Scots get new powers

 

BE CAREFUL what you wish for. In announcing proposals on Monday, St Andrew’s Day, for a radical extension of fiscal devolution for Scotland – powers to control a third of public spending, to borrow and to vary income taxes – the British government and Scottish unionism are calling the nationalist bluff. With the largest transfer of fiscal power from London since 1707, to quote Scottish Secretary Michael Moore, it may also be handing the minority Scottish National Party (SNP) administration in Edinburgh’s Holyrood what it may come to see as a poisoned chalice but one that cannot be refused.

 At a time of public spending cuts such devolution will mean sharing in responsibility and the flak for what will be deeply unpopular measures – the price of real power.

The new Scottish Bill will also set an important new benchmark for devolved power, akin to assemblies in Italy, Spain, Belgium and Australia, that will certainly raise expectations in Northern Ireland and Wales.

The proposals are the product of a cross-party commission on devolution chaired by Sir Kenneth Calman, established by the unionist parties, Labour, the Tories and the Lib Dems as an alternative to the SNP’s independence agenda. Polls show popular backing for the initiative at 44 per cent, twice the level for independence.

The Bill will allow the Scottish government to increase or cut income tax rates from 2015 – up to 50 and 20 per cent respectively on the lower and highest rates – and to borrow up to £2.7 billion from 2013 for capital spending and shortfalls in income tax revenues. In addition, Holyrood will be allowed to introduce new, Scotland-only taxes, with Westminster’s approval, and have control over stamp duty and landfill tax. Unsurprisingly corporation tax, excise duty on North Sea oil and gas, and VAT will remain with the treasury.

That will represent power over about £12 billion or 35 per cent of current spending: the block grant from the treasury of £29 billion a year will be cut by an equal amount. The powers were denounced by SNP’s first minister Alex Salmond as “extraordinarily modest, a missed opportunity”. But they will lay the basis for what will be lively May elections to the Scottish parliament when the unionist parties will hope to capitalise on the weak SNP general election showing when it took only six of 59 Westminster seats in Scotland.

A first decade of devolution has whetted the appetite for more power to be devolved in the evolving political map of Britain.