In a calculated yet audacious move, David Cameron has adopted the Conservative Party’s Strathclyde Commission proposals for greater tax-gathering powers for the Scottish Parliament. With that single move he has gazumped Labour on its own traditional ground, given a boost to the No campaign in the Scottish referendum and improved the Scottish Conservatives’ chances in next year’s general election.
The Strathclyde Commission, established to determine what further powers – if any – the Scottish Parliament should have in the event of a No vote in the referendum published its findings yesterday, at a press conference chaired by Ruth Davidson, the Scottish party leader.
The key proposals, which were endorsed by Davidson, included the following:
- While the tax-free personal income tax allowance should remain reserved to Westminster, after that, the Scottish Parliament should decide on the rates and bands (this goes further than Labour, which has only advocated Holyrood being able to increase tax rates, but not cut them);
- VAT should be devolved – but, since this is not allowed under EU rules, there is therefore a case for a share of Scottish VAT receipts being assigned to the Scottish Parliament (again, Labour has not suggested this);
- While Corporation Tax, Capital Gains Tax and Inheritance Tax should, on balance, not be devolved, further taxes such as Air Passenger duty can be devolved by Order of Council and that this should now happen (which is also not on the Labour agenda);
- Corresponding reductions in the Scottish Block Grant be made for the amount of tax revenue that would now go to Holyrood;
- Holyrood should get responsibility on welfare issues which relate to devolved policy areas, such as housing benefits, and attendance allowance paid to disabled people aged 65 or over who need help with personal care (a policy Labour is in step with);
- A new, independent Scottish Fiscal Commission should be created to produce Scottish economic data and forecasts; and,
- A new committee of the Parliaments and Assemblies of the United Kingdom should be established to consider the developing role of the UK and the respective powers of the different institutions.
Conservatives proposing that the Scottish Parliament set the income tax bands and rates for all personal tax in Scotland except investments, dividends and savings is a seminal moment in Scottish and UK politics, because the party has been bitterly divided on the issue since the 1980s, when the proposals was first published by Struan Stevenson.
Murdo Fraser later proposed similar policies in 1998, after a referendum in 1997 had confirmed public support to establish a Scottish Parliament. The point of both men has always been that if there is going to be a Scottish Parliament, it should be made to raise the majority of its spending – or it will behave like a drunk let loose in a brewery.
Subsequent Scottish Party leaders, David McLetchie and Annabel Goldie (the latter was a member of the Strathclyde Commission) both resisted further calls within the party to make the Holyrood institution accountable for more of the money it spends. Ruth Davidson herself declared there should be no change in policy in her leadership election campaign – announcing a line in the sand on constitutional matters – but this was soon breached by Cameron himself, who has since made the running on the issue.
Critics in the Conservative Party have branded the policy as a consolation prize for Alex Salmond. But in truth it is a straightjacket, because it means that so long as he or the SNP (or indeed Labour) are in power in Scotland, they will have to match their spending promises with an explanation of how they will fund them. Relying on spending the block grant is no longer enough.
The issue is not about giving more and more powers to the Scottish Parliament, but making it truly accountable to the Scottish people, and especially those that pay taxes.
By adopting the policy of ensuring the Scottish Parliament and its MSPs will have to decide how to raise between 40–60 per cent of their spending, Cameron has played a canny game:
- With all the unionist parties now backing further reform of Holyrood’s powers and responsibilities, the Yes campaign can only carp from the sidelines, suggesting the promises would not be delivered. This is childish, empty rhetoric – for any party breaking such a promise would face electoral annihilation (rather like the Lib Dem broken promise on tuition fees);
- Cameron can also point to his credibility in agreeing before the general election of 2010 to introduce legislation based upon Labour’s Calman Commission proposals – and then did so, it becoming the Scotland Act 2012;
- Having trumped Labour, Scottish Conservatives can go into next year’s general election with confidence and a strong Scottish message, neutralising their past weakness, and thus being able to focus on the economic recovery;
- Cameron comes out of this announcement in a dominant position, which is how it should be – for it is only through a Cnservative government that these policy proposals can be delivered. Labour’s proposals are weaker and the Liberal Democrats’ best hope for theirs is to be in power with the Conservatives.
It was, after all, Cameron who crossed Davidson’s line in the sand and said more powers are necessary for the Scottish Parliament. It was Downing Street which briefed the contents of Strathclyde’s report to the Daily Telegraph on Friday, ahead of the Scottish party’s briefing of the Sunday papers (causing considerable consternation in Edinburgh), so that Cameron would be seen as being full square behind it. And it is Cameron who will go into the general election selling the idea. Davidson can take credit for facing down internal critics, but it is Cameron who comes out of the process the strongest.
This is only right – for it is Cameron who must win the trust of the Scottish people for it will be Westminster that delivers the reforms.
As a result of these moves, Cameron now ‘owns’ devolution reform in the UK, blazing a trail that leaves the Labour leader well behind with a party divided between its MPs and MSPs and openly squabbling about what to do. As we might say in Scotland, “Where’s yer One Nation policy now, Ed Miliband?”
Today, the people smiling from ear to ear are Murdo Fraser and Struan Stevenson – who have been vindicated and at last can see the fruits of their campaigning – while Alex Salmond and Nicola Sturgeon typically resort to name calling, while knowing all the game is now up after the 18th September.