Category Archives: Wales

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.

The Charter would accompany the specific devolution statutes for Scotland, Wales and Northern Ireland, so they would need to be construed in accordance with it and its principles would govern further considerations of devolution – and indeed changes at UK level.  It would therefore set out a clearer constitutional framework for the UK as a whole, rather than the current ad hoc approach to three distinct arrangements plus an evolving pattern for England.  This might be a staging-post to a written constitution, but it would certainly put the UK’s territorial constitution at the forefront of its constitutional debates over the coming years.

The second major recommendation relates to funding arrangements.  The review is clear that the Barnett formula has had its day.  It does not deliver equity between the various parts of the UK.  It does result in a number of unintended policy spillovers between England and the devolved tier of government, and it gives the Treasury a huge degree of control and scope to make subjective judgements about how the UK’s finances as a whole work.  These are incompatible with the sort of devolved Union that the UK has become, and will only become worse.  The block grant will become increasingly subjective as adjustments are made to allow for devolved tax capacity, to pay for devolved welfare functions in Scotland, and by application of the ‘no detriment’ rule intended to help separate tax policy decisions by both devolved and UK governments (both the subject of forthright criticism by the Scottish Parliament’s Devolution (Further Powers) Committee).  This ‘multiple black box’ approach will become a source of nothing but disagreement and intergovernmental tension.

The Commission’s proposals entail reform of the UK’s devolution finance arrangements, of the easy parts as soon as practicable and of the more difficult ones over time.  The machinery needs an independent, impartial body to advise on financial matters and calculations.  There also needs to be an effective way of resolving disagreements and disputes when they arise, rather than ones that leave the initiative in the hands of the UK Government as at present.  And the block grant arrangements need to be put on a statutory basis rather than resting on a Treasury ‘Statement of Funding Policy’, and be subject to external scrutiny and audit

Linked to this is the need for a wider debate about welfare and the Union; how much the Union is responsible for delivering social solidarity and how, and the ways this relates to the arrangements for funding devolution.  This political choice has such wide-reaching effects it needs to be explicitly debated, not implied by other decisions.

The third major recommendation relates to ‘English votes for English laws’.  The report supports the principle that bills or provisions which satisfy the McKay Commission’s test of having a ‘separate and distinct effect’ for England should be subject to consideration by English MPs alone, within the House of Commons.  The problem will come with identifying what these bills are.  The government of the day may have a view about this, but ultimately deciding this will have to be a job for someone with authority and expertise or access to it, so probably the Commons Speaker.  It will need to take into account not only the policy implications of a decision about health, education or policing, but also the financial implications.  This will be tricky, and is an argument for both disentangling devolved and non-devolved finances and for separating the way finances and policy are considered within Parliament.

The fourth major set of recommendations relate to the UK Government, and particularly Whitehall. Whitehall needs to pay much more attention to devolution concerns; it needs to ensure that the machinery of intergovernmental co-ordination actually works; and it needs to reinforce ministerial capacity.  The last is a strong reason for a single Secretary of State for the Nations and Regions, or for the Union.  The absence of an effective overview at ministerial level has made the disjointed structure of the UK much worse.  Without much greater care about what devolution means, and the relationship between devolved and non-devolved functions, it will be impossible to distinguish between devolved and non-devolved financial matters or between legislation that has a ‘separate and distinct’ effect for England and that which does not.  Treating devolution as some sort of add-on or variation from an English ‘norm’ has also had its day.

In September 2014, Scottish voters chose to stay in a reformed Union rather than leave it.  There is strong public support for greater self-government in Wales and England as well.  Northern Ireland, as part of the Union, needs and deserves a system that works effectively.  The Commission’s proposals are designed to lay the groundwork for a union that delivers on those demands.

 

 

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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.)
Second, new Labour treated devolution as an event not a process. What was done in 1998-9 for Scotland, Wales and Northern Ireland was itself always unstable, a reform half-completed.  For it to work as a durable constitutional settlement, it needed to form the first step in a wider programme, addressing regional issues for England, the West Lothian question, the working of the Barnett formula and the inequities in spending on public services that generated, and issues of tax devolution to complement that of service delivery.  But Labour largely stopped there.  Leaving these matters un-addressed generated or fuelled tensions between different parts of the UK. Moreover, to maintain its position in Scotland and Wales, it needed to understand the new political dynamics that arose once there were devolved electoral arenas that were also sub-state nations, but did so very poorly (although Welsh Labour appears to have learned that lesson rather better than Scottish Labour).
In office in Westminster, Labour not only failed to act on these issues. It positively sought to squelch any serious discussion of them (note the utter silence on the question of the Barnett formula after 1999 until 2008 and the establishment of the Holtham Commission in Wales, itself at Plaid Cymru’s insistence).   Labour could have addressed them during the decade after devolution, from 1999 to 2010, while it was in government in Westminster.  If it had done so, it would have been able to do so on comparatively favourable terms and with less serious consequences than now. It positively refused, despite repeated private urgings (to some of which I was party). It failed to change anything for fear it might lose something – and now it has suffered a grave electoral defeat and lost any meaningful influence over events, particularly in its former powerbase in Scotland. These are bitter lessons for Labour, but it has only itself to blame for learning them now and not addressing them sooner.

