When the press reported that a House of Lords committee had condemned the Scotland Bill, I was sceptical. The Scottish Office has consistently taken the line that no devolution is possible without foreknowledge of the outcomes of future decisions, and that position is inconsistent with devolution in principle. The report of the Economic Affairs Committee is a different kettle of fish. They identify seven problems with the fiscal framework, and I think they are right about six of them. The seven problems are
- the absence of an agreed fiscal framework
- the lack of a fair, need-based mechanism for resource allocation – Barnett is not it
- how the block grant should be adjusted to allow for tax receipts
- Smith’s second ‘no detriment’ principle, which calls for footling cross-compensation to be made for every decision taken – the Committee calls it “a recipe for continuing conflict”
- the lack of an explicit mechanism to pay for joint activities such as international aid
- the unrestrained borrowing powers, and
- the lack of transparency and scrutiny.
The only thing in this list I disagree with is the point on borrowing powers – there is no good reason why any public authority should not be able to issue bonds, if people want to buy them.
The criticisms of the settlement are not an argument to delay the Scotland Bill, but, nearly a year after Smith reported, they are good reason to get the UK government to stop digging their heels in and think harder and more clearly about the mechanisms that are needed to deliver a devolved settlement.