1. 08.00 Good morning. At 08.30, Lord Smith of Kelvin will unveil a new devolution deal to Scotland that will grant Holyrood powers over income tax and welfare spending. The cross-party commission was set up after the unionist parties promised greater powers for Scotland in the event of a no vote in the independence referendum, in a pledge known as ‘The Vow’. The deal is being hailed as the biggest transfer of powers to Scotland since the Scottish Parliament was set up 15 years ago. It has been drawn up in little over two months. The deal includes:
a.. Full control in Scotland over income tax rates and bands, but not the personal allowance threshold.
b. More control over welfare, including the rate of Disability Living Allowance ands its successor PIP, Attendance Allowance and Carer’s Allowance. Scottish ministers will have the power to top up Universal Credit to effectively abolish the “bedroom tax”.
c. Control over Scottish Parliament elections will be devolved, allowing SNP ministers to press ahead with plans to give 16 and 17 year olds the vote.
2. 08.10 The devolution of income tax goes beyond what Labour intended. Gordon Brown warned the devolution of income tax would be a “trap” because it would force Scottish MPs to surrender significant voting rights in Westminster over budgets – putting the Union itself at risk. Under the deal, however, we expect Scottish MPs to retain votes over budget votes. Asked why the reversal in position, Jim Murphy, running to lead Scottish Labour, said this morning: “I’ve changed my mind.” “I listened to the people of Scotland in the referendum, who wanted real change but in the United Kingdom. We changed our mind, and reflected on the wishes of the people of Scotland. “I think this morning very many of those Yes voters who are not dyed-in-the-wool SNP people, they will be pretty satisfied with this deal. “But the second thing is that important parts of pooling and sharing of resources within the UK remain, the Barnett formula will remain, issues about the state pension will remain, and the ability to deal with a downturn in the economy will remain by Universal Credit and things like that remaining part of the UK. “So I think it’s a remarkable deal and a best of both worlds deal: really strong devolution but Scotland remaining part of the UK.”
3. 08.20 Gordon Brown has issued a statement, saying: “The Vow to deliver a stronger Scottish Parliament within the UK has been kept, as promised, and the timetable for draft laws to be published in January will now be honoured, as promised.” He says that the Smith Commission has ruled that income tax is a “shared UK tax” and that a reserve power to levy a UK-wide income tax has been retained. “The Commission has rightly REJECTED the Conservative proposal from the day after the referendum for excluding Scottish MPs from voting on Budget income tax decisions. It has rightly recommended that the whole of the House of Commons, including Scottish representatives, will always vote on every aspect of UK Budget tax decisions.”
4. 08.30 Lord Forsyth, John Major’s Scottish Secretary, has attacked the reforms to income tax as “piecemeal” that will be easily avoided, as the wealthy can take their income as dividends. “This is why it’s mad to rely on income tax as your main source of revenue. If the proposals are that dividends in income should be not taxed, they can change to have most of their income in dividends and avoid the Scottish rate of tax. I think we could end up if people think more powers to the Scottish parliament means more money… this has not been thought through,” he told Newsnight last night. “The Labour party’s idea that we should have a constitutional convention for the whole of the United Kingdom, and not do this piecemeal reform as a panic measure to the rise of the nationalists and the result of the referendum.”
5. 08.40 Boris & Co: Now give powers for England. Local government leaders including Boris Johnson, the Mayor of London, have called for negotiation similar to that in Scotland to agree a comparable package for English local government. The letter, entitled What is good enough for Scotland, says:
a. We leaders and supporters of local government in England of all parties and types of local government congratulate Scotland on the measure of devolution they have worked for and that is now proposed by the Smith Commission. We call upon central Government and party leaders to recognise that local government should be the vehicle for devolution in England and to now negotiate with us using a similar non-party Commission to agree a comparable package of measures for local government in England which can appear in the Manifestos and be enacted after the General Election:
Sir Richard Lees, Leader Manchester City Council
Boris Johnson, Mayor of London
Jim O’Neill, Author RSA Cities Report
George Ferguson ,Mayor of Bristol
Cllr David Hodge, Chair County Councils Network .
