Monday, 10 August 2009

“Serving Scotland Better: Scotland & the UK in the 21st Century”: Briefing Note


It has been some time since the publication of the Calman Commission’s final report. 269 pages long and costing the tax payer somewhere in the region of £500,000 (as has the National Conversation) it has produced fierce debate across the political spectrum. Much of the contention surrounds its main proposal to devolve further fiscal powers to the Scottish Parliament (from here on in the “Parliament”): that is, increasing the Parliaments’ tax varying powers.

Commentators, politician and journalists alike flocked to comment. The words ‘authoritative’ and ‘intelligent’ were never far away, notwithstanding the barrage of criticism too. The Centre deliberately held back from rushing an analysis of this important work, believing that it’s always best to let emotions settle before attempting to objectively assess a piece of work that seeks to alter how our country is run.

Let us offer a few important words of caution prior to the analysis. The Commission’s report is not an objective assessment of the devolution settlement in Scotland. The aim of this report, as Sir Kenneth Calman stated on Newsnight Scotland, is to “strengthen the parliament, help it serve Scotland better and maintain and develop the union.”

The important term here is “develop the union” which naturally necessitates the exclusion of the independence option. Remember this commission was created by a Scottish Labour leader, Wendy Alexander MSP, as a response to the SNP’s National Conversation.

Now this is not a political point; far from it in fact. We only suggest that if it was truly objective it would have reviewed all options. The participants in this analysis are influenced by their beliefs, values and unionist prejudices. Hence, this document is as much a declaration of values and principles as it is an objective assessment of devolution. See this is an intellectual warning of sorts.

What follows is not an exhaustive analysis of the report but an overview, one that merely scratches the surface.


The Commission has three key aims which would create a Parliament to:

1. “serve the people of Scotland better”.
2. “improve [its] financial accountability”.
3. “secure the position of Scotland within the United Kingdom”.

These aims are looked at via several chapters. We will focus on the social union; the economic union; and other recommendations for strengthening devolution.

Social Union

Considerable attention is placed on outlining “Scotland’s place in the UK” where they seek to validate the positive and popularly backed relationship Scotland has had with the rest of the UK throughout its history; notwithstanding the occasions where conflict and tension has been the norm. Put simply, they seek to promulgate a 21st century version of unionism. Correctly they argue that issues, interests and values are shared throughout the UK. Importantly they state that:

“The evidence confirms that it is possible to have a distinct Scottish political identity, and differing Scottish policy choices, without undermining the essential unity of the United Kingdom in relation to matters that are critical to all its people.”

Undeniably, the “Scottish Parliament is here to stay” but whether or not it has “embedded itself in… the consciousness of the people of Scotland is debatable, particularly when seen in the context of a recent BBC Scotland poll which found that 46% of Scots think devolution has made “no difference” to their lives.

In reality the Parliament has been more readily accepted by the political elites/”usual suspects”, a view validated by looking more closely at the poll. The responses to the question: “Scotland's devolved parliament has been in existence since 1999. Do you think devolution has been a good thing for Scotland, a bad thing, or has it made no difference one way or the other” have a clear and identifiable trend. Those who think it has been a “good thing” are located in the higher social classes (AB and C1, 51%), whilst those who think it has made “no difference” can be found in the lower social class (C2 and DE, 53% and 56% respectively).

Lindsay Paterson provides further proof of this claim. Citing statistics from the Scottish Social Attitudes Survey 2007, Paterson affirms that “professionals are much more impressed by the Parliaments’ record… [they have] become its public bulwark”. Indeed, 67% of those working in high professional/managerial occupations thought the Parliament was giving people a greater say in Government in contrast to 34% of those in semi-routine/routine occupations.

There is no doubt that they are serious question marks over the report’s claim that the “verdict of the people of Scotland is that… devolution… has been a remarkable and substantial success”. The evidence with which they base these claims on is thin because the data is not representative of the population.

Hidden away in footnote 2.4 (p58) the authors reveal that: (1) respondents were “self-selecting”; and (2) the group “constitute a non-random sample [that] is not… representative of public opinion”. Point one is particularly important if we bear in mind that predominantly it is the usual suspects who respond to open consultations; not your average citizen (see Paterson 2009).

