The other category of tax proposal is to leave decisions on the rates of particular taxes to be set UK-‐wide by the UK Government, but to work out the proportion of UK tax receipts generated in Scotland and to allocate those receipts to the Scottish parliament’s budget. The Liberal Democrats would allocate a Scottish share of UK corporation tax receipts to the Scottish parliament in this way, and the Conservatives have said they would explore whether to do the same with Scottish VAT receipts. In each case there would be an incentive for the Scottish parliament to take measures which would increase Scottish receipts from corporation tax or VAT.
Labour does not propose similar measures for corporation tax or VAT. Together with the more limited proposals on income tax, Labour’s tax proposals are by some way the most modest of the three pro-‐union parties. This appears to reflect divisions within the party about the desirability of more devolution, with the parliamentary party at Westminster less open to further devolution than the party in the Scottish parliament and the Westminster party winning out.
Though none of the parties’ reports say this explicitly, it is likely that the amount of block grant received from the UK Government would be reduced in proportion to the amount any new Scottish tax-‐setting powers or any shares of receipts from UK-‐ wide taxes would bring in. This approach was established in the 2012 Scotland Act. One effect would be remove some of the controversy around the Barnett formula (which has been used to calculate the Scottish block grant until now), because the amount of funding it would allocate would be much less.
Welfare
Each of the pro-‐union parties also proposes welfare devolution, though none of them would want to devolve higher cost benefits like pensions. The emphasis instead is on benefits that connect closely with existing devolved responsibilities. The Liberal Democrats have least to say here except for a greater Scottish Government role in implementing the UK Work Programme so as to connect it better to Scottish training and skills policies.
Both Labour and the Conservatives would devolve Housing Benefit to connect to existing Scottish parliament responsibilities in housing policy, and Attendance Allowance for pensioners needing care in their homes, which connects with existing responsibilities in health and social care. Labour would also devolve the Work Programme, but give responsibility for it to local authorities rather than the Scottish Government. The Conservatives would enable the Scottish parliament to supplement benefits still run on a UK-‐wide basis.
At their fullest extent these proposals on tax and welfare devolution are clearly significant and would have direct impact on Scotland’s citizens, whether through benefits received, taxes increased (or reduced) and – if all the incentive effects worked in practice as well as in theory – higher economic growth. In addition all three parties would take steps to strengthen the powers of local government and introduce modest new policy-‐making powers for the Scottish parliament along with new institutional arrangements either to strengthen the legal status of the parliament and/or to build improved links between Scottish and UK political institutions.
What the Yes side says
The Yes side’s response to the pro-‐union parties’ proposals on more devolution has been very simple: the pro-‐union parties cannot be trusted to deliver. This is often accompanied by recollection of the commitments given by senior Conservatives in the late 1970s that if the Scots rejected the proposals in the 1979 devolution referendum, the Conservatives would deliver a better alternative after the next UK election. They did not. The Yes side message is in effect ‘don’t get fooled again’ and that the best way to guarantee a stronger Scottish parliament is to vote Yes.
Would the No side deliver?
So would the No side deliver? There are no guarantees that they would. The closest to a guarantee was given in June 2014 when the three pro-‐union parties made a joint pledge on more devolution. This focused on the common ground around tax and welfare devolution and foresaw that each would write a commitment to pursue this common ground in their 2015 UK election manifestos.
The common ground may be substantial, but there are still significant differences. Labour lags behind the other two and appears to have more internal party divisions to contend with. There is a suspicion too that the Conservative Party may also have divisions that have not yet surfaced. Given such actual and potential internal party differences it may be difficult to maintain cross-‐party consensus.
And much may depend on the outcome of the 2015 UK General Election. Many commentators envisage another hung parliament which could make the parliamentary arithmetic for a further Scotland Act challenging – especially if the new UK Government rested disproportionately on support from MPs in England. There is also a question mark around the sense of priority that Scotland would have either if the No vote had been a clear one, or if other matters pressed higher onto the agenda at Westminster – not least that parliament’s enduring concerns about European integration.
There are though two counterbalances that could help ensure delivery of a new Scotland Act with significant additional powers for the Scottish parliament following a No vote this September.
The first lies in the pledge made by the pro-‐union parties in June 2014. Although it was painfully thin on detail, it exists. We can be sure those parties will be reminded of this and will be aware that the middle ground voter wanting more devolution but not independence will have alternatives to the pro-‐union parties both in the 2015 UK election and the 2016 Scottish parliament election. If those parties are felt to have gone back on their pledge there is likely to be only one beneficiary, the SNP.
Charlie Jeffery Jeffery WA