Graham Allen MP ,Chair of Parliament’s Political and Constitutional Reform Select
Cllr Dave Sparks ,Chair of the Local Government Association
Cllr Ken Browse, Chairman, National Association of Local Councils
Cllr Marianne Overton ,Leader LGA Independent Group
Cllr Neil Clarke, Chairman of the District Councils Network
Cllr Gerald Vernon-Jackson, Leader LibDem group LGA
Cllr Julie Dore ,Leader of Sheffield City Council,
Clive Betts MP ,Chair of Parliament’s Local Govt Committee
Cllr Nick Forbes, Leader Newcastle City Council,
Cllr Albert Bore ,Leader Birmingham City Council,
Joe Anderson Mayor of Liverpool,
Cllr Jon Collins Leader Nottingham City Council,
Cllr Ruth Dombey,Vice Chair London Councils
Cllr Keith Wakefield, Leader Leeds City Council
Jules Pipe,Chair London Boroughs Association
6. 09.00 Lord Smith of Kelvin begins the press conference. He praises political leaders for coming together after the “bruising” referendum. The Scottish Parliament will be “stronger” with “more tools to pursue its tools and objectives”, he says, after the biggest transfer of powers since it was created. It will be “more accountable” because more spending will be funded from tax within Scotland. Specific mentions;
a. New borrowing powers alongside tax raising and the Barnett Formula block grant.
b. The Parliament will get the first ten per cent of VAT.
c. Receipt of Air Passenger Duty.
d. Control over how elections are run.
e. The number of msp’s to be elected to parliament and how they are to be disqualified.
f. Power to give 16 and 17 year olds a vote.
g. Scotland will get power over disability and care benefits.
h. Control of unemployment programmes, welfare subsidies, cold weather, winter fuel & funeral payments and the maternity grant.
i. power to create new benefits.
j. The Scottish Government will be given a bigger role in EU negotiations.
k. Urging the Scottish people to be “patient” for the delivery of the new powers. he said:
l. “Change of this magnitude cannot be rushed through.” He says inter-governmental working “needs to be improved”.
m. David Cameron and Nicola Sturgeon must meet to discuss outcomes soon after after 25 January 2015.
n. The Speakers of the Commons and the Scottish Parliament should meet to discuss how public understanding of the new settlement can be improved.
o. Some believe the commission has gone too far, others not enough,” he said, “but my work is done – responsibility now passes to the Scottish Government.”
7. 09.15 Comments were received from:
a. John Swinney, the Scottish finance minister and Deputy First Minister, said the proposals lack the job creation powers, welfare powers, control over personal allowance or national insurance that will allow Scotland to succeed. “I regret these powers have not been delivered.” He said they recognised the Smith Commission could not grant independence but they hoped it would allow Scotland to succeed economically. They say this does not happen. “We welcome the new powers – as we support all progress for Scotland – and pledge to use them when they are in place in the best interests of the Scottish people. We also welcome the acknowledgement of the ‘sovereign right’ of the people of Scotland, and our ability to proceed to independence if we so choose. “But the proposals clearly do not reflect the full wishes of the people of Scotland, and also fall far short of the rhetoric from the No campaign during the referendum. Then, Gordon Brown promised ‘nothing less than a modern form of Scottish Home Rule’ and ‘as close to a federal state’ as the UK can be. That was the context for the “extensive new powers” promised in the Vow. Regrettably, the Westminster parties were not prepared to deliver the powerhouse parliament the people of Scotland were promised – under these proposals, less than 30 per cent of our taxes will be set in Scotland and less than 20 per cent of welfare spending will be devolved to Scotland. That isn’t Home Rule – it’s continued Westminster rule.” “Most significantly, the proposals do not include the job-creating powers that Scotland so badly needs to get more people into work and grow the economy, or welfare powers to tackle in-work poverty.” That claim is based on these two sentences in the report:
i. “Reflecting the sovereign right of the people of Scotland to determine the form of government best suited to their needs, as expressed in the referendum on 18 September 2014, and in the context of Scotland remaining within the UK, an enhanced devolution settlement for Scotland will be durable, responsive and democratic.”
ii. “It is agreed that nothing in this report prevents Scotland becoming an independent country in the future should the people of Scotland so choose.”
b. Iain Gray, for Labour, says the vow has been kept. “This is a good day for Scotland.”
c. Annabel Ewing, the former Scottish Tory leader, says the Scottish Parliament will have to “look people in the eye” over how taxpayers’ money is spent.
d. Michael Moore, the former Scottish secretary, says the deal is “Home Rule for Scotland” and a “transformation of the United Kingdom”. “We are creating a Scottish welfare system,” he says.
