The future of devolution after the Scottish referendum - Political and Constitutional Reform Contents


2  The future shape of the Union

The Vow and the impact of the Scottish referendum

7. The Scottish referendum was a highly significant political event for the UK. 4,283,938 people were eligible to vote in the Scottish independence referendum, and 3,623,344 votes were cast, a turnout of 84.6 per cent. 1,617,989 (44.7 per cent of valid votes cast) voted Yes; 2,001,926 (55.3 per cent) voted No.[6]

8. The turnout of 84.6 per cent was the highest turnout at a nationwide referendum or parliamentary election in Scotland since the establishment of universal suffrage. 16- and 17-year-olds were eligible to vote in the referendum, and by the date of the poll 109,533 people in this age group had registered to vote.[7] The very high turnout reflected the considerable level of voter engagement with a referendum campaign which had lasted for over two years. The significance of the referendum and its outcome has been confirmed by the reaction to the result not only in Scotland but in the rest of the UK, with greater levels of interest in the way the Union is governed and the potential for the further devolution of power down to localities in each nation of the UK.

UNDERTAKINGS ON FURTHER DEVOLUTION

9. During the referendum campaign the constitutional future of Scotland in the event of a Yes vote appeared reasonably certain. Less clear, until the latter stages of the campaign, were the potential constitutional consequences of a No vote.

10. In June 2014 the leaders of the Scottish Conservative, Scottish Labour and Scottish Liberal Democrat parties issued a joint statement:

    Power lies with the Scottish people and we believe it is for the Scottish people to decide how we are governed.

    We believe that the pooling and sharing of resources across the United Kingdom is to Scotland's benefit in a partnership of four nations in which distinct national identities can flourish and be celebrated.

    We believe that Scotland and the United Kingdom have been strengthened since the advent of devolution.

    We support a strong Scottish Parliament in a strong United Kingdom and we support the further strengthening of the Parliament's powers. The three parties delivered more powers for Holyrood through the Calman Commission which resulted in the Scotland Act 2012.

    We now pledge to strengthen further the powers of the Scottish Parliament, in particular in the areas of fiscal responsibility and social security. We believe that Scotland should have a stronger Scottish Parliament while retaining full representation for Scotland at Westminster. Our common agenda can bring people together from all of Scotland, from civic society and every community.

    The Scottish Labour Party, the Scottish Conservative and Unionist Party and the Scottish Liberal Democrats have each produced our own visions of the new powers which the Scottish Parliament needs.

    We shall put those visions before the Scottish people at the next general election and all three parties guarantee to start delivering more powers for the Scottish Parliament as swiftly as possible in 2015.

    Our common endeavour will deliver a stronger Scottish Parliament in a stronger United Kingdom.[8]

11. On 7 September the Chancellor of the Exchequer, Rt Hon George Osborne MP, indicated that a 'plan of action' was being developed to give more powers over taxation, spending and benefits to the Scottish Parliament in the event of a No vote. On 8 September the former Prime Minister, Rt Hon Gordon Brown MP, set out a process and a timetable for achieving the delivery of further powers to the Scottish Parliament, and on 10 September the leaders of the main UK political parties travelled to Scotland to campaign for a No vote. On that day the Leader of the House indicated that the commitment to further powers for the Scottish Parliament made by the party leaders were not statements of Government policy:

    The statements by the party leaders made on this in the last few days are statements by party leaders in a campaign—not a statement of Government policy today, but a statement of commitment from the three main political parties, akin to statements by party leaders in a general election campaign of what they intend to do afterwards. It is on that basis that they have made those statements.[9]

12. A key moment in the debate immediately prior to the referendum was the publication in a Scottish daily newspaper of a commitment—known as The Vow—from the Prime Minister, the Deputy Prime Minister and the Leader of the Opposition, made on behalf of their parties, "to deliver change for Scotland".[10] The three UK party leaders declared agreement on the following:

·  That the Scottish Parliament is permanent

·  That, in the event of a No vote in the referendum, "extensive new powers" for the Scottish Parliament would be delivered by a process, and to a timetable, agreed by the parties, beginning on 19 September

·  Each party will work to improve the way the UK is governed

·  The UK exists to ensure opportunity and security for all, by sharing resources equitably to secure the defence, prosperity and welfare of every citizen

·  Expenditure on the NHS in Scotland is a matter for the Scottish Parliament

Willie Rennie, Leader of the Scottish Liberal Democrats, described to us the significance of The Vow:

    [P]reviously we were having a kind of a Unionist offer, in which each individual party would put its proposals in its manifesto and if it won power it would implement those proposals. It was a direct line from its commissions to implementing its legislation. What changed was that it was going to be a cross-party affair […] and also there would be a consensus before the general election.[11]

13. In evidence to us the Local Government Association indicated the significance of the Scottish referendum campaign, and, in particular, The Vow, for further transfers of power away from Westminster:

    Scotland's referendum campaign has illustrated the political dynamic very clearly. The Yes campaign was as much an anti-Westminster campaign as a nationalist movement. Even No voters, while rejecting a nationalist independence agenda, demanded greater ownership by Scots of decisions that affect their lives. The referendum's outcome, underpinned by the "Vow" made to Scotland by the three main UK party leaders, has exposed the failure of the centralised UK model for all the countries and communities of the Union, not just Scotland. The UK government has conceded that the old way of doing business must end.[12]

Devolution proposals after the Scottish referendum

14. Since the referendum in Scotland, proposals on further devolution to Scotland, Northern Ireland and Wales have been agreed upon in principle: legislation giving the Northern Ireland Assembly the power to set the main rate of corporation tax in respect of certain trading profits from April 2017 has passed both Houses and awaits Royal Assent.[13] The Government has also been taking forward a programme of decentralisation within England which we examine further below.

