The Calman report on Scottish devolution has surprised its critics and will likely speed major constitutional reform
The Calman Commission on the future of Scottish devolution, which published its report last month, has astonished its many critics by producing a radical, informed and highly readable document, which has made a major contribution to the debate over constitutional reform.
Sir Kenneth Calman might not have found a perfect replacement for the Barnett Formula but he might be close. The report recommends that Holyrood must move from being dependent on hand-outs from Westminster to a grown-up legislature responsible for raising money as well as spending it.
Even the Scottish National Party has belatedly endorsed much of the report, though it disagrees with Calman’s mechanism for achieving fiscal autonomy.
The commission was the initiative of former Scottish Labour leader Wendy Alexander 18 months ago. She said it was the time to review devolution to date and map out the future. She won the backing of the other opposition parties in Scotland, and the Scottish Parliament voted to establish the commission with Calman, former chief medical officer for Scotland, as its chair.
The SNP government initially dismissed this as an empty unionist exercise since the commission was set up to find ways of strengthening the union with England and its remit specifically excluded independence. But paradoxically (and this has been a major strength), it has sought to support the union by loosening the ties that bind it.
Calman’s report says devolution has been a success and is here to stay. However, it believes that Holyrood lacks powers, especially economic, to ensure stability and responsibility in legislative affairs. It calls for powers over minor issues such as air guns, elections, drink driving laws and so on, to be devolved immediately, and for the Scottish Parliament to be able to introduce local income tax without financial penalty from London. These have all caused controversy in Scotland in the recent past because Westminster has, for example, vetoed the SNP government’s proposal to abolish council tax.
But it is in the field of direct taxation that Calman is most radical. The commission sought advice on tax powers from an independent group on financial accountability, chaired by Professor Anton Muscatelli, principal of Heriot-Watt University. He looked at various models for funding sub-national parliaments and suggested a mix of grant funding, tax devolution and tax assignment for Holyrood.
Calman says any new fiscal settlement must meet the tests of equity, autonomy, accountability and transparency. It should: be fair, ensuring Scotland doesn’t lose out; allow Scotland its own tax base; make politicians responsible for raising the money they spend; and be transparent, so voters can see clearly where the money is coming from and where it is being spent.
Calman’s main proposals are to allow Holyrood to raise half of income tax by giving it power to vary the Scottish rate by 10p; to have standalone taxes such as stamp duty; and to be able to create its own new taxes, subject to Treasury approval. The Scottish Government should also be able to borrow for capital projects on an annual basis.
These proposals have been criticised on a number of grounds. Why only half of income tax, if the principle is accountability? Would it make sense to go to the expense of collecting a separate tax in Scotland if not giving full responsibility to Holyrood?
Most important for the SNP is why Scotland should not have access to North Sea oil revenues. Calman doesn’t rule this out but argues it would not be in Scotland’s interest to depend on a resource that can vary in price from $50 to $150 a barrel in less than a year.
There will be intense debate about these mechanisms. But what is most remarkable about the Calman report is that it has been endorsed by all the opposition parties, including the Scottish Conservatives. It could be the basis for negotiations between an incoming Conservative UK government and First Minister Alex Salmond. In exchange for the abolition of the Barnett Formula and the West Lothian question, it is likely that Conservative leader David Cameron will be prepared to go at least as far as Calman towards fiscal autonomy.
This is a landmark report that could fundamentally change the nature of the UK constitution. Any way you look at it, a federal Scotland seems highly likely within two years.
Iain Macwhirter is a political commentator on the Sunday Herald
