Too little, too late?

Is the above to be the long term verdict on the Smith Commission recommendations, published today? First thought, Lord Smith and his team deserve a warmth round of thanks. To have come up with any kind of agreement among the five political parties is quite an achievement it itself. The Commission also seems to have done a fair job of media management. Nearly all of the media are reporting the proposals in glowing terms, or in the case of some English outlets at least as some significant new powers for Scotland. First impressions from the media, however, are rarely very reliable indicators of lasting success.

My reading of the report chimes very much with the verdict of Professor Michael Keating from Aberdeen University, who sums up the report thus: The Smith commission report provides the minimum amount of extra devolution required to meet the expectations raised by the famous ‘vow’ from the three UK party leaders in the last week of the referendum campaign. Minimum amount of change perfectly describes the essentials of the recommendations.

Not to be churlish, there are a few positives in the report relating to the Crown Estate in Scotland, Air Passenger Duty, elections and the operation of the Scottish Parliament, and a few others. All important, but hardly the stuff of Devo-Max or a Powerhouse Parliament.

However the recommendations have to be judged against the objectives set out by the Commission itself. It refers to them as the three pillars:

  1. providing a durable but responsive constitutional settlement for the    governance of Scotland
  2. delivering prosperity, a healthy economy, jobs, and social justice
  3. strengthening the financial responsibility of the Scottish Parliament

It is not clear that the recommendations will fully achieve any of these pillars. As regards the first – a durable and responsive constitutional settlement – there are two obvious weaknesses. The first is that without a written constitution there is no way that the current or proposed constitutional settlement can be made permanent. UK legislation can state whatever it likes, but no legislation can bind any future government. It is also noteworthy that the report recommends that changes to the electoral system or the workings of the Scottish Parliament be subject to a two-thirds majority. This limitation and requirement is to be imposed on the Scottish Parliament by legislation at Westminster. However no such requirement is deemed necessary for Westminster itself.

This highlights the other weakness in the proposals, namely that they focus entirely on Scotland. This may seem a strange criticism, but given the result of the referendum, any proposals for constitutional change need to take account of how they will affect the governance of the UK as a whole. This not exactly the fault of the Commission which was restricted in its remit. However it does raise serious question marks as to the willingness of the rest of the UK to accept the recommendations as they stand.

When it comes to the economy, jobs and social justice, there is very little change at all. It is amazing to see how often a paragraph ends with the words – will remain reserved. In this case all of pensions and effectively all of welfare are to remain reserved matters. The Scottish Parliament will have new powers to create new benefits in areas of devolved responsibility. However these can only be at the margins as any monies to be spent will need to be raised by the Scottish government. Which is only right and proper, but the report contains virtually nothing in the way of substantive additional revenue raising powers.

Which leads nicely on to the final pillar – financial responsibility. While a lot of noise will be made about the recommendations in this area, they amount to little more than re-arranging the deckchairs on the Titanic. The Scottish Parliament will gain the power to set the rates and thresholds for personal income tax and the first 10% of the standard rate of VAT will be assigned to Scotland. This is all fine and dandy, but in return the current block grant assigned to Scotland will be reduced by exactly the same amount. We gain no say or control over the rates of VAT. While income tax is important it is only one of many, many taxes available to governments and one which will prove in practice, difficult to change from the rates set by Westminster. Richard Murphy of Tax Research UK explains here, why devolving income tax is the worst possible solution for everyone. All the other revenue sources remain reserved.

So, all in all, the recommendations are pretty timid and completely fail to address the key issue facing the UK as a whole, namely the over centralisation of power. Political power will remain concentrated at Westminster, while economic power will remain concentrated in London. Not much was expected from the Smith Commission and in this respect it has not disappointed.

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