Hence, the Commission can not legitimately extrapolate generalizations from the sample to the population. It may appear that we are being pedantic but this entire report is largely based upon the belief that devolution is perceived to be a success by the Scottish population. This belief, then, may well be a skewed interpretation of a (self) selected few.

Foreign Policy

The case, it seems, is closed here. The Commission’s argument that “all parts of the UK must be joined together for defence and national security” appears to be the orthodox view. Certainly, the BBC Scotland poll reaffirms this view with 63% responding that the UK Government “should make most of the important decisions for Scotland about defence and foreign affairs”. But is it? Clearly the foreign policy functions of the state are “integral to the effective functioning of the United Kingdom as a sovereign nation-state with international responsibilities”. This is beyond doubt.

What remains less clear is if this architecture is in the “best interests of all its [UK’s] citizens”. Two high profile examples illustrate that there is a philosophy developing in Scotland that markedly contrasts with the view south of the border. The first of which is the Iraq War in 2003. The Scottish Parliament witnessed some of its most relevant and emotional debates on this issue, while Scottish civil society demonstrated in its thousands against the military operation. Of course the anti-war marches were replicated and surpassed throughout the UK but no other devolved parliament witnessed such antipathy to the invasion.

Secondly, the nuclear arsenal at the heart of UK foreign policy during the Cold War and maintained today is flatly rejected by a growing number of Scots’, including the current Scottish Government. They reject the arsenal in principle, refuse to accept that the UK needs a nuclear deterrent in the post Cold War international system and believe that Trident should not be renewed nor placed at Faslane Naval Base.

Is the Commission correct to argue, then, that the UK should exercise defence and national security powers indefinitely? That devolution of this power “is undesirable in principle”? “That it is in the best interests of all its citizens?” It seems that the case is far from closed and that the debate over nuclear power (both military and civilian) will continue to escalate, particularly if the next UK Government is Conservative and the SNP win a second term in the Parliament. Indeed, it could be postulated that by advocating the security status quo this report would create a Parliament that did not “serve the people of Scotland better”.

Economic Union

Without doubt the key objective for the Commission was to create “better linkage between taxation decisions and spending decisions it makes”. It was this issue, this recommendation, which the report would be solely judged against. This proved to be the case. Amid the flurry of commentary it was as if the Commission’s report only contained one section on finance. Its recommendations were:

1. That the Parliament “should be able to determine a ‘Scottish rate’ of income tax applying to all rates, but should not be able to change the difference between the rates”. Thus giving the Parliament “some control over its total spending”.
2. That “Stamp Duty Land Tax, Aggregates Levy, Landfill Tax and Air Passenger Duty should be devolved to the Scottish Parliament, again with a corresponding reduction in the block grant.”
3. That the Scottish Government be given the “capacity to borrow for capital investment on a prudential basis”.
4. That the Parliament strengthen the” intergovernmental arrangements to deal with finance”.

These recommendations were, not surprisingly, both applauded and attacked. For some it didn’t go far enough (for e.g. the Scottish Government) while for others it was a “road map for devolution mark two” (Annabel Goldie, Scottish Conservative leader). For us the recommendations represent something of a “half-way house”. We commend the report’s attempts to address the linkage between tax and spend and its attempts to create more financial accountability in the Parliament (not to mention the other suggestions – see below)

Yet, it doesn’t go far enough. Weighed under by the numerous party political concerns and the culminating need to compromise it retains the anachronistic Barnett Formula; a “block and formula arrangement… that is unique internationally” (p73). Its uniqueness is not a source of pride, however, and ranks alongside the UK’s unelected House of Lords and its relic of an electoral system, FPTP, as a regressive feature of British politics.

The Commission hedges its bets on modifying the much maligned Barnett Formula - which will “still provide a significant share of the funding’ for the Parliament” - by “introducing a new Scottish Variable Rate (SVR) of income tax… which should apply to the basic and higher rates of income tax, building on the statutory framework that already exists for collecting a different rate in Scotland from the rest of the UK (p7, 10). Of course this power, as set out in Part IV of the Scotland Act 1998, has never been used. The authors admit that: “the SVR has not been successful in creating financial accountability”. Not surprisingly, the MSPs have shied away from utilising this power perceiving it as ‘electoral suicide’.

