ScotRef Westminster Mismanagement

Smith – A Constitutional fudge and the worst of both worlds?

The national day onePantomime politics – Anyone passing through the Glasgow underground, or any train station, or even looking at the back end of a bus, will know it’s pantomime season.  My favourite one just launched yesterday, written by a new scriptwriter called Lord Smith, it is called “Devolution to never never land”. The grand old dames are played by the London centric unionist press, the bad guys are the Unionist Westminster MPs who will attempt to derail any real devolution, and the audience who might soon regret buying a ticket (by voting No) are the people of Scotland.  It’s got a complicated plot but it all revolves around the unionists shouting “it’s devo max, and effective home rule, everything we promised” to which the audience shout “Oh no it’s not”.


Vow max or pantomime politics taken to the max?

First we have the Daily Record, the original publisher of the VOW, desperate to avoid a circulation drop to match the Scottish Labour parties poll ratings, saying the Smith Commission report was the vow delivered.  We also have Mr No Tuition Fees himself, deputy PM Nick Clegg, getting so excited about the Smith Commission that he seems to have lost the ability to speak in normal English and just uses a dialect called spin, when he said “We’ve not only delivered on that vow, on the timetable that we said, we’ve over-delivered on it – it’s ‘Vow Max’, if you like.”

Vow max? That really is pantomime politics taken to the max.  You would expect me or the SNP / SSP and Greens to be fairly disappointed with some (if not all) of the Smith Commission suggestions, but its worthwhile taking a moment to figure out who is shouting “Oh no it’s not” the loudest.

Labour and the STUC

Outside of its relationship with the voters, the Scottish Trades Union Congress (STUC) must be the most important influencer on the Labour party’s thinking, as well as selection of new leaders, but they are not happy.

STUC general secretary Grahame Smith described himself as “underwhelmed” by the recommendations, which “does not meet our aspirations”.  He continued: “The STUC continues to believe that control over employment law, equalities and minimum wages is a necessity if inequality is to be effectively challenged. We will continue to press for this”.  Welcoming as most people will “The no detriment clause and retention of the Barnett Formula” he stated that “the proposals for further fiscal devolution do not go far enough. Without the key powers over inheritance and capital gains taxes, meaningful tax and land reform will be more difficult. “

Students of politics looking to understand the meltdown of Scottish Labour in Scotland might look here and wonder how the Labour party managed to find itself on a different page from such a key supporter, as well as the majority of the Scottish public.  They might also question how the Conservative party ended up supporting more devolution than Labour.

Equality and the disappointment of SCVO

Much has been said recently about the move in Scottish politics towards almost universal calls to create a more equal society and to end discrimination against the most vulnerable in our society.  The loudest voice in the voluntary sector is the Scottish Council for Voluntary Organisations (SCVO) and they are also shouting “Oh no it’s not”, they say: “We’ve said all along that anything less than wholesale devolution of welfare would be a real missed opportunity to meet the needs of the most vulnerable people in our communities, so we are disappointed to see that today’s offerings fall far short of this. Lack of control over Universal Credit will continue to impede our efforts to help the poorest people in our communities.

SCVO also stated: “What we’re seeing today is piecemeal devolution of powers which will not make way for the integrated and more efficient approach to welfare which is vital to delivering the fundamental change and greater social justice that so many people in Scotland want.

My main priorities are powers to build our economy and create jobs and, I guess you might say in old-fashioned terms, I sit a little to the right of most readers of this newspaper but on this I couldn’t agree more with the STUC or SCVO.

Various other commentators, especially from the charitable sector, are coming forward to state their disappointment but criticism is not all from the political left. The free market Institute of Economic Affairs described the Smith Commission recommendations as a “dangerous 1/2-way house” and strangely I find myself agreeing with them as well.

Much as I see any new powers coming to Scotland as a good thing in general, Devo Max wasn’t subject to democratic and media scrutiny during the campaign.  If it had been on the ballot paper as a third option it would have been scrutinised by the public. Had this been the case, the plethora of issues and implementation problems that are now going to be shouted from the roof tops by Westminster MPs, right wing think tanks such as the Institute of Economic Affairs and Tory business clubs such as the CBI would have sunk it as a plan and Scotland would now be making preparations for independence day.

We are promised the best of both worlds but this report looks like it could end up being an unworkable constitutional fudge and the worst of both worlds.

