Saturday, 9 May 2015

Why fiscal autonomy will help both Tories and Labour as well as Scotland in general

The landslide victory of the SNP in the General Election allied to the nearly 45 per cent vote in the 'indyref' signals the support of the majority of the Scottish voters for devomax. If this is to have real meaning it must mean full fiscal autonomy (FFA). This will mean that the Scottish Parliament would have to take responsibility for social and economic matters and take the blame as well as the credit .

Labour has resisted this arguing that Scotland gets a good deal out of the Barnett formula compared to the uncertainty of FFA. A good argument, especially in view of the fact that eventually the growth of electric cars will keep oil prices reduced and reduce the bonus of North sea oil revenues. But the point is that the majority of Scots have voted, in effect, to say that regardless of such claims they want self- determination, albeit still within the UK.

The problem with resisting this call is that the SNP can go on and on blaming Westminster for austerity, and avoid facing the choices of cutbacks or tax increases that they would have to take under FFA. For them it is perfect - power without responsibility and they can continue to play  the 'blame Westminster game' until the cows come home - or until such time as they can argue to have another Indyref. They could well win the next one. Ok fiscal autonomy - which means Scottish control over all of their tax and spending decisions (apart from spending on common 'federal'  items such as defence), may lead to independence, but we'll have to see. It is right that the Scots should get a good portion of self-determination before they decide whether they want the whole dish of full independence. It may be that Scots will decide that (despite the heavy incubus of hosting Trident) the advantages of the United Kingdom in providing overall financial security including, and (I hope) continued large spending on renewable energy in Scotland justifies continued union with the UK. 

But really, rather than the drip-drip process of more conventions and more bit by bit concessions of Scottish autonomy, Westminster should take one bold step and agree FFA for Scotland.

We know that giving the Scottish Parliament FFA could make things difficult for a future Labour Government since they would have to have a vote only among English and Welsh MPs for a budget for the rest of the UK. But what is worse? Carrying on indefinitely with the current position where the SNP blame the 'red and blue' Tories for everything? Maybe independence would come anyway. But maybe not, and there would be a more stable political settlement wherein there is not at present.

Labour has been knocked out in Scotland. So when it struggles to its feet is it going just to carry on with the same losing punches, or can it do better by calling the SNP's bluff? That is by supporting FFA. Labour is re-evaluating. It should re-evaluate its stance on FFA for Scotland as an urgent priority.

It is a conversation that needs to include Labour and Tories and the other parties south if the border as well. Arguably, the SNP cost Labour some seats in the election (indirectly) south of the border since the Tories ran a vigorous scare campaign about the impact of SNP on a putative Labour Government. The Tory claims may have been implausible, perhaps, in the sense that the SNP would have little alternative to back Labour in key votes (including the budget since there would be no better available alternative) but nevertheless, they seemed, to many to be effective. Giving Scotland FFA could ensure that the Tories could no longer play the scare card about the SNP holding Labour to ransom over the budget again. 

Okay there would be a political price to this for Labour in that the ability of Scottish MPs to vote on English and Welsh matters would be curtailed (and this will benefit the Conservatives) - but if you think carefully you come to realise that the political cost if NOT grasping the FFA mettle is even higher. Not only will the Tories continue to play the SNP card, but Labour's chances of making a comeback north of the border wound be much reduced as the SNP were able to carry on blaming Westminster for everything. Finally of course comes the biggest reason for granting full fiscal autonomy to Scotland - the Scots have voted for it large numbers. Let democracy rule.

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