All of this begs the question why the Commission chose to retain the Barnett Formula? In the executive summary the authors’ state:

“Because it reflects the principle of the social Union, that taxes are pooled together and shared out in the form of a grant according to need” [and because it has] “no remit in relation to the rest of the UK”.

In considering why the SVR has not been used they also reach these conclusions (p79):

(1) There hasn’t been a “political consensus in the Parliament to exercise the power”.
(2) The last ten years witnessed “rapidly growing public spending” via strong economic growth. This may have suggested that “further growth from additional taxation was unnecessary”.
(3) Efficiency and simplicity of the grant-based system has “many practical advantages”.
(4) “The start up cost of the SVR for the first time” would have been “substantial” in comparison to the revenue which might be generated.
(5) A decision not to use the SVR “has no effect” on the Parliamentary budget.

Other implicit justifications can be found in the make up of the Commission itself. The Scottish Conservatives, Scottish Liberal Democrats and Scottish Labour may agree on rejecting independence but they disagree quite vociferously on the future of devolution in Scotland. It’s well known, for example, that the Lib Dems are proponents of federalism while it is far from certain that a new Conservative Government (if they are successful in the next General Election) would deliver on the report.

Our point is this: the entire report, particularly on financial matters, was arrived at through compromise. It is only by compromising that the Commission could speak with one voice. This need to compromise, it could be argued, had a detrimental effect on the financial recommendations of the report. But more than anything the single most important factor in only modifying Barnett is that:

“…the balance between these conflicting principles and the combination of funding mechanisms to be used should be determined not by the technical considerations of funding mechanisms, but by the constitutional objectives that the funding system
is designed to support.” (Underline added)

Here is conclusive proof that the report’s overriding aim is not to improve the Parliament’s financial accountability but to “secure the position of Scotland within the UK”. Of course this is no surprise to anyone - the report was a response to the rise in support for independence. Yet, one can still be surprised, perhaps even angered, that a document that was publically funded subjugates any factor that doesn’t serve their raison d’être: namely, maintaining the union.

A salient criticism of this report was published in an open letter to The Scotsman by a group of seven respected academics. They conclude that the “fiscal reforms proposed by the Calman Commission are at best an opportunity missed and at worst a recipe for economic instability in the future”. The authors’ continue:

“Only under fiscal autonomy can the accountability of the Scottish Parliament properly be entrenched… The proposals will do little to enhance the ability of a Scottish government to introduce measures necessary to improve Scotland's underlying economic growth rate, or to balance the Scottish economy through good times and bad.”

The last point is worth stressing. The recent Government Expenditure and Revenue Scotland 2007-08 (GERS) report illustrated that “estimated current budget balance for the public sector in Scotland was a deficit of £7.1 billion (6.3 per cent of GDP) excluding North Sea revenue, a deficit of £6.4 billion (5.5 per cent of GDP)”. Clearly, tough decisions will have to be made if Scotland is going to recover from this recession, particularly when the deficit is likely to increase. The budgetary squeeze on the public sector will be severe.

Yet thus far the debate in the Scottish Parliament has centred on the £500m efficiency savings that the UK Government is imposing in Scotland. Largely they have swerved the important debate that has to be had on the state of our national economy and the cost of our public sector. And, who can blame them?

The Parliament is “not accountable for the total of their budget or how it is raised; it has no fiscal powers that can be used as policy instruments and it does not have a direct financial stake in the performance of the Scottish economy”. This leads the Commission to propose increased tax-varying powers to bring greater responsibility and accountability to the Parliament. But given the MSPs historical reluctance to use this power it can not be said with any certainty that they will find this greater ability to vary tax more appealing than before. Agreeing with the academics above, we maintain that the solution is full fiscal autonomy.

Strengthening Devolution

In addition to the above recommendations, the Commission also sought to devolve the following powers to the Scottish Parliament:

1. The administration of elections.
2. The regulation of airguns.
3. Regulation-making powers relating to drink-driving limits and national speed limits should be transferred to Scottish Ministers.

