Five political problems with ‘Full Fiscal Autonomy’ for Scotland

‘Full fiscal autonomy’ (FFA) is the devolution of all tax and spending decisions to Scotland. It involves the Scottish Government forming its own Treasury and Inland Revenue function, raising its own revenue, and making a contribution to the UK for shared services such as spending on defence and foreign affairs.

FFA is back on the agenda following the combination of a Conservative majority in the general election, on the back of votes in England, and its need to recognise a sweeping SNP win in Scotland. Early rumours suggest that David Cameron is ready to offer it ‘in a peace deal to save the Union’ and we might get the impression that a UK government can click its fingers and make it so. There are five important political problems with this idea.

No party in Scotland wants it – or, at least, not like this

This seems like a strange thing to say – surely, at the very least, the SNP wants it?! Yet, Sturgeon’s language throughout the election campaign (and p11 of the SNP’s manifesto) was about FFA taking a long time, based on it taking 5 years (2007-12) to introduce a modest devolved tax and spending regime. By this calculation, the groundwork for something far more ambitious would take longer than a second independence referendum to materialize.

The other main parties in Scotland have described FFA as disastrous (generally drawing on IFS analysis). It is hard to overstate just how much they are against it. Indeed, they were the parties which talked about it most because they saw it as a subject that weakened the SNP. Maybe it doesn’t matter so much that Labour used the imagery of the bombshell and the Liberal Democrats described the ‘devastating impact’ it would have on Scotland, since both parties are now out of the picture.

However, it does matter what the Scottish Conservative rhetoric has been, including the statement that, ‘The public deserve to know the full impact of what fiscal autonomy would mean for Scotland’, that FFA would produce ‘massive spending cuts, a hike in taxes or radically increased borrowing’, and that ‘Almost no major employers back the SNP’s plan for full fiscal autonomy’. Only three weeks ago, Ruth Davidson described FFA as a disastrous way to exploit Scottish taxpayers to secure independence ‘by the back door’:

Stage two comes if the SNP gets its way to impose independence by the back door. Ms Sturgeon has confirmed this week that separation remains her goal, and has refused to rule out another referendum soon. But, in the meantime, the goal is to settled for what the Nationalists call “full fiscal autonomy”. Under this plan, we’d remain in Britain, but all the financial ties we currently share with the rest of the UK would be severed. And Scotland’s system of public services would rest entirely on the shoulders of the poor, benighted Scottish taxpayer.

The people advocating it are doing it to help themselves, not Scotland

Some senior conservatives are using the right language with the SNP and describing the Scottish result as something that has to be respected – but suddenly portraying FFA as good for Scotland and the Union would be near impossible given what the David Cameron said about it less than a month ago.

Others may be describing FFA as a way to stick it to the SNP, encourage centre-right politics in Scotland and satisfy an audience in England. For example, Conservative MEP Daniel Hannan argues that the SNP is the Scottish equivalent of Greece’s Syriza and only able to use anti-austerity rhetoric because the Scottish Government doesn’t raise its own budget.

This tactic is divisive and damaging

Playing politics with Scottish constitutional change just makes things worse. Portraying FFA as good for England and some much-needed medicine (or, perhaps confusingly, a poisoned chalice) for Scotland is divisive and goes against the idea that the Conservatives want to do what it takes to protect the Union.

Key arguments against Scottish independence apply to FFA

Remember the sorts of issues that arose during the referendum, such as: you can’t have a shared currency if your tax/ spending regimes are too different (No campaign); and independence is a way to get rid of Trident (Yes). These problems would resurface with FFA, since the UK Treasury would want assurances that Scottish Treasury decisions did not have too much of a knock-on effect, and an SNP-led Scottish Government would not want to transfer money to the UK for Trident. Effectively, the UK Conservative government would be saying: ‘you can have FFA if you pay for the shared services we choose, and you stick to our fiscal rules’ (the latter seems to be a feature of the albeit-vague ‘no detriment’ principle). Calling this ‘full fiscal autonomy’ would be rather misleading.

There would be very little to hold the Union together

The economic argument dominated the independence campaign. It was by far the biggest element of the No campaign. FFA would largely remove that argument, since almost all warnings would be about powers that have already been granted to Scotland.

In short, ‘full fiscal autonomy’ for Scotland could be seen as the ultimate cynical solution to the rise of the SNP, and could well backfire to cause the death of the Union – unless the parties are now proposing something that can be described (with fingers crossed) as FFA while being nothing of the sort.

