Lord Smith and his report on devolution to Scotland. Photo: Getty
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The PM, Labour, SNP and the BBC: the political muddle of Scottish devolution

The Smith Commission says Scotland should set its income tax: what is the politics behind this decision?

A colourful taste of the fraught politics surrounding the Scottish independence debate has returned. As the Smith Commission – the body tasked with deciding how much further power to devolve to Holyrood after the No vote – says Scotland should have full control over its income tax rates, questions emerge about the politics behind this decision.

How come Labour, once against such all-encompassing fiscal control, has come to agree with the Tory stance? What does such a decision mean for the SNP? And how does the new devolution plan tie in with the BBC, which was so derided during the referendum campaign by Yes supporters?
 

Labour and the Conservatives

The Labour party, though the original drivers of devolution to Scotland 15 years ago, were against Scotland having full tax autonomy. In the build-up to the referendum, when the leaders made their “Vow” for more power to Scotland in the event of a No vote, the details on this were murky because Labour disagreed with the Tories about devolving full income tax powers to Scotland.

The reasons behind their opposition are three-fold.

First, the party disagreed with the principle of splitting power in this way, fearing it would undermine the UK’s fiscal union, something the Labour MP and former Better Together campaign leader Alistair Darling has voiced today.

Second, Labour was suspicious of the Conservative-led government’s intentions of backing full income tax powers for Scotland. With Scotland having greater fiscal and welfare spending responsibility, it would have to make the difficult, and often unpopular decisions, which would mean there would be less blame on Westminster and its austerity drive.

Third, giving such extensive economic autonomy to Scotland would raise the “English votes for English laws” question, where it would be argued by the Tories that Scottish MPs should no longer be able to vote on English tax matters. Labour would fear this because such a system would scupper a future Labour government, particularly one with a small, or no, majority. If its Scottish MPs are unable to vote through its budgets, it would be severely crippled. Tory MPs calling to restrict Scottish MPs’ voting rights have renewed the momentum today begun by David Cameron's speech the morning after the referendum result, when he said: "We have heard the voice of Scotland and now the millions of voices of England must be heard," 

Now that the Smith Commission has made its recommendations, Labour has had to do an about-turn. Jim Murphy, the Labour MP and candidate for leader of Scottish Labour, told the BBC this morning that he had “changed my mind” on the matter, due to listening to the “wishes of the people of Scotland”. “I’ve changed my mind,” Murphy said. “ . . . the Labour party and others changed our mind. We reflected on the wishes of the people of Scotland. Because it wasn’t enough simply to win the referendum. We had to bring Scotland together.”

Although Darling, a high-profile Labour figure, is today expressing his reservations with the Smith Commission’s findings, and former Labour Prime Minister Gordon Brown has previously called such a plan a “Tory trap”, it looks like Labour will have to come round to Murphy’s line and accept the Commission’s recommendations. Not least because the party needs to win back support in its Scottish seats, and such measures are popular.

Such measures are also in keeping with the spirit of the “Vow”, the promise the three Westminster party leaders made pre-referendum to give Scotland more power. This is also problematic for Labour. Having spoken to a source close to the Commission, I reported in October that Labour figures on the Smith Commission resented Brown’s 11th-hour “home rule” intervention in Scotland, because it meant they had to fall in line with further devolution to Scotland than they were comfortable with. The irony is that Brown opposed handing over full income tax control, but the zeal of speechmaking in an attempt to save the Union meant the Scottish people expected a great deal more than he meant.

 

The SNP and the BBC

What does the SNP think about the Smith Commission’s report? Other parties fear such powers would bring independence in by the “backdoor”, but is it really positive direction for Scotland’s nationalists?

If it is, that isn’t the SNP’s line. Although welcoming any new powers to Scotland, it is suggesting that the Commission’s package does not amount to the “home rule” the Scottish people were promised. The BBC reports the First Minister Nicola Sturgeon commenting that it is ultimately disappointing:

70 per cent of our taxes continue to be set at Westminster, 85 per cent of social security controlled at Westminster – this parliament responsible for less than half of the money we will spend . . . It's not so much the home rule that was promised – in so many respects, it's continued Westminster rule.

However, a small triumph for the SNP could be what the Smith Commission means for BBC Scotland. In a revealing piece by an insider on the website NewsnetScotland this week, the big question about the Commission is: Will there be any sort of devolution of broadcasting?

 . . . there is a working possibility that the SNP contingent on the commission may sneak in an apparently anodyne small measure, perhaps in exchange for dropping its insistence on something more high-profile.

The only suggestion that matters to the BBC is the possibility that Scottish Parliament Committees might be empowered to order BBC executives to attend and answer questions, as their counterparts at Westminster can do. It’s that prospect which is causing bums to squeak here at “PQ” [Pacific Quay] . . .