Naturally, these recommendations have been well received across the political spectrum. The first one in particular will be critical in atoning for the debacle that was the 2007 Scottish Parliamentary and Local Authority elections.

The Commission also proposed changes to the Parliament itself. One that stands out is the proposal to alter the bill process from three stages to four, allowing MSPs more time to reflect on newly made amendments made at stage three.

Nevertheless, the committee system remains largely unchanged albeit they were some recommendations (see 223). While the committee system is rightly acknowledged as being “generally effective”, it is highly questionable that it is still a “detailed scrutineer and an effective counterweight to the executive”. For a unicameral system like ours this is a serious concern. Indeed, any democratic system must have functioning checks and balances.

In the absence of a second chamber, the Consultative Steering Group (CSG) believed that “strong” committees would “rein in the government when necessary”. They anticipated that the committees would “initiate legislation, scrutinise and amend the Scottish executive’s proposals and have wide-ranging investigative functions”. Power-sharing too would be a central facet of the post-devolution parliamentary process.

Unfortunately there has been a notable schism between the ideals proposed by the architects and the practise of the committees themselves, as they always are. The scrutiny and legislative role of the committees have faced innumerable challenges throughout the last ten years. To name but a few, these are: (1) considerable time and resource pressures, particularly when compared to Westminster; (2) the lack of support from Government in drafting amendments and consequent executive dominance; (3) and innate partisanship.

Such challenges must be seen in context, however. The Scottish Parliament is not yet a teenager and its processes and deficiencies will most likely be refined through time. What Scotland has in place now is a vast improvement on what existed pre-devolution. And moreover, the inability of the Parliament (specifically the committees) to be an effective bulwark against executive dominance correlates with global trends. Since the dawn of the modern American (“imperial”) presidency, for instance, power has been firmly rooted in the executive branch.

Thus, rather than excessively criticising the Parliament for failing to live up to the CSG ideals one must perceive these principles “as ideals to work towards” (Carman and Shepherd, 1999: 27). The Commissions’ recommendations are prudent and will most likely result in an improved committee system. Still, if the committees’ remain unable to be a “detailed scrutineer and effective counterweight to the executive” a serious debate will have to take place if Scotland wishes to maintain a system that has functioning checks and balances.

What next?

The key issue now is whether or not the recommendations will be delivered before the next Westminster election by the current UK Labour Government. Thus far we have had mixed signals. The proposal was well received by the UK Government but one wonders whether or not such complex proposals could be realistically enacted in a year (or less), particularly as they attempt to steer their own democratic and banking reforms through Parliament. They may be “kicked into the long grass”; not out of reticence but purely because of the congested legislative timetable or because they are perceived to be a low priority.

The truth is we don’t know. On the one hand we have the Scottish Labour leader Ian Gray stating that the proposals are “complex” [and] will take some time to bring in”, while on the other hand we have other Unionist leaders (including Iain Gray) saying that they are “real momentum” behind these proposals. They hint that the recommendations will be “moved forward quite quickly” though one may reasonably wonder how valid this claim is when another mechanism (cross-party steering group) has been created to deliver these proposals.

All in all its business as usual in devolutionary politics - more smoke, more mirrors. What is irrefutable, however, is that this is an exciting time in Scottish politics, epoch defining even, as we seek to map out how devolution should develop after the Calman Commission. Yet the Scottish people remain the elephant in the room. Our elected representatives continue to affirm that Scots support this, that and everything but the truth is they don’t know - they assume through polls or sporadic consultation exercises/e-discussion forums that this is the case. Clearly, what is needed is a more inclusive, bottom up review of devolution where all Scottish citizens can have their say in the future of the country.

The time is ripe for a radical redistribution of power where it is truly shared between the people of Scotland, the legislators and the Scottish Government. The Commission’s report is neither putting us on a motorway to independence nor a lasting defence of the Union. This particular road less travelled is to a different place - it is called Federalism.

Now is the time that we fulfilled, or at least attempted to, the participative ideals set out in the CSG. The new “devolution default” position is clear: unless there is a compelling national interest not to, all power should be devolved. This isn’t grandiose “new politics”. This is democracy.

Barry McCulloch, Policy Officer

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