SCOTLAND

15. Immediately after the result of the referendum on independence for Scotland was known, the Prime Minister invited Lord Smith of Kelvin to convene a commission comprising two representatives of each of the five parties represented in the Scottish Parliament. Lord Smith's terms of reference were

    To convene cross-party talks and facilitate an inclusive engagement process across Scotland to produce, by 30 November 2014, Heads of Agreement with recommendations for further devolution of powers to the Scottish Parliament. This process will be informed by a Command Paper, to be published by 31 October and will result in the publication of draft clauses by 25 January. The recommendations will deliver more financial, welfare and taxation powers, strengthening the Scottish Parliament within the United Kingdom.

Each of the parties represented in the Scottish Parliament accepted the invitation to participate in the Commission.[14]

16. The UK Government subsequently published a Command Paper setting out the published proposals of the three main UK parties on further devolution to the Scottish Parliament,[15] while the Scottish Government and the Scottish Green Party published their own proposals.[16] The Commission held nine plenary meetings, including a public evidence session with representatives of civic institutions, and Lord Smith held a number of bilateral meetings with his fellow commissioners. Each party representative agreed to the proposals set out in the Smith Commission Agreement, published on 27 November 2014.[17] On 22 January the UK Government published a further Command Paper on implementation of the Smith Commission Agreement, including draft clauses for a Scotland Bill intended to be introduced early in the new Parliament.[18]

17. The Smith Commission Agreement proposes substantial new powers for the Scottish Parliament, and the draft clauses are intended to illustrate how these powers will be transferred to the Parliament. We have already undertaken pre-legislative scrutiny of the draft clauses with major constitutional significance which are to implement Pillar 1 of the Agreement. Draft clause 1 purports to make the Scottish Parliament and Scottish Government permanent institutions, draft clause 2 is intended to establish in statute the convention that the UK Parliament will not normally legislate on matters within the competence of the Scottish Parliament unless the Scottish Parliament has consented to such legislation, and draft clauses 3 to 9 make provision for the Scottish Parliament to have powers over its own arrangements and operations, and to have all powers in relation to elections to the Scottish Parliament and to local government in Scotland. As we said in our earlier report,

    The draft clauses, taken together, represent a major change to the United Kingdom's constitutional arrangements: they provide for very substantial devolution of powers over income tax and welfare to the Scottish Parliament, assignment to the Scottish Government's budget of the first ten percentage points of all VAT raised in Scotland, a wholesale revision of the fiscal framework for Scotland within the UK, and new borrowing powers for the Scottish Government.[19]

WALES

18. The Commission on Devolution in Wales (the Silk Commission) was established in October 2011 with a remit "to review the present financial and constitutional arrangements in Wales" in two stages, first with respect to financial accountability and then with respect to the powers of the National Assembly for Wales. It reported on the two elements of its remit in November 2012 ('Silk I') and March 2014 ('Silk II') respectively.[20] A bill to implement recommendations from Silk I was enacted in December 2014 as the Wales Act 2014.

19. In October 2014 the leaders of the four political parties in the National Assembly for Wales tabled, and secured the Assembly's agreement to, a motion calling for the devolution of further powers to Wales.[21] The Secretary of State for Wales committed himself to bringing forward proposals for further devolution on the basis of Silk II: on 27 February 2015 he published a Command Paper setting out the UK Government's proposals for further devolution to Wales.[22] The proposals include a programme of work to establish a separate legal jurisdiction for Wales.

NORTHERN IRELAND

20. On 23 December 2014 the political parties in Northern Ireland, the UK Government and the Government of the Republic of Ireland reached agreement on a number of measures aimed at furthering the peace process in Northern Ireland, reforming Northern Ireland institutions, restructuring the welfare and benefits system in Northern Ireland and devolving certain fiscal powers, including powers over the rate of corporation tax, to the Northern Ireland Assembly.[23] The Stormont House Agreement is the latest in a series of agreements stemming from the 1998 Belfast Agreement which provide for further devolution to the Northern Ireland Assembly and contribute to the continuing operation of the Northern Ireland peace process.

The nature and process of further devolution

21. The scale of the new powers promised by the political parties to the Scottish Parliament in the event of a No vote in the referendum surprised many, since the Government had not adopted a policy on further powers to be offered in the event of a No vote. There has been significant debate in Scotland over whether the terms of the Smith Commission Agreement and the draft clauses fulfil the broad promise of 'substantial new powers' for the Scottish Parliament set out in 'The Vow'. Our colleagues on the Scottish Affairs Committee have examined the provisions in detail and have found that the promises in 'The Vow' have been met.[24]

22. We asked whether the broad offer of substantial further powers to the Scottish Parliament should also be offered to England, Wales and Northern Ireland. This would seem to be a logical step in the development of devolution across the UK. The evidence we received in return indicated practical difficulties in offering similar levels of devolution to the rest of the UK, arising from the asymmetric circumstances of the existing devolution settlements. Akash Paun, of the Institute for Government, identified a flaw in the premise of such a proposal:

