By the Deputy First Minister
The Scottish Government believes that Scotland should be - and will be, in the future - an independent country. However, we accept that independence was not the choice of a majority of the Scottish people in the referendum on 18 September.
For Scotland to become independent, the people of Scotland must choose this future at the ballot box in a referendum. Independence will not be the outcome of the Commission led by Lord Smith of Kelvin. It follows that our proposals for further devolution are not, and cannot, be an attempt to achieve independence "by the back door".
In this paper we describe proposals for self-government driven by four over-riding and inter-connected objectives. These objectives will also inform our approach to the discussions that will follow.
Firstly, the outcome of this process must meet the expectations of the Scottish people as expressed in the referendum - which is for a package of reform that lives up to the rhetoric of 'Home Rule', 'near federalism' and 'devo-max'.
Secondly, we must significantly enhance the financial and democratic accountability of the Scottish Parliament and Government to the people we serve.
Thirdly, we must transform the ability of the Scottish Parliament to create jobs and economic growth, tackle inequality and represent our interests in the EU and international community on matters within our devolved responsibility.
Fourthly, we must ensure that the overall funding arrangements for the Scottish Parliament are equitable and allow it and the Scottish people to enjoy the financial and economic rewards of sound and sensible decision-making, as well as having the tools to manage the risks of our new responsibilities.
On the first of these, we consider it beyond argument that there is a powerful majority for change in Scotland. This is comprised of the 45% of the Scottish people who voted Yes in the referendum and those who were persuaded to vote No on the basis of the Vow to deliver significant new powers for the Scottish Parliament.
The language used during the campaign serves as a measure of the change that people now have a right to expect. The Prime Minister said: "[t]he status quo is gone. This campaign has swept it away". Both Gordon Brown and Danny Alexander talked of "Home Rule", and Gordon Brown also referred to "a federal state". In their Vow of 16 September, the Prime Minister, Ed Miliband and Nick Clegg said: "[t]he Scottish Parliament is permanent and extensive new powers for the Parliament will be delivered".
In a recent poll (Panelbase, 5 October 2014), 66% of respondents answered Yes to the question, "Should extensive new powers include control of all areas of government policy except for defence and foreign affairs, which is sometimes referred to as 'devo max'?". 71% backed "control of all taxation raised in Scotland", 68% backed "control of oil and gas tax revenue generated in Scottish waters", 75% backed "control of the welfare and benefits system", and 65% backed "control of policy regarding the state pension".
These findings are in line with previous polls and the findings over time of the Scottish Social Attitudes Survey.
We therefore believe that the proposals we put forward for maximum self-government have majority support in Scotland and that if the outcome of this process falls significantly short of that, it will not be living up to the expectations of the Scottish people.
Our second objective is strengthened financial and democratic accountability of the Scottish Parliament and Government to the people we serve.
Following the full implementation of the Scotland Act 2012, the Scottish Parliament will be responsible for around 16% of all taxes raised in Scotland and the revenue raised by taxes under our control will pay for around 22% of our spending.
The Scottish Government believes the principle should be that all taxes raised in Scotland should be the responsibility of the Scottish Parliament unless there are good reasons for them being reserved. This achieves in financial terms the principle that Donald Dewar enshrined in legislative terms in the Scotland Act 1998 - that all matters are devolved unless expressly reserved.
The Scottish Parliament should also be responsible for all domestic spending, including welfare, and make agreed payments to the UK Government for reserved services.
Our third objective is the transformation of the Scottish Parliament's ability to create jobs and economic growth, tackle inequality and represent our interests on matters within our devolved responsibility in the EU and international community.
This means that consideration of new powers must be a discussion driven by what the people want the Scottish Parliament to be able to do. It should be about 'powers for a purpose'. For the Scottish Parliament to be able to create jobs and tackle inequality, it needs more than control over one or two taxes. It needs control over the range of taxes, both personal and business. It needs control of key economic levers like employment policy. It needs control of welfare policy and the minimum wage. And the package of powers that is agreed needs to reflect the fact that interactions between different powers matter as much as the individual powers themselves. Therefore, the final package needs to be coherent and meaningful and avoid unintended consequences. For example, the level of the minimum wage, the tapering of benefits to reflect income, and support to sustain employment all need to be considered together.
Our fourth objective relates to the overall funding arrangements people want for the Scottish Parliament. Our starting point is that the Scottish Parliament should raise all of its own revenue and make payment to Westminster for reserved services. However, any final package that falls short of this, and requires an allocation of resource from Westminster to the Scottish Parliament must ensure equity. Any allocation of grant funding should continue to be based on the Barnett formula. Adjustments to the block grant to take account of the revenue that the Scottish Parliament will raise directly must be transparent and fair. It is vital that the Scottish Parliament reaps the rewards of sound decision-making. For example, if by investing in child care, the Scottish Government enables more parents with children to enter employment, the revenues from the tax they pay should flow to Scotland, not to the Westminster Treasury.
These, therefore, are the principles and objectives that inform our proposals and that will guide us in the discussions that follow.
The Scottish Government aims to secure the best deal possible for Scotland - by which we mean a package that will both live up to the clear demand for real change expressed in the referendum, and promised by all sides, and transform the ability of the Scottish Parliament to meet the challenges we face as a country.
We call on all participants in the Smith Commission to take the same approach - to recognise, as we have, that we will not achieve all that we want, but that there is a duty to think beyond party interest to secure the best that we can for Scotland. For us, that means accepting that independence will not be the outcome of the process. For others, it must mean embracing an outcome that goes radically and significantly beyond the limited proposals published so far towards a position that reflects statements made and Vows delivered during the referendum campaign.
If all participants approach this process in that spirit, and in line with promises made to the Scottish people, then it should be possible to secure agreement to a package of proposals that will significantly strengthen the Scottish Parliament and transform its ability to deliver real change for Scotland.
We look forward to discussing our proposals in the weeks ahead with the Smith Commission and with the Scottish people who, of course, will be the final judge of what is delivered.
Nicola Sturgeon MSP