The Devolution (Further Powers) Committee was established in October last year. Its task was to scrutinise the proposals for further devolution that arose from the recommendations of the Smith commission. We are here to debate our interim report, which was published last week, and which gives the committee’s initial view of the proposals thus far.
Across the committee, we believe our report to be constructive, balanced and objective. Members of the committee may differ on the powers that we consider that the Scottish Parliament should have, but it is clear that we speak with a common voice in saying that, as a minimum, the spirit and substance of the Smith commission recommendations must be delivered in full in legislative terms and in the actions of the Scottish and United Kingdom Governments. Our conclusion was that, unfortunately, the draft clauses that were published in January by the previous UK Government do not meet that objective in significant areas. The committee has called on the new UK Government to seriously consider the areas that we have highlighted in which we believe that the draft clauses fall short.
The UK Government must ensure that the bill, which is expected to be published next week, is strengthened to fully deliver on the Smith recommendations. As a committee, we set ourselves four very clear and specific tasks in scrutinising the proposals for further devolution: to assess whether the draft legislative clauses that the UK Government published would implement the Smith commission recommendations; to engage as widely as possible with stakeholders, communities and individuals; to obtain as wide a range of expert opinion as possible within the timeframe available; and to publish a report that would seek to influence the content and development of a new Scotland bill. I will let others judge whether we have met those objectives.
I wish to thank all those who provided evidence to the committee, whether in formal evidence sessions, at informal meetings in local communities or at the public meetings that we held in Hamilton, Aberdeen and Shetland. To assist us in our task, we appointed three advisers: Christine O’Neill, to provide advice on constitutional matters; Dr Heidi Poon, to deal with taxation; and Professor Nicola McEwen, to advise us on welfare. I put on record the committee’s thanks for the assistance that they provided us with in developing our report. I also put on record our thanks to the clerking team so ably led by Stephen Imrie, which did a fantastic job in preparing us to question the witnesses who were called to give evidence and in helping to pull together our report. Most of all, I thank my fellow committee members for the mature, professional manner in which they approached their work.
Our report has been agreed unanimously by all members of the committee and, in my view, it carries far greater weight as a consequence. Our recommendations are intended to be constructive and to assist the new UK Government in producing legislation that will implement the Smith recommendations.
It important to note that in certain areas, such as the devolution of air passenger duty and the aggregates levy, the draft clauses met the aims of the Smith commission as far as the committee was concerned, but because of the time available, I must focus on the broad areas in which the committee found that the draft clauses were not fit for purpose.
In a wide range of areas, the committee considered that clarification was required on the effect of a clause or that amendment was required to the clauses as currently drafted. Perhaps the most significant area in which we considered that to be the case was welfare. The committee considered that the draft welfare clauses would not provide a future Scottish Government with the power to, for instance, create new benefits in areas of devolved responsibility or make discretionary payments in any area of welfare, and that the definitions of “carer” and “disability” would significantly constrain the policy autonomy of a future Scottish Government in those areas. The committee also considered that the clauses would not devolve all the powers over support for unemployed people that Smith expected. For example, the access to work programme appears to remain reserved.
We seek assurances that winter fuel payments will be devolved and that, where a Scottish Government introduces a new benefit or top-up, that will not result in an offsetting reduction in a UK benefit.
The interaction of devolved and reserved powers is critical across many of the Smith commission proposals. Universal credit provides an example of where there is one such proposed shared power. In that light, the committee considered that draft clauses 20(4) and 21(3) could be considered or perceived to be a veto and that they need to be looked at again.
More generally, we recommended that the principles that would inform intergovernmental working on welfare require to be placed in statute.
That is a summary of our recommendations on welfare. Other members will no doubt want to go into more detail on those recommendations in due course.
The draft welfare clauses are the area in which perhaps most concerns rest, as they are potentially the most complex to implement. I know that the Welfare Reform Committee is carefully scrutinising that area. Those clauses will impact on some of the most vulnerable and disadvantaged individuals in Scottish society. I am reminded of a quotation that Sir Harry Burns is fond of recalling. A Los Angeles priest said to him:
“What we need is a compassion that stands in awe at the burdens the poor have to carry, rather than stands in judgment at the way they carry it.”
It is therefore essential that legislation in that area not only implements the spirit and substance of the Smith commission, but is capable of being implemented efficiently.
The taxation powers that the Smith commission proposed for devolution will also result in a significant degree of shared power between the Scottish Government and the UK Government. The most critical elements of the operation of powers in that area are not dealt with by the draft clauses; instead, the operation of those powers will be governed by a new fiscal framework, which is currently being developed. Although the operation of the no-detriment principle and the block grant adjustment may sound esoteric, those issues are absolutely critical to the effective operation of those powers. The committee is grateful for the work that has been undertaken by the Finance Committee in that area. It found clear differences between the Scottish Government and the UK Government on the no-detriment principle. Similarly, we recommend that greater clarity is required on how the no-detriment principle will operate in practice.
We made a number of detailed recommendations that relate to the implementation of the taxation proposals, such as how to determine what constitutes Scottish VAT. However, I will leave that for others to discuss.
