What would happen if we asked: powers for what?

Published: 24 September 2014
Author: Paul Cairney

In response to discussions of devo-max (see part I), Paul Cairney examines the competences held by each government and what might be devolved.

So, what follows is my attempt to work out what each government does, and what we might reasonably expect if our focus is more on the ‘joined up’ rather than political side to the next devolved settlement.

Economic and social security policy: what hope for redistributive policies?

The idea of devo max suggests that you can, in Scotland, join up taxation and spending issues. For example, if you want to redistribute on a massive scale, to address economic inequalities that contribute to health and education inequalities, you need to connect those dots. You decide who to raise taxes from, in what mix (corporations? North sea oil? People who buy things? Higher earners? Local property taxes?), and how much you want to borrow to fund capital programmes. At the same time, you decide which services (health, education, criminal justice, local authorities, universities and colleges, etc.) and which people should benefit from the distribution of that income.

Then, you might try to join up some of those things by, for example: spending big on employment and training programmes, on the assumption that you will then save money on benefits or gain it in tax; rolling out a huge childcare expansion policy, to do the same when more people (mostly women) are freed up to work; introducing a ‘living wage’ (higher minimum wage) and reducing benefits (or transferring benefits to tax credits); or, spending big on public health to reduce long term pressure on the NHS (as part of a broader focus on ‘prevention’ or ‘early intervention’). Under devo max, it is clear who to blame if your taxes are too high or your benefits are too low.

However, there are several obstacles to that outcome:

  1. Scotland remains part of the UK. Many of the arguments rehearsed during the referendum still apply, including: the desire to maintain a degree of fiscal uniformity when two countries share a currency; the cost of setting up new (or boosting old) institutions to deal with the administration of a new tax regime; and, the desire to maintain a certain level of uniformity in taxes and benefits (and to transfer proceeds across the UK) as part of a broad attachment to UK ‘social citizenship’.  
  2. Scotland remains part of the EU. This makes it difficult to devolve certain taxes, such as corporation (if the Scottish Government reduced corporation tax, to become more competitive, it may be interpreted as state aid) and value added (or, at least, the EU promotes a high degree of uniformity and minimum levels of VAT). I’m not sure about alcohol duty which, if devolved, could have been a more straightforward instrument (than minimum pricing legislation) to keep prices high.
  3. No-one promised anything of the sort. If you look at the proposals by the main parties (summarised here), you find the greatest emphasis on devolving all, or most, responsibility for income tax. I have never heard a UK politician promise to assign oil tax revenue to Scotland. Instead, we have heard the three leaders maintain a commitment to the Barnett formula, which suggests that they envision Scottish Governments tinkering at the taxation margins while, on the whole, receiving their income from the Treasury. Under ‘devo max’, the Barnett formula would disappear in Scotland – and I just don’t see it happening.

So, we are likely to see the introduction of limited borrowing powers, plus the devolution of some taxes, some of which can be used as instruments in their own right (such as the landfill tax, already due to be devolved, which could be used for environmental purposes), and one which remains electorally toxic (income tax). If we are being super-cynical, we might say that the UK will mostly devolve a tax that it expects Scotland not to use, while claiming that a Scottish Government can raise taxes to fund more public services to satisfy an allegedly left-wing electorate.  

It might also talk up the idea of the Scottish Parliament becoming more accountable for the money it spends. This is the bit I don’t get: if most of the Scottish Government budget is raised by the UK, and the Scottish Government is destined to tinker at the margins, and remains integrated within a UK regime, how can you hold it accountable for its tax and spending regime? It seems only a little more plausible than holding local authorities to account for their council tax rates. More broadly speaking, a multi-level policymaking environment makes it increasingly difficult to know who decides what happens.

Instead, what we could (but, I expect, won’t) explore is the idea of a shared strategy, with the Scottish Government signalling to the Treasury its desire to pursue distinctive policies (on employment, childcare, and/ or a higher minimum wage) and seek the financial rewards/ punishments if they work out. Or, it might seek equivalent funding when its policies have an effect on UK benefits. That would require a degree of regular cooperation (and, to be honest, Treasury guesswork) that we have yet to see since devolution. Indeed, in high profile cases – attendance allowance to people receiving free personal care (introduced by the Labour-LD Scottish Government), and council tax benefit for people paying local income tax (a policy proposed, but not introduced, by the SNP) – the experience has been bruising for all involved.

Perhaps a safer bet is in the field of ‘employability’, which currently combines devolved public service provision (such as education and training) and reserved job search/ support services. Certainly, the ‘Christie Commission’, which received cross-party support in Scotland, recommends the devolution of the latter.

International relations, defence and security: what does it cover?

This category covers some of the big, scary, issues regarding the future of nuclear weapons, the UK armed forces, and the UK’s part in international security. We can also expect immigration to be a UK (and EU) responsibility, with minimal scope for the Scottish Government to pursue a distinctive policy (Fresh Talent seems like a long time ago).

The UK would also remain the member state in the EU, responsible for monitoring the Scottish Government’s adherence to EU rules and regulations, particularly in areas (including environment, agriculture, and fish) with a strong EU presence. There is some scope for Scottish discretion in some areas (such as in the implementation of a common agricultural policy).

Crime: drugs and guns

Most aspects of criminal justice, and police operations, are already devolved, and Scotland has always had its own legal system. The main exceptions are in responsibility for firearms, drugs and certain driving offences. The Scotland Act 2012 would devolve responsibility for the regulation of air weapons (a longstanding issue for successive Scottish First Ministers, largely following high profile incidents of air rifle misuse), the treatment of drug addicts with controlled drugs (e.g. prescribing opiates), the national speed limit (which can’t really go up in Scotland while its roads are so crap) and drink drive limits. 

It is in this field that we might see the greatest reason for governmental cooperation to address issues such as human trafficking, drug trafficking, and terrorism – but perhaps without a great desire of the UK to devolve more responsibilities to do so.

Energy

It is in this field that we have seen a promising degree of cooperation (or, at least, delegation) beyond the reserved/ devolved divide. The UK remains responsible for energy policy, but has effectively devolved some decisions to Scottish ministers – such as agreeing (informally) to a Scottish veto on new nuclear power stations - and, through the devolution of planning (and land reform) laws, has allowed the Scottish Government to develop distinctive policies on the expansion of renewable energy (and, to all intents and purposes, the decision to allow or refuse fracking for unconventional oil and gas in Scotland – even though the UK still grants the drilling licenses). As things stand, the UK would remain responsible for the taxation of North Sea oil, and it is difficult to see a future in which that responsibility would be devolved, to allow the Scottish Government to pursue a coherent energy strategy (instead, we might expect a focus on entitlement to the proceeds of oil taxation, which is a different thing).

Broadcasting

Who knew this would be a hot button topic? Our original concern was about the fate of Doctor Who (which has turned out to be not worth the debate), but now our attention has shifted to allegations of BBC bias against the Yes campaign, which might prompt the SNP to push harder for a devolved system.

The already-devolved areas

Health, education, housing and social care is devolved, and we have seen a significant amount of policy divergence in key areas, such as higher education tuition fees, personal care for older people, homelessness legislation, healthcare organisation, public health and mental health. The remaining issues regard the funding of public services and their link to the benefits system. We might expect the devolution of housing benefit, largely because the ‘bedroom tax’ became such a beacon of the Yes campaign, and (perhaps) other benefits related to previous Scottish Government policies on personal care (attendance allowance) and a proposed local income tax (council tax benefit) – subject to a strong desire within the UK to retain a uniform level of pension and social security entitlement. 

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