Nicola Sturgeon was yesterday told to abandon her plan to take control of Scottish finances after independent experts wiped £35b off projected oil revenue. The eye-watering cut would leave just £2b from the North Sea over the two decades from 2020 – down from an earlier estimate of £37b.
The Office for Budget Responsibility (OBR) delivered their projection as the SNP pushed ahead with proposals for full fiscal autonomy (FFA). Their policy would mean Holyrood taking control of tax-raising and spending powers.
Dugdale delivered her party’s own expert – endorsed oil analysis. It charted how oil prices fell from more than $100 a barrel during the independence referendum campaign to a low of $45 in January before rising again to $65 after only three months. SNP backbenchers shouted down Labour’s analysis as a “Mickey Mouse” project.
Deputy First Minister John Swinney accused Dugdale of being “out of touch with public opinion”. adding “She has been going on and on about full fiscal autonomy for nine months, all the way up to the general election. And the Labour Party delivered the worst performance they have delivered in 90 years.” What full fiscal autonomy is about is building on the powers of this Parliament – powers that over the last 16 years have seen an improvement in the economic performance of Scotland.
Our GDP per head used to be sixth in the UK. It is now third, behind London and the south-east. Our productivity has increased from 96 per cent of UK levels in 1999 to being in line with UK levels in 2012.
Where we can exercise distinctive economic policies in Scotland, we can transform the economic performance of this country. For me, that is what fiscal autonomy is all about. It’s about enabling this Parliament to take the decisions that are right for Scotland, not to be at the mercy of a Tory chancellor that comes along one Thursday and takes £100m out of our budget without a by your leave.”
Tory Scottish Secretary David Mundell said: “What this shows is how right the Scottish people were not to believe the wildly exaggerated claims that were made about oil revenues in last year’s referendum campaign.”
11 June 2015: Smoke and Mirrors – Westminster Unionist partys’ offer of devolution of limited fiscal powers to Scotland is driven by the dogma of doing just the minimum to keep Scotland in the UK, whilst reserving power to Westminster.
Preservation of the Ruth Davidson named “pocket money parliament” will be assured if Scots politicians allow themselves to be conned into accepting the proposals presently on offer. What we have is the illusion of a transfer of power with, pinned to it, a not so subtle £6billion reduction in the “Barnett Formula” financial allocation.
This will require the Scottish Government to find new sources of finance, (without borrowing money from the markets) so that existing benefits can be retained and new measures introduced providing assistance to those in need, (eg. removal of the bedroom tax). Income Tax rises would be a consequence, even for the Standard Rate taxpayer since Higher Rate taxpayers in Scotland are insufficient in number to bear the cost of any new financial requirements.
Scotland’s government will only be totally responsible when they have access and authority over all of Scotland’s resources and financial income, but Westminster will never willingly allow that since with absolute power retained by Westminster, solving problems in the Scottish economy through increased income tax and other personal taxes will only serve to make the Holyrood parliament very unpopular.
This proven tactic of delegating responsibility without authority suits the Westminster agenda. The “Unionist” partys’ are determined to impose their will, (no matter how long it takes) and Scotland will be asset stripped by stealth so that it becomes ever poorer and increasingly dependent on Westminster’s whims reducing the confidence of Scot’s in their ability to build, without Westminster’s benign governance, a better future for Scot’s as an equal partner within the United Kingdom.
Witnessed by their actions, in the months following the referendum it is clear Westminster remains to be in the business of building failure into any devolved powers instead of doing the right thing, identifying what has the best chance of succeeding and transferring relevant powers and authority to Scotland.
If Westminster is serious about creating a federal state then the truly radical approach would require a team of independent advisors to go away, investigate the construction and governance of successful multi-state countries eg Germany, then report back. Unresolved Aspects:
* The Barnett Formula. Should be retained until reductions are agreed between Westminster and devolved governments.
* Vat collection. Without the ability to vary rates needs to be addressed.
* The Scottish government should be able to raise and lower income tax.
* Multinationals operating out of Scotland, (Tesco, Asda, Morrisons, RBS, BOS, etc) should be liable for tax collection on their sales.
* Authority should be devolved allowing Scotland to gather taxes from Capital trusts etc. who may be practicing tax avoidance by registering in the Bahamas, Channel Isles etc.
* Corporation Tax and Air Passenger Duty, including variance authority should be devolved.
* Oil, fuel taxation, excise duty (whisky) should be devolved.
Scottish fiscal autonomy, stopping short of full political independence, forming part of a federal or confederal constitution for the United Kingdom is the way forward. The Scottish Government would be responsible for all financial matters in Scotland, making payments to the UK government covering Scotland’s share of the cost of providing agreed specified UK-wide services, such as, defence and the conduct of foreign relations. https://en.wikipedia.org/wiki/Full_fiscal_autonomy_for_Scotland
23 June 2015: In a bid to gain sweeping powers over Scottish finances, Deputy First Minister John Swinney published legislation that he hopes will secure full fiscal autonomy.
