The Scotland Act: A poisoned chalice?

So Scotland enacts the Calman report (aka the Scotland Bill), that drops in . That it is brought in by a Conservative (not all of whom are happy campers, btw) Lib Dem coalition that fought tooth and nail over a political generation (or more) against, is an irony not lost on Peter Curran, who notes John Curtice’s remarks:

…their [the SNP] victory in 2007 forced the Labour Party in particular to re-think its attitude towards devolution, to work together with the Conservatives and the Liberal Democrats to produce this proposal that the Coalition is now putting forward. So, the SNP will undoubtedly put out a lot of criticism about this, but the truth is, they are probably principally responsible for this proposal at least getting this far as the statute book.”

And Iain McWhirter reckons Alex Salmond is privately pinching himself. But Peter Geoghegan’s take on Slugger back in July was that underneath the labyrinthine legislative processes, the cuts it entails could hinder a Scottish economic recovery.

Gerry Hassan outlines some of the detail (and some of the attendant problems likely to follow in its trail:

While reducing the Scottish Block Grant, it still defines Scotland’s spending via London and retains the indefensible Barnett formula. 65% of Scottish devolved spending will still come from the Block Grant; the Barnett consequentials will still determine much of the wider debate. Scottish spending will rise and fall relative to London decisions on tax, and the last thirty years have seen a massive move away from income tax as a means of taxing and raising monies – shown by the fact it was a 33% basic rate in 1979 and is now 20%.

Income tax is a diminishing part of government revenues, a process which long predates New Labour’s ‘taxation by stealth’, and according to BBC ‘Newsnight Scotland’ HMRC estimates for 2010-11 income tax will raise £150b out of £548b: the rest being made up of £99b National Insurance, £46b excise duties, £43b corporation tax, £81b VAT, £25b business rates, £25b council tax, £79b others; income tax making up 29% of the tax take (2).

He argues this half way house will suit no one:

Democratisation should be connected to the idea of a much fuller fiscal autonomy whereby Scotland raises all of its monies and identifies and agrees an amount for common services with London; this is the type of measure seen in the Basque Country and elsewhere in the world – unlike the Calman proposals – which are untried anywhere, untested and uncosted (with no financial modelling undertaken by its supporters).

A poisoned chalice, the Irish Times calls it