The draft clauses were silent on how a new borrowing regime will operate. Accordingly, an early understanding of what borrowing powers are being devolved should be a high priority for both Governments at this point. In the committee’s view, a move towards a prudential regime would provide a sensible approach. We also recommend that future Scottish Governments should be able to retain any underspend in order to better manage volatility in income.
It is clear that the Scottish Government’s current borrowing powers are too restrictive to cope with the new era of fiscal devolution. It is therefore imperative that the borrowing regime that is entered into provides genuine flexibility for future Scottish Administrations.
The committee expressed significant concerns about the devolution of the Crown Estate. The Smith commission could not have been clearer in its recommendations on the Crown Estate. It said:
“Responsibility for the management of the Crown Estate’s economic assets in Scotland, and the revenue generated from these assets, will be transferred to the Scottish Parliament.”
However, the committee found that the draft clauses in that area would result in the creation of two Crown estates operating in Scotland. Let me assure members that that revelation was a considerable surprise to the committee, not least to those members of the committee who also served on the Smith commission.
Moreover, the committee took the view that the legislative approach to devolution taken in the draft clauses could be construed as being overly complex and complicated. Accordingly, the committee recommended that the UK Government should revise its approach to devolving the Crown Estate. I welcome the Rural Affairs, Climate Change and Environment Committee’s work in that area, which is now under way.
On the constitutional issues, the committee has made recommendations that seek to strengthen the draft clauses in relation to the permanency of the Scottish Parliament. In particular, we recommend that a referendum of the Scottish people should be held if there was ever a suggestion that this Parliament should be de-established.
We also made recommendations in relation to the Sewel convention. As we all know, that issue has become much more relevant given the new UK Government’s plans to repeal the Human Rights Act 1998.
The proposals for further devolution will, if implemented, result in a fundamental shift in the structure of devolution. Lord Smith recognised the importance of intergovernmental relations in the foreword to his commission’s report. Throughout the course of the committee’s work, the importance of intergovernmental relations was a constant theme raised as a critical issue underpinning the delivery of further devolution.
As a committee we agree with Lord Smith that the current largely non-statutory machinery of intergovernmental relations in the UK will not be sufficient to deal with the challenges arising from the proposals for further devolution. The committee recognises that for intergovernmental relations to operate effectively there must be space for discussions between Governments to take place in confidence. However, the general principles that will underpin intergovernmental relations and dispute resolution in future should, in the committee’s view, be placed in statute.
Central to any new structure or intergovernmental relations will be the role of this Parliament and, indeed, Westminster in scrutinising the actions of Governments within the new structure. That will pose a significant challenge to this Parliament. That is an area to which the committee intends to give further consideration and thought in the coming months.
The committee’s report is the culmination of seven months of intensive scrutiny, first of the Smith commission recommendations and secondly of the draft legislative clauses that were produced by the previous UK Government. I do not wish to sound conceited—it is not usually my style—on behalf of the committee, but the sense that I have is that the report has been well received across the spectrum of Scottish society. In this age of the digital Parliament, I cite two tweets in my defence. The first is from a former member of the Smith commission, Professor Adam Tomkins, whom many will know well—some in this chamber certainly know him well. He said:
“I’m quick to criticise the @ScotParl when it screws up but today’s report from the @SP_DevoCttee is legislative scrutiny at its best.”
At the other end of the constitutional spectrum, Dr Andrew Tickell of Glasgow Caledonian University, perhaps better known to some as the author of the blog, Lallands Peat Worrier, considered the committee’s report to be “forensic, clear and constructive” and one of the best reports he had seen coming out of Holyrood. I do not make those points lightly. That is a message as much for this Parliament as it is for the Secretary of State for Scotland in terms of the contents of the committee’s report.
It is now the ambition of all the committee to see
“both the letter and the spirit of the Smith Commission’s report fully translated into a legislative package”
in the coming months. If the UK Government is getting ready to fire the starting pistol by introducing the Scotland bill next week, my committee is saying that we are not yet at the starting line, so let us not have a false start. Let us try to get the legislation right at the outset of this journey.
It was in that spirit that Lewis Macdonald, Linda Fabiani and I met David Mundell on Tuesday. We were pleased that he signalled an imminent introduction of a Scotland bill and that he was planning to make some—and I stress the word “some”—changes to the bill before introduction, most notably on the welfare clauses. All three of us welcomed the constructive dialogue that we had with the Secretary of State for Scotland, but we also said that we reserve judgment until we see the actual bill, as there is still a lot of work ahead for the UK Government to get it right. We would like to see as many changes as possible incorporated into the bill before its introduction, but if that is not possible, the Secretary of State for Scotland has a responsibility to clearly articulate what changes he intends to make via Government amendments during the passage of the bill. Let us leave nothing to nuance and interpretation. We owe it to the people of Scotland to be crystal clear on what new powers are coming.
That is not just me or other members of the Scottish National Party speaking, but, I believe, all five political parties that were represented on the committee.
I move,
That the Parliament notes the conclusions and recommendations contained in the Devolution (Further Powers) Committee’s 3rd Report, 2015 (Session 4), New Powers for Scotland: An Interim Report on the Smith Commission and the UK Government’s Proposals (SP Paper 720).
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