Leader: Smith steers UK towards decentralisation
The task now for politicians is to live up to the promise offered of a more powerful, responsible and accountable Holyrood that meets the hopes and needs of the Scottish people. Of course, honouring the “vow” was made easier by the fact that it was necessarily vague. Its central promise was that “Holyrood will be strengthened with extensive new powers, on a timetable beginning on 19 September, with legislation in 2015.” The timetable, thanks to the prodigious efforts of Lord Smith of Kelvin in shepherding five sets of politicians towards an agreement, has so far been kept.
The new powers also match the description “extensive”. When the Scottish Parliament’s spending power is viewed on its broadest definition, its current power to raise just over 10 per cent of its revenues is to be lifted well past the 22 per cent that it should reach under the already enacted Scotland Act 2012, to become entirely responsible for raising 38 per cent of its spending.
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Hide AdAn assigned share of VAT, which cannot be varied by the Scottish Parliament but which will vary according to economic cycles, will lift that revenue base to just short of 50 per cent.
Calculated on the basis of the budget over which Holyrood has full control and excluding items such as public sector pensions which can only be managed, then the level of fiscal responsibility rises to just over 60 per cent.
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Holyrood also gets to control about £2.5 billion of welfare payments and the power to make any additional welfare awards it chooses, such as, say, a supplement to the old age pension. On top of that, there are powers to come over Holyrood’s elections, control over the Crown Estate, broadcasting, transport, and the energy market.
First Minister Nicola Sturgeon says she is disappointed. Of course, it doesn’t match the powers of independence, but Scots voted against that. Neither does the package match up to full fiscal autonomy or “devo-max”, as defined by the SNP as everything other than defence and foreign affairs.
This should not come as a surprise. Beyond a few paper number exercises, no party, including the SNP, had a credible plan to show how that would work, especially in a macroeconomic sense. Viewed from any non-partisan perspective, the Smith proposals can reasonably be regarded as a major step forward for self-government in Scotland. The Commission has produced a report of greater breadth and depth than most people expected, and the SNP will struggle to present it to voters as a betrayal of “the vow”.
Assuming the UK government implements the report – and there may yet be skirmishes with back-benchers at Westminster – much greater responsibility is now going to be handed to Scottish politicians. While there may still be Treasury cuts eroding the block grant which the Scottish Government receives through the Barnett formula, they can now be either reduced or offset by the power to raise revenue through taxes – if, indeed, that is what is proposed in any successful party’s political manifesto.
There is also the opportunity for a Scottish government to stimulate the economy by reducing taxes, though that will come with the painful discipline of having to reduce public spending accordingly, a discipline which may give a new stimulus to yet greater efficiency in public service delivery.
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Hide AdNo doubt Ms Sturgeon will work hard to make sure that this is not the last chapter in the independence story. A commitment to independence is part of the SNP’s DNA, and the party will always strive to move beyond devolution to full sovereignty. For them this story only has one conclusion.
But this is also, and somewhat unexpectedly, the first chapter in a new story of decentralising power within Britain.
David Cameron’s embracing of the “English votes on English laws” principle must mean that devolution is no longer solely of concern to the Scots, Welsh and Northern Irish, but now of acute interest to the English. Regions and cities south of the Border are already putting the case for spending and tax-raising powers to be devolved from Westminster, in addition to the calls for England to have a political voice of its own.
It means that Britain is headed down a more federal road, offering the intriguing possibility that this journey will throw up more opportunities for Scotland to become more autonomous, as decentralisation becomes the norm.
It is unknown territory, with much detail to sort out, difficult new relationships to negotiate, dangers to avoid, and opportunities to discover. Our politicians – at both Holyrood and Westminster – must now explore this new landscape and find out how to make it work, for the common good. The people of Scotland expect, and deserve, no less.
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