    The idea that devolution is about powers being offered by the centre to parts of the country maybe is not always the best starting point. My perception is that devolution should be driven by a dialogue between the different levels of the different parts of the country—it is not even about governments, of course—about how we want to divide the resources and functions of the state.[25]

23. Professor Jim Gallagher, of Nuffield College, Oxford, took issue with "the simple proposition that devolution is good and therefore more devolution must be better", which he said was not the right answer to the challenge set in finding a new devolution settlement "that is consistent with the maintenance of the union that was described and defended in the campaign itself".[26] The settlement which had to be found, he said, needed to be

    consistent with the structure of the UK as a political union, with the integrated economy of the UK, which was defended during the campaign, and [. . .] a social union, that is to say social solidarity inside the United Kingdom, because without all of those the UK will not be stable in the long run. That is what the people voted for, that is what they were offered and that is what they should get.[27]

AN ASYMMETRIC SETTLEMENT

24. The asymmetry of the UK's present devolution arrangements has long been recognised. The Institute for Government reminded us that the four nations of the UK each have "very different governance arrangements, powers and responsibilities", a situation which long predated the present process of devolutionary reform which began in the 1990s. Scotland has retained its own legal and educational system since the 1707 Act of Union, for example, while Northern Ireland has had its own civil service and social security system since its creation in 1921.[28] The Institute for Government told us that "these differences reflect the UK's longstanding approach to constitutional design, which has been to respond differentially to specific circumstances and pressures arising in each part of the country rather than seeking to design and implement a single consistent constitutional model" and indicated that this approach remained the default.[29]

25. The Parliamentary Under Secretary of State for Scotland, Rt Hon David Mundell MP, told us that the present debates on devolution throughout the UK were not necessarily linked: "the debate is at different stages in each of the respective parts of the United Kingdom and even within different parts of England", though debates on independence and a Scottish Parliament had been the subject of debate for all his lifetime.[30]

26. David Ford MLA, Northern Ireland Justice Minister and Leader of the Alliance Party of Northern Ireland, summed up the challenges:

    Part of the issue that we have to address is the fact that in the UK we have a unitary state that has somehow developed three entirely different forms of devolution. We do not have anything that is a federal-type arrangement and, therefore, to some extent, we are in the bizarre position that what is proposed in one of the devolved nations does not necessarily have a read across to the other two. […] I am not sure there is a direct read-across from the Scottish proposals. Clearly, the issues for us are what an appropriate level of devolution around fiscal matters is for Northern Ireland, and I am not sure that Smith necessarily relates that directly to us in the absence of a more overarching constitutional settlement for the UK as a whole.[31]

27. Rt Hon Peter Robinson MLA, First Minister of Northern Ireland, recognised that a number of the proposals for further devolution to Scotland under the Smith Commission Agreement would not necessarily be appropriate for Northern Ireland. He was sceptical about whether Northern Ireland should have all the powers on offer to Scotland:

    […] [S]ome take a constitutionally political position. It is a grab from Government of any powers that they can; taking it away from London and bringing it back here. Almost a sort of hyper-devolution collector's item: how much can you have? I look at it on the basis of where is it best capable of being used. Where can it function best? Because of the size of Northern Ireland, I think we have to recognise that there are some powers devolved or are intended to be devolved to Scotland that would not operate in the same way in Northern Ireland because of the cost of doing the work, so I think we have to take that into account.[32]

28. The Institute for Government suggested that there were often "good economic, cultural and historical reasons for constitutional asymmetry." They ventured the following examples:

    For instance, fiscal devolution (implying a greater degree of self-sufficiency) is less attractive to Wales than Scotland due to Wales' weaker economic position. And Northern Ireland's distinct power-sharing devolution model is a product of devolution there being part of the peace settlement. As for England, its pre-eminence within the UK means that there has not been the perceived need to create separate English governance structures—Westminster and Whitehall are already predominantly focussed on English matters.[33]

Baroness Randerson, Parliamentary Under Secretary of State for Wales, told us that in negotiating devolution settlements the UK Government recognised that "the needs of the individual countries of the Union are different. We are aware in Wales that, institutionally, the background is very different from that in Scotland. Geographically, the situation is very different. We have a long border with England that is very porous. People cross that border very much more frequently than they do in Scotland."[34]

A 'NEW UNION MINDSET'?

29. Evidence we received from party leaders in Wales indicated that the recent offer of further devolution to Scotland under the Smith Commission Agreement should be matched in any proposal made by the UK Government for further devolution to Wales. Following an all-party agreement in the National Assembly on the basis of further devolution to Wales, the First Minister, Rt Hon Carwyn Jones AM, told us that he saw "no reason why the Smith Commission offer in Scotland should not be made to Wales", though he had been surprised by the proposal for full devolution of many aspects of income tax.[35] Leanne Wood AM, Leader of Plaid Cymru, told us that "that agreement gives us the basis for implementing both Silk Commission reports in full, without any undue delay, in addition to applying new powers recommended by Smith for Scotland to Wales, too."[36]

30. Baroness Randerson indicated that the Smith proposals had had some bearing on the proposals made for further devolution to Wales: "we are aware that although the situation is very different in Wales from that in Scotland, what is happening in Scotland does have a knock-on effect on Wales and needs to be considered in Wales".[37]