If the Smith Commission recommends devolving any part of the regulation of broadcasting, there is a real possibility that BBC Scotland executives would have to answer questions about their behaviour . . .

If the Smith Commission puts broadcasting devolution into the realms of possibility, heads may roll quickly, and you may even see a BBC re-think on the SNP’s role in the pre-election BBC Leaders’ Debate strategy.

And here’s what the Commission report says:

There will be a formal consultative role for the Scottish Government and the Scottish Parliament in the process of reviewing the BBC’s Charter. The BBC will lay its annual report and accounts before the Scottish Parliament and submit reports to, and appear before, committees of the Scottish Parliament in relation to matters relating to Scotland in the same way as it does in the UK Parliament.

This could give the SNP – whose Yes campaigners protested against the BBC’s coverage of the referendum campaign – a chance to scrutinise the broadcaster that its supporters so vehemently fell out with.

Another political tangle worth noting here is that there is a similar antipathy on the Unionist side. Many pro-independence figures claimed they experienced bullying and aggression from Yes campaigners during the campaign, and there are some very high up in the Westminster establishment who blame the BBC for refusing to report the extent of this in its attempt to remain impartial. One cabinet minister tells me this aspect of the campaign “has fundamentally shaken my faith in the BBC”.

***

With Labour siding with the Conservatives on devolution to Scotland, and some Westminster figures' disappointment in the BBC reflecting the Yes campaign's hostility, it's clear the Smith Commission report is the product of a very tricky political knot – which this report comes nowhere near to untangling.

Anoosh Chakelian is senior writer at the New Statesman.

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John Major's double warning for Theresa May

The former Tory Prime Minister broke his silence with a very loud rebuke. 

A month after the Prime Minister stood in Chatham House to set out plans for free trading, independent Britain, her predecessor John Major took the floor to puncture what he called "cheap rhetoric".

Standing to attention like a weather forecaster, the former Tory Prime Minister warned of political gales ahead that could break up the union, rattle Brexit negotiations and rot the bonds of trust between politicians and the public even further.

Major said that as he had been on the losing side of the referendum, he had kept silent since June:

“This evening I don't wish to argue that the European Union is perfect, plainly it isn't. Nor do I deny the economy has been more tranquil than expected since the decision to leave was taken. 

“But I do observe that we haven't yet left the European Union. And I watch with growing concern  that the British people have been led to expect a future that seems to be unreal and over-optimistic.”

A seasoned EU negotiator himself, he warned that achieving a trade deal within two years after triggering Article 50 was highly unlikely. Meanwhile, in foreign policy, a UK that abandoned the EU would have to become more dependent on an unpalatable Trumpian United States.

Like Tony Blair, another previous Prime Minister turned Brexit commentator, Major reminded the current occupant of No.10 that 48 per cent of the country voted Remain, and that opinion might “evolve” as the reality of Brexit became clear.

Unlike Blair, he did not call for a second referendum, stressing instead the role of Parliament. But neither did he rule it out.

That was the first warning. 

But it may be Major's second warning that turns out to be the most prescient. Major praised Theresa May's social policy, which he likened to his dream of a “classless society”. He focused his ire instead on those Brexiteers whose promises “are inflated beyond any reasonable expectation of delivery”. 

The Prime Minister understood this, he claimed, but at some point in the Brexit negotiations she will have to confront those who wish for total disengagement from Europe.

“Although today they be allies of the Prime Minister, the risk is tomorrow they may not,” he warned.

For these Brexiteers, the outcome of the Article 50 negotiations did not matter, he suggested, because they were already ideologically committed to an uncompromising version of free trade:

“Some of the most committed Brexit supporters wish to have a clean break and trade only under World Trade Organisation rules. This would include tariffs on goods with nothing to help services. This would not be a panacea for the UK  - it would be the worst possible outcome. 

“But to those who wish to see us go back to a deregulated low cost enterprise economy, it is an attractive option, and wholly consistent with their philosophy.”

There was, he argued, a choice to be made about the foundations of the economic model: “We cannot move to a radical enterprise economy without moving away from a welfare state. 

“Such a direction of policy, once understood by the public, would never command support.”

Major's view of Brexit seems to be a slow-motion car crash, but one where zealous free marketeers like Daniel Hannan are screaming “faster, faster”, on speaker phone. At the end of the day, it is the mainstream Tory party that will bear the brunt of the collision. 

Asked at the end of his speech whether he, like Margaret Thatcher during his premiership, was being a backseat driver, he cracked a smile. 

“I would have been very happy for Margaret to make one speech every eight months,” he said. As for today? No doubt Theresa May will be pleased to hear he is planning another speech on Scotland soon. 

Julia Rampen is the editor of The Staggers, The New Statesman's online rolling politics blog. She was previously deputy editor at Mirror Money Online and has worked as a financial journalist for several trade magazines.