Readers of this column will be aware that I've been complaining about by gob being smacked on a regular basis by the twists and turns of unionist policy. Each week a new destiny is revealed for Scotland: independence light, devolution max, devolution plus, skinny devolution lite with a shot of max... You could be forgiven for thinking that the politicians are few clauses short of a full constitution. But bear with me because there could just be a happy ending here.
This week senior figures in all three unionist parties in Scotland, Conservatives, Liberal Democrats and Labour, came together behind a new constitutional settlement called devolution plus. This is essentially the formula devised by the Reform Scotland think tank, which seeks to ensure that the Scottish parliament raises the vast bulk of the money it spends. In other words, that it pays its way. In a sense this is Calman reloaded, an extension of the plan devised in 2009 by the commission set up by the unionist parties after the SNP victory in the 2007 election campaign.
Calman was widely criticised for his plan to split income tax between London and Edinburgh. This was a difficult proposal to explain, let alone to implement, and many economists believe it would be deflationary. But the worst thing about Calman, and the Scotland bill that implements it, was that it failed to live up the principles set out so cogently in the main body of the report - that a parliament should be responsible for raising its revenue in a way that it is accountable, equitable and transparent. Devolution plus puts the Calman principles into practice in a way that is fair and that people can understand.
Under devolution plus, Scotland gets income tax, corporation tax, various other taxes and a geographical share of oil revenue. The UK keeps national insurance and VAT – reasonable because these taxes need to be more or less consistent across a monetary and customs union, which is what the new Scotland would be. This may not be “full fiscal freedom”, as the SNP have described it, or even devolution max, where Scotland raises all tax and sends a contribution south for common services like defence. But it's very close to it. If this scheme were implemented, Holyrood would have the vast majority of the powers it requires to pursue an independent economic policy, to the extent that this is possible within a monetary union where a UK central bank sets interest rates.
It would be tough, though. No more could a Scottish government spend freely knowing that the Barnett Formula will pay for it all. A Scottish government running devolution plus would have to make hard choices between cherished social programmes and the need to keep taxes low to attract inward investment. Oil revenue would present a temptation to buy votes which a populist government might find hard to resist. The Scottish National Party, might well split between low-tax Celtic neo-liberals, and the high spending social democrats.
But with a fair wind Scotland could end up rather like Quebec, where economic policy is almost entirely run from Montreal, even though it remains a province of the Canadian federation. Quebec has many very attractive social policies too , including universal child care for $7 a day, which it manages to finance even though it lacks revenue from natural resources. There is still a Quebec nationalist party, the Parti Quebecois, but it's ambitions focus principally on questions of defence and foreign policy.
Devolution plus could offer the best of both worlds – independence within the United Kingdom. It could even give Scotland more control over its affairs than formal independence. How so? Because there would still be a Scottish presence – albeit reduced – in Westminster, allowing Scotland's voice to be heard on the many nominally English issues that would have a bearing on Scotland. Not just defence and foreign affairs, but immigration, maritime law, the national grid, the NHS, interest rates and English employment law. Indeed, if the Coalition had any imagination, they would use the forthcoming reform of the House of Lords to turn it into an elected Senate with a federal representation from the constituent nations of NUK – the New United Kingdom.
But we are getting ahead of ourselves. Devolution plus is still just a proposal, albeit from an influential cross party grouping. And for some perverse reason, they don't want to give Scotland a chance to vote for it. However, given that both David Cameron and the former Labour chancellor, Alistair Darling, have said recently that they envisage more powers for Scotland than in the current Scotland Bill, devolution plus must surely be what they have in mind. If it isn't what they have in mind, they'd better say so very clearly now, if they don't want to be accused of constitutional jiggery pokery. Labour and the Liberal Democrats have their Scottish conferences this weekend: their leaders must make their positions clear. The current Scotland Bill will have to be put out of its misery for a start.
If Scots had a vote tomorrow, devolution plus is almost certainly what they would vote for – by similar margins to the 1997 devolution referendum. Scots want to run their own affairs, but don't particularly want to break up the UK. So, why has Alex Salmond been keen to embrace devolution plus, and offer a place for it on the referendum ballot paper? Surely it means that the SNP will lose the referendum? Well, because he realises that this represents a massive step towards independence. Unionism has become federalism – and the referendum is still two years away. But it's not just a stepping stone.
The First Minister realises that this scheme, if it is implemented sincerely, would effectively bring to an end Scotland's economic dependency, and could vastly improve the country's prospects, not least because of oil revenue. That this is now being promoted as the new “status quo” is an astonishing testament to how Alex Salmond has changed the landscape of Scottish, and British politics since the SNP landslide in May. And England would welcome the arrangement because it would end the Barnett Formula. Indeed, this might just be one of those rare moments in politics when everyone's a winner.
4 comments:
"It would be tough, though. No more could a Scottish government spend freely knowing that the Barnett Formula will pay for it all."
To imagine that the Scottish government can do this now implies a belief that the Barnett Formula allocation is infinitely flexible to accommodate spending in Scotland. This simply is not true. What is true is that the Scottish government can set spending priorities within the constraints of the block grant.
What terrifies the UK government is the fact that, even within these constraints, the spending decisions of the Scottish government are producing results against which their own policies do not compare at all favourably. It is reasonable to anticipate that as more powers are devolved the divergence between Scotland and the RUK will increase. And if Scotland fares better, as has generally been the case since 2007 when we got a real government, this will inevitably lead to some very awkward questions being asked of whatever party is in power (actually or parasitically) at Westminster.
The other point worth making is that independence, and to a lesser extent FFA, would expose the lie of English taxpayer subsidies to Scotland. Although many would continue to cling to the myth regardless, there would also be more than a few voices raised in protest at having been lied to for so long by successive UK governments.
Federalism would solve ALL constitutional problems ( except nuclear weapons, but cost will do for it ) but Westminster will not give up on its political and economic hegemony. It sees London as Rome to everyone elses provinces.This includes all Unionist parties, even the Libs, who falsly claim to be federalists.Anything we get will be hard won, no matter what they claim to be considering. Best to go for Independence!
completely agree good article thanks for writing
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