As their ‘consultation paper’ from that exercise isn’t otherwise available, and given the developing debate about this issue, with Plaid’s permission I’ve uploaded the paper in PDF format.  The English version is available here, and the Welsh one is here.

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Filed under Courts and legal issues, Legislation, Plaid Cymru, Policy issues, Wales

Justice for Wales’s pamphlet on a Welsh legal jurisdiction

The Welsh legal group ‘Justice for Wales’ published its pamphlet on the case for a Welsh legal jurisdiction, and extensive devolution of the legal and justice system, last week.  There’s news coverage of it from the Western Mail here and BBC News here.  I don’t necessarily agree with their arguments (and I’ll have more to say about questions of a Welsh legal jurisdiction shortly), but their ideas certainly ought to be considered seriously.

As Justice for Wales doesn’t have its own website, readers may wish to download their pamphlet from this blog.  The PDF of the Welsh version is here, and that of the English one is here.

 

 

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Filed under Courts and legal issues, Policy issues, Wales

Devo More and Welfare

Our paper on devolving welfare, snappily entitled Devo More and Welfare, is now available on the IPPR website here.

Our concern in making these proposals has been to formulate workable proposals which preserve important parts of the UK and its ‘social union’ as it presently is. There’s a lot of material in the paper discussing this, and why risk-sharing at a UK level is in the interests of all parts of the UK.  Constraints also arise from the existing pattern of welfare spending and the structures that support that – the role of the National Insurance fund when it comes to contributory benefits, for example.  However, we think it would be wrong to treat that social union as rigid; sharing risks for big things like old age or unemployment doesn’t mean other things can’t and shouldn’t be changed.  We argue for recognition of the role of devolved governments when it comes to providing welfare benefits, bearing in mind the large role they already play in providing public services that are part of the welfare state – an approach we call ‘welfare pluralism’.

We endorse, broadly, changes in three areas.  First, housing benefit should be devolved, given how closely it is linked to the devolved function of social housing. This would enable devolved governments to improve housing policy, by joining up housing benefit with already-devolved functions, and giving them more flexibility in how they invest in providing social housing.

Second, we support devolution of functions where this will improve social investment.  This applies to two areas in particular: the Work Programme and welfare-to-work, and childcare.  Devolving the Work Programme would involve a form of executive devolution, with Job Seekers Allowance and Employment Support Allowance remaining paid on a UK-wide basis. Childcare powers are already in devolved hands; the question is how that should be funded, and here fiscal devolution (as we recommended in Funding Devo More) addresses the problem.  Devolving the childcare element of the Working Tax Credit would support this.

Third, we support a power for devolved governments to supplement UK level welfare, and removing existing legal restrictions on devolved governments providing cash benefits, provided they do so within devolved resources.  This would certainly simplify action like that taken by the Scottish Parliament to redress the ‘bedroom tax’/spare room subsidy, and would enable a much wider range of possibilities for devolved governments that wished to undertake them.

Welfare devolution should not simply be about handing over more powers to devolved governments.  It is about improving how devolution works, but even more importantly about improving social outcomes across the UK.  This can produce benefits for all; it is about a win-win game not ‘making concessions’.  It is also for all devolved governments; what we propose would be as applicable in Wales and Northern Ireland as in Scotland.  It is also, importantly, about responsibility; in particular, we argue that fiscal devolution is a necessary prerequisite before devolution of welfare functions can take place.

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Filed under Policy issues, Publications and projects

‘Devo More and Welfare’ in ‘Scotland on Sunday’

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.

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Filed under Northern Ireland, Policy issues, Publications and projects, Scotland, Wales

Devolution literacy and party conference policies

The party conference season always produces a crop of policy announcements that are meant to be eye-catching.  The extent to which these are thought through is often doubtful, though – these are announcements for political purposes, not necessarily to work in the real world. That also means how their devolution implications is addressed is often rather sketchy.   Regular readers of this blog will know that concern about ‘devolution literacy’ is a long-standing one of mine, and one which I find has slowly but materially improved over the courts of the 2000s and 2010s.