31. In a speech delivered after the Scottish referendum result the First Minister of Wales indicated that in his view the process of devolution was already changing the nature of the British state, and was likely to change it further:

    [D]evolution has already fundamentally changed the governance of the United Kingdom. This was clear before the Scottish referendum was even in prospect, and it has become blindingly obvious since then. Public support for the devolved Parliament and Assemblies has created a presumption of popular sovereignty in the different parts of the UK, which has fundamentally challenged assumptions about a centralised British state. […]

    [W]e have to move from a devolution mindset to a New Union mindset. A devolution mindset starts with the assumption that the Westminster Parliament is sovereign and we are fundamentally a centralized state. That thinking has led us to making concessions to national feelings, by way of specific limited delegations to the so-called devolved administrations. A New Union mindset, on the other hand, says that the UK is a state governed by four representative institutions. Those Parliaments and Assemblies embody popular sovereignty in each part of the country, and yet work with one another for our mutual benefit. […]

    On the day after the Referendum there were encouraging signs of a change of mindset. There was a recognition that the Old Union had been swept away. The Prime Minister recognized (at least for a few moments) the implications for the whole of the UK, and said that Wales should be at the heart of the debate.[38]

32. Whatever the merits of the 'New Union mindset', it appears that it has not led to greater agreement between the Wales Office and the Welsh Government on further devolution. The process leading up to the publication of the UK Government's proposals for further devolution to Wales has been described by the First Minister as "rushed, incoherent and unsatisfactory", with the proposals themselves representing "no more than a staging post to which we will now return after the general election in order to craft a new and sustainable system of Government: one that will resolve many of the constitutional anomalies and disparities that currently exist."[39] He criticised the apparent failure to bring forward proposals on the same basis as the offer which had been made to Scotland:

    [A]ll these proposals are positive but there is no question that they fall short of fair and equitable treatment for Wales. Our consenting powers on energy will still be capped at what is an arbitrary limit, albeit one substantially higher than now. There is no progress at all on policing, no commitment to even the further review on justice that Silk recommended, nor any transfer of executive powers for youth justice.[40]

Asked to consider the First Minister's case for a process that would "treat all four nations as equal and develop a long-term view on what the UK should look like", Baroness Randerson was pragmatic: "there may be a case for doing that but it is not something that you would, ideally, establish in the last months of a Parliament. It is something that is undoubtedly an issue for the future."[41]

A JOINED-UP PLAN FOR FURTHER DEVOLUTION?

33. Several of the submissions were received were critical of the apparent lack of coherence in the approach of successive administrations to the process of devolution. Akash Paun, of the Institute for Government, drew attention to the inherent risks of a piecemeal approach:

    I think the way it has worked up until now is that there has been almost no joined-up thinking. […] There are some good reasons for that but you do end up running into maybe unintended consequences of devolving just to one part of the country. We referred in our evidence to spill-over effects, […] If you devolve a lot of tax powers just to Scotland, there are potentially concerns about tax competition, competition for inward investment and so on that one has to be mindful of in designing a settlement. […] If, in the way that has been happening, one thinks only about devolution to Scotland without any consideration of how it will spill over elsewhere, it could lead to instability.[42]

The policy analyst Dr Robin Wilson described the Whitehall approach to devolutionary change as "'chopped-up' governance […] with very little policy exchange among the jurisdictions—or even mutual knowledge about what they are doing."[43]

34. Ministers were nevertheless adamant that the Government had been taking a joined-up approach to devolutionary change since 2010. Greg Clark indicated that devolution had been "a pretty constant conversation during the whole of the last four and half to five years. It has regularly been discussed at every level of Government from the Cabinet, and in Parliament multiple times. The idea that these are proceeding without any reference to what is going on elsewhere is not the case." David Mundell told us that "We are demonstrating that we have a consistent approach for the constituent parts of the United Kingdom and I think our approach to Scotland has been an entirely consistent one", while Baroness Randerson countered the argument that the Government had been moving forward too hastily in proposing further devolution in Wales: "I would call it responsive government and moving forward in steady but quite large steps in terms of the devolution settlement. I would ask you to reflect on the dangers of delay. When there is a strong demand for further devolution, there is great common sense, in a reasonable and timely manner, in seeking to deal with that issue."[44]

Our view

35. The timing of the Scottish referendum, and the natural wish within Government to make progress on devolution before the end of the present Parliament, have led to the development of three separate proposals for further devolution which, while not drafted in isolation, are not the product of a coherent process for planning the future of a devolved Union. In part, this reflects differing political circumstances and the asymmetric nature of the present devolution settlement. In the three post-referendum proposals for further devolution, each developed separately and to be implemented bilaterally, it is difficult to perceive the 'new Union mindset' which the First Minister of Wales has championed, and easier to perceive a 'devolution mindset' where powers are handed down from Whitehall along bilateral channels. As the devolution settlement matures, the implications for the operation of the Union as a whole of each transfer of powers must be fully taken into account. We examine proposals for refreshing the intergovernmental and intragovernmental machinery of devolution further below.