8. 09.30 On Twitter, ‘betrayal’ is now trending in Glasgow, which voted yes. A sample of some reaction from separatists;
a. The SNP should NOT accept this deal. Barnett Formula IS being cut. That is NOT acceptable. It’s a betrayal. https://twitter.com/hashtag/BETRAYAL?src=hash
b. These banners are all over the east end of Glasgow. Telling labour that they won’t forget https://twitter.com/hashtag/indyref?src=hash
9. 09.40 John Redwood, the standard bearer for the Tory right, warns Scottish MPs voting on English income tax will be “unjust”. He wants a new settlement where the Speaker will declare which issues are English only. “I’m here to speak for England, and what we need is the ability to make a decision on behalf of England, just based on the votes of the English MPs at Westminster. Or in some cases we may be doing it with Wales and Northern Ireland if the issues are not devolved there, but not with Scotland, because the issues have been devolved to the Scottish Parliament. “Now that Scotland is going to get this mighty power to choose the tax rates and the bands for income tax, [it’s important] that Scottish MPs don’t come to Westminster and then impose an income tax rate or income tax band on England that we don’t want. It would be quite unjust if Scottish MPs were still able to vote on our income tax when they could not vote on their own income tax, and when Scotland had her right to choose her own income tax without us.”
10. 09.50 Nick Clegg says the parties have over-delivered on The Vow. “Call it Vow Max, Vow Plus Plus,” he tells his weekly radio show on LBC. “Because what you have got in the Smith Commission, which I think is truly remarkable, is the devolution over money so that Scotland now will be responsible for the majority of the money that it spends which is a good thing. “This is not asking more of English tax-payers. It is saying that if the Scottish people and the Scottish politicians they elect want to do more things, on welfare for instance, they have got the freedom to raise it for them themselves and they will have, basically, a new welfare system for them to manage themselves in Scotland. They will have to fund it but they will be allowed to take responsibility for it. “That is basically Home Rule and that is something that Liberals down the ages have argued for over a long period of time. We also need Home Rule for Sheffield for Liverpool for Newcastle… we need devolution, decentralisation across the country.”
11. 10.00 A re-cap from the report – in full here – on what the deal proposes: https://www.smith-commission.scot/wp-content/uploads/2014/11/The_Smith_Commission_Report-1.pdf
– Scotland can set the rates and thresholds of income tax, but the personal allowance will remain set in Westminster. All the revenue will stay in Scotland. It will be administered by HMRC, with any extra costs footed in Scotland.
– Scotland will take the first 10 percentage points (i.e. half) of VAT receipts.
– Scotland will have have the power to borrow on the international markets, within a “prudential borrowing regime consistent with a sustainable overall UK framework.”
– Scotland will have control on air passenger duty from Scottish airports, and can scrap it.
– Power over the running of Scottish Parliament elections, including spending and the age of the franchise and the number of MSPs.
– Consultation with Scottish ministers on negotiations with the European Union, and allowing Scottish Government ministers to speak on behalf of all of the UK at the Council of Ministers in Europe.
– The Crown Estate i.e. Government land will transfer to the Scottish Parliament. This includes the seabed, rural estates, stretches of coast line and mineral and fishing rights. But it will not cover “critical national infrastructure” covering defence, oil and gas.
– The Scottish Government will have a role in reviewing the BBC’s charter and the BBC – vilified in the referendum campaign by nationalists – will have to answer to the Scottish Parliament’s committees.
– Scotland will have a greater say over running the Maritime and Coastguard Agency, the Northern Lighthouse Board, Ofcom and Ofgem.
– the ability to top-up benefits payments to cancel out the so-called Bedroom Tax.
– Benefits for carers, the disabled and the ill; cold weather, funeral payments, maternity grants and winter fuel payments.
– The right to create new benefit payments.
– The running of back-to-work schemes for the unemployed.
– The report calls for “serious consideration” to devolving control over abortion and call for immediate consideration.
– It calls for a discussion around the devolution of medical rules on embryology, surrogates and medicines.
– Tribunals will transfer to Scotland, except the Special Immigration Appeals Commission and the Proscribed Organisations Appeals Commission.
– Transport will be devolved, including the power to set speed limits, and allowing the state to bid for rail franchises.
– The level of so-called Green Levies on fuel bills will remain in Westminster, but how they are raised will be devolved.
– Scotland will take control of onshore oil and gas licencing, but off-shore will remain a UK-wide issue.
– Scottish ministers can request competition authorities investigate issue in Scotland.
– Scotland takes control of consumer advocacy, and will have the power to prevent the spread of payday loan shops and fixed odds betting terminals.
