The Yes campaign says that Better Together and the Noes need to come up with a positive vision for Scotland. I think that we already have plenty – I’ve seen at least two versions of “Devo Plus” and “Devo More”, and while “Devo Max” is self-explanatory, the Lib Dems federal Britain scheme could be classed as “Devo Max”, so that makes two of them as well. I’m not going to put a label on my vision for the powers that Scotland should have – I’ll leave that for others – but unlike those others, which seem mainly to be about giving Scotland as much or as little as needed to combat independence, I will talk about what it is appropriate for Scotland to do. Labour could and should adopt these as its policy for 2015, so that we can go into the referendum campaign in 2014 with a concrete set of proposals that will speak to people of a vibrant and distinctive way forward – if our politicians want to take us in that direction.
The Scotland Act 2012 gives Holyrood limited power over income tax, specifically by giving the proceeds of a 10% rate, and deducting that money from the block grant. However, I think we should go further, and give the Scottish Parliament complete control over income tax raised in Scotland, including rates and levels. This would allow a future government to set a higher rate of 50% or 60% if it so wished. It could introduce this at a lower level than the equivalent in England – if it wanted to do so. It should also have the power to vary National Insurance in the same way. The employee’s contribution is no more than an additional income tax. The employers’ NI has been called a tax on jobs, and varying this could be one way for the Scottish Government to attract and promote business, in the same way as business rates are devolved. Corporation Tax and VAT rates should not be devolved, as there needs to be harmonisation across the UK – indeed there ought to be harmonisation of Corporation tax across the EU.
The biggest area of spending which is not devolved is benefits, and I would propose that some, but not all benefits are devolved to Holyrood. The key is what is appropriate for Holyrood to deal with, and what benefits which if changed by the Scottish Government, could lead to a benefit (!) to them, especially if they are relevant to areas already devolved.
If we are to devolve income tax fully to Holyrood, then it follows that the tax credits should go too. The idea being, that if the Scottish Government were to improve people’s income, e.g. through industrial policy etc., they would reap the benefit of not only of an increase in income tax income, but also a reduced spend on tax credits. This should provide an incentive to Holyrood to promote policies which would increase people’s income, or get more people into work and paying tax.
I believe that Scotland should also have responsibility for sickness and disability benefits too. Currently the Scottish Government has control over Health, in the form of a devolved NHS, but it is widely recognised that Scotland suffers from some of the highest levels of long term illness – partly as a result of de-industrialisation going back many decades. If the NHS were to look more at preventative work, then this could provide benefits in terms of lower levels of Employment and Support Allowance (the benefit which replaced Incapacity benefit). Likewise Education Maintenance Allowance should be devolved, as it is really a tool of Education policy, which is already the responsibility of Holyrood.
As the Scottish Government has responsibility for Housing and Council Tax, so should it have responsibility for the benefits associated with them. In England, local councils have been given the power to vary how council tax benefit is applied, with different authorities coming up with different ways of distributing the money – Scotland should have that power too. Once again, this means that when it implements policies (or decides not to) in those areas, it has an effect on expenditure in those areas. For instance, it could decide that in order to cut the Housing benefit bill, it would implement rent controls, rather than cutting the rates paid. The money saved could be used to build affordable housing.
My final transfer of power is over the form of our national railways. An amendment to give Scottish Ministers the power to bring ScotRail under public ownership if it desired was proposed during the passage of the Scotland Bill in 2011. It is surely only right that as it has responsibility to fund the franchise, it should be able to specify it’s delivery in whatever way it sees fit. While Transport Minister Keith Brown was unable to say on Newsnight Scotland, whether railways would be nationalised in an independent Scotland, the Scottish Government should have that power now, whether they want to exercise it or not.
These proposals would give the Scottish Government a balanced combination of tax raising powers and spending responsibilities that complement existing obligations. They would give the government the ability to create a fairer more just society – if that was its wish. It is my desire that not only should Labour devolve these to Scotland at the earliest opportunity, but that Scottish Labour then work to use them to create that better, fairer Scotland.