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Devolution, territorial politics and the general election

This post also appears on the Constitution Unit’s blog, here. Constitution-unit.com 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:

engage proactively with the Northern Ireland Executive to support continued political progress, and deliver on it’s (sic) vision of a shared future. We will ensure the economic pact between the UK Government and Northern Ireland Executive is focused on stimulating jobs and growth which contribute to reducing unemployment and poverty in Northern Ireland. (p. 66)

Things get murkier when it comes to Wales and the proposals for further devolution made through the St David’s Day process. The Conservatives simply commit to that; the Liberal Democrats to both St David’s Day and the Silk Commission recommendations, a number of which were dropped through the St David’s Day process. This means that the Lib Dems have committed themselves to devolution of policing, prisons and probation while the Conservatives have not. Labour revisit, yet again, the Silk/St David’s Day recommendations and support a ‘Barnett floor’ for fair funding and devolution of elections, transport and energy, but not policing and offender management. Instead, they propose an all-Wales policing plan (though how this would work is hard to say, as policing plans are a matter for elected Police and Crime Commissioners – are these to be abolished or superseded?). Labour also say nothing about holding a referendum on income tax devolution as required by the Wales Act 2014, though this was recommended by the Silk and Holtham Commissions.

All three parties are in favour of sub-national devolution in different ways but the greatest variation relates to England, and ‘English votes for English laws’ (EVEL). For the Conservatives at least, the ground is now well-trodden and builds on the McKay Commission proposals: votes on measures affecting England at Westminster would be limited to MPs from English constituencies at Committee and Report stages, with a ‘legislative consent motion’ afterward, before 3rd reading. The Lib Dems say they are in favour of EVEL, but only in the context of proportional representation. Both these positions were set out in the December 2014 Command paper on The Implications of Devolution for England. Labour emphasise devolution within England, to include an English regional cabinet committee, and propose a ‘people-led’ constitutional convention to consider EVEL issues (in which the McKay proposals would only be an option) and an elected ‘senate of the nations and regions’ to replace the Lords.

The nationalist parties

The nationalist parties’ manifestos are more clear-cut. While the Scottish National Party endorse the Smith Commission recommendations and call for them to be implemented ‘in full’ (a further dig at the Scotland in the United Kingdom Command paper), they say these are insufficient and call for extensive further devolution. These demands include what they now call ‘full fiscal responsibility’ (itself to be delivered in stages), regulation of pay-day lenders, the minimum wage, and specifically ‘business taxes’ (the term corporation tax is never used).

Plaid Cymru call for funding on the Scottish level – in other words, a ‘Barnett bonus’ like Scotland’s – but also a ‘fair funding settlement’ with a ‘funding floor’. They call for ‘the same tax powers as Scotland’ but also devolution of corporation tax, and a higher (but not devolved) minimum wage. They also say

In principle, we support English Votes for English Laws. However, Welsh MPs must be able to vote upon any issue which affects the people of Wales or the Welsh Government’s finances.

It may be slightly odd to describe the Democratic Unionist Party from Northern Ireland as a nationalist party, but in their focus on a particular part of the UK and its specific interests, they function rather like one. They emphasise various forms of privileged treatment for Northern Ireland including favourable financial treatment, both through the block grant and through arrangements for corporation tax devolution, and a Secretary of State for Northern Ireland. At the same time, they want equal status for Northern Ireland, whether that be through support for inward investment, the renaming of the Olympic ‘Team GB’ or UK departments carrying out operations there.

Considering the manifestos

There is one coherent and consistent theme to be found in all these manifestos: a lack of coherence and consistency. For the SNP, this is chiefly in attempts to have their cake and eat it; to have Smith but demand more, and to have full fiscal responsibility (itself a dubious proposition, since it would involve serious cuts of 15-20 per cent in Scottish public spending or tax increases to cover the higher levels of spending there) but ‘in stages’ and while preserving the Barnett bonus. Plaid Cymru have now abandoned ‘fair funding’, but seem both to want what Scotland has, and more. The three pro-UK parties all demonstrate a similar fault as well; they fail to take an overarching view of the implications of their proposals for each part of the UK on the others. Perhaps the Lib Dems come closest to a coherent view of a decentralised, sort-of federal UK, but it remains an incomplete picture assembled of different proposals for each part of the UK.

