Cameron promises fast-track constitutional reform after Scots vote no

19 Sep 14
Prime Minister David Cameron today set Britain on a headlong programme of constitutional reform, after the people of Scotland voted by a 55-45% margin in yesterday’s referendum to reject the option of independence from the UK.

By Keith Aitken in Edinburgh | 19 September 2014

Prime Minister David Cameron today set Britain on a headlong programme of constitutional reform, after the people of Scotland voted by a 55-45% margin in yesterday’s referendum to reject the option of independence from the UK.

Scotland votes No

In a dawn statement at Downing Street, Cameron promised that the unionist parties would honour their last-minute pledge to Scots of increased fiscal and welfare devolution, and announced that the industrialist Lord Smith of Kelvin had been asked to formulate proposals within the ambitious pre-general election timetable outlined to Scottish voters by former Labour prime minister Gordon Brown.

The prime minister moved to ease growing unrest among his own English backbenchers by announcing that the reforms would also seek to deliver a ‘fair and balanced settlement’ of the so-called West Lothian Question, concerning the continued right of Scottish MPs to take part in Commons votes on subject areas that are devolved to Holyrood. 

In Scotland, a visibly disappointed First Minister Alex Salmond undertook that his Scottish National Party government would co-operate fully and constructively with the process, as agreed under his 2012 Edinburgh Agreement with Cameron. But he also warned Cameron not to renege on the promised extra powers for Holyrood. ‘Scotland will expect these to be honoured in rapid course,’ Salmond said.

Reinforcing this warning is the fact that the referendum, though not producing as close a result as the later polls had predicted, demonstrated a high and continuing degree of dissatisfaction with Scotland’s treatment under the British state.  

Across the country, 2,001,926 people voted No and 1,617,989 voted Yes on a massive 84.6% turnout, following a two-year campaign which both sides of the debate agreed had energised Scottish civic life and re-engaged Scots with the business of politics. 

It has also decoupled the cause of independence from the SNP, and won over many Scots who have never voted for the nationalists. A clear majority of voters in the biggest Scottish city – and one-time Labour heartland – of Glasgow voted in favour of independence.

Cameron’s statement effectively acknowledged the consequent need to deliver in full on what was promised, not least to expunge bitter memories of the 1979 devolution referendum, when Lord Home promised a better devolution scheme that never materialised. However, Smith and the UK government face some major challenges in honouring the pledge.

The highly ambitious Brown timetable – a white paper next month, a draft Bill in January, a Second Reading in March, and a final legislative version by May – was endorsed by all three unionist parties, but their proposals for reform remain both sketchy and significantly different from each other.

Conservatives are offering Holyrood full control of income tax, and have undertaken to devolve some aspects of social security such as Housing Benefit. Labour would give Holyrood power to vary the basic rate by up to 15p and to introduce a new 50p rate for top earners, while the Liberal Democrats favour a federal UK within which Holyrood would control most of the fiscal regime.

These new powers are in addition to the 2012 Scotland Act, which will give Holyrood power to vary the basic rate of income tax above 10p in the pound from 2016, and control over some minor taxes like stamp duty.

But it is now clear that the package will need to contain other, highly tricky, elements. Cameron has faced mounting backbench anger, echoed by London Mayor Boris Johnson, over ‘concessions’ made to Scotland, and has today bowed to demands to resolve the issue of Scottish MPs voting on non-Scottish issues.

The three unionist parties also promised during the campaign that the new tax powers would not bring an end to the Barnett Formula, which determines consequential shares of Westminster decisions for the budget block grants to the devolved administrations.

But it has always been hard to envisage southern backbenchers continuing to swallow Barnett, which gives Scotland a per-capita advantage, were Holyrood to use its new powers either to cut taxes below English levels as an investment incentive, or raise them to fund better public services. The more tax powers Holyrood gains, the harder that circle looks to square.

Meanwhile, Wales and Northern Ireland, which feel disadvantaged by Barnett, are also now piling on pressure for a fairer deal.  The Cardiff and Belfast governments plan to meet to discuss joint post-referendum strategy, and Plaid Cymru leader Leanne Wood said Wales would henceforth expect to keep pace with any constitutional gains granted to Scotland.

Meanwhile, CIPFA today offered to lend its expertise to the reform process to redress what it highlighted during the campaign as a lack of reliable information about the Scottish public finances.

CIPFA Scotland head Don Peebles said:‘As new powers over taxation and spending are given to Scotland it must be acknowledged that neither the Scottish nor UK Government has a true picture of the financial situation of Scotland or a clear idea of what assets or liabilities it holds.

‘If we are to find a constructive way across this constitutional watershed, openness and clarity about liabilities and assets must be at the heart of the process,’ Peebles said.

‘CIPFA will lead this process by bringing together key financial management experts to advise government on the necessary steps forward.’

 

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