PUBLIC ENGAGEMENT WITH THE PROCESS OF DEVOLUTION

36. Although the Smith Commission process has been hailed in several quarters for producing a negotiated settlement acceptable to all parties represented on the Commission, there has been criticism of the way in which the settlement was reached. Though he thought the Smith Commission agreement was impressive, Akash Paun thought that the level of public engagement had been insufficient. He told us that changes to the constitution of this significance should follow a process of proper engagement, but that in this case "the timetable was set for political reasons in the days before the referendum and the commission had to work to it."[45] He stated:

    I think they did the best they could in a pretty difficult, constrained situation. Ideally you would have had a much longer period allowing for greater public engagement. The Scottish Constitutional Convention in the 1980s and 1990s sat for six years or so. The Scotland Act 2012 was the output of a long process going back to 2007 or 2008 when the Calman commission was set up.[46]

He told us that the Commission had made an effort to encourage civil society submissions and had received a good range of them, as well as thousands of public submissions, although he was unsure whether those submissions had had much impact on the outcome of the process. He also noted that the Smith Commission "ended up being called a commission just because that is the sort of phrase that emerges in these kind of situations", but had not in fact been set up to be an evidence-driven, deliberative process of the kind normally associated with such commissions.[47]

37. Unlock Democracy was also critical of the Smith process, telling us: "The arbitrary timetable for the "vow" to Scotland agreed in the heat of the referendum campaign means that complex decisions about the future of devolution will be examined in extreme haste." We heard that:

    The timetable set by the government would be unrealistic even if the decision were one that only involved ministers and civil servants. It was determined purely by party political calculation and leaves the public no meaningful opportunity to contribute to the process. The impact the restrictive timetable will have on the decision-making process is already clear. The Smith Devolution Commission has invited the public to send in their individual views on the future of Scottish devolution, but they only have a window of 28 days to contribute. This process does not meet even the government's own guidelines for consultations, which recommend significantly longer periods of consultation for more complex issues. After the consultation process, the Commission itself then has just one month to produce proposals. This is simply not enough.[48]

Professor Nicola McEwen, of the University of Edinburgh, thought that the Smith process would not allow sufficient time for proper analysis of the implications of the new powers proposed for the Scottish Parliament:

    I think that there is probably enough time to get a set of ideas, a heads of agreement we are talking about now, but they will not scratch beneath the surface to explore whether these are workable ideas, what the implications of introducing those new responsibilities would be and how it might unfold.[49]

She suspected that the result would be that whatever came out would probably not be sustainable and "we will be back here within a few years talking about either fixing that or what next." She also noted the disparity between the level of public engagement with the referendum, and the lack of scope for engagement with the Smith process, telling us she thought "almost an exclusion of the public from the process as it is now is very unfortunate."[50]

38. Mr Mundell, however, defended the process from charges of insufficient public engagement:

    I do not agree that the public is excluded from this process. […] I think particularly in Scotland the public have been very much engaged in this debate, which is continuing. The Scotland Office, for example, is engaged at the moment in consultation sessions in relation to the detail of the clauses that have been produced and there have been events already in Aberdeen and Inverness, and there is one in Glasgow in the next few days, where people can engage directly in relation to the process. [T]here was very significant engagement and also the Smith commission itself had significant engagement. But ultimately agreement does have to be reached, and although that agreement on individual aspects was not done on a plebiscite basis, the big question was.[51]

Our view

39. The process of constitutional change which has resulted in the Smith Commission Agreement and the draft clauses for a Scotland Bill was designed to address the political demand in Scotland for a coherent and scheduled commitment to the delivery of further powers for the Scottish Parliament. It is undeniable that the Smith proposals and the draft clauses have been delivered to an extremely tight timescale. Lord Smith, his fellow Commissioners and the team of civil servants assembled to support the Commission have clearly met the Commission's brief, and the Government has ensured that the timetable for the Commission's work and its outputs has been met. It will be for the political parties which have underwritten the Smith process to ensure that commitments on the enactment of legislation are met following the general election.

40. The Smith Commission undertook its work in a political climate in Scotland already galvanised by the referendum campaign. Sustained constitutional discourse is not a novelty in Scotland: as we observed in our report on Do we need a constitutional convention for the UK?, the Scottish Constitutional Convention was established in 1989 and deliberated for six years on proposals for a Scottish Parliament which were adopted by the Government in 1997.[52] As a number of witnesses pointed out to us, the level of debate and public understanding of constitutional issues and choices in Scotland is now very high. Willie Rennie told us that "We have been debating this for three years. We know the ins and outs of how the whole system works. […] We have to run with it just now. We know more than anybody would really want to know about their constitution and I think we will make very sound decisions."[53]

41. The constitutional changes proposed in the Smith Commission Agreement are nevertheless being taken forward without detailed external scrutiny of their effect on the overall devolution settlement. As we indicate below, substantial bilateral work has been undertaken—and remains to be undertaken—on the design of machinery which will support the additional taxation and welfare powers to be granted to the Scottish Parliament, and on the fiscal framework envisaged in the Agreement, but it is not clear what account this work is taking of the likely overall effect on the UK and its constituent nations. Although, as we report below, the UK Parliament and the devolved institutions are to receive regular reports from the committees established under a renewed intergovernmental structure, it is not yet clear what opportunities there will be for Parliamentary scrutiny of the emerging settlement, over and above the formal scrutiny afforded by the legislative process.

