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Sunday, 14 October 2012

England Will Expect - Better Believe It

Johann Lamont has been a surprise to more than a few political commentators since her elevation to the leadership of the Scottish Labour Party. She has performed better than expected in the Scottish Parliament and has been praised for her courage in raising the issue of universal benefits. Where she has provided absolutely no surprises is in her determination to save the Union. Not only has she shown- as if there was ever any doubt-that Labour in Scotland will dismantle the welfare state in Scotland, allying itself with the Tories, but they will even adopt the old Tory tactic of promising a "better tomorrow" if Scots will only vote to remain a dependency of England. Johann Lamont has set up "A Commission" which, it is claimed, will report  the Labour Party's preferences and policy for increased Devolution, or Devolution Plus, in time for Scots to make a choice between that and independence before they vote in the referendum in 2014.

The first and most important point, of which Scots should be made aware from the outset, is that it will not matter a toss what the Labour Party in Scotland proposes. Nothing will be decided about any change in the constitution, until the people of England, Wales and Northern Ireland have their say. Any change in the degree of devolution which will be granted to the Scottish people, will be a question for the whole of the United Kingdom. If it is even hinted that whatever the Labour Party proposes, is likely to become law, it must be knocked on the head because no changes in the constitution, other than Scottish independence, can be decided by the Scots on their own. We need not only the agreement but the permission, of the rest of the UK and the Westminster Parliament, to increase the powers of the devolution settlement. It should also be remembered there will be Westminster elections in 2016, therefore we have no idea which party will form the government or what issues will dominate their priorities. I think it is safe to assume that increasing the powers of the Scottish (and Welsh & Northern Irish parliaments) will not be one of them. We need no one's permission to be independent. The act of transferring sovereignty from the parliament of the UK to the parliament of an independent Scotland, will be the subject of discussion, but only in the sense of timescale or practicalities, never the decision itself. That is for Scots and Scots alone, to decide.

What kind of increased powers are Labour likely to suggest and, more importantly, what would be acceptable to the Westminster Parliament? Advocates of Devo-Plus have been unclear about the changes they would propose, beyond saying that power over all taxation and welfare payments would be a must. The SNP's Fiscal Autonomy would have met the demand for control of taxation, including the level of corporation tax applied in Scotland and complete control of the oil revenues. The Calman Commission decided that a form of half-way house would satisfy the demands for more powers in Scotland and suggested that Scotland should be made responsible for raising up to 35% of the Scottish budget, as opposed to the 15% for which it currently has responsibility, but the SNP quite rightly, pointed out that the measures did not go nearly far enough. When two bodies start from entirely opposite ends of the argument, it is hardly likely that any kind of half-way house is going to satisfy those whose aim is to wrest total control from the centre. Calman believed that the division of powers between Scotland and Westminster were "broadly right" therefore was never likely to offer anything that would undermine the status quo.

Alistair Darling, who heads up the No Campaign, has consistently argued that the SNP decision to keep the pound sterling after independence and to have the Bank of England as the lender of last resort, would mean that an "independent" Scotland would have little or no control over its economy. He points to the major crisis currently facing the Euro-zone and points to the fact that the single currency cannot work without centralised control over the tax and spending powers of the member states, so that monetary and fiscal policy can be made to complement each other, rather than be allowed to drift in opposite directions, as has been the case since the launch of the single currency. He argues that the Bank of England would require that kind of control over Scottish taxation, in order to avoid the kind of problems which have taken place in the Euro-zone. I agree with that criticism, which is why I have just as consistently argued in favour of a Scottish currency and a Scottish central bank but John Swinney, initially agreed that a Scottish Treasury would be prepared to offer the Bank of England assurances that Scotland would run a fiscal policy which would be acceptable to the Bank, thereby acknowledging Darling's criticisms as valid. More recently, Alex Salmond informed an American audience that he saw no reason for a fiscal stability pact with the rest of the UK, which directly contradicts Swinney and leaves Scots in a position where they have no idea what the SNP now offers.

One of the strongest arguments the SNP made, in its demands for Fiscal Autonomy, was that Scotland could then set its own corporation tax rates and like Eire, act as a magnet for inward investment. There are serious disadvantages with that policy, not least of which is the revenue gap that would have to be filled if large companies were to be attracted to Scotland on the basis of low corporation tax. It has been argued that the total revenue take would increase as a consequence of increased overall activity, the same claim that is made for a flat rate tax system, but not all members of the SNP agreed, with one of the fiercest crtics of such a system being the late Stephen Maxwell. The notion of Scotland, inside the Union but with Fiscal Autonomy, being allowed to operate such a tax regime, is quite risible for the very obvious reason that other areas of England which would be seriously disadvantaged, would never agree. Swinney's statement to the Bank of England, was a recognition of this, if Scotland continues with sterling as its currency but Salmond's latest comments have now thrown the whole debate wide open again. Unfortunately, the advocates of Devo-Plus have also relied heavily on the argument that Scotland should be given more control over taxation and oil revenues, at a time when the example of the crisis in the Euro-zone is encouraging greater fiscal centralisation.

Calman's proposals were agreed by all of the Unionist parties and stopped well short of Fiscal Autonomy. Without even mentioning the term, Darling has already made the case against it by pointing to the debacle in the Euro-zone and arguing that the Bank of England would not allow that level of fiscal freedom to operate inside the UK. Having had a ceiling placed on the degree of control that would be acceptable to the politicians at Westminster, Johann Lamont has had her limits set for her before her Commission has had its first meeting. No matter how it will be dressed up, whatever proposals are made by the Commission, will fall well short of what is looked for by those who advocate Devo-Plus, if by that is meant control over taxation. Whether or not Lamont is sincere in her efforts to meet the demands for greater powers in Scotland, she will be hard pushed to persuade the electorate that her Commission is anything other than a cynical attempt to undermine a Yes vote at the referendum. She has promised the proposals will be before the Scottish electorate in time for them to consider them before having to make a decision on the referendum, but anyone with even a passing interest in politics in Scotland, will be in little doubt that whatever is offered will fall well short of offering Scots any meaningful increase in control over their own affairs.

As there is to be no second question on the ballot paper, the Scots have a very straightforward choice. They can choose to be independent with all that that means in terms of opportunity to build the kind of country we want, cementing the kind of international relationships we want, promoting the kind of society we favour with full control over our many resources. They can have that or the Union, a Union dominated by the English electorate for no other reason than that there are more of them. It will be a Union that will continue to be defined by their priorities because that is the kind of Union they prefer. Scots have shown it is not the kind of society which satisfies our priorities but unless we fall in line, we are ridiculed and parodied as subsidy junkies, content to live off English largesse. A No vote in the referendum will see those priorities ignored and set aside because it will be what England expects. Anyone who thinks that will not be the case, should ask Johann Lamont and Scottish Labour.

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