Scotland – one month on from the independence referendum

What progress has been made and who wants what?

On September 18th the people of Scotland voted in unparalleled numbers on the country’s constitutional future. Lynn McMath, PLMR’s Senior Manager of our Scottish office, looks at what’s happened since and what additional powers could now come Scotland’s way.

84.5 per cent of eligible Scots cast their vote in what was a record turnout for any UK election. The No camp won in 28 of the 32 Scottish council areas and overall 55.3 per cent of voters decided that remaining part of the United Kingdom was the right choice.

After such a long campaign it would have been a fair assumption that a decisive no vote would mean the issue of the constitution would be put on the backburner. This has been far from the case with additional powers for Scotland remaining a key issue for politicians across the floor. This is also true of the electorate who have engaged with politics like never before with social media being a real platform for voices to be heard.

Much has been made of ‘the vow’ signed by David Cameron, Nick Clegg and Ed Miliband which was announced just two days before the referendum. It’s difficult to determine the impact this had on wavering voters, but since the No result was declared the three Westminster leaders have reiterated their commitment to devolve further powers to the Scottish Parliament within an agreed timetable put forward by former Prime Minister Gordon Brown.

Lord Smith of Kelvin was given the mandate by David Cameron to chair an independent commission (the Smith Commission) on further devolution for Scotland. It will look at the proposals for further devolution from the five parties in the Scottish Parliament who each have two representatives. Talks have now started and legislative proposals will be brought forward by 25th January 2015. A tight timescale for parties who will be unlikely to willingly make concessions from their own plans which vary drastically.

So who wants what?
There are a complex range of issues which the individual parties have made comment on – for example Scottish Labour want consumer advice and rail franchises devolved and alongside the Greens want Holyrood to have control over equalities legislation and payday lenders. Both Labour and the Lib Dems want the Crown Estate to pass their 50 per cent share of the Scottish seabed to local councils which would give them control over fish farms, ports and marinas and renewable energy developments. The Conservatives, along with Labour, want attendance allowance devolved as it’s closely linked to health and social care.

The Lib Dems think all areas of social protection including pensions and welfare should remain at UK level but Labour would like to see housing benefit devolved and the Tories say there is scope for this. The Greens want more control over borrowing at Holyrood and aside from pensions think welfare should be devolved.

Perhaps not surprisingly the SNP want full fiscal responsibility across the board as well as control over all domestic spending including welfare, employment and human rights. The only issues they want to keep reserved are defence, foreign affairs, border security and monetary policy. Similarly the SNP want responsibility on national broadcasting (control of the BBC in Scotland) to come to the Scottish Parliament while all other parties disagree. Where everyone seems to be in agreement is on the permanent entrenchment of the Scottish parliament in the UK constitution.

Broadly speaking there’s also consensus on the issue of income tax with all seeking devolution of the setting of bands and rates to be fully devolved to the Scottish Parliament, although the Conservatives want Westminster to retain control over the personal allowance level.

Labour’s proposal is different. They want Holyrood to have control of roughly 40 per cent of tax with the capacity to raise, but not lower, the higher levels of personal income tax and they want to widen the variation in income tax in the Scotland Act by half from 10p to 15p.

There’s more of a split on other taxes with the Lib Dems, Greens and SNP looking to devolve Inheritance and Capital Gains Tax. The Greens, who never agreed with the SNP’s plans to cut corporation tax in an independent Scotland, have pulled back from devolving all tax as they believe it would promote tax competition and nobody else is in favour of a cut to the rate for big business.

Air Passenger Duty is already devolved for flights to the Highlands and Islands and so all parties are agreed on full control of that, although for obvious reasons the Greens haven’t included it in their submission and Labour have made a stipulation that the scope should consider ‘environmental impact.’

The Unionist parties are content for National Insurance, Excise duties and VAT to remain with Westminster, but the Tories have suggested that the Scottish parliament should get an equitable share of VAT receipts. An area that is likely to be a sticking point is oil and gas which the SNP will fight for receipts to be devolved which the Tories, Labour and Lib Dem will oppose.

So, there’s still a long way to go before any firm plan is put forward. Regardless of what (the Smith Commission’s) final proposals look like there will be more powers coming to Scotland from next year as a result of the Scotland Act 2012. This means that from next year Stamp Duty Land tax and Landfill tax will come directly to the Scottish Government and in April 2016 there will be a Scottish Rate of Income Tax which will issue its own bands.

Without question the debate on independence has played a massive role in engaging Scots in the political sphere. Despite losing the vote, the SNP and Green parties have seen a huge spike in membership in the wake of the referendum. SNP numbers have trebled in the last month or so which means they now have the third largest membership of any UK party. The impact this may have on the political landscape as Scots vote in the Westminster elections next year and Holyrood’s in 2016 could be considerable and should not be taken lightly.

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