Powerful article in the Glasgow Herald by Iain Macwhirter on the Calman Commission on Scottish Devolution which everyone in London who is interested in UK politics should read . He reports that Calman is "arguably as
important as the 1988 Claim of Right and the 1997 Devolution white
paper. By making the intellectual case for a degree of fiscal autonomy
so cogently, it has set Scotland on a new course which should lead, at
the very least, to a new federal United Kingdom within 10 years." Macwhirter says he is astonished that the Tories have agreed to it and set Britain on course for new settlement. Is Cameron ensuring the English card remains in play despite his professed unionism? (Hat tip Tom Griffin)
Scotland and the tide below the waves
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Comments
"Is Cameron ensuring the English card remains in play despite his professed unionism?"
I don't think that's it. This is about the blame game. No one wants to go down in history as the party or politician who broke up the Union (apart from the separatists). At the moment the honour will be going to Donald Dewar and Gordon Brown, and for Cameron it is easiest to just go with the tide.
The Calman Commission report is as much about England as it is about Scotland. Partial fiscal federalism helps dispel the impression that England is subsidising Scotland and the differences in social spending can now possibly be attributed to different levels of taxation. However, if the SNP keep taxation at English levels then they can't complain too much about the Barnett straight-jacket (financial accountability became a pressing urgency when the SNP took power in Scotland and began looking to accentuate policy divergence).
And because the Barnett Formula is left standing Scottish MPs still have financial accountability over funding the devolved portfolio (and therefore have 'the right' to vote on English domestic affairs - which have a knock-on effect on Scotland's budget). It would be rather difficult for Cameron to argue the case for Ken Clarke's version of English votes if Scottish MPs were not financially accountable for the (English tax) money that they were spending.
The problem with Iain MacWhirter is that he views all reports on the Scottish Constitution as the road to his Shangri-La of a federal UK. The Calman Commission is not a road to a Federal UK nor is it even a road to the much touted financial accountability.
It does nothing to improve the Scottish Parliament's economic powers and if the home rule project is about creating a Scottish Parliament which exists on a fixed amount of money which is calculated from English expenditure then Calman has simply reinforced that aim. If the Calman Commission is radical then Iain MacWhirter is a nationalist.
Iain MacWhirter just doesn't understand the report. It is important only as a demonstration that you can't create a federal tax system on top of a provincial system of government while at the same time keeping a wary eye out to ensure no change gives extra power which could be used to give the nationalists an advantage or a leverage to use to gain independence.
What has changed is that the method of collecting the money has become much more complicated. Instead of a block grant it has been changed to a block grant plus assigned taxes which equal the old-style block grant in value.
For every tax or proportion of a tax assigned to Scotland a corresponding cut is made in the Barnett derived block grant. In order to maintain what the Barnett Formula says Scotland needs in funding and to maintain the current level of funding the overall income tax and other minor tax levels will have to be set at exactly the same rates as the rest of the UK because that is how the block grant portion is worked out to give Scotland the funding defined by the Barnett Formula.
Another point to note in the Calman Report is that the block grant is determined by the level of tax receipts collected in Scotland the previous year, or perhaps averaged across several years. This ignores any rate changes by the Scottish Parliament up or down. If Scotland's standard tax take goes down in a recession the block grant goes up and vice versa. The block grant proportion of the funding will always ensure that Scotland receives no less and also no more than the Barnett funding level on average. There is no incentive to improve the economy of Scotland to enable an increase in Government spending because the block grant always pulls Scotland back to the Barnett level.
The Calman Commission can be summarised as follows:
Part 3
1.Scotland will continue to be funded at the level set by the Barnett Formula
2.The Scottish Parliament can now vary income tax by 10p in the pound rather than 3p in the pound
3.The Scottish Parliament can now borrow money just like any other local authority.
Part 5.
There will be an exchange of minor powers, going both ways. None of the powers that Scotland gains result in any real transfer of power to the Scottish Parliament.
Iain's gone starry-eyed again. It's a pity the Herald has discarded its comments section or I could tell him directly the way I used to.
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