Either devolution has bedded itself into party-policy framers’ consciousness, or something has changed.  When he made his announcement about free school meals for 5-7 year olds in England, Nick Clegg was keen to point out that funding would be given to the devolved administrations to decide whether to follow suit.  (The political pressure to do so will be considerable, of course – a lot of parents’ and poverty groups will be asking pointed questions about it.)  And that’s all well and good; the Treasury’s Statement of Funding Policy provides that spending on the schools budget has a 100 per cent comparability percentage for Scotland, Wales and Northern Ireland – so any extra spending on that budget automatically triggers a full population-related comparable payment.

Ed Miliband’s widely-trailed announcement about cancelling a cut in corporation tax and instead making one in business rates (strictly, non-domestic rate or NDR) is more problematic.  The aim is to favour smaller businesses, which may not be incorporated (or have profits), but which necessarily occupy business premises.  Like Clegg, Multiband will apparently announce a change for England, with funding for devolved governments to make a similar cut.  The problem is that this is not what the Statement of Funding Policy says.  NDR is only 100 per cent comparable for Wales, where a complex England and Wales pooling mechanism currently exists.  Even there, there are plans for change following the Morgan Review last year (BBC News summary here, full documentation here).  In Scotland and Northern Ireland, NDR is 0 per cent comparable – because it’s regarded as fully devolved.  So any decision for England would not automatically trigger comparables for Scotland or Northern Ireland.

There are ways to resolve this, of course.  The easiest is probably the messiest – a one-off concession relating to adding a specific block of money to the devolved governments’ budgetary baselines.  (If the comparability percentage were changed, it would lead to further complications in future.)  Even then, though, there is no guarantee whatever that devolved governments will use the extra money in the way UK Government might desire.  (Indeed, the Scottish Government has been imaginative in making use of NDR as an instrument of local economic policy – extra charges for out of town superstores, for example.)  But the point is that Miliband’s attempt to make an impression by reshaping where the burden of business taxation falls has run into the practical realities of how the post-devolution, fiscally decentralised UK functions.  While Miliband deserves 8/10 for effort in thinking about the problem, it’s only 4/10 for success in doing so.

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Filed under Devolution finance, Labour, Lib Dems, Policy issues

Inheritance tax, ‘care caps’ for the elderly, and devolution

Inheritance tax (IHT to its friends) is an odd tax.  It doesn’t raise a lot of money; £2.7 billion in 2010-11 according to HM Revenue and Customs, which sounds like a lot of money but was only 0.65 per cent of total UK tax revenues.  It also has plenty of loopholes.  The most important are the seven-year rule (it doesn’t catch anything given away more than seven years before the death of the donor), an exemption on transfers between spouses, and the nil-rate band which taxes at 0 per cent anything up to a specified threshold, currently £325,000 per individual.  The combination of the seven-year rule and the nil-rate band mean that it’s largely an optional tax, hitting the well- and comfortably-off who are disorganised; indeed, the joke in tax classes is that it’s a charge on those who hate their relations more than the Revenue.

So – if the news that IHT is to bear the burden of increasing resources to pay for the new ‘social care cap’ in England is right (see BBC News here, and Sunday’s Telegraph here) – the upshot is rather confusing.  An additional tax burden will be imposed on residents of all parts of the UK, including Scotland, Wales and Northern Ireland as well as England – to pay for a benefit only to be experienced in England.  That is anomalous.

There are two ways to resolve this problem.  One is to allocate shares of the extra tax revenues so generated to devolved governments in Scotland, Wales and Northern Ireland, since social care for the elderly is a devolved function.  That is attractive, and would be the sort of approach sought by Quebec, where the long-standing demand of the provincial government has been to call for an ‘opt out with compensation’ from expansions of the Canadian federal government’s social programmes.  However, that might not be in devolved governments’ best interests – the tax base that supports inheritance tax revenues is driven by property values, and so hugely skewed toward southern England.  (In Scotland, according to GERS, it only generated 0.4 per cent of total tax revenues in 2010-11.  It’s only 0.37 per cent in Wales according to the Silk Commission report, and 0.33 per cent in Northern Ireland, according to the Northern Ireland Net Fiscal Balance Report.)  Getting those extra tax revenues from the tax base in Scotland, Wales or Northern Ireland would in fact mean a larger share of a smaller cake.  That’s all the worse for Scotland and Northern Ireland given their ageing populations.

The alternative approach would be to let the Barnett formula take the strain, and allocate to devolved governments their consequential share of increased UK Government spending in England.   This is what Barnett is meant to do, after all – allocate consequential shares of spending on ‘comparable’ functions in England to devolved governments.  It appears that the increased IHT revenue will only bear part of the cost of increasing resources for the care cap, so the rest will presumably come from general taxation anyway.  Using Barnett would in fact put rather more funds into the hands of devolved governments, albeit at the expense of English taxpayers, but in a way that accomplishes a form of equity in distributing shares of the cost of the English policy across the UK.

If the latter is the approach to be taken, it should form part of the Department of Health’s formal announcement.  The pre-announcement briefings have suggested a UK-wide tax to fund a purely English policy, which may make electoral sense for the Conservatives but not much constitutional sense (and that’s without judging whether this policy approach is in fact right or not – given that it has been criticised by Andrew Dilnot as well as Labour spokespeople).  It looks rather like the sort of high-handed approach from Whitehall that has been all too common in the past – and which in the present context strengthens arguments for independence in Scotland.  (Of course, it also sits on top of the UK Government’s exclusion of claims for attendance allowance from beneficiaries of that policy after free long-term care for the elderly was introduced.)  It also suggests that a more nuanced approach to welfare devolution may be hard to implement, because doing so is beyond Whitehall’s habitual ways of working.

What this is not is a case for devolving inheritance tax.  IHT is one of few taxes emphatically not suitable for devolution on fiscal grounds.  Experience in both Canada and Australia of transferring the death/estates duty tax base to the provinces/states was that within a decade, tax competition between the various governments drove the rate of tax to zero across the whole country.  There are few cases where the evidence of fiscal competition cannibalising a tax base is so clear.

Thinking about social care costs is actually a tricky challenge.  It involves redistribution across time as well as space.  At present, devolved governments have the responsibility for providing care, but not the policy or legal instruments to secure its funding.  The way the UK Government has ploughed ahead making policy for England with so little regard for the position of devolved governments has done it few favours.

UPDATE: This post was written just before Jeremy Hunt made his statement in the Commons (which is available here) or the Department of Health published its white paper Caring For Our Future: Reforming care and support, Cm 8378 (available here).  There’s no mention in the white paper of the use of changes in inheritance tax (or NICs transferred from the soon-to-be-discontinued second state pension) to fund the new policy.  Indeed, for that matter there’s no mention of devolved governments or institutions at all.

Yet the white paper notes, without irony, ‘Fragmented health, housing, care and support are letting people down.  A failure to join up also means that taxpayers’ money is not used as effectively as possible, and can lead to increased costs for the NHS’ (p. 16).  Moreover, the DH statement says, ‘A national minimum eligibility will make access to care more consistent around the country, and carers will have a legal right to an assessment for care for the first time.’  All that is true, but applies as much to policy across the UK as that within England.  When directly asked about the devolution implications in the Commons, by Willie McCrea from South Antrim, Hunt stalled, saying ‘different approaches are being tried in all four constituent parts of the United Kingdom and we must look at what is happening in the different parts and all learn from each other.’

The UK Government has set out a policy only for England, which affects devolved governments and their policy functions quite significantly – but without there being any apparent assessment of its impact on them, or the fact that the UK Government possesses and is using policy levers that are not available to them despite their similar responsibilities.  This is simply confused policy-making; and the fact that the financing was discussed in the press and Commons statement, but does not appear in the published documents, suggests it was made rather late in the day too.

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Filed under Conservatives, Devolution finance, Intergovernmental relations, Northern Ireland, Policy issues, Scotland, Wales, Whitehall