Analysis: Offering an alternative to the 'subsidy junkie' jibe

Published on Monday 15 June 2009 22:47

THE publication of the report of the Calman Commission is the most significant event in the debate about Scotland's constitutional future since the 1997 devolution referendum.

It provides the basis for a radical recasting of the role and status of the Scottish Parliament, while retaining Scotland's membership of the Union.

Until now, Holyrood has been responsible for spending a lot of money – 30 billion at the last count – but for raising very little.

Business rates and the council tax aside, the amount of money available to the Scottish Government to disburse has been determined in Whitehall, primarily through the application of the Barnett formula.

Under Sir Kenneth Calman's proposals, as much as a third of the Scottish Government's income would depend instead on taxes set and raised in Scotland.

This would primarily be achieved through a Scotland-only portion of income tax, the rate of which Holyrood would have to determine each year.

There is room for quibbling about the details. Holyrood will only be able to set one rate of tax across all incomes, rather than charge a higher rate on the better-off.

It is debatable how easy it will be in practical terms for Holyrood to set different rates of tax from those operating in England.

Also, the Calman report itself suggests that its proposals may eventually need to be taken further, such as for example by giving Holyrood a share of VAT.

But this is to miss the importance of the Calman principle that Holyrood should become an institution that taxes as well as spends.

It would mean an end to the days when Scottish election campaigns merely consist of a sterile choice between different combinations of more police, more nurses and more teachers.

Under Calman, parties would be free to propose different levels of spending – and of taxation – too.

Thus, so long as the report is endorsed by one or more of the unionist parties, the terms of the debate about Scotland's constitutional future will be radically changed.

No longer will that debate simply be between the current devolution settlement and independence.

Instead, it will be between the current settlement, a Holyrood with a significantly enhanced role and powers, and independence.

The SNP will no longer be the only party apparently able and willing to offer constitutional change.

And perhaps most dramatically of all, the Conservatives could emerge at last as a party that is seen to be in favour of a more powerful – if also more fiscally responsible – Holyrood.

South of the Border, meanwhile, English politicians could find it more difficult to argue that Scotland is a "subsidy junkie".

True, Calman ducks the question of what the overall level of devolved spending should be, simply acknowledging the current system "is not well related to need".

But if marginal decisions about the level of spending in Scotland depend in future on revenues raised in Scotland, then the country would seem at least – and at last – to be paying for the privileges it enjoys thanks to devolution.

&#149 John Curtice is professor of politics at Strathclyde University

War of words over spending

LABOUR and the Conservatives yesterday clashed over spending cuts, after shadow chancellor George Osborne conceded for the first time that a Tory administration would have to rein in costs.

Mr Osborne challenged the government to come clean on the economic reality, insisting that gloomy UK forecasts showed real spending would have to be cut whoever won the next election.

But Children and Schools Secretary Ed Balls hit back, pledging that a Labour government would still raise spending on education as long as the economy allowed it.

In an article for the Times, Mr Osborne said: "The real dividing line is not 'cut versus investment', but honesty versus dishonesty."

Yesterday, Mr Balls had to backtrack on his own previous claims that there would be a real-terms spending boost under Labour for education.