Home Rule is simply arguing that we should be raising the money to pay for Scottish services, as opposed to simply spending it
Supporters of the Smith Commission proposals loudly claim that the powers on offer will give Scotland more tax and spending responsibilities than nearly any other tier of government in the world below the nation-state level.
While the Smith proposals would give more responsibility in these areas than many other countries, they do not undermine the arguments in favour of going beyond Smith, which was at the end of the day a rushed compromise and will soon, like Calman, be overtaken by events. Efforts will therefore continue to secure a proper home rule settlement for Scotland: in the aftermath of the referendum, this is a next step that’s supported by the vast majority of both Yes and No voters.
Scotland still has a large fiscal gap between the money spent by the Scottish Government and the taxes it collects and manages, raising just 22 per cent of what it spends. The Smith Commission proposals would increase this to only 38 per cent.
Having a large fiscal gap between the level of control over taxation and expenditure greatly limits the autonomy of a Scottish Government – a problem that was highlighted in the Labour Party’s devolution commission report. This blurs accountability and transparency, and can lead to arguments from the rest of the UK that they are paying for Scottish public services – such as those arguments surrounding Jim Murphy’s plan to use Scotland’s share of Labour’s Mansion Tax, which would primarily affect London, to pay for extra nurses in Scotland.
The other key proposal here is that the Scottish Parliament would be able to vary the nature of the taxes used, not just the rates and thresholds for existing taxes. I’d want to see the same freedoms extended to local authorities too: it’s hardly a surprise that turnout is so low when so few real decisions are made locally by councillors.
Many countries have layers of government responsible for raising a greater level of their own expenditure. In some countries, like Canada, provincial and territorial governments have a higher level of both tax powers and expenditure levels and a smaller fiscal gap. In other countries, like Sweden, they have a lower level of power over expenditure but a higher level of tax powers, and therefore a lower fiscal gap.
However, looking at international data can also be misleading as it more often than not focuses on the norm, leaving out the exception. As a result, in countries with asymmetric devolution – in other words, where some parts of the country have greater powers than others, such as the UK, India or Spain – those areas with greater powers can be overlooked.
For example, the OECD said in 2013 that 4.87 per cent of tax and 25 per cent of expenditure is devolved in the UK. However, this does not cover Scotland, where the levels devolved were 10 per cent (pre-Calman) and 59 per cent currently.
Regardless of how tax and expenditure powers are organised overseas, greater decentralisation is a good thing. Some countries may not go further down this path because central governments fear losing control of fiscal policy, while some local or devolved administrations fear taking unpopular tax decisions, but fiscal decentralisation offers many benefits.
It is worth referring to Westminster’s Communities and Local Government Committee report from June 2014 which looked at devolution for England and highlighted the benefits of greater fiscal devolution:
“Fiscal devolution presents an opportunity to improve accountability, to hold local politicians to account for their successes and failures and, therefore, to improve democracy.”
Scotland has had a distinctive constitutional settlement, even prior to devolution. We may have been part of the UK, but we have always had independent education and legal systems. Since 1999, with responsibility over substantial areas of expenditure, services like Scotland’s NHS have diverged from the rest of the UK, especially over successive UK governments’ privatisation agenda.
Home Rule is simply arguing that we should be raising the money to pay for these services, as opposed to simply spending it.
The UK as a whole, and Scotland, are very diverse areas, with different needs. Home Rule would offer greater potential for policy opportunities as well solutions to Scotland’s persistent problems of inequality to be pursued. Each Scottish administration since 1999 has tried to address these issues, but can only tinker around the edges because key welfare powers remain at Westminster.
Home Rule is a rare opportunity for a bit of consensus. For Yes voters like me, it is exactly that, a step towards independence and more accountability. But for No voters, it’s a coherent and principled devolution package which might instead support the Union for the long term. Consider it a sensible crossroads in the woods, rather than yet another confusing thrash through the constitutional undergrowth.
For more information on the Campaign for Scottish Home Rule go to www.homerule.scot
James Mackenzie is a steering group member of the Campaign for Scottish Home Rule, and former Head of Media for the Green MSPs. He is the co-founder of Cutbot
Leave a Reply