Of the pro-UK parties, Labour’s proposals are both the most distinctive but also the most unclear. We know they wish to unpick both the Scotland in the United Kingdom paper and the St David’s Day proposals for Wales, as well as have a different approach for Northern Ireland – but have no clear idea what these policies are or what they would mean if implemented, let alone how high a priority they are. Moreover, we do not know how they will interact with the proposed ‘people-led constitutional convention’. The working of other proposals is doubtful in practical terms, such as the idea of an elected senate of the nations and regions. The Conservatives’ advocacy of English votes for English laws introduces a sequence of practical problems and problems that arise from a disproportionate electoral system that advantages winners (but, ironically, may protect the Lib Dems themselves from as large a loss of seats compared to their loss of votes).

Of course, the manifestos all need to be read against the backdrop of possible coalition-building. The Conservatives in particular are fearful of a Labour-SNP alliance, and given the degree of similarity in their manifestos have reason to be. A cynical view would be that the SNP have carefully framed their manifesto both to appeal to traditionally Labour voters and to create scope for – indeed, put pressure on – Labour to come to some arrangement if the parliamentary arithmetic so dictates. There has been some confusion about the price of such support (further devolution ‘concessions’? No Trident replacement? A reversal of ‘austerity economics’?) Equally, Labour have been under a good deal of pressure from the Conservatives about the supposed illegitimacy as well as instability of such an arrangement. But the SNP have weakened their hand by their adamant refusal to support the Conservatives under any circumstances, meaning they only have one choice of potential governing party to support. Conversely, the Conservatives’ attempt to undermine the legitimacy of the SNP as a player at Westminster sits strangely with both the party’s unionism and indeed much that was said during 2014’s Scottish referendum campaign. If Scots and particularly Scottish nationalists want ‘in’, experience overseas suggests it is prudent to ensure they are.

Plaid’s overall left-of-centre profile would seem to rule out any support for a Conservative-led administration, but the lack of clarity about their requirements and impossibility of their likely demands, as well as the limited clout Plaid are likely to have, may diminish their attractiveness to a Labour-led one too.

By contrast, the DUP have played their cards astutely. By indicating they would do a deal with either Labour or Conservatives and setting out a short list of criteria which would seem to inflict roughly equal pain on each of the parties, they have maximised their scope for influence and for being able to claim to have influenced a government.

Post-election negotiations to form a government are likely to be protracted, even tortuous.  They are also likely to be less heated than much of the campaign rhetoric has been, and that will be no bad thing.  This is a delicate constitutional dance, and cool heads and a willingness to compromise will be at a premium.

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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]binghamcentre.biicl.org 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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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.

The third question is how to resolve the difficulties an ‘English rate of income tax’ shares with any move toward ‘English votes for English laws’ at Westminster to address the West Lothian question. These can be summarised as

• Serious practical difficulties in identifying ‘English laws’
• Operational problems in limiting those and ensuring only qualified MPs voted on them in divisions
• The potential governability issue, if a UK Government with the support of a majority in Parliament as a whole did not have majority support from English MPs, and could not get its business relating to England through Parliament.

On top of these, it would probably intensify (and not redress or remove) the problem of the connection between decisions about funding for services in England, and the block grants for devolved governments calculated using the Barnett formula. It would risk intensifying those problems because the ‘no detriment’ principle which is adopted for tax devolution is meant to protect each government from the effects of tax decisions taken by the other tier of government. An ‘English-only’ tax decision would risk creating all sorts of spill-overs which would trigger that principle.  So this is a recipe for greater complexity, not simplicity or ‘fairness’.

The operational problems of identifying what measures Scottish MPs could vote on and which they could not would be considerable. Collection and enforcement of income tax, even after Smith is implemented, will be for HM Revenue & Customs – so Scottish MPs should be able to vote on all matters relating to that. So would the definition of income, and exceptions, exemptions and reliefs. Also allowances – the personal allowance, married couples’ allowance, and so forth. And as income tax on savings and dividend income is not devolved, decisions about that would also need to include Scottish MPs. No wonder the Smith Commission noted that ‘Income Tax will remain a shared tax and both the UK and Scottish Parliaments will share control of Income Tax. MPs representing constituencies across the whole of the UK will continue to decide the UK’s Budget, including Income Tax’ (paragraph 75). There may be a logic in stopping Scottish MPs voting on the devolved matters, but those are rates, bands and the thresholds between bands – a very significant measure of fiscal devolution, but not the sort of complete devolution that an ‘English rate of income tax’ would imply. Making that actually work, vote by vote, will involve a veritable Parliamentary hokey-cokey.  The Smith recommendation not to limit MPs’ voting rights on tax matters will be very much easier to make work.

