Peter Jones: Scotland’s future in the balance

Alex Salmond has to box clever to get as close to independence as the political climate allows

BIG constitutional change, including the devolution of more tax power to the Scottish Government, seemed pretty much inevitable after May’s election of a majority SNP administration. Now, however, it seems a lot less clear. In fact, it is possible that what we may end up with is an almighty guddle and no change at all.

This may seem an unlikely proposition given that, apart from the SNP desire for a near revolutionary change in Scottish tax powers, the new Scottish Liberal Democrat leader, Willie Rennie, seems intent on shifting his party’s policy towards more radical change. And there are signs of similar movement within Scottish Conservative ranks, although whether it happens depends on the outcome of the party leadership election.

But let’s go back a little and look at what is actually happening. The plans for enhanced fiscal powers drawn up by the Calman Commission, including control over 10p of income tax, are wending their way through Westminster. Before May, it was assumed that even if the SNP opposed them, the unionist parties would have voted them through the Scottish Parliament. Of course, thanks to the SNP winning a majority, they now no longer have the power to do that.

Indeed, the SNP has the power to block the transfer of powers. Last week’s meeting of the Scottish Parliament committee examining the Scotland Bill’s provisions made it pretty clear that the SNP is preparing the ground to do exactly that. In an interesting press release issued after David Gauke, a junior UK treasury minister, had given evidence, SNP MSP Stewart Maxwell gave several reasons why the Nationalists might block it.

First, he said, the Treasury had given no evidence for the 10p rate. In the session, he asked why it should not be 12p or 8p. Mr Gauke’s answer was that 10p had been chosen because it was a simple and straightforward division of income tax powers – on the 20p basic rate, the UK government collects half and the Scottish Government collects the other half.

That clearly is a political judgment and it seems a perfectly reasonable answer to me. If Mr Maxwell was saying that there should be econometric evidence which says this is the best division, I am at a loss to think of a test which would fit that bill, a point which Mr Gauke made.

Mr Maxwell’s second and third objections were that the Treasury had not yet given a mechanism for calculating the reduction in the block grant to the Scottish Government that would accompany the transfer of tax powers and no final costs for the implementation of the plan.

Mr Gauke’s evidence was that he had spent the morning discussing these points with Scottish Government officials and good progress had been made, the implication being that eventually these figures will be produced for all to see. I can’t see what’s wrong with that.

In fact, exactly the same sort of objections can be raised about SNP plans to control corporation tax. Scottish Financial Enterprise, which represents the finance industry, has published a list of 24 or so questions which it says it would like to see answered. They are not given as reasons to oppose devolution of corporation tax, but technical questions about how devolved control of the tax might work, aimed at finding out more information.

Mr Maxwell, however, has concluded that the Calman proposals are “damaging”, despite a Treasury rebuttal of Scottish Government arguments that they will cut its budget. Nevertheless, I have no doubt that the SNP will do what it always does – ignore the evidence and keep on maintaining that the Calman plan is damaging, justifying a Scottish Parliament vote against implementing the Scotland Bill. What then will the UK government do?

It would be politically unwise, to say the least, for David Cameron’s government to force it on Scotland. Better to leave it on the statute book and say that implementation will await either a change of mind or different political circumstances in Scotland.

But then, of course, Alex Salmond plans on having a referendum. This seems likely to be a multi-option plebiscite. There will be a status quo option, with or without a stalled Scotland Bill package, an independence option, and in the middle, a devolution-max proposal falling short of independence but with pretty full range of tax powers.

And in those circumstances, since people tend to like happy mediums rather than extremes, the devolution-max package is likely to get the Yes vote. What will the UK government do about that?

It is rather hard to tell. Mr Cameron has said he doesn’t much like the multi-option choice format, believing that a straight yes-or-no vote gives a much clearer verdict, which politicians would be foolish to ignore. The devolution-max idea is also akin to a federal solution and, with the best will in the world, Scotland cannot unilaterally force federalism on the rest of Britain.

Another factor is that if the Scottish referendum is held in 2014, a UK general election is due in 2015 and a Scottish Parliamentary election in 2016.

Mr Cameron might declare that rather than take orders from an untrustworthy referendum, he will follow the election verdict of the people. If those elections go against the SNP, then devolution max becomes a bit of a dead duck.

Now, I am not saying that this is what will happen, only that it is one possible scenario. What gives it plausibility is that the Calman package now seems to have a lot fewer friends in Scottish politics than it does at the UK level. That creates a bit of a vacuum which Mr Salmond is happily trying to fill.

But, as I have suggested, he also needs to think carefully about his tactics. If he is to achieve his goal of a Scotland which is as close to independence as is possible in today’s world of political inter-dependencies, the political case which compels the UK government to concede it has to be as strong and as water-tight as possible.

He is not yet in that position. And if the unionist parties want the Calman package to be in place and creating, as they say, a more fiscally responsible and accountable Scottish Parliament, which in turn would create more difficulties for Mr Salmond, they are going to have start fighting for it.