Powers explicitly staying with Westminster are:
– The Barnett Formula, setting the block grant from Westminster, will remain.
– The state pension, including the pension age.
– National Insurance, Inheritance Tax, Capital Gains Tax, Corporation tax, fuel duty, oil and gas receipts remain controlled by Westminster.
– Universal Credit, the new DWP system for delivering working age benefits, including the rates and sanctions regime
– Housing benefit, maternity pay, statutory sick pay, bereavement allowance and child benefit.
– the National Minimum Wage.
– The Equality Act will remain UK wide, but Scotland will be able to set new rules such as gender quotas.
– The Treasury retains overall responsibility to manage risks and shocks to the economy, including a power to levy UK-wide taxes if required.
12. 10.50 David Cameron welcomed the Smith Commission, and says the case for English votes for English laws is now “unanswerable”. He will unveil proposals before Christmas. “I’m delighted with what’s been announced. We are keeping our promises and we’re keeping our United Kingdom together. I always said that a ‘no’ vote didn’t mean no change. Indeed, we made a vow of further devolution to Scotland. And today we show how we’re keeping that vow and we’ll continue to keep that promise. “The Scottish Parliament is going to have much more responsibility in terms of spending money. But it will also have to be accountable for how it raises taxes to fund that spending. And I think that’s a good thing. “I think the report today also makes the case for English votes for English laws unanswerable and we’ll be taking action on that shortly. And I think, taken together, this extra devolution for Scotland and dealing with the all the issues in our United Kingdom will make our United Kingdom stronger. So it’s a good day for the UK.”
13. 10.58 On Twitter, the Smith Commission becomes #smithscommission;
a. This Charming Mandate For Radical Change #smithscommission — Robert Hutton (@RobDotHutton) https://twitter.com/hashtag/smithscommission?src=hash
b. heaven knows i’m miserable vow. #smithscommission euan mccolm (@euanmccolm) https://twitter.com/hashtag/smithscommission?src=hash
c. Please please please let me get greater fiscal autonomy #smithscommission — Steve Van Riel (@steve_vr) https://twitter.com/hashtag/smithscommission?src=hash
14. 11.04 Jim Murphy, the Labour leadership front runner, says the deal means the SNP will no longer be able to blame London for failing to deliver. “The Vow made during the referendum campaign has not only been delivered – it has been exceeded. “This huge package of new powers is a good deal for Scotland. More decisions about Scotland will be taken here in Scotland, without losing the financial security that comes with the Barnett formula. “The days of political parties in Scotland promising the earth but blaming someone else for their failure to deliver are well and truly over. There will be no hiding place for those parties which preach social justice but duck for cover when called to act.”
15. 11.15 In the Commons, MPS are discussing the Smith Commission;
a. Alistair Carmichael, the Scottish Secretary, says the measures “will be implemented without hesitation, without reservation and without equivocation”. He says “work starts today” to turn recommendations into draft legislation by Burns Night in January 2015. “For the first time over 50 percent of the money spent by the Scottish Government will be raised by the Scottish Government,” he says.
b. Alistair Darling, the former Chancellor, says devolution must do nothing “that undermines the integrity of the United Kingdom.
c. Stewart Hosie, the SNP Deputy Leader, says the SNP “won’t stand in the way” of the package but says it has not turned the Scottish Parliament into a “powerhouse”, and says the Scottish voters have been let down.
d. Carmichael chided Stewart Hosie’s tone and said he should have failed to welcome the deal. “He predictably and depressingly seeks to claim this is not the fulfilled.” He waved a copy of today’s Record, which declared: “The Vow Delivered”. He demanded the SNP respected the outcome of the referendum for a generation. He went on to say, “Britain needs federalism,” but held back from saying that’s what the report achieved.
f. Redwood demanded English MPs have control over English taxes. Carmichael dodged the question a little, and said that the Smith Commission ruled that income tax is a UK-wide tax. MPs shouted “Rubbish!”.
g. Carmichael is asked if the UK Treasury will have to undewrite Scotland’s extra borrowing. He responded; “Scotland will be liable for any debts it incurs under its new borrowing powers”. (How that works in theory and practice is not clear since the UK retains responsiblity for overall fiscal framework.)
h. Carmichael is asked whether Scottish control of income tax could trigger a low-tax race between England and Scotland. “That is indeed one of the possible consequences,” he responded.
i. Pete Wishart (SNP, Perth) said the package is disappointing.
