In a new paper released today, Lucy Shaddock and Akash Paun explore future constitutional scenarios for Scotland and the UK. In this article, they focus on what the three unionist parties have proposed regarding further devolution to Scotland in the event of ‘No’ vote.
The Scottish referendum campaign has gone into overdrive since the weekend as poll results have indicated a closing gap and provoked concern on the ‘No’ side. Gordon Brown’s announcement of a high-speed timetable for transferring powers to Holyrood in the event of a ‘No’ vote has been endorsed in principle by the Scottish and Westminster leaders of the pro-union Labour, Conservative and Liberal Democrat parties. This would mean agreement on a plan by the end of October, a White Paper in November and a draft Bill in January. This will require the three parties to reach a shared position on exactly which powers should be devolved, although the three parties have up until now published their own separate proposals, which the Institute for Government discusses in a new ‘scenarios analysis paper’ published today.
The parties’ partially overlapping devolution proposals led to a joint statement in June that committed to strengthening Holyrood’s powers in the areas of ‘fiscal responsibility and social security’. However, there are significant differences in how they make the case for their proposals. The Conservatives’ rationale for recommending devolution of both the rates and bands of income tax (as well as air passenger duty) is to close the ‘fiscal gap’, ensuring Scotland has greater responsibility to raise the money it spends. The Liberal Democrats’ vision is of a ‘federal UK’ with a written constitution, so their proposals for devolution of income tax, the aggregates levy, inheritance tax and capital gains tax can be seen as part of a broader constitutional reform agenda. Labour’s more limited proposals on tax, comprising only the powers to vary the rate by up to 15 pence in the pound and to create additional ‘progressive rates’, reflect concerns in the party that tax devolution would result in a competitive ‘race to the bottom’. Labour also places greater emphasis on ‘pooled risks and resources’ as part of an ongoing ‘social union’.
Alongside extra tax powers, the other main area of potential change relates to welfare and benefits policy, which is currently largely non-devolved (though some small welfare powers have been transferred to the Scottish Parliament already as knock-on effects of the UK welfare reform agenda). It seems likely that housing benefit and attendance allowance would be devolved under the unionist parties’ plans. Both Labour and the Conservatives have made a case for devolution based on the close relationship of these benefits to powers already held by Holyrood, specifically relating to housing policy and social care. Labour has also called for the transfer of control of welfare-to-work programmes to local authorities (with the Scottish Parliament providing strategic oversight), though whether the Conservatives in particular would be willing to give up control of this important policy area remains to be seen.
Another possible avenue of reform is to create shared responsibilities between the UK and Scottish governments, rather than all powers being either reserved or devolved. Both Labour and the Liberal Democrats favour more partnership working in areas including skills, employment and cross-border transport, though there is little detail of exactly how this would work.
Beyond what the three unionist parties have proposed, our paper also considers the effects of other more radical models for tax and welfare devolution that have been put forward by groups such as the IPPR, the Devo Plus group and Reform Scotland.
Gordon Brown has said that a ‘No’ vote on 18th September would be the “starting gun for action”. Arguably, the “starting gun” came in October 2012 when the UK and Scottish Governments agreed that a referendum would be held. Nonetheless, there now seems to be unstoppable momentum towards further devolution so long as Scotland does remain in the UK. This is likely to fuel the debate about how much more power to devolve to Wales and Northern Ireland. It may also lead to a serious attempt to solve the ‘English Question’, either via substantial devolution within England, or by reform at Westminster to enable England-only matters to be dealt with separately.
Whatever new constitutional settlement is ultimately agreed, the Institute for Government will in the next phase of our research consider how any further devolution should be implemented and how the relationship between the different parts of the UK should be managed in future.
Note: This article gives the views of the authors, and not the position of the British Politics and Policy blog, nor of the London School of Economics. Please read our comments policy before posting. Featured image credit: Michael Duxbury CC BY 2.0
Akash Paun is a Fellow of the Institute for Government and leads the Institute’s Governing after the referendum project.