Can Holyrood be one of the most powerful devolved parliaments in the world?

Published: 8 March 2016
Author: Nicola McEwen

The Prime Minister has claimed that the Scotland Bill, once enacted, will deliver one of the most powerful devolved parliaments in the world. Is he right? It depends upon what we mean by "devolved". And it depends upon what we mean by "powerful".

Devolution refers to the decentralisation of power from central to regional government. Power is derived from the centre without formally diluting its sovereignty – its ultimate authority. That is not to suggest, as Enoch Powell once did, that power devolved is power retained. Devolution can imply a considerable transfer of powers even if it doesn’t alter the legal basis of sovereignty. In practice, devolution reduces the political authority central governments and parliaments can exercise over the regions in question. That some of these regions, like Scotland and Wales, are also nations doesn’t alter this constitutional relationship, though it can give them added political legitimacy. If the Prime Minister’s claim refers only to those parliaments and assemblies that derive their powers from the centre, as in France, Italy or the Netherlands, then few can claim the depth or breadth of political authority within Scotland, even before the Scotland Bill transfers new powers.

If, on the other hand, we include the parliaments of regions or provinces within federations, where regional and national parliaments are each sovereign within their spheres of jurisdiction, the Scottish Parliament’s power is on most measures surpassed by the American states, the Canadian provinces, the Australian states and the German lander. Also, federacies like the Aland islands (Finland) or the Faroes (Denmark) have substantial political authority. They too rank more highly than Scotland in international comparisons on comparative indices like the Regional Authority Index compiled by a team led by Professor Liesbet Hooghe and Gary Marks from the VU University in Amsterdam.

Evaluating the Prime Minister’s claim also depends on what he means by "powerful". Power in relation to parliaments and government refers to the exercise of legitimate political authority. The academic literature on federalism draws a distinction between two forms of political authority: "self-rule" and "shared rule". Self-rule is what in Scotland is usually referred to as "home rule". It measures the depth and breadth of formal legislative, executive and fiscal autonomy. Shared rule, by contrast, concerns the participation and influence of sub-state governments in decision-making processes at the centre over matters that directly affect their competences.

The new devolution settlement is, by any measure, a marked increase in the Scottish Parliament’s level of self-rule, with a significant expansion of the powers and responsibilities over taxation and social security. Once implemented, Scotland may still not enjoy the levels of self-government of the provinces and states of North America or the Swiss cantons but it is a reasonable claim to suggest that it would be one of the most powerful devolved systems in the world, however broadly we define devolution.

But on the second dimension of political authority – shared rule – the position is less clear. In formal terms, Scotland ranks much lower in terms of shared rule than the regions and provinces of most federal states. The Scottish Government does not have a formal right to co-decide UK-wide policy frameworks that affect Scotland, nor a formal role in determining alongside the UK Government how tax revenues should be distributed or the rules for public borrowing. By convention, the Scottish Parliament does have a role in consenting to those aspects of UK-wide legislation that affect devolved competence, including changes over the division of powers, but both the Parliament and Government have limited input into or influence over central decision-making structures more broadly.

In part, the relative lack of shared rule may be because no significant player demanded it. The Scottish constitutional debate, both before and after devolution, has been heavily centred on "self-rule" and the politics of self-government. For many within the broad home rule movement, the goal was to maximise the capacity of the Scottish Parliament and Government to make policy decisions autonomously. Consequently, there were no mechanisms through which the devolved institutions could be represented in the Westminster Parliament (for example, in a House of nations and regions), and the machinery of intergovernmental relations that developed since devolution is comparatively weak. The asymmetry within UK devolution – with varying degrees of devolution for Scotland, Wales and Northern Ireland and the continued absence of devolution in England – also makes it difficult to develop strong systems to support intergovernmental collaboration.

The lack of formal shared rule is problematic if we take a closer look at the new devolution settlement. Until now, most of the areas of devolved competence were previously under the administrative control of the Scottish Office. This latest round of devolution and the Scotland Act 2012, which is still to be fully implemented, take Scottish devolution on to new terrain. These new powers create new interdependencies between the Scottish Government and the UK Government. For example, the Scotland Bill devolves to the Scottish Parliament the responsibility for raising 100 per cent of income tax levied on the earnings of Scottish residents, with the power to alter the rates and thresholds. However, the personal allowance, taxes on savings and dividends, capital gains and national insurance – all of which interact closely with income tax on earnings – will remain reserved to the UK Parliament. As a result, Scottish tax autonomy will be shaped by UK policy decisions over which the Scottish Government will have no control. For example, if the UK Government chooses to raise the personal allowance – effectively giving taxpayers across the UK a tax cut – this would result in lower revenues accruing to the Scottish Government which, unlike its UK counterpart, would not be able to offset these lost revenues by raising other taxes to fill the gap. If the Chancellor changes taxes and allowances just before the new tax year, this could adversely affect the calculations and forecasts underpinning Scottish Government policy made months before. The new devolution settlement undoubtedly means a formal increase in self-rule, but the interdependencies between the new powers and those that remain reserved could also, paradoxically, expose the vulnerability of the Scottish Government and its continued dependence on UK decision-making.

Federal political systems designed to be interdependent tend to be accompanied by structures and processes that foster collaboration and co-decision. The UK, by contrast, has retained rather centralised decision-making and fiscal structures, with the authority of the Treasury particularly notable. The negotiations that led to the Fiscal Framework may be a sign of a cultural change. They took place within an intergovernmental forum, the Joint Exchequer Committee, which saw the Deputy First Minister, John Swinney, and the Chief Secretary to the Treasury, Greg Hands, locked in intensive bilateral negotiations intended to reach agreement. From the perspective of the Scottish Government at least, this was a negotiation among equals. Its success was crucial to agreeing the framework underpinning the new powers. But negotiating the transfer of new powers is one thing. Managing the new settlement in all its complexity is quite another. It will require the two governments to maintain a spirit of cooperation and mutual respect for their respective political mandates, and a more formal and effective machinery of intergovernmental relations.

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