On Tuesday, the Scottish Labour Party published its report into reforming devolution. To say that it was a disappointment to many unionists looking for a salvo that would hole the SNP below the waterline and sink them once and for all would be an understatement. And that’s being generous.
The smiles were all on the nationalists faces, relieved that Labour could not agree about what to offer – so it is the lowest common denominator
The truth is that Labour was never going to launch a torpedo: all they have come up with is a dud. Don’t take it from me, the report was given little coverage in the Scottish media, and practically ignored by its standard bearer, the Daily Record, which instead ran a feature on the SNP deputy leader’s ambition to take over from Alex Salmond.
Having already covered the manoeuvrings and conflicts of Scottish Labour in my last article I do not wish to dwell on the party’s problems, but for background on Labour’s new proposals you can read ThinkScotland and The Scotsman. What interests me here is how the Scottish Conservatives respond and – let me be very clear – there is a great opportunity now for their leader, Ruth Davidson, to take the initiative and start making the running in Scottish politics. Such an opportunity does not come around often, possibly only once, and if she flunks it now she might as well start looking for another job.
The late David McLetchie, the Scots Tory leader between 1998–2005, had such a chance in 2003 when the SNP support fell back and the Conservatives had an opportunity to campaign to become the official opposition, but instead of maintaining his initially aggressive and radical approach he consolidated by diluting his policies, letting the SNP regroup.
Likewise, Annabel Goldie, who succeeded him, could have taken a higher profile in negotiating for a more robust agreement to let the SNP govern as a minority after the 2007 election (for instance, forcing a referendum that would have been far more certain in its outcome) – but she was a wallflower and Alex Salmond governed imperiously, without any political upside to the Conservatives who lost more ground in 2011.
Now Ruth Davidson has her own chance, and she must seize it. The Scottish Parliament needs to be made responsible for its heavy-handed approach to regulation and its keenness to make Scotland a more expensive place to do business in. It also has an attraction to giving away public services or benefits for free: why charge when it is routinely funded by a bloc grant from the UK exchequer?
The funding arrangement will change at the margins, with the application of the Scotland Act 2012 coming into force in 2015/16, whereby income tax can be varied plus or minus 10p over all of the tax rates, and the Scottish Bloc is then adjusted to reflect this. So the referendum is not a Yes to change and a No to the status quo, but a No to further devolution that is already legislated for.
The unionist parties have thus far been inexplicably lamentable about explaining this. Maybe this will change as the vote comes closer. I certainly like to think so.
What is badly needed, though, is to make Holyrood accountable; its politicians need to feel the pain of the electorate in the cost that it imposes on jobs, wealth creation and the standard of living. As well as higher taxes (e.g. business rates) there are huge opportunity costs that it imposes upon the economy that the Scottish public do not see. Making the institution financially responsible is not only a correct position for Conservatives, but would force the debate on to more fertile ground. Offering tax cuts that could help economic growth and reward work would at last make political sense.
This requires two things – a wider range of taxes of which the revenues can accrue to the Scottish Parliament (offset against income already received by block grant) and a deeper scope in being able to vary, or even abolish those taxes. To be truly accountable, the parliament needs to raise over the 50 per cent threshold of what it spends – the Scotland Act arranges for 35 per cent and Labour is aiming at 40 per cent. Ruth Davidson should aim beyond half.
The Labour proposal to allow a 15p variation in income tax is an advance, but it is a climbdown from its own interim report that suggested all Scottish income tax going to Scotland. While Scottish Labour wishes to be able to increase taxes on the higher bands (the number of bands themselves and their thresholds would also remain set at Westminster), it would not allow them to be reduced. This is an intentional socialist ratchet that leaves it able to soak the rich (and they are quite explicit in this ambition as Labour politicians believe it will shore up their vote in the council estates) but ensure there is no tax competition with the rest of the Union by cutting taxes.
Again, Ruth Davidson must come out in favour of tax competition. Not only is it a bold Conservative move, it is from such competition that the whole of Britain could become more prosperous as the benefits are seen and replicated.
Politicians that talk of a race to the bottom forget that the money does not belong to them. It is taken from people and businesses by legal coercion – a political consensus that is regularly tested, and often results in capital flight and people moving abroad. Whatever powers are offered there must be the opportunity to allow taxes to be cut at differing levels across the various bands – and, crucially, any improved revenues that accrue as a result must go to the Holyrood treasury, not the UK treasury. A formula for this process will need to be agreed. Added into this mix should be taxes such as Air Passenger Duty and Inheritance Tax as well as greater authority to abolish taxes or create new ones.
If socialists wish to create a collectivist nirvana in Scotland, then let them do it within the UK and test it to destruction – so long as Scotland bears the cost. The Scottish electorate will soon find out how disastrous it will be, and seek a political solution from the only elected centre-right party available – Ruth Davidson’s Conservatives.
Finally, the UK operates under a system of asymmetric devolution, with the range of powers available to parliaments and assemblies all different – and no institution for England at all. So in drawing up what Conservatives will offer, it should be made clear what the process will be for making the change possible, the timing of it and when and how it will apply to UK institutions – with a UK convention to ensure that a solution for the similar problems of accountability in the rest of the UK can be addressed. Lord Strathclyde is chairing this commission and he has an unenviable task – for background, read Professor Adam Tomkins. Crucially, such an agreement could stop the constant revisiting of constitutional politics and tie in any changes to a UK-wide agreement that would require all of the UK to change in future.
Let accountability through localism and competition be Davidson’s watchwords, and she will find herself in the vanguard of a Scottish Conservative revival. She is a relatively new face, she has no baggage, she is not a stereotypical Tory and is a decent communicator. She just needs a big idea. Providing that real torpedo to sink the nationalist flagship would change Scottish politics for a generation and would be the making of her.
Soon we will find out what she’s made of.