42. The three main Westminster parties have all given undertakings that the Smith Agreement's provisions are to be enacted very early in the new Parliament. While we do not recommend any breach of these undertakings, or even any pause for greater scrutiny, we note that a substantial refashioning of the UK is being undertaken with little UK-wide debate or discussion, and relatively limited formal opportunities for Parliamentary scrutiny.

43. We welcome the level of public debate and engagement in Scotland over its constitutional future, both during and after the referendum campaign. Despite the high levels of awareness of constitutional debates, we note with concern the limited timescale for the public and civil society to be consulted as part of the Smith Commission process, and the similarly limited formal opportunities for consultation and deliberation on the Smith Agreement and the Government's draft clauses. This rushed process cannot substitute for a full deliberation on the constitutional future of all elements of the United Kingdom.

INTERGOVERNMENTAL WORKING AND PARLIAMENTARY SCRUTINY

44. The principles underlying relations between the UK Government and the devolved administrations are set out in the Memorandum of Understanding and supplementary agreements first issued in July 2000[54] and most recently issued in October 2013.[55] The intergovernmental working arrangements include a Joint Ministerial Committee (JMC) consisting of UK Government, Scottish, Welsh and Northern Ireland Ministers, with a remit to consider devolved matters falling within non-devolved responsibilities and vice versa, to keep arrangements for liaison between the administrations under review and to resolve disputes.

45. In evidence we heard that the JMC process was not working as well as it could. Rt Hon Carwyn Jones AM, First Minister of Wales, told us that the plenary sessions of the JMC were in danger of becoming "simply a meeting that airs grievances", though he acknowledged that the JMC machinery could be helpful:

    The JMC is useful as a way of exploring issues. The difficulty with it is that, where there is any dispute, it is resolved by the Treasury. We have a dispute resolution process, but ultimately UK Government can decide to do what it wants. That has to change. We have to move to a situation where there is a recognition of four nations working together as part of a sovereign state. We are a long way from that.[56]

46. Rt Hon Peter Robinson MLA, First Minister of Northern Ireland, was more caustic about the value of the JMC disputes procedure, which he also believed was under Treasury control:

    While Finance Minister, I had disputes about significant expenditure in England that was not subject to Barnett consequentials. We took that to the JMC disputes procedure, which is a useless procedure. The people who have taken the initial decision want to decide what the outcome of the arbitration should be.[57]

He thought that the JMC dispute procedure needed to be reviewed, telling us that there was a need to look at issues such as dispute resolution processes and how the devolved administrations could have a voice in Europe, as they would have priorities different from those of the rest of the UK. He also noted that there were already many good processes in place, stating:

    We have built up over the last number of years institutions and processes within the UK arising out of Northern Ireland issues, but which benefited Scotland and Wales as well, in terms of the British-Irish Council and the various working groups that it has set up where we share our views, we show what we are doing in our area and how it has made changes so that it can be picked up by other areas. So there are good processes in place.[58]

Mr Robinson concluded his comments by telling us: "At the end of the day, there are still a lot of decisions that are being taken for us, and how you get that greater input without interfering to an acceptable level with the right of a Government to take the decisions that it wishes to, that is a difficult conundrum."[59]

47. The Smith Commission considered that, in the light of the scale of the agreement reached on further devolution to the Scottish Parliament, the present intergovernmental machinery between Scotland and the UK required urgent reform and significant upscaling.[60] The views of all the devolved administrations would have to be taken into account in the revised quadrilateral machinery. Under the Smith proposals, the new arrangements would require a "new and overarching" Memorandum of Understanding, which would add to the existing memorandum the details of arrangements for the bilateral governance of the implementation of the tax and welfare powers to be devolved under Smith, and provide for additional sub-committees in areas such as home affairs, rural policy, agriculture and fisheries and social security and welfare. More effective and workable dispute resolution mechanisms are proposed, with provision for arbitration "as a last resort".[61]

48. The Commission also called for "much stronger and more transparent parliamentary scrutiny" of the operation of the devolution machinery. It envisaged the production and laying before respective Parliaments on the implementation and operation of the revised Memorandum of Understanding, and active reporting to respective Parliaments of conclusions of Joint Ministerial Committee, Joint Exchequer Committee and other inter-administration bilateral meetings.[62]

49. Baroness Randerson told us that the Silk Commission, in its second report, had made recommendations for improving the bilateral relationships between the Welsh Government and the UK Government, and that proposals to implement these recommendations had been made in the recent paper from the Secretary of State.[63] She acknowledged that the intergovernmental machinery needed reinvigoration: many of the proposals would be addressed in the overall review proposed by Smith of the institutions underpinning the devolution settlement.[64]

50. The UK Government, in the Command Paper publishing the draft clauses to give effect to the Smith agreement, has accepted the recommendation of a change to intergovernmental working practices, and has committed itself to working with the devolved administrations on a revised Memorandum of Understanding. The work was commissioned at the Joint Ministerial Committee meeting on 15 December 2014 and officials expect the work to take 'a number of months'.[65]

51. The UK Government has made no explicit proposals for Parliamentary oversight of the operation of the devolution settlement. Sir William McKay reminded us of the proposals which the McKay Commission on the consequences of devolution for the House of Commons had made for Parliamentary scrutiny of "the general development of the devolutionary settlements so far as they impacted on the House of Commons".[66] The Commission had proposed a select committee of the House of Commons which could, for example, draw the attention of Members to legislative consent motions passed in the devolved parliaments, examine how best to deal with cross-border spillovers in UK legislation, and consider the working of the Barnett formula.[67]

52. The Government has accepted the Smith Commission proposals for greater involvement of the UK Parliament and the devolved institutions in the functioning of the intergovernmental arrangements for devolution. We welcome the proposal of the Smith Commission that the UK Government and the devolved administrations should lay reports on the implementation and effective operation of the revised Memorandum of Understanding before their respective legislatures. We further welcome the proposal for stronger and more transparent Parliamentary scrutiny inherent in the proposal that conclusions of all inter-administration committee meetings be reported as a matter of course.

