Saturday 29 November 2014

The breakfast any self-respecting dog would reject

The Smith Commission report has 28 pages, but in fact the meat of it is precisely half that: fourteen pages cover the 'three pillars' of its recommendations. That's four pillars, by my arithmetic, short of wisdom.

The pillars are, in brief
  1. a 'durable' constitutional framework;
  2. prosperity, jobs, and social justice;
  3. financial responsibility for Holyrood.
If the report lived up to its billing and delivered these things, then, indeed, we would have a durable constitutional framework, and the pressure for independence would recede; unfortunately, it does not.


Let's start with the last first, because it is flaws in the last pillar that destabilise the whole platform. In my personal submission to the Smith Commission I wrote:
The only solutions which will work on taxation are
  1. Devolve no tax-raising powers, and continue with an enhanced Barnett Formula. It will be very hard to get a political consensus on this, and it is against Scotland's interests since the long-term drift of Union policy is towards ever more austerity and ever deeper cuts to social and health provision, leading to lower Barnett Formula payments to Scotland; or
  2. Devolve all tax raising powers completely, and have Scotland pay a subvention to the Union. Again, this will not be easy to build a political consensus around, and the formula for the subvention will be particularly contentious; but it is clearly the only solution which will work in the medium term.
It's hardly surprising that the Smith Commission did not bow down before my ineffable sagacity, but nevertheless I contend that was - and remains, if a United Kingdom is to be salvaged - good advice.

So what did they agree? The first clause of the third pillar is the one David Cameron is attempting to tear up immediately:
Income Tax will remain a shared tax and both the UK and Scottish Parliaments will share control of Income Tax. MPs representing constituencies across the whole of the UK will continue to decide the UK’s Budget, including Income Tax.[¶ 75]
Scotland can set rates and bands of income tax; it can raise or lower thresholds. However,
All other aspects of Income Tax will remain reserved to the UK Parliament, including the imposition of the annual charge to Income Tax, the personal allowance, the taxation of savings and dividend income, the ability to introduce and amend tax reliefs and the definition of income.[¶ 77]
So all Scotland actually gets to set rates on is tax on earned income - what ordinary working people pay. Tax on unearned income - which is predominantly what the rich pay - we cannae touch. For the same reason - to protect the rich - we cannae touch inheritance taxes or capital gains taxes[¶ 81]. We cannae touch taxes on business. We cannae tax the oil coming out of the North Sea, or the gas coming from (if we permit it) fracking.

So what else can we do? We can set the rate of Air Passenger Duty, but if we abolish it we must compensate the UK government for doing so![¶ 87] We can tax aggregates, but again, if we do, we must 'reimburse' the UK government[¶ 90]. And that's all, folks. That's your whack.

The Barnett Formula remains and is - if the UK parties do indeed implement the document as written - protected into the future. We get the benefits and costs of any changes we make to our taxes as permitted in the recommendations, on top of Barnett[¶95]. And we'll need it, because we're only getting 29% of the tax revenue generated in Scotland.

There are many other reasons why these proposals on tax powers are the worst of all possible worlds; they've been stated very clearly by Richard Murphy. But the point which I want to repeat, which I want you to remember, is this: we are permitted to raise revenue, for example for improved services, by taxing the labour of ordinary working folk, the relatively poor; we're not permitted to touch the wealth or unearned income of the rich.

Social Justice

You'll have noticed already, then, that the 'social justice' pillar is necessarily hollow. We are to have powers over 'social justice' only in so far as they do not hurt the rich.

So, we're to have the power to abolish the spare bedroom tax[¶45], but we'll have to pay for it by taxing ordinary working folk. We can't do ANYTHING about 'Universal Credit' sanctions [¶46]. We do get power over a small range of minor benefits amounting to 14% of total benefits by value, but again if we choose to be more generous with them we'll have to pay for it by taxing ordinary working folk[¶49].

We cannae mess with the minimum wage, so we cannot lift people out of poverty that way[¶59]

However, there is one gleam of daylight. Under ¶54, we can create new benefits. So I think it would be possible to set up Citizens' Income, although it would in effect only redistribute wealth from ordinary folk to the very poor, because, again, we are not trusted to effectively tax the rich.


We get to renationalise the railways[¶65]. Except, of course, that that contract has already been let to the Netherlands national railways, so it's the tax payers of the Netherlands who get the benefit of this for the next ten years. We get to license (or not license) onshore oil and gas exploitation - so we could ban fracking[¶69]. Or, alternatively, we could raise revenue from it. We get to 'prevent the proliferation' of loan sharks and gambling machines[¶73,74].

So, in fact, tinkering not at the margins but at the margins of the margins. We cannot do anything effective (except perhaps licensing fracking, which would be environmentally destructive and wildly unpopular) to improve our economy.

A 'durable' framework?

Which takes us back to the first pillar. With the third broken and the second hollow, does the first have the capacity to take the full load on its shoulders? It starts well, recognising
the sovereign right of the people of Scotland to determine the form 
of government best suited to their needs [¶20]
Hold onto that phrase. We may need to come back to it in future. Under [¶21], the UK parliament will not - under the terms of these recommendations, which, of course, the UK parliament is at liberty to ignore - abolish the Scottish Parliament. The UK parliament will not interfere in devolved matters[¶22].

We can regulate our own elections, including the number of MSPs and of Scottish Parliament constituencies (provided we have a 'super majority', [¶27]), and the voting age; but we cannae regulate political parties, or political donations. Furthermore, the boundary commission, although not reserved, 'will continue to operate as a UK public body'.

We do get to administer, and receive the revenue from, the crown estates, but we must devolve these to those local authorities who request them (I think that's probably a good thing, but we are not trusted to decide for ourselves).

We don't get our own voice in Europe, and we don't get to represent the UK in Europe, not even on fishing, unless no UK minister is available; but we will be 'consulted'[¶31]. We don't get any control over broadcasting, but again we'll be consulted.

Smiffy messes up

I wrote at the beginning of this process, in my submission to the commission, that theirs was a task
which I know will prove thankless, suspect will prove fruitless, and believe will prove pointless

It was, of course, an immensely difficult brief. All the commissioners are to be congratulated that a document has emerged at all by the deadline. Robert Smith himself is to be congratulated for facilitating their work. Of course we now know that the document was sabotaged by Westminster before it could see the light of day. But none of the three pillars are stable; none will bear the weight the unionists seek to put on them. It's no surprise that the overwhelming public verdict in Scotland has been 'underwhelming'.

In short, if this is the fruit of their labour, it is strange and bitter fruit indeed; more like to poison the union than to nourish it.

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