It’s All Over – Except It’s Not

  Well, there we go. That’s that, as they say. Scotland, land of haggis and whisky (of which I’m fond) and of bagpipes and tartan (of which I’m not so fond) has voted in what was probably the defining moment in recent British political history. The result, a 10-point win for the No campaign, on the back of a turnout of 84.6%, is not the vast thrashing of the Independence campaign which was predicted when the referendum was called, but it is a significant enough margin to settle the question for some time.

  But, I’m afraid, that’s not quite the end of it. In fact, not by a long shot. It has been clear for some years, and most especially for the last fortnight or so, that the status quo simply will not be acceptable to Scotland for any longer. The fallout from the referendum will send shockwaves through Scottish politics, and it will profoundly affect the rest of the Union too. The Scots may have gone for No, but this emphatically doesn’t mean No Change.

Scottish Devolution

  With the current Devolution plans under the Scotland Act 2012 lay out some powers which will be transferred to Scotland over the next two years. These include a replacement of UK Stamp Duty by a Scottish version, the ability for the Scottish Government to borrow from the capital markets and issue government bonds and – crucially – the cutting of the UK Income Tax in Scotland to 10%, with the Scottish Government responsible for setting a separate rate to make up the shortfall, which would allow Scotland to vary overall Income Tax rates from the UK standard of 20%. 

  Let’s be clear, these powers are to go to the Scots, regardless of what happens over the next few months. However, there are now proposals on the table for new Scottish powers from each of the three main Westminster parties. These new powers will be needed to assuage the demand for greater autonomy which 1.6 million votes for independence demonstrates. There are differences between the parties on what these powers should be, however.

  Labour Proposals   [SOURCE: Scottish Labour Devolution Commission – Executive Summary]

  • The Scottish Parliament to be made a permanent feature of the UK constitution
  • The Scottish Parliament to have administrative authority over Scottish Parliament elections
  • The Scottish Government to raise approx. 40% of its own tax revenues
  • UK Income Tax rate in Scotland to be reduced to 5% rather than 10%
  • The Scottish Government to be able to vary different Income Tax bands by different amounts
  • Retention of the Barnett Formula for the Scottish block spending grant
  • Housing Benefit to be devolved to the Scottish Parliament
  • Greater powers for the Island Communities – Orkney, Shetland and Eilean Siar

  Conservative Proposals   [SOURCE: Commission on the Future Governance of Scotland]

  • Income Tax entirely devolved to the Scottish Parliament
  • Official Scottish Fiscal Commission to be established
  • Possible devolution of Housing Benefit
  • Possible ability for the Scottish Parliament to supplement UK social security payments
  • Retention of the Barnett Formula for the Scottish block spending grant

  Liberal Democrat Proposals   [SOURCE: Federalism: the best future for Scotland]

  • Power of Initiation, allowing the Scottish and Westminster Parliaments to request actions of one another
  • Devolution of Income Tax to the Scottish Parliament
  • Devolution of Inheritance Tax and Capital Gains Tax
  • The proceeds of Scottish corporation tax to be assigned to the Scottish Government
  • Retention of the Barnett Formula for the Scottish block spending grant until a new formula is agreed
  The rhetoric generally is that Labour’s proposals are the least extensive, but this is mainly focusing on the slightly weaker offer on Income Tax. In fact, overall it is clear that it is the traditionally Unionist Tories who have made what I would consider the least attractive offer. For a new devolution settlement to work, though, all three parties will have to agree a package of powers, which will then have to be agreed with the SNP. The man in charge of this process is the Lord Robert Smith, Baron of Kelvin, who also ran the Glasgow Commonwealth Games earlier this year. A White Paper is planned for January. Watch this space…
Winners and Losers
  The big loser of this referendum has been Alex Salmond. Despite cutting No’s lead from 22 points two months ago to just 10 in the referendum, Salmond has announced his decision to step down both as SNP leader and First Minister of Scotland in November. This leaves the way open for his popular deputy, Nicola Sturgeon, long tipped as his sucessor to take the reins of power. With so long under Salmond, this could prove a real shake-up for the Scottish Nationals.
  The biggest sigh of relief was likely breathed by David Cameron, for whom a Yes vote could have meant a vote of no confidence in the commons and the loss of his premiership. Ed Miliband, too, was likely a little anxious in the run-up to this vote, as a failure for Better Together would likely have been seen as a failure of Labour to successfully challenge the SNP – and thus a damning indictment of his London-centric leadership. Both major party leaders were staring down the barrel of a gun pointed straight at their careers; the No vote has saved them. For now.
  The star of the show, though, has undoubtedly been Gordon Brown. Alistair Darling’s leadership of Better Together has been criticised for his lack of charisma and failure to stand up to Salmond, but Brown’s fiery eve-of-referendum speech appeared to more than make up for that. It is hard to say just how much his intervention contributed to the eventual success of the No campaign, but calls for the ex-Prime Minister to return to front-line politics after more than four years – perhaps as leader of Scottish Labour – demonstrate how much public opinion he has won by speaking out.
What About the English?

  Almost as soon as the No result was clear, prominent English politicians began their calls for English devolution to match the Scots. Both David Cameron and Ed Miliband mentioned the so-called West Lothian Question in speeches today – Why should Scottish MPs, with significant and growing powers over Scotland now in the hands of the Scottish Parliament, continue to vote on English matters at Westminster? – with Nigel Farage among the many others taking up the cry.

  The Conservative backbenches are pushing for ‘English votes on English laws’ within the current Westminster Parliament, a solution which would settle the question in the short term. However, Labour – who would find it difficult to get approval for their English agenda under such a system, given their partial reliance on Scotland and Wales for their Parliamentary majorities – are going to take some convincing. Meanwhile, the more interesting – and controversial – question of an English executive, complete with ministerial departments and a possible First Minister of England, has also been floated. Whatever happens, one thing is clear – England will not be satisfied with the status quo either.
  It is clear, then, that a No vote in Scotland does not mean that the leaders of the Westminster parties can rest on their laurels. Independence may have been rejected, but change is coming to the UK – and not before time, either. 

[NOTE: A previous version of this article stated Alex Salmond was unlikely to step down as SNP leader. He announced his intention to do so while I was finishing writing this piece. That’ll teach me to make predictions]

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