53. A commitment to regular reporting to Parliaments is beneficial, and promotes transparency at the heart of the intergovernmental process. However, if there is no corresponding mechanism for Parliamentary scrutiny of such reports then they are in danger of becoming formulaic. We therefore recommend that the House of Commons develop a mechanism for systematic and effective scrutiny of the intergovernmental operation of the devolution settlement. A quadripartite Devolution Committee, comprising the three territorial select committees and the committee with oversight of the Government department with responsibility for constitutional policy, could be established along the lines of the present Quadripartite Committee on Arms Export Controls. Such a committee could consider the regular reports to Parliament from the Joint Ministerial Committee, undertake the tasks contemplated by the McKay Commission, and keep the operation of the devolution settlement under review.

INTRAGOVERNMENTAL WORKING

54. Professor Jim Gallagher, speaking from long experience of working on devolution issues within the UK Government, proposed a re-examination of the governmental structures supporting the devolution settlement:

    Now that the decision is made that Scotland remains in the United Kingdom, we should start thinking about how we manage this stably for the long run. […] [W]hat you do need is a substantial institution of government, that is to say resources and people who are dedicated to this task over the long run. If I may, I will offer you two reasons why. The first is a simple and obvious managerial one. I worked for 35 years in government, and the one lesson I learnt […] was the things that I put resources behind were done and the things that I did not put resources behind did not get done. The blunt truth is that the UK Government has not put substantial resources behind the management of its territorial nature. […] [T]he Scotland Office and the Wales Office […] are tiny departments with almost no staff and the resources that they would need are an order of magnitude short of the task that they should have.[68]

He indicated what the priorities for greater resources should be:

    [You] would make sure that there was an understanding both here in Westminster and Whitehall, but also in Edinburgh and Cardiff and London, that the UK Government had a role and responsibility and was discharging it. Successive Secretaries of State for Scotland have struggled to make their own place and find their space. Secretaries of State for Wales have moved in and out of that capacity over the years, depending essentially on their political relationships. Similarly, to be fair, Secretaries of State for Scotland have depended on their personality and style.[69]

55. Although Professor Gallagher indicated that he was in favour of replacing the territorial Secretaries of State with a Minister for the Union, the Parliamentary Under-Secretary of State for Scotland was not convinced:

    I think [that the Secretary of State] is a very important part of the settlement […] with Scotland. Scotland has a seat at the Cabinet table and within the UK and Scotland's distinct interests can be represented around that table. I think the shape of the Government must ensure that individual parts of the United Kingdom have the opportunity to have their distinct needs voiced at the Cabinet.[70]

Baroness Randerson, who represents the Wales Office and the Northern Ireland Office in the House of Lords, also argued for retaining territorial Ministers and departments:

    One of the things that constantly surprises me day after day is the differences between the two settlements and the fact that they are very different settlements from a very different historical perspective. I can sit and read something that the UK Government is proposing to do and I will immediately think through the different channels it will take within the two countries and that it will be received differently in the two countries as a result. If you amalgamate things in one government department, not only do you lose the benefit of three different voices at the Cabinet table—you only have one—but you also lose that understanding and nuance across government of the difference between the three settlements.

    It is also worth pointing out that of course the territorial departments have two roles. They have the role of making sure that the UK Government's views are known appropriately in the individual country, but they also are responsible for making sure that each individual country is able to put its point of view effectively within the UK Government. We are kind of liaison departments, one to the other. I wonder how that could be done effectively, bearing in mind the difference in the settlements, if you amalgamate it into one department.[71]

Akash Paun, of the Institute for Government, took a realistic view of the proposal:

    I think it would be sensible to have more joined-up thinking about how the different bits of our territorial constitution operate and interact. That idea has been floating around for years. I know it was proposed to Tony Blair several times when he was Prime Minister. It might have some benefits, but even if you were to do it you would still have at least three very different devolution settlements with different relationships with Whitehall or Westminster. However you set up the Government machinery in Whitehall, you would still have quite different issues to manage with respect to the different parts of the country. It would not change that.[72]

Our view

56. We acknowledge the benefits to the Union, and to relationships with the devolved institutions, of territorial Secretaries of State and Ministers who can provide effective liaison between the UK Government and the devolved institutions. It is important to the Union that all its elements are represented at the Cabinet table.

57. Since the advent of devolution the territorial departments supporting Ministers have diminished substantially in size. We have received no evidence on the impact of the reduction in size of territorial departments on their effectiveness, but we note Professor Gallagher's observation about the relationship between Government resource and outcomes. Similarly, we note that the three territorial departments are set up to work with devolution settlements which are very different in nature.

