The review of the budget framework has a simple goal: to remove the power of Holyrood
The UK government’s confident assertion that it is fully sovereign compels it to treat the Scottish government as little more than a raised parish council. Add to that the expectation of the British Treasury to maintain strict control over all public authorities, not just the other departments of Whitehall, and the Scottish government is caught between the blades of a pair of scissors, cutting its authority.
Faced with two decades in which the powers of the Scottish Parliament have increased, and are multiplying, the Conservatives at Westminster have started to reduce them. The first line of attack was with Brexit. Powers repatriated to the UK in areas of delegated responsibility remained in London. This will lead to public projects, even in devolved areas of competence, being stamped with the Union Jack, and declared proudly British.
Then came a dispute over the powers of the Scottish Parliament. Repeated appeals to the Supreme Court can be expected to set much stricter limits on the authority of decentralized legislatures. The court’s most recent judgment suggests it is likely to be broadly in favor of the British government’s expansive claims.
But it might just be the act of warming up. The main event is set to begin next year, as the Treasury, the second scissor blade, spells out the review of the fiscal framework.
This defines the support the Scottish Government gets through a block grant from the Treasury and the amount of money it can raise through Scottish taxation. The implementation of the framework is intentionally opaque and complex. It takes years to figure out all the details of who owes what to whom. This is the result of the principle that the application of the framework should harm neither the UK nor the Scottish government.
This means determining how much revenue the UK government would have collected in Scotland if there had been no devolution. Although it may sound simple, it is not. To take a somewhat odd example, last year the UK government claimed that any money recovered in Scotland under the Proceeds of Crime Act should be turned over to HMRC.
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This money is the result of spending in Scotland by the police and the Crown Office. It is not tax revenue. Yet the argument is that he remains in Scotland only because of devolution. This seems to be a very clear indicator of the Treasury’s assertive negotiating position early next year.
As obscure as the details of its plan are, the Treasury will simply aim to take as much power away from the Scottish government as possible. Not quickly, or crudely – just a slight pressure on the life of this parliament, in an attempt to weaken support for independence enough to block the way to an agreed referendum.
Think of all the ways the Scottish government has tempered the UK government’s tendency to rely on markets for the provision of services, especially in healthcare and education.
Think about how Scotland, gaining social benefit administration powers, will increase payments for children. It is fitting that the British government should undermine these distinctively Scottish policies. Does Nicola Sturgeon lead a government? It was a smart branding in 2007 to change the name from Scottish Executive to Scottish Government.
Computing has added to the story of autonomy. But, in itself, the name change did nothing concrete. “Scottish Executive” certainly captured Donald Dewar’s original ambition for Holyrood, that it would enable debate and decision-making in Scotland, for Scotland, including how to spend the money given in the block grant.
The budget process has certainly supported the gradual emergence of divergences between Scotland and the UK, even when there was a Labor majority in Westminster, and a Labor-led Scottish administration.
There is at least one argument that the fiscal framework is an elegantly crafted disguise of ever tighter limits on the capabilities of the Scottish government. Defining success, planning for it, and taking responsibility for failure are all hallmarks of government. A spending authority, which the Scottish government still is, faces enormous constraints. It suits the UK government. In Scotland we can have months of agony over whether to change income tax rates very slightly, raising perhaps Â£ 200million a year – in a budget of Â£ 40 billion.
The Scottish government’s borrowing powers are simply not enough. Just over Â£ 300million a year they exist so if something goes wrong and block grant payments are lower than expected the Scottish government does not need to cut spending.
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This block grant is of course determined by UK government spending. The sudden increase in national insurance contributions last month has not guaranteed more funding for the Scottish government.
If the Treasury imposes more years of austerity, the Scottish government could complain and find ways to mitigate the worst effects. But, as with Covid policy, it will have to follow the UK’s lead.
There is no easy and obvious way out of this situation. We are about to discover that vested power is indeed conserved power.
The challenge for the Finance Secretary will be to play a weak role in the negotiations publicly enough that everyone knows how tied the hands of the Scottish Government are by the Treasury, and the over-the-top arrogance of UK institutions bolsters support for independence.