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Scottish Parliament at 20: two decades of growth in the Scottish Parliament’s devolved powers

Scottish Parliament at 20: two decades of growth in the Scottish Parliament’s devolved powers

Scottish Parliament chamber - image credit: Scottish Parliament

When looking back on the Scottish Parliament in the context of the near 300 years that Scotland did not have its own parliament and the many, many people that campaigned for it through the 19th and 20th centuries, the 1979 referendum and the Scottish Constitutional Convention, 20 years is just a blip.

Yet in that time an entire generation of Scots has grown up unable to remember Scotland without a parliament and without devolved powers to make its own decisions.

“It is a moment rare in the life of any nation when we step across the threshold of a new constitutional age,” said the Queen as she opened the new Scottish Parliament in 1999.

For then first minister Donald Dewar, it was the fulfilment of his vision, SNP leader Alex Salmond said it would infuse new blood into Scotland’s nationhood and Conservative leader David McLetchie committed his party to working for the success of a parliament they had never wanted.

In fact, the formation of that new parliament went down in history for a number of firsts: the first time proportional representation had been used in a UK parliamentary election; the first time the Greens and the Scottish Socialists had had elected representatives at parliamentary level; and when Labour and the Lib Dems formed the Scottish executive, it was the first coalition government since the Second World War.

And while there were complaints early on about the cost of the building and whether it was all worth it, there has been relatively little serious questioning of whether the parliament – backed by 74 per cent of the public with 60 per cent turnout in the 1997 referendum – should continue to exist.

Devolved powers gave Scottish politicians the ability to take different decisions, and they have done so on a number of issues, including land reform, replacing health trusts with health boards and banning smoking in public places before the rest of the UK.

But beyond the celebration and acceptance of the institution, what has changed over two decades?

The 1998 Scotland Act set out all the Scottish Parliament’s original powers, which included the ability to make decisions in all areas that were not reserved to Westminster.

This included education; health and social care; agriculture, fishing and forestry; the environment; housing and planning; culture and tourism; justice; business and economic development; and local government.

It could also amend the basic rate of income tax up or down by up to three pence in the pound.

At this point, almost all of the Scottish Parliament’s budget came directly from Westminster.

In 1999, 93 per cent of Scotland’s money came in the form of a block grant calculated through the Barnett formula. The remaining seven per cent came from non-domestic rates.

This changed only slightly after the 2012 Scotland Act, with 92 per cent of the budget made up of the block grant and eight per cent from business rates, land and buildings transaction tax and landfill tax.

A major change in Scotland’s control over its own revenue did not come about until the third Scotland act in 2016.

The Scottish Parliament’s powers remained unchanged for several years as the new body bedded in.

But in December 2007, the Commission on Scottish Devolution, better known as the Calman Commission, was proposed by Labour in opposition and passed in the Scottish Parliament with the backing of the Conservatives and the Lib Dems against the will of the then minority SNP government.

The commission’s remit was: “To review the provisions of the Scotland Act 1998 in the light of experience and to recommend any changes to the present constitutional arrangements that would enable the Scottish Parliament to serve the people of Scotland better, improve the financial accountability of the Scottish Parliament and continue to secure the position of Scotland within the United Kingdom.”

Led by former chief medical officer Sir Kenneth Calman, the commission met for the first time in April 2008 and presented an initial report in December 2008 and its final report in June 2009.

An independent expert group, led by current University of Glasgow principal Sir Anton Muscatelli, who was then at Heriot-Watt, looked at different funding models for sub-national parliaments and fed its recommendations into the wider commission.

The initial report concluded that devolution had been a success, but following the findings of the expert group, it stated that full fiscal autonomy would be incompatible with the continuation of the union.

In the final report, a key recommendation was that the Scottish Parliament should have more control over the raising of revenue through shared responsibility with the UK Parliament for setting income tax rates and through devolution of some smaller taxes.

It recommended that the UK should reduce income tax rates in Scotland by 10p, allowing the Scottish Parliament to decide whether to set a Scottish rate that was higher or lower than the rest of the UK, with the block grant to be reduced by a corresponding amount.

The block grant would continue to be calculated through the Barnett formula in the short term, but a UK-wide needs assessment should replace it in the longer term.

The commission also recommended that the Scottish Government should have new borrowing powers, as well as responsibility for the regulation of airguns, the administration of elections, drink driving limits and the national speed limit.

Furthermore, it recommended better interparliamentary dialogue and communication, with further development of the Sewel convention and more involvement of Scottish ministers in key decisions and appointments to UK bodies.

These recommendations formed the basis of the Scotland Act 2012. That gave the Scottish Parliament some new powers but did not radically alter the status quo.

It took 10p off each of the income tax bands and gave the power to vary income tax up or down – although MSPs had to do so by the same amount across all the bands.

This power – which, like the 3p in the pound one before it, was never used – became the Scottish Rate of Income Tax (SRIT) and was only in place from 2016 to 2017 before it was supplanted by greater income tax powers in the 2016 Scotland Act.

The 2012 act gave the Scottish Government revenue borrowing powers of up to £200m a year and £500m in total and up to 10 per cent of capital spending limits and £2.2bn in total for capital and allowed it to build up a cash reserve of up to £125m.

In addition, it devolved two smaller taxes to Scotland: landfill tax and stamp duty – the latter became land and buildings transaction tax.

This in turn led to the creation of Scotland’s tax agency, Revenue Scotland, in 2015 to collect these devolved taxes. Other new powers that were devolved to Scotland included the ability to regulate air weapons and to set drink driving and speed limits.

However, the biggest change in Holyrood’s powers came in the wake of the 2014 independence referendum. In the final weeks of the campaign, as it looked possible for the first time that a majority might vote yes to independence, an intervention was made by the leaders of the three main unionist parties, David Cameron, Ed Miliband and Nick Clegg.

