As I said in my submission, we have to define each of those things. It is fairly obvious what “transparent” means, but there are degrees of transparency. People’s interpretation of what is “fair” will vary. What does “effective” mean? On “mechanical”, as both Jim Cuthbert and I have said, we probably want something that is reasonably, but not wholly, mechanical.
This is one of the big things that the Smith commission did not do. It got a political agreement to something, but did not explain what the economic and fiscal rationale was for the package—possibly because there was none. That then makes it difficult to say why those things are being done and to defend something and say what the perfect way of implementing it is, because we cannot go back to a basic set of principles or a rationale.
From the Scottish end, if you define what you believe those things to be—what the elements of prioritisation are within them—that would help. Both Jim Cuthbert and I have brought up in our papers the things that you need to look out for. The first is the issue of income tax and Scotland’s relative position on that. The second is population change, which is not a straightforward issue. If Scotland were to do particularly well through implementing the powers that it has, we would want the population element to work in our favour, whereas it currently works against us. It could work in our favour, although without more powers in relation to immigration that is not likely to arise in the short term. The third thing is the demographics, which are related to population and work against Scotland.
My final point is that Scotland needs to arm itself as best it can. By that I mean that when the inevitable negotiation takes place, and because there is so much uncertainty here, a Scottish office for budget responsibility and a beefed-up Scottish finance department, which would be more like a Scottish treasury, would need to have sufficient or better ammunition than the other side, in terms of determining what would be fair and what the likely consequences of something would be.
Although the Barnett formula is fairly mechanical, such negotiation happens even under it. A classic example, which I have used before, is that to work out the consequentials, someone had to decide whether something that was in place in the rest of the UK was also in place in Scotland. When a lot of money was being put into the London underground the claim from the Treasury was that no money should go to Scotland because there were no consequentials, until someone pointed out that Glasgow had its own underground and so a settlement was made. That was not mechanical.
That is an obvious example, but there will be other areas where you will need to know the detail in what will ultimately be some form of negotiation.