Duncan Hamilton: To veto or not to veto, that is the question on Scotland Bill

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WILL 2012 be the most hard-fought and divisive year in the history of devolution?

Certainly, the seasonal sentiment of “goodwill to all men” looks unlikely to define relations between David Cameron and Alex Salmond as we enter the New Year.

The current clash is because the Scottish Parliament has to agree to what is called a Legislative Consent Motion (LCM) in order that Westminster proceed with the proposed Scotland Bill. The Cameron government has already made it plain that without the consent of the Scottish Parliament, it will not proceed.

Topically, therefore, that gives Salmond an effective veto if he doesn’t believe the bill as it stands is in the national interest. Many may smile at the irony of the Prime Minister urging the Scottish Government not to use a veto, having done precisely that last week, alienating Scotland from Europe in the process.

But why would a Nationalist Government oppose a Scotland Bill which we are told is about devolving further powers? Well, this week the Scotland Bill Committee in the Scottish Parliament identified a whole host of problems with the proposed legislation. In fact, there are even elements of the explicitly unionist Calman Commission which the UK government is still resisting. But the biggest issue surrounds the proposal to pass power to levy 10p of the current income tax rate to Holyrood in return for a cut in the Scottish block grant. Not surprisingly, the Scottish Government has asked for figures or projections outlining what any such block grant cut would look like before signing up to the UK government plan.

The UK government refuses to answer that question. In a provocative response it has also rejected an entirely reasonable alternative Scottish Government suggestion that there be an agreement on “joint commencement” which allows the bill to proceed, but which guarantees no change unless and until the clarity on budget cuts is given.

All of which creates a whole new dynamic – one in which the Scottish Government may have to play hardball. Just consider what would happen if the LCM wasn’t passed. Westminster would either have to legislate in the face of Scottish opposition to a flawed bill or would have to ditch the bill completely. The first course is legally possible but politically unthinkable. The second is an embarrassing defeat for the UK government which would be rightly attacked as unreasonable and obstructive. Either path would boost the case for independence and provide solid evidence for the SNP that Westminster cannot be trusted on Scottish affairs.

The UK government is not, therefore, in anything like the strong position it imagines. If this process descends into acrimony and political trench warfare, my money is on Scots backing their own government and First Minister every time as the champion of the Scottish national interest.

And yet, I suspect for all the sabre-rattling, reason may yet prevail. Two points suggest a compromise may yet be found. First, the vital motion of the Scottish Parliament giving consent to Westminster to legislate does not have to be an “all or nothing” moment. The terms of that motion are for the parliament, in which the SNP has a majority, to dictate. There is nothing to prevent a motion along the lines of “we consent, but only if and when the concerns raised by the parliament are addressed”. That has two advantages over simple refusal. The first is that it represents the instinctive gradualist position of the Scottish people. Salmond didn’t come into politics to refuse powers coming to Edinburgh, however limited. The second is that it bounces the ball back to the intransigent Westminster government to come up with answers. It would send the message that, in principle, the will of the Scots is for all the powers in the Scotland Bill to be repatriated, but not at any cost.

Secondly, there continue to be signs that unionist thought is fast mutating towards a more radical and popular position. Lord Foulkes last week announced an amendment to the Scotland Bill in the Lords proposing “full fiscal responsibility”. Add that to the recent comments of Henry McLeish, Douglas Alexander and Malcolm Chisholm and the sense of movement within Labour is palpable.

Further, it would be wrong to see the Scotland Bill Committee as having divided on entirely traditional and tribal party grounds. Yes there was disagreement, and indeed a minority report. But equally there were important areas where some degree of agreement was possible – such as capital and revenue borrowing, devolution of the Crown Estate, devolution of Air Passenger Duty and the Aggregates Levy, the need for agreement on the block grant adjustment and the role of the Supreme Court. In fact, of the 45 conclusions, 16 were unanimous and cross-party.

The point is this – if Westminster wants a fight it can have one, and will lose. If constructive engagement replaces the current approach, there is ample evidence agreement might still be reached. At that stage this bill can become law and clear the stage for the more important debate on “devo max” already championed by more enlightened unionists. That option is more serious and more sustainable than anything in this bill. If so, by the time the referendum comes this bill, and the 2012 skirmishes, will be long forgotten.