More questions than answers in 'state of the union' review

Professor Sir Kenneth Calman, one of the country's senior academics, was unveiled as the chairman of a new cross-party, cross-Border commission to review the devolution settlement.

His appointment will inevitably lead to more powers for the Scottish Parliament and a complete review of the way money is divided around the UK.

For Donald Dewar, the late First Minister, the devolution settlement he devised represented "the settled will" of the Scottish people. Yesterday, in a wood-panelled and brightly-lit conference room, Sir Kenneth's appointment proved this was no longer the case. The devolution settlement now represents merely the starting point for a radical redrawing of the relationship between Scotland and the rest of the United Kingdom.

As he walked into room P102 on the first floor of the media tower in the Scottish Parliament yesterday, Sir Kenneth was flanked by three beaming party leaders: Wendy Alexander for Labour, Annabel Goldie for the Tories and Nicol Stephen for the Liberal Democrats.

Together, they command 78 of the 129 MSPs in the parliament, more than enough to drive through their plans in this or any other parliament.

But beneath the nervous smiles as the flash guns cracked and the television cameras rolled, there was considerable uncertainty – none of them really had any idea quite where this process will take the country.

"I believe this will be the commission that will decide the constitutional future of Scotland and will create a stronger Scottish Parliament within a stronger UK," Mr Stephen said.

That view was echoed by Miss Goldie, when she said: "Mainstream opinion in Scotland wants devolution to work better and for Scotland to be secure in a stronger UK – that is what this body is all about."

And Ms Alexander said: "I think ten years on is the right point to review whether the powers and responsibilities of the Scottish Parliament are properly managed."

But none could say what the commission would come up with, because its remit is so wide-ranging. It can examine any and all parts of the devolution settlement and recommend any changes – as long as Scotland stays within the UK.

Sir Kenneth was clear that he would stop short of considering the question of independence, but he, too, has no idea what his commission will come up with. "Like the majority of the Scottish people, I very much see myself as part of the UK, but a Scot within that," he said.

He went on: "Seventy-seven per cent of the Scottish public don't think independence is the right way forward. All of the work over the last few years makes it pretty clear that's not an issue right now. Certainly, for this commission, it will not be an issue we will be discussing.

"There are plenty of other issues that are relevant to Scotland and its institutions and its parliament, which will give us plenty to look at."

However, as the three party leaders and the new chairman of the constitutional commission were taking this brave leap in the dark, SNP managers were clear where they stood: they were delighted, even though the body would not consider independence.

They believe that any moves to strengthen the powers of Holyrood and weaken the ties with Westminster will push Scotland along the road to independence.

If the Scottish Parliament gets fiscal autonomy of any form – whether in the guise of assigned tax revenues or actual control over the power to raise or lower taxes – the Nationalists believe this will give Scots the desire for more power and will lead to Holyrood getting complete control over its finances in time.

A spokesman for the First Minister said the decision of the unionist parties to set up the commission had made an independence referendum more likely, and he made it clear Alex Salmond thought his opponents had played into his hands.

He said: "The election last May has brought about change right across the political spectrum. What we are seeing at the moment would not have happened had we not won the election."

He said Mr Salmond had always been willing to accept more than one question in an independence referendum, and now the commission had been tasked with coming up with more powers for the parliament, that option could be put to the people, too.

In a piece of media management designed to show the support of the UK government, Gordon Brown issued a carefully worded statement to coincide with yesterday's commission launch.

The Prime Minister said the Cabinet had given the commission its approval and he was "determined to review the provisions of the Scotland Act in the light of ten years' experience while securing Scotland's place within the United Kingdom".

However, Professor John Curtice, of Strathclyde University, warned that the creation of the commission was a "gamble" for the unionist parties, who were hoping it would entrench support for the Union but not lead to greater demands for independence.

"If this comes up with anything that increases the autonomy of the Scottish Parliament, Scotland is going to look different from the rest of the United Kingdom," he said.

He said the commission aimed to do two things: convince Scots of the need for more financial control and persuade the English that Scots should have more financial responsibility.

"The crucial thing about this commission is who it persuades at Westminster, because all the important decisions on this will be made at Westminster," Prof Curtice said.

Sir Kenneth will publish his interim report in November, with his final report due some time next year. He will take evidence from the political parties, from "civic Scotland" – which means the churches, trade unions, business leaders and others – and from any other interested parties and individuals.

His review will run alongside the "national conversation" being organised by the Scottish Government and, while the SNP's version is concentrating on independence, Sir Kenneth's review will look at everything but that.