The fifth question is whether, if this really is about an ‘English’ (or English/Welsh/Northern Ireland) rate of tax, it can actually work at all.  It almost certainly can’t.  Tax devolution for Scotland (both under the Scotland Act 2012 and the Smith Commission proposals), Wales and Northern Ireland works by making a reduction from the block grant to allow for devolved tax capacity. There are many issues about how that will function in practice, but the principle is a viable one – because there is a distinct and identifiable grant to fund each devolved government.  That is not the case for England. Funding for English services is simply funding for UK Government functions that happen to be located in England. To have a separate English rate of income tax means identifying what those services are and having a separate and identifiable pot of funding for them, to which the English rate of income tax flows. That would be a huge upheaval for the administrative machinery of government, which certainly goes beyond the commitment in the Conservatives’ UK manifesto for a veto for English MPs on income tax decisions.  It would amount to putting in place a federal fiscal structure for the UK.  That certainly hasn’t been discussed by any political party to date.

The sixth question is whether this is meant to apply just to the Scottish proposals for income tax, or more widely.  With devolution of stamp duty land tax and landfill tax to Scotland and (in due course) Wales, shouldn’t it logically apply to those too?  What about issues regarding the new Northern Ireland rate of corporation tax?  What about air passenger duty or the aggregates levy when those are devolved?  The fact these are small taxes doesn’t alter the principle that appears to underlie Cameron’s proposal.

So, if this is something new, it may well be unworkable. But it’s probably the case that this is just eye-catching rhetoric to reheat an old promise, which is causing much more heat than light.  But who would report an announcement about ‘English, Welsh and Northern Ireland votes on English, Welsh and Northern Ireland income tax rates and thresholds between rates on non-savings non-dividend income’?

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Improving intergovernmental co-ordination: better intergovernmental relations and better devolution

I’ve a report out today on the procedural aspects of intergovernmental relations.  This was commissioned by the UK Changing Union project through the Wales Governance Centre at Cardiff University, and can be found on their website here. Today was also the day when the plenary Joint Ministerial Committee met; it agreed, among other things, a full-scale rewrite of the Memorandum of Understanding.  As this post argues, such a rewrite is overdue. 

Intergovernmental relations are key to making devolution work effectively. The Scottish Parliament, National Assembly for Wales and Northern Ireland Assembly all operate in a wider context of governance across the UK, and how their functions overlap with those of the UK Government (and other governments) is vital for all four governments and all UK citizens. The Smith Commission’s recent report pays a good deal of attention to the need to ‘scale up’ intergovernmental co-ordination as part of the package of further devolution.

The UK Government is not very interested in managing intergovernmental relations, however. It put in place an attenuated under-institutionalised set of mechanisms in 1999, and has allowed that to weaken or fall further into disuse since then. The key institution is the Joint Ministerial Committee. Plenary meetings of that ceased altogether between 2002 and 2008; they have been more or less annual since then, but are characterised by grandstanding rather than productive work. The JMC’s ‘Domestic’ format has nearly ceased to function, as so few policy issues concern more than one devolved government. The only established format of the JMC which does meet regularly, and does more or less what it was expected to, is the EU format which helps formulate the UK ‘line’ for major EU Council meetings, though there are problems even there. In reality, most intergovernmental issues are bilateral, but with few exceptions they are dealt with in an ad hoc, casual way, out of sight of public or legislatures, and many important issues slip through the net.

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New ‘page’ on the West Lothian question

I’ve just added a page explaining the West Lothian question to those on the blog.  It can be accessed through the links at the top of the page, or HERE.

One point often overlooked, which I discuss there, is the extent to which the anomaly of the West Lothian question is made worse by problems of mis-representation, which are fuelled by using the First-past-the-post electoral system.  The result is that Labour is disproportionately strong (compared to its share of the vote) in Scotland and Wales, as are both Conservatives and (somewhat less so) Labour in England.  The Lib Dems in England, the SNP and Conservatives in Scotland, and Plaid Cymru and the Lib Dems in Wales are the main losers.

There are arguments on both sides of the question of proportional representation, but its absence creates these anomalies that mean Labour has far more Scottish and Welsh MPs than its share of the vote justifies, and the Conservatives more English MPs.  A more equitable electoral system would reduce that disparity, and the degree to which the West Lothian question is played up or down for party advantage.

I’ll be saying something further about the possible solutions to the West Lothian question in the next few days.

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