That intervention, which became known as ‘The Vow’, promised significant devolution of more powers to Scotland if the country voted ‘no’, which in the event, it did.

The day after the vote, on 19 September 2014, then prime minister David Cameron launched a new commission to look at devolution powers, the Smith Commission, led by the businessman Lord Smith of Kelvin and made up of a cross-party group of politicians, with two representatives from each of the five political parties then represented in the Scottish Parliament.

This commission considered most areas of government still reserved to Westminster, including tax, welfare, elections, equality law, employment law, charity regulation, consumer protection, transport, energy, asylum support and misuse of drugs.

It invited submissions, receiving over 14,000 from the general public and 250 from organisations, but it was given a very rapid turnaround time to produce a report, something that was later criticised.

The Smith Commission’s recommendations, published on 27 November 2014, called for the Scottish Parliament to have complete power over income tax, except for the personal allowance, and to receive a proportion of the VAT collected in Scotland.

However, the Scottish Parliament would not have power to influence the UK’s VAT rate and it would not be a devolved tax. The Scottish Government would also have greater borrowing powers.

The block grant from the UK Government to Scotland would continue to be determined via the operation of the Barnett formula.

Another major area was welfare. The Scottish Parliament would be given control over a number of benefits including disability payments, winter fuel payments and the housing part of Universal Credit and also be able to top up reserved UK benefits and create additional devolved ones.

In addition, it would be given control over air passenger duty in Scotland, have the power to allow public sector operators to bid for rail franchises and manage the Crown Estate’s assets in Scotland, including seabed, mineral and fishing rights, with the revenue generated to go to the Scottish budget.

The Smith Commission also said that the Scottish Parliament and Scottish Government should be made permanent institutions in UK legislation, with the parliament to be given powers over its own elections, including being able to extend the vote to 16 and 17-year-olds.

The timetable of the commission was condensed to allow for draft legislation to be produced in January 2015 to move the issue forward before the general election in May 2015.

And although the report was agreed by the cross-party group, the SNP continues to raise complaints to this day that Labour opposed the full devolution of welfare.

And when the draft legislation came out in May 2015, the Scottish Parliament’s Devolution and Further Powers Committee reported that it did not meet the “spirit or substance” of the Smith Commission.

Yet this went on to become the Scotland Act 2016, which was the biggest shake-up of Holyrood’s powers since 1999. The 2016 act gave the Scottish Parliament full control over income tax, with the ability to change rates and bands, something the Scottish Government did for the first time in 2018.

This meant that 36 per cent of the Scottish budget was now coming direct from devolved revenue sources and under two-thirds from the block grant.

When all parts of the 2016 act are fully implemented, including the devolution of half the 20 per cent rate of VAT, half of the Scottish budget is expected to come from devolved sources.

It also has increased borrowing power, up to £600m per year and £1.75bn overall for revenue and up to £3bn overall for capital.

Along with this was the devolution of air passenger duty, the aggregates levy, consumer advocacy, employment programmes, games machine licensing, onshore oil and gas licensing, railway policing, elections in Scotland, the Crown Estate, energy efficiency and fuel poverty, some aspects of equalities, road signs, speed limits and the rail franchise.

The 2016 act also gave Scotland substantial new powers over social security which, along with income tax, have been the most significant changes.

Scotland’s benefits agency, Social Security Scotland, launched in 2018 and will eventually handle 10 devolved benefits, including personal independence payment, carer’s allowance, funeral payments and winter fuel payments as well as new benefits created by the Scottish Government.

However, this has not been without controversy, with serious concerns raised over the impact of breaking railway policing in Scotland away from the British Transport Police and, more recently, about the delays to Social Security Scotland taking control of the devolved benefits from the DWP, some of which will not be devolved until 2023 or 2024, meaning it could be up to five more years before the Scotland Act 2016 is fully implemented.

While unquestionably, much has been achieved over 20 years, devolution remains unfinished business in both policy and process. The SNP vowed in its 2007 and 2011 manifestos to replace council tax in Scotland, but despite the cross-party Commission of Local Tax Reform making a number of suggestions in 2015, no change has yet been forthcoming, other than a modest rise to some of the rates.

With the SNP committing to more cross-party talks before 2021, this will no doubt be discussed further.

In terms of powers, it has been Brexit that has caused the biggest upset.

When the UK Government was able to pass its EU Withdrawal Bill in June 2018 despite the Scottish Parliament withholding its consent, it was the first time that Westminster had legislated on a devolved matter without the consent of MSPs since the Scottish Parliament was established and it caused ripples of concern about the status of Scotland’s devolved powers.

Scotland’s Brexit minister, Mike Russell, said UK ministers had “torn up the constitutional rule-book”.

Brexit has renewed calls for independence in some quarters, but whether or not independence happens, undoubtedly there will be calls for devolution of more powers.

In her recent statement to MSPs announcing plans for a second independence referendum by 2021, Nicola Sturgeon proposed cross-party talks and citizens’ assemblies on further devolved powers for Scotland that echoed the wider cross-party discussions and civic input that led up to the setting up of the devolved parliament 20 years ago.

She said: “This place was established with the hope that it would be a new type of parliament. I think that we are, but we can prove it anew by the way in which we respond today to the challenges that lie before us.

“We can show that we have already begun to learn not just the lessons from Westminster’s failure but those that Scotland has taught us as devolution has grown and strengthened.”

In his opening speech to the parliament in 1999, Donald Dewar said it was “a new stage of the journey begun long ago and which has no end”.

And whatever the citizens’ assemblies come up with, it is likely that the first 20 years is but a stepping stone on the devolution journey.

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