Magazine article Public Finance

Fast-Forward to Federalism

Magazine article Public Finance

Fast-Forward to Federalism

Article excerpt

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 Caiman 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 NationaJ Party has belatedly endorsed much of the report, though it disagrees with Caiman'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 Caiman, 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.

Caiman'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. …

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