After the financial crisis, the emergency in the public finances, the
emerging sovereign debt crisis and several years of austerity rhetoric,
word seems to have reached the Scottish Parliament that something
important is happening.
Last week, the leader of the Scottish Labour party gave a brave
speech in which she observed that there really isn't very much money
around, and this might mean that the free (meaning very expensive) stuff
that the Scottish devolved government has been doling out might not be
affordable. She asked whether universal benefits, often enjoyed by the
affluent, are always the best use of scarce resources. South of the
border this would be considered standard stuff. At Holyrood, where the
Scottish Parliament sits, news of her speech was greeted by Scottish
Nationalists with synthetic horror and genuine glee. Johann Lamont had
committed a thought crime against the Scottish political consensus,
which dictates that there is always plenty of other people's money and
that spending as much of it as possible proves one's moral superiority.
The SNP circled Lamont, shouting the most offensive word known in Scottish politics: Tory.
For providing the beginnings of a reality check, Labour's Lamont was
supposedly in league with the Conservatives to deprive Scotland and
steal the trainers from the feet of Weegie (Glaswegian) street urchins.
In Scotland – where the Tories are a hunted and endangered species –
the T word is so toxic that even the merest association can tarnish a
reputation beyond repair.
Now the former Auditor General Robert Black, who for years oversaw
the finances of Holyrood and the Scottish government, has intervened. He
has also noticed (a little too late some might say) that there isn't
any money, or not as much as there used to be. Writing in the paper I used to edit, The Scotsman, he says:
The first decade of devolution was the most benign period
for the public finances in living memory, with budgets growing close to
5 per cent a year in real terms. We are now into the most challenging
period in living memory, with the current spending plans providing for
reductions of over 12 per cent by 2014-15 and the prospect of further
reductions beyond that. Attention is usually given to the bleak prospect
for public revenues, but we need to be acutely aware of pressures on
the cost side.
Crivens, jings and help ma boab, as they still say in a few parts of
Scotland: "We need to be aware of pressures on the cost side." Who would
have thunk it?
It might have been better if more thought had been put into whether
or not the free stuff was really affordable when the various bits of
legislation on bus passes, free care for the elderly etc, were passed. A
few people tried to point this out at the time.
As a Scot living in England, hoping not to be extradited in the event
of Scottish independence, I have long regarded the patience and
tolerance of the English to be one of the most remarkable features of
the devolution experiment. There is some anger at all the free stuff and
the high moral tone. But incredibly, it has never coalesced into a
programme advocated by any of the large parties.
Yet, it seems that the current settlement cannot hold. Once the
independence referendum is out the way – and the expectation is that
Salmond will be defeated – talk will turn to more powers. That can only
mean tax powers, so that the Scottish parliament starts raising its own
taxes which it then spends. In theory it might mean the Holyrood
parliament thinks more carefully about voting to spend more money,
because it might have to put up taxes. Labour seems to be vaguely in
favour of new tax powers for Holyrood.
Now David Cameron is talking about establishing a Constitutional
Convention to agree a new settlement if the Scots say no in an
independence referendum. He is understood to be open-minded on taxation
powers. This could have enormous constitutional implications.
If Scotland gets its own tax system – or control of certain taxes –
then England or the Rest of the UK (RUK) would also have its own tax
set-up, voted on in Westminster finance bills. The UK tax system would
have been partially dismantled. Presumably Wales and Northern Ireland
would have to decide if they want to follow the Scots down the devo max
road or stick with the RUK for tax and spend.
All very messy. But it is inconceivable – completely inconceivable –
that those south of the border would countenance the Scots having their
own tax system controlled by the Scottish parliament and Scottish
Westminster MPs who continue to travel south and vote on finance bills
which impact only on England/Wales/NI. That would be, as I've said
before, representation without taxation.
Where this leads is to two classes of Westminster MPs, or some kind
of federal arrangement where the Commons sits as a UK body for a set
number of days a week and the rest of the time handles mainly English
business with only English MPs voting.
For obvious reasons, Labour in London and the Scots near the top of
the UK Labour party, really don't want to talk about any of this. I
suspect they hope they can win the 2015 general election and shut it
down by quietly introducing a few more tax powers for Holyrood and
hoping the English don't notice. I doubt that will work.
In my simple mind economies that export more than they import will be healthy and those that import more than they export will be sick.