“To improve is to change, and to be perfect is to change often”: Where is Scotland’s ‘permanent devolution’ agenda going?


CommonSpace speaks to four authors and academics about what the future is for the devolution agenda in Scotland, and the different political forces and factors at play

SCOTLAND’S first First Minister, the late Donald Dewar, said as the Scottish Parliament was launched in 1999 that devolution was “a process, not an event”. At the time it was quite a radical statement, but now, in the SNP-dominated era, it is almost taken as given that Holyrood becomes steadily more powerful over time.

Every time Westminster agrees to further devolution it has already been taken over by political events. By the time powers actually move from London to Edinburgh, the debate has already moved on.

Former prime minister Winston Churchill once said that “to improve is to change, and to be perfect is to change often”; if that is true for Scottish devolution, it’s perfect.

Or to misquote Leon Trotsky, another 20th century political leader, Scotland is in a state of ‘permanent devolution’.

What is the meaning of the devolution agenda, and where is it going? Furthermore, can it deliver what the Scottish people overwhelmingly voted for in the General Election – an end to austerity?

Calman, Smith and beyond

Let’s start at the beginning of the post-1999 Scottish devolution era: the Calman Commission.

Calman was a response by pro-union parties to the SNP’s minority government in 2007, and its final report in 2009 led to the Scotland Act 2012, which begun its implementation this year, with the Scottish Parliament’s first tax raising and borrowing powers beginning on 1 April.

By then, the Smith Commission had already agreed a new devolution plan to set the rate and bands and collect income tax in Scotland, and over some areas of welfare including disability benefit and more borrowing powers, but that is already being superseded before it has even been proposed to the House of Commons.

As James Mitchell, professor of politics at the University of Edinburgh says, the recent General Election and the political fallout from it “suggests that something more than Smith is likely to be proposed”.

“Even if the UK Government refuses to offer anything more than Smith now, this matter is moving,” he adds.

Where is it moving to? Nicola Sturgeon’s Scottish Government is seeking a phased transition to “full financial responsibility” – the SNP’s rebrand of ‘full fiscal autonomy’ – which would see “priority” areas like national insurance contributions, employment law and full welfare powers devolved first, before moving to Scotland raising and spending all of its own money and paying back to the UK Parliament for reserved services like defence and monetary policy.

This is a long way off what the Tory government at Westminster currently has in mind, as it seeks to focus on the full devolution of the Smith Agreement in the Queen’s Speech on 27 May, although it is currently in question as to whether even this will be proposed to the House of Commons in full.

The political balance between Edinburgh and London is a recipe for much push and pull back and forth over the next few years, all distilled through the wider political climate of Tory austerity and a referendum on the EU, issues which create further tension between Scotland and the rest of UK, the SNP and the Tories.

It all amounts to massive uncertainty about the future of devolution, premised as it is upon various factors and forces.

“I don’t think there is any inevitability nor a clear destination,” Mitchell surmises.

David Cameron, the Smith Commission and small-c conservatism

What are Cameron and Sturgeon are trying to achieve from the endless rounds of devolution debacles?

For the Tories, a debate is increasingly emerging over what approach to devolution could stem the SNP tide where Calman and Smith have failed.

Michael Forsyth, a former Tory Scottish Secretary, said shortly after the General Election that the only way to halt the march of the SNP to independence was to call its bluff, and give it full fiscal autonomy.

“The big advantage being of course that Nicola Sturgeon and the SNP would not be able to produce manifestos that promise the earth without carrying the possibility of raising the money in the first place,” he explained. (Click here to read more).

Other senior Tories have made similar soundings, as they believe that the funding “black hole” created by low oil prices in the North Sea would be a bridge too far for the Nationalists, and therefore exposing the tough talk on ending austerity as a sham, or so the theory goes.

Jamie Maxwell, journalist and author, thinks this approach is too high risk for someone as cautious as Cameron.

“I suspect Cameron’s instinct is to resist SNP demands for radically enhanced powers and stick with Smith, or at least stray as little from Smith as is politically possible,” he says.

“He has shown almost no appetite for the kind of radical decentralisation of power necessary to save the Union. The moment for federal reform was last year, during the independence referendum, when the future of the United Kingdom was immediately at stake.

“What was offered instead – a handful of welfare and tax powers & English votes for English laws – is clearly inadequate, and already looks redundant.”

If Smith is “inadequate” and FFA is a no go area, what is Cameron’s approach to devolution?

Professor Kirstein Rummery is part of the Centre for Constitutional Change and hosted an event with Lord Smith and the rest of the Commission at Stirling University. She believes that Cameron’s approach is the same one that was behind the Smith Commission, and has failed badly.

“It was drawn up for the sake of political expediency,” Rummery says. “The aim was to find something within a very quick period that all the parties could sign up to. It based its framework on the existing sets of rights and powers instead of agreeing an overarching set of principles.”

