Will there be a race to bring forward limited taxation powers for Scotland before the SNP minority government moves a referendum Bill? It looks like it even though the Bill stands no chance of passing through the unionist majority in Holyrood. Alex Salmond will claim moral authority though, after the Euro election results which put the SNP ahead of Labour by almost nine points. And now crafty Alex has a plan to break the unionist logjam – to put the limited taxation powers of Calman as one of the referendum questions. Nice one. They won’t buy it, but nice one all the same.
The Calman Report, commissioned by that majority will put pressure on the SNP to explain how its alternative of full tax and spend autonomy might realistically be achieved. And it will put pressure on the UK government and unionist parties, to show that the Calman package can be delivered as an alternative to independence. The significance for Northern Ireland is that it foreshadows the eventual end of the Barnett formula and its replacement by assigned revenues based on a needs assessment of the whole UK -but some years ahead (phew!). I pulled together the comment below for the Constitution Unit.
Its deliverable at Westminster and presents a balanced package designed to give the people of Scotland what the polls say they want – a substantially self-governing Scotland within the United Kingdom. But with the SNP minority government likely to introduce a Bill for a referendum on independence later this year, failure to secure broad support for the proposals in Scotland and at Westminster could boost the SNPs cause of independence.
Calman recommends raising the level of Scottish fiscal responsibility from about 9% today (from local taxation) to about 30%, from a mixture of 10 percentage points in income tax, stamp duty, land tax, air passenger duty, aggregates levy, and landfill tax. Its fiscal recommendations are cautious and pragmatic. They avoid clashes with other UK areas that variations in corporation tax to attract business and wider powers over social security and the welfare state could create. This approach should ease its path through Westminster.
On the other hand, says Dr Paul Cairney of Aberdeen University editor of the Scotland Devolution Monitoring Report, Calman is surprisingly ambitious by providing the potential for future change with some measures consistent with SNP aims such as giving the Parliament control over its own elections; stiffer drink-driving penalties and allowing prudential (affordable) Scottish government borrowing to fund big capital projects like the Forth Road Bridge.
Although Calman, a half way house, gives limited autonomy over assigned revenues alone, there is no real incentive for the Scottish government to use its tax revenues as levers for economic growth.
Other measures he identifies may mark the beginning of substantial further shifts in fiscal arrangements including:
Requiring HMRC to work with the Scottish government for the first time
Recommending consideration of further tax devolution later
Opening the door to the Scottish government to use reserved housing
benefit and council tax to develop its own policies with UK
In his blog under “intergovernmental relations”, Paul Cairney lists several measures to create a more formal relationship between the UK and Scottish government and between the two Parliaments. Might any of these appeal to a more stable Stormont even without taxation powers?