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More Powers for the Scottish Parliament: Scottish Government Proposals

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CHAPTER 3

THE OPPORTUNITIES OF SELF-GOVERNMENT FOR SCOTLAND

This chapter sets out an overview of proposals for maximum self-government for Scotland within the United Kingdom. The Scottish Government believes these offer Scotland significant opportunities to benefit from self-government, and the following chapters set these out in more detail in the key areas of the economy, fairness and equality, democracy and Scotland's place in the world.

These proposals have been developed by the Scottish Government in dialogue with a range of key interest groups in Scotland. We believe there will be widespread support for both the overall approach and for the detailed suggestions within each section.

However, the Scottish Government recognises that there will be a need for discussion and negotiation within the Commission, and between the Commission and wider Scottish society, before it reaches its conclusions.

The Scottish Government will also be engaging in a wide-ranging conversation with organisations, stakeholders and the people of Scotland, encouraging full participation in the Smith Commission, and the discussion and debates that will follow its conclusions.

Our proposals in summary:

  • 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
  • defence
  • intelligence and security including borders
  • many aspects of foreign affairs

We believe that, taken together, the proposals meet the criteria and tests set out in Chapter 2:

  • Democratic accountability will be enhanced by putting responsibility for much of domestic policy into the hands of the Scottish Parliament, bringing decisions on those issues closer to the Scottish people
  • Financial accountability will be significantly strengthened by giving the Scottish Parliament full responsibility for taxes raised in Scotland and how they are spent
  • Powers over tax, welfare and economic development will transform the Scottish Parliament's ability to support jobs and growth in Scotland, allowing it to tailor policy to the specific strengths and needs of individuals and businesses in Scotland
  • Powers over social protection and equalities will give the Scottish Parliament more of the tools it needs to tackle the deep-seated inequalities in Scottish society
  • The ability to represent Scottish interests on devolved matters in international affairs will benefit business and exports
  • The package as a whole would mean that the Scottish Parliament would have strong incentives for effective decision-making by ensuring that it would reap the benefits and carry the risks of the policies it chooses

Meeting the aspirations of the people of Scotland

The Scottish Government believes that these proposals bring the greatest possible benefit to Scotland, while at the same time providing a coherent and logical division of responsibilities between Westminster and Holyrood.

It is right that our proposals should be discussed and tested. We recognise that others may share many of our objectives but argue for more evolutionary change. The Scottish Government stands ready to discuss any and all proposals for improving outcomes for the people of Scotland with the Smith Commission.

Those discussions must, however, reflect the aspirations of the people of Scotland.

The Scottish Government sees a number of elements as being fundamental to fulfilling those aspirations and meeting the tests outlined in Chapter 2. For example:

  • There must be a much closer relationship between the revenue the Scottish Parliament raises and its expenditure. It is difficult to see how a large gap between expenditure and revenue powers can create meaningful democratic or financial accountability
  • Those elements of tax and social protection most closely aligned to employment and equality should be the priorities to bring within the responsibility of the Scottish Parliament. These must allow for the redesign of the system to address Scottish priorities on jobs and fairness
  • The Scottish Parliament should have responsibility for the shape of democracy within Scotland
  • Scotland must have a stronger voice within the EU, particularly on issues of primary relevance to Scotland
  • Most remaining elements of domestic affairs should be devolved to make real the commitments to 'Home Rule'