j. Carmichael said Wishart just wanted independence. “He lost. It’s about time he and his party came to terms with that loss. For him and his party to try and get independence by the back door does not respect the views of the Scottish people as expressed in the referendum. He has a duty to speak for the 60.91 per cent of his own constituents who rejected independence.”
k. Philip Davies asks “how those people who wanted the status quo should have voted in the independence referendum.” Carmichael said it was clear that a “vote for no was not a vote for no change”.
l. Chi Onwurah, Labour MP for Newcastle, asked about air passenger duty and the competition from Scottish airports v northern English airports. Carmichael said it was for her and her city to propose the new powers they wanted.
m. Asked about English votes for English laws, he said: “I am confident that England will get what England wants, when England decides what it is it wants.”
17. 12.00 Update on borrowing: the PM was asked about this at the Liason Committee last week. He said borrowing would be capped at £2.2 billion and the UK is the lender of last resort. http://data.parliament.uk/writtenevidence/committeeevidence.svc/evidencedocument/liaison/evidence-from-the-prime-minister-2014-15/oral/15649.html
18. 12.20 Elsewhere in the world, the price of Brent Crude has fallen to the lowest level in four years as Opec meets. http://www.bbc.co.uk/news/business-30223721 The Yes campaign’s finances were built on assumptions of oil at $113 a barrel. It’s now $75.75. Under the Smith Commission, oil revenues will not be devolved – to SNP chagrin.
19. 12.40 A number of aspects outstanding will be clarified in time by Westminster;
a. What English votes for English laws really mean – and whether MPs from north of the border will be barred from voting on income tax bands and rates in the rest of the UK.
b. Details are due to be set out by Mr Cameron before Christmas but the PM’s official spokesman said that the principle would be that the differentiation would apply to “all financial matters”.
c. Some elements of income tax would remain UK-wide, he pointed out, such as the allowance thresholds and how income was defined – and there would “continue to be a UK Budget”.
d. Asked specifically if MPs from north of the border would be excluded from voting, for example, on a change to income tax bands or rates in the rest of the UK, he declined to give detail of specific plans.
e. But he added: “Where you see significant areas of devolution, there is an important principle there in terms of English votes for English laws.
f. The Prime Minister was pretty clear when he was in front of the select committee that he thinks he is going to bring forward proposals which are going to reflect that because that is the fair thing to do.”
20. Ed Miliband insisted the settlement meant Scottish MPs WILL vote on English budgets. “The system of tax reliefs remains at a UK level, other aspects of the income tax system remain at the UK level. “I think it’s part of the integrity of the UK that it continues to be the place that Scottish MPs vote on the budget. The Smith Commission itself recognises that in their report.
21. 13.30 Other matters arising;
a. Nicola Sturgeon ‘wants to impose stealth tartan tax’. http://www.telegraph.co.uk/news/uknews/scotland/11263852/Nicola-Sturgeon-wants-to-impose-stealth-tartan-tax.html
b. Nicola Sturgeon attacks Scotland powers deal agreed by SNP. http://www.telegraph.co.uk/news/politics/SNP/11259179/Nicola-Sturgeon-attacks-Scotland-powers-deal-agreed-by-SNP.html
c. Ed Miliband trys to win back Yes voters in Scotland. http://www.telegraph.co.uk/news/politics/ed-miliband/11260800/Ed-Miliband-attempts-to-win-back-Yes-voters-in-Scotland.html
22. 13.30 Labour are concerned about regional airports in the north of England, and tax competition from lower levels of air passenger duty in Scotland.Is a tax race brewing? Balls and Umunna have written to their Tory counterparts;
a. All of our parties support the Smith Commission conclusions and its principle that implementation should “not cause detriment to the UK as a whole nor to any of its constituent parts.” and ”cause neither the UK Government nor the Scottish Government to gain or lose financially simply as a consequence of devolving a specific power”
b. It is important that, in implementing the Smith recommendations in relation to Air Passenger Duty, this principle is upheld. This means ensuring that English Regional Airports are not disadvantaged.
c. English Regional airports cannot be faced with continuing uncertainty and risk through not knowing whether they will be significantly disadvantaged should a future Scottish Government introduce changes to Air Passenger Duty.
d. It is therefore imperative that the UK Treasury leads work across Government – and working with the Scottish Government – on a mechanism to ensure that English airports, particularly in the North of England, are not disadvantaged. http://www.telegraph.co.uk/news/uknews/scotland/scottish-politics/11257164/Scottish-devolution-Smith-Commission-report-as-it-happened.html