Rummery adds that Smith was a “patchwork of powers which made no theoretical sense, really, and did not give Scotland the levers it needed to grow its economy and transform its welfare system”.

The problem for Cameron, beyond his own small-c conservative instincts, is how to come to a coherent and systematic constitutional solution within a lop-sided UK system, England being 85 per cent of the population and the UK Parliament also serving as the parliament for all English matters.

Rummery describes it as “a parliamentary system designed for the 18th Century that cannot cope with 21st Century governance”.

For the Tories, then, there appears to be no ultimate solution to the devolution question, their menu of options all falling into the bracket of ‘best-worst’ scenario.

It’s likely that the Conservatives will continue responding to pressure rather than setting the agenda, and hope the SNP juggernaut somehow falls off the rails.

Sturgeon, full fiscal autonomy and ending austerity

For the first minister and her party, the biggest challenges come if they get what they want: more powers, and the devolution end game of full fiscal autonomy (FFA).

Sturgeon came under most pressure in the referendum debate when she had to deal with questions about how she would cover the PS7.6bn funding gap under FFA from falling oil revenues, and while she said she would borrow and “grow the economy”, it was not a convincing display.

Maxwell, an independence supporter, believes this is a problem for Sturgeon.

“The problems with full fiscal autonomy are pretty clear and well documented,” he says.

“Scotland would have to borrow a lot (on top of an already substantial deficit) just to keep spending at its current (declining) levels. Alternatively, the Scottish economy would have to grow at an absurd rate to cover the shortfall.”

Part of the issue with FFA is that it’s not clear to what extent it really does mean full control in Scotland over fiscal policy, despite the name.

In the independence debate, Mark Carney, governor of the Bank of England, made it clear that if there was to be a currency union with an independent Scotland there would have to be some common themes in fiscal policy over issues like the amount government can borrow money.

Therefore, if Carney’s position was true for the SNP’s independence vision, it would surely be even truer for FFA.

Mitchell agrees, and explains why it makes it difficult to come to an accurate prospectus about the ability of the Scottish Government to end austerity under FFA.

“Given uncertainties about: a) what FFA means, b) The context in which it is implemented; and c) what might be done with FFA, it is difficult to make any firm prediction about austerity – one thing seems clear, if FFA is meaningful there would be some greater degree of choice in the various aspects of fiscal policy whether or not such choices are acted upon.”

Question marks over what the SNP would do with new tax and borrowing powers remain. For example, the SNP wants National Insurance devolved, but would it raise National Insurance or cut it?

The party wants to increase the top rate of income tax to 50p, but this wouldn’t radically alter the tax base from the current situation. Previously, the party wanted to reduce corporation tax, but has recently abandoned this plan under Sturgeon’s leadership.

James Foley, author of ‘Yes: the radical case for Scottish independence’, said the party now has to explain how exactly it would use new powers to achieve the growth it projects under FFA.

“Superior economic growth could eventually achieve a situation where the tax intake increases sufficiently to pay for public services, but they haven’t properly explained how the growth will be achieved,” he said.

“Since the 1970s, most Western economies have suffered from weak growth historically speaking, and in any case the gains have tended to go to rich elites. How will Scotland escape these traps?” Foley asks.

“For a while, SNP leaders stuck to the discredited nonsense that we could increase our tax revenues by cutting corporation tax,” Foley states. “Thankfully, they’ve abandoned this voodoo economics now, but this leaves nationalism without a plan for growth. Cutting corporation tax was a silly plan, but it was a plan.”

For the SNP leadership, such issues are not pressing concerns. For the moment, they have to work out how to mitigate austerity and use new powers more effectively than Westminster, two issues that are interconnected – how do you do more with less?

Part of the plan may be to use the party’s new cohort of 56 MPs in the House of Commons to put the pressure back on to Westminster rather than Holyrood.

However if cuts are as deep as expected and unemployment begins to rise, the Scottish Government may struggle to avoid taking at least some of the blame, especially with new powers over income tax which will give the Scottish Parliament some more lee-way to raise extra money.

Even then, Smith will not be implemented for at least another year or so, while the austerity agenda ploughs ahead.

Is a split inevitable?

Alex Salmond was ‘outed’ as the senior SNP source who told various journalists last week that a referendum would be “won” by the Yes side if it was to take place tomorrow, and said even if Cameron refused to allow the Scottish Parliament to hold another referendum it could do it anyway.

There is hesitation among SNP cadres to take a risk on a second referendum when the party is in such a strong position, but that may come under pressure if the Tories next round of austerity is as crushing as expected, and if an exit from the EU is on the cards.

In any case, the threat of a referendum is another weapon Sturgeon can use in her zero-sum game with the Tories over devolution.

Is it all inevitably leading towards a split, with the current devolution bartering merely shadow boxing before the big showdown? Perhaps, perhaps not; as Mitchell states, no one knows how it is all going to end. The only certainty is that the devolution story still has at least a few chapters left to go.

Picture courtesy of the First Minister of Scotland