Conclusions and recommendations
Conclusions are in plain text, recommendations are
italicised.
Draft clauses
1. We are surprised
that the Scottish Government did not raise its concerns when it
was initially consulted over the draft text of the clauses but
instead waited until after publication to air them. Lord Smith
called for both Governments "to work together to create a
more productive, robust, visible and transparent relationship".
Of course the timetable was tight but on this occasion the working
relationship between the UK and Scottish Governments fell markedly
short of Lord Smith's aspiration. (Paragraph 14)
2. The idea that the
draft clauses contain "twelve vetoes" is a ludicrous
one and it is disappointing that the UK Government failed adequately
to rebut such claims. We hope that a good working relationship
between the two Governments will mean that consultation will be
routine, agreement a formality, and that dispute will not arise.
On such a basis some might question why requirements to consult
are included in the draft clauses at all; in the interests of
good governance and good legislation it is right that they are
there, but we remain of the view that the UK Government should
have been better able to explain the clauses and to have avoided
the unnecessary conflict and confusion which was used to detract
from the real substance of this legislative package. (Paragraph
18)
3. The recommendations
on welfare confer broad powers that would allow the Scottish Government
to increase any benefit and create new benefits in devolved areas.
In effect, the only powers the Scottish Government will not have
over welfare are the powers to cut or completely redesign benefits
in reserved areas; this presents the Scottish Government with
substantial powers to shape the welfare system in Scotland. (Paragraph
21)
4. The Smith Agreement
clearly states that the Scottish Government will have the power
to make discretionary payments in any area of welfare so long
as it is able to fund them. If the discretionary payments are
to come out of the Scottish Government's budget then it should
be for the Scottish Government, not the UK Government, to set
the terms and conditions under which those payments can be made.
We recommend that draft clause 18 be amended to give the Scottish
Government broader powers over the application of discretionary
payments. Such a change will make it clear to the people of Scotland
that they have the benefit of the security of the UK welfare state
while, at the same time, the Scottish Government has the capacity
to provide more generous welfare support should it wish to do
so. (Paragraph 24)
A revised fiscal framework
5. The updated
fiscal framework should account for circumstances where there
might be a direct link between a particular tax and specific public
spending. It would not be fair for Scotland to benefit from public
spending in reserved areas that was directly based on revenues
raised in the rest of the UK. We note, however, the recommendation
of the Smith Commission that the UK Government has the power to
levy a UK-wide tax if it is in the national interest to do so.
(Paragraph 32)
6. The potential for
grievance over the operation of the no detriment principle is
enormous. If the Smith Agreement is to be an enduring settlement
both Governments must work together in good faith and agree a
mechanism to administer a policy of no detriment that is proportionate,
fair and based on independently verified data. (Paragraph 35)
7. Whatever the mechanism
decided upon, the new fiscal framework must have the support of
both Governments and deliver a robust set of fiscal rules that
are fair, transparent and which allow the Scottish Government
the power to exercise its new responsibilities while bearing the
consequences of its actions. (Paragraph 39)
Full fiscal autonomy
8. The collapse in
the oil price is a stark reminder of the risks that face economies
which rely on a volatile revenue stream to fund a large proportion
of their public spending. The conclusion of the Smith Commission
not to devolve such a volatile source of revenue, nor to recommend
full fiscal autonomy, but instead to retain the system of shared
benefit and pooled risk across the United Kingdom has already
proved to be a wise decision, and one that is of obvious and immediate
benefit to the people of Scotland. (Paragraph 52)
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