John Swinney yesterday pushed ahead with a bid to gain sweeping powers over Scottish finances. The Deputy First Minister published draft legislation which he hopes will secure full fiscal autonomy, Including the proposals in amendments they want to see adopted through the Scotland Bill at Westminster.
He said “The draft clauses we are publishing would, if implemented, not only provide for agreement on full fiscal autonomy, but would transfer control of business taxes, the minimum wage, working age benefits, employment and equality laws to Holyrood – new powers that give us a better mix of tools to boost the economy, tackle poverty and build a fairer society.”
He went on to say that he envisaged transition to full fiscal autonomy would take “some years” to complete and until full handover is complete, he wanted to retain the Barnett formula which is used to spread cash around devolved administrations. But the UK Government branded the move “as far away from sensible as you can get”. And opponents claimed the falling oil price had blown a hole in SNP finance projections.
When I told Parliament I wanted Scots to hold me to account for delivering The Vow published in theDaily Record before the independence referendum, I meant it. Today sees the start of one of the most important stages in making that happen and delivering to Scotland the powerhouse Parliament we deserve. Over the next 48 hours, MPs will be debating our plans to give a huge range of tax and welfare powers to Holyrood through the Scotland Bill. How these powers are used will have a direct effect on how much money a future Scottish government take from our pay packets and the level of benefits paid in Scotland.
Scotland indicated a wish for a strong Scottish Parliament within a strong United Kingdom. My party, along with all of Scotland’s other main political parties, promised to deliver on that after the last general election. Now most of the big ticket items are agreed – even the SNP accept the Scotland Bill will give the Scottish Parliament big new powers over tax and welfare. And there are serious changes too in areas like energy, transport and elections which often barely get a mention. At this crucial moment in making good on that promise, I want to spell out exactly what we are doing, why we are doing it – and maybe bust a few myths at the same time. The Vow front page
Q. Is the Scottish Parliament being made permanent?
A. The Scottish Parliament is here to stay – and now the law will spell that out. It is inconceivable that our Holyrood Parliament could be abolished without the consent of the Scottish people. If any government ever tried, it would spell the end of the United Kingdom, plain and simple. The Scotland Bill puts that into law in black and white for all to see, as the Smith Commission said it should.
Q. What about the talk of “vetoes”?
A. There are no vetoes – it’s as simple as that. In some areas, Scotland’s two governments will have to agree the timing of when a change is made, because these are huge transfers of power and money and we need to make sure we do it right. But the new laws also make it impossible to hold things up unless there is an incredibly powerful practical reason for doing it – not just because we disagree on the policy. That’s not a veto, it’s just plain common sense and it’s what people keep telling me they want to see – Scotland’s two governments working together to guarantee big changes in areas like welfare take place smoothly and without disruption to the public.
Q. Should we go further in devolving tax and welfare powers?
A. First, let’s remember what IS being devolved: tax powers worth £15b – including control over how much income tax comes out of your pocket – and a welfare package of £2.5b. Taken with everything else in the Bill, they will make Holyrood one of the most powerful devolved parliaments anywhere in the world. They reflect what we voted for in the referendum – more big decisions taken in Scotland, while remaining part of the United Kingdom. It delivers in full the recommendations of the Smith Commission set up to deliver The Vow.
Those recommendations were signed off by all five of Scotland’s main political parties, including the SNP. And it is a package of tax and welfare powers which will work in the best interests of Scotland. For example, no one – not even the SNP – is calling for pensions to be devolved. Why? Because it would be wrong to lumber our children and grandchildren with the burden of funding the state pension on their own. Instead, the cost can be shared across the UK. We share risks and rewards with our friends, family and neighbours in England, Wales and Northern Ireland. In other words, what we clearly said we wanted when we went to the polls in the referendum.
Q. So there’s no chance of changing the Bill?
A. I didn’t say that. I have always made clear – and again I mean it – that we will listen to sensible suggestions which will be to the benefit of Scotland within the United Kingdom. Indeed the whole point of having the Bill examined line by line in Parliament is so people can suggest changes. But those changes must reflect the will of the people as seen in the referendum result, must improve the Bill – and must make sense for Scotland.
Q. What about full fiscal autonomy (FFA) then? Is that on the cards?
A. No – because that is about as far away from sensible as it is possible to get. Let’s put it into context: Accepting the SNP plan would leave us with £10b less to spend by the end of this Parliament. And, according to the SNP’s own figures on oil tax income which were slipped out last week, it could be even worse. Last year the Scottish Government spent £10b on education and justice – that’s everything from schools and colleges to our police force, prisons and courts. Under FFA, that budget would disappear and the black hole would have to be plugged with either massive tax rises or severe cuts in public services. The SNP might think that’s a price worth paying to get closer to their dream of independence, but I don’t think it is – and I don’t think Record readers do either. This is a “deal or no deal?” moment for fans of FFA. They can either vote for a more powerful Scottish Parliament or they can support a plan that would cost Scotland the same amount as we currently spend on schools, the police and courts combined. It’s a no-brainer.
