The submission by the Royal Society of Edinburgh working group to Holyrood’s finance committee (“New Holyrood powers could create fresh constitutional instability, warn experts”, 19 May) demonstrated some misunderstanding regarding the expected new powers from the Smith report.
A glaring omission was that paragraph 78 of the Smith report was ignored – its significance speaks for itself: “The Scottish Government will receive all income tax paid by Scottish taxpayers on their non-savings and non-dividend income with a corresponding adjustment in the block grant received from the UK Government, in line with the funding principles set out in paragraph 95.”
So, the funds available to Holyrood would remain unaltered.
That would be compatible with the original concept that we should be more accountable for the money we spend, although you can’t be a little bit accountable any more than you can be a little bit pregnant.
And the Barnett Formula, which determines the amount of block grant, would have to remain.
So long as Scotland receives 20 per cent more central funding per head than England, our tax proceeds cannot be retained, as well as the full block grant.
Also, Barnett serves to assess the comparative movement of Scottish and English central funding, so as to measure the point at which parity is reached in the event we don’t have either fiscal autonomy or full independence prior to that.
The English consider we are subsidised by their taxpayers, but the extra we have was poured into Scotland in the post-war years to thwart the perceived nationalist threat, and it is being clawed back through Barnett, whereby we receive a straight 10 per cent population ratio of any extra England receives year-on-year, instead of the 12 per cent we need to maintain services at our present level – that could mean a £250 million loss each year.
The next tranche of Westminster cuts will be some £5 billion, which equates to 20 per cent of our £25bn block grant, so at that point our central funding would reach parity with that of England, leaving aside the fact that England would also suffer a commensurate cut.
And that £5bn of cuts also reads across to our viability, except that Westminster would be making the reduction and not the Scottish Government!
But, of course. I could be wrong!
Douglas R Mayer