Power and purpose

In May 2011 when Labour found itself once again on the opposition benches, but this time across from a majority SNP Government, it was faced with the certain knowledge that there would be a referendum on independence. It did, however, take a little time for that realisation to turn into action.

Eventually it emerged that September 2014 would be the most likely date and that there would be over two years in which to campaign. Such a drawn-out campaign has some benefits, but also drawbacks. The benefit is that no one could say they were rushed into such an important decision without having time to consider every angle. On the downside there is a danger that other politics is put on hold. This is particularly dangerous when we are faced with attacks on jobs, services and living standards. Instead of building a campaign against austerity there is a danger that everything is focused on winning the referendum so that all these problems can be solved in a new Scotland.

One of the first trade union events which discussed the debate ahead was the United Left’s Political Conference in January 2012. The discussion that day showed an interest in using the referendum debate to explore more than constitutional issues, but to describe the type of Scotland that was best for the working class and then to ask what powers could deliver it. That approach has continued in the Red Paper Collective formed in December 2011, the STUC’s a Just Scotland consultations and across most of the individual trade unions.

In the Red Paper Collective we believe that the devolution of powers should be based on the principle of subsidiarty so that decisions can be taken at the closest representative body to where they will have an impact

At the 2012 Scottish Labour Party Conference, after some intense backroom discussions, Johann Lamont announced that she would establish a Devolution Commission. The Red Paper Collective had worked within the labour movement at all levels to promote the approach of ‘Powers for a Purpose’ and when the document was published in April 2013 with the title Powers for a purpose – strengthening devolution we had to hope that it adopted more of our approach than a catchy title.

It must be said that the Commission did not get off to a good start. It took six months for it to have its first meeting, but once it started it has achieved a considerable amount of work. The interim report which was presented to the Conference in April 2013 is probably one of the better documents of its kind with its useful history and interesting proposals.

It is a slightly odd situation to find ourselves considering new powers for a Scottish Parliament before the recent extension of power in the Calman Commission have actually been put in place. What this demonstrates is how little interest there was at the time of the Calman and how that has vastly increased since the announcement of the referendum. For example it has triggered the devo max and devo plus proposals. Alex Salmond’s interest in, and even encouragement of, devo max and a second option in the referendum, required us to look at the implications of further devolution and ask whether this would benefit working people.

It must be said, right away, that the Devolution Commission is not a route map for a socialist Scotland. On the other hand neither are the SNP’s proposals for an independent Scotland. The document does however state that devolving income tax “would enable the Scottish Government to make the tax system more progressive”. So it is useful to analyse it in terms of whether it opens possibilities for a greater equality and a democratic control of our economy which are the basis of the Red Paper Collective’s approach to constitutional change.

In the Red Paper Collective we believe that the devolution of powers should be based on the principle of subsidiarty so that decisions can be taken at the closest representative body to where they will have an impact. This applies between Westminster and the Scottish Parliament, but also the Scottish Parliament and Local Government. We further believe that any devolution of powers should not weaken the ability to redistribute wealth from people and places with much to those with less and should strengthen the potential to have democratic control over our economy. These are the principles that we would apply to any proposals including Independence, Devo Max, Devo Plus and the interim report of the Devolution Commission.

The interim report confines itself the three areas: devolution of taxation; welfare; and local democracy. The most far reaching is taxation where it raises the possibility of devolving all income tax. The Red Paper has been advocating this, not for the reasons that motivate Devo Plus which claims there are “traditional Scottish principles of limited government, diversity and personal responsibility” and would use income tax as a means of disciplining a Scottish Parliament by placing the burden of expenditure of those least able to bear it and thereby constraining public spending. The Red Paper position is that fiscal policy should support the creation of a more equal society through progressive taxation and welfare support. As with everything else in this debate, it is not the powers themselves that are the issue, it is what you will do with those powers.

The second area covering welfare involves a complex equation between what the document describes as the two halves: one being the directly provided services such as health, education, social work and housing; and the second cash benefits. Currently, the first is devolved and the second reserved. The report then proceeds to discuss the cash ‘benefits’ which include old age pensions, child benefit, income support and disability benefits as if those in receipt had never contributed towards them. We should be concerned that the services are seen as ‘good’ welfare while the cash benefits are problematic and ‘bad’.

The document does however note that the introduction of the welfare state bound social classes, rather than nations, together and recognises that the benefit system is the major engine of redistribution, alongside income tax. We should not, however, believe that Scotland is immune to the popular myth of skivers and strivers – opinion polls have shown a different story. While the report documents the high level of welfare spending and the likelihood of demographic changes making even more demands, it lacks any analysis of how economic development and greater control over our economy through public investment could change that. If the Scottish Parliament had the power to create and support industries with well paid jobs it could begin to turn some of the welfare costs into tax income.

The third section deals with local government and recognises that the Scottish Parliament has tended to take powers to the centre rather than encourage further devolution out into Scotland. This should not be a surprise. Each level of government is jealous of its power and only reluctantly shares it with other elected bodies. There will always be this sort of tension, which Labour can more easily recognise now it is out of government and still has some power at local level. It does suggest that there should be constitutional guarantees of powers for local government. It also recognises that local government should move away from a managerial and instrumentalist way of operating. The report suggests that local authorities could take back powers over areas such as skills, transport, housing and other growth-related levers that can support economic development. Hopefully Labour has learnt from its mistakes in relation to local government and in particular the devastating attack on council housing. It accepts that the attack by the SNP on local government has been a lesson for Labour in the Scottish Parliament. The document states “The council tax freeze does not come without a cost. Individuals may pay less, but the communities they live in are worse off.”

The Devolution Commission report is open to anyone to respond to. It is, however, eventually a Labour Party document and it should be Labour Party members that make a decision on the final report.

The Red Paper Collective has issued a statement available on its website (address below) in which it argues for the following package on fiscal powers: devolve all property based taxes; fully devolve income tax including the power to vary the rates in bands; business taxes should remain at UK level because Tax competition is wrong.

While we agree that welfare benefits should be generally reserved, consistent with fiscal solidarity, there are a few exceptions. Council Tax Benefit is being devolved and this is necessary for any reform of the Council Tax, which is a devolved matter. We also believe that Housing Benefit should be separated from the Universal Benefit because of the close link to housing policy, a devolved issue. While the state pension should remain at UK level as above, public service pensions for devolved services should be fully devolved. At present devolution is limited to regulatory powers only. Experience with the recent UK Public Service Pensions Act confirms our view that a one size fits all UK approach is not appropriate for this issue.

On local government we state:

“Local authorities should have a stronger statutory footing – gaining greater control over their finances including business rates and there should be less ring fencing of council grants as with the Council Tax freeze, police numbers etc. As the Christie Commission recognised, Scotland has the smallest number of local authorities per head of population in Europe. We should be considering strengthening local democracy, not taking it further away from the people through mergers and centralisation.”

At the heart of the Red Paper Collective’s responses is that working people share more in common with each other whatever part of the UK they live in than they do with those who exploit them, whether they are English or Scottish. We believe that Scottish Parliament should gain control of its economy and that independence does not actually deliver that. Power has to be wrested from the City of London because it is from there that the Scottish economy is controlled, and that won’t change with independence.

To look at Red Paper proposals for the next stage in the Devolution Commission’s work go to http://redpaper.net/2013/06/18/powers-for-a-purpose-response-to-scottish-labour-devolution-commission/ and to see the Executive Summary and leave opinions on the Devolution Commission’s report go to http://www.scottishlabour.org.uk/campaigns/entry/devolution-commission