Q. What happens next?
A. I want to get this Bill turned into law by early 2016 – in time for the Holyrood elections. That is important because we need to know how the next Scottish government are going to spend our money. For the first time, Scotland’s political parties will have to look voters in the eye and say whether or not they plan to take more out of our pay packets through taxes. That is the logic of what the SNP say they want to do – yet they seem awfully shy about being upfront with voters about it. That is where the focus of attention should now rest – it’s the next great debate in Scottish politics. This Scotland Bill really will give those who want the honour of serving in our Scottish Parliament real power. It’s time for them to start telling us how they will use it.
29 June 2015: It’s a good sign that the Scottish Secretary is keen to push on with legislation to improve devolution.
Today David Mundell insisted the Scotland Bill would be hammered out and ready to go in time for next year’s Holyrood election. The Bill is supposed to be the result of The Vow his party and others on the No side of the referendum campaign signed up to and offered to Scotland last September. It doesn’t please everyone, naturally. Holyrood’s all-party devolution committee have already complained it doesn’t fully reflect the Smith Commission recommendations on further devolution. On the headline items, many will disagree with Mundell’s words. The SNP have made clear they don’t believe the Bill properly ensures Holyrood’s permanence. John Swinney raised complaints about “vetoes” left at Westminster over key powers.
But once the Bill is enacted, Holyrood should have much greater powers to make decisions and changes. Failure to deliver The Vow would have serious consequences. With the Bill in train, most people will be keen for politicians to resolve then move on from groundhog-day battles. If the legislation delivers on the promises, the Scottish Parliament will indeed be all the stronger. And with that, voters will finally be able to hear what our politicians plan to do with the powers. http://www.dailyrecord.co.uk/news/politics/record-view-scotland-bill-must-5967294
30 June 2015: MPs say Scotland Bill calls are being ‘ignored’
David Mundell (Tory) dismissed accusations that UK ministers are not listening to those who want the Scotland Bill strengthened. It follows complaints in the Commons and a letter from Deputy First Minister John Swinney suggesting that Scottish proposals are being ignored. The government has again won a series of Commons votes – ignoring calls for the legislation to be amended. The third day of debate has been focusing on welfare powers. As with Monday’s debate on taxation Mundell insisted that the Scotland Bill lives up to the spirit of the Smith Commission’s recommendations.
The SNP and Labour backed each others calls for Holyrood to have unrestricted power to create new benefits and top up existing ones – as well as seeking other changes. But despite a written complaint from the Scottish government that calls from Scottish MPs were being resisted, Mundell said he was listening and would reflect before the next stage of the bill’s parliamentary progress later this year. MPs are deciding which additional powers will be given to the Scottish parliament. Mundell has previously said the UK government would not back any amendments to the Scotland Bill that were “bad for Scotland”. The bill will give further control to the Scottish Parliament over taxation, VAT revenues and welfare.
Mr Swinney said that during the previous day’s committee stage of the legislation on taxation the UK government had “again resisted all amendments, whatever their support amongst MPs from Scottish constituencies”. The deputy first minister quoted Mr Mundell’s response to the SNP MP Tommy Sheppard, when he cited evidence of “productive discussions” with Mr Swinney and his willingness to address issues raised by Holyrood’s Devolution (Further Powers) committee. Mr Swinney said: “There will have to be clear movement by the UK government otherwise it is becoming harder to justify that description.”
Meanwhile, Labour’s Ian Murray said Scotland would be able to mitigate Conservative cuts to tax credits or other welfare under Labour and SNP plans to give Holyrood the power to create new benefits and top up existing payments. Murray said Labour amendments to the Scotland Bill, some of which are backed by the SNP, would effectively give the Scottish Parliament the power to design its own welfare system.
If MPs pass the proposals in the Commons, Scotland would be able to therefore create additional benefits to lessen the effect of welfare cuts by the UK government, for example reported Tory plans to cut tax credits, Murray said. Moving a series of amendments, the Labour frontbencher said: “There would be an ability to create a system that allowed you to mitigate the reduction in tax credits. Murray said that Labour’s amendments would implement the recommendations of the cross-party Smith Commission in spirit and in substance while ensuring the welfare state remains UK-wide and allows the pooling and sharing of resources across the union.
He added: “I want to be clear that fundamentally our amendments will ensure that the Scottish Parliament has the unrestricted power to create any new benefits in areas that are devolved, in addition to the guarantees of the UK benefits and pensions system and the power to top up any benefits that remain reserved to this parliament.”
