Category Archives: Scotland

Spending Review 2015: a test the Treasury flunked

The welter of responses to yesterday’s UK Spending Review and Autumn Statement have overlooked an important set of things the review did not do when it comes to managing the devolved UK. Despite proposals on the table for tax devolution for all three devolved governments (if not the English city-regions), we learned nothing about how this fiscally devolved UK will work. We got a new, updated edition of the Statement of Funding Policy (the seventh in all and the first since 2010) , but that remains essentially the operations manual for the Barnett formula it always was. Nothing substantial about the framework for managing devolved finances has been altered, despite recommendations for this from a variety of bodies including the Bingham Centre Constitutional Review, the Lords Economic Affairs Committee’s recent report on The Implications of Financial Devolution to Scotland and committees in all the devolved legislatures.  The devolved governments remain as entangled in the UK system of public finance as they ever were.

What the Treasury could and should have done was put the basis for devolution finance under the Conservatives on a clear and transparent footing, in particular by:

1. publishing its proposals for how reductions in block grant allocations are to be made as tax powers are devolved and the wider ‘fiscal framework’ for devolved taxation – an issue now for all three devolved governments, with high political stakes in Scotland and the need to comply with EU state aid rules in Northern Ireland emphasising its importance. This appears to be the subject of behind-the-scenes negotiations between governments but is of such fundamental importance that it needs to be in the public domain.
2. establishing an independent body to keep devolution finance under review, considering changes to the Statement of Funding Policy, the application of the Barnett formula to changes in public spending, and the working of the system more generally – a form of UK Finance Commission.
3. establishing an effective way of resolving disagreements and disputes, rather than trying to provide for informal resolution by inter-ministerial discussion followed by use of the (clearly ineffective) ‘disputes resolution’ format of the Joint Ministerial Committee. Some sort of impartial mediation is my preference, rather than an attempt at binding arbitration – but the important point is that it should be impartial and independent of all governments involved, and be able to impose some sort of meaningful sanction on the UK Government, even if that is only publication of an adverse finding.
4. Publication of better, more coherent data about how the UK’s territorial finances work – what taxes are raised where, how much is spent and where, and how that changes from year to year. This information is mostly available, but the data about tax collection are variable and scattered across various publication and documents.

For a government that has embraced devolution and is extending its scope, this is a major missed opportunity.  And it preserves the contradiction about the financial implications of English spending decisions that is the worm eating at the heart of the UK Government’s now-adopted proposals for English Votes for English Laws.

The new Statement of Funding Policy contains a number of intriguing if minor changes in comparability percentages (that is, the calculation of how much a UK Department’s spending is for the benefit of England versus for the benefit of the UK as a whole). Of the big spending departments, Work & Pensions remains almost wholly a UK-wide department with spending now being 1.4 per cent ‘comparable’ for Wales and Scotland (compared to 0 per cent in 2010). Health spending is now 99.4 per cent devolved (for all three governments) compared to 99.1 per cent in 2010, and Education remains 100 per cent comparable. Both Education (schools) and health spending have been sheltered from austerity in England, of course, which also has the effect of protecting devolved budgets compared to overall spending in England.

The interesting shifts have come in departments that are ‘mixed’ and which have not been protected from austerity since 2010. At first glance, these mostly reflect protection of ‘UK-wide’ functions at the expense of ‘English’ domestic spending. Energy and climate spending was about 20.6 per cent comparable for all three governments in 2010; it’s now 1.8 per cent for Scotland and Wales, 15.3 per cent for Northern Ireland. Business, Innovation and Skills (which includes universities and the science budget) was 78-79 per cent comparable in 2010; it’s now around 66.5 per cent. Culture, Media and Sport was 96 per cent comparable for Scotland and Northern Ireland and 90.2 per cent for Wales in 2010; now it is 76.9 per cent for Scotland and Wales, 77.6 per cent for Northern Ireland. An exception (probably due to protection of police spending) is the Home Office, where spending is now 91.7 per cent ‘comparable’ for both Scotland and Northern Ireland, compared to 76 per cent in the 2010 Statement. (It was and remains 0 per cent for Wales.)