None the less, devolution is the only option available and we all know that The Vow contained the claim that: “The Scottish Parliament is permanent and extensive new powers for the Parliament will be delivered.” That David Cameron promised: “a major, unprecedented programme of devolution with additional powers”.  That Gordon Brown said Scotland would be as close as possible to a federal state within one or two years and finally Danny Alexander, spoke of effective Home Rule”.

Nick Clegg says we’ve over-delivered on it – it’s ‘Vow Max’, Say it with me ‘Oh no it’s not’.

Politicians reach a compromise well short of home rule or federalism

Politicians reach a compromise well short of home rule or federalism

The Expectation of Home Rule

Home rule is now, however, the expectation of the people of Scotland and the turgid debate that’s about to commence on how to implement these new powers in a way that actually works will not distract from that political reality created by the vow.  Westminster road blocking strategies such as English votes for English issues (which effectively will stop Ed Miliband becoming Prime Minster) will come to the fore so if anyone thinks that the hard line No supporters, especially in Westminster, are not going to try to sabotage the devolution of extra powers then they have not been paying attention.

Powers for a purpose versus retained for a reason

In its advice on submissions the Smith Commission requested that people focus on the reasons for powers to be devolved, and that is right and proper. However, given the significant support for maximum devolution for Scotland within the United Kingdom a fair check and balance on the process should have been that there must be a reason for retaining a power at Westminster. If the retention of a power that falls within the agreed definition of maximum devolution or near federalism could have a negative effect on Scotland, it should have been devolved. The Smith Commission started its consideration from the point of view of what new powers can the Scottish government justify, when a better place to start would have been from the position that all powers should be devolved unless there is a mutually agreed reason for not devolving that power.

A lack of Job Creating powers

The lack of devolution of tax incentives for research and development will slow Scotland’s ability to catch up with the rest of Europe on growth optimised levels of research and development. Why is this important? Well, research published earlier this year by innovation charity NESTA explored how small countries thrive in an international economic environment, some such as Catalonia were not even fully independent.  The evidence demonstrated that if Scotland could somehow encourage research and development spending to the same levels as Norway Finland, Catalonia from our current 1.25% to the average 3%, then our economy would begin to grow until it was £12bn a year larger within 5 years. That’s a lot of jobs and a set of powers with a real purpose of economic growth and job creation, but we only have (and I am being kind) half the tools we need to improve productivity, innovation, investment and competitiveness.

The fact that there are no corporation tax varying powers is a bit of a shocker when you consider that Northern Ireland is expecting corporation tax to be devolved in the next few weeks. In fact Prime Minister David Cameron has said: “the argument made for the devolving of corporation tax powers to Northern Ireland is strong.” But not to Scotland, apparently?

Corporation tax powers would allow the Scottish Government to create incentives for companies to invest in key areas that underpin the Scottish economy and, in particular, in projects which create jobs and boost vital sectors such as tourism, food and drink, innovation and manufacturing.

Lord Smith of Kelvin set an impossible task

Lord Smith of Kelvin set an impossible task


And finally a word on Smith himself: I spoke to him on the phone a few times and met him at the Smith Commission and he seems like a thoroughly decent chap.  He and his team had an impossible job and they seem to have managed to pull a set of recommendations together in an impossible time frame whilst managing to get all the political parties to compromise and I applaud him and his team for that.  However, the report by its very nature is a compromise and the fact that the report has managed to have a little something for everyone to celebrate and also a little something for everyone to complain about doesn’t make it bullet proof. Unfortunately there are many in Westminster looking for ways to shoot down any new powers that don’t come with huge caveats.

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About the author

Gordon MacIntyre-Kemp

Gordon MacIntyre-Kemp is the Founder and Chief Executive of Business for Scotland. Before becoming CEO of Business for Scotland Gordon ran a business strategy and social media, sales & marketing consultancy.

With a degree in business, marketing and economics, Gordon has worked as an economic development planning professional, and in marketing roles specialising in pricing modelling and promotional evaluation for global companies (including P&G).

Gordon benefits (not suffers) from dyslexia, and is a proponent of the emerging New Economics School. Gordon contributes articles to Business for Scotland, The National and Believe in Scotland.

1 Comment

  • The problem with Northern Ireland setting it’s own corporation tax rate, is that they already benefit from a lower rate of vat when compared to the Republic.

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