Mundell said that MPs must respect the referendum result and accept that people in Scotland voted to remain part of a United Kingdom where there’s benefit from sharing risks and resources with all other parts of the UK. He said: “The fact that no Scottish MP has tabled an amendment to devolve UK pensions speaks volumes. It tells us that even the supporters of independence accept there are parts of welfare where it makes sense to share resources and risks with the rest of the UK.
It is clear that pensions are safer and more affordable if we work with everyone else in the UK and that it would be wrong to devolve UK pensions. MPs have to respect the referendum result where people in Scotland voted to remain part of a United Kingdom and hold on to the benefits of being part of the UK. Looking after people in Scotland who are retired, unwell or out or work is now a shared space where the UK and Scottish governments need to work together.”
An SNP amendment to the Scotland Bill that would give the Scottish Parliament full fiscal autonomy was defeated in a vote in the House of Commons last night by 508 votes to 56. A Labour amendment that would have set up a commission to analyse FFA was defeated 376 to 192 with Secretary of State for Scotland David Mundell saying he did not need a commission to know that Full Fiscal Autonomy would be a “disaster”.
Ian Murray MP suggested that the bill would be a “sobering response to a key manifesto commitment of the Scottish National Party”. The SNP voted against the amendment claiming that it was proof that Labour thought Scotland “too small, too poor and too stupid for any powers at all”.
After the vote Perth MP Peter Wishart tweeted “The Tories response to improving the Scotland bill and giving Scotland what it voted for is to say No. Labour just say we can’t”.
The Scotland Bill clauses on devolving income tax were criticised by opposition MPs for not matching up the Smith agreement. SNP Deputy Leader Stewart Hosie told MPs: “The taxation powers are very limited – even if one includes the VAT assignation, the Scottish Parliament would raise around 50% of devolved expenditure”. However, excluding the VAT assignation the figure falls to barely a third.
That’s important because many of the submissions to the [Scottish Parliament’s] devolution committee called for more. It’s also important because it doesn’t match with what the UK Government said in their command paper, Scotland in the United Kingdom, which claimed, ‘as a result of the Smith Commission agreement, the Scottish Parliament will control around 60% of spending in Scotland and retain around 40% of Scottish tax’.
Mundell said the Tory changes would give “unprecedented flexibilities” to the Scottish Parliament on income tax. He said: “The Scottish Parliament will retain the receipts from income tax that they are responsible for. This represents a significant devolution of powers with Scotland retaining around £11 billion of income tax receipts. This accounts for over 90% of income tax receipts collected in Scotland.
This gives Scotland greater fiscal autonomy with incentives to increase employment and increase wage growth. And I would emphasise to MPs that there are no restrictions on this power. If the Scottish Parliament wants an income tax system with a dozen different rate bands these powers allow them todo that. Similarly, to answer issues raised in the debate, if they want to set a zero rate of income tax they can.”
MPs also debated the anomaly that sees Police Scotland and the Scottish Fire Service pay VAT, unlike every other police force and fire service in the country. Speaking during the debate, Central Ayrshire MP, Philippa Whitford argued that £33 million a year could be poured back into frontline services. David Gauke, the financial secretary to the Treasury said that the Scottish Government knew that the VAT bill would be a consequence of the merger of Scotland’s eighth forces.
Gauke said: “This was a choice of the Scottish Government with their eyes wide open that the VAT refund scheme was not available in the event of that reform. There are often many claims, many arguments that are made in respect of the VAT refund schemes that we have and requests that this be broadened and applied to additional organisations. That comes with significant fiscal cost. There may well be a case for argument’s sake that this should be looked at, but I don’t think we should look at this in isolation because of a particular decision that was made in one case.”
Ian Blackford said that it was now a matter of respect “We keep hearing about the issue of respect. We all know the reasons why the Scottish Government brought these moves forward – because it creates efficiency” the MP for Skye said, “if there is genuinely this feeling of mutual respect between the government in Scotland and the government in Westminster, all we simply have to do is make sure that we get the VAT back and invest that in front line services.”
Welfare will be the main focus of today debate on the Scotland Bill. Both the SNP and Labour have tabled amendments would give Holyrood greater powers over benefits and employment law than those already in the Bill. The SNP amendments would see the removal of any clause that could give Westminster a veto over Holyrood’s new powers. The party also wants Holyrood to be given control over working age benefits, benefits relating to children, and employment support programmes.
And it wants control over National Insurance contributions, employment law and equal opportunities being given to MSPs. Labour’s proposals include giving a final say on benefits rates for the Scottish Parliament, unrestricted power to create new devolved benefits, a power to top up benefits, including in reserved areas, and the full devolution of housing benefit.