Magazine article Public Finance

Brown's Fiscal Fissure

Magazine article Public Finance

Brown's Fiscal Fissure

Article excerpt

Has Gordon Brown become a nationalist fellow-traveller? The Scottish National Party has been quick to congratulate the prime minister on his apparent U-turn over 'fiscal federalism': his belated acceptance that there might be a case for giving the Scottish Parliament further tax-raising powers.

Before the Scottish election, Brown had appeared to rule out reviewing Holyrood's tax powers. But in a recent BBC television interview, Brown said: There is an issue about the financial responsibility of an administration that has £30bn to spend but doesn't have the responsibility to raise any of that.'

SNP leader Alex Salmond cheekily sought to present this as a welcome contribution to his party's own 'national conversation' on constitutional reform.

Brown talked of 'assigned revenues' perhaps going to Holyrood, but did not say from which tax base. The Scottish Labour leader, Wendy Alexander, who has been canvassing for reform, has ruminated on measures such as a sales tax, excise duties and perhaps some business taxes. Of course, the Scottish Parliament already has the ability to vary the basic income tax rate by 3p, but for some reason no one seems to believe that this is a tax power that could be used practically.

There is no doubt that the prime minister has made a highly significant concession to Scottish home rule in agreeing to look again at tax. However, it has come about a year too late. If Brown had been this open-minded before the May Scottish election, Labour might still have been in power in Holyrood.

The impression that London was somehow placing a veto on Scottish aspirations damaged Labour in that election, as most in the party now accept. The perception was that the-then Scottish Labour leader, Jack McConnell, was not his 'own man'.

But the soon-to-be prime minister in Westminster was anxious about the unity of the United Kingdom, and didn't want any more constitutional innovations. Especially when the Tories were mobilising English opinion on the Barnett funding formula and the West Lothian question.

Historians may well judge that the rhetorical failure of Labour to play the Scottish card in that election was itself the real threat to the Union. It gave the SNP a unique opportunity to transform latent nationalism into an actual desire for self-government of the third kind.

But to return to the original guestion, has Brown now become a de facto nationalist - a fellow traveller who is helping the Scots seize more power from Westminster? Well, of course not. The PM remains implacably opposed to Scottish independence, or even federalism. …

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