Sir Kenneth stressed yesterday that he was a unionist and a devolutionist, and that he did not believe in Scotland going it alone. However, what no-one knows is how far his review will go in pushing devolution along the road to independence.

Calman says study 'will not be driven by Downing Street'

ONE of Scotland's leading doctors and academics took charge of the new, wide-ranging review of the devolution settlement yesterday, and immediately insisted he would not take orders from Downing Street.

Sir Kenneth Calman, the Chancellor of Glasgow University, who will chair the Scottish constitutional commission, said that he would lead a genuinely independent inquiry.

"I would not have accepted this if I felt this was something being driven from elsewhere," he said.

Sir Kenneth also denied his inquiry would be fatally weakened by the fact independence would not be within the scope of its study, adding: "All the work over the last few years makes it pretty clear that's not an issue right now."

The setting up of the commission was discussed and approved by the Westminster Cabinet yesterday.

Gordon Brown, the Prime Minister, said: "I am delighted that Sir Kenneth Calman has agreed to chair this body and that it has the support of both the Conservatives and the Liberal Democrats.

"Together, we are determined to review the provisions of the Scotland Act in the light of ten years' experience, while securing Scotland's place within the UK."

The commission hopes to produce an interim report in November.

At yesterday's launch in Edinburgh, Sir Kenneth was joined by Wendy Alexander, the Scottish Labour leader, Nicol Stephen, the Scottish Liberal Democrats' leader and Annabel Goldie, the leader of the Scottish Tories.

The commission is officially described as an "independent review" supported by both the Scottish Parliament and the UK government, and its recommendations will be considered by both.

Its terms of reference, in line with a resolution passed by the Scottish Parliament, are to review the workings of the Scotland Act and recommend improvements, while continuing to secure the position of Scotland within the United Kingdom.

Sir Kenneth said that his activities and interests over the past 30 years had all involved questions of quality of life.

He added: "This report is about how we can improve the quality of life and wellbeing of the people of Scotland."

Meanwhile, the Scottish Government will today launch the second phase of its "national conversation" on the country's constitutional future.

This will involve taking the views of a range of organisations and institutions, from churches to trade unions and professional bodies.

Last night, a spokesman for Alex Salmond, the First Minister, contrasted the SNP-led administration's approach with the "extraordinary" exclusion of independence from the commission's deliberations.

The First Minister's spokesman also claimed the commission had been "hijacked" by the Prime Minister and downgraded to the status of a review.

He added: "We may disagree on the destination, but all parties must agree on the fundamental point that a referendum (on independence] is the democratic route."

The choices

These are the four main possibilities the commission will explore, as Hamish Macdonell explains:

1. THE STATUS QUO

THE first option open to Sir Kenneth Calman's review is to recommend no change at all – the status quo.

He could deliberate and take evidence for the next six months and decide that the devolution settlement is working well and there is no need to alter the Scotland Act in any way.

However, given that the Scottish Constitutional Commission was set up by three parties, all of which want to see change in some form or other, it would be almost inconceivable for Sir Kenneth to recommend nothing.

He could suggest handing back some powers to Westminster. Possible avenues include some legal controls, allowing the Westminster government to take complete control over anti-terrorism work – without having to ask the permission of the Scottish judiciary or the Scottish Government – or some environment controls. But any move to hand back powers to Westminster without bringing any other powers north would be hugely controversial and also unlikely. Sir Kenneth knows he is acting under the auspices of the main Unionist parties who want to see movement, particularly financial, in the devolution settlement and he will be under pressure to justify the commission's role.

2.NON-FINANCIAL POWERS

WHEN the Scotland Act was approved by Westminster, a number of key policy areas were reserved to Westminster.

The main ones – defence and foreign affairs – will remain in place because these represent the last bulwarks of the Union. If the Scottish Parliament was given charge of these policy areas, Scotland really would be independent. Sir Kenneth Calman's job is to consider whether any of the more minor powers should now be transferred to Edinburgh.

Some are small, self-contained policy areas like control over broadcasting or abortion policy in Scotland, issues which were considered for the Scottish Parliament but rejected by the UK government during the discussions in 1998. Others, however, are more wide-ranging, like firearms, drugs and immigration. These are big Home Office issues but there have been claims that Scotland would do better to make policy in these areas for itself. Immigration would be particularly problematic, because different immigration rules would need checks at the border and a Scottish immigration service, both of which would put up fresh barriers between Scotland and England.

3.ASSIGNING TAX REVENUES

IF THE Scottish Parliament is assigned tax revenues it would no longer get the 30 billion cheque from the Treasury it receives at the moment. Instead, it would be given money in parcels, allocated on the basis of the money raised in Scotland.

