The Green Ribbon

Brown U-turn on fiscal devolution

Today brought yet another twist in the saga of the ‘Wendy Commission’, the devolution plan put forward by Labour’s Holyrood leader in opposition to the Scottish Government’s National Conversation.

Backing her plans for a fresh study of devolution, Mr Brown said: "There is an issue about the financial responsibility of an executive or an administration that has £30bn to spend but doesn’t have any responsibility for raising [that].

"In any other devolved administration in the world, there is usually a financial responsibility that requires not only the spending of money by the administration but also its responsibility to take seriously how it raises money." (BBC News)

In the wake of last week’s internal Labour squabbles, Brown has come out in support of Wendy Alexander, and dissociated himself from David Cairns’ ‘McChattering classes‘ comments.

However, his suggestion that Westminster could take some powers back from Holyrood will only increase concerns that Alexander’s proposed constitutional commission is being downgraded into a review under tight control from Westminster.

It is currently being suggested that the appointment of Menzies Campbell as chairman might boost the commission’s credibility.

The Lib Dems will want to ensure that Campbell is not exploited by Brown as he was when he was Lib Dem leader. That requires a commission with a strong remit that can deliver their policy of devolving tax powers to Holyrood.

Brian Taylor, interviewed Gordon Brown for the Politics Show, questions that possibility on his blog:

The snags? You might choose to assign VAT or corporation tax. But European Union rules almost certainly preclude a devolved Scotland from varying the rate of those taxes. Which rather defeats the purpose of allowing fiscal discretion. (Blether With Brian)

That snag may already have been removed by the review of taxation in Northern Ireland, which Brown commissioned from Sir David Varney. As I noted at the time over at OurKingdom, the report concluded that EU law was not an obstacle to fiscal devolution:

A move to a differential corporation tax rate for Northern Ireland would be possible in principle. However, it would involve legislative changes and legal issues would affect the design of such a scheme. Also, the fiscal consequences of such a move would have to be borne immediately by the Northern Ireland Assembly.
Varney Report

Varney nevertheless came out against any significant changes to Northern Ireland taxation for other reasons. Given Scotland’s greater significance in British politics, and the raised expectations there, the Scots are in a much better position to extract concessions which may ultimately have to be extended to the other side of the North Channel as well.
 

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3 responses to “Brown U-turn on fiscal devolution”

  1. DougtheDug avatar
    DougtheDug

    Brown has graciously permitted the commission to look at revenue raising because if he doesn’t then the commission will never get off the ground.
    Annabel Goldie and Nicol Stephen voted for the motion in the Scottish Parliament based on the speech that Wendy Alexander gave on St. Andrews Day. Wendy Alexander specifically said,
    “One key issue, which must be part of these efforts, is to strengthen the financial accountability of the Scottish Parliament. In short the financing of the Parliament almost wholly through grant funding does not provide the proper incentives to make the right decisions. Hence strengthening the financial accountability of the Scottish Parliament by moving to a mixture of assigned and devolved taxes and grant is something the Commission should consider.”
    http://www.scottishlabour.org.uk/a_new_agenda_for_scotland
    Brown has been in the news as has David Cairns talking about the remit of this commission. What has been noticeably absent is any comment from the Conservatives or from the Lib-Dems on the remit of the commission despite it being promoted as a cross-paryt effort.
    Both Goldie and Stephen know they’ve been had and have been suckered into supporting a Labour led and driven review of devolution. Anything such as a refusal to discuss the finance raising powers of the Scottish Parliament would give them a get out clause and enable them to withdraw without looking like fools.
    Brown is politician enough not to give them this get out clause but not politician enough to bring the other parties into considering the remit.
    I think any idea of bringing Menzies Campbell in as Chairman would be fraught with difficulty.
    The motion all the unionist parties signed up to in the Parliament specifically says, “an independently chaired commission”.
    http://www.scottish.parliament.uk/business/officialReports/meetingsParliament/or-07/sor1206-02.htm#Col4267

    Reply
  2. Tom Griffin avatar
    Tom Griffin

    Can you think of anybody of sufficient stature who would go for it? Maybe what they need is a distinguished economist, perhaps someone who has made favourable comments about fiscal devolution in the past…

    Reply
  3. DougtheDug avatar
    DougtheDug

    I would have thought the obvious choice would be Canon Kenyon Wright who chaired the Scottish Constitutional Convention which lead to the Scottish Parliament.
    Unfortunately he’s involved with the pre-existing, “Scottish Constitutional Commission”, and might not want to get involved in a rival organisation.
    http://www.constitutionalcommission.org/
    Gordon and Wendy apparently forgot about Canon Kenyon Wright and his commission when they proposed their own version.
    Another possible is Professor Arthur Midwinter. He was nicknamed “Bleak” Midwinter by nationalist commenters for his pronouncements of financial doom if the SNP were ever victorious.
    “Professor Arthur Midwinter, Visiting Professor, Institute of Public Sector Accounting Research, University of Edinburgh
    Arthur Midwinter retired as Dean of the Faculty of Arts and Social Sciences at the University of Strathclyde, in 1999. Since then, he has concentrated on consultancy and research, and was appointed Visiting Professor in the Institute of Public Sector Accounting Research at The University of Edinburgh in 2004.
    Professor Midwinter has extensive experience of consultancy work for local government, health boards and public sector agencies. He was commissioned to write a “brief history of local government finance in Scotland” for the Burt Committee. He was Budget Adviser to the Scottish Parliament’s Finance Committee from 2002-2007, and was appointed Financial Adviser to Labour’s Shadow Cabinet by Wendy Alexander MSP, in September 2007.”
    Bio from:
    http://www.cipfa.org.uk/scotland/conference/speakers.cfm
    Maybe he’s not visibly independent enough though. The choice will be Mr. Brown’s but the qualifications needed will be:
    Unionist
    Labour
    Willing to do Gordon’s bidding.
    There’s probably a lot of those in Scotland to choose from.

    Reply

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