See also: Alex Salmond saying that it’s not on offer anyway (2m30)

Then see David Cameron ruling out FFA and focusing largely on implementing Smith: http://www.bbc.co.uk/news/uk-scotland-32750461

Scottish constitutional change always seems one step behind the national mood – but we finally have a chance to get it right

It is 19 years since George Robertson declared famously that Scottish devolution would ‘kill nationalism stone dead’. It remains one of the most important, symbolic, phrases because it sums up one of the worst sentiments in British politics: constitutional change seems, too often, to be a stitch up by one or more political parties at the expense of the others.  Too often, we have seen unionist parties produce deals amongst themselves rather than engage meaningfully with nationalist parties like the SNP.

The main result is that Scottish constitutional change often seems out of step with the national mood. The Calman Commission, established in 2007 by Labour, the Liberal Democrats and Conservatives, produced the Scotland Act 2012 that seemed out of date before it was implemented. The Smith Commission was established in 2014 and, although it produced its recommendations in a ridiculously short space of time, they already seem like the starting point for discussion, not a new devolved settlement.

Yet, it was not always this way. For a brief period, from devolution in 1999, we talked more about ‘new politics’ than independence. This is partly because many of the parties involved were more inclined to do the right thing than Robertson’s comment suggests. Scottish Labour didn’t hold hands with the SNP, but it made sure that it got SNP support during the Yes to devolution campaign in 1997. The parties (including Scottish Labour, Liberal Democrats and what would become the Scottish Greens) also thought about how political reforms would go hand in hand with constitutional reform, encouraging some debate about new forms of deliberative and participatory democracy.  They engaged ‘civil society’ groups, and the campaign for devolution had a strong focus on gender and the participation of women in public life. In short, they had a Scottish Constitutional Convention. This period of reform in the 1990s should provide some lessons today.

It is too tempting to argue that the incredible rise of the SNP, and its likely dominance of Scottish seats in Westminster, will produce a constitutional crisis – a UK party only governing with the consent of the SNP will reinforce a broad sense that ‘The Scots appear fed up with the English, and the English with the Scots’. Simon Jenkins suggests, rather provocatively, that the current union is dying and that ‘Some new format is required that must embrace parliamentary disengagement, devo-max or indie-lite or whatever. The task for Cameron or Miliband is to be architect of that format’.

Yet, this conclusion is not inevitable and the solution is not quite right. In particular, we do need to rethink the plans for further constitutional change that were produced so hastily by the Smith Commission for the sake of party politics rather than sensible constitutional redesign. However, a new constitutional convention should be the architect, not the leader of one political party doing a deal with another.

If you look at the rhetoric of the main parties, a new convention in Scotland is just the ticket. It suits Labour’s ‘no deals with the SNP’ stance, since a convention is a way out: it could be portrayed as an attempt to go beyond party politics and engage Scottish civil society. It suits the SNP, looking to maximise its influence but not be stuck with the idea that all it wants is ‘devo max’ or ‘full fiscal autonomy’ as a stepping stone to independence.  It might even suit the Conservative party if it squeaks into government again with the Liberal Democrats, since a convention may be the only way to generate a sense of legitimacy in Scotland if it has few or no MPs in Scotland.

The alternative for the UK parties (apart from the UK-wide convention proposed by Labour, which seems separate from Scottish reforms) is to stick with Smith and exclude the SNP, which seems like an untenable position for parties that claim to want to reform the Union to protect it. Only the SNP benefits from the stand-off, and only a constitutional convention provides anything close to a competing story of Scottish legitimacy to the one crafted so well by the SNP.

After last night’s question time, #indyref2 looks further away (unless it’s Rocky II)

After I watched Miliband and Sturgeon on last night’s Question Time, I knew I had seen something similar before: the closing scene of Rocky. We are currently at the ‘ain’t gonna be no rematch … I don’t want one’ stage.

Of course, by Rocky II there was a rematch. So, if life mirrors the Rocky franchise directly, here is what will have to happen before a second referendum on independence happens:

1. Miliband changes his mind dramatically and, after much soul searching and taunting-based persuasion from Miliband, Sturgeon is persuaded to go for it one more time.

2. Miliband is driven by the unexpectedly high potential revenue from a spinoff #indyref2 (a great boost to the UK budget) and Sturgeon writes the script.

Then, Sturgeon wins. Then, Sturgeon loses to the US before winning again with the help of Miliband (maybe that’s the Trident negotiations). Then, during WWIII, Russia annihilates the UK before Scotland saves the day. I forget what happened in the next two.