The Smith Commission report out today contains some positive measures that can be used by the Scottish Government to the betterment of Scotland. It is also true to say that it is the largest movement of power from Westminster to Scotland since the formation of the parliament, but it falls well short of the vow made by the leaders of three of the four main Westminster Unionist parties. It falls even further behind the promise of the No campaign’s official spokesperson Gordon Brown that Scotland would be as close as possible to a federal state within one or two years, or Danny Alexander who told us to expect “effective Home Rule”.
Federalism and effective home rule it isn’t, but that hasn’t stopped The Times from screaming from its front page “Fears of a federal UK as Scots get new powers”. Now I obviously could never write for the Times as the headline I would have used is “Hope for creation of a federal UK as Scots get new powers”.
The Times today states “Under the agreement, Scottish MPs will still be able to vote on income tax rates in the rest of Britain but English MPs will have no say north of the border. However, No 10 said yesterday that it would still press ahead with plans to force English-only votes for English laws after the election.”
The backlash and co-ordinated campaign to stop the Smith Commission recommendations from being implemented will now move into full swing. We shall have to watch closely as Westminster MPs seek to further water down Smith’s recommendations. Today in Westminster Conservative MP John Redwood asked the Scottish Secretary (Carmichael) if he agrees that “once Scotland is determining its own income tax rates in the Scottish parliament, it would be “quite wrong for Scottish members of this parliament to fix the bands and rates for the English”.
It will be interesting to see what UKiP (now outpolling the Lib Dems in England) has to say about the report given its last Scottish manifesto effectively suggested shutting the Scottish Parliament.
It strikes me that the unionist parties have a track record in attempting to placate the Scottish people with promises to match the growing support for constitutional change and then letting them down in the final delivery of recommendations. The Calman Commission being a case in point, where the powers that were delivered were underwhelming and seen to be such by the people of Scotland. The failure of Calman to wow the people of Scotland, combined with the generational shift away from Unionist parties that continues today, set us up for the referendum. The Failure of Smith to impress or the failure of Westminster to support its implementation without catches and unworkable caveats will reopen the independence debate within a few short years, and Yes will very much be in the ascendancy.
The Smith Commission – what’s good and what’s missing
Any step towards the goal of giving the Scottish Parliament the ability to govern Scotland more effectively for the benefit of the people of Scotland should be welcomed.
From a business point of view, control over Air Passenger duty is a good move and will help boost Scotland’s international connectivity which is vital for business and tourism. It should be noted at this point that the Calman Commission recommended devolving APD and it still has not happened, yet we remain optimistic this wont be the case again. However, the lack of powers to vary VAT rates, for example to lower VAT rates on tourism related activity in the same way as Ireland and 23 other EU nations, means that the Scottish Parliament will not have the ability to create a joined up connectivity and tourism strategy that would boost overnight stays and rural economies and create jobs.
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. 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 fact Prime Minister David Cameron has said “the argument made for the devolving of corporation tax powers to Northern Ireland is strong.”
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 that create jobs and boost vital sectors such as tourism, food and drink, innovation and manufacturing.
It’s good that Scotland will see progress in control of personal taxation, but no control of employer national insurance contributions or the personal allowance which could allow the working poor to earn more before being taxed, child and working tax credits, and full control over the welfare system – all of which stay with Westminster – leaves the Scottish government with only half the tool set required to boost jobs and the attractiveness of work through welfare powers.
Failures to progress in key areas
According a Panel Base poll published in October, the most popular areas that people would like to see devolved to Scotland are the very ones where the proposals fall short.
71% supported control of all taxation raised in Scotland, 75% wanted control of the welfare and benefits system and 72% sought guaranteed consultation by the UK Government with the Scottish Government when deciding the UK’s stance in European Union negotiations. Disappointment on key powers then?
Key organisations will be disappointed
During the commission’s deliberations I represented Business for Scotland at a commission round table discussion and the input of several key organisations in Scottish life was sought. The Scottish Council for Voluntary Organisations (SCVO) were very keen to see major welfare powers and I suspect they will see this as a missed opportunity to devolve the key welfare powers.
Even key Labour party supporting organisations such as the STUC will likely be disappointed that the minimum wage will still be set in Westminster under the beady eye of the CBI, rather than in Scotland with an eye on the opportunity to address and eventually end in work poverty.
Grahame Smith, general secretary of the Scottish Trades Union Congress (STUC) said he was “underwhelmed” by the package of recommendations which “does not meet our aspirations”.
He added: “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.”
Some of the unionist parties have had to compromise hard on their weak position on devolving more powers, and it is good to see the Labour Party bring its position up to the same level as the Conservatives and Liberals. How Labour ever fell into a trap of being the party of less devolution when compared to the Conservatives is mind boggling – perhaps they should have listened to their branch office more. The Yes supporting parties have also compromised, the No vote made that a requirement, however we do see some progress in the Smith Commission’s recommendations. But what we have is, essentially, what the Calman Commission should have been allowed to be and not what we were promised in the vow.
The devil is in the detail and over the next few weeks and months we will see how Westminster reacts. If the proposals are blocked, watered down or tied to stopping Scottish MPs voting on devolved issues (Cameron’s Labour killer plan) or if cuts made by the Scottish Government, say in APD, result in withering cuts in our block grant then the vow has failed and the union will fall.
What’s your view? Leave a comment and tell us if you think the Smith Commission recommendations go far enough and if you think Westminster will agree to implement them.
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