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”.

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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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How Theresa May laid a trap for herself on the immigration target

When Home Secretary, she insisted on keeping foreign students in the figures – causing a headache for herself today.

When Home Secretary, Theresa May insisted that foreign students should continue to be counted in the overall immigration figures. Some cabinet colleagues, including then Business Secretary Vince Cable and Chancellor George Osborne wanted to reverse this. It was economically illiterate. Current ministers, like the Foreign Secretary Boris Johnson, Chancellor Philip Hammond and Home Secretary Amber Rudd, also want foreign students exempted from the total.

David Cameron’s government aimed to cut immigration figures – including overseas students in that aim meant trying to limit one of the UK’s crucial financial resources. They are worth £25bn to the UK economy, and their fees make up 14 per cent of total university income. And the impact is not just financial – welcoming foreign students is diplomatically and culturally key to Britain’s reputation and its relationship with the rest of the world too. Even more important now Brexit is on its way.

But they stayed in the figures – a situation that, along with counterproductive visa restrictions also introduced by May’s old department, put a lot of foreign students off studying here. For example, there has been a 44 per cent decrease in the number of Indian students coming to Britain to study in the last five years.

Now May’s stubbornness on the migration figures appears to have caught up with her. The Times has revealed that the Prime Minister is ready to “soften her longstanding opposition to taking foreign students out of immigration totals”. It reports that she will offer to change the way the numbers are calculated.

Why the u-turn? No 10 says the concession is to ensure the Higher and Research Bill, key university legislation, can pass due to a Lords amendment urging the government not to count students as “long-term migrants” for “public policy purposes”.

But it will also be a factor in May’s manifesto pledge (and continuation of Cameron’s promise) to cut immigration to the “tens of thousands”. Until today, ministers had been unclear about whether this would be in the manifesto.

Now her u-turn on student figures is being seized upon by opposition parties as “massaging” the migration figures to meet her target. An accusation for which May only has herself, and her steadfast politicising of immigration, to blame.

Anoosh Chakelian is senior writer at the New Statesman.

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