58. There is clearly scope for greater joined-up thinking between territorial departments, and between those departments, the rest of Whitehall and the devolved administrations, on the way the Union can operate. At a point when the intergovernmental machinery is being examined and retuned, it may also be appropriate for intragovernmental operations to be examined, in order that Ministers are better supported in their objectives in managing both the Union and the devolution settlement.

59. We recommend that the Government review the resources and structure of the departments which presently support the territorial Secretaries of State, with a view to more effective management of the territorial constitution.


6   Results published by Electoral Management Board for Scotland, www.electionsscotland.info . The referendum question was 'Should Scotland be an independent country?'. Back

7   Scottish Independence Referendum: Report on the referendum held on 18 September 2014, Electoral Commission, December 2014 Back

8   The Centre on Constitutional Change published a copy of the statement: http://www.centreonconstitutionalchange.ac.uk/news/joint-statement-more-devolution-uk Back

9   HC Deb, 10 September 2014, col 900  Back

10   "The Vow", Daily Record, Tuesday 16 September 2014 Back

11   Q265 Back

12   Local Government Association (PRD 0075), para 3.3 Back

13   Corporation Tax (Northern Ireland) Bill 2014-15 Back

14   The representatives put forward by the parties were: Annabel Goldie MSP, Scottish Conservative and Unionist Party, Adam Tomkins, Scottish Conservative and Unionist Party, Maggie Chapman, Scottish Green Party, Patrick Harvie MSP, Scottish Green Party, Gregg McClymont MP, Scottish Labour, Iain Gray MSP, Scottish Labour, Tavish Scott MSP, Scottish Liberal Democrats, Michael Moore MP, Scottish Liberal Democrats, John Swinney MSP, Scottish National Party, and Linda Fabiani MSP, Scottish National Party. Back

15   The parties' published proposals on further devolution for Scotland, Scotland Office, Cm 8946, October 2014 Back

16   More powers for the Scottish Parliament: Scottish Government proposals, Scottish Government, October 2014, and Scottish Green Party submission to Smith Commission on Devolution, Scottish Green Party, October 2014 Back

17   Report of the Smith Commission for further devolution of powers to the Scottish Parliament, The Smith Commission, November 2014 Back

18   Scotland Office, Scotland in the United Kingdom: An enduring settlement, Cm 8990, January 2015 Back

19   Political and Constitutional Reform Committee, Constitutional implications of the Government's draft Scotland clauses, Ninth Report of Session 2014-15, HC 1022, para 12 Back

20   Commission on Devolution in Wales, Empowerment and Responsibility: Financial Powers to Strengthen Wales, November 2012 and Empowerment and Responsibility: Legislative Powers to Strengthen Wales, March 2014 Back

21   Record of Proceedings, National Assembly for Wales, 21 October 2014 Back

22   Powers for a purpose: Towards a lasting devolution settlement for Wales, Wales Office, Cm 9020, February 2015 Back

23   Northern Ireland Office, The Stormont House Agreement and The Stormont House Agreement-Financial Annex, December 2014 Back

24   Scottish Affairs Committee, The implementation of the Smith Agreement, Fourth Report of Session 2014-15, HC 835, para 57 Back

25   Q408 Back

26   Q64 Back

27   Ibid. Back

28   Institute for Government (PRD 0083) Back

29   Ibid. Back

30   Q512 Back

31   Q435 Back

32   Q491 Back

33   Institute for Government (PRD 0083) Back

34   Q511 Back

35   Q366 Back

36   Q298 Back

37   Q511 Back

38   A keynote speech by the Rt Hon Carwyn Jones AM, Minister of Wales: Our future union-a perspective from Wales, Institute for Government, October 2014 Back

39   Record of Proceedings, National Assembly for Wales, 3 March 2015 Back

40   IbidBack

41   Q513 Back

42   Q411 Back

43   Dr Robin Wilson (PRD 0068), para 17 Back

44   Ibid. Back

45   Q427 Back

46   Ibid. Back

47   Ibid. Back

48   Unlock Democracy (PRD 0057), para 7 Back

49   Q36 Back

50   Ibid. Back

51   Q514 Back

52   Political and Constitutional Reform Committee, Do we need a constitutional convention for the UK?, Fourth Report of Session 2012-13, HC 371, paras 21-23 Back

53   Q267 Back

54   Memorandum of Understanding and supplementary agreements between the United Kingdom Government, Scottish Ministers, the Cabinet of the National Assembly for Wales and the Northern Ireland Executive Committee, Cm 4806, July 2000 Back

55   Memorandum of Understanding and Supplementary Agreements, October 2013 Back

56   Q369 Back

57   Q496 Back

58   Q508 Back

59   Ibid. Back

60   Report of the Smith Commission for further devolution of powers to the Scottish Parliament, The Smith Commission, November 2014, para 28 Back

61   Ibid. Back

62   Report of the Smith Commission for further devolution of powers to the Scottish Parliament, The Smith Commission, November 2014, para 28 Back

63   Q526 Back

64   Q526 Back

65   Scotland in the United Kingdom: An enduring settlement, Scotland Office, Cm 8990, January 2015, paras 9.2.2. and 9.2.3 Back

66   Sir William McKay (PRD 0073), para 28 Back

67   Ibid. Back

68   Q83 Back

69   Q84 Back

70   Q527 Back

71   Q527 Back

72   Q423 Back


 
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Prepared 29 March 2015