It went right down to the wire, but the UK and Scottish governments finally compromised on the fiscal framework that will underpin the new powers that Holyrood will get later this year. I don't want to over-egg this pudding, but it does mean that Holyrood will be one of the most powerful devolved legislatures in the world. Not as powerful as a Swiss canton, certainly, and maybe no as much of a heavyweight as Quebec is within Canada, but certainly it puts Scotland up there with the other Canadian provinces or even the American states.
The hold-up came about owing to different interpretations of the no-detriment clauses of the Smith Commission Report. Actually what both sides were doing was pretending that there is only one such clause, when actually there are two.
The UK government argued that they were meeting clause 95(3) in full by transferring powers without causing any loss of income to Scotland at the point of transfer. The Scottish government said that this was all very well, but clause 95(4) was the problem as that bit states that there shall be no detriment as the powers are used by Holyrood.
In a nutshell, since income tax will be fully devolved, if the population in England continues to grow with high levels of immigration, then the tax take for Westminster will rise. However, Scotland does not have large numbers of immigrants, so her income tax levels would decline over time. Under the existing system that was not a problem, since all the revenues raised in Scotland went to Westminster, there to be put through the formula known as Barnett, and returned to Holyrood with a nice top-up. However, with income tax now being a matter purely for Holyrood, that sum will be removed from the future block grant that London pays to Edinburgh. In simple English, unless a deal could be done, Scotland would get less money from her own income tax than she would had she remained under the pure block grant system.
When these negotiations began, the UK government wanted to cut the block grant by £7 billion, that being the amount, more or less that Scotland raises with her own income tax and other incidentals that will also be devolved. By Monday of this week they had dropped that to £3 billion, then on Tuesday morning they asked for a £2.5 billion cut, before in the afternoon reducing it to £2 billion.
Then Cameron seems to have stepped in and shrugged his shoulders, with the result that there will be no cuts at all. The matter has been kicked into the long grass with a joint promise of a review in five more years, when all the current teams will probably be out of office. Besides, five years is a long time and we can expect inertia to kick in when it all comes up for renegotiation, with the result that it will get rolled over again for the next generation to worry about.
Scotland is very, very lucky with the timing over this. All Cameron cares about is winning the EU referendum. The last thing he wants is to have an outraged Scotland making waves. Far better to provide us with a rather nice bung to go away and shut up.
To be honest, that suits me down to the ground. I voted Yes in the IndyRef because the thought of continuing to live in a country that was dominated by scummy Tories and their odious hangers-on in ratholes like Nuneaton left me feeling in need of a bath.
Looking ahead, pretty much everything that affects the day to day life of people in Scotland will be decided by Holyrood, a chamber far more responsive that the two that exist in Westminster.
All with a nice bung courtesy of HMG!
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