Scottish devolution deal to go further than many expected

Scotland’s House of Commons MPs could be banned from voting in crucial Westminster votes, following the publication of extra devolution powers to the Edinburgh parliament. Under the proposals of the Smith Commission, Edinburgh would have complete authority over setting income tax rates and bands, but personal allowances would still be decided in London

Negotiated only by Scottish politicians, but accepted by prime minister David Cameron, the Smith deal will form the core of legislation to go to the Commons early next year honouring pledges made before the September 18th referendum.

Despite criticisms from the Scottish National Party (SNP) and other pro-independence campaigners that it has fallen short, there is little doubt that the deal goes further than was expected a few weeks ago. A share of VAT will also be paid directly to Scotland, while Edinburgh will have power over some welfare benefits, onshore oil and gas exploration and air passenger duties, the latter of which has infuriated north-of-England airports.

Electoral threat to Labour

Labour, which opposed granting Scotland full powers over income tax rates and bands, conceded ground because of the electoral threat it faces there from the SNP.

However, it believes it has headed off demands to exclude Scottish MPs from key votes in the Commons by getting agreement that MPs from across the whole of the UK will decide the UK’s budget. The issue is crucial for Labour, as it has 41 Scottish MPs, though these will face a huge challenge from the SNP in the general election in May.

There is still significant room for doubt on this, though, as English Conservative MPs are increasingly furious that Scotland could get stronger devolution, yet retain its say in the Commons.

Reflecting this, perhaps, 10 Downing Street said Scottish MPs would retain “full responsibilities” but hinted that they may only be able to decide on UK-wide personal allowance rates and not get a vote on income tax in England.

Deputy prime minister and Liberal Democrat leader Nick Clegg agreed, saying that allowances, exemptions and “who you raise it from” will be decided by Westminster, but that “the bands and the rates of the income tax system will be devolved to Scotland”.

Scottish MPs needed

The issue is crucial, as Labour will struggle next year to form a majority in Westminster without Scottish MPs, even though Tony Blair did twice win a majority counting just English Labour MPs alone.

The Scottish government will be given increased borrowing powers, though the sums drawn down will have to be agreed with the treasury, because it retains responsibility over UK debt.

Rejecting Conservative criticism, the Liberal Democrat Scottish secretary Alistair Carmichael said England would get more authority over its particular affairs “once it decided what it wants”. For now, that remains an open question: while some English cities want greater tax powers and devolved budgets, voters in many places are less willing to accept the idea of more powerful local governments or new regional administrations.

Equally, Conservative MPs, particularly, are unwilling to accept the creation of a federal UK parliament, since England’s influence would have to be moderated if it is to work.

Under existing rules, Scotland, England, Wales and Northern Ireland each receive an annual block grant from the treasury for public spending. The Smith Commission declared that neither London nor Edinburgh “will lose or gain financially from the act of transferring a power”, but the details to ensure this have not yet been worked out.