Chapter 1 of this paper discusses the need for more powers for Scotland's Parliament.
Since the Scottish Parliament was re-convened in 1999, responsibility for governing Scotland has been divided between Edinburgh and London.
At Westminster, the UK Parliament and Government exercise powers and bear responsibilities 'reserved' by the Scotland Act 1998 (as later amended). These include defence, foreign affairs, monetary policy, the welfare system, financial and business regulation and most aspects of taxation.
The Scottish Parliament and Government in Edinburgh are responsible for everything that is not reserved. These matters include the National Health Service, education, justice, social services, housing, the environment, farming, fisheries and aspects of transport.
The Scottish Government believes that decisions about Scotland are best taken here, close to the people they affect and with their participation and consent.
The Scottish Government continues to believe that Scotland should, and will in the future, be independent. However, we accept both the result of the referendum on 18 September, and that independence will not be the outcome of the Smith Commission.
What is beyond doubt is that the people of Scotland expect early and substantial change - change that will give the Scottish Parliament the further powers and responsibilities it needs to tackle the challenges facing Scotland in a way that responds to the views and votes of people in Scotland. That is what was promised in the referendum campaign and it is what people now expect to be delivered.
Chapter 2 sets out the Scottish Government's approach to delivering progress through self government. We propose maximum self-government within the Union. Others would describe this as 'devo-max', 'home rule' or 'federalism'.
We argue that further devolution should be underpinned by clear principles. It must:
- respect the sovereignty of the people of Scotland and enhance financial and democratic accountability to them. As part of this, the Scottish Parliament should have the power to devolve power further, to local authorities and communities
- transform the ability of the Scottish Parliament and Government to meet the challenges we face as a country, in particular to enable Scotland to be a more prosperous country, a fairer and more equal society and have a stronger voice in the EU and internationally on matters within devolved competence
- be equitable and transparent in its approach to resources, risks and rewards including arrangements for Scotland to have access to taxes raised in Scotland and transitional or residual transfers of resources based on the current Barnett formula
Chapter 2 also argues that any package of further devolution should be assessed against criteria of coherence, effectiveness and transparency. To tackle issues such as inequality, for example, the Scottish Parliament requires a coherent and effective set of powers covering welfare, taxation, employment and equality.
Chapter 3 sets out an overview of our proposals for extending self-government in Scotland consistent with the principles set out in Chapter 2.
- Full fiscal responsibility for the Scottish Parliament: all tax revenues should be retained in Scotland. The Scottish Parliament should have policy responsibility for all taxes unless there is a specific reason for a continued reservation. In particular, the Scottish Parliament should have full autonomy for income tax, national insurance, corporation tax, capital gains tax, fuel duty, air passenger duty and inheritance tax
- The Scottish Parliament should be responsible for all domestic expenditure - including welfare - and make payments to the UK Government for reserved services
- The Scottish Parliament should have a sustainable framework for public finances including the necessary borrowing powers, and an agreement with the UK Government on the overall approach to public finances
- As part of any agreement, the Barnett formula should continue to be used to determine Scotland's resources during any transitional period and if the Scottish Parliament's financial powers fall short of full fiscal responsibility. Scotland should get any financial benefits, as well as having the tools to manage the risks, of its new responsibilities
- Responsibility for all welfare policy and administration should be devolved. As a priority this should involve all working age benefits. In the meantime, roll out of Universal Credit and Personal Independence Payments in Scotland should be halted to ensure that the practical ability to devolve individual benefits is not compromised
- Employment and employability policy, including responsibility for setting the minimum wage, and all employability programmes should be devolved
- Equal opportunities and equality policy should be devolved
- Other key economic levers, including competition, energy and broadcasting policy, responsibility for the Crown Estate, transport policy not currently the responsibility of the Scottish Parliament (including rail) and aspects of immigration policy, such as the post study work visa, should be devolved
- The sovereign right of the people of Scotland to determine their form of government should be enshrined in law
- The Scottish Parliament should become responsible for its own elections, rules and procedures and the Sewel Convention should be given statutory force
- Scotland should have the opportunity to establish its own constitutional framework, including human rights, equalities and the place of local government
- The Scottish Parliament should have the ability to directly represent its interests on devolved matters in the EU and internationally
Our proposals would leave the following under the control of the UK Parliament and Government at Westminster:
- aspects of the constitution of the United Kingdom as a whole, such as the monarchy and the Westminster Parliament
- monetary policy, including the currency and the Bank of England
- aspects of citizenship, including nationality and passports
- intelligence and security including borders
- many aspects of foreign affairs
These are developed further in Chapter 4 on Scotland's economy, Chapter 5 on welfare and social policy, Chapter 6 on Scotland's democracy and Chapter 7 on Scotland's place in the world. In each policy area, we explain how maximum self-government will enhance decision-making in Scotland. We believe that, taken together, these proposals are practical ways of achieving meaningful self-government within the Union.
We set out our view of the way forward in Chapter 8. Some of our proposals can be implemented quickly and simply through order-making powers already available under the Scotland Act. For example, the UK Parliament and Government could devolve to the Scottish Parliament now control of Scottish elections, in time to allow 16 and 17 year olds to vote in the Scottish Parliament elections in 2016. There are also well developed and long standing proposals to devolve responsibility for the Crown Estate.
It is vital, however, that proposals for further devolution are put before the people of Scotland in a way that engages their full participation in the democratic process, building on the unprecedented level of participatory democracy seen in Scotland in recent months. This paper is therefore part of the Scottish Government's own conversation with the people of Scotland on the future governance of our country.