For the peoples of Scotland and the United Kingdom today’s cross-party agreement published by the Smith Commission is the right deal for a durable devolved settlement for Scotland. The vow made by the three main pro-UK party leaders in the House of Commons and the leaders of the Scottish pro-devolution parties has been honoured in full and on schedule. Given the decisive nature of the referendum result, described as a ‘once in a lifetime’ event by Nicola Sturgeon before September 18, the duty of all political parties in Scotland must be to make this agreement work – this is a time for stateswomanship and statesmanship not for the politics of grievance and division.
The real betrayal would be not to put the interests of Scotland first, and to downplay the historic nature of the new tax varying, welfare and job creating powers to be devolved in a new Scotland Act next year. This Scotland Act will create the most significant transfer of power away from Westminster to a continuing part of the UK in more than 300 years. With the centre-piece reform of devolution of income tax rates to Scotland, it will give the Scottish parliament the power to raise more than half of its own revenue – higher than devolved institutions in federal Germany and Australia, and with the assignation of half of the revenues from VAT, control over 62.6 per cent of its own resources. This is what Scotland voted for on 18 September – a stronger Scottish parliament, but preserving the most successful social, economic and fiscal union in the world – continuing to share risks and resources to ensure most elements of tax credits, the right to a UK pension, and a national minimum wage for a single UK labour market are preserved for future generations with the Barnett formula continuing to apply to spending rises at UK level not covered by the devolved or mainly devolved taxes.
But the Smith agreement rejects full fiscal autonomy, and the ending of Barnett and any fiscal sharing. Federal states like Germany, Canada and the USA all have fiscal sharing. Illinois is a net contributor to the US federal budget, and Florida a net beneficiary. Quebec is a net beneficiary from fiscal transfers from the Canadian federal government in Ottawa. We have seen from across the Channel in the Eurozone what happens when you have a currency union without fiscal sharing. So, there is not a major nation state on earth that is governed in the way the Scottish Nationalists have proposed with full fiscal autonomy, and they must accept it is not the way Scotland within the UK should be governed either.
This new Scotland Act will end the sterile blame game under the SNP or any other party of denying responsibility for every single policy issue in government in Scotland with the excuse of the lack of fiscal powers – under this new deal for Scotland, the Scottish government will be able to borrow for capital investment, subject to joint working with the Treasury, and have full control of the most stable source of revenues – income tax, together with many out of work benefits, and policy over employment, to create better paying, higher skilled jobs, to end the scandal of long-term and youth unemployment, and with £3bn in devolved welfare powers, to create a more socially just Scotland. Powers for a purpose, and Scotland expects its political parties to outline for whom they stand, and for what they stand. The SNP flunked that challenge today, but this is the agenda that Scottish Labour, under its new leadership team elected in three weeks’ time, will be powerful advocates for.
But importantly, today’s settlement means Scotland’s members of parliament will still vote on an important range of economic levers affecting Scotland – such as the personal allowance and non-earnings element on income tax, on the rates of VAT, excise duty, and corporation tax. It would have been deeply damaging to have entered into a race to the bottom across these islands on the taxation of corporate profits, when it is raising investment in innovation, research and development that remain key economic priorities.
There have been only eight bills out of 400 so far this century which contained no provisions which related to Scotland. Every finance bill has contained provisions applying in Scotland. That will continue to be the case when the new Scotland Act becomes law. England contains around 85 per cent of the British population. Decisions on taxation, even mainly devolved taxes like income tax will be, affect the deficit, total UK public borrowing, and ultimately interest rate policy too which our constituents, wherever they are in the UK, all have an interest in. So again, if a decision on a tax affects the fiscal policy followed by the UK government, that has consequences for Scotland, and Scotland’s MPs should not be excluded from voting on such measures. We should not fall into a Tory trap of an imagined conundrum, or whipped-up grievance on “English votes for English laws.”
This report strengthens Labour’s case for a Constitutional Convention across the UK dealing with how devolution can evolve in the rest of the UK, whether to cities, towns, city-regions or in other forms, plus how we can create an elected Senate representative of and acting as a voice for the constituent regions and nations of the UK. Debate will now be truly joined on what the UK-wide consequences of today’s agreement will be in terms of entrenching the role and status of local government, protecting from Tory vandalism our human rights settlement, crucially linked to devolution, and hopefully a codified constitution for the UK, binding our citizenship in a common document of our shared obligations, rights and governance for the first time.
I have spent my adult life as a supporter and activist for devolution. Today is a proud day – these reforms fit within the radical Scottish Labour tradition of Home Rule and political reform championed by Keir Hardie, John Smith, Donald Dewar and Gordon Brown. A new generation is ready to write the next chapter of Scotland’s devolution story based on strengthening our economy, and cutting inequality. Today makes it ever more likely that it can be Scottish Labour who can help the Scottish people build that national story of greater shared prosperity in a dynamic, optimistic Scotland.
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William Bain MP is the Labour member of parliament for Glasgow North East. He tweets @William_Bain
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Labour MP for Scottish constituency …. So no impartiality then in this article. The first time we get a measure forced through Parliament by Scottish votes on a matter not affecting Scotland as it is devolved, expect a big backlash. That’s of course if the SNP don’t take out most of Scottish labour seats first, which is looking more and more likely.
You can see the SNP line developing now, “look at what we have screwed out of them purely through their fright they might have lost the indyref, and just imagine how much more we can screw out of them if they have a minority government after the GE and need SNP votes to govern”.
I don’t see how the ability to raise 30% of taxes and spend 20% of the welfare budget represents any great step forward. The separation of income tax raising powers was designed to make it difficult to vary tax rates – why no national insurance, capital gains etc? What was needed was the ability for Scotland to raise all of its taxes and thence from to pay a subvention for defence, foreign affairs and any other pan U.K. expenses. This would truly have been ” ….as close to devolution as it’s possible to get….” ( copyright viceroy Broon). Above all there is no access to the economic levers we need to grow the Scottish economy. Included in these should have been access to the profits of the North Sea which Should be used to set up a sovereign wealth fund, This could then have been reinvested in the Scottish economy, especially in renewable energy.
In your panic to save the labour pary ( I speak as one who was A member When you were at primary school) you have, again, been drawn into a Tory EVEL spell.