Why More Devolution is Inevitable

My Lords Steel and Vallance make unlikely revolutionaries,but their Commission's report on the future of the Scottish constitution is little short of a declaration of independence. Giving Scotland control of taxation, broadcasting, welfare, immigration, asylum, the civil service, the constitution and many other powers would amount to a lot more than “fiscal federalism”, whatever that means. Under their plan Scotland’s government would even have its own borrowing powers and a national debt. It’s difficult to think of what Westminster would have left to do, apart from start wars.
Now, there has been much scoffing about how passé Lord Steel’s report is; that there’s little demand in Scotland for more constitutional upheavals, especially with the roof falling in in Holyrood. However, it would be unwise to dismiss the Steel Commission Report as the misguided musings of a home rule romantic. Critics said much the same about the last big constitutional report that Lord Steel chaired - that of the Scottish Constitutional Convention in 1988. It called for a Scottish parliament with full legislative powers to be elected by proportional representation. It’ll never fly,we were told...
These things have a way of creeping up on you. The Scottish people may not be taking to the streets to demand more powers for Holyrood, but nor did they for devolution. In Scotland, constitutional change happens incrementally, through the formation of broad coalitions, almost by stealth. And look around: a majority of the MSPs in the Scottish parliament already support the powers of Holyrood being extended. The political reality is that they almost certainly will be - sooner or later.
Devolution was always a process rather than an event, and we live in rapidly changing times. The new Tory leader, David Cameron, is on record as supporting greater powers for the Scottish parliament and a new constitutional settlement to take account of anomalies like theWest Lothian Question. The Liberal Democrats have a new leader in Menzies Campbell, who served on the original Scottish Constitutional Convention and has a rare intellectual grasp of the issues.
It is quite possible that there could be a coalition in Westminster after the next general election - even Professor John Curtice says so. Labour only need drop thirty three seats and Gordon Brown would find himself a leader bereft of a working majority. Brown is, of course, a long time supporter of devolution and any talks between him and Menzies Campbell about a UK coalition would inevitably involve the proposals in the Steel Commission.
Indeed, one way of looking at this week’s report is that it’s an opening bid in these very negotiations. It is a set of constitutional demands deliberately set high to allow room for movement. I cannot, for example, see any Westminster government handing powers over immigration and asylum to Scotland. Or rather I could, but it would mean setting up border controls at Gretna Green.
Given the government’s sensitivity over immigration, revealed yesterday by Charles Clarke’s new points system for immigrant workers , Westminster will not want to see foreigners entering the country through the Scottish backdoor. However, there could be some further modification of the points system to give it more of a regional bias.
Similarly, Gordon Brown would be reluctant to give full tax raising powers to the Scottish Parliament. But again, there could be scope for bargaining here - perhaps a concession on corporate taxation. Remember that the Scottish parliament already possesses the power to vary income tax by 3 pence in the pound - a power it has never used. It’s not inconceivable that Prime Minister Brown might go along with the idea of the Scottish parliament setting tax rates provided it didn’t involve setting up a rival Inland Revenue. The Barnett Formula, which currently shares revenue on a peer capita basis, has outserved its usefulness and will almost certainly be reformed in the next parliament.
Brown - assuming he is returned as Prime Minister - might anyway have no choice but to accept greater Scottish autonomy. It will loom large in the negotiations for form a new Scottish coalition after the 2007 Holyrood elections. The Steel Report, commissioned by the Liberal Democrats, represents the kinds of terms Nicol Stephen, will be set of Jack McConnell for any future Lib-Lab Partnership Agreement. We thought they had got everything they ever wanted from Labour, but not so.
And, of course, if there is no Lib-Lab coalition, then the Steel Report could form the basis of an alternative SNP/Lib/Green coalition in Holyrood. Labour has no freehold on office, and McConnell only need to lose half a dozen seats for the non Labour parties to be within sight of a non-Labour administration. An alternative coalition must happen eventually. The SNP has been careful not to speak too enthusiastically about Steel’s agenda, but it is right up Alex Salmond’s street. He might even get the SNP to shelve its demand for a referendum on independence - the main obstacle between the SNP and the Libdems - on the grounds that the Steel Report is only a couple of steps away from it.
And the Tories? Well, as their deputy leader, Murdo Fraser, made clear at the weekend, even the Scottish Tories are conquering their fear of nationalism and are willing to contemplate a “business pact” with the SNP. An extraordinary development, which would have been unthinkable ten years ago. The Steel Report would provide much of the intellectual ground work for any such arrangement. We really are in a very difficult political game, north and south of the border.
But merely stating the possible political configurations in Westminster and Holyrood is missing the point. For the main reason that the Steel report should be taken seriously is the force of its argument. It’s all a matter of respect. The Scottish parliament needs to find some way of moving on from the present transitional status of financial dependency, or financial delinquency.
Lord Steel is right to say that “no self respecting Parliament should expect to exist permanently on 100% handouts determined by another Parliament”. Scottish politicians will never be taken seriously, or take themselves seriously, until they are responsible for raising the tax payer’s money they are spending. This is what accountability really means. In curious way, local government is actually more responsible in Scotland than the Scottish Executive - at least councils raise part of their revenue and have to answer for their spending decisions at election time.
And there’s another reason why the Steel Report demands attention. Its call for a written constitution for the UK, to take account of devolution and revive parliamentary democracy, is shared by many people of all parties who believe that the relationship between government and the people is out of kilter. The decline of parliament and the cabinet and the rise in Prime Ministerial power has provoked a crisis of legitimacy, seen most strikingly in the Iraq war. As long cherished freedoms are eroded, day by day, by a PM who rules like an elective monarch, we need a more solid foundation for our liberties.
Even Gordon Brown has accepted that the constitution needs to be looked at to address public cynicism and mistrust. Where better to address these issues than in a new Constitutional Convention for the UK. It could be an idea whose time has come - again.