In his response to the Scotland Bill, Richard Parry examines the shift in Conservative party strategy from drawing a line into the sand on devolution to advocating the further transfer of tax and benefits powers. This, according to Richard, is an attempt to open up new areas for competition and situate the party as a bourgeois, pro-business alternative to Labour and Nationalists in Scotland and Wales.
The conclusion of Commons proceedings on the Scotland Bill on 9 November 2015, following David Mundell’s amendments proposed on 2 November 2015, allow us to evaluate contentions that the Bill is not properly implementing the Smith Commission report. The story that has emerged is a further example of the tendency for the Conservatives to renounce their previous role as a line-in-the-sand anti-devolution party in favour of a more permissive approach that gives devolved Scotland rope – to do whatever you can do with rope. This is a broader trend visible in both Scotland and Wales.
The Smith process, in many ways a technical success, left problems in its wake when it concluded, its mandate handed back by Lord Smith, immediately on publication of its report. The drafting of legislative clauses corresponding to its proposals was an ultimately futile attempt, initially promoted by Gordon Brown, to make substantive parliamentary progress on further devolved powers before the UK General Election. The drafting process excluded the Scottish Government but included Whitehall departments whose input to Smith had been indirect. Comment on Smith has perhaps understated both the significance of the intergovernmental working in the Smith process and the abruptness of its termination.
SNP suggestions that that the Scotland Bill is an attempt by the UK Government to grab back parts of the Smith agreement are as much a political tactic than a comment on the substance of the Bill. Clause-writing is always complex and should not be interpreted as solely a search for legal loopholes. The Treasury and the Department for Work and Pensions are moving fast to accommodate novel discretions within the tax and benefits systems and to stake out the matters they really care about and those they are prepared to let go.
The new social security powers have allowed Labour to claim a victory in its search for devolved powers to roll back cuts, but they build upon existing scope to transfer money to individuals on social work, training and housing grounds. The core of the system – the work test requirements for paying Universal Credit to those of working age – remains retained. Even though powers over contracts under the Work Programme will be devolved when current ones expire, the purposes to which it is put in the benefits system will not. The bottom-line of the Conservatives on the tax side seems to be to reserve National Insurance contributions, a lucrative tax bearing heavily on employers, and taxation on corporations, savings, dividends and energy. On benefits, the bottom-line concept is of Universal Credit as a social assistance benefit readily sanctionable against work requirements many would regard as unreasonable.
The longer-run context here is the Treasury’s fear that devolved spending decisions would leak into a financial imposition on the UK exchequer (in one scenario foreseen in 1999, that council rents and council tax would be forced up and the bill passed on to Housing Benefit and Council Tax Benefit). Beyond that was a feeling that Scots should be paying more for their present per capita spending levels, and certainly more for anything more generous. The smoke-and-mirrors success of the SNP in accommodating their policies within a balanced Scottish budget was not meant to happen. The new fiscal regime, far from being a concession to the SNP, is more of an attempt to force more and more Scottish expenditure to change in line with tax receipts and choices rather than English expenditure patterns.
With the English Votes for English Laws standing orders, we now have the intriguing possibility of functions being devolved for the primary purpose of excluding Scottish MPs from voting on them in respect of England at Westminster. The always controversial issue of abortion – now proposed for devolution by a government amendment – may fall into this category. It was given ambiguous treatment by Smith. It was noted (para 61) as an ‘anomalous health reservation’ but recommended for no more than ‘further serious consideration’ after last–minute interventions by Labour, betraying their anti-devolution mentality that wondered whether Scottish discretion might change policy in the wrong direction.
The Conservatives, so often seen as the natural party of government in England, have in Scotland and Wales been the perpetual party of opposition. In an effort to rebuild themselves as a bourgeois, pro-business party, they are veering from resistance to towards promotion of more devolution, almost taunting Labour and the nationalists to use new powers to promote tax- and benefit-raising positions that can then be attacked. The SNP strategic line is that the UK Government is reneging on Smith. Having detached Labour and Gordon Brown from that position, David Mundell seems happy to give the SNP the smallest possible factual basis for their assertions.
Richard Parry is Honorary Fellow in the Centre on Constitutional Change at the University of Edinburgh. With Jan Eichhorn, Daniel Kenealy and Lindsay Paterson, he has been conducting ESRC-funded research into the constitutional change process and public attitudes to it.