Sweeping New Powers? What The Smith Commission Offers Is More Like A Mix Of The Marginal And The Unusable – Column 28.11.14.

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JOYCE MCMILLAN for The Scotsman 28.11.14.
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THURSDAY LUNCHTIME, and I turn on the radio to find out how the British body politic is responding to the report of the Smith Commission into further devolution for Scotland, published four hours earlier.  The newsreader begins by announcing, in confident tones, that the Commission has proposed “sweeping new powers” for the Scottish Parliament, including control over income tax; my problem, though, is that I have spent the whole morning reading the Commission’s Report, with the result that I know that this is, at best, only one interpretation of what has been offered, and one that fails – in vocabulary and emphasis – to reflect the balance of the debate about of the proposal.

So I turn back to the report itself, and ponder its twenty-odd pages of “pillars” and provisions.   It’s clear, to anyone interested in constitutional politics, that it does contain a few interesting new proposals for the devolution of powers; the ones that appear mot significant, to my eye, are the devolution of the administration of the Crown Estates in Scotland, with all that that means in terms of development and protection of Scotland’s coastline, of licensing for onshore gas and oil operations (including hugely controversial fracking licences), and of all aspects of elections to the Scottish Parliament – a measure which gives Holyrood, at last, control over its own electoral system.

Elsewhere, though, I find myself searching in vain for new powers that could possibly be described as “sweeping”; there’s certainly no hint of federalism here, or of “devo max”.  The vow to “make the Scottish Parliament permanent” makes no sense in terms of the UK constitution, in which each parliament has an absolute sovereign right to reverse previous decisions.  The allocation of the first 10% of Scottish VAT  revenues to the Scottish government, with consequent readjustments, is nothing but a relabelling of part of the existing block grant.

And while the Scottish Parliament’s new power to vary income tax bands and rates in Scotland looks impressive on paper, in fact it is almost as likely to prove unusable and impractical as the existing 3p tax power, in place since 1999, which all Scottish Governments so far have been wise enough not to touch.  In the first place, the proposed new tax powers apply only to earned income, and not to income from savings and dividends.  In the second place, it will be wellnigh impossible to prevent the wealthy from rearranging their places of residence, and their status as “Scottish” taxpayers, so as to avoid any higher rate that might be introduced, such as Jim Murphy’s proposed 50p top rate.  In the third place, there will be strong and not unreasonable pressure from businesses operating UK-wide not to impose on them the administrative hassle and cost of operating different tax rates across the UK.

And lastly and most importantly, it’s clear to anyone who examines these proposed powers in conjunction with the knell-like list of huge taxes reserved to Westminster – capital gains tax, corporation tax, national insurance, inheritance tax, oil and gas industry revenues – that this limited new income tax power represents a political poisoned chalice, an invitation to Scotland’s political class to increase their spending by hammering ordinary middle and lower earners, while once again letting the seriously wealthy, and large corporations, off the taxation hook.

Yet here’s the rub; that despite the complex and strictly limited reality of what the Smith Commission has proposed, we are now already – at UK level – experiencing one of those smoke-and-mirrors debates in which Westminster increasingly specialises, where myths about some perceived enemy are loudly enunciated as facts, and then used as the occasion for a collective outpouring of self-righteous patriotic rage across the House of Commons, followed by the rapid introduction of a few ill-thought-out measures to deal with the imagined  problem.  In this case – as the Tory grandee John Redwood made abundantly clear, yesterday on lunchtime television – the perceived enemy is an allegedly “greedy” Scotland, grabbing ever more sweeping powers for its own benefit; and the proposed remedy is a round of instant devolution to large English cities, combined with the introduction at Westminster of “English votes for English laws”, a measure once again promised by the Prime Minister yesterday, in his first response to the Smith Commission recommendations.

And about that, there are two things worth saying.  The first is that by joining with the Conservatives and the Liberal Democrats in spinning the Smith Commission’s recommendations as a “sweeping” set of new powers, the Labour Party has walked straight into a firestorm of resentment at Westminster, which could see Labour’s Scottish MP’s increasingly excluded from Commons votes on financial matters – even while Westminster retains the whip hand on both tax and benefits across the UK – and the Labour Party therefore increasingly unable to form a stable majority in the Commons.

And the second is that by feeding that firestorm, and accepting the aggressive terms of argument set out by UKIP and some backbench Tories, David Cameron has conclusively proved himself no statesman, but an opportunistic party politician willing to put the now-fragile Union at further risk, for short-term political advantage.  The fact is that since the late 1970’s, when the Conservatives embarked on their love-affair with neoliberal economics, and began to forfeit support in Scotland, Labour has been the principal party of the Union, and has often – particularly under Donald Dewar’s leadership – played that role with some skill and wisdom.

Now, though, as the tectonic plates of UK politics shift, Labour’s role as a Unionist party is beginning to look like a liability, both in Scotland – where former Labour voters increasingly identify the Union with the current Westminster and City establishment – and in a Westminster moving sharply to the patriotic English right.  And David Cameron faces the paradox that in playing that English card, in order to weaken the party most likely to defeat him next May, he also further weakens the Union that he so passionately pledged to defend; but which he now seems barely to understand at all, as he deliberately widens the gap between the heightened political language of Westminster, and the complex reality of a Scotland in which the main levers of economic power still remain firmly, and undeniably, elsewhere.

ENDS ENDS

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