If, for example, stamp duty raises 500 million a year in Scotland, then that would be allocated under that heading. The advantage of this system is that it introduces a limited degree of control and responsibility. If revenues in one area go up, so the money coming to the Scottish Parliament in this area would go up, so it would be in the interest of the Scottish Government to improve the economy and hence improve the buoyancy of tax receipts in a particular area.

But there are major difficulties in this field. If Sir Kenneth decides that all Scottish tax revenues should be assigned, then what happens to North Sea oil revenue? If the majority of these receipts are assigned to Scotland, wouldn't that leave the Treasury short of cash?

Also, once the tax revenues are assigned, it would not be long before demands would grow for control of these taxes to be devolved too.

4.TAX-VARYING POWERS

SIR Kenneth's commission could solve some of the problems of assigned tax revenues by recommending that various tax levers are handed over to the parliament as well.

The scope here is limited by European regulations which forbid variations to certain taxes, such as business taxes, within a member state, but there is room for changes to stamp duty, excise duty and other indirect taxes, as well as more complex changes to the way the Scottish Parliament can vary income tax. At the moment, the Scottish Parliament can change the basic rate by up to 3p in the pound, up and down. It can also alter local taxes, as the Scottish Government is trying to do with its plans for a local income tax.

Income tax could be handed over to the Scottish Parliament in its entirety, but that would be such a big step it would be resisted furiously by ministers in London.

Whatever he suggests in this field, however, if Sir Kenneth recommends any changes to Scotland's fiscal base, it will inevitably spell the end of the Barnett Formula, the funding formula which has been allocating spending increases around the different parts of the UK for the past three decades.

Q & A: THE CONSTITUTIONAL COMMISSION

Q: What will the commission do?

A: It will review the devolution settlement, examine the powers the Scottish Parliament has at the moment and recommend changes.

Q: Who will it report to?

A: The UK government and Scottish Parliament.

Q: When will it report?

A: An interim report is expected in November this year with a final report in the summer of next year.

Q: Who is in charge?

A: Professor Sir Kenneth Calman, Chancellor of Glasgow University is chairman. He will be joined by other commissioners in the next few weeks.

Q: What is the commission's remit?

A: It can study any aspect of the devolution settlement, short of independence. The commission was set up to look for changes which may "better serve the people of Scotland, that would improve the financial accountability of the Scottish Parliament and would continue to secure the position of Scotland within the UK".

Q: What will happen to the recommendations of the commission?

A: These will be considered by the main Unionist parties, but any changes to the devolution settlement will need to be enacted by Westminster, which would need to change the Scotland Act.

Q: How often will it meet, and where?

A: The frequency of meetings has yet to be decided. However, the first meeting will be next month, with regular meetings after that to hear oral evidence and consider written evidence. Nicol Stephen, the Scottish Lib Dems leader, said he hoped many of the meetings would be at Holyrood.

Q: How much will it cost?

A: Sir Kenneth is not taking a fee and neither will the other commissioners, so the cost will not be huge. Any other costs, including expenses of those involved and the costs of producing the reports, will be met jointly by the UK Government and by the Scottish Parliament's Corporate Body.

ALEX Salmond will today launch the second phase of his 'national conversation' on independence.

The First Minister has invited representatives from trade unions, church groups, environmental campaigns and business organisations to a conference at Edinburgh University.

He will deliver a speech and then invite representatives to take part in workshops based around each of the Scottish Government's main themes – a wealthier, healthier, greener and safer Scotland.

The conversation's first phase, launched last August, saw the public and organisations submitting comments on the Scottish Government's website. More than 26,000 comments were registered.

THE IDEAL CHOICE

AS both a unionist and a devolutionist, Professor Sir Kenneth Calman was the ideal choice to lead the Scottish Constitutional Commission.

He is respected in academia and in government, he knows politicians and how to work with them and he was willing to work for free.

All these factors propelled him into a job yesterday which is likely to change the face of Scottish politics for ever.

Now aged 66, Sir Kenneth came to public prominence, first as Scotland's Chief Medical Officer in 1989 and then as the CMO for England in 1992.

He trained as a doctor at Glasgow University and after working in London returned to Glasgow in 1974 as professor of oncology.

He has held high office in the World Health Organisation and was vice-chancellor of Durham University from 1998 to last year.

Sir Kenneth is currently the Chancellor of the University of Glasgow.

He has written seven books and more than 100 scientific papers and lists outside interests as Scottish literature, cartoons, gardening – and sundials.