10 Powers For A Better Scotland

I was as disappointed as any member of the Yes campaign about the referendum result a week last Friday. Many better people than I have written at length about the aftermath of the referendum and about where, as a movement for democratic and progressive change in Scotland, we go from here. I don’t feel I can add much right now to what has already been said – though I may return to the subject later.

One thing that is worth re-stating though is that grassroots groups such as Common Weal, National Collective, Women for Independence and, perhaps most significantly, Generation Yes – as well as websites like Better Nation, Newsnet Scotland, Scot Goes Pop! and Wings Over Scotland – all of which have indicated they have no intentions of disappearing into the night following the referendum, have together led to, and led, what has been nothing short of a revolution in political engagement in Scotland – what one person astutely called “Scotland’s democratic moment”.

The fact that these grassroots movements have been able to flourish despite a mainstream media which remains dominated by – indeed, often peculiarly obsessed by – Westminster, UK-level politics makes the achievement all the more remarkable. Scotland has finally developed into a genuinely separate polity with its own public sphere, to the extent that in terms of democratic participation we are arguably already almost independent. This is something we must cherish and build on – though I’m sure the more hardened parts of the unionist establishment are terrified at what they have seen unfolding.

Anyway, onwards.

I am more convinced than ever of the intellectual case for Scottish independence – and it is notable that polls conducted during the referendum campaign showed that, as undecided voters became more informed, they plumped for Yes twice as often as for No – but the people, who are rightly sovereign on these matters, have decided to remain in the United Kingdom for now, and the UK is therefore the framework in which we must anchor any movement for political change in Scotland for the foreseeable future.

While many of us believe in independence from a ‘first principles’ standpoint – that is, we believe that Scotland should have statehood, and thus the sovereign ability to make or delegate decisions on all matters that comes along with this – many of the big themes of the campaign tended more towards what we might call bread- and-butter issues: job creation, social justice and the NHS. That so many people in egalitarian Scotland care deeply about these issues is not surprising, but we must now transform the engagement and concern surrounding these issues into something more concrete. The Smith Commission is our immediate opportunity to do this.

As Alex Salmond, Nicola Sturgeon and other members of the government have pointed out, the Better Together parties, during the panicked final days of the referendum campaign, promised substantial new powers for Holyrood: “home rule… approaching federalism”. Polls suggest that at least a quarter of No voters – most of whom, I think we can reasonably assume, hadn’t studied in detail the three Better Together parties’ earlier, rather tepid proposals for further devolution – voted No due to the promise of significant extra powers, suggesting that there is a comfortable majority in Scotland for a materially more powerful Scottish parliament.

Keeping in mind the campaign themes above, and what seems to me to be the clear wish of the majority for Holyrood to be the place where policy on all main aspects of everyday life is debated and decided, Lord Smith et al – if their interest is in a constitutional settlement which will endure – would be well-advised to come up with a new plan for the governance of Scotland which includes our parliament in Edinburgh taking on responsibility for all of the following:

1. All of income tax and National Insurance

This means control over (i) rates and bands (including the personal allowance, which is simply a 0% band), (ii) control over income tax on both non-savings and savings/dividend income, and (iii) control over National Insurance contributions (which are simply a complex second income tax).

This is going further than previous proposals on enhanced income tax devolution from the main unionist parties, for one simple but very important reason – democratic accountability. If income tax, in all its parts and variants, is not fully devolved, Scottish people will not be able to express a clear choice at any election between competing, holistic visions of the income tax system.

To elaborate on this somewhat, a UK party might, for instance, propose during a UK general election campaign to increase the personal allowance, but also to increase the top rate of tax so that the plan is revenue-neutral and/or broadly maintains the progressiveness of income tax. Half of this plan would apply to Scotland and half wouldn’t. (Specifically, what would apply to Scotland under current Conservative proposals is the part about the personal allowance, plus the rate of tax on savings and dividend income, but not any of the rates on earned income. Simple deciding how to vote on that basis, right?)

Presumably the Scottish government would be compensated in cases where it lost out – due, for example, to a Westminster-mandated increase in the personal allowance – but that is a poor substitute for proper democratic control over the whole framework.

The most difficult part of income tax devolution, given the UK’s historically centralised tax system, is separating out Scottish taxpayers from rUK taxpayers. As part of the implementation of the income tax powers in the Scotland Act 2012, work on this separation is already substantially complete, and so adding control of the personal allowance, tax on savings income, and National Insurance contributions would by comparison be conceptually simple, and, while certainly non-trivial, would be nothing more than a series of technical challenges to be worked through and overcome.

We mustn’t be so timid as to let short-term, surmountable technical issues undermine the fundamental design of our democracy.