Transport spending has become somewhat less ‘comparable’ for Scotland and Northern Ireland, but more comparable for Wales; it has moved from being 73.1 per cent comparable in 2010 to 80.9 per cent. The main items that are not ‘comparable’ for Wales (but are for Scotland and Northern Ireland) are HS2 and Rail Projects generally. ‘Capital rail projects’ were treated as wholly comparable for all three governments in the 2010 version – so this has been reclassified to the Welsh Government’s disadvantage, although Wales now gets a larger overall share of changes to Transport spending (and those ‘Rail Projects’ will include electrification of the Great Western mainline to Swansea).

Overall and in structural terms, the Spending Review delivers a profoundly (small-c) conservative approach that maintains the Treasury’s dominance of tax and financial allocation decisions, even as it seeks to devolve aspects of both spending and tax-raising. Except for that maintenance of Treasury power, there is no attempt to take a UK-wide view of how the UK’s fiscal arrangements work. At the centre of these is a new version of the Statement of Funding Policy that in its essentials is very similar to its predecessors dating back to 1999. Ultimately (and probably sooner rather than later) the contradiction between purporting to devolve power and Treasury retention of it will prove unsustainable.



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

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

The Bingham Centre devolution review: the UK at a constitutional crossroads

This post also appears as a guest post on the Centre on Constitutional Change blog here, the LSE’s British Politics and Policy blog here, and the Institute of Welsh Affairs blog ClickonWales here.

The impact of the Scottish independence referendum has been wide-ranging. It raises a number of questions about how the UK works as a whole and its territorial constitution, as well as ones about Scotland.  But for all the importance and urgency of these issues, they have not yet been subject to any wide-ranging or sustained scrutiny.  A new report from the Bingham Centre for the Rule of Law, available here, seeks to change that and look at what issues the UK as a whole will need to address in the coming months and years.  The review commission has been chaired by Sir Jeffrey Jowell QC, and its membership is here and remit is set out here.

The Commission’s starting point was to consider the implications of the piecemeal, ad hoc approach to devolution taken so far.  Its view is that this has reached the end of its road.  The knock-on effects of the Smith Commission proposals for Scotland mean that this now creates serious constitutional difficulties beyond Scotland.  A more systematic view, considering the UK as a whole, is badly needed.

The first big recommendation to address that is a Charter of the Union, to be passed as a Westminster statute with consent from the devolved legislatures, and setting out key principles for the working of a devolved union.  These draw on what already applies – they include such principles as respect for democracy, the rule of law, autonomy of each government and comity and respect for each other in their dealings with each other.  Subsidiarity and social solidarity are also key principles for the Charter of the Union.

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Filed under Conservatives, Devolution finance, English questions, Northern Ireland, Publications and projects, Scotland, Wales, Westminster

How Labour messed up 1998-model devolution

It’s intriguing to see various senior figures from the New Labour era call for a return to something much more like new Labour to revive the Labour Party. Those figures seem to overlook how responsible New Labour’s politics and legacy are for the mess Labour now finds itself in. (On the nature of that mess, I agree with quite a lot of what Paul Mason says here; it is very clearly a structural problem caused by the collapse of an electoral coalition, not just a question of policy detail or leadership.)
New Labour helped create the mess, at least in its territorial dimension, in two particular ways. First, its political economy depended on getting London to generate large tax revenues to pay for redistributive benefits and much of public services in the rest of the UK, and satisfying those already owning property in London through a property boom. This has left a lasting and damaging legacy by creating or at least magnifying huge inequalities and resentments arising from different regional economies and levels of prosperity.  (In technical terms, it sought to use a huge vertical fiscal imbalance to redress horizontal inequalities.  What actually happened was that those horizontal inequalities increased.)
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Filed under Devolution finance, Elections, English questions, Labour, Scotland, Wales

Devolution, territorial politics and the general election

This post also appears on the Constitution Unit’s blog, here. has a number of other election-related posts which are well worth reading.

It is hard to think of a general election that has ever been so freighted with questions about the UK’s territorial constitution. It is hardly an overstatement to say that the outcome of the 2015 election, and actions of the government that takes office after it, will either reshape the UK significantly or ease the way to its breakup. This post considers what the manifestos tell us about what the various parties propose to do and how they propose to do it, when it comes to the reshaping of devolution arrangements across the UK, and then discusses some of the issues that will loom larger after 7 May.

The pro-UK parties

The 2015 manifestos contain a welter of devolution-related commitments. Those in the three pro-UK parties (Conservative, Liberal Democrats and Labour) are all strikingly similar, though not identical. For Scotland, all commit to implementing the Smith Commission’s recommendations, and to retaining the Barnett formula. (Interestingly, they do not commit to the UK Government’s white paper Scotland in the United Kingdom: An enduring settlement, raising the possibility they could scrape off some of the barnacles that paper puts on the Smith proposals). Labour want to go further in a ‘Home Rule bill’ in unspecified ways, though it appears that wider scope for the Scottish Parliament to legislate on welfare matters is key to it. These commitments rather resemble those made by the same three parties in 2010 about the implementation of the Calman Commission’s recommendations, though with Labour somewhat breaking ranks with the two governing parties.

There is also similarity when it comes to Northern Ireland: endorsement of the peace process and commitments to support it, along with the economic rebalancing package agreed as part of December’s Stormont House Agreement. For Conservatives and Lib Dems, this includes support for sustainable public finances, welfare reform and corporation tax devolution subject to adequate progress being made on financial matters. Labour’s commitments appear to embrace similar policies, but are confusingly worded. They say they will: Continue reading

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Filed under Conservatives, English questions, Labour, Lib Dems, Northern Ireland, Plaid Cymru, Scotland, SNP, UK elections, Wales, Westminster

Bingham Centre review of devolution in the UK

For the last few months, I’ve been working with the Bingham Centre for the Rule of Law on a major inquiry into devolution and how it should develop, from the point of the UK as a whole. The starting point has been constitutional: what sort of constitutional system has emerged given the fragmented nature of the process of devolution in Scotland, Wales, Northern Ireland and across England. Our committee has been chaired by Professor Sir Jeffrey Jowell QC, Director of the Bingham Centre, and includes such figures as Professor Linda Colley, Gerald Holtham, Sir Maurice Kay, John Kay and Philip Stephens of the FT. (Full details of the committee are here.) Adam Tomkins and I have acted as advisers to the committee.
We’ll be publishing the report on 20 May, with a launch at Middle Temple Hall, and have a number of important recommendations for how the UK should work which we hope will shape the actions of the incoming UK Government, whatever political complexion it may have. Key to these is the need now to think about devolution as affecting the UK as a whole, and what the nature of that Union is – not unitary, but not federal either. No new government can afford to ignore these issues, or fail to try to tackle them.

UPDATE: Anyone wanting to come to the launch should email Sandra Homewood on s.homewood[at] to confirm their attendance. 

UPDATE, 21 May:  The report, A Constitutional Crossroads: Ways forward for the United Kingdom, can now be downloaded here as a PDF file.

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Filed under Devolution finance, English questions, General, Northern Ireland, Publications and projects, Scotland, Wales

An ‘English rate of income tax’: six questions in search of an answer

In a speech on Friday launching the Conservative Party’s ‘English manifesto’, David Cameron apparently proposed an ‘English rate of income tax’, on which voting in Parliament would be limited to English (or non-Scottish) MPs.  (There’s also Telegraph coverage here and BBC News coverage here.)  There’s not much detail about this – Cameron’s speech isn’t available on the Conservative Party website, nor is the ‘English’ manifesto.   But from what we can tell of it, this proposal raises a lot of questions.

The first question is whether this is a move beyond the Conservatives’ manifesto commitment for a veto for English MPs (or English, Welsh and Northern Ireland) MPs on non-Scottish income tax decisions, after the Smith Commission proposals are enacted.  This proposal caused quite a stir  when it was first announced, back in December 2014, and raises the hackles of Labour and other parties (and see also here), but it’s not actually new.  This may just be a rhetorical shift, using heightened language to get news coverage for an old story, but if so it has been publicised in remarkably insensitive terms: what the Conservatives are proposing is not an ‘English rate of income tax’, but relates to Wales and Northern Ireland as well. This may be an attempt to curry favour with English voters, but England is not the only part of the UK it affects.

The second question is what this proposal relates to: the Scottish rate of income tax which is due to come into effect in April 2016, and on which a decision will need to be taken this autumn, or the Smith Commission proposals? The latter probably won’t come into effect until April 2018 at the earliest, so this will not be something that could be put in place for England very quickly, or would need to be.  If the former, it implies very quick action indeed – and it’s hard to see a rationale for excluding Scottish MPs from voting when only the Scotland Act 2012 powers are in effect.

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Filed under Conservatives, Devolution finance, N Ireland corporation tax devolution, Northern Ireland, Scotland, Wales