As an aside, some have expressed a wish to keep National Insurance (NI) reserved to the UK parliament for its symbolic link with the UK social security system. This is a link which is indeed only symbolic, as NI revenues – as distinct from the entitlements which they generate, which could instead simply be linked to income tax payments – are used to fund current expenditure in the same way as any other tax. It doesn’t make sense to reserve one of the taxes on earned income and not the other, particularly since UK politicians often like to tinker with both as a package. Furthermore, at least one of the unionist parties has recently floated the idea of merging income tax and National Insurance, which, given the overwhelming logic of doing so, will surely happen sooner rather than later.

Genuinely full devolution of income tax would be a little complicated – that is not in dispute. However, this should not be a good enough reason for the Smith Commission simply to dismiss the proposition. There are many sound, democratically healthy reasons in fact to embrace it.

2. Full assignment of VAT

As a matter of principle, the Scottish administration should be able to fund substantially all of its own expenditures from tax receipts (along with its own debt, should it choose to issue this). This is a foundational principle of accountable and responsible government anywhere. Control of income tax – in all its guises – is one aspect of this. Another significant tax source is needed however.

Given that EU law prevents Scotland, as an integral part of the UK, from having different VAT rates from the rest of the UK, the next best solution is to assign VAT revenues from economic activity in Scotland to Holyrood. This should be coupled with a requirement for the UK chancellor of the Exchequer to consult the first minister on any proposed changes to the rates or scope of VAT – effectively turning VAT into a tax that is jointly ‘owned’ by the UK and Scottish governments (and possibly also the governments of the other UK nations in the future).

This proposal would have the additional benefit of giving the Scottish government and parliament a revenue source with a very clear and immediate link to the health of the economy, and thus an incentive to act in ways which are conducive to economic growth.

3. New taxes

There currently exists a non-statutory agreement between the Scottish and UK governments regarding the introduction of new taxes by the Scottish parliament.

In future, the introduction of new taxes in Scotland – subject to complying with the UK‘s EU and other international obligations – should be entirely a matter for the Scottish people and their elected representatives.

This position should be given the force of law.

4. Universal Credit/Job search and support

Support for working-age people is a bread-and-butter issue which affects people‘s everyday lives and which, given its close links with matters such as education, apprenticeships, and economic development, is perhaps the non-tax reserved policy area that is most obviously ripe for devolution. One can in fact imagine that the main reason it is not already devolved is simply that it was not the responsibility of the Scottish Office at the time the original devolution settlement enshrined in the Scotland Act 1998 was being drawn up.

Common sense suggests that, within the broader macroeconomic framework of the UK, primary responsibility for all matters related to the educating and training of people living in Scotland, helping them to find jobs, and supporting them through their work life should be the responsibility of Holyrood – and this is borne out by much of the discourse of the referendum campaign.

I strongly believe that the people of Scotland want and expect Scotland‘s government to have responsibility in this area – and consequently for the Scottish government to be free to choose a different path from UK-level policy such as the bedroom tax, or plans Labour have recently floated to restrict working-age benefits for people under 22.

5. The minimum wage

Closely related to (4), but worth mentioning separately is the minimum wage.

Even if the Scottish parliament didn‘t exist, there would be a fairly convincing argument for having different minimum wage rates in different parts of the UK, responding to different local circumstances in the UK‘s far from equally balanced economy. But given the close link and interaction between the Scottish education system, Scotland’s economic development infrastructure (Scottish Enterprise, Scottish Development International and the like), and now also Scottish income tax and some, if not all, working-age benefits, it seems illogical for Scottish workers to be subject to a one-size-fits-all minimum wage set for the whole of the UK at Westminster.

From a democratic accountability perspective, the minimum wage is something that should form part of a coherent, overall policy platform on work. Such a platform would also include policies on education, training, income tax, and in- and out-of- work welfare benefits.

There are already several countries in the world which have different minimum wages in different parts of their territory – including the United States – and from a technical perspective, a separate Scottish minimum wage would be no more difficult to implement than a separate Scottish income tax (and quite possibly significantly easier).

6. Equality

Equality (or equal opportunities) legislation is closely intertwined with both the criminal law and family law. We saw a real-life example of this recently when the Scottish parliament was considering the Marriage and Civil Partnership (Scotland) Bill, where the Scottish government had to seek agreement with the UK government to make an amendment to the Equality Act 2010 at Westminster.

The criminal law and family law are already almost entirely devolved. This makes sense, since these are subjects which have a direct effect on people’s day-to-day living – both, at their most essential, could be said to be about the state supporting individuals reach their fullest potential in life.

That being the case, reserving only the equality part of this wider package of “the law that affects everyday life” to the UK parliament hardly makes sense. There are of course obligations in this area under ECHR and EU law, but subject to complying with those, the law on equality in Scotland should be devolved – as indeed it already is in Northern Ireland.

7. Drugs

Continuing on the legal theme, one of the notable exceptions to the Scottish parliament’s current powers over the criminal law is its power to regulate recreational drugs. Given the parliament’s complete control over alcohol licensing (to the extent that it could effectively make alcohol illegal and bringing alcohol rehab facilities to light), prisons, rehabilitation, and the NHS, this has always been an odd exclusion. Now that we are considering the devolution settlement afresh, it would seem to make sense to arrange things so that the Scottish parliament and government can make holistic policy choices in this area, deciding both on the legal status of drugs, and on the consequences of their misuse.

Holyrood could decide in favour of a Portuguese approach to drugs, or a Swedish one. The point at this stage is not to decide on the policy itself, but rather the principle that the Scottish government should be able to adopt a coherent, end-to- end policy in this area – not have one hand tied behind its back unnecessarily. It’s not as if there is a single UK market in recreational drugs that we wish to protect.

On a side note, devolution of the law on drugs should also include the power to set drug-driving limits in Scotland – consistent with the power to set drink-driving limits that was already devolved in the Scotland Act 2012.

8. Broadcasting

Despite the reach of social media, many parts of western society still obtain the majority of their information about what is going on in their country (and the world) from traditional broadcast media. The importance to a vibrant democracy of high- quality, impartial broadcast media should therefore not be underestimated.

In Scotland, 15 years after the advent of the Scottish parliament, it is still the case that the average person can name more politicians in the UK cabinet than in the Scottish cabinet. It can be tempting to laugh this off as not very important, or to make some remark about the calibre of politicians at Holyrood, but it is not the hallmark of a healthy democracy and it is something which should concern us all.

That this lack of knowledge of Scotland’s national politicians exists and persists should not surprise us, given the continued dominance of UK (24-hour) media in Scottish homes, and the obsession of said media with Westminster politicians and their often England- or England & Wales-only policies. But it is a fundamental issue with Scottish democracy that we must finally step up to the plate and do something about.

In federal Germany, broadcasting is the responsibility of the states (Länder in German). There are nine regional public service broadcasters (PSBs) in Germany, and these work alongside nationwide broadcaster ARD (which is actually a creature of an inter-state agreement on broadcasting between the 16 Länder).

This gives people living in Germany what the unionist parties would presumably call the best of both worlds – strong state (or regional) broadcasters that keep people educated and informed about their part of the federation, as well as a larger public service broadcaster covering the whole of the Federal Republic.

As part of the new devolution settlement, and using the German model as a reference (a structure which the UK actually helped setup), the Scottish parliament should be given primary power over broadcasting in Scotland.

The parliament may choose to use this power to setup a separate Scottish Public Service Broadcaster (similar, for example, to Bayerischer Rundfunk in Bavaria), while also entering into an agreement with the BBC regarding a continued role for the BBC as the UK-wide PSB in Scotland. That would be for the parliament to decide, but the fundamental point is that it should have power to act in this area.

9. Arrangements for elections in Scotland (including political parties)

A local sports club can decide on the arrangements for electing members to the club committee, yet the Scottish parliament cannot currently decide on the arrangements for its own elections. If, for example, the parliament wanted to increase the number of MSPs from 129 to, say, 139, to share out the workload better, it wouldn’t be able to do so. Nor – to pick a more topical example – could it extend the franchise in its elections to 16- and 17-year olds.

The UK parliament can choose to make these kinds of changes for elections to the House of Commons. The German state legislatures can change the way they are elected without recourse to Berlin. It is to treat Holyrood, and the people of Scotland, like a constitutional child that cannot really be trusted, to require decisions about how the Scottish parliament is elected to be made in London.

On a related note, as has been highlighted by MSPs across the party divide in recent days, common UK rules on political parties prevent the Scottish parliament from introducing quotas on female members.

Common rules across the UK may be an administrative nicety, but given that in Scotland we have a distinct polity and demos, which often wishes to take a different path not just on the ‘bread-and-butter’ issues, but on matters relating to the conduct of our democracy itself, this administrative nicety is unhelpful and counter- productive. Impeding the UK single market in political parties seems like an acceptable price to pay for a more responsive democracy in Scotland.

10. Independence referendums

Finally, given that the political legitimacy of an independence referendum being called by a Scottish parliament containing a majority of referendum-supporting members is these days accepted by almost everyone, the power to hold a referendum on independence that was temporarily devolved to the Scottish parliament in the snappily named Scotland Act 1998 (Modification of Schedule 5) Order 2013 should now be devolved permanently.

The Scottish people are not fools, and they are perfectly capable of regulating the frequency at which independence referendums are held. A party that proposed holding a referendum every parliamentary cycle would quickly be punished at the ballot box. Conversely though, if the people decide that they want a new referendum, and they clearly express this wish in a Scottish general election, it should be possible for the Scottish parliament to legislate to this effect without another arduous round of negotiations between Edinburgh and London.

In the absence of Scotland having its own written constitution, as a member of a federal United Kingdom, the power to hold an independence referendum at a time of its choosing would be the ultimate expression of the fact that Scotland and the Scottish people remain sovereign, and that Scotland is a part of the UK only because the people of Scotland have solemnly decided that they want that to be the case.

Would anyone disagree with that?